Hewitt v. Community & Southern Bank
324 Ga. App. 713
Ga. Ct. App.2013Background
- In 2006 West Georgia National Bank (later First National) opened a $6,000,000 line of credit to Hewitt; the written commitment and promissory note expressly provided a 12‑month term. The note was renewed several times; the final renewal (April 29, 2009) had a six‑month maturity to October 29, 2009, which Hewitt did not repay.
- First National failed on January 29, 2010; the FDIC was appointed receiver and sold/assigned certain assets, including Hewitt’s loan and note, to Community & Southern Bank, which demanded payment and filed a counterclaim to enforce the note.
- Hewitt sued Community & Southern alleging (1) breach of contract based on an alleged oral or extrinsic five‑year term, (2) breach of a commitment to issue a letter of credit, (3) promissory estoppel, and (4) defenses including mitigation of damages.
- The trial court granted summary judgment to Community & Southern on Hewitt’s claims and on the bank’s counterclaim; Hewitt appealed.
- The court applied the D’Oench, Duhme doctrine to bar Hewitt’s claims and defenses based on unrecorded agreements or representations, and found Community & Southern was validly assigned the loan and note by the FDIC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of D’Oench, Duhme doctrine | Hewitt: Doctrine applies only to the FDIC, not to later assignees like Community & Southern | Bank: Doctrine protects federal guarantor and assignees who acquire assets from FDIC receiver | Held: Doctrine applies to assignees; protects Community & Southern from unwritten/unrecorded claims |
| Whether exit‑fee language created a five‑year loan term | Hewitt: Exit‑fee clause (fees taper over four years and terminate after four years) manifests an agreed five‑year term | Bank: Clause is vague and only addresses exit‑fee calculation, not loan maturity; no written five‑year term exists | Held: Clause does not establish a five‑year term; D’Oench bars enforcement of any unrecorded term |
| Breach of commitment to issue letter of credit | Hewitt: He was a party or third‑party beneficiary of the 2008 commitment requiring issuance of a letter of credit | Bank: Hewitt was not a party/beneficiary; commitment terminated after 45 days; bank did not assume liabilities when buying FDIC assets | Held: Summary judgment affirmed; alternative grounds (termination and no assumption of liabilities) support judgment even though Hewitt only contested party/beneficiary point |
| Bank’s counterclaim/enforcement of promissory note (assignment) | Hewitt: Bank failed to prove it was assignee of the note | Bank: FDIC assigned all rights and interests in promissory notes and loan documents to Community & Southern; documentary and affidavit proof unrebutted | Held: Assignment proven; bank entitled to enforce the note; summary judgment for bank on counterclaim |
| Promissory estoppel defense | Hewitt: Equitable defense based on alleged promises/representations that would prevent enforcement | Bank: Estoppel rests on same unrecorded representations barred by D’Oench | Held: Promissory estoppel barred by D’Oench when based on unrecorded agreements |
| Mitigation of damages under OCGA § 13‑6‑5 | Hewitt: Jury issue whether bank failed to mitigate damages | Bank: Provision does not apply to an absolute promise to pay | Held: § 13‑6‑5 inapplicable to absolute promise to pay; no mitigation issue |
Key Cases Cited
- D’Oench, Duhme & Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447 (1942) (establishes doctrine barring enforcement of unrecorded agreements against federal bank guarantor)
- Fed. Financial Co. v. Holden, 268 Ga. 73 (1997) (explains D’Oench protects depositors and federal guarantor and extends to assignees)
- First Union Nat. Bank of Fla. v. Hall, 123 F.3d 1374 (11th Cir. 1997) (recognizes D’Oench protection for entities acquiring assets from FDIC receiver)
- Baumann v. Savers Fed. Sav. & Loan Assn., 934 F.2d 1506 (11th Cir. 1991) (D’Oench bars obligations not specifically memorialized in institution records)
- Fed. Deposit Ins. Corp. v. McCullough, 911 F.2d 593 (11th Cir. 1990) (requires documents that clearly manifest the obligation to overcome D’Oench)
- Kensington Partners v. Beal Bank Nevada, 311 Ga. App. 196 (2011) (assignment of loan/note to purchaser from FDIC validated)
- Bowen v. Fed. Deposit Ins. Corp., 915 F.2d 1013 (5th Cir. 1990) (promissory estoppel defeated where based on unrecorded agreements)
- American Express Travel Related Svcs. Co. v. Web, Inc., 261 Ga. 480 (1991) (OCGA § 13‑6‑5 does not apply to absolute promises to pay)