H & E Innovation, LLC v. Shinhan Bank America (Inc.)
343 Ga. App. 881
| Ga. Ct. App. | 2017Background
- In 2008 Kim obtained a $750,000 business loan from Shinhan Bank (the Note); H&E guaranteed the Note and in 2011 conveyed a second mortgage on Greenville, SC property to secure the loan. A separate first mortgage (SBA Loan) also encumbered the property.
- After forbearance and alleged defaults, the Bank sued Kim and H&E in 2016 for breach of loan documents, seeking money judgment on the Note and fees.
- On February 1–2, 2017 the parties exchanged emails and defendants accepted a settlement offer providing for a lump-sum payment of $50,000, a “full, final, general mutual release of any and all claims and counterclaims arising from the loan documents sued upon in the lawsuit (i.e., the first mortgage on Greenville property remains intact),” and joint dismissal with prejudice.
- Defendants’ counsel repeatedly requested that the settlement include a release/cancellation of the Second Mortgage; Bank’s counsel initially acquiesced in preparing documents but later refused to execute a release, claiming the settlement did not include that obligation.
- Defendants moved to enforce the settlement and sought attorney’s fees under OCGA § 9-15-14; the trial court denied enforcement and certified the order for immediate review. The Court of Appeals granted interlocutory review.
- The Court of Appeals found the settlement language ambiguous as to the Second Mortgage but resolved the ambiguity against the drafter (the Bank) and in light of uncontroverted parol evidence, held the parties intended the settlement to include release of the Second Mortgage; judgment reversed and remanded for consideration of fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Settlement required release of the Second Mortgage | Settlement language is plain and does not obligate Bank to release the Second Mortgage | Settlement (including emails and negotiations) required Bank to execute and file cancellation of the Second Mortgage | The language was ambiguous; applying contra proferentem and uncontroverted parol evidence, Court holds the Settlement required release of the Second Mortgage |
| Whether parol evidence could be considered to resolve ambiguity | Parol evidence cannot add to/alter an unambiguous written contract | Because the settlement language is ambiguous, parties’ communications and conduct may be considered and show intent to release the Second Mortgage | Parol evidence (counsel affidavit and emails) was admissible and supports defendants’ position; Bank offered no contradictory evidence |
| Whether ambiguity requires jury resolution | Ambiguity should preclude enforcement as a matter of law | Court can resolve ambiguity using rules of construction and undisputed parol evidence | Court resolved ambiguity as matter of law in defendants’ favor (no jury required) |
| Whether defendants are entitled to attorney fees and expenses under OCGA § 9-15-14 | If settlement enforcement granted, fees should be considered | Bank did not contest entitlement at that stage | Case remanded for trial court to consider fee request after enforcement ruling |
Key Cases Cited
- Cone v. Dickenson, 335 Ga. App. 835 (discussing de novo review of motions to enforce settlements and summary-judgment analogies)
- Lamb v. Fulton-DeKalb Hosp. Auth., 297 Ga. App. 529 (settlement agreement treated as contract)
- Riverview Condo. Assn. v. Ocwen Fed. Bank, FSB, 285 Ga. App. 7 (construction of contracts is ordinarily a question of law)
- Pace Constr. Corp. v. Houdaille-Duvall-Wright Div., Houdaille Indus., 247 Ga. 367 (undefined contract terms may render an agreement ambiguous)
- Shepherd v. Greer, Klosic & Daugherty, 325 Ga. App. 188 (definition and treatment of ambiguity in contract language)
- McKinley v. Coliseum Health Group, 308 Ga. App. 768 (ambiguity can be resolved by rules of construction and parol evidence)