This appeal arises from the efforts of appellee Bank of America, N.A. (“Lender”) to enforce the terms of the promissory note and deed to secure debt executed in its favor by appellant Johntá M. Austin (“Borrower”). Lender sued to collect the debt it claims the Borrower owes as a result of default, including attorney fees, and the trial court awarded summary judgment to Lender. This Court has jurisdiction in this case because the constitutionality of a statute has been drawn in question. See Ga. Const. of 1983, Art. VI, Sec. VI, Par. II.
By letter dated April 25, 2011, Lender provided notice that the loan was in default as a result of Borrower’s failure to make six monthly payments that were then due and owing (“payment default”) and was also in default for failure to pay 2009 and 2010 real property taxes that purportedly had resulted in the filing of four liens against the property that secured the loan (“tax lien default”). The April letter set forth the total amount of the delinquency and that Lender intended to enforce the provisions of the loan documents regarding payment of attorney fees. The April letter further provided notice that, pursuant to OCGA § 13-1-11, Borrower had ten days from receipt of the notice to pay the amount of the delinquency in full in order to avoid liability for Lender’s attorney fees, that failure to pay within said time period would result in Borrower’s liability for paying attorney fees to become fixed as to the amount of the delinquency, and that payment within said time period would relieve Borrower from liability to pay attorney fees. The April letter stated that the payment-default could be cured by paying the amount due, plus attorney fees if the default was not cured within ten days of receipt of the letter. It provided notice that failure to cure the default on or before May 30, 2011 (which was 35 days from the date of the letter) could result in acceleration of all sums owed and a foreclosure sale of the property. It further gave notice of the right to reinstate the loan after acceleration, pursuant to the terms of the loan documents.
Lender, by and through its attorney, sent another default letter dated May 20,2011, that referenced the defaults set forth in the April letter. The May letter further advised Borrower he was in default as a result of an unauthorized transfer of the property by warranty deed to a third party, in violation of the terms of the security deed (“due on sale default”). The May letter notified Borrower that Lender was thereby accelerating the full amount of the indebtedness pursuant to the terms of the security deed. It further notified Borrower that if he remitted the amount due for the payment default and the amounts due for satisfaction of the tax lien default, along with attorney fees calculated pursuant to OCGA § 13-1-11 by May 30, 2011, then Borrower would have until June 17, 2011 to repay the full amount of the indebtedness. Although the terms of the security deed required 30 days notice of acceleration for the due on sale default, this was a date less than 30 days from the date of the May letter.
•Lender’s attorney sent a final default notice by letter to Borrower dated June 2, 2011, referencing the defaults set forth in the April and May letters. In the June letter, Lender gave notice of acceleration of the full amount of the indebtedness for Borrower’s failure to cure the payment default set forth in the April letter. The June letter set forth the total amount of indebtedness due as of June 1, 2011, and the per diem interest due for each day thereafter. The June letter again provided notice that Borrower intended to enforce its right to collect attorney fees pursuant to the loan documents and again provided Borrower with ten days in which to pay the full amount due in order to avoid liability for attorney fees, but notified Borrower that if not paid within ten days the liability for attorney fees would become fixed.
When Borrower failed to cure the default, Lender filed suit to collect all amounts due.
1. We first address Borrower’s second enumeration of error asserting Lender was not entitled to summary judgment for damages allegedly due pursuant to the loan documents because Lender failed to comply with certain conditions precedent to its right to bring a collection action. Borrower asserts that all three of the notice letters were deficient to provide him with the notice and opportunity to cure to which he was contractually entitled before Lender could sue to enforce its contractual rights.
Lender’s right to accelerate the debt for breach of the covenant not to transfer the property that secured the loan without Lender’s written consent is governed by Section 18 of the deed to secure debt, which requires notice of acceleration and a period of no less than 30 days to cure. Section 22 of the deed to secure debt sets forth the specific notice Lender was required to give Borrower prior to acceleration of the debt due to Borrower’s breach of any other covenant in the deed to secure debt. Such notice was required to specify:
(a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and the sale of the Property [that secures the debt]. The notice shall further inform Borrower of the right to reinstate after acceleration.
Section 22 further provides that if the default was not cured by the specified date, Lender could require immediate payment in full of all sums secured by the security deed without further demand and could pursue any other remedies permitted by law. Section 22 also authorizes Lender to collect all expenses incurred in pursuing the remedies provided in said section including attorney fees.
The issue of the sufficiency of notice required by a contractual provision of a contract is a question of law for the court. Great Central Ins. Co. v. Bowery Savings Bank,
Finally, Borrower argues Lender is not entitled to an award of attorney fees pursuant to OCGA § 13-1-11 because, by demanding attorney fees as part of the amount necessary to cure the payment and tax lien defaults if the fees were not paid within ten days, the notice of default letters purported to demand more than Lender was authorized to demand under Section 22 of the deed to secure debt. In other words, Borrower claims Lender’s right to recover fees did not become ripe until the default cure period expired and thus Lender could not demand payment of fees as part of the cure for default. We reject this argument.
When read and construed together, OCGA § 13-1-11 and Section 22 of the deed to secure debt permit Lender to require payment of the attorney fees due under the code section in addition to payment of the debt that had matured in order to cure the default if payment was made after the expiration of ten days, provided Lender had complied with the condition precedent of giving the notice required by the contract and the statute.
The instructions for curing the payment default contained in the April letter, requiring payment of the amount of the delinquency on or before the date specified in the letter, which exceeded and thus complied with the 30-day cure period provided by the deed to secure debt, in addition to attorney fees if not cured within ten days of receipt of the letter, did not violate the provisions of the deed to secure debt. Likewise, these instructions did not violate the provisions of OCGA § 13-1-11. Under the facts of this case, even if Borrower had cured the payment default within the thirty-day cure period he would have been liable for attorney fees pursuant to OCGA § 13-1-11 if the matured debt obligation for the payment defaults was not paid within the ten-day requirement of the statute.
Pursuant to Section 22 of the deed to secure debt, “[i]f the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by [the security deed] without further demand . . . and any other remedies permitted by [applicable [l]aw.” Thus, Lender was entitled to seek and collect payment in full of all sums owed pursuant to the note, including attorney
2. Having concluded that Lender was entitled to file suit and recover the sums owed pursuant to the note, we now address Borrower’s assertion that, nevertheless, the award of attorney fees pursuant to OCGA § 13-1-11 should be reversed because, in this case, the award represents an unconstitutional penalty.
First, we note that, in the quoted language relied upon by Borrower, the Court of Appeals in Simpson was analogizing treble damages and punitive damages primarily for the purpose of determining the standard of proof to be applied to these two types of damages. Id. This holding was reversed by this Court in Williams, supra, noting that the purpose of treble damages in the Georgia RICO Act is distinct from the purpose of punitive damages, also provided by that Act. The Georgia RICO Act at OCGA § 16-14-6 (c) provides that an injured person “shall have a cause of action for three times the actual damages sustained, and, where appropriate, punitive damages.” Thus, the legislature must have intended treble damages to be a type of damages that may be recovered
Borrower also asserts the award of attorney fees in this case must be reversed because it results in a windfall to Lender since the damages awarded exceed the actual fees incurred. As Borrower points out:
The measure of damages in the case of a breach of contract is the amount which will compensate the injured person for the loss which a fulfillment of the contract would have prevented or the breach of it entailed. In other words, the person injured, is, so far as it is possible to do so by a monetary award, to be placed in the position he would have been in had the contract been performed.
Redman Dev. Corp. v. Piedmont Heating & Air Conditioning, Inc.,
In Radioshack Corp. v. Cascade Crossing II, LLC,
“In all interpretations of statutes, the courts shall look diligently for the intention of the General Assembly, keeping in view at all times the old law, the evil, and the remedy.” OCGA § 1-3-1 (a). In General Electric Credit Corp. v. Brooks,
Authorization for the creditor to collect attorney fees after giving the debtor notice and an opportunity to pay the debt first arose in a 1900 amendment to the 1891 statute providing that attorney fees were void unless “ ‘the holder of the obligation sued upon, his agent or attorney notifie(d) the defendant in writing ten (10) days before suit [was] brought of his intention to bring suit, and also the term of court to which suit will be brought’ ” and the debtor failed to pay on or before the return day of court. Ga. L. 1900, p. 53. As this Court noted in General Electric, the 1900 statute was clearly more favorable to the creditor and signaled a change in the legislative intent from that of preventing collection of attorney fees provided for in a note, unless the debtor asserted an unsuccessful defense to the debt in court, to a scheme that permitted collection so long as the creditor gave the debtor the required statutory notice and opportunity to pay the debt to save the creditor the necessity and expense of filing suit. Id. (quoting Harris v. Powers,
Applying this construction to the facts of this case, it is obvious Borrower was afforded the opportunity to avoid the “evil” of his contractual obligation to pay Lender’s attorney fees by paying the debt within the statutorily provided time period. Even in this case, OCGA § 13-1-11 does not impose a penalty; it provides Borrowerwith an option to avoid the contractual obligation to pay any attorney fees to Lender. That the statutory formula applied to the debt in this case resulted in an award in excess of actual fees incurred does not provide a ground for ignoring this mandatory statute or forbearing its enforcement.
This Court has long held that
all presumptions are in favor of the constitutionality of an act of the legislature and that before an [a]ct of the legislature can be declared unconstitutional, the conflict between it and the fundamental law must be clear and palpable and this Court must be clearly satisfied of its unconstitutionality.
DeKalb County v. Purdue,
Judgment affirmed.
Notes
By operation of law OCGA § 13-1-11 becomes a part of all promissory notes “and all such instruments must be construed in the light of this particular section.” Anderson v. Hendrix,
The contract in this case was dated prior to July 1, 2011, and thus the 2012 amendment to OCGA § 13-1-11 adding subsection (b) is inapplicable to this case. See Ga. L. 2012, p. 1035, § 3/SB181. Pursuant to subsection (b), when application of this Code section results in an award of attorney fees in excess of $20,000, the party required to pay may seek a hearing to determine the reasonableness of the fees. We reject Borrower’s argument that this statutory amendment demonstrates that the Legislature recognizes the constitutional deficiency he asserts in this appeal.
Borrower also relies upon case law addressing the constitutionality of excessive punitive damages awards in tort actions. See, e.g., State Farm Mut. Automobile Ins. Co. v. Campbell,
The Radioshack opinion was issued in response to a certified question from the Eleventh Circuit Court of Appeals asking whether OCGA § 13-1-11 applied to the contract in that case, which arose out of a breach of a commercial lease, and limited what would otherwise he the full amount of attorney fees that could be awarded pursuant to the contract. This Court answered by ruling that the phrase “evidence of indebtedness” as used in OCGA § 13-1-11 was to be broadly construed to encompass leases.
An appellate court in at least one other state, in construing a similar statute, has also upheld the application of statutory attorney fees even where, as here, the formula resulted in fees in excess of actual fees incurred. “[T]he purpose of [the statute] is to allow the debtor a last chance to pay his outstanding balance and avoid litigation, not to reward the prevailing party with the reimbursement of his costs in prosecuting or defending the action.” Trull v. Central Carolina Bank & Trust,