Wachovia Bank, National Association v. L&H Investments, LLC et al

Filing 28

MEMORANDUM OPINION AND ORDER granting Plaintiff Wachovia Bank, National Association's 25 Renewed Motion for Summary Judgment on Loans V and VII; that the Court finds summary judgment is appropriate for Loans/Notes V and VII in the amount of &# 036;13,595.40 which includes principal and interest accrued through the date of this Opinion; that including the additional interest on the other six loans previously granted, the new total amount for summary judgment due is $956,592.53; that the Court also finds summary judgment is appropriate as to attorney's fees in the amount of $62,671.04. Signed by Honorable Terry F. Moorer on 9/24/2010. (cc, )

Wachovia Bank, National Association v. L&H Investments, LLC et al (CONSENT)

Doc. 28

IN THE DISTRICT COURT OF THE UNITED STATES F O R THE MIDDLE DISTRICT OF ALABAMA S O U T H E R N DIVISION W A C H O V IA BANK, NATIONAL A S S O C IA T IO N , P la in tif f , v. L & H INVESTMENTS, LLC., a n Alabama limited liability company, e t al., D e f e n d a n ts. ) ) ) ) ) ) ) ) ) ) ) )

Case No. 1:09-cv-966-TFM [w o]

MEMORANDUM OPINION AND ORDER T h is action is assigned to the undersigned magistrate judge to conduct all proceedings a n d order entry of judgment by consent of all the parties (Docs. 8-9, filed November 20, 2 0 0 9 ) and 28 U.S.C. § 636(c). Pending before the Court is Plaintiff Wachovia Bank, N a tio n a l Association's Renewed Motion for Summary Judgment on Loans V and VII and s u p p o rtin g brief (Docs. 25-26, filed August 27, 2010). The motion is now ripe for review. Upon consideration of the motion, the Court finds it is due to be GRANTED. I. JURISDICTION

T h e district court has subject matter jurisdiction over the claims in this action pursuant to 28 U.S.C. § 1332 (diversity jurisdiction). The parties do not contest personal jurisdiction o r venue, and there are adequate allegations to support both.

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II.

NATURE OF THE CASE AND MOTION FOR SUMMARY JUDGMENT

T h e underlying facts of this case are necessarily viewed in favor of the nonmovant D e f e n d a n ts . Plaintiff, Wachovia Bank, National Association ("Wachovia" or "Plaintiff") is a national banking association with its principal place of business located in Charlotte, North C a ro lin a . See Doc. 1. The background of this case was already discussed in great detail in th e Court's Opinion pertaining to the first motion for summary judgment wherein the Court g ra n te d summary judgment as to six of eight loans defaulted on by Defendants L&H In v e s tm e n ts ("L&H"), W.G. Liddon ("Liddon"), and M.E. Hawker ("Hawker"). See Doc. 2 3 (Memorandum Opinion I). The Court will not rehash those same facts here. The re m a in in g loans at issue are summarized below: (1 ) L o a n V - On or about November 17, 2006, Wachovia made a loan to L&H in th e original principal amount of $60,000.00. Both Liddon and Hawker secured th e L&H loan with an Unconditional Guarantee. As a result of Defendants' f a ilu re to repay the amounts owed under Loans I, II, III, and VIII, Wachovia d e c la re d this note to be in default and accelerated the maturity of the loan p u rsu a n t to its Notice of Default and Demand for Payment on May 21, 2009. Defendants failed to repay this amount as well. (2 ) L o a n VII - On or about June 27, 2007, Wachovia made a loan to Defendants in the original principal amount of $60,000.00. As a result of Defendants' f a ilu re to repay the amounts owed under Loans I, II, III, and VIII, Wachovia

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declared this note to be in default and accelerated the maturity of the loan p u rsu a n t to its Notice of Default and Demand for Payment on May 21, 2009. Defendants failed to repay this amount as well. S e e Doc. 1 at p. 5-8, 13-14. O n June 4, 2010, Wachovia filed its first motion for summary judgment. See Docs. 1 5 -1 6 . On July 27, 2010, the Court granted summary judgment as to all loans except Loan V and Loan VII because of apparent typographical errors causing discrepancies as to the d e f ic ie n t amount as to these two loans. See Memorandum Opinion I. The Court also p ro v id e d Wachovia the opportunity to renew its summary judgment request as it was a p p a re n t that the loans were in default and the sole question remaining was the amount due. Id. Wachovia now renews that request with this new motion for summary judgment. Wachovia asserts there are no material facts at issue thus making it entitled to ju d g m e n t as a matter of law. Specifically, Wachovia states the Defendants failed to repay th e amounts due on Loans V and VII and as a result of the alleged default, Defendants owe W a c h o v ia $13,521.95 through June 3, 2010 not including attorney's fees and expenses. This n u m b e r includes principal, interest accrued through June 3, 2010, and late fees with a d d itio n a l interest accruing per diem. O n August 30, 2010, the Court issued a briefing schedule on the renewed summary ju d g m e n t motion wherein Defendants were given until September 17, 2010 to file their re s p e c tiv e responses. See Doc. 27. To date, no response has been filed. Based on all the

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above, the motion for summary judgment is ripe for this Court's review. I II . SUMMARY JUDGMENT STANDARD A party in a lawsuit may move a court to enter summary judgment before trial. FED. R . CIV. P. 56(a) and (b). Summary judgment is appropriate when the moving party e s ta b lis h e s that there is no genuine issue of material fact and the moving party is entitled to ju d g m e n t as a matter of law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 3 2 2 -2 4 , 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Gonzalez v. Lee County Housing Authority, 1 6 1 F.3d 1290, 1294 (11th Cir. 1998). "[T]he substantive law will identify which facts are m a te r i a l." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L .E d .2 d 202 (1986). At the summary judgment juncture, the court does not "weigh the e v id e n c e and determine the truth of the matter," but solely "determine[s] whether there is a g e n u in e issue for trial." Id. at 249. Only disputes about the material facts will preclude the g ra n tin g of summary judgment. Id. A material fact is one "that might affect the outcome of th e suit under governing law," and a dispute about a material fact is "genuine" "if the e v id e n c e is such that a reasonable jury could return a verdict for the nonmoving party." Id.; a c c o r d Greenberg v. Bell-South Telecomms., Inc., 498 F.3d 1258, 1263 (11th Cir. 2007); see a ls o Slomcenski v. Citibank, N.A., 432 F.3d 1271, 1277 (11th Cir. 2005) (quoting Hudgens v . Bell Helicopters/Textron, 328 F.3d 1329, 1344-45 (11th Cir. 2003)) ("In determining w h e th e r an issue of fact is `genuine' for the purpose of defeating summary judgment, we ask w h e th e r the evidence is `such that a reasonable jury could return a verdict for the nonmoving

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party.'"). Thus, the initial burden of proof rests on the movant. Celotex, 477 U.S. at 325, 1 0 6 S.Ct. at 2554; Gonzalez, 161 F.3d at 1294. This burden is satisfied when the movant s h o w s that if the evidentiary record were reduced to admissible evidence at trial, it would be in s u f f ic ie n t to permit the non-movant from carrying its burden of proof. Celotex, 477 U.S. a t 322-23; 106 S.Ct. at 2552-53. The admissibility of evidence is subject to the same s t a n d a r d s and rules that govern admissibility of evidence at trial. Clemons v. Dougherty C o u n ty , Georgia, 684 F.2d 1365, 1369 n.5 (11th Cir. 1982) (citing Pan-Islamic Trade Corp. v . Exxon Corp., 632 F.2d 539, 556 (5th Cir. 1980)). Once the movant meets its burden under Rule 56, the non-movant must designate s p e c if ic facts showing there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Z e n ith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). C o n c lu s o ry assertions, unsupported by specific facts, presented in affidavits opposing the m o tio n for summary judgment are likewise insufficient to defeat a proper motion for s u m m a ry judgment. Lejaun v. Nat'l Wildlife Federation, 497 U.S. 871, 888, 110 S.Ct. 3177, 1 1 1 L.Ed.2d 695 (1990); see also Holifield v. Reno, 115 F.3d 1555, 1564 n.6 (11th Cir. 1997) (c o n c lu s o ry assertions in absence of supporting evidence are insufficient to withstand s u m m a ry judgment). "Speculation does not create a genuine issue of fact." Cordoba v. D illa rd 's , Inc., 419 F.3d 1169, 1181 (11th Cir. 2005) (citation omitted) (emphasis in o rig in a l). The party opposing summary judgment must respond by setting forth specific e v id e n c e in the record and articulating the precise manner in which that evidence supports

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his or her claim, and may not rest upon the mere allegations or denials of the pleadings. FED. R . CIV. P. 56(e); Johnson v. Board of Regents of University of Georgia, 263 F.3d 1234, 1264 (1 1 th Cir. 2001). If the evidence is merely colorable or is not significantly probative, s u m m a ry judgment may be granted. See Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2511 (c ita tio n s omitted). Thus, to avoid summary judgment, the nonmoving party "must do more th a n simply show that there is some metaphysical doubt as to the material facts." Matsushita E le c . Indus., 475 U.S. at 586 106 S.Ct. at 1356 (citations omitted). In determining whether a genuine issue for trial exists, the court must view all the e v id e n c e in the light most favorable to the nonmovant. McCormick v. City of Fort

L a u d e rd a le , 333 F.3d 1234, 1243 (11th Cir. 2003); Johnson, 263 F.3d at 1242-43. Further, " a ll justifiable inferences are to be drawn in [that party's] favor." Anderson, 477 U.S. at 255; 1 0 6 S.Ct. at 2513; see also McCormick, 333 F.3d at 1243 (the evidence and all reasonable in f e re n c e s from the evidence must be viewed in the light most favorable to the nonmovant). If the non-moving party fails to make a showing sufficient to establish the existence of an e le m e n t essential to its case on which it will bear the burden of proof at trial, summary ju d g m e n t must be granted. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53. In other w o rd s, summary judgment is proper after adequate time for discovery and upon motion a g a in s t a party who fails to make a showing sufficient to establish the existence of an element e s s e n tia l to that party's case. Id. at 322, 106 S.Ct. at 2552.

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IV. DISCUSSION AND ANALYSIS A. D e fic ie n c y W h e n an action brought is before a federal court pursuant to its subject matter ju ris d ic tio n under 28 U.S.C. § 1332, that court must employ the choice-of-law rules of the ju ris d ic tio n in which it sits in determining the proper law to apply in the case. See, e.g., K la x o n Co. v. Stentor Elec. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Morris v . SSE, Inc., 912 F.2d 1392, 1394 n. 1 (11th Cir. 1990); see also Benchmark Med. Holdings, In c . v. Rehab Solutions, LLC, 307 F.Supp.2d 1249, 1258-59 (M.D. Ala. 2004) ("When a f e d e ra l court decides a state law claim, whether acting pursuant to diversity or supplemental ju ris d ic tio n , it applies the choice-of-law rules of the jurisdiction in which its sits."). Thus, th e Court looks to Alabama choice-of-law rules. In a contractual dispute, Alabama law must " f irs t look to the contract to determine whether the parties have specified a particular s o v e re ig n 's law to govern." Stovall v. Universal Const. Co., Inc., 893 So.2d 1090, 1102 (A la . 2004); see also Clanton v. Inter.Net Global, L.L.C., 435 F.3d 1319, 1323 (11th Cir. 2 0 0 6 ) (quoting Stovall). In the case between Wachovia and the Defendants, the contracts all p ro v id e that they shall be "governed by and construed under the laws of the state named in th e Bank's address on the first page hereof without regard to that state's conflict of laws p rin c ip le s ." See Doc. 15, Ex. 2-2 through Ex. 2-16. In all the contracts, the state named is A la b a m a . Thus, all substantive matters are governed by Alabama law. In considering an unopposed motion for summary judgment, the court "cannot base

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the entry of summary judgment on the mere fact that the motion was unopposed, but, rather, must consider the merits of the motion." United States v. One Piece of Real Prop. Located a t 5800 SW 74th Ave., Miami, Fla., 363 F.3d 1099, 1101 (11th Cir. 2004). "The district court n e e d not sua sponte review all of the evidentiary materials on file at the time the motion is g ra n te d , but must ensure that the motion itself is supported by evidentiary materials. At the le a s t, the district court must review all of the evidentiary materials submitted in support of th e motion for summary judgment." Id. at 1101-02 (citations omitted). In first looking to the appropriate law, the Court determines the breach of contract c la im itself is covered by Alabama law. To prevail on a breach of contract claim under A la b a m a law, the plaintiff must establish: (1) the existence of a valid contract binding the p a rtie s in the action, (2) its own performance under the contract, (3) the defendant's n o n -p e rf o rm a n c e , and (4) damages. Ex parte American Heritage Life Ins. Co., -- So.3d -- , -- , 2010 WL 1170513, *2 (Ala. 2010) (citing Congress Life Ins. Co. v. Barstow, 799 So.2d 9 3 1 , 937 (Ala. 2001)); Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009) (quoting R e y n o ld s Metals Co. v. Hill, 825 So.2d 100, 105 (Ala. 2002)). As to the remaining loans/notes at issue - specifically Numbers V and VII, Wachovia n o w has clearly met those four elements. The undisputed evidence establishes the debt, the d e f a u lt, and the deficiency. Specifically, the existence and terms of the loan are evidence by th e eight Promissory Notes and the Unconditional Guaranties. See Doc. 15, Exhibit 2-2 th ro u g h 2-16; Doc. 25, Exhibit A-1 through A-5. The Promissory Notes and Unconditional

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Guaranties contain all the terms agreed to by the parties. Id. This includes what occurs in th e event of default. Id. The second uncontroverted affidavit of John Cathey, Director of the Special Assets M a n a g e m e n t Department for Wells Fargo Bank, National Association (successor-by-merger to Wachovia), clearly establishes that these two loans are in default and Defendants have m a d e no further payments. Id., Ex. A, Cathey Affidavit. Cathey further avers that, as a result o f the default, the outstanding indebtedness is as listed in the subsections below. The a m o u n ts are clearly established by the record and are uncontroverted. As such, summary ju d g m e n t is appropriate for these amounts. A s there is default, the Court must look to Alabama law as to whether the interest is a p p r o p r ia te . In Alabama, pre-judgment interest on damages stemming from a breach of

c o n tra c t are governed by ALA. CODE § 8-8-8. It provides that "All contracts, express or im p lie d , for the payment of money, or other thing, or for the performance of any act or duty b e a r interest from the day such money, or thing, estimating it at its money value, should have b e e n paid, or such act, estimating the compensation therefor in money, performed." ALA. C ODE § 8-8-8. Therefore, prejudgment accrued interest is appropriate under Alabama law a n d is governed by the Promissory Notes. a. L o a n /N o t e V

A s of June 3, 2010, Defendants owe Wachovia $1,000.00 in principle plus interest in th e amount of $4,370.49 and late fees in the amount of $406.91. Interest continues to accrue

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at the rate of $0.22 per day. This amount is uncontroverted and clearly established by the re c o rd . As such, through September 24, 2010 - the date of this opinion - the additional in te re s t is $24.86 ($0.22 multiplied by 113 days). This brings the total indebtedness on L o a n /N o te V to $5802.26 b. L o a n /N o te VII

A s of June 3, 2010, Defendants owe Wachovia $2,000.00 in principle plus interest in th e amount of $5,327.38 and $417.17 in late fees. Interest continues to accrue at the rate of $ 0 .4 3 per day. This amount is uncontroverted and clearly established by the record. As such, th ro u g h September 24, 2010 - the date of this opinion - the additional interest is $48.59 ($ 0 .4 3 multiplied by 113 days). This brings the total indebtedness on Loan/Note VII to $ 7 7 9 3 .1 4 . c. T o ta l Indebtedness of Loans/Notes V and VII

T h e indebtedness of these two loans reaches a total of $13,595.40. This is the c u m u la tiv e total of the principal and interest accrued through September 24, 2010. Summary ju d g m e n t is appropriate as to that amount. d. T o ta l Indebtedness of All Loans/Notes

T h e Court also recognizes that interest has continued to accrue on Loans/Notes I, II, III, IV, VI, and VIII. As such, the Court will consider the additional 59 days of interest a c c ru e d on those loans. The Court hereby incorporates its analysis as to those loans in this s e c tio n and Court finds the following additional amounts appropriate:

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(1)

L o a n /N o te I - Additional interest in the amount of $1187.08 ($20.12 multiplied o n 59 days)

(2 )

L o a n /N o te II - Additional interest in the amount of $1611.88 ($27.32 m u ltip lie d on 59 days)

(3 )

L o a n /N o te III - Additional interest in the amount of $2890.41 ($48.99 m u ltip lie d on 59 days)

(4 )

L o a n /N o te IV - Additional interest in the amount of $29.50 ($0.50 multiplied o n 59 days)

(5 )

L o a n /N o te VI - Additional interest in the amount of $24.78 ($0.42 multiplied o n 59 days)

(6 )

L o a n /N o te VIII - Additional interest in the amount of $391.17 ($6.63 m u ltip lie d on 59 days)

T h is new interest totals to $6,134.82 in addition to the amounts previously calculated in M e m o ra n d u m Opinion I. These amounts are calculated based on the 59 days that have p a s s e d since the issuance of Memorandum Opinion I. In Memorandum Opinion I, the Court c a lc u la te d the total amount due through July 27, 2010 to be $936,862.31. Adding the new in te re s t ($6,134.82) and the amounts due on Loans/Notes V and VII ($13,595.40), the new o v e ra ll amount due is $956,592.53. B. A tto r n e y 's Fees F in a lly, Wachovia requests $62,671.04 in attorneys' fees. This pertains to the

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recovery on all eight notes delineated in the complaint. During Memorandum Opinion I, the C o u rt deferred its ruling on attorneys' fees. W a c h o v ia should recover its attorneys' fees. " In Alabama and most other jurisdictions, the general rule is that attorney's fees and e x p e n s e s of litigation are not recoverable as damages, in the absence of a contractual or s ta tu to ry duty, other than by a few recognized equity principles." Ex parte Burnham, K lin e fe lte r, Halsey, Jones & Cater, P.C., 674 So.2d 1287, 1290 (Ala. 1995) (internal m o d if ic a tio n s and citation omitted). Thus, a mortgagee may recover attorneys' fees incurred w h e n the contract imposes a duty on the mortgagor to pay those fees. See Lunceford v. M o n u m e n ta l Life Ins. Co., 641 So.2d 244, 247 (Ala. 1994). The Alabama Supreme Court h a s also stated that "[t]he claim for an attorney's fee is as much a part of the contract as any o th e r feature of it. Such fees, under the contract, become an effective part of the main debt." Taylor v. Jones, 290 Ala. 268, 276 So.2d 130 (1973). If the Court finds that attorney's fees are recoverable, it must then determine the re a s o n a b le n e s s of the request. The Alabama Supreme Court has set forth twelve criteria that a trial court may consider in setting attorney fees: (1) the nature and value of the subject m a tte r of the employment; (2) the learning, skill, and labor requisite to its proper discharge; (3 ) the time consumed; (4) the professional experience and reputation of the attorney; (5) the w e i g h t of his responsibilities; (6) the measure of success achieved; (7) the reasonable e x p e n s e s incurred; (8) whether a fee is fixed or contingent; (9) the nature and length of a The Court will now determine whether

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professional relationship; (10) the fee customarily charged in the locality for similar legal s e rv ic e s ; (11) the likelihood that a particular employment may preclude other employment; and (12) the time limitations imposed by the client or by the circumstances. Knox Kershaw, In c . v. Kershaw, 598 So.2d 1372, 1374 (Ala. 1992) (citing Peebles v. Miley, 439 So.2d 137, 1 4 0 -4 1 (Ala.1983)). Rarely will all twelve criteria be applicable in a given case. T h e Loan Agreements at issue clearly provides for the recovery of attorneys fees. See D o c . 15, Exhibit 2-2 through 2-16; Doc. 25, Exhibit A-1 through A-4. Thus, the Court need o n ly determine whether the amount requested is reasonable. The Court specifically looks to f a c to rs 1, 2, 3, 6, 7, 8, 9, and 10 as applicable to this case. Using these factors as guidance, th e Court finds the amount requested is appropriate. V. CONCLUSION P u rs u a n t to the foregoing Memorandum Opinion, the Court grants Plaintiff Wachovia B a n k , National Association's Renewed Motion for Summary Judgment on Loans V and VII (Doc. 25). The Court finds summary judgment is appropriate for Loans/Notes V and VII in th e amount of $13,595.40 which includes principal and interest accrued through the date of th is Opinion. Including the additional interest on the other six loans previously granted, the n e w total amount for summary judgment due is $956,592.53. The Court also finds summary ju d g m e n t is appropriate as to attorney's fees in the amount of $62,671.04. An appropriate ju d g m e n t will be entered separately.

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DONE this 24th day of September, 2010. /s/ Terry F. Moorer T E R R Y F. MOORER U N IT E D STATES MAGISTRATE JUDGE

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