York v. RES-GA LJY, LLCAnnotate this Case
The Community Bank loaned money to several entities (“the Borrowers”) over the course of several years. The Borrowers executed five promissory notes, granting the bank a security interest in real estate located in three different counties. To further secure the loans, the Guarantors signed commercial guaranties (“the Guaranties”) in which they guaranteed full payment of the notes. In 2011, RES-GA foreclosed on and bought the properties that were serving as collateral. It then filed confirmation actions in the three counties in which the secured properties were located. In each instance, the court entered an order refusing to confirm the sale, finding that RES-GA had failed to prove that it obtained the fair market value of the property in question, and refusing to allow a resale. RES-GA appealed two of those orders, and the Georgia Court of Appeals affirmed in each case. Last year, the Supreme Court held that compliance with OCGA 44-14-161, Georgia’s confirmation statute, “is a condition precedent to the lender’s ability to pursue a guarantor for a deficiency after foreclosure has been conducted, but a guarantor retains the contractual ability to waive the condition precedent requirement.” The Court granted certiorari in this case to consider additional questions regarding creditors’ ability to pursue deficiency actions against guarantors. The Court concluded that Jim York and John Drillot (“the Guarantors”) waived any defense based on the failure of creditor RES-GA LJY, LLC (“RES-GA”) to confirm the relevant foreclosure sales, and thus affirmed the Court of Appeals’ decision that upheld deficiency judgments against them.