CresCom Bank v. Edward L. Terry

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 2:12-cv-00063-PMD. Copies to all parties and the district court/agency. [999587570].. [13-2467, 13-2549]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 13-2467

CRESCOM BANK, successor by merger to Community FirstBank,
Plaintiff – Appellee,
v.
EDWARD L. TERRY,
Defendant – Appellant,
and
HARRIS STREET LLC, now known as CCT Reserve LLC; SUGARLOAF
MARKETPLACE LLC; CCT RESERVE LLC,
Defendants.

No. 13-2549

CRESCOM BANK, successor by merger to Community FirstBank,
Plaintiff – Appellant,
v.
EDWARD L. TERRY,
Defendant – Appellee,
and
HARRIS STREET LLC, now known as CCT Reserve LLC; SUGARLOAF
MARKETPLACE LLC; CCT RESERVE LLC,
Defendants.

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Appeals from the United States District Court for the District
of South Carolina, at Charleston. Patrick Michael Duffy, Senior
District Judge. (2:12-cv-00063-PMD)

Argued:

January 27, 2015

Decided:

May 21, 2015

Before MOTZ and DIAZ, Circuit Judges, and DAVIS, Senior Circuit
Judge.

Affirmed in part, vacated in part, reversed in part, and
remanded by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Motz and Senior Judge Davis joined.

ARGUED: Daniel Francis Blanchard, III, ROSEN, ROSEN & HAGOOD,
LLC, Charleston, South Carolina, for Appellant/Cross-Appellee.
Meredith Long Coker, ALTMAN & COKER, LLC, Charleston, South
Carolina, for Appellee/Cross-Appellant.
ON BRIEF: Richard S.
Rosen, ROSEN, ROSEN & HAGOOD, LLC, Charleston, South Carolina,
for Appellant/Cross-Appellee.
Charles S. Altman, ALTMAN &
COKER, LLC, Charleston, South Carolina, for Appellee/CrossAppellant.

Unpublished opinions are not binding precedent in this circuit.

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DIAZ, Circuit Judge:
CresCom Bank brought suit in the district court to enforce
four promissory notes against borrower CCT Reserve, LLC, and to
enforce

guaranty

agreements

member, Edward L. Terry.

executed

by

CCT

Reserve’s

sole

After CresCom’s claims against CCT

were resolved in CCT’s bankruptcy proceedings, CresCom and Terry
each moved for summary judgment on the guaranty agreements.

The

district court substantially granted CresCom’s motion, finding
Terry liable under the agreements and awarding CresCom damages
of $2,171,211.04.

However, the district court denied CresCom’s

motion with respect to attorney’s fees, agreeing with Terry that
CresCom could not recover those fees because it did not give
adequate notice of its intent to seek them under Georgia law.
Terry appeals the district court’s ruling on liability and
its calculation of damages, and CresCom has cross-appealed on
the issue of attorney’s fees.
substantially

affirm

the

For the reasons that follow, we

district

court’s

grant

of

summary

judgment to CresCom but vacate its award of late fees on the
full

outstanding

principal

and

reverse

its

denial

of

the

attorney’s fees CresCom incurred in CCT’s bankruptcy.

I.
Although the basic facts of this case are not in dispute,
we view them in the light most favorable to Terry as the non3

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prevailing party below, and resolve any factual ambiguities in
his favor.

White v. BFI Waste Servs., LLC, 375 F.3d 288, 294

(4th Cir. 2004).
who

maintains

his

Terry, a citizen of Florida, is a developer
office

in

Georgia

and

has

estate projects throughout the Southeast.

undertaken

real

Between February and

October 2006, CresCom 1 made three loans to Terry’s wholly owned
corporation, CCT Reserve, LLC, 2 for real estate developments in
South

Carolina.

promissory

notes

The

financing

was

and

mortgages

in

extended
favor

of

in

exchange

CresCom

on

for
the

properties being developed.
On

February

1,

CresCom

loaned

CCT

$1,275,000

for

a

development called the “Maybank Tract,” and CCT delivered Note
No. 145002622 (“Note 2622”) to CresCom.

On April 12, CresCom

loaned CCT $841,260 for another development called the “Baker
Tract,” and CCT delivered Note No. 145002718 (“Note 2718”) to
CresCom.

Finally,

on

October

25,

CresCom

loaned

CCT

an

additional $881,250 for a development called the “Parker Tract,”

1

CresCom was at the time doing business as Community
FirstBank.
In 2011, Community FirstBank merged with Crescent
Bank to create CresCom Bank, a South Carolina entity with twelve
locations in the state.
2

At the time the loans were extended in 2006, Terry’s
wholly owned corporations were known as Harris Street LLC and
Sugarloaf Marketplace LLC. In 2011, Harris Street and Sugarloaf
Marketplace merged into CCT, with CCT as the surviving entity.
We refer to Terry’s businesses collectively as CCT.

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and CCT delivered Note No. 145002911 (“Note 2911”) to CresCom.
All three loans were “interest only,” meaning that CCT was only
required to pay the monthly interest on the loans until they
reached maturity.
In addition to executing the notes and mortgages on behalf
of CCT, Terry also guaranteed all three loans in his personal
capacity.

He signed the notes, loan agreements, mortgages, and

guaranty agreements at his office in Georgia and mailed them to
CresCom’s office in South Carolina.
After

CCT

renewed

the

loans

several

times,

the

maturity date for all three notes was July 25, 2009.
2009,

with

maturity

approaching,

CCT

began

making its monthly interest payments.

having

final

In early
difficulty

To avoid default, the

parties executed a Commitment Letter in June 2009 under which
CresCom agreed to loan CCT an additional $750,000 to help CCT
pay the interest on the earlier loans, as well as property taxes
and

other

loans.

expenses

related

to

the

real

estate

securing

the

In exchange, the Commitment Letter required that the

earlier loans be amended to include cross-collateralization and
cross-default provisions, providing that in the event of CCT’s
default on any of the notes, CresCom “at its option and [with]
ten (10) days written notice may declare all of the loans in
default.”

J.A.

265–70,

¶ 9.

The

Commitment

Letter

was

to

survive the closing of the new $750,000 loan and become binding
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together with the other loan documents.

Id. ¶ 26.

Terry signed

the Letter as CCT’s representative and in his personal capacity
as guarantor.
On

June

25,

2009,

pursuant

to

the

Commitment

Letter,

CresCom loaned CCT $750,000 and CCT delivered to CresCom Note
No. 145003572 (“Note 3572”), with a maturity date of June 18,
2011. 3

As with the earlier loans, Note 3572 was secured by a

mortgage

in

favor

of

CresCom

on

CCT’s

real

estate

in

South

Carolina and was also personally guaranteed by Terry.
The parties memorialized their new agreement in a written
contract titled “Amendment to Loan Agreements and Mortgages to
Provide for Cross-Default” (the “Loan Amendment”).

The Loan

Amendment provided that if CresCom “determines to exercise its
rights

[under

the

cross-default

provision]

it

shall

give

Borrowers no less than ten (10) days written notice from the
date

of

specified

the
that

receipt

of

the

notice

notice

be

given

by

cure

certified

method that provides proof of delivery.

3

to

default,”

mail

or

J.A. 310–12.

and

another
The Loan

The parties also signed a written addendum to the
Commitment Letter stating that the maturity dates for the first
three loans would be extended to coincide with Note 3572’s
maturity date of June 18, 2011, and reinforcing the crossdefault and cross-collateralization provisions.
On August 19,
2009, the parties formally executed loan modification agreements
to that effect.

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Amendment was signed by Terry only in his capacity as CCT’s
representative, and not in his personal capacity.
Four days before the loans were scheduled to mature, on
June 14, 2011, CresCom sent letters to CCT and its predecessors
to inform them that full payment would be due on the notes on
June 18, 2011, and that there would be no further forbearance or
other

arrangements.

The

letters

were

sent

by

regular

and

certified mail to a number of addresses CresCom had on file for
the Borrowers, although none were the Marietta, Georgia address
specified in the Loan Amendment.

Neither CCT nor Terry paid the

debt and on June 18, 2011, the principal of all four loans
remained outstanding.
After CCT and Terry failed to pay the debt, CresCom filed a
complaint

in

the

district

court

seeking

to

enforce

the

four

notes against CCT and the guaranty agreements against Terry.
Terry answered and filed a motion to dismiss, which the district
court denied.
While

this

action

was

pending,

CCT

filed

a

Chapter

11

Petition in the U.S. Bankruptcy Court for the Northern District
of

Georgia.

CresCom

participated

in

CCT’s

bankruptcy

proceedings as a creditor and the bankruptcy court ultimately
ordered

that

directly

to

the

properties

CresCom.

securing

After

an

CCT’s

loans

evidentiary

be

deeded

hearing,

the

bankruptcy court issued an order establishing the value of those
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properties

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and

crediting

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that

value,

principal owed on the loans.

$2,551,000,

against

the

CCT conveyed the properties to

CresCom and at the conclusion of the proceedings, the bankruptcy
court

found

that

claim

against

the

CCT

remaining

was

value

$1,121,029,

principal remaining outstanding.

of

based

CresCom’s
on

the

unsecured
amount

of

CresCom did not appeal the

bankruptcy court’s rulings.
Following a period of discovery, CresCom and Terry filed
cross-motions for summary judgment in the case at bar.

CresCom

argued that Terry breached the guaranty agreements by failing to
pay the outstanding balance on the notes after CCT defaulted,
and sought a judgment of $2,142,861.25 in principal, interest,
and

late

fees,

plus

attorney’s

fees

and

continuing

per

diem

interest against Terry.

In Terry’s motion for summary judgment,

he

his

claimed

agreements

that
were

(1)

discharged

obligations
because

under

CresCom

the

failed

guaranty
to

give

written notice of default and an opportunity to cure the default
as required by the parties’ contracts, (2) CresCom could not
collect attorney’s fees because it failed to give notice and an
opportunity to cure as required under Georgia law, and that in
any

event,

(3)

his

liability

was

capped

at

$1,121,029

as

a

result of the bankruptcy court’s order.
The

district

court

granted

CresCom’s

motion

for

summary

judgment on liability, finding that the guaranty agreements were
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valid and enforceable against Terry.

It also held that the

bankruptcy court’s determination of the value of CresCom’s claim
in

CCT’s

bankruptcy

did

not

discharge

Terry’s

independent

obligation to guarantee the full amount of CresCom’s debt.
However,

the

district

court

denied

CresCom’s

motion

granted Terry’s motion on the issue of attorney’s fees.
court

found

that

because

Georgia

law

governs

the

and
The

guaranty

agreements, CresCom’s failure to provide notice of its intent to
seek attorney’s fees as required under Ga. Code Ann. § 13-111(a)(3) bars it from collecting any attorney’s fees from Terry.
After
district

ordering
court

supplemental

awarded

CresCom

briefing

on

$2,171,211.04

damages,
in

the

principal,

interest, and fees (after subtracting the value of the conveyed
properties).

This appeal followed.

II.
Terry raises a number of arguments on appeal that can be
distilled into two primary issues:

first, whether the district

court erroneously granted summary judgment to CresCom on the
issue of Terry’s liability under the guaranty agreements; and
second, whether the district court erred in its calculation of
damages.

Additionally, we consider CresCom’s contention that

the district court erred by applying Georgia law to the guaranty

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agreements

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and

thus

refusing

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to

award

any

attorney’s

fees

incurred by CresCom.
We review the district court’s award of summary judgment de
novo, applying the same legal standards as the district court
did.

Motor Club of Am. Ins. Co. v. Hanifi, 145 F.3d 170, 174

(4th Cir. 1998).
is

no

genuine

Summary judgment is appropriate only if there
dispute

of

material

fact

entitled to judgment as a matter of law.
Anderson

v.

Liberty

Lobby,

Inc.,

477

and

the

movant

is

Fed. R. Civ. P. 56(a);
U.S.

242,

247

(1986).

Neither party argues that there are material facts in dispute in
this case, and we therefore review each of the district court’s
legal conclusions de novo.

A.
We first consider Terry’s claim that the district court
erred

by

finding

him

liable

to

CresCom

under

the

guaranty

agreements he signed in connection with Notes 2622, 2718, 2911,
and 3572.
Commitment

Terry maintains that under the parties’ June 2009
Letter,

Addendum,

and

Loan

Amendment,

CresCom

was

required to provide him, as guarantor, with ten days’ written
notice and an opportunity to cure before declaring any of the
loans in default.

Citing Georgia law for the proposition that

breach of a contractual notice of default provision discharges a
party’s contractual obligations, he argues that he is not liable
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to CresCom because CresCom failed to give proper notice.

We

disagree.
Under Georgia law, 4 the enforcement of unambiguous terms in
a guaranty agreement presents an issue appropriate for summary
judgment.

Cong. Fin. Corp. v. Commercial Tech., Inc., 910 F.

Supp. 637, 641 (N.D. Ga. 1995).

Georgia courts have readily

enforced unambiguous guaranty agreements, noting that competent
parties may “choose, insert, and agree to whatever provisions
they desire in a contract,” provided they do not contravene the
law or public policy.

Core LaVista, LLC v. Cumming, 709 S.E.2d

336, 341 (Ga. Ct. App. 2011) (quoting Brookside Cmtys., LLC v.
Lake Dow N. Corp., 603 S.E.2d 31, 33 (Ga. Ct. App. 2004)).
Georgia

law

thus

recognizes

the

enforceability

waivers of defenses in guaranty agreements.

of

blanket

See Branch Banking

& Trust Co. v. Envtl. Tech., Inc., No. 5:12-CV-115, 2013 WL
4505884,

at

*9

(M.D.

Ga.

Aug.

22,

2013).

Although

Georgia

courts have held that notice of default provisions in contracts
must be strictly followed, In re Colony Square Co., 843 F.2d
4

As explained infra in Part II.C., we agree with the
district court’s conclusion that Georgia law applies to the
guaranty agreements between Terry and CresCom because we
construe their ambiguous choice of law provisions against the
drafter, CresCom. However, because most of the other agreements
between CresCom and CCT (including the Commitment Letter and all
of the loan agreements) contained explicit choice of law
provisions selecting South Carolina law, South Carolina law
governs all other documents referenced herein.

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479, 481 (11th Cir. 1988), they have not held that failure to
give proper notice discharges independent agreements with nonparties, including guarantors.
As the district court observed, the guaranty agreements in
this case are absolute and relatively unambiguous.

They provide

that the signatory (Terry, in his personal capacity) “hereby
absolutely and unconditionally guarantees to Lender the full and
prompt

payment

when

due,

whether

at

maturity

or

earlier

by

reason of acceleration or otherwise, of the debts, liabilities
and obligations” of the notes guaranteed.
added).
agrees

J.A. 74 (emphasis

They further state that the guarantor “acknowledges and
with

Lender”

that

“[n]o

act

or

thing

need

occur

to

establish the liability of the Undersigned hereunder, and no act
or thing, except full payment and discharge of all indebtedness,
shall in any way exonerate the Undersigned.”
guaranty

agreements

also

specifically

J.A. 74.

provide

The

that

the

guarantor’s liability will be unaffected by any failure to give
notice, and the lender need not seek payment from the borrower
before

asserting

its

rights

under

the

guaranty

agreements.

Finally, by signing the guaranty agreements, Terry waived “any
and all defenses, claims and discharges of Borrower . . . except
the defense of discharge by payment in full.”

J.A. 75.

The loan agreements themselves are similarly clear.
each

agreement,

CCT

agrees

that
12

default

will

occur

if

In
it

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“fail[s] to make a payment on time or in the amount due.”
189.

J.A.

Under the loan agreements, the only trigger required for

the loans to be in default is the failure to make a timely
payment, at which time CresCom may demand immediate payment of
the entire amount owed.

The loan agreements contain no notice

requirement and no requirement that a loan be formally declared
in default after a missed payment.
Against this backdrop, Terry argues that he is nonetheless
excused

from

his

obligations

under

the

guaranty

agreements

because CresCom was required to provide him, in his personal
capacity, with ten days’ written notice and an opportunity to
cure any default before enforcing the agreements against him.
For support, he points primarily to the notice provisions found
in

the

parties’

2009

Commitment

Letter

and

Loan

Amendment,

through which CresCom and CCT negotiated a cross-default and
cross-collateralization
extension

of

$750,000

provision
of

concurrently

additional

credit

to

with

the

CCT.

To

understand Terry’s argument, a brief explanation of the terms of
those documents is necessary.
The first page of the Commitment Letter defines the term
“Borrower”:
Borrower: A to-be-named entity owned 100% by Edward L.
Terry. The term “Borrower” as used herein shall be
deemed to include any person named as an endorser,
grantor or surety in connection with the proposed
loan.
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J.A. 265.

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The Letter also separately addresses Terry’s role as

guarantor, stating under the heading “Guaranty Agreement” that
“Edward L. Terry (hereinafter referred to as ‘Guarantors’) shall
guarantee payment of the Loan and other sums advanced for the
Borrower’s account under the loan documents.”

J.A. 266.

The

Commitment Letter later provides as follows, under the heading
“Cross-Collateralization/Cross-default of Existing Loans”:
As part of the transaction contemplated herein, (i)
Borrower, will cause [the existing Loans to] be
amended to provide in the event of a payment default
on any of those loans or a payment default on the
[new] Loan, the Bank, at its option and ten (10) days
written notice may declare all of the loans in
default . . . .
J.A. 266.
The Commitment Letter was signed by CresCom, CCT
(through Terry as its representative), and Terry in his personal
capacity under the heading “Guarantor.”
After Note 3572 was finalized, CresCom and CCT memorialized
their new agreement by signing the Loan Amendment.

Terry was

not a party to this agreement in his personal capacity, and the
Loan Amendment makes no reference to him as guarantor.
introductory

paragraph,

the

Amendment

identifies

In its

only

two

parties: (1) the Lender (CresCom Bank), and (2) the Borrowers
(Terry’s wholly owned companies).

The Loan Amendment contains

the following notice provision:
[I]n the event
Previous Loans
declare some or
Loan in default

of a payment default on either the
or the New Loan . . . the Lender may
all of the Previous Loans or the New
and require the immediate repayment of
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those loans . . . . In the event Lender determines to
exercise its rights hereunder it shall give Borrowers
no less than ten (10) days written notice from the
date of the receipt of the notice to cure the default.
J.A. 311.
Borrower

The Loan Amendment states that all notices to the
should

be

directed

to

Edward

Terry

at

his

business

address in Marietta, Georgia.
Terry contends that despite the unambiguous terms of the
guaranty agreements, CresCom was required under the Commitment
Letter

and

Loan

Amendment

to

provide

him,

in

his

personal

capacity as guarantor, with notice and an opportunity to cure
before

enforcing

the

guaranty

agreements

against

him.

He

stresses that the notice provisions in the Commitment Letter and
Loan Amendment were drafted “such that CresCom is required to
address

and

individually.”

deliver

the

notice

of

Appellant’s Br. at 20.

default

to

Terry

Because no notice of

default was provided to Terry, he argues that his obligations
under the guaranty agreements have been discharged.
Terry’s argument is unavailing for two independent reasons.
First, the notice of default provisions in the Commitment Letter
and

Loan

rights

Amendment

under

the

refer

newly

cross-default provisions.

only

to

negotiated

CresCom’s

exercise

of

its

cross-collateralization

and

Both provisions state that “in the

event of payment default” on any loan, CresCom may declare any
other loan in default with ten days’ written notice.
15

The notice

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provisions themselves thus presuppose that a “payment default”
occurs automatically, before any notice requirement kicks in.
This

interpretation

which

make

clear

payment.

The

is

consistent

that

default

Loan

with

occurs

Amendment’s

the

loan

immediately

notice

agreements,
upon

provision

non-

further

clarifies that it refers to CresCom’s option to “exercise its
rights hereunder,” referring to the new cross-default provision.
On June 18, 2011, each of the loans matured independently.
Because

full

payment

was

not

made,

all

of

CCT’s

loans

were

immediately, automatically in default under the clear terms of
the loan agreements.
default

was

Thus, we find that no resort to cross-

necessary

because

independently in default.

all

of

the

loans

were

Because CresCom had no obligation to

provide notice in the event of an ordinary payment default, the
district court correctly found that Terry was owed no notice.
Terry’s argument also fails because, even if the notice
provisions did require CresCom to provide CCT with ten days’
notice of an ordinary default, neither the Commitment Letter nor
the Loan Amendment provides for notice to Terry in his personal
capacity as guarantor.

As an initial matter, Terry is not a

party to the Loan Amendment.

See J.A. 310-14.

claim

the

relies

on

language

in

parties’

Therefore, his

Commitment

Letter.

Specifically, Terry focuses on the definition of “Borrower” in
the Commitment Letter, which states that the Borrower is a “to16

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be-named entity owned 100% by Edward L. Terry.”
goes

on

to

say

that

“as

used

herein,”

the

The provision
term

“Borrower”

includes “any person named as endorser, grantor or surety in
connection with the proposed loan.” 5

J.A. 265.

Terry argues

that this language, in combination with the notice requirement’s
reference to the “Borrower,” indicates that CresCom was required
to give him notice and an opportunity to cure before enforcing
the guaranty agreements.
Even if the notice requirement applied to all defaults, the
other terms of the Commitment Letter make clear that Terry was
not a “Borrower” under that agreement and was not owed notice
under this provision.

Initially, paragraph 1 defines “Borrower”

as an entity owned by Terry.

In paragraph 11, the Commitment

Letter separately provides for Terry personally as guarantor:
11. Guaranty Agreement: Edward L. Terry (hereinafter
referred to as “Guarantors”) shall guarantee payment
of the Loan and other sums advanced for the Borrower’s
account under the loan documents, and performance of
Borrower’s
obligations
under
the
loan
documents . . . .
J.A. 266.
that

Finally, the last paragraph of the Letter provides

Terry

Homes . . . ,

is

signing

Sugarloaf

“on

behalf

Marketplace,

5

of
LLC,

Borrower,
Whipple

Brentwood
Development

Under South Carolina law, which governs the Commitment
Letter, there is no distinction between a surety and a
guarantor. See Carolina Hous. & Mortg. Corp. v. Orange Hill A.
M. E. Church, 97 S.E.2d 28, 31 (S.C. 1957).

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Corporation and Harris Street, LLC.”

J.A. 270.

On a lower

line, he signs separately as “Edward L. Terry, Individually”
under the heading “Guarantor.”
Examining

each

of

these

provisions

and

the

Commitment

Letter as a whole, the term “Borrower” simply cannot be read to
include

Terry

absurd result.

in

his

personal

capacity

without

inviting

an

By way of example, in the above-quoted “Guaranty

Agreement” passage, it would mean that the guarantor and the
borrower are one and the same.
agreement

refers

to

“the

Additionally, paragraph 3 of the

Bank’s

loans

to

the

Borrower,”

there are no loans in this case to Terry personally.

but

Still

other sections would be redundant if the “Borrower” was Terry
personally, for example, paragraph 25, requiring “Borrower and
guarantor[]” to provide annual financial statements.

J.A. 268.

Moreover, as the district court observed, CresCom’s claim
against Terry is not based on CCT’s breach of the promissory
notes or Commitment Letter or any other agreement between those
parties;

it

agreements.

is

based

on

Terry’s

breach

of

the

guaranty

Under the unambiguous and absolute terms of those

agreements, notice is not a prerequisite to liability.

See J.A.

81 (“No act or thing need occur to establish the liability of
the Undersigned hereunder . . . .”); J.A. 82 (“The Undersigned
waives presentment, demand for payment, notice of dishonor or
nonpayment,

and

protest

of
18

any

instrument

evidencing

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Indebtedness.”).

Therefore,

Pg: 19 of 34

even

if

CresCom

failed

to

give

proper notice of default to CCT, Terry’s obligation to guarantee
the loans would be unaffected.
waives

any

and

all

Borrower . . . except
full.”).

See J.A. 82 (“The Undersigned

defenses,
the

Because

claims

defense

Terry’s

of

and

discharges

discharge

guaranty

of

by

in

payment

obligations

arose

automatically upon CCT’s failure to pay, we find that they have
not been discharged.
B.
Having found that the district court correctly concluded
that Terry is liable under the guaranty agreements, we turn to
Terry’s claim that the district court’s computation of damages
was

erroneous.

different

Specifically,

aspects

of

the

he

district

assigns
court’s

error

award.

to

three

First,

he

argues that the district court erred by failing to cap CresCom’s
damages at $1,121,029, the value the bankruptcy court assigned
to

CresCom’s

CCT’s

Chapter

bankruptcy

remaining
11

court’s

unsecured

proceedings.
valuation

claim

at

Second,
of

the

he

the

conclusion

argues

properties

that

conveyed

of
the
to

CresCom in CCT’s bankruptcy was improperly low, and that the
district court erroneously adopted that figure.

Third, Terry

argues that the district court erred by awarding CresCom a “late

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fee” on the entire unpaid balance of the notes.

We address

Terry’s arguments in turn. 6
1.
Terry first contends that the district court was obligated
to

cap

damages

at

$1,121,029,

which

reflects

the

bankruptcy

court’s assessment of the value of CresCom’s claim against CCT
after subtracting the value of the properties deeded to CresCom.
Terry

stresses

that

because

“[a]

guarantor’s

liability

is

commensurate with the outstanding indebtedness of the principal
debtor,” Appellant’s Br. at 29, he cannot be responsible for
more than the amount that CCT owed CresCom in its bankruptcy.
This argument, however, misapprehends CCT’s actual indebtedness
to CresCom and misapplies settled bankruptcy law.
Under the guaranty agreements, Terry is obligated to pay
CCT’s entire outstanding debt to CresCom, including interest and
fees,

“even

though

any

other

person

obligated

to

pay

Indebtedness, including Borrower, has such obligation discharged

6

Terry also contends that the district court erred by
applying the parties’ contractual default interest rate to all
interest accruing after the loans reached maturity despite
CresCom’s failure to formally declare them in default.
As
explained above, we find that default occurred automatically
upon nonpayment under the terms of the loan agreements.
Therefore, no formal declaration of default was necessary
(either to CCT or to Terry personally) for the default interest
rate to apply, and default interest is appropriately part of the
Indebtedness guaranteed by Terry.

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in bankruptcy.”

Pg: 21 of 34

J.A. 82 ¶¶ 7, 8.

This result is consistent

with 11 U.S.C. § 524(e), under which the discharge of a debt in
bankruptcy “does not affect the liability of any other entity
on, or the property of any other entity for, such debt.”

As the

district court explained in its order, creditors are not barred
by res judicata or any other doctrine from seeking the full
amount

of

remaining

debt

against

a

guarantor

unless

the

bankruptcy court has made a specific finding releasing claims
against third parties.
Terry

No such finding was made in this case.

nonetheless

argues

that

even

if

the

discharge

of

CCT’s debt in bankruptcy does not relieve him of his guaranty
obligations,

those

obligations

are

value of CresCom’s deficiency claim.

limited

to

the

$1,121,029

He stresses that § 524(e)

does not preclude the bankruptcy court from releasing a nondebtor

as

prevent

a

part

of

finding

a

debtor’s

that

a

bankruptcy

debt

has

been

plan,
wholly

satisfied because of a debtor’s bankruptcy plan.

nor
or

does

it

partially

However, Terry

also acknowledges that the bankruptcy court “credited [the value
of

the

transferred

properties]

against

CresCom’s

claim

in

partial satisfaction of the debt,” Appellant’s Br. at 28, and
does

not

properties

contend
was

not

(nor

could

he)

subtracted

CresCom.

21

from

that
the

the

value

amount

he

of
now

those
owes

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The critical fact overlooked by Terry is that the amount
CresCom could seek in CCT’s bankruptcy proceedings was less than
the full amount it was owed.

As Terry notes in his brief,

CresCom’s claim in CCT’s bankruptcy “was allowed in the amount
of

$3,747,314

Petition

plus

Date.”

costs

and

Appellant’s

attorneys’

Br.

internal quotation marks omitted).

at

27

fees

through

(emphasis

the

added

and

But that figure represented

only the principal of the loans in question; CresCom’s claim in
the bankruptcy court did not include any interest or fees.

At

the time the properties were conveyed to CresCom in June 2013,
the actual amount of CCT’s debt to CresCom, including interest
and

fees,

outstanding
bankruptcy

was

$4,663,294.70.

unsecured
was

$2,112,294.70,

only
the

claim

Therefore,
at

$1,121,029,

total

the
CCT

indebtedness

although

conclusion
actually
less

the

CresCom’s
of

CCT’s

owed

CresCom

value

of

the

conveyed properties.
Contrary to Terry’s suggestion that CresCom will enjoy a
windfall if it is allowed to recover more than $1,121,029 under
the guaranty agreements, it is clear from the record that CCT’s
actual indebtedness to CresCom exceeded $2 million after the
value of the conveyed properties was applied.

Under the clear

language of § 524(e) and the terms of the guaranty agreements,
Terry remains liable for CCT’s entire indebtedness regardless of
the discharge of any of CCT’s obligations in bankruptcy.
22

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therefore

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reject

Terry’s

Pg: 23 of 34

contention

that

the

district

court

erred by awarding more than $1,121,029 to CresCom. 7
2.
Terry

next

argues

that

the

district

court’s

award

was

excessive because it improperly adopted the bankruptcy court’s
valuations of the properties transferred to CresCom.

He points

out that the loan documents CresCom submitted to the district
court for calculation of damages included appraised values of
the

properties

from

2009

that

totaled

well

over

$4

million,

significantly more than the $2,551,000 value determined by the
bankruptcy

court.

If

the

district

court

had

adopted

those

figures, Terry argues, the debt would have been fully satisfied
upon transfer of the properties.
the

properties

by

the

Although the value assigned to

bankruptcy

court

was

undoubtedly

more

favorable to CresCom than its internal valuations, we find no
error in the district court’s use of this figure because Terry

7

We observe that the bankruptcy court and the district
court differed in their estimations of the outstanding principal
balance because the bankruptcy court did not take into account
that a small portion of the principal (approximately $75,000)
was paid off prior to the default.
Thus, the bankruptcy court
appears to have allowed CresCom to claim slightly more than the
outstanding principal it was owed.
However, because the
district court had a more complete record before it and
correctly stated the outstanding principal in its damages order,
this inconsistency did not affect CresCom’s final award or lead
to a double recovery.

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provided no alternative evidence of the properties’ value at the
time of their conveyance in 2013.
The bankruptcy court arrived at its valuations in March
2013 after a two-day hearing during which it heard testimony
from three different appraisers (two offered by CresCom and one
offered by CCT).

Although Terry’s wholly owned entity was a

party to those proceedings, we agree with Terry that because he
was not a party in his personal capacity, the valuations are not
directly binding on him in this case.

Understanding that the

bankruptcy court’s findings were not binding, CresCom proposed
to

stipulate

to

the

findings

for

court’s calculation of damages.

purposes

of

the

district

Although Terry stresses that

CresCom “offered no evidence in the district court to establish
the

values

of

the

properties”

other

than

proffering

the

bankruptcy court’s orders, Appellant’s Br. at 25, CresCom was
not

required

to

present

additional

evidence

to

propose

a

stipulation.
Notably, the only evidence Terry presented to contradict
the

bankruptcy

appraisals.
the

district

court’s

valuations

were

CresCom’s

2009

Terry submitted no affidavits or other evidence to
court

to

support

his

assertion

reached by the bankruptcy court was inaccurate.

that

the

figure

His reliance on

outdated, one-line notations in CresCom’s loan documents does
not create a genuine issue of fact because it does not bear on
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the only valuation relevant in these proceedings: the value of
the properties in 2013.
As the district court explained in its order on damages,
“[t]here is no evidence in the record to support a finding that
the old appraised value noted in the payment records reflects
the

value

of

particularly

the
in

properties

light

of

at

the

the

time

bankruptcy

of

conveyance,”

court’s

thorough

examination of the evidence and consideration of testimony from
both sides.

CresCom Bank v. Terry, No. 2:12-cv-00063-PMD, Dkt.

No.

5

73,

at

n.5

(D.

S.C.

Nov.

25,

2013).

Because

the

bankruptcy proceedings contained the only evidence before the
district court regarding the 2013 value of the properties, the
district court did not err by adopting the bankruptcy court’s
findings and concluding that Terry had not created a genuine
issue of material fact.
3.
Finally, Terry objects to the award of contractual “late
fees” of five percent on the entire principal due at the time of
the default.

He argues that the terms of the loan agreements

make clear that the parties intended late fees to apply only to
missed

monthly

interest

payments

and

not

to

the

entire

principal, and further, that a late fee on the entire principal
constitutes

an

unenforceable

penalty.

CresCom

devotes

only

three sentences of its brief to this issue, simply stating that
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Appeal: 13-2467

late

Doc: 41

fees

are

Filed: 05/21/2015

an

“accepted

Pg: 26 of 34

business

practice”

that

do

not

violate the lending laws or public policy of South Carolina or
Georgia. 8

Appellee’s Br. at 28.

While we agree with CresCom

that late fees are a permissible and unremarkable element of the
parties’ agreement when applied to monthly interest payments, it
is evident from the loan documents and Commitment Letter that
the parties did not intend the five percent late fee to apply to
the entire outstanding principal.
The late fees agreed upon by the parties are described in
three different documents: the loan agreements, the Commitment
Letter, and the loan modification agreements executed after the
Commitment

Letter

and

final

loan

were

finalized.

The

loan

agreements provide that “[i]f a payment is not made within 10
days days [sic] after it is due, [Borrower] agree[s] to pay a
late charge of 5.00% of the late payment.”

See, e.g., J.A. 26. 9

Under a separate heading labeled “Payments,” the loan agreements
describe both “Interest” and “Principal,” establishing monthly
interest payments due on the first of each month and a single
8

While the parties cite cases from a number of
jurisdictions, we reiterate that South Carolina law governs the
loan agreements in which the late fee provisions are found. See
supra note 4.
9

Later loan renewals altered this language slightly to
provide that the late charge would be “5.00% of the late payment
or $25.00 whichever is greater.”
See, e.g., J.A. 29 (emphasis
added).

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date on which the principal would be due.

In June 2009 when the

parties signed the Commitment Letter, they addressed the issue
of late fees more specifically:
Late Charge: The note shall impose a late charge of
five (5%) percent of the current monthly interest
installments if the payment is not received within ten
(10) days of its due date.
J.A. 266 (emphasis added).

Although Note 3572 (closed six days

after the Commitment Letter was signed) used the same standard
late charge provision as the other loan agreements, the parties
agreed that the terms of the Commitment Letter would survive the
closing of the new loan and the modifications to the existing
loans.

The

subsequent

modifications

essentially

incorporated

the standard language in the earlier loan agreements, specifying
that if a payment is ten days late or more, the Borrower “will
be charged 5.00% of the unpaid portion of the payment amount or
$25.00, whichever is greater.”
Given

the

binding

J.A. 46.

nature

of

the

Commitment

Letter,

we

cannot agree with the district court that a late charge on the
entire principal is supported by the loan documents because Note
3572 “broadened the late charge language to cover all payments.”
J.A. 742.
provision

Rather, we find that to the extent the late charge
in

the

loan

agreements

might

previously

have

been

ambiguous in scope, that confusion was eliminated by the clear
language of the Commitment Letter, the terms of which explicitly
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survived Note 3572 and the modifications to the existing loans.
See J.A. 269 (providing that the Letter “shall survive the loan
closing

and

documents”).

become

binding

together

with

all

other

loan

Moreover, although the terms of the Commitment

Letter only directly applied to Note 3572, the language used in
Note 3572 regarding late charges was identical to the language
used in the other notes.

Because there is no indication that

the parties intended identical late charge provisions in the
four notes to be interpreted differently, we read the language
of

the

Commitment

Letter

as

an

indication

that

the

parties

intended to limit the five percent late charge to outstanding
monthly

interest

assessment

of

a

under
late

all

of

charge

the

notes.

on

the

outstanding principal is impermissible. 10
10

Accordingly,

multi-million

the

dollar

We therefore vacate

Terry cites a body of non-precedential case law to
support his argument that even if the parties did intend the
late fee to apply more broadly, a five percent late fee on the
entire principal amounts to an unenforceable penalty.
See
Appellant’s Br. at 47–51.
However, neither his brief nor the
district court’s opinion cites any relevant cases decided under
South Carolina law. Although it appears that at least one court
in our circuit has refused to award a five percent late charge
on the entire principal due upon a loan’s maturity, see Mountain
1st Bank & Trust v. Holtzman, No. 7:11-cv-01433, 2012 WL
3126833, at *3 (D.S.C. July 31, 2012) (providing no reasoning
but “declin[ing] to grant Plaintiff” over $10,000 in late
charges after the defendant failed to pay the principal of
$200,000 when due), we need not decide whether the late charge
was an unenforceable penalty under South Carolina law because we
find that the parties’ contracts only provide for late charges
on monthly interest payments.

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the district court’s award of a five percent late fee on the
full outstanding principal.

Because the outstanding principal

to which the improper fee was applied totaled $3,672,029.78, we
direct

the

district

court

to

reduce

CresCom’s

award

by

five

percent of that amount, or $183,601.49.

C.
We now turn to CresCom’s sole basis for appeal--that the
district
because

court
it

improperly

found

that

refused

Georgia

to

law

award

applies

attorney’s
to

the

fees

guaranty

agreements and bars recovery of those fees for lack of notice.
CresCom alternatively contends that even if Georgia law does
apply, the district court still erred by refusing to reimburse
CresCom for the attorney’s fees it incurred as a result of CCT’s
bankruptcy.

Although we agree with the district court that the

guaranty agreements are governed by Georgia law, we also agree
with

CresCom

that

the

attorney’s

fees

it

incurred

in

CCT’s

bankruptcy are a part of the underlying “Indebtedness” and their
recovery is therefore not barred by Georgia law.
The
notes,

parties

agree

mortgages,

and

that

the

Commitment

loan

agreements,

Letter

contain

promissory
unambiguous

choice of law clauses selecting South Carolina law.

However,

the choice of law provision in the guaranty agreements is less
clear:
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This guaranty shall be effective upon delivery to
Lender, without further act, condition or acceptance
by
Lender,
shall
be
binding
upon
the
Undersigned . . . and shall inure to the benefit of
Lender
and
its
participants,
successors
and
assigns. . . . This guaranty shall be governed by the
laws of the State in which it is executed. The
Undersigned waives notice of Lender’s acceptance
hereof.
J.A. 75 (emphasis added).

Terry argues that Georgia law governs

the guaranty agreements because the agreements were “executed”
when

he

signed

them

at

his

office

in

Georgia.

CresCom

disagrees, maintaining that the agreements were “executed” when
they became
South

effective

Carolina),

dealing

(i.e.,

and

demonstrates

upon

moreover
that

the

delivery

that

the

entire

to

its

parties’

transaction

office

in

course

of

(including

Terry’s personal guaranty) was intended to be governed by South
Carolina law.
As

the

district

problematic here.

court

observed,

the

term

“executed”

is

Black’s Law Dictionary defines “execute” to

mean either (1) “[t]o make (a legal document) valid by signing,”
or (2) “to bring (a legal document) into its final, legally
enforceable form.”

Black’s Law Dictionary 609 (10th ed. 2014).

It further defines “executed” to mean a document “that has been
signed.”

Id.

It is thus unclear whether the state “in which

[the guaranty] is executed” is the state in which it was signed
by

Terry

(Georgia)

enforceable

(South

or

the

state

Carolina).
30

in

which

A

clear

it

became

legally

contractual

term

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susceptible

Filed: 05/21/2015

to

more

than

Pg: 31 of 34

one

reasonable

interpretation

constitutes a patent ambiguity appropriate for resolution by the
court.

Am. Trucking Ass’n, Inc. v. Fed. Highway Admin., 51 F.3d

405, 412 & n.9 (4th Cir. 1995); Ward v. Dixie Nat’l Life Ins.
Co., 257 F. App’x 620, 627 (4th Cir. 2007) (unpublished).
Under basic principles of either South Carolina or Georgia
contract

law,

we

construe

agreement

strictly

against

the
the

ambiguity
drafter,

in

the

CresCom.

parties’
Duncan

v.

Little, 682 S.E.2d 788, 791 (S.C. 2009); J & E Builders, Inc. v.
R

C

Dev.,

Inc.,

646

S.E.2d

299,

301

(Ga.

Ct.

App.

2007).

Although CresCom argues strenuously that the parties’ course of
dealing demonstrates that South Carolina was the “home base” for
all transactions, the guaranty agreements are legally distinct
instruments, made with a private citizen of Florida from his
office in Georgia.

Notably absent in the guaranty agreements

are the clear South Carolina choice of law clauses found in each
of

the

signed

parties’
the

other

guaranty

documents.
agreements

Therefore,
in

Georgia

because
and

Terry

reasonably

believed that they were consequently covered by Georgia law, we
find that Georgia law applies.
Under Georgia law, a party may not seek attorney’s fees
unless it complies with the requirements of Ga. Code Ann. § 131-11(a)(3), which provides that obligations to pay attorney’s

31

Appeal: 13-2467

fees

Doc: 41

are

valid

Filed: 05/21/2015

and

Pg: 32 of 34

enforceable

subject

to

the

following

condition:
[T]he holder of the note or other evidence of
indebtedness . . . shall,
after
maturity
of
the
obligation, notify in writing the maker, endorser, or
party sought to be held on said obligation that the
provisions relative to payment of attorney’s fees in
addition to the principal and interest shall be
enforced and that such [party] has ten days from the
receipt of such notice to pay the principal and
interest without the attorney’s fees.
CresCom concedes, and we agree, that under Georgia law it would
not be entitled to attorney’s fees incurred in this litigation
because it did not provide Terry proper notice.

But CresCom

argues that Georgia law does not bar it from recovering the
attorney’s fees it incurred participating in CCT’s bankruptcy,
because those fees are a part of the underlying indebtedness and
are not covered by Georgia law.

We find that CresCom’s argument

is supported by the loan and guaranty agreements, and that the
district court erred by refusing to award CresCom this portion
of its attorney’s fees.
Although CresCom’s enforcement of the guaranty agreements
against Terry is governed by Georgia law, CCT’s obligations to
CresCom (and thus, the total “indebtedness” CresCom can seek
from Terry) are governed by South Carolina law by virtue of the
unambiguous
Unlike

choice

Georgia,

requiring

CresCom

of

South
to

law

clauses

Carolina
give

does

notice
32

in

of

the

loan

not

have

its

intent

agreements.
a

provision
to

collect

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attorney’s fees.

Pg: 33 of 34

The loan agreements between CCT and CresCom

make clear that CCT is liable for reasonable attorney’s fees and
costs

incurred

as

part

of

CresCom’s

including in bankruptcy proceedings.

collection
J.A. 250.

of

the

debt,

The guaranty

agreements also define the “Indebtedness” of the borrower for
which the guarantor is responsible to include “post-bankruptcy
petition interest and attorneys’ fees,” even if those fees are
discharged in bankruptcy.

J.A. 77.

Because the loan agreements made CCT liable for CresCom’s
attorney’s fees upon default, the expenses that CresCom incurred
due to its participation in CCT’s bankruptcy (before any efforts
to enforce the guaranty agreements and before Terry personally
became a party) were not governed by the guaranty agreements or
by Georgia law.

Rather, CresCom’s attorney’s fees from those

proceedings became a part of the underlying indebtedness owed to
it by CCT under the loan agreements, which are governed by South
Carolina law and do not require notice.

Because the fees are a

part of CCT’s indebtedness, they are guaranteed absolutely by
Terry.

We

therefore

partially

reverse

the

district

court’s

grant of summary judgment to Terry and remand with instructions

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to award CresCom attorney’s fees stemming from its participation
in CCT’s bankruptcy. 11

III.
For the reasons given, we affirm the district court’s grant
of summary judgment to CresCom with respect to Terry’s liability
under the guaranty agreements.

We vacate the district court’s

award of a five percent late fee to CresCom on the outstanding
principal of the loans, reverse its refusal to award CresCom the
attorney’s fees it incurred in CCT’s bankruptcy proceedings, and
remand for recalculation of attorney’s fees.

AFFIRMED IN PART, VACATED IN PART,
REVERSED IN PART, AND REMANDED

11

The “Affidavit of Indebtedness” and “Affidavit of
Attorney’s Fees” submitted by CresCom describe $51,156.00 in
attorney’s fees related to CCT’s bankruptcy, but also reference
unallocated fees of over $22,000 paid to the Falcone Law Firm
and the Annino Law Firm.
J.A. 589–93.
Because it is unclear
from the record whether those fees were expended in the instant
action or in CCT’s bankruptcy proceedings, we remand for the
district court to recalculate CresCom’s attorney’s fees.

34