Patrick Malloy Communities, LLC v. Community & Southern Bank
334 Ga. App. 76
Ga. Ct. App.2015Background
- PMC borrowed $3.5M under a commercial promissory Note; J. Patrick Malloy, Jr. signed an unlimited Guaranty in favor of the original lender or its successors/assigns.
- First National Bank of Georgia failed in Jan. 2010; the FDIC was appointed receiver and entered a P&A Agreement transferring loans to Community & Southern Bank (CSB).
- The FDIC recorded an Assignment of Security Instruments and other Loan Documents conveying promissory notes, loan files, and related security instruments to CSB; CSB took possession of the Note and Guaranty.
- PMC and Malloy defaulted; CSB accelerated and sued for breach of the Note and Guaranty seeking principal, interest, and contractual attorney fees. CSB moved for summary judgment.
- The trial court granted summary judgment to CSB on liability and awarded the damages CSB sought. On appeal, appellants challenged (1) CSB’s status as real party in interest/assignment proof and (2) the evidentiary basis for the damages calculation.
Issues
| Issue | Plaintiff's Argument (CSB) | Defendant's Argument (PMC/Malloy) | Held |
|---|---|---|---|
| Whether CSB proved it was assignee/real party in interest entitled to enforce the Note and Guaranty | CSB relied on the P&A Agreement, recorded Assignment Agreement, and bank custodian affidavit showing possession of originals and transfer of loan files | Appellants argued CSB failed to produce competent evidence of assignment; challenged hearsay and affiant's personal knowledge (Harvey appointed after 2010 assignment) | Court: CSB established assignment as a matter of law; P&A and Assignment are "verbal acts" (not hearsay) and other admissible evidence (custodian affidavit, chain of documents) sufficed; liability affirmed |
| Whether CSB proved the precise amount of damages due | CSB submitted custodian affidavit with a damages calculation and attached payment history and Note | Appellants pointed to material discrepancies between the affidavit figures (per diem and principal) and the attached payment history, arguing uncertainty as to the amount owed | Court: Discrepancies material and unexplained; genuine issue of fact exists as to unpaid principal, interest, and attorney fees; award of damages reversed and remanded |
Key Cases Cited
- Bobick v. Community & Southern Bank, 321 Ga. App. 855 (discusses assignment and privity principles for enforcing notes)
- Thomas v. State Bank & Trust Co., 330 Ga. App. 274 (affiant's lack of personal knowledge can require reversal when no chain-of-title documents exist)
- Miller Grading Contractors v. Ga. Federal Sav. & Loan Assoc., 247 Ga. 730 (harmless-error principle at summary judgment stage)
- Nelson v. Hamilton State Bank, 331 Ga. App. 419 (plaintiff must prove damages with reasonable certainty)
- Thomason v. FIA Card Svcs., N.A., 330 Ga. App. 603 (inconsistencies between affidavit and exhibits preclude summary judgment on amount due)
- Lockwood v. Fed. Deposit Ins. Corp., 330 Ga. App. 513 (when bank records otherwise show a definite principal balance, alleged record gaps may be immaterial)