Crossing Park Properties, LLC v. Archer Capital Fund, L.P.
311 Ga. App. 177
| Ga. Ct. App. | 2011Background
- 2006 Florida hotel financing involved Bank of America, JDI (senior lender) and Archer (junior lender) with 2000 Ocean Drive LLC, Crossing Park, Mrs. Hammer, and TKW Partners as borrowers/guarantors.
- Archer's subordination agreement contained unusual provisions affecting certain guarantors but Crossing Park and the Hammers were not provided with it before closing.
- Provision 14(a) barred actions against Owner, guarantors other than Hammer, and certain interests, while Provision 19 contemplated release of Archer’s lien if JDI obtained the property by deed in lieu.
- Mr. Hammer alleges Archer failed to disclose the subordination agreement’s material terms, which allegedly increased risk to Crossing Park and the Hammers.
- After default in 2007, Crossing Park and the Hammers sued Archer and affiliates for fraud, release of surety, and discharge of surety; summary judgment for Archer was entered but appealed.
- Georgia Court of Appeals held disputed material facts exist regarding Archer’s duty of good faith and fair dealing and disclosure, reversing summary judgment on all counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment was proper given disputed facts about disclosure duty | Crossing Park/Hammers contend Archer failed to disclose material provisions. | Archer contends disclosures were adequate or not legally required; reliance on NY law and standard. | Disputed facts remain; summary judgment improper. |
| What governs the substantive law for disclosures and guaranties | New York law governs due to contract clause. | Procedural issues or other law apply; forum law governs procedure. | New York law governs substantive disclosures; procedural law follows forum. |
| Whether Archer breached the duty of good faith and fair dealing | Archer’s nondisclosure of unusual provisions breached duty. | No breach proven; reliance on undisclosed information insufficient for trial. | Issue of good faith/fair dealing is not dispositive on summary judgment; facts disputed. |
| Whether undisclosed provisions materially impaired collateral and affected guarantors | Undisclosed terms materially increased risk and impaired collateral value. | Disclosure not required or impact not proven. | Material factual questions exist; not suitable for summary disposition. |
Key Cases Cited
- Chemical Bank v. Layne, 423 F. Supp. 869 (S.D.N.Y. 1976) (duty of creditor to disclose to surety; concealment can be fraud)
- Credit Suisse First Boston v. Utrecht-America Finance Co., 80 A.D.3d 485 (N.Y. App. Div. 2011) (triable issue on good faith and fair dealing)
- Ly v. Jimmy Carter Commons, 286 Ga. 831 (2010) (summary judgment standard; disputed issues of material fact rule)
- Matjoulis v. Integon Gen. Ins. Corp., 226 Ga.App. 459 (1997) (summary judgment de novo standard; view evidence in nonmovant’s favor)
- Yenom Corp. v. 155 Wooster St. Inc., 23 A.D.3d 259 (N.Y. App. Div. 2005) (no meeting of minds where posturing documents misrepresented)
- Stephens v. Alan V. Mock Constr. Co., 302 Ga.App. 280 (2010) (summary judgment appropriateness; notice and response requirements)