Lead Opinion
After CEP-Ten Mile Resorts, LLC defaulted on two loans, Bank of the Ozarks (hereinafter, the “Bank”) brought an action against it and several other defendants to enforce the two promissory notes and several guaranties associated with the loans. The Bank moved for summary judgment, and some of the defendants also moved for summary judgment. The trial court denied those defendants’ motions and granted summary judgment to the Bank against all of the defendants. These appeals followed.
In Case No. A13A1790, defendants Greg W. Greenstein, Jeffrey P. Goldstein, Gold.Net, Inc. and Green State, LLC (collectively, the “Greenstein Defendants”) appeal from the trial court’s order granting summary judgment to the Bank. They correctly argue that the Bank failed to demonstrate that it was the real party in interest entitled to enforce the notes and guaranties. Accordingly, we reverse the judgment in Case No. A13A1790. Given this disposition, we do not address the Greenstein Defendants’ other claim of error regarding the amounts that they allegedly owed under the notes and guaranties.
In Case No. A13A1791, defendants CEP-Ten Mile Resorts, LLC, Philip H. Weener, Eric J. Nathan, J. David Jones, Jr., J. David Jones, Inc., Commercial Equity Partners, Ltd., Three Martini Partners, LLC and CEP Investments, LLC (collectively, the “CEP-Ten Defendants”) appeal from the trial court’s order granting summary judgment to the Bank and denying their cross-motion for summary judgment. Unlike the appellants in Case No. A13A1790, the CEP-Ten Defendants do not challenge on appeal the evidence that the Bank was the real party in interest. Instead, they argue that the parties’ choice of Georgia law to govern the promissory notes and guaranties required the Bank to comply with Georgia’s statutory confirmation procedures following foreclosure of the real property securing the loans at issue, and that the Bank’s failure to do so precluded it from obtaining summary judgment. As detailed below, this argument provides no ground for reversal because Georgia law does not require confirmation in this case.
The CEP-Ten Defendants, however, also claim that the trial court erred in its ruling on the amounts that the Bank could recover under the notes and guaranties. Because it is not clear from the trial court’s order whether the trial court awarded summary judgment to the Bank on the amount it could recover, we vacate the order in Case No. A13A1791 and remand the case for further proceedings not inconsistent with this opinion.
1. Facts and procedural posture.
Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). “On a motion for summary judgment the plaintiff, as movant, has the burden of establishing the absence or non-existence of any defense raised by the defendant.” City of Fayetteville v. Fayette County,
So viewed, the evidence shows the following. The Bank seeks to enforce two promissory notes. The first note, dated November 22,2006, reflects CEP-Ten Mile Resorts’ promise to repay a loan from Farmers and Merchants Community Bank in the amount of $3,700,000. The other defendants in both cases each guarantied this loan, which was secured by real property located in Tennessee. The second note, dated May 28, 2008, reflects CEP-Ten Mile Resorts’ promise to repay a loan from First Choice Community Bank 1874 in the amount of $171,970.41. Again, each of the other defendants guarantied this loan, which also was secured by the Tennessee property. It is undisputed that the several notes and guaranties are governed by Georgia law. They provide either that they are to be governed by Georgia law or by the law of the state in which they were
CEP-Ten Mile Resorts defaulted. The Bank foreclosed, alleging that it was the successor in interest to the lenders on both notes. It employed a nonjudicial foreclosure process in Tennessee. It then brought this Georgia deficiency action on the notes against CEP-Ten Mile Resorts and the guarantors, and moved for summary judgment. Although similarly situated, the two groups of defendants adopted different strategies.
The Greenstein Defendants argued that the Bank failed to show that it was the original lenders’ successor-in-interest. They also argued that the Bank failed to prove the amounts owed under the notes.
The CEP-Ten Defendants filed a cross-motion for summary judgment on the ground that, because the Bank did not follow statutory confirmation procedures set forth in OCGA § 44-14-161 in foreclosing upon the Tennessee property, it could not seek to recover a deficiency judgment on the promissory notes. In their opposition to the Bank’s motion for summary judgment, they also incorporated the arguments made by the Greenstein Defendants.
The trial court granted summary judgment to the Bank against all of the defendants and denied the CEP-Ten Defendants’ cross-motion for summary judgment. As to the defendants’ liability to the Bank, the trial court held, among other things, that the Bank had established that it was the holder of the notes and guaranties and that Georgia law did not require confirmation proceedings following the foreclosure of out-of-state property. Although the trial court also held that “the Bank has proven the amounts owed under the [n]otes and associated [guaranties,” it granted summary judgment to the Bank “on liability only.”
Case No. A13A1790 (Greenstein Defendants)
2. The Bank’s interest in prosecuting the action.
“Every action shall be prosecuted in the name of the real party in interest.” OCGA § 9-11-17 (a). Below and on appeal, the Greenstein Defendants have argued that the Bank was not entitled to summary judgment because it had not established its status as the real party in interest, in that it had not presented admissible evidence that it was the successor-in-interest to the original lenders, Farmers and Merchants Community Bank and First Choice Community Bank 1874. See Sawgrass Builders v. Key,
The Bank attempted to show that it was the successor-in-interest of the original lenders through the affidavit of one of its special asset managers, Frank Felker. In his affidavit, Felker testified that Farmers and Merchants Community Bank had changed its name to First Choice Community Bank 1874 in 2007; that First Choice Community Bank 1874 had merged into First Choice Community Bank in 2010; that First Choice Community Bank had closed and the Federal Deposit Insurance Corporation (“FDIC”) had been appointed its receiver; and that the FDIC had transferred First Choice Community Bank’s assets to the Bank under a purchase and assumption agreement.
The Greenstein Defendants argue that the above-cited portions of the Felker affidavit do not demonstrate the Bank’s status as the real party in interest because they are not admissible evidence. “It is well settled that evidence that would be inadmissible at trial is also inadmissible upon summary judgment.” Atlanta Glass v. Tucker,
We do not find merit in all of the Greenstein Defendants’ challenges to Felker’s affidavit testimony. As to the closure of First Choice Community Bank, the appointment of the FDIC as receiver, and the transfer of First Choice Community Bank’s assets to Appellee Bank of the Ozarks, his testimony was admissible. Felker referred to and attached to his affidavit the purchase and assumption
But Felker’s affidavit testimony regarding two of the other links between the original lenders and the Bank — the 2007 name change from Farmers and Merchants Community Bank to First Choice Community Bank 1874 and the 2010 merger of First Choice Community Bank 1874 into First Choice Community Bank — is inadmissible. It does not meet the statutory requirements for an affidavit supporting summary judgment. OCGA § 9-11-56 (e) requires that such an affidavit “shall be made on personal knowledge, shall set forth such facts as would be admissible in the evidence, and shall show affirmatively that the affiant is competent to-testify to the matters stated within.” Felker stated in his affidavit that its contents were based on his personal knowledge. But
while a statement in an affidavit that it is based upon personal knowledge is generally sufficient to meet the requirement that affidavits be made upon such knowledge, if it appears that any portion of the affidavit was not made upon the affiant’s personal knowledge, or if it does not affirmatively appear that it was so made, that portion is to be disregarded in considering the affidavit in connection with the motion for summary judgment.
Goddard v. City of Albany,
It does not affirmatively appear that Felker’s affidavit testimony regarding the 2007 name change and the 2010 merger was made upon his personal knowledge. The affidavit gave “no indication whether the ‘personal knowledge’ was gained through personal involvement with the matter, whether it was gained from others, or whether it was based merely upon review of [documents].” Sullivan v. Fabe,
Furthermore, nothing in the record suggests that Felker learned of the name change and merger through personal involvement with those events. See Langley v. Nat. Labor Group,
Under these circumstances, and “giving the [Greenstein Defendants] the benefit of any doubts arising from this evidence, we must conclude that [Felker’s] information about [the name change and merger] did not come from his personal knowledge.” Sullivan,
Without the assertions in the Felker affidavit, the Bank did not present any evidence to show either that Farmers and Merchants Community Bank changed its name to First Choice Community Bank 1874 or that First Choice Community Bank 1874 merged into First Choice Community Bank. Consequently, the Bank has not shown that First Choice Community Bank had a right to enforce the promissory notes. See OCGA § 11-3-301 (providing that person entitled to enforce instrument means, pertinent to this case, holder of instrument or nonholder in possession of instrument who has rights of holder); see also OCGA § 11-1-201 (20) (a) (defining “holder” to mean, pertinent to this case, person in possession of negotiable instrument payable “to an identified person that is the person in possession”) (emphasis supplied). For that reason, the Bank has not shown that it obtained any right to enforce the promissory notes as a transferee of those instruments under OCGA § 11-3-203 (b) (providing that a transferee of an instrument obtains “any right of the transferor to enforce the instrument”) (emphasis supplied).
Accordingly, the Bank did not demonstrate that, by purchasing the assets of First Choice Community Bank, it became the successor-in-interest to either Farmers and Merchants Community Bank or First Choice Community Bank 1874. Because “[t]he burden of proof was upon the plaintiff [Bank], as movant for summary judgment, to show [its entitlement to enforce the promissory notes],” Bulloch County Bank v. Dodd,
Our decision in Capital City Developers v. Bank of North Ga.,
Accordingly, we reverse the trial court’s grant of summary judgment to the Bank in Case No. A13A1790.
3. Amounts owed to the Bank.
In light of our reversal of the grant of summary judgment to the Bank in this case,
Case No. A13A1791 (CEP-Ten Defendants)
4. Confirmation proceedings.
Unlike Case No. A13A1790, Case No. A13A1791 does not involve an appellate challenge to the Bank’s evidence that it was the real party in interest. Instead, the CEP-Ten Defendants argue that the trial court erred in granting summary judgment to the Bank because the Bank failed to comply with Georgia’s statutory confirmation procedures before obtaining the judgment, despite choice of law provisions that applied Georgia law to the promissory notes and guaranties. We find no merit in this argument.
While it is true that, under their terms, the notes and guaranties are to be construed under Georgia law, Georgia law did not require confirmation in this case. Georgia’s confirmation statute, OCGA § 44-14-161 (a), provides that no action may be taken to obtain a deficiency judgment on a loan secured by real property unless, within 30 days after the foreclosure sale on the property, the person instituting foreclosure proceedings obtains confirmation of the sale from the superior court of the county in which the land is located. But we have repeatedly held that OCGA § 44-14-161 (a) does not apply where, as here, the property foreclosed upon is not located in the state of Georgia. See, e.g., Kelly v. American Fed. Sav. & Loan Assn.,
Instead, in such instances, “the obtention of a deficiency judgment in a Georgia court against owners of foreclosed property after a foreclosure in another state is governed by the laws of the state where the foreclosure occurred. If confirmation is not required under that state’s law, it is not required in Georgia.” Kelly,
5. Amounts owed to the Bank.
The CEP-Ten Defendants also argue that the trial court erred in its ruling on the amounts that the Bank could recover under the promissory notes and guaranties. The trial court’s order, however, does not clearly grant summary judgment on this issue. At one place in the order, the trial court states that he “finds the Bank has proven the amounts owed under the [njotes and associated [gjuaranti.es.” At another place, however, the trial court states that he grants the Bank’s motion for summary judgment “on liability only.”
Given this ambiguity, we vacate the order granting summary judgment in Case No. A13A1791 and remand the case to the trial court for the entry of an order that reflects the issues upon which the trial court finds summary adjudication appropriate in this case, or for other proceedings not inconsistent with this opinion.
Judgment reversed in Case No. A13A1790.
Judgment vacated and case remanded with direction in Case No. A13A1791.
Concurrence in Part
concurring in part and dissenting in part.
I concur fully with all that is said in Case No. A13A1791.
As an initial matter, based on the documents and on Felker’s affidavit, the Bank has established that it is the real party in interest as a transferee of the notes and guaranties.
Moreover, the Greenstein Defendants failed to establish a genuine issue of material fact as to the Bank’s right to enforce the notes and guaranties. Contrary to the conclusion of the majority, Felker’s affidavit, which was based “upon [his] personal knowledge” is sufficient to support the trial court’s finding that the Bank presented evidence that it has present title to the notes and guaranties and was authorized to enforce them. Felker averred as the Bank’s employee that “[o]n March 7, 2007, [Farmers & Merchants] changed its name to First Choice Community Bank 1874”; and “[o]n March 26, 2010[,] First Choice 1874 merged with First Choice Community Bank, and First Choice thereby succeeded to the rights of First Choice 1874.” As a current employee of the Bank, which succeeded in interest to the business records of First Choice, Felker was competent to testify as to information contained in the Bank’s records in the present case.
I am authorized to state that Chief Judge Phipps and Judge Branch join in this dissent.
Notes
See OCGA §§ 11-3-203 (b) (“Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course”), 11-3-301; Lee v. Muller,
See, e.g., Phillips v. Mtg. Electronic Registration Systems, Case No. 09-CV-2507 at *4-*8 (II) (D.C. N.D. Ala., decided Apr. 5, 2013) (employee of successor institution may competently testify to personal knowledge garnered from documents received from predecessor institution in order to fulfill summary judgment requirements). See also United States v. Jakobetz, 955 F2d 786, 801 (2nd Cir. 1992) (stating that “[ejven if the document is originally created by another entity, its creator need not testify when the document has been incorporated into the business records of the testifying entity”); United States Bank Nat. Assoc. v. American Screw & Rivet Corp., Case No. 09-C-7312 (D.C. N. Ill., Aug. 10, 2010) (order granting summary judgment finding that employee of receiving bank who acquired assets through the FDIC was competent to offer testimony under Fed. R. Evid. 803 as to the failed hank’s records); In re: Trafford Distributing Center,
Of the numerous guarantors, only the Greenstein Defendants contested the Bank’s standing as the real party in interest, not because there is any real question that the name change and merger took place, but instead by interposing generic responses to the Bank’s Statement of Material Facts Not in Dispute “that [the Bank] has [failed to] establish [these facts] through the proper submission of evidence into the record.” While a plaintiff is required to prove its case, here, where the Greenstein Defendants admitted in their answers that CEP-Ten signed the first and second promissory notes and that they signed the first and second guaranties, these tactics appear interposed to delay payment of a legitimate debt rather than as an actual challenge to the evidence.
Dew v. Motel Properties,