Whitney Bank v. Payne Lee & Associates Architects, LLC (JOINT ASSIGN)(MAG+), 2:14-cv-00969

Whitney Bank sued Payne Lee & Associates Architects, LLC, David Payne, and Mark Lee for breach of a $250,000 promissory note (the Payne Lee loan) secured by collateral and guaranteed by Payne and Lee; bank says loan matured June 15, 2014 and defendants defaulted.
David Payne asserted a counterclaim alleging breach of an oral agreement concerning a separate $750,000 loan (the Perry Monroe loan), claiming it was intended as a bridge loan and not to mature in one year.
Plaintiff moved for summary judgment on its breach claim and to dismiss Payne’s counterclaim under Alabama’s Statute of Frauds for lack of a written modification/extension (filed Dec. 2014).
The Magistrate Judge analyzed summary-judgment and Rule 12(b)(6) standards, hearsay admissibility at summary judgment, and Alabama Code § 8-9-2 controlling enforceability of agreements to modify loans or forbear repayment.
The court found no written memorandum evidencing any extension or separate agreement and rejected defendants’ arguments about ambiguity or a separate oral contract; recommended granting plaintiff’s summary judgment and dismissing the counterclaim.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Payne Lee loan matured and defendants defaulted	Bank: note matured June 15, 2014 and defendants failed to pay → breach	Defendants: loan was orally extended, so no maturity/default	Court: no admissible written modification; summary judgment for Bank — note matured and defendants defaulted
Enforceability of an oral extension/forbearance under Alabama law	Bank: Statute of Frauds bars oral modification or forbearance absent a signed writing	Defendants: parties orally agreed to extend/modify term; separate oral contract or ambiguity avoids writing requirement	Court: Statute of Frauds (Ala. Code § 8-9-2) bars oral modification or separate oral loan commitment; no writing → unenforceable
Whether alleged oral agreement could be a separate contract escaping the Statute of Frauds	Bank: even a separate agreement to forbear or modify lending falls within the Statute and requires writing	Defendants: oral agreement was distinct and enforceable as separate contract	Court: § 8-9-2(7) expressly covers agreements to lend, delay, or forbear repayment; separate oral contract fails absent writing
Contract ambiguity argument to admit oral understanding	Bank: contract terms are clear and control; reasonable person standard governs interpretation	Defendants: subjective understanding that term was longer than written term	Court: objective reasonable-person standard controls; contract unambiguous as written; subjective belief insufficient

Anderson v. Liberty Lobby, 477 U.S. 242 (summary-judgment standard)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (nonmoving-party burden at summary judgment)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment procedures)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard at pleading stage)
Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to pleading-stage deference)
Jones v. UPS Ground Freight, 683 F.3d 1283 (hearsay at summary judgment)
United States v. Dotson, 821 F.2d 1034 (analysis of hearsay-within-hearsay)
Pendas–Martinez v. United States, 845 F.2d 938 (double-hearsay inadmissibility)
Nettles v. Wainwright, 677 F.2d 404 (consequences of failing to object to magistrate recommendations)