NORTHSIDE BANK v. MOUNTAINBROOK OF BARTOW COUNTY HOMEOWNERS ASSOCIATION, INC.; and vice versa.
A16A0005, A16A0220
Court of Appeals of Georgia
JULY 14, 2016
789 SE2d 378 | 338 Ga. App. 126
BARNES, Presiding Judge.
These companion appeals arise from the trial court‘s grant of summary judgment to Mountainbrook of Bartow County Homeowners Association, Inc., formerly known as Mountainbrook Property Owners Association (hereinafter “Mountainbrook“). Northside Bank foreclosed on six lots in the Mountainbrook subdivision and when, after several years, Northside did not pay homeowners association assessments on the lots, Mountainbrook filed an action against Northside to foreclose on the property liens and collect the unpaid assessments, interest, late fees and attorney fees. The trial court granted summary judgment to Mountainbrook and awarded $190,904.68 for the unpaid assessments, interest, and late fees, and $65,834.02 in attorney fees.
In Case No. A16A0005, Northside contends that the trial court erred by granting Mountainbrook 18 percent interest on the assessments, by granting Mountainbrook actual attorney fees, rather than “reasonable” attorney fees under
Summary judgment is proper only if the pleadings and evidence “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Mountainbrook filed a motion for summary judgment, which the trial court denied. In the same order, the trial court granted Northside‘s request for the appointment of a receiver to “conduct a full and comprehensive audit of [Mountainbrook‘s] fund” to determine if the assessments were proper in “form and substance.” Subsequent to the filing of the receiver‘s report, Mountainbrook filed a renewed motion for summary judgment and damages in the amount of $190,904.68 for “past due annual and special assessments, late fees and interest,” $1,443.11 for costs, and $65,834.02 for attorney fees. Following a hearing, at which the trial court noted that it had adopted all of the receiver‘s findings, the trial court granted Mountainbrook‘s motion for summary judgment.
Case No. A16A0005
1. Northside contends that because the Declaration does not specify an interest rate, the trial court erred in granting Mountainbrook 18 percent interest on the assessments, rather than the 7 percent interest allowed by law pursuant to
Mountainbrook‘s entitlement to interest on the past due assessments is governed by the contract between the parties, in this case the Declaration. “[T]he parties may establish by written contract any rate of interest, expressed in simple interest terms as of the date of the evidence of the indebtedness, . . . where the principal amount involved is more than $3,000.00.”
Here, Article VI, Section 8 of Mountainbrook‘s Declaration provided that for assessments not paid “within five (5) days after the due date, the assessment shall bear interest from the date of delinquency at the maximum legal rate per annum.” (Emphasis supplied.) In its order granting Mountainbrook‘s motion for summary judgment, the trial court found “the proper rate of interest for the unpaid assessments to be 18 percent per annum as the maximum allowable by law provided for in Article VI, Section 8 of the Declaration and based upon the holding in Noons v. Holiday Hospitality Franchising, 307 Ga. App. 351 [(705 SE2d 166) (2010)].”
The trial court‘s reliance on Noons is misplaced. In Noons, the contract provided for the lesser of an interest rate of 1.5 percent per month, which is 18 percent a year, or the maximum interest rate allowed by law. 307 Ga. App. at 355 (3). We held that Holiday Inn was entitled to the interest rate designated by the specific terms of the contract of 1.5 percent per month or 18 percent per annum. Id. Although not argued in Noons,
Here, contrary to Mountainbrook‘s contention, an interest rate of “the maximum legal rate per annum” is not a rate that is definite and ascertainable. Unlike a reference to the “prime rate” which, while not of specific numerical value, is easily computable, the “maximum legal rate per annum” provides no set and certain base for computation. See Stewart v. Nat. Bank of Ga., 174 Ga. App. 892, 893 (1) (332 SE2d 19) (1985). In this case, the term “maximum legal rate” as used in the
Although Mountainbrook maintains that the maximum legal amount under Georgia law is 18 percent pursuant to
2. Northside also contends that the trial court erred in calculating the attorney fees owed under the Declaration because the amount of fees was governed and limited by
“The general rule is that expenses of litigation, including attorney[ ] fees, are not recoverable by a litigant against the opposite party except in those cases which are specifically provided for by contract or by statute. [Cit.]” Hickman v. Frazier, 128 Ga. App. 552 (1) (197 SE2d 441) (1973). Here, Article VI, Section 1 of the Declaration provides, in relevant part: “Each such assessment, together with the interest thereon and costs of collection thereof, including reasonable attorney[ ] fees, shall . . . be the personal obligation of the . . . Owner.” Article VI, Section 8, provides that in an action to collect delinquent assessments, “interest, cost and reasonable attorney[ ] fees of any such action shall be added to the amount of such assessment.” Northside contends that because the Declaration only provided for reasonable attorney fees without specifying the amount, the award should be calculated pursuant to
If such note or other evidence of indebtedness provides for the payment of reasonable attorney[ ] fees without specifying any specific percent, such provision shall be construed to mean 15 percent of the first $500.00 of principal and interest owing on such note or other evidence of indebtedness and 10 percent of the amount of principal and interest owing thereon in excess of $500.00[.]
The trial court found that “based upon the language . . . of the Declaration, . . . the award of reasonable attorney[ ] fees . . . [was] proper” and awarded Mountainbrook $65,834.02 for “reasonable attorney[ ] fees.” Mountainbrook asserts that
We agree that
face a legally enforceable obligation to pay money.” (Citation and punctuation omitted.) Radioshack Corp. v. Cascade Crossing II, 282 Ga. 841, 846 (653 SE2d 680) (2007).
The Declaration provides: “Each Owner of a Lot, by acceptance of a deed . . . is deemed in covenant and agree[s] to pay to the Association: (1) annual assessments, which may or shall be levied by the Association, and (2) special assessments . . . to be established and collected as hereinafter provided.” Thus, while the Declaration provides for attorney fees incurred in collecting assessments, it also provides that annual assessments may be levied annually or, in some instances, the assessments may not be assessed. Thereby, rather than an evidence of indebtedness reflected by a written instrument for the payment of money that imports on its face the existence of a debt, the Declaration only evinces an obligation that may arise to pay assessments should they be levied. See generally O‘Brien‘s Irish Pub v. Gerlew Holdings, 175 Ga. App. 162, 166 (4) (332 SE2d 920) (1985) (statute inapplicable to exclusive real estate listing agreement); Holcomb v. Evans, 176 Ga. App. 654, 657 (3) (337 SE2d 435) (1985) (personal services contract was not “note or other evidence of indebtedness” within meaning of statute); Vaughters v. Outlaw, 293 Ga. App. 620, 623 (2) (668 SE2d 13) (2008) (
Because
Accordingly, we affirm the trial court‘s award of attorney fees.
3. Northside also contends that the award of 10 percent of the past-due assessments as late fees constituted an unenforceable penalty under Georgia law. Article VI, Section 8 of the Declaration provides, in relevant part: “[I]f the assessment is not paid within five (5) days after the due date, the assessment shall bear a late charge in an amount set by the Board.” “Determining whether such a clause constitutes an enforceable liquidated damages provision or an unenforceable penalty is a question of law for the court.” (Citation and punctuation omitted.) Jamsky v. HPSC, Inc., 238 Ga. App. 447, 449 (519 SE2d 246) (1999). See
Generally, “for the late fee to be considered an enforceable liquidated damage provision, rather than a penalty, it must comply with three requirements.” Telescripps Cable Co. v. Welsh, 247 Ga. App. 282, 284 (1) (542 SE2d 640) (2000). “First, the injury
Mountainbrook has not met its burden as to the third prong by demonstrating that the late fee provision is a reasonable pre-estimate of the probable loss. Here, per the Declaration, “if the assessment is not paid within five (5) days after the due date, the assessment shall bear a late charge in an amount set by the Board.” As this language reflects, the late fee provision provides no pre-estimate, reasonable or otherwise, of the probable loss associated with the late payment of assessments. The late fee is set at the total discretion of the Board. There is no indication as to what criteria the Board must use to determine the late fees, when the late fees are to be set, or whether there is any ceiling on the amount of late fees that can be charged.6
Accordingly, Mountainbrook failed to show that the late fees provision in the Declaration were liquidated damages rather than an impermissible penalty, and thus the trial court erred in granting summary judgment to Mountainbrook as to these damages. Compare Oami v. Delk Interchange, 193 Ga. App. 640, 642 (388 SE2d 706) (1989) (a $10 surcharge for each day of tenant‘s failure to pay rent was “adjusted to the length of tardiness” and was a reasonable pre-estimate of the probable loss).
Case No. A16A0220
4. In several enumerations of error Mountainbrook contends that the trial court impermissibly abated post-judgment interest in its order granting Mountainbrook‘s motion for supersedeas bond. We agree.
The record reflects that on July 10, 2015, the trial court granted Mountainbrook‘s motion for summary judgment and entered judgment for Mountainbrook in the amount of $258,181.81, which included an award of 18 percent interest on unpaid assessments, attorney fees, and late fees. On July 23, 2015, Northside timely filed a notice of appeal from the judgment, and on July 29, Mountainbrook filed a motion for supersedeas bond, in which it requested a hearing on its motion, and, in anticipation of accruing costs associated with “a time-consuming appeal,” sought a bond of $344,655.53.7 In its response to the motion, Northside filed a response and requested that the trial court instead authorize payment of $263,402.03 into the court registry, reflecting the amount of the judgment and daily interest from the date the judgment was entered until the date the money was placed into the court registry, and that such payment into the court registry would “abate any post-judgment interest accrual” while it appealed the judgment.
Following a hearing, the trial court granted Mountainbrook‘s motion for supersedeas bond and ordered that Northside deposit $279,262.03 into the court‘s registry within 15 days, after which time, if no deposit was made, interest would accrue. The order stipulated that the “Deposit satisfies the requirements of
providing a sufficient form of security to satisfy the judgment in full,” and also that the “Deposit
(a) Mountainbrook contends that the trial court‘s abatement of the post-judgment interest in the order granting supersedeas bond was an impermissible modification of its previous order granting Northside summary judgment. It asserts that the filing of the notice of appeal deprived the trial court of jurisdiction to modify or alter the judgment. We agree.
“Regarding the order requiring a supersedeas bond,
filed, trial court lacked jurisdiction to enter an order purporting to limit scope of earlier ruling from which notice of appeal was filed).
[S]upersedeas suspends all further proceedings in the suit in which the judgment superseded is rendered, such as are based upon and relate to the carrying into effect of that judgment. Under this rule the supersedeas, during its pendency, prevents any steps to enforce or carry into effect the judgment, such as issuing an execution based thereon.
(Citations and punctuation omitted.) Intl. Images v. Smith, 181 Ga. App. 543, 544 (352 SE2d 846) (1987). Thus, abatement of the post-judgment interest was prohibited by the supersedeas, and the trial court erred in so ordering. Compare JTH Tax v. Flowers, 311 Ga. App. 495, 497 (716 SE2d 559) (2011) (after remittitur, trial court properly ruled on post-judgment interest abatement, finding interest was not abated per
Accordingly, the trial court‘s order granting the motion for supersedeas bond is reversed to the extent that it abated post-judgment interest.
(b) In light of our finding that the trial court lacked jurisdiction during the appeal to abate the post-judgment interest on the judgment, we need not address Mountainbrook‘s remaining enumerations of error.
DECIDED JULY 14, 2016.
Jones & Walden, Leon S. Jones, Cameron M. McCord, for appellant.
Bentley, Bentley & Bentley, Fred D. Bentley, Jr., B. Blake Hungerford, for appellee.