326 Ga. App. 710
Ga. Ct. App.2014Background
- Arlington Capital, LLC (borrower) executed successive renewals (2004–2008) of a $4M line of credit with Gwinnett Community Bank (GCB); Richard Tucker personally guaranteed the note and provided annual financial statements.
- Arlington assigned a $2.5M Shiloh Woods promissory note and second-priority deed to GCB as additional collateral; that collateral later defaulted and GCB disposed of it in 2010 without giving the notice required by OCGA § 11-9-611(b).
- GCB sued on the Arlington note and Tucker’s guaranties in 2010; Arlington and Tucker counterclaimed under the UCC for lost surplus value and for conversion, breach of the security agreement, and privacy violations.
- The trial court initially granted summary judgment to Arlington/Tucker on GCB’s note/guaranty claims based on UCC provisions precluding deficiency recovery; GCB’s appeal was dismissed, making that ruling law of the case.
- On remittitur the trial court granted summary judgment to Arlington/Tucker on GCB’s tort claims (fraud, breach of fiduciary duty, punitive damages, attorney fees) and denied GCB summary judgment on several counterclaims; GCB appealed those rulings.
Issues
| Issue | Plaintiff's Argument (GCB) | Defendant's Argument (Arlington/Tucker) | Held |
|---|---|---|---|
| Whether GCB presented evidence of a material misrepresentation by Tucker to support fraud | Tucker misrepresented/omitted transfers of ~$6M in assets and treated Jan. financial statements as current at renewals, inducing GCB renewals | Financial statements were accurate as of their effective dates; specific parcels were not shown as collateral or misrepresented | No evidence of material misrepresentation as a matter of law; summary judgment for defendants affirmed |
| Whether a fiduciary duty existed such that preferential transfers support breach of fiduciary duty | Tucker’s transfers to insiders were preferential and injured creditors once Arlington was insolvent | No evidence Arlington was insolvent at transfer times; no fiduciary duty arose between lender and borrower | No fiduciary duty proved; summary judgment for defendants affirmed |
| Whether the law of the case precludes recovery of surplus or deficiency and displaces common-law claims (conversion, breach of contract) | GCB argues counterclaims II/III are not preempted and UCC remedies may not apply | Earlier judgment (appeal dismissed) held OCGA §§ 11-9-608(b) and 11-9-615(e) apply; parties bound by that ruling | Law of the case bars recovery of surplus and displaces conversion/contract claims seeking surplus; GCB entitled to summary judgment on counterclaims II & III (reversed trial court denial) |
| Whether Counterclaim VIII (privacy/federal law) survives summary judgment | Arlington contends federal privacy law or GCB’s online privacy notice was breached | GCB shows the online privacy notice applies to consumer customers only and plaintiff cites no federal law | Counterclaim VIII fails as matter of law; trial court erred in denying GCB summary judgment on that claim |
Key Cases Cited
- Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243 (general standard for de novo review of summary judgment)
- Aetna Cas. & Surety Co. v. Bullington, 227 Ga. 485 (law-of-the-case and preclusive effect of affirmed rulings)
- Hickman v. Hyzer, 261 Ga. 38 (directors’ duties to creditors when corporation insolvent)
- Isbell v. Credit Nation Lending Svc., 319 Ga. App. 19 (conjecture/speculation insufficient to create fact issues on summary judgment)
- DaimlerChrysler Motors Co. v. Clemente, 294 Ga. App. 38 (relationship of tort recovery and punitive/attorney-fee claims)