U. S. Bank Trust National Association v. Chieftain Atlanta, L. P.

• Decision Date: 20 September 2021
• Docket Number: A21A0796
• Citation: 863 S.E.2d 541,361 Ga.App. 186
• Parties: U. S. BANK TRUST NATIONAL ASSOCIATION as Delaware Trustee et al. v. CHIEFTAIN ATLANTA, L. P.
• Court: Georgia Court of Appeals

361 Ga.App. 186

863 S.E.2d 541

U. S. BANK TRUST NATIONAL ASSOCIATION as Delaware Trustee et al.

v.CHIEFTAIN ATLANTA, L. P.

A21A0796

Court of Appeals of Georgia.

September 20, 2021

Sean Robert Quirk, Atlanta, for Appellant.

James P. Blum Jr., Atlanta, for Appellee.

Phipps, Senior Appellate Judge.

In this real property dispute, plaintiffs U. S. Bank Trust National Association, as Delaware Trustee, and U. S. Bank National Association, as co-trustee for Government Loan Securitization Trust 2011-FV1 (collectively, "U. S. Bank"), appeal from the denial of U. S. Bank's motion for reconsideration of the denial of its motion for summary judgment on its claim for a declaratory judgment.¹ U. S. Bank contends that the trial court erred when it concluded that disputed factual issues precluding summary judgment exist regarding whether U. S. Bank ratified a forged cancellation of a security deed and thereby extinguished its interest in the real property at issue here. For the reasons that follow, we agree and reverse.

Viewed in the light most favorable to the nonmoving party, see City of St. Marys v. Reed , 346 Ga. App. 508, 508, 816 S.E.2d 471 (2018), the record shows that non-party Jannifer Thomas bought the property at issue in this action (the "Property") in 2000. The following year, she obtained a mortgage loan in the amount of $98,907 (the "Loan") and executed a security deed as to the Property in favor of her lender (the "Security Deed"). Thomas's lender later transferred the Loan and Security Deed, which eventually were obtained by non-party Wells Fargo Bank, N. A., in 2009 and by U. S. Bank in April 2013. In September 2014, a cancellation of the Security Deed purportedly executed by Wells Fargo (the "Cancellation") was recorded in the county real estate records. Wells Fargo (which remained the servicer for the Loan) first learned of the Cancellation in late October 2014, during a title examination pursuant to a foreclosure referral. Consequently, in May 2015, U. S. Bank and Wells Fargo filed an "Affidavit Affecting Title to Land" executed by a Wells Fargo vice president, who attested that the September 2014 Cancellation is a forgery and that an outstanding balance on the Loan still exists (the "Affidavit"). The Affidavit was recorded in the county real estate records on May 22, 2015.

Meanwhile, in 2013, Thomas transferred the Property, which eventually was obtained by defendant Chieftain Atlanta, L. P., via a limited warranty deed on July 22, 2015, two months after the Affidavit was recorded.

Chieftain thereafter used the Property (along with other properties) as security for a pre-existing $26 million loan. Notably, in the weeks before Chieftain acquired the Property, it obtained a title report highlighting the Affidavit recorded in the county real estate records.

This action began in January 2018, when U. S. Bank filed a complaint against several defendants, including Chieftain. As relevant to this appeal, U. S. Bank sought a judgment declaring that the September 2014 Cancellation is ineffectual and that the Security Deed assigned to U. S. Bank remains in full force as the first priority security interest and/or lien on the Property.² Following discovery, U. S. Bank moved for summary judgment on its request for a declaratory judgment, arguing that the undisputed facts show that the Loan remains outstanding, the Cancellation is a nullity because it is a forgery, and Chieftain is not a bona fide purchaser for value because it had notice of the May 2015 Affidavit when it acquired the Property. In support of its motion, U. S. Bank submitted the affidavits of the individuals who purportedly signed and notarized the Cancellation, each of whom attested that it is a forgery, as well as the affidavit of a loan officer who attested that a balance of $100,233.45 remained outstanding on the Loan.

In its opposition to summary judgment, Chieftain contended that disputed factual issues remain as to whether U. S. Bank's delay in filing the May 2015 Affidavit and initiating this action effectively ratified the Cancellation.³ The trial court agreed with Chieftain and denied summary judgment on that basis. U. S. Bank filed a motion for reconsideration, which the trial court also denied, and this interlocutory appeal followed.

We review de novo a grant or denial of summary judgment, viewing the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovant. City of St. Marys , 346 Ga. App. at 508-509, 816 S.E.2d 471. Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Id. at 508, 816 S.E.2d 471 ; see OCGA § 9-11-56 (c). "[T]he burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party's case." Ellison v. Burger King Corp. , 294 Ga. App. 814, 819 (3) (a), 670 S.E.2d 469 (2008) (citation and punctuation omitted); see OCGA § 9-11-56 (c). If the movant meets this burden, the nonmovant "cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue." Ellison , 294 Ga. App. at 819 (3) (a), 670 S.E.2d 469 (citation and punctuation omitted); see OCGA § 9-11-56 (e).

1. We first address U. S. Bank's challenge to the trial court's ruling that questions of fact remain as to whether U. S. Bank ratified the Cancellation. For the reasons that follow, we hold that no ratification occurred on the facts of this case.

"The relationship of principal and agent may be established if one person, expressly or by implication, ratifies the acts of another on his behalf." Rains v. Dolphin Mtg. Corp. , 241 Ga. App. 611, 614 (4), 525 S.E.2d 370 (1999). "Ratification, the confirmation by one of an act performed by another without authority, is an affirmative defense, and the burden of proving it is on the party asserting it."

Hendrix v. First Bank of Savannah , 195 Ga. App. 510, 511 (1), 394 S.E.2d 134 (1990) ; accord Griggs v. Dodson , 223 Ga. 164, 171 (2), 154 S.E.2d 252 (1967) (burden is on party seeking ratification). "The ratification must be made by the principal with knowledge of the material facts and ‘may be express or implied from the acts or silence of the principal.’ " Hendrix , 195 Ga. App. at 511 (1), 394 S.E.2d 134 (citation omitted) (quoting OCGA § 10-6-52 ). Thus, "[i]f the principal, with full knowledge of all the material facts, accepts and retains the benefits of the unauthorized act , he thereby ratifies the act." Id. (emphasis supplied; citation and punctuation omitted); accord Rains , 241 Ga. App. at 614-615 (4), 525 S.E.2d 370 ; Medley v. Boomershine Pontiac-GMC Truck, Inc. , 214 Ga. App. 795, 798 (4), 449 S.E.2d 128 (1994) ; Hyer v. C. & S. Nat. Bank , 188 Ga. App. 452, 453 (1), 373 S.E.2d 391 (1988).

Ratification issues often arise in contract disputes, in which a court is asked to determine whether a party to the contract ratified the agreement at issue. See, e.g., Griggs , 223 Ga. at 169-171 (2), 154 S.E.2d 252 ; Harris v. Underwood , 208 Ga. 247, 250 (4), 66 S.E.2d 332 (1951) ; Div. Six Sports, Inc. v. Hire Dynamics, LLC , 348 Ga. App. 347, 350-352, 822 S.E.2d 841 (2019) ; McKean v. GGNSC Atlanta, LLC , 329 Ga. App. 507, 511-513 (1) (b), 765 S.E.2d 681 (2014) ; American Computer Technology, Inc. v. Hardwick , 274 Ga. App. 62, 65-66 (2), 616 S.E.2d 838 (2005) ; see also Mori Lee, LLC v. Just Scott Designs, Inc. , 325 Ga. App. 625, 630-631 (3), 754 S.E.2d 616 (2014) (physical precedent only). A key question in these cases typically is whether the party knowingly accepted benefits under the agreement through silence and/or performance. See McKean , 329 Ga. App. at 513 (1) (b), 765 S.E.2d 681 ; American Computer Technology, Inc. , 274 Ga. App. at 65-66 (2), 616 S.E.2d 838 ; Medley , 214 Ga. App. at 798 (4), 449 S.E.2d 128.

The concept that ratification typically entails the acceptance of benefits extends to cases in which a party alleges that another forged his signature on a contract without his knowledge. See Ferguson v. Golf Course Consultants, Inc. , 243 Ga. 112, 112-113, 252 S.E.2d 907 (1979) ; Southtrust Bank of Ga. v. Parker , 226 Ga. App. 292, 294-295 (1), 486 S.E.2d 402 (1997) ; see also generally Brock v. Yale Mtg. Corp. , 287 Ga. 849, 854-855 (3), 700 S.E.2d 583 (2010) (observing that "a forged signature is nonetheless binding if" the person whose name was signed, "with full knowledge of all the material facts, accepts the benefits of an unauthorized act, or retains such benefits after discovering the material facts") (citation omitted); Summit Automotive Group, LLC v. Clark , 298 Ga. App. 875, 883-884 (4), 681 S.E.2d 681 (2009) (for ratification of allegedly fraudulent acts to occur, "the principal must accept and retain the benefits of the unauthorized act") (citation and punctuation omitted). For example, a party whose signature is forged on a land sale instrument may be deemed to have ratified the forgery if he later accepts the financial benefits of the sale with knowledge of the forgery. See Ferguson , 243 Ga. at 112-113, 252 S.E.2d 907. And a party whose signature is forged on a promissory note may be deemed to have ratified the forgery if she accepts the benefits of the loan with knowledge of the forgery. See Southtrust Bank of Ga. , 226 Ga. App. at 294-295 (1), 486 S.E.2d 402. A party also may ratify the allegedly unauthorized sale of his land by another purporting to act as his agent, where the party later acknowledges the purported agent's authority to have made the sale or affirmatively acquiesces in the buyer's right to possession of the land. See Harris , 208 Ga. at 248-249, 250 (4), 66 S.E.2d 332.

Here, Chieftain has pointed to no record evidence suggesting that U. S. Bank accepted any benefits under the Cancellation, which, given the outstanding Loan balance, could operate only to U. S. Bank's...