Ameris Bank v. Russack, No. 6:2014cv00002 - Document 78 (S.D. Ga. 2016)
Court Description: ORDER granting in part and denying in part 56 Motion for Summary Judgment; denying 63 Motion for oral argument. Signed by Judge J. Randal Hall on 3/31/16. (cmr)
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Ameris Bank v. Russack Doc. 78 IN THE UNITED FOR THE STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA STATESBORO DIVISION AMERIS BANK, as assignee of the Federal Deposit Insurance Corporation, receiver for Darby Bank and Trust Co., * * * * * Plaintiff, * v. * CV 614-002 * IRA RUSSACK, * * Defendant. * ORDER Plaintiff Ameris Bank ("Ameris") seeks enforcement of five personal guaranties allegedly executed by Defendant Ira Russack. The Court DENIES 63.) and GRANTS Mr. Russack's IN PART summary judgment (doc. motion and DENIES 56) for oral argument (doc. IN PART Ameris7 s motion for because Mr. Russack denies signing four of the five personal guaranties, and a jury must determine whether is he did. Summary judgment appropriate only with respect to the limited guaranty that Mr. Russack admits signing but contests on other, I. inadequate bases. FACTUAL BACKGROUND In late 2003, Mr. Russack formed a business with R. Richard Yates to engage in real estate acquisition, management, and sale in Florida and South Georgia. development, (Doc. 62-1, Dockets.Justia.com "Russack Decl.," 1f 3.) In 2004, Mr. Russack purchased tracts for development in Florida and Georgia and became interested in modular homes manufactured (uCrossroads"), a by financially Crossroads troubled Homes, company owned Inc. by Terry Kelly. Crossroads had a secured by the modular (Russack Decl. f 9.) properties were LLC to purchased home danger Crossroads credit with Darby Bank ("GTOT") in of and three residences. in foreclosure, Mr. Yates formed late 2004 to provide adequate capital afloat. property factory ("Darby") Because Crossroads was delinquent and the in G.T.O.T. keep line of (Yates Bluffton, Aff. South 1f 12.) GTOT Carolina from also Darby. (Doc. 57, f 4.) GTOT currently has Note 2620, "First Credit balance Loan," $3,750,000; $1,960,327; as of loans 45.) June 4250 (2) (3) (4) Note 0240, to Loan," and "Crossroads 2-3; doc. Note 5870, "GTOT Loan," Loan," and (5) 56, pp. (1) 0220 Note Town balance $125,312; 62, pp. in default: consolidate "Olde 0230, 6620, (Doc. created "Lizella Note Note balance $308,428. 1, p. $962,689, Note Line"; five outstanding loans balance balance Note 6270, 5-7; doc. 56- GTOT owes a total of $6,712,063.75 under the loans 30, listed 2015. above, (Doc. Notes 57, 6270 1f 19.) and The 6620, fourth and fifth are referred to collectively as the "2008 Loans." The Georgia closed Darby Deposit The on Department November Insurance of 12, Corporation FDIC-R assigned all Banking 2010, and and appointed ("FDIC-R") rights Finance the Federal receiver. as and assets ("GDBF") (Id.) Darby to Ameris. of (Id. 17.) Ameris alleges Mr. subjecting defaulted him loans, March 16, 2004, 5870 dated to Russack signed five guaranty agreements personal as liability follows: (1) 21, all five of GTOT's an unlimited guaranty dated and signed in Macon, Georgia in relation to Note ("First Unlimited Guaranty"); April for 2005, allegedly (2) two unlimited guaranties sent and received from Mr. Russack by mail in relation to renewal of the First Loan and the Lizella Loan ("Second and Third limited guaranty dated August Florida in Guaranty"); relation and (4) a to 26, Unlimited 2004, Note Guaranties"); a signed in Tallahassee, 0230 ("Crossroads limited guaranty dated August and signed in Tallahassee in relation to Note 0240 Limited Guaranty"). (3) Limited 26, 2004, ,("Olde Town (Doc. no. 56-1, Exs. 2, 3, 6, 11, 13.) The unlimited guaranties obligate Mr. Russack for 100% of the balance for both the loan referenced in the guaranty and any future loans made by Darby to GTOT. (Id. Exs. 2, 3, 6.) The limited guaranties obligate Mr. Russack for only ten percent of the balance for the specified loan, also expressly Russack may state have they under are any but the cumulative other limited guaranties to obligations guaranties in Mr. existence, including unlimited guaranties covering 100% of the balances on future loans. In his (Id., Exs. 11, declaration, Mr. Crossroads Limited Guaranty, the $1.96 million 13.) Russack admits to signing obligating him for ten percent of loan balance. (Russack Decl. f 15.) Mr. Russack has denied signing the four remaining guarantees. If 16.) the (Id. At his deposition on April 15, 2015, Mr. Russack denied signing the First Unlimited Guaranty on March 16, office of James Emory Company in Macon, setting foot in Macon, Georgia. (Doc. Georgia, 62-3, 2004, at the and denied ever "Russack Dep.," pp. 11-16.) Ms. Bobbie Reddell, the notary public to the alleged signing and an employee of James Emory Company in Macon, recollection of ever meeting Mr. Russack. Dep.," pp. 9-13.) no recollection Macon on that Garner, would Ms. Kim Lewis, of day. the (Doc. 62-11, documents, been executed 62-10, "Reddell a witness to the guaranty, has transaction or meeting a former Darby officer, have (Doc. has no "Lewis Dep.," Mr. Russack pp. 4-6.) in Mr. testified the unlimited guaranty contemporaneously with the loan but the loan documents were executed in Tallahassee, Florida and not Macon. As April to the 21, "Garner Dep.," pp. 44-45.) Second and Third Unlimited Guaranties 2005, existence. (Doc. 62-5, Mr. Russack (Russack Dep., denies p.15.) any Mr. executed on knowledge of Russack maintains their that, had he known of an unlimited guaranty purporting to subject him to an unlimited amount of GTOT's debt, he would not have signed the Mr. document. (Russack Dep. 21.) Yates testified by affidavit that GTOT would not have agreed to any loan unless Mr. Russack's guaranty was limited to ten percent. (Doc. 17-1, "Yates Aff.," p. 23.) Mr. Russack also denies signing the Olde Town Limited Guaranty. (Russack Decl. K 16.) II. Summary genuine 56(a). the judgment dispute entitled to SUMMARY JUDGMENT as judgment is to as appropriate any material a matter of STANDARD only fact if and law." *there the Fed. is no movant is R. Civ. P. Facts are "material" if they could affect the outcome of suit under Liberty Lobby, the Inc., governing 477 U.S. substantive 242, 248 law. (1986). Anderson v. The Court must view the facts in the light most favorable to the non-moving party, U.S. in Matsushita Elec. 574, [its] 587 (1986), favor." Indus. Co. v. Zenith Radio Corp., 475 and must draw "all justifiable inferences United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (en banc) (internal punctuation and citations omitted). The Court, moving by motion. How to proof 1115 party reference Celotex carry at this proof at Cir. trial, to the initial materials Corp. trial. (11th has v. burden Catrett, depends Fitzpatrick v. 1993) . on When burden file, 477 on the U.S. who of basis 317, bears non-movant 323 the City of Atlanta, the showing 2 has the for the (1986) . burden of F.3d 1112, the burden of the movant may carry the initial burden in one of two ways—by negating an essential element of the non-movant's case or by showing that there is no evidence necessary to the non-movant's case. Inc. , 929 F.2d 604, v. S.H. U.S. 323). response in Before the opposition, movant has met issues its of 144 Court it must material fact law. F.3d 248, 1997) (11th Cir. 1991) (1970) can and Clark, Coats & Clark, and Celotex Corp. , 477 the consider that Jones v. it is City of (per curiam) . 929 F.2d at 608. fact non-movant7s whether the showing that there are no statement that the non-movant cannot meet insufficient. a (explaining Adickes evaluate first initial burden of judgment as a matter of 254 See Clark v. (11th Cir. Kress & Co. , 398 U.S. at genuine 606-08 to prove entitled Columbus, to 120 A mere conclusory the burden at trial is If—and only if—the movant carries its initial burden, non-movant may avoid summary judgment only by that there is indeed summary judgment." proof at trial, a Id. material issue of "demonstrat[ing] fact that precludes When the non-movant bears the burden of the non-movant must tailor its response to method by which the the movant carried its initial burden. If the the movant presents evidence affirmatively negating a material fact, the non-movant withstand a "must directed fact sought to be respond verdict negated." with motion evidence at trial Fitzpatrick, shows an absence of evidence on a non-movant must show that the on the 2 F.3d at the movant either sufficient record to material 1116. material contains fact, If the evidence that was "overlooked or ignored" by the movant or "come forward with additional verdict motion deficiency." burden by evidence at Id. sufficient trial at based 1117. on The withstand the relying on the pleadings or by F.2d 1032, 1033-34 (11th Cir. III. Disputed Judgment Issues on All a alleged non-movant allegations contained in the complaint. A. to directed evidentiary cannot carry its repeating conclusory See Morris v. Ross, 663 1981). DISCUSSION of Material Fact Preclude Summary Three Unlimited Guaranties and the Olde Town Limited Guaranty. Because Mr. Russack adamantly denies signing four of the guaranties, a jury must determine whether he did. Under Georgia law,1 a signature is "presumed to be authentic and authorized unless the action is to enforce the signer and the signer is dead or liability of incompetent the purported at trial of the issue of validity of the signature." 3-308. trial This where presumption "the of purported signature and produces denial of execution there exist authenticity maker other irregularities denies evidence in support of on may the the be separate face of time of O.C.G.A § 11- both defense the rebutted knowledge from of the and sworn forgery, the at and negotiable instrument that would place a reasonable person on notice under a reasonable commercial standard." v. Parker, 486 S.E.2d 402, 405 v. 405 (Ga. Floyd, S.E.2d 265 Southtrust (Ga. Ct. App. App. 1991)). Bank of 1997) Georgia (citing Fabe However, at the summary judgment stage, only a sworn denial of execution by the obligor is required to create a genuine issue of material fact for trial. Ct. App. See Lee v. 2012) SunTrust Bank, (denying summary 722 S.E.2d 884, judgment where 885 (Ga. plaintiff submitted affidavit denying execution of instrument). Here, Mr. that he signed, Russack unequivocally denies the First Unlimited Guaranty. knowledge of, (Russack Dep. or 11- xThe guaranties specify that Georgia law applies and neither parties disputes that it applies. 16.) Mr. Russack adamantly denies March 16, Decl. 1f 27.) 2004, the date and being in Macon, location For further support, of Mr. Georgia on execution. (Russack Russack has presented deposition testimony of a notary and a witness to the March 16, 2004 signing, both of whom do not recall the transaction and do not recall ever meeting Mr. Russack. (Reddell Dep. 9-13; Lewis Dep. 4 -6 .) Ms. the Reddell testified the ordinary," and she cannot driver's license (Reddell Dep. 13.) recall whether or other form Ms. signer's 9, signing "would have been out of Lewis likewise of she the identification. denied customary practice to verify the identity of signers, she was unable to discern whether Mr. checked it was and stated Russack signed the First Unlimited Guaranty or whether another individual signed for Mr. Russack. officer, (Lewis 9.) Mr. Garner, a former Darby loan testified the guaranty would likely have been executed simultaneously executed Dep. with the in Tallahassee other and not loan documents, in Macon. but (Doc. those 62-5, were "Garner Dep.," pp. 44-45.) Ameris points out that Mr. Russack denied in his deposition signing the Second and Third Unlimited Guaranties and Olde Town Guaranty.2 (Doc. 56, p. 14.) excerpt containing Mr. Guaranty, but However, not knowledge, Russack's the Russack Mr. he did remaining not sign create judgment. a See Lee, of the three. by any First Unlimited (See affidavit of these doc. that, four 56-17.) to his guaranties. While a sworn denial is not sufficient to rebut the presumption at to denial testified (Russack Decl. f 16.) law The parties filed the deposition trial, genuine it issue is of sufficient under Georgia material fact at summary 722 S.E.2d at 885. Ameris argues this testimony is a sham designed to defeat summary judgment because Mr. request for admission and Russack previously answered in a in an interrogatory that he was without sufficient knowledge to admit or deny whether he signed these four guaranties. (Doc. 56, p. 13; PL's Ex. I, Nos. 3-6.) The sham affidavit rule allows a court to disregard an affidavit as a sham deposition Assocs., when it testimony Inc. v. U.S. contradicts, on a material Indus., Inc., without fact. explanation, Van 736 F.2d 656, T. 657 prior Junkins & (11th Cir. 2 Oddly, Mr. Russack's counsel fails to discuss the validity of the second and third unlimited guaranties in the briefs and even seems to admit their execution despite Mr. Russack's deposition testimony to the contrary. (Doc. 62, p. 7.) ("Despite Russack having allegedly already executed a guaranty covering the First Loan, Darby Bank requested that he execute the Second Unlimited Guaranty in April 2005 together with a renewal of the First Loan, and that he execute the Third Unlimited Guaranty in conjunction with a renewal of the Lizella loan, which he did.") 10 1984) . The sham affidavit rule is applied sparingly, Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1237 (11th Cir. 2010), and only when u[t]he earlier deposition testimony . . . consist[s] of clear answers of existence to genuine any Celotex Corp., omitted). and disregarded. Cir. the 1532 material (11th Cir. inconsistency deposition Tippens v. of which Celotex Corp., fact," 1986) must before negate Lane v. (quotations exist the the between affidavit 805 F.2d 949, can 954 an be (11th 1986) . Here, is inherent questions issue 782 F.2d 1526, An affidavit unambiguous no request and the sham affidavit rule does not apply because there inherent for inconsistency affidavit testimony. guaranties deposition, the admission when compared with stated he could not four between he at Mr. Russack, recall at that issue. denied In his executing interrogatory the in later deposition his interrogatory, time whether he later affidavit the would exist discovery responses only that he if he signed the and guaranties. discovery in the case refreshed his recollection. conflict admitted and at his Perhaps Such a direct in signed the guaranties, the written only to say the opposite during his deposition and in his affidavit. In addition, Junkins & the sham affidavit rule as espoused in Van T. Assocs. , Inc. , 736 11 F.2d at 657, only applies to affidavits not that deposition after an attempt to change testimony that interrogatory prior deposition testimony, detailed information provides response claiming no recollection. Ameris has failed to point out any decision applying the rule in this context, The rule and for good reason. recognizes judgment that would summary judgment the diminution inevitably by testimony elicited during a Cir. 1969) follow submitting Perma Research & Dev. Co. v. doc. in 56, pp. 14-16.) of summary utility if parties affidavits could defeat that contradict lengthy in-person deposition. Singer Co., 410 F.2d 572, See 578 (2d (disregarding contradictory affidavit submitted after four days of deposition); Tippens, affidavit so matter of law) . the (See suspect sworn denial of untruthfulness Obviously, of 805 F.2d at 953 as to (finding sham be disregard as this is not a concern here because execution occurred during the deposition, which gave opposing counsel a full opportunity to ask follow-up questions the and explore recollection the that ways was in which Mr. so hazy at Russack refreshed the time of his interrogatory and request for admission responses. In sum, the sham affidavit rule does not apply, and summary judgment is inappropriate under Georgia law because Mr. Russack has denied in sworn statements guaranties. 12 that he signed the four B. It is Undisputed that Mr. Russack Signed the Crossroads Limited Guaranty, and Georgia Law Requires Rejection of His Arguments Regarding Consideration, Mutual Assent, and Fraud, Entitling Ameris to Summary Judgment on this Guaranty. Mr. Russack admits he signed the Crossroads Limited Guaranty for ten percent of the $1.96 million loan balance, but he nevertheless attempts to avoid liability by alleging failure of consideration, assent. fraud in the inducement, and lack of mutual All three arguments fail as a matter of Georgia law. Mr. Russack consideration borrower. argues because The the argument contract under seal, the guaranty benefits ignores only the fails for flowed guaranty's created by the word "seal" lack GTOT to of as status as a appearing after Mr. Russack's signature and the proclamation that "this guaranty is given under seal and it is intended that this guaranty is and shall constitute and according to law." Office Holdings, have (Doc. LLC, 695 the effect 56-1, p. S.E.2d of 65.) 82, a sealed instrument See Perkins v. M & M 84 (Ga. Ct. App. 2010) (requiring recital of intention to seal and word "seal" printed by signatures). is sufficient Inc. , 497 as Accordingly, any nominal consideration recited a matter of S.E.2d 402, 405 law. (Ga. Ct. Autrey v. App. UAP/GA AG Chem, 1998). The guaranty recites nominal consideration of five dollars to be given to Mr. Russack, which is sufficient as a matter of law even if five 13 dollars never actually changed hands. Jolles v. Wittenberg, S.E.2d 203, Furthermore, in citing Code, 205 (Ga. Ct. App. Georgia overlooks case law 1979). predating the merger of the Mr. Uniform 253 Russack, Commercial sureties and guarantees and that the loan flowing to GTOT serves as adequate consideration to Mr. Russack for his limited guaranty. See Helton v. Jasper Banking 00^,715 S.E.2d 765, 767 (Ga. Ct. App. 2011). Turning his attention to consideration for this guaranty, whether Mr. Darby received any Russack argues it did not because he had already signed an unlimited guaranty covering all future GTOT loans with Darby. was thus redundant, served no purpose, benefit to the bank. certainly does The Crossroads Limited Guaranty Of course, serve a useful and offered no additional the Crossroads Limited Guaranty purpose here if Mr. succeeds in convincing a jury that he never signed the Second, and Third Unlimited Guaranties. limited guaranty served to protect In the bank in Russack First, addition, the the event Mr. Russack exercised his right to revoke the unlimited guaranties. (See doc. 56-1, Ex. 2.) ("This Guaranty will continue to bind Guarantor for all indebtedness incurred by Borrower or committed by Lender prior revocation, or to receipt of Guarantor's written including any extensions, modification of the renewals, indebtedness.") 14 Thus, notice of substitutions, consideration exists because obligation, Mr. Russack separate from was his incurring an obligations independent under the legal unlimited guaranties. Mr. Russack7s fraud argument is also without merit. He contends the bank unfairly confused and misled him by having him sign the Crossroads executed the Crossroads could Limited unlimited loan have Limited guaranties balance, avoided Guaranty, his which Guaranty a fact he confusion provides when he covering now by that had 100% denies. reading of Mr. the "Guarantor's already the Russack Crossroads liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties." 1., does Ex. not 11.) Failure to read the plain language of constitute fraud. Parrish v. Jackson W. (Doc. 56a contract Jones, P.C., 629 S.E.2d 468, 471 (Ga. Ct. App. 2006). Undeterred, Mr. Russack argues Darby had a duty to remind him the unlimited guaranties applied to future loans such that they also covered the Crossroads loan. relationship There is no confidential between a bank and its customer that would give rise to such a duty to remind Mr. Russack of the prior unlimited guaranties. Ct. App. Li11iston v. Regions Bank, 653 S.E.2d 306, 309 (Ga. 2007); O.C.G.A. § 23-2-53. In addition, fraud by concealment only applies to a fact unknown by the claimant and 15 not easily discoverable. (Ga. Ct. App. 1995) Hanlon v. Thornton, 462 S.E.2d 154, 157 (person claiming fraudulent concealment must show the "defect could not have been discovered by the buyer in the exercise of here if a unlimited due diligence"). jury determines guaranties. If Mr. a Clearly, Russack jury that does not apply did, finds in that fact, he did sign the not, the current argument regarding fraud is moot. Mr. Russack also argues there was no mutual assent due to his confusion concerning whether his the liability was loan balance or only ten percent. plain language of Russack he was the (Doc. 62, for 100% of p. 18.) The Crossroads Limited Guaranty informed Mr. liable for ten percent of the loan balance, in addition to any liability under any other existing guaranties. Messrs. Russack and Yates testify to a different understanding, but that understanding conflicts with the plain language of the guaranty. (See Yates Aff. 1f 39; doc. 62, pp. 6-7.) By affixing his signature to a document with unambiguous language as to his liability, Mr. Russack manifested mutual assent to that agreement. The Crossroads Limited Guaranty provides entitled to recover all costs and expenses, that parties executed this guaranty 16 in is including attorneys' fees, incurred in connection with enforcing its terms. the Ameris 2004, Because recovery of attorneys' fees is governed by the version of O.C.G.A. existing at that time, before the 2011 amendments. § 13-1-11 This version of the statute provides, in pertinent part, as follows: Obligations other to evidence pay of attorney's fees indebtedness, upon in any note addition to or the rate of interest specified therein, shall be valid and enforceable and collectable as a part of such debt if such note or other evidence of indebtedness is collected by or through an attorney after maturity, subject to the following provisions ... If such note or other evidence of indebtedness provides for the payment of reasonable attorney's 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 O.C.G.A. Ameris § 13-1-11. is percent entitled of Mr. Under the plain language of to an Russack's award of this statute, $19,628.27, obligation under which the is guaranty ten in addition to fifteen percent of the first $500. Under the statute, Ameris is entitled to attorneys' Russack is petition amount. liable for a (Doc. for the debt, and there is reasonableness determination of 68, pp. 21-23; Doc. 70, p. no fees if right to the fixed fee 8.) Mr. Russack argues the guaranty trumps the statutory mandate by providing for the recovery of all attorney's fees rather than reasonable attorneys' fees. The Georgia Court of Appeals has addressed this very argument and correctly found it lacking. 17 Best v. CB Decatur Thus, Court, Ameris LLC, is 750 S.E.2d entitled to 716, 720 attorneys' (Ga. fees Ct. in App. the 2013) . amount of $19,628.27 IV. For the reasons set CONCLUSION forth above, the Court DENIES Mr. Russack's motion for oral argument (doc. 63.) and GRANTS IN PART and DENIES IN PART Ameris's motion for summary judgment (doc. 56) . SO ORDERED this J^V day of March, 2016, at Augusta, Georgia. HONORABL2 J. RANDAL HALL UNITED SPATES DISTRICT JUDGE DISTRICT OF GEORGIA 18
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