MPP Investments, Inc. v. Cherokee Bank, N.A.
288 Ga. 558
| Ga. | 2011Background
- Old Roswell Investments, LLC executed a 1998 promissory note and security deed in favor of Etowah Bank, later Regions Bank after a merger.
- Howe executed a 1998 promissory note with a separate security deed on the same property, subordinated to Regions Bank’s security deed.
- In 2006 Old Roswell granted Cherokee Bank a security deed to secure a new loan, funded to satisfy Regions Bank’s prior debt.
- Howe began foreclosure proceedings in 2008; Cherokee Bank filed a quiet-title action and lis pendens asserting superior title.
- A special master ruled in 2009 that Howe’s sale to MPP Investments was void for failure to provide 60-day cure notice, and that title reverted to Old Roswell; Cherokee Bank held first-priority lien.
- Trials were consolidated on appeal; the Georgia Supreme Court upheld the master’s findings and excerpts, affirming judgment for Cherokee Bank and rejecting MPP Investments’ claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 60-day cure notice was properly required and preserved. | MPP argued the issue was not properly raised and thus waived. | Cherokee Bank contends the issue related to validity of sale and was preserved. | Not waived; the issue related to validity of sale and within the pleadings and pre-trial order. |
| Whether Cherokee Bank is estopped from asserting title reversion. | MPP contends estoppel applies due to silence and reliance on prior actions. | Cherokee Bank argues purchaser had notice and no silence reliance. | Estoppel not meritorious; purchaser had notice and no reliance. |
| Whether the 60-day cure notice is required given a note’s acceleration clause. | MPP argues note and deed do not conflict; no need for 60-day cure. | Cherokee Bank argues security deed and note are distinct and both enforceable. | Both provisions valid and non-conflicting; 60-day notice required under the deed. |
| Whether Howe’s September 4, 2008 notice letter sufficed to start foreclosure. | MPP contends the notice was not properly timed under 60-day requirement. | Cherokee Bank contends the sale process commenced timely and notices were adequate. | Not sufficient; foreclosure not properly commenced; title reverted under OCGA § 44-14-80(a)(1). |
| Whether MPP Investments qualifies as a bona fide purchaser for value. | MPP asserts BFP protection despite notice and lis pendens. | Cherokee Bank argues actual and constructive notice defeats BFP status. | MPP not entitled to BFP protection; knowledge of cherokee Bank’s interest barred protection. |
Key Cases Cited
- Kennedy v. Gwinnett Commercial Bank, 155 Ga. App. 327, 270 S.E.2d 867 (Ga. App. 1980) (60-day notice/escalation and foreclosure procedure relevance)
- Duncan v. Lagunas, 253 Ga. 61, 316 S.E.2d 747 (Ga. 1984) (contract interpretation; no conflict when deed requires notice and note silent)
- Ellis v. Ellis, 161 Ga. 360, 130 S.E. 681 (Ga. 1925) (bona fide purchaser; knowledge and negligence considerations)
- Mathis v. Blanks, 212 Ga. 226, 91 S.E.2d 509 (Ga. 1956) (purpose of bona fide purchaser doctrine; notice and equity)
- Steinichen v. Stancil, 281 Ga. 75, 635 S.E.2d 158 (Ga. 2006) (trial court may adopt special master’s report without hearing on exceptions)
- Parks v. Breedlove, 241 Ga. App. 72, 526 S.E.2d 137 (Ga. App. 1999) (liberal pre-trial order construction; scope of issues)
- Clarence L. Martin, P.C. v. Chatham County Tax Commissioner, 258 Ga. App. 349, 574 S.E.2d 407 (Ga. App. 2002) (estoppel requirements; reliance and silence considerations)