York v. RES-GA LJY, LLC
300 Ga. 869
| Ga. | 2017Background
- Community Bank (later assignee RES-GA) made loans secured by real estate; Jim York and John Drillot signed commercial guaranties guaranteeing full payment.
- The Guaranties contained a broad waiver provision disclaiming “rights or defenses based on suretyship or impairment of collateral,” including anti-deficiency or one-action protections.
- RES-GA foreclosed and purchased the collateral, then sought judicial confirmation under OCGA § 44-14-161(a); trial courts denied confirmation in each county for failure to prove fair market value, and appellate courts affirmed some denials.
- After the denials, RES-GA sued the Guarantors for deficiencies; the trial court granted summary judgment to RES-GA and entered large deficiency judgments against York and Drillot based on waived defenses.
- The Court of Appeals affirmed, and the Georgia Supreme Court granted certiorari to decide whether the Guarantors waived OCGA § 44-14-161(a) defenses and whether RES-GA retained power to pursue deficiencies after unsuccessful confirmation efforts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Guarantors waived the confirmation-statutebased defense (OCGA § 44-14-161(a)) | RES-GA: Waiver language explicitly covers anti-deficiency/one-action defenses, so guarantors waived confirmation defense | Guarantors: Waiver limited to traditional suretyship defenses; § 44-14-161(a) is not a suretyship defense or was not intended to be waived | Held: Waiver covers defenses based on suretyship or impairment of collateral, including § 44-14-161(a); guarantors waived the defense. |
| Whether § 44-14-161(a) is an “anti-deficiency”/suretyship-based defense | RES-GA: § 44-14-161 limits creditor’s post-foreclosure deficiency remedy and fits within anti-deficiency concept | Guarantors: § 44-14-161 is not a suretyship defense limited to common-law/statutory surety defenses | Held: § 44-14-161 is an anti-deficiency/suretyship-based defense available to guarantors and thus subject to waiver. |
| Whether pursuing confirmation precludes RES-GA from later seeking deficiency (election/collateral estoppel) | RES-GA: Seeking confirmation did not waive right to pursue deficiencies; confirmation rulings affect damages but not the right to sue given waiver | Guarantors: RES-GA’s failed confirmation and judgments estop or collaterally attack RES-GA’s deficiency claim | Held: No collateral attack or election of remedies bar; confirmation findings may affect damages but do not preclude a deficiency action when waiver applies. |
| Whether a creditor loses power to pursue deficiency after denied confirmation | RES-GA: Even if confirmation denied, guarantor-waiver preserves lender’s ability to obtain deficiency | Guarantors: Denial of confirmation means creditor cannot pursue deficiency against guarantor | Held: Because guarantors validly waived the confirmation requirement, RES-GA could pursue deficiency judgments despite denied confirmation. |
Key Cases Cited
- PNC Bank, Nat’l Ass’n v. Smith, 298 Ga. 818 (Ga. 2016) (held guarantor may waive confirmation-statuterequirement as condition precedent)
- HWA Properties, Inc. v. Community & Southern Bank, 322 Ga. App. 877 (Ga. Ct. App. 2013) (addressed effect of failed confirmation on guarantor deficiency liability)
- York v. RES-GA LJY, LLC, 336 Ga. App. 253 (Ga. Ct. App. 2016) (Court of Appeals affirmed waiver and deficiency judgments)
- United Gov’t of Athens-Clarke Cty. v. Stiles Apts., 295 Ga. 829 (Ga. 2014) (standard of contract/guaranty construction reviewed de novo)
- Ctr. for a Sustainable Coast v. Coastal Marshlands Prot. Comm., 284 Ga. 736 (Ga. 2008) (ejusdem generis rule for interpreting enumerations)