Nelson v. Hamilton State Bank
331 Ga. App. 419
| Ga. Ct. App. | 2015Background
- Jimmy R. Nelson signed a $2,977,019.70 commercial promissory note (renewal of a 2005 furniture-business loan) and later defaulted; Hamilton State Bank (HSB) succeeded to Bartow County Bank’s (BCB) interest and sued on the note.
- Nelson and his cousin Dolph each executed parallel personal promissory notes in June 2010 (~$2.98M each) after the original commercial loan was converted to personal loans; both debtors made 16 monthly payments and stopped paying after October 2011.
- Dolph previously obtained a residential purchase-money loan (2007) secured by a deed containing a dragnet clause; Dolph later replaced that loan with an equity line (ELOC) paid off in October 2011, but BCB/HSB retained the original recorded security deed with the dragnet clause.
- HSB sued both Nelson and Dolph in March 2012; the trial court granted summary judgment for HSB against Nelson for $2,866,990.37 plus post-judgment interest.
- On appeal Nelson conceded execution of the note but disputed the specific judgment amount and argued HSB’s asserted leverage over Dolph (re: residence security) should affect Nelson’s obligation because the notes were inextricably intertwined.
- The appellate court affirmed liability but held there was insufficient competent evidence in the record to support the trial court’s specific damages figure, and remanded for further proceedings on amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to assert defenses based on Dolph’s mortgage/ELOC | Nelson: HSB’s actions toward Dolph (dragnet clause, retaining security) impaired Nelson and excuse payment because the notes are inextricably intertwined | HSB: Nelson lacks privity/standing to challenge Dolph’s separate contracts; any intertwinement doctrine doesn’t apply here | Held: Nelson lacks standing to assert claims arising from Dolph’s contracts; doctrine of "inextricably intertwined" not extended beyond foreclosure/deficiency contexts |
| Whether the two 2010 notes are "inextricably intertwined" so Nelson can assert defenses tied to Dolph | Nelson: Notes incurred for same purpose, same creditor, and thus intertwined—HSB’s treatment of Dolph affects Nelson | HSB: No authority to extend intertwinement doctrine outside foreclosure/deficiency statute; Nelson not party to Dolph’s agreements | Held: Court declines to apply intertwinement doctrine here; doctrine limited to OCGA § 44-14-161 context |
| Sufficiency of evidence to support the specific principal amount awarded ($2,866,990.37) | Nelson: Admits execution but disputes the amount entered; challenges lack of accounting support | HSB: Relies on defendants’ discovery responses, bank officer affidavit with an aggregate figure, note terms, and counsel’s statements/proposed order | Held: Reversed as to damages—HSB failed to present competent, calculable evidence (amortization, accounting, or witness testimony) to support the precise amount; remand for determination of damages |
| Summary judgment standard and appropriate remedy where liability proved but damages uncertain | Nelson: Summary judgment on amount improper without documentary or testimonial proof | HSB: Trial court properly entered judgment as to principal balance | Held: Summary judgment appropriate for liability; judgment awarding a specific amount reversed due to insufficient proof; remanded for further proceedings on damages |
Key Cases Cited
- Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243 (de novo review of summary judgment standard)
- Dominic v. Eurocar Classics, 310 Ga. App. 825 (party lacking privity lacks standing to assert contract claims)
- Jurden v. HSBC Mtg. Corp., 330 Ga. App. 179 (nonparty lacked standing to challenge loan/assignment)
- Iwan Renovations v. North Atlanta Nat. Bank, 296 Ga. App. 125 (doctrine of debts "inextricably intertwined" applied in foreclosure/deficiency context)
- Myers v. First Citizens Bank & Trust Co., 324 Ga. App. 293 (plaintiff must prove amount due with reasonable certainty in suit on note)
- Lockwood v. Federal Deposit Ins. Corp., 330 Ga. App. 513 (burden to prove indebtedness and amount in action on a promissory note)
- Alexander v. Wachovia Bank, Nat. Assn., 305 Ga. App. 641 (judgment on the pleadings improper where amount due not shown)
- Hanna v. First Citizens Bank & Trust Co., 323 Ga. App. 321 (remand for determination of damages where liability established but amount uncertain)