Valley Nat'l Bank v. Czapla
Decision Date | 17 January 2023 |
Docket Number | 2:20-CV-961-RAH-KFP |
Parties | VALLEY NATIONAL BANK, Plaintiffs, v. PIOTR CZAPLA, SUSAN M. CZAPLA, and QUALITY HOME HEALTH CARE, INC., Defendants. |
Court | U.S. District Court — Middle District of Alabama |
RECOMMENDATION OF THE MAGISTRATE JUDGE
Before the Court are Valley National Bank's Motion for Default Judgment (Doc. 61) as to Defendant Quality Home Health Care Inc. (Quality Home), its Motion for Summary Judgment (Doc 67) as to Defendants Piotr and Susan Czapla, and the Czaplas' two Motions to Dismiss (Docs. 69 70).[1] Upon consideration of the motions and the parties' briefing and evidentiary submissions, the undersigned RECOMMENDS that the Court GRANT Valley National's motions and DENY the Czaplas' motions, as set forth below.
This case arises out of two commercial loans made to Quality Home by Valley National,[2] both of which were personally guaranteed by the Czaplas. When Quality Home and the Czaplas defaulted under the terms of the loan documents by failing to make payments, Valley National accelerated the loans and began collection proceedings. Because a statement of undisputed facts is required for summary judgment and will also provide a factual background for the remaining motions, the Court begins with the undisputed facts.
Valley National made a commercial loan to Quality Home for $411,500.93 on December 15, 2015. See Doc. 67-1. In connection with this loan, Susan Czapla, as president and secretary of Quality Home, signed a promissory note, business loan agreement, and commercial security agreement dated December 15, 2015. Doc. 67-1 at 10-12, 14-20, 4351. The loan was also secured by a real estate mortgage and assignment of leases and rents dated May 28, 2008, and signed by Susan Czapla as president of Quality Home and Piotr Czapla as secretary. Doc. 67-1 at 22-31, 33-41. The promissory note contains the following provision regarding Quality Home's obligation to pay attorney's fees incurred to collect the note:
Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses whether or not there is a lawsuit, including attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
Doc. 67-1 at 11. The business loan agreement, mortgage, assignment of leases and rents, and commercial security agreement contain similar provisions for payment of attorney's fees and expenses incurred to collect on the loan. Doc. 67-1 at 18, 26, 37, and 46. On January 8, 2016, the Czaplas signed individual commercial guaranties for this loan. Doc. 67-1 at 51-59. Those guaranties also contain a provision regarding payment of attorney's fees:
Guarantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorney's fees and Lender's legal expenses, incurred in connection with the enforcement of this Guaranty. Lender may hire or pay someone else to help enforce this Guaranty, and the Guarantor shall pay the cost and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy services. Guarantor also shall pay all court costs and such additional fees as may be directed by the court.
Quality Home took out another commercial loan on August 27, 2017, in the amount of $71,977.10. Doc. 67-1 at 61. As with the previous loan, Susan Czapla signed a promissory note and business loan agreement in her capacity as Quality Home's president. Doc. 67-1 at 60-63, 65-71. This loan was secured by a mortgage and assignment of rents executed by Susan Czapla as president on Quality Home on March 9, 2015 (Doc. 67-1 at 73-80, 83-88), and a commercial security agreement dated February 27, 2015, which Susan Czapla also signed in her capacity as president (Doc. 67-1 at 90-97). On March 17, 2017, the Czaplas signed individual guaranties for this loan. Doc. 67-1 at 99-106. The loan documents for the second loan were similar to the first set and contained similar attorney fee provisions. Doc. 67-1 at 62, 69, 78, 85, 94, 101, 105.
Finally, on January 8, 2016, the Czaplas signed a cross-collateralization agreement under which collateral for either loan would serve as collateral for both. Doc. 67-1 at 108-114.
Susan Czapla signed this agreement as president and secretary of Quality Home, and the Czaplas signed as individual guarantors of the loan. Id. at 114.
Quality Home eventually defaulted on its loans to Valley National by failing to pay the amounts due. Doc. 67-1 at 5. Under the signed guaranties, the Czaplas were obligated to pay the amounts due from Quality Home but failed to do so, placing them in default as well. Id. at 6. As a result, on September 16, 2019, Valley National sent Quality Home and the Czaplas a demand letter notifying them of the default, accelerating the amounts due, and demanding full payment within ten days. Doc. 67-1 at 119-122. As of the date of the letter, the amount due under the first loan was $359,825.23 plus late charges, and the amount due under the second loan was $45,475.46. Id. at 120.
When Defendants still failed to pay the amounts owed, Valley National noticed a foreclosure of the real property described in the mortgages at issue. In anticipation of the foreclosure, Valley National ordered an appraisal of the property. The appraisal, dated December 3, 2019, valued the property at $360,000 “as is” on November 26, 2019.[3] Doc. 67-1 at 202, 124-252.
One day before the foreclosure, Quality Home filed a Chapter 7 bankruptcy petition, which stayed the foreclosure until September 8, 2020, when the bankruptcy court granted Valley National relief from the automatic stay so it could proceed with foreclosure. Doc. 67-1 at 6-7. Valley National then noticed the foreclosure for October 23 and conducted the foreclosure on that date during the legal hours of sale. Id. at ¶¶ 20-21. The bank submitted the highest and best bid at the foreclosure sale with a credit bid of $292,100. Thus, the property was sold to Valley National, and its bid was credited against the outstanding loan amounts. Id. at ¶¶ 21, 22. Valley National sold the property fifteen months later for $289,500. Id. at ¶ 23.
In November 2020, shortly after the foreclosure, Valley National filed a Complaint against the Czaplas for breach of contract under the guaranties. Doc. 1 at 2. In October 2021, Valley National filed an Amended Complaint adding Quality Home as a Defendant. Doc. 40. The Amended Complaint contains four claims: breach of contract against the Czaplas as guarantors and breach of contract, unjust enrichment, and money had and received against Quality Home. Valley National demanded judgment for the outstanding indebtedness under the loans, plus accrued and accruing interest and expenses of collection, including attorneys' fees and costs. Doc. 40 at 10.
Quality Home was served with a copy of the Summons and Complaint on December 27, 2021. Doc. 45. Under Rule 12 of the Federal Rules of Civil Procedure, it had 21 days to file an answer or responsive pleading. It failed to do so. On February 22, 2022, Valley National filed an application for entry of default by the Clerk, which was entered on February 24. Docs. 49, 50. On April 25, Plaintiff filed its Motion for Default Judgment. Doc. 61. Despite the filing of this motion, Quality Home still has not answered or otherwise responded to Valley National's Amended Complaint.
As of August 2, 2022, the total amount of debt outstanding under the loans, exclusive of attorneys' fees and costs, was $254,511.54, which includes $181,523.91 in principal, $887.25 in late fees, $3,310 in appraisal fees, and $1,050 for an environmental review, along with $67,740.38 in interest,[4] which continues to accrue. Additionally, as of the filing of its summary judgment motion, Valley National had incurred $74,943.48 in attorneys' fees and costs through June 30, 2022, and had paid a total of $71,543.34 of those fees. Doc. 67-2 at 3.
After Valley National filed its Motion for Summary Judgment, the Czaplas filed two Motions to Dismiss (Docs. 69 and 70) and a response (Doc. 75) to Valley National's summary judgment motion.
In the first Motion to Dismiss, the Czaplas claim that, even without verification of a forensic expert, it is clear that Susan Czapla's signature on a 2010 promissory note and business loan agreement are forged. Doc. 69 at 1. Even if Susan Czapla is correct about her signature, those two documents predate the loan documents at issue in this lawsuit. In her deposition, she admitted signing a promissory note to the bank dated May 28, 2008. See S. Czapla Dep. at 19:2-20:2 and Ex. 3. That loan was periodically renewed, and the two allegedly forged documents are from a 2010 renewal. The final renewal-the first loan described above-occurred on December 15, 2015, and Susan Czapla admits signing the note, loan agreement, mortgage, assignment of rents, security agreement, and loan guaranty for that renewal. Id. at 23:19-31:9.
In the second motion, the Czaplas state the only undisputed fact is that they did not knowingly and personally guarantee Quality Home's commercial loans. Doc. 70 at 1. They then claim that Valley National misled them about the...
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