Martin v. Hamilton State Bank
314 Ga. App. 334
Ga. Ct. App.2012Background
- Bartow County Bank loaned over $2.7 million to Martin and took four promissory notes.
- Martin defaulted on three notes; the fourth note also defaulted via cross-default.
- Bank declared default, accelerated the debt, and pursued collection in court after discussions to restructure failed.
- Notes expressly authorize immediate payment and allow pursuing multiple remedies, with no waiver of other remedies upon choosing one.
- Martin sought discovery into the Bank's motivation for default and restructuring decisions; the trial court denied, and the Bank moved for summary judgment, which was granted.
- On appeal, Martin contends the Bank breached the implied duty of good faith and that discovery should have been allowed before summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the Bank breach the implied duty of good faith by declaring default and not restructuring? | Martin argues the Bank acted in bad faith by not restructuring. | Bank contends it had no duty to restructure and could pursue any remedy under the note. | No breach; remedies choice permitted under the notes. |
| Was discovery on the Bank's motivation permissible before summary judgment? | Martin needs discovery to show bad faith motive. | Motivation is immaterial to breach of good faith given contract terms. | Discovery denial proper; summary judgment affirmed. |
Key Cases Cited
- Hunting Aircraft, Inc. v. Peachtree City Airport Auth., 281 Ga.App. 450 (Ga. Ct. App. 2006) (contractual good faith limits)
- Automatic Sprinkler Corp. of America v. Anderson, 243 Ga. 867 (Ga. 1979) (implied duty only for matters not regulated by contract)
- Kham & Nate's Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351 (7th Cir. 1990) (implied duty not to exploit gaps in contract)
- Westinghouse Credit Corp. v. Hall, 144 Bankr.Rep. 568 (S.D. Ga. 1992) (good faith principles in contracts)
- REL Development, Inc. v. Branch Banking & Trust Co., 305 Ga.App. 429 (Ga. Ct. App. 2010) ( creditor not required to pursue foreclosure before suit)
- Fulton Nat. Bank v. Willis Denney Ford, Inc., 154 Ga.App. 846 (Ga. Ct. App. 1980) (implied duty arises where contract silent)