ABI Investments, LLC v. FSGBank, National Ass'n
2014 Ga. App. LEXIS 187
Ga. Ct. App.2014Background
- DWB sued ABI and ABI members for principal and interest on a promissory note.
- ABI signed the Note in Sept. 2008 for $1 million to buy Appalachian Bank subordinated notes.
- Notes schedule: first payment Dec. 31, 2008, semiannual payments thereafter, balance due Sept. 2011.
- Default provisions include insolvency and belief ABI would have difficulty collecting the amount owed.
- FDIC cease-and-desist order issued for Appalachian Bank in Apr. 2009; Appalachian Bank later closed by FDIC in Mar. 2010.
- DWB accelerated the note and demanded immediate payment after Appalachian Bank’s closure, asserting OCGA § 11-1-208 gave power to accelerate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DWB established a prima facie right to judgment on default. | DWB: default triggered by insolvency/collection concern per note. | ABI/Individuals: ABI current; no trigger shown. | No; no clear default triggered by ABI's actions. |
| Can Appalachian Bank’s closure be attributed to ABI for default purposes? | DWB treated closure as impairment of repayment. | Appalachian Bank is a separate entity; not attributable to ABI. | Attributed actions not established; must treat entities separately. |
| Whether OCGA 11-1-208 good-faith standard governs acceleration. | DWB accelerated under statute requiring good faith. | Good faith issue fact for jury; record shows ambiguity. | Question of fact for jury on good faith. |
| Whether acceleration was proper when ABI was current on payments. | Acceleration allowed due to anticipated collection difficulties. | ABI current; no demonstration of impairment at time of acceleration. | Not established; no undisputed evidence of impairment. |
Key Cases Cited
- Speir v. Nicholson, 202 Ga. App. 405 (1992) (prima facie right to judgment when note shows default; burden shifts to borrower)
- Augusta Tennis Club v. Richmond County, 219 Ga. App. 94 (1995) (separate legal entity doctrine; actions not attributable to related entities)
- Crosson v. Lancaster, 207 Ga. App. 404 (1993) (good faith standard for OCGA 11-1-208; jury question)
- Smith v. Atlantic Mut. Cos., 283 Ga. App. 349 (2007) (de novo review on appeal; burden shifting in default cases)