362 Ga. App. 548
Ga. Ct. App.2022Background
- Underwood, his company ATech, and his wife executed three promissory notes (two secured by Underwood’s home); loans were accelerated after defaults and a foreclosure sale was scheduled for Sept. 3, 2019.
- Parties signed a written forbearance agreement in August 2019: required immediate and monthly $25,000 payments, payoff of the ATech note, and provided that the secured notes remained accelerated; the agreement contained a no-oral-modification clause.
- On Sept. 3 Underwood delivered a deed in lieu; Colony’s counsel wrote that Colony would hold the deed and continue to forbear so long as Underwood made agreed payments, with an agreed extension of one payment deadline.
- Underwood thereafter made several late and partial payments which Colony accepted and applied to the unsecured Kayla note; Colony did not invoke remedies or clearly demand strict compliance during the fall of 2019.
- After no payments from Dec. 23, 2019 to Feb. 21, 2020, Colony’s counsel mailed a Feb. 21 letter giving Underwood five days to pay roughly $53,800; Underwood did not pay and Colony recorded the deed in lieu Feb. 28, 2020.
- Underwood sued for breach of contract, promissory estoppel, to set aside the deed in lieu, and conversion; trial court granted summary judgment for Colony on all claims. Court of Appeals affirmed on promissory estoppel, deed-set-aside, and conversion; reversed as to breach of contract (issues of fact remain).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — modification by Sept. 3 oral agreement | Underwood: Sept. 3 exchange (deed in lieu + extension) modified written forbearance; Colony later breached by enforcing original terms without adequate notice | Colony: Forbearance was enforceable as written; no valid oral modification and it consistently reserved rights | Court: Forbearance enforceable; Sept. 3 oral modification valid. Summary judgment reversed on breach because issues of fact exist whether parties further modified terms by course of conduct and whether Colony gave reasonable notice before enforcing the written terms |
| Mutual departure / acceptance of late payments (OCGA §13-4-4) | Underwood: Colony’s repeated acceptance of late/partial payments and statements like 'not to worry' created a new quasi-agreement | Colony: Acceptance of payments did not constitute a waiver or mutual departure; it intended to enforce original terms | Court: Whether mutual departure occurred and whether reasonable notice was given are jury questions; summary judgment improper |
| Promissory estoppel (reliance on 'more time to pay') | Underwood: Worthy’s statement that Underwood would have 'more time to pay' induced reliance | Colony: Statement too vague to be an enforceable promise | Court: Affirmed summary judgment for Colony — the statement was too vague/indefinite to support promissory estoppel |
| Set aside deed in lieu / equitable tender & Conversion | Underwood: Deed recorded despite assurances; seeks equitable relief and claims conversion | Colony: Deed valid; Underwood never tendered payment; conversion claim cannot recover real property | Court: Affirmed dismissal — Underwood failed to tender payment required to set aside deed; Georgia law does not recognize conversion/trover to recover real property |
Key Cases Cited
- Hanham v. Access Mgmt. Group L.P., 305 Ga. 414 (Ga. 2019) (parties can orally modify a written contract and waiver of a written-modification clause can be shown by course of conduct)
- Banks v. Echols, 302 Ga. App. 772 (Ga. Ct. App. 2010) (repeated acceptance of late payments can create a factual issue of mutual departure under OCGA § 13-4-4)
- Wright Carriage Co. v. Business Dev. Corp. of Ga., 221 Ga. App. 49 (Ga. Ct. App. 1996) (pattern of accepting late, irregular payments may support a jury finding of a new quasi-agreement)
- Reynolds v. CB&T, 342 Ga. App. 866 (Ga. Ct. App. 2017) (mutual departure may defeat summary judgment where evidence shows modification or extension by lender)
- Prudential Ins. Co. of Am. v. Nessmith, 174 Ga. App. 39 (Ga. Ct. App. 1985) (acceptance of late payments does not always show waiver when lender consistently signals intent to enforce written terms)
- Crawford v. First Nat. Bank of Rome, 137 Ga. App. 294 (Ga. Ct. App. 1976) (bank notices and late fees can manifest intent to demand strict compliance, negating mutual departure)
- Woodstone Townhouses, LLC v. S. Fiber Worx, LLC, 358 Ga. App. 516 (Ga. Ct. App. 2021) (promissory estoppel requires a sufficiently definite promise; vague assurances are insufficient)
- Oconee Fed. Sav. & Loan Assn. v. Brown, 349 Ga. App. 54 (Ga. Ct. App. 2019) (borrower seeking equitable relief to set aside foreclosure must tender amounts owed absent extraordinary circumstances)