Ray Mashburn Homes, LLC v. Charterbank
339 Ga. App. 490
Ga. Ct. App.2016Background
- Ray Mashburn Homes, LLC executed a variable-rate promissory note to the bank predecessor on 6/27/2007 for $327,702.99; Ray M. Mashburn guaranteed the business note.
- Ray and Jan Mashburn executed a separate promissory note to the same bank predecessor on 7/8/2008 for $296,359 at a stated 5.5% interest rate.
- The business note defined the variable rate as 0.50% above "Lender’s Prime, the base rate used by Lender to set interest rates at which loans are made to various borrowers."
- The borrowers defaulted; the bank foreclosed and sued for the unpaid balances. The trial court granted summary judgment to the bank on liability and damages.
- Appellants contested (1) the meaning of "Lender’s Prime" for the business note (affidavit saying it meant WSJ prime) and (2) the accuracy of the bank’s damages calculations (conflicting internal exhibits).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper meaning of "Lender’s Prime" for business note | "Lender’s Prime" meant the Wall Street Journal (WSJ) U.S. prime rate (per Gafford affidavit) | Note unambiguously defines Lender’s Prime as bank’s own base lending rate; parol evidence inadmissible to vary note | Court held the note unambiguous: rate is bank’s base lending rate + 0.5%; parol evidence rejected; summary judgment on liability affirmed |
| Whether bank proved damages amount for business note | Disputed: bank’s exhibits show inconsistent interest-rate application and resulting balances, creating factual dispute | Bank offered affidavits and minutes but did not reconcile timing discrepancy between minutes/affidavit and spreadsheet calculations | Court found a material factual dispute as to damages for business note (rate change timing Jan–Feb 2009); reversed summary judgment on damages and guaranty; remanded |
| Whether bank proved damages amount for Mashburns’ personal note | Mashburns pointed to a $90.54 discrepancy between loan history card and bank’s spreadsheet | Bank did not explain discrepancy but used the lower spreadsheet amount in its calculations | Discrepancy benefited Mashburns; court affirmed summary judgment for bank on damages for personal note because appellants were not aggrieved by the favorable error |
| Standard for admitting parol evidence to vary promissory note | Parol evidence should create a factual issue | Promissory note plain and unambiguous; absent fraud/mistake, parol evidence inadmissible | Court reaffirmed that parol evidence cannot vary an unambiguous promissory note; applied to reject Gafford affidavit on rate meaning |
Key Cases Cited
- Nelson v. Hamilton State Bank, 331 Ga. App. 419 (2015) (summary judgment standard and de novo review)
- Kothari v. Patel, 262 Ga. App. 168 (2003) (parol evidence cannot alter unambiguous promissory note)
- 1600 Capital Co. v. Bankers First Federal Sav. & Loan Assn., 187 Ga. App. 504 (1988) (parties may fix future variable rate by an agreed mechanism)
- Parker v. Cook, 248 Ga. App. 621 (2001) (written contract plain and unambiguous controls; parol evidence inadmissible absent fraud)
- Hurt v. Norwest Mortg., 260 Ga. App. 651 (2003) (party not aggrieved by favorable error cannot complain on appeal)
- Patrick Malloy Cmtys., LLC v. Cmty. & S. Bank, 334 Ga. App. 76 (2015) (plaintiff bears burden to prove damages with definite certainty)