Keith D. Jones v. Bank of America, N.A.
564 F. App'x 432
11th Cir.2014Background
- Plaintiffs Keith D. and Florestine Jones financed construction and acquisition of a residence in Atlanta with Bank of America (BOA); a $5,000,000 promissory note and security deed were executed in April 2008.
- The note matured on March 25, 2011; parties executed a loan modification on July 22, 2011, effective March 25, 2011, extending maturity to March 25, 2012; the modification expressly did not constitute a novation.
- Plaintiffs defaulted by failing to pay the note and property taxes; BOA paid overdue taxes and an insurance premium after Plaintiffs’ lapse, and sent multiple default notices before filing collection steps.
- Plaintiffs sued BOA in state court alleging fraud, statutory violations, bad faith, and attorney’s fees; BOA removed the action, answered, and asserted a counterclaim for the debt, specific performance of certain contract provisions, and attorneys’ fees under the loan documents and O.C.G.A. § 13-1-11.
- Plaintiffs failed to respond to the counterclaim and were defaulted; BOA moved for default judgment on parts of its counterclaim and for summary judgment on Plaintiffs’ claims.
- The district court granted summary judgment to BOA on Plaintiffs’ claims, awarded BOA the unpaid principal and interest at 3% per annum, property taxes ($114,081.20), reduced insurance expense ($5,856.16), and attorneys’ fees under O.C.G.A. § 13-1-11(a)(2); default judgment was denied as to BOA’s specific-performance request and certain declaratory/indemnity relief as moot or inadequately pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Liability for unpaid principal and interest | Joneses did not dispute owing unpaid principal and that interest rate is 3% | BOA sought judgment for outstanding principal and accrued interest at 3% | Court awarded unpaid principal and interest at 3% per year (granted) |
| 2. Recovery for property taxes and insurance BOA paid | Plaintiffs argued BOA failed to produce sufficient evidence of payments | BOA produced affidavits documenting $114,081.20 in taxes and $37,500 insurance (later partly refunded) | Court credited BOA: $114,081.20 taxes and $5,856.16 net insurance (granted) |
| 3. Default judgment seeking specific performance of contract provisions | Plaintiffs argued BOA never sought performance and did not plead breach or need for equitable relief | BOA sought specific performance of paragraph 7 (security deed) and §7.7 (modification) | Court denied default judgment on specific performance: claim not pleaded as required and equitable relief not shown necessary (denied) |
| 4. Attorneys’ fees: entitlement and reasonableness under O.C.G.A. § 13-1-11 | Plaintiffs contended fee amount was unreasonable and asked court to determine a reasonable fee under amended statute | BOA argued the note’s execution date controls (pre-amendment statute applies) and seeks statutory fee per §13-1-11(a)(2) | Court applied pre-amendment statute (note date), denied Plaintiffs’ fee-reasonableness motion, and awarded fees under O.C.G.A. § 13-1-11(a)(2) (granted) |
Key Cases Cited
- Kramer v. Gwinnett Cnty., Ga., 306 F. Supp. 2d 1219 (N.D. Ga. 2004) (failure to respond to motion indicates the matter is unopposed)
- Hudson v. Norfolk S. Ry. Co., 209 F. Supp. 2d 1301 (N.D. Ga. 2001) (failure to address an argument can be treated as abandonment)
- Chudasama v. Mazda Motor Corp., 123 F.3d 1353 (11th Cir. 1997) (default judgment cannot rest on a counterclaim that fails to state a claim)
- PMS Constr. Co. v. DeKalb Cnty., 257 S.E.2d 285 (Ga. 1979) (specific performance is an equitable remedy where legal damages are inadequate)
- Farmers & Merchants Bank of Charing v. Rogers, 189 S.E. 274 (Ga. Ct. App. 1936) (later instrument is not a novation of an earlier note absent agreement)
- Remler v. Coastal Bank, 354 S.E.2d 79 (Ga. Ct. App. 1986) (no novation absent evidence parties intended to cancel earlier obligation)