Synovus Bank v. Summerford

Filing 43

MEMORANDUM OPINION AND ORDER DENYING 42 MOTION to Amend 36 MOTION for Summary Judgment, GRANTING IN PART and DENYING IN PART 36 MOTION for Summary Judgment. Signed by Judge Virginia Emerson Hopkins on 7/2/2014. (JLC)

FILED
2014 Jul-02 PM 04:19
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SYNOVUS BANK,
Plaintiff,
v.
RALPH Q. SUMMERFORD,
Defendant.

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) Case No.: 2:12-CV-3598-VEH
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MEMORANDUM OPINION AND ORDER
On October 15, 2012, the plaintiff, Synovus Bank, filed this action for breach
of a promissory note, and alternatively for unjust enrichment, against the defendants,
Ralph Q. Summerford and Tarrie Hyche. (Doc. 1). On December 26, 2012, after
Hyche filed a notice of bankruptcy, the court severed the plaintiff’s claim against
Hyche and dismissed that claim without prejudice. (Doc. 15).1 The action continued
as to defendant Summerford.
The case comes before the court on the motion for summary judgment filed by
Synovus (doc. 36), and the motion to amend the motion for summary judgment filed

1

On November 16, 2012, Hyche filed a notice of bankruptcy. (Doc. 8.) Pursuant to 11
U.S.C. § 362, this action was then automatically stayed against Hyche, pending the outcome of
the bankruptcy proceedings, until this court ultimately dismissed Hyche.

by Synovus (doc. 42). For the reasons stated herein, the motion to amend will be
DENIED, the motion for summary judgment will be GRANTED in part and
DENIED in part, and the case will be set for trial.
I.

STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment is proper if there

is no genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986) (“[S]ummary judgment is proper if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”) (internal quotation
marks and citation omitted). The party requesting summary judgment always bears
the initial responsibility of informing the court of the basis for its motion and
identifying those portions of the pleadings or filings that it believes demonstrate the
absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. Once the
moving party has met its burden, Rule 56(e) requires the non-moving party to go
beyond the pleadings in answering the movant. Id. at 324. By its own affidavits – or
by the depositions, answers to interrogatories, and admissions on file – it must
designate specific facts showing that there is a genuine issue for trial. Id.
2

The underlying substantive law identifies which facts are material and which
are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). All
reasonable doubts about the facts and all justifiable inferences are resolved in favor
of the non-movant. Chapman, 229 F.3d at 1023. Only disputes over facts that might
affect the outcome of the suit under the governing law will properly preclude the
entry of summary judgment. Anderson, 477 U.S. at 248. A dispute is genuine “if the
evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id. If the evidence presented by the non-movant to rebut the moving party’s
evidence is merely colorable, or is not significantly probative, summary judgment
may still be granted. Id. at 249.
How the movant may satisfy its initial evidentiary burden depends on whether
that party bears the burden of proof on the given legal issues at trial. Fitzpatrick v.
City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). If the movant bears the burden
of proof on the given issue or issues at trial, then it can only meet its burden on
summary judgment by presenting affirmative evidence showing the absence of a
genuine issue of material fact – that is, facts that would entitle it to a directed verdict
if not controverted at trial. Id. (citation omitted). Once the moving party makes such
an affirmative showing, the burden shifts to the non-moving party to produce
“significant, probative evidence demonstrating the existence of a triable issue of fact.”
3

Id. (citation omitted) (emphasis added).
For issues on which the movant does not bear the burden of proof at trial, it can
satisfy its initial burden on summary judgment in either of two ways. Id. at 1115-16.
First, the movant may simply show that there is an absence of evidence to support the
non-movant’s case on the particular issue at hand. Id. at 1116. In such an instance, the
non-movant must rebut by either (1) showing that the record in fact contains
supporting evidence sufficient to withstand a directed verdict motion, or (2)
proffering evidence sufficient to withstand a directed verdict motion at trial based on
the alleged evidentiary deficiency. Id. at 1116-17. When responding, the non-movant
may no longer rest on mere allegations; instead, it must set forth evidence of specific
facts. Lewis v. Casey, 518 U.S. 343, 358 (1996). The second method a movant in this
position may use to discharge its burden is to provide affirmative evidence
demonstrating that the non-moving party will be unable to prove its case at trial.
Fitzpatrick, 2 F.3d at 1116. When this occurs, the non-movant must rebut by offering
evidence sufficient to withstand a directed verdict at trial on the material fact sought
to be negated. Id.
II.

FACTS
Synovus made a commercial loan to Summerford and Hyche to acquire certain

property located on Smith Lake in Walker County, Alabama (the “Loan”). (Doc. 1-1
4

at 2).2 The most recent promissory note regarding this loan is dated December 19,
2011 (the “Note”). (Doc. 1-1 at 11).3 In this document, Summerford and Hyche,
jointly and severally, agree to pay to Synovus the principal amount of $3,424,766.86.
(Doc. 1-1 at 11). The Note set the maturity date of the loan to April 17, 2012. (Doc.
1-1 at 11). It also provided that:
– the borrowers agreed “to pay interest on the outstanding principal balance
from December 19, 2011[,] at the rate of 5.0% per year until the interest rate
changes” (doc. 1-1 at 11);
– the new rate, called the “index rate” in the promissory note, would be 1.0 %
above “Lender’s prime, which is the rate used by Lender to set interest rates at
which loans are made to various customers. Loan may be made at, above[,] or
below said prime rate” (doc. 1-1 at 11);

2

The loan was actually made by First Bank of Jasper, which was formerly known as First
National Bank of Jasper, a division of Synovus. For ease of reference, the court will refer to the
bank as Synovus.
3

The loan’s history is extensive. It was refinanced by Synovus on or about August 24,
2009. (Doc. 1-1 at 2). The maturity date on the promissory note was February 24, 2010. (Doc. 11 at 2). The principal amount of that loan was $3,424,568.86. (Doc. 1-1 at 2). On March 1, 2010,
the bank modified the loan to extend the maturity date to June 24, 2010. (Doc. 1-1 at 4). On June
24, 2010, the bank again extended the maturity date of the loan from June 24, 2010, to October
22, 2010. (Doc. 1-1 at 5). A new promissory note dated November 19, 2010, reflects that the
bank, inter alia, changed the maturity date of the loan to May 19, 2011. (Doc. 1-1 at 6). A May
19, 2011, modification agreement extended the maturity date to September 16, 2011. (Doc. 1-1 at
8). Another promissory note dated September 16, 2011, extended the loan’s maturity date to
November 19, 2011. (Doc. 1-1 at 9). The December 19, 2011, promissory note is the last
promissory note.
5

– the rate could change as often as “daily,” but would change “when the index
rate changes” (doc. 1-1 at 11);
– the rate would never be below 5.0% (doc. 1-1 at 11);
– after the maturity date of the loan, the borrowers would continue to pay the
same variable rate of interest “on the unpaid balance of the [N]ote owing after
maturity, and until paid in full” (doc. 1-1 at 11);
– the borrowers would pay late fees “on the portion of any payment not made
within 10 days after it is due equal to 5% of the unpaid amount with a
minimum of $100” (doc. 1-1 at 11);
– accrued interest would be paid monthly “beginning January 17, 2012” (doc.
1-1 at 11);
– the principal would be paid back by the maturity date of April 17, 2012 (doc.
1-1 at 11); and
– the borrowers agreed “to pay all costs of collection, replevin or any other
similar type of cost if [they] are in default. In addition, if [Synovus] hire[s] an
attorney to collect this [N]ote, [the Borrowers] also agree to pay any fee
[Synovus] incur[s] with such attorney plus court costs . . .” (Doc. 1-1 at 12).
The defendant does not dispute the fact that he entered into this agreement, nor does
he dispute the terms of same. (Doc. 36 at 3-8; doc. 39 at 5-10).
6

On April 17, 2012, the Note was modified by a Note Modification Agreement
executed by and among Synovus, Hyche, and Summerford (the “Note Modification
Agreement”). (Doc. 1-1 at 13). At the time the Note Modification Agreement was
executed, the loan was secured by mortgages on three separate pieces of property.
(Doc. 1-1 at 13; doc. 42-1 at 3; doc. 42-2 at 1-19). The Note Modification Agreement
refers to this property as “the Mortgaged Property.” (Doc. 1-1 at 13). The
modification provided, in pertinent part:
2.
Amounts Owing on the Loan. [Summerford and Hyche] confirm
with the Lender and agree that:
(a) as of March 26, 2012, the principal amount owing on the
Loan is $3,424,766.86; and
(b) as of March 26, 2012, the Borrowers owe $26,279.91 in
accrued but unpaid interest on the Loan, with additional interest
accruing at the rate of $380.53 per diem, and $11,048.69 in unpaid late
fees on the Loan.
3.

Extension of the Loan.

(a) The Note is hereby modified so that the Maturity Date is
hereby extended from April 17, 2012, until July 1, 2012, at which time
the Loan will be due and payable in full.
(b) If on June 30, 2012 (by or before the close of business) the
conditions set forth in Section 3(c) have been met, the Maturity Date
will be further extended for an additional term of two (2) years, until
July 1, 2014 (the “Additional Extension”).
(c)

Without limitation, in order for the Lender to Agree to the
7

Additional Extension, the following conditions must be satisfied:
...
b.

The ratio of the principal balance of the Loan
divided by old and new collateral acceptable to the
Lender in its sole discretion must not exceed one
hundred percent (100%). Collateral acceptable to the
Lender shall mean the following: (i) the Mortgaged
Property, in which the Lender holds a first priority
mortgage security interest, and the value of which
shall be based on a current appraisal reviewed by
and accepted by the Lender, and (ii) all other
collateral agreed upon by the Parties to be
mortgaged or pledged to the Lender by the
Borrowers, subject to the Lender’s normal
underwriting standards and guidelines for such
collateral, including appraisal, security
documentation, survey, title insurance and
customary requirements for collateral of the type
provided, and with the acceptability of such
collateral to be in the sole judgment and
discretion of the Lender;

d.

The Borrowers shall have paid or reimbursed the
Lender for all expenses (“Loan Expenses”)
associated with this Agreement and with the
transactions contemplated by the Extension Loan
Documents or required by the Lender in connection
with the Additional Extension, including but not
limited to, appraisal fees, appraisal review fees . . ..

...

...
(f)

ALTHOUGH THE BORROWERS AND THE LENDER
8

HAVE REACHED SUBSTANTIAL AGREEMENT REGARDING
THE BUSINESS TERMS BY WHICH THE LOAN MAY BE
EXTENDED UNTIL JULY 1, 2014, THE BORROWERS AND THE
LENDER ACKNOWLEDGE AND AGREE WITH EACH OTHER,
HOWEVER, THAT SUCH ADDITIONAL EXTENSION IS SUBJECT
TO, AMONG OTHER THINGS, THE IDENTIFICATION AND
ACCEPTABLE VALUATION OF ADDITIONAL COLLATERAL TO
ACHIEVE THE REQUIRED LOAN TO VALUE RATIO OF NOT
MORE THAN 100%, AND THE EXECUTION AND DELIVERY OF
DEFINITIVE EXTENSION LOAN DOCUMENTS EVIDENCING
THE ADDITIONAL EXTENSION AND THE ADDITIONAL
COLLATERAL, IN A FORM MUTUALLY AGREEABLE TO THE
LENDER AND ITS ATTORNEYS AND THE BORROWERS AND
THEIR ATTORNEYS, AND IT IS ACKNOWLEDGED AND
UNDERSTOOD THAT THERE CAN BE NO ASSURANCE THAT
THE COLLATERAL OFFERED BY THE BORROWERS
ULTIMATELY WILL BE ACCEPTABLE TO THE LENDER OR
THAT DEFINITIVE EXTENSION LOAN DOCUMENTS WILL BE
AGREED TO, AND ACCORDINGLY, IT IS UNDERSTOOD AND
AGREED THAT THE PARTIES ULTIMATELY MAY BE UNABLE
TO REACH AGREEMENT FOR THE ADDITIONAL EXTENSION.
RECOGNIZING AND CONFIRMING SUCH POSSIBILITY, THE
BORROWERS AGREE THAT THERE SHALL BE NO CLAIM
AVAILABLE TO THEM, IN CONTRACT OR TORT, IN THE EVENT
THAT THE MATURITY DATE OF JULY 1, 2012, IS NOT FURTHER
EXTENDED.
(Doc. 1-1 at 14-17) (emphasis in original). No new collateral was ever mortgaged by
either Summerford or Hyche after this agreement was entered into. (Doc. 37-1 at 5).
No new loan documents were executed to extend the maturity date of the Loan
beyond July 1, 2012. (Doc. 37-1 at 6).
On August 31, 2012, Synovus made demand on Summerford and Hyche for

9

immediate payment in full of all amounts owed on the Loan pursuant to the terms of
the December 19, 2011, promissory note and the April 17, 2012, modification.
Neither has paid.
Jeffrey Spielberger is a Managed Assets Officer for Synovus Bank. (Doc. 37-1
at 2). In his affidavit, he states that he is “personally involved in, and responsible for,
Synovus’[s] collection activities with respect to the loan [at issue in this case].” (Doc.
37-1 at 2). In support of the statements in his affidavit, he references records which
he states “were made at or near the time of the event recorded by a person with
knowledge of the event and charged with the responsibility of recording such events,”
and “are kept in the ordinary course of [Synovus’s] regularly conducted business
activity, which is Synovus’[s] customary practice.” (Doc. 37-1 at 2-3). Spielberger
states that, as of Septemer 17, 2013, the following amounts were due and payable on
the loan:
$3,424,766.86
$173,902.05
$13,548.69
$121,751.76
$5,500.00

principal
accrued interest
late fees
attorneys’ fees and expenses
appraisal costs

(Doc. 37-1 at 4). Summerford offers no evidence to dispute these sums, and does not
challenge the admissibility of the affidavit or the documents it references. Further,
these sums were listed as part of the Synovus’s statement of fact number 14 in
10

support of the motion for summary judgment. In response to this fact, the defendant
“[a]dmitted that Summerford cannot dispute the outstanding principal amount owed
on the ‘Loan.’” (Doc. 39 at 7). Summerford did not dispute the remaining amounts,
and they are therefore deemed to be admitted.4
Spielberger attaches to his affidavit what he has identified as “a true and
correct copy of a Synovus principal, interest and late fee payoff statement for the
Loan as of September 17, 2013.” (Doc. 37-1 at 4). The document to which he refers
shows that, as of September 17, 2013, outstanding principal due on the loan was
$3,424,766.86, with accrued interest being $173,902.05, and late charges equaling
$13,548.69. (Doc. 37-1 at 35). He also states that “[i]nterest continues to accrue on
the Loan at the rate of $380.53 per day.” (Doc. 37-1 at 5). Summerford offers no
evidence to dispute these sums, and does not challenge the admissibility of these
4

The court’s summary judgment scheduling order requires that:

The first section [of the brief opposing summary judgment] must consist of only
the non-moving party’s disputes, if any, with the moving party’s claimed
undisputed facts. The non-moving party’s response to the moving party’s claimed
undisputed facts shall be in separately numbered paragraphs that coincide with
those of the moving party’s claimed undisputed facts. Any statements of fact that
are disputed by the non-moving party must be followed by a specific reference to
those portions of the evidentiary record upon which the dispute is based. All
material facts set forth in the statement required of the moving party will be
deemed to be admitted for summary judgment purposes unless controverted by the
response of the party opposing summary judgment.
(Doc. 2 at 17) (emphasis in original).
11

documents, or the statements made therein.
Spielberger’s affidavit refers to two documents which he refers to as “true and
correct copies of the invoices for . . . appraisal costs” incurred “to determine whether
the conditions to the additional extension described in the Note Modification
Agreement could be satisfied.” (Doc. 37-1 at 5). The first of these documents is an
invoice from Wm. Scruggs & Associates for appraisal fees in the amount of
$1,500.00. (Doc. 37-1 at 37). The second is an invoice from Real Estate Matrix for
appraisal fees in the amount of $4,000.00. (Doc. 37-1 at 39). Summerford offers no
evidence to dispute these sums, and does not challenge the admissibility of these
documents, or the statements made therein.
Speilberger states that he has “reviewed and approved” the legal bills from
Bradley Arant Boult Cummings LLP, which he states “include the above-described
collection costs.” (Doc. 37-1 at 5). Jennifer Harris Henderson, a partner with the law
firm of Bradley Arant Boult Cummings LLP, has submitted her affidavit in which she
states that she “has firsthand knowledge of the services rendered by [the firm] on
behalf of Synovus in connection with the collection of [this loan].” (Doc. 37-2 at 3).
She also states that she is “familiar with the fees being charged to Synovus . . . in this
matter,” as well as those “charged in this area in matters such as this Lawsuit.” (Doc.
37-2 at 3). Henderson’s affidavit describes in detail the services the firm performed
12

on behalf of Synovus5 and then states that “the . . . described fees and expenses billed
by [the firm] as of August 30, 2013[,] for services rendered to Synovus in connection
with [this Loan] are described on [an attachment to her affidavit].” (Doc. 37-2 at 5).
She states that these fees and expenses total $121,751.76 as of August 30, 2013.
(Doc. 37-2 at 6). The attachment to which she refers sets out the invoice numbers
presented to Synovus by the firm, summarizes the amounts appearing on the invoices
presented to Synovus, and separates out the portion which applies only to legal
services provided for collecting on the Loan. That amount, as noted on the form, is
$121,751.76. (Doc. 37-2 at 13). The actual invoices also appear in the record. (Doc.
37-2 at 14-60; doc. 37-3 at 1-66). The affidavit of J. David Dresher, who states that
he is the “billing attorney for this matter,” certifies that these time records are
accurate, and that they were “prepared contemporaneously with the performance of
the work for which the fees are claimed.” (Doc. 37-3 at 66). Summerford offers no
evidence to dispute these sums, and does not challenge the admissibility of these
documents, or the statements made therein.
On February 27, 2014, Synovus filed a motion to amend its summary judgment
motion, and attached a second affidavit of Jeffrey Spielberger, wherein he states that,

5

It also goes into extensive detail as to the names and qualifications of the persons who
performed those services.
13

on February 3, 2014, Synovus foreclosed on the property which had secured the
Loan. (Doc. 42-1 at 3). He also states: “At the foreclosure sales, Synovus submitted
the highest bid for each of the properties, in the amounts of $1,836,750.00,
$201,810.00, and $48,360.00.” (Doc. 42-1 at 3). He also states that “Synovus’[s]
claim in this lawsuit also should be reduced by the same amount, which is
$2,086,920.00 in the aggregate.” (Doc. 42-1 at 3). He concludes that “[a]s of February
3, 2014, interest is accruing on the Loan at the rate of $148.65 per day.” (Doc. 42-1
at 4). No response to this motion to amend has been filed by the defendant.6

6

Summerford lists 61 “Additional Disputed Facts” to which Synovus has not specifically
responded. Instead, referring to only the first 46 of these facts, Synovus writes:
Although the Response includes a litany of other “disputed facts,” comprised of
alleged acts or omissions that occurred or failed to occur prior to the execution of
the Note Modification Agreement (see Response at 11-21, ¶¶ 1-46), it appears that
these “disputed facts” are submitted solely to support Summerford’s contention
that Synovus is obligated to foreclose. (See Response passim.) This Court already
has found that these allegations do not create a duty of foreclosure on the part of
Synovus, and, therefore, these other “disputed” facts are irrelevant. (See Doc. 28
at 10-11.)
(Doc. 41 at 2). The court notes that merely ignoring such facts based on the presumption that the
court will agree that they are not material is a dangerous proposition, given that this court’s
summary judgment scheduling order provides that “[a]ll additional material facts set forth in the
statement required of the opposing parties will be deemed to be admitted for summary judgment
purposes unless controverted by the statement of the movant.” (Doc. 2 at 19) (emphasis in
original). However, in this case, and as noted in the section which follows, the court agrees with
Synovus that it need not consider anything other than facts which bear upon whether the terms of
the Note Modification Agreement were followed. Defendant’s facts 1-46 concern events which
occurred prior to the execution of that agreement and therefore are irrelevant and immaterial, and
will not be deemed admitted. The remaining facts offered by Summerford either concern
provisions in the agreement, the relevant portions of which are already set out herein, or are
merely argument, which will be dealt with in the appropriate section of this opinion. The court
14

III.

ANALYSIS
A.

The Plaintiff Does Not Have To Foreclose Before It Seeks and/or
Receives a Money Judgment

The defendant argues:
On June 23, 2013, Synovus affirmatively demanded the right to
foreclose on the property mortgaged for the Loan when it filed its
Motion to Stay in the Tarrie Hyche bankruptcy proceeding. That Motion
demanded that the automatic stay imposed by the bankruptcy court be
lifted so Synovus could “exercise its rights against” the mortgaged
property securing the Loan, including, specifically, nonjudicial
foreclosure. (Synovus Foreclosure Motion at ¶¶1, 24 (Exh. 4)). In
insisting upon its right of foreclosure, Synovus effectively made its
choice with respect to Summerford; rather than pursue monetary
damages against Summerford, Synovus chose instead to insist upon and
demand its right to non-judicial foreclosure. That choice cannot be
undone at this point, and Synovus is left with the sole remedy of
foreclosing on the property mortgaged for the Loan if the fair market
value of that property and any other property pledged to secure the Loan
exceeds the amount owed as it does here.
(Doc. 39 at 24-25). The defendant cites no caselaw or other support for this position,
which the court previously rejected in its ruling dismissing the defendant’s
counterclaims. (Doc. 28 at 10); see also, Triple J Cattle, Inc. v. Chambers, 551 So.
2d 280, 282 (Ala. 1989) (““[a]bsent an agreement to the contrary, a secured lender
may proceed on all of its remedies simultaneously or elect to pursue these remedies
at different times.”); Whitney Bank v. Point Clear Dev., LLC, CIV.A. 11-0657-WS-M,

also omits all four of Summerford’s “Additional Disputed Facts” (doc. 39 at 10-11) as irrelevant
and immaterial.
15

2012 WL 2277597 at *5 (S.D. Ala. June 18, 2012) (Steele, J.) (“Alabama courts have
expressly declined to impose any such mandatory duty of foreclosure in the mortgage
context.”). This argument is still without merit. Regardless, as noted above, it
appears that the property has now been foreclosed upon.
B.

The Breach of Promissory Note Claims (Count I)
1.

The Plaintiff Is Entitled to Summary Judgment on the Elements
of the Claim

A breach of promissory note claim is merely a type of breach of contract claim.
See, PNC Bank, N.A. v. S. Home Builders, LLC, 5:13-CV-000961-KOB, 2013 WL
5524108 at *4 (N.D. Ala. Oct. 2, 2013) (Bowdre, J.); Branch Banking & Trust Co.
v. R & T Rentals, L.L.C., CIV.A. 10-0518-KD-N, 2012 WL 2872447 at *3 (S.D. Ala.
July 12, 2012) (DuBose, J.). “In order to establish a breach-of-contract claim, a
plaintiff must show (1) the existence of a valid contract binding the parties in the
action, (2) his own performance under the contract, (3) the defendant's
nonperformance, and (4) damages.” City of Gadsden v. Harbin, 1120537, 2013 WL
6516387 at *6 (Ala. Dec. 13, 2013) (citations omitted). In this case, as shown in the
statement of facts set out above, there is no genuine issue of material fact that all of
these elements are present.
Still, the defendant argues that he should not be required to repay the sums he

16

borrowed, because
the Note Modification Agreement required Synovus to appraise property
identified by [Hyche] to allow Synovus to reach a 1 to 1 loan-to
collateral ratio. In exchange for the pledging of additional collateral by
[Hyche] and the payment of certain development costs by Summerford
(in excess of $250,000), the term of the Note was extended for a period
of two (2) years until July 2014. Summerford and [Hyche] performed
their part of the Note Modification; however, Synovus failed to perform
theirs.
(Doc. 39 at ¶11, 13, 14, 17, 19, 20, 21). This argument is without merit.
First, Summerford does not explain which section of the Note Modification
Agreement requires Synovus to obtain an appraisal. One of the conditions to the
extension, section 3.(c).b., requires that “the ratio of the principal balance of the Loan
divided by old and new collateral acceptable to the Lender in its sole discretion must
not exceed one hundred percent (100%).” (Doc. 1-1 at 15). “Appraisals” are
mentioned thereafter only in defining the phrase “collateral acceptable to the Lender.”
(Doc. 1-1 at 15). There is no requirement that Synovus obtain an appraisal on any
new piece of property pledged by the borrowers. The agreement is clear that such new
collateral must be
agreed upon by the Parties to be mortgaged or pledged to the Lender by
the Borrowers, subject to the Lender's normal underwriting standards
and guidelines for such collateral, including appraisal, security
documentation, survey, title insurance and customary requirements for
collateral of the type provided, and with the acceptability of such
collateral to be in the sole judgment and discretion of the Lender.
17

(Doc. 1-1 at 15) (underlining added; underlining and bold in original). “Appraisal”
is only one tool that Synovus could have used to find the collateral to be acceptable.
However, it was not required to do so, and Synovus clearly did not have to accept the
new collateral.
Second, two appraisals were done on new property in anticipation of the
possible extension. Spielberger stated that Synovus appraised two separate pieces of
property “to determine whether the conditions to the additional extension described
in the Note Modification Agreement could be satisfied.” (Doc. 37-1 at 5; doc. 37-1
at 36-39). He has provided copies of invoices from the appraisers. (Doc. 37-1 at 3639). The defendant does not address Spielberger’s statements or these invoices.7
Further, by the express terms of the agreement, the additional extension could
only occur if the parties entered into a new extension agreement (doc. 1-1 at 15),
which did not occur. The Note Modification Agreement is clear that:
IT IS ACKNOWLEDGED AND UNDERSTOOD THAT THERE CAN
BE NO ASSURANCE THAT THE COLLATERAL OFFERED BY
THE BORROWERS ULTIMATELY WILL BE ACCEPTABLE TO
THE LENDER OR THAT DEFINITIVE EXTENSION LOAN
7

Importantly, the defendant never identifies the collateral that was supposedly “pledged”
but not appraised. It is vaguely referenced in the Hyche declaration (doc. 40-2) and the
Summerford declaration (doc. 40-6) merely as “additional property,” or “additional collateral.”
The defendant has pointed to no evidence that no appraisals were done, except their conclusory
statements to that effect. (Doc. 40-2 at 4; doc. 40-6 at 11-12). The court rejects these statements
as the declarations do not indicate how they could have personal knowledge of that fact.
18

DOCUMENTS WILL BE AGREED TO, AND ACCORDINGLY, IT IS
UNDERSTOOD AND AGREED THAT THE PARTIES
ULTIMATELY MAY BE UNABLE TO REACH AGREEMENT FOR
THE ADDITIONAL EXTENSION.
(Doc. 1-1 at 17) (emphasis in original). Not only was the agreement clear that there
was no agreement to extend an additional two years, it was also clear that there might
never be such an agreement. Further, the contract stated:
RECOGNIZING AND CONFIRMING SUCH POSSIBILITY, THE
BORROWERS AGREE THAT THERE SHALL BE NO CLAIM
AVAILABLE TO THEM, IN CONTRACT OR TORT, IN THE EVENT
THAT THE MATURITY DATE OF JULY 1, 2012, IS NOT FURTHER
EXTENDED.
(Doc. 1-1 at 17) (emphasis in original). Nowhere in his response to the motion for
summary judgment does Summerford address these sections of the contract.8
The Note Modification Agreement says nothing about $250,000 in
“development costs.” It contains a “merger clause,” stating that there are no oral
representations or promises not set out in the Agreement, and stating that any
alteration or modification of the Agreement’s terms must be in “a writing of
subsequent date hereto signed by all parties in interest . . ..” (Doc. 1-1, ¶ 17). The
defendant has identified no writing wherein the plaintiff agreed to extend the maturity

8

Further, even if the maturity date had been extended to July 1, 2014, that date has now
passed. There can be no doubt that, at the very least, the loan has now matured.
19

date if these costs were paid.9
2.

The Plaintiff Is Entitled to Summary Judgment as to the
Amount of Damages through September 17, 2013

There is no genuine issue of material fact that, as of September 17, 2013, the
amount of damages, was $3,733,969.36, which is comprised of:
$3,424,766.86

principal

$173,902.05

accrued interest

$13,548.69

late fees

$121,751.76

attorneys’ fees and expenses

9

The court has addressed these issues before in this case. As noted in this court’s
memorandum opinion of May 10, 2013, which dealt with the tort counterclaims which had been
asserted by Summerford,
although Summerford conclusorily complains of actions or omissions by the Bank
which, he claims, caused the Bank not to extend the loan maturity date beyond
July 1, 2012, the Agreement, which undisputedly extended the maturity date
“from April 17, 2012, until July 1, 2012,” (doc. 1-1, ¶ 3.(a)), expressly disavowed
any final agreement between the Bank and Summerford as to any further
extension of the maturity date beyond July 1, 2012 (doc. 1-1, ¶ 3.(f)). The
Agreement also contains a “merger clause,” stating that there are no oral
representations or promises not set out in the Agreement, and stating that any
alteration or modification of the Agreement’s terms must be in “a writing of
subsequent date hereto signed by all parties in interest ....” (Doc. 1-1, ¶ 17.).
Summerford’s counterclaims do not allege the existence of any such writing. To
the contrary, he expressly alleges that the parties’ negotiations “culminated in the
execution of [the] April 17, 2012 Agreement.” (Doc. 13, ¶ 14 of the counterclaims
portion). Absent such a post-April 17, 2012, fully executed writing, any attempt to
amend Summerford’s counterclaims to assert a counterclaim based upon such
alleged actions or omissions by the Bank would appear to be futile.
(Doc. 28 at 11).
20

(Doc. 37-1 at 4).

Synovus is not entitled to summary judgment on the $5,500.00 in

appraisal costs incurred in an attempt to finalize the extension. The Note Modification
Agreement reflects that Synovus was only entitled to these costs if it agreed to the
additional extension, which it did not. (Doc. 1-1 at 15).
3.

A Fact Question Remains as to the Deficiency and the Total
Amount of Damages

According to the motion to amend, the bid placed on the property by Synovus
was less than the amount it claims is owed by the defendant. Accordingly, the sale
created a deficiency. Because the sale took place after the filing of the motion for
summary judgment, the defendant has not yet had a chance to counter the evidence
of the sale. That issue is not ripe for summary judgment, and will go to trial. For that
reason, the court will deny the motion to amend.10

10

To the extent that the defendant argues that he is entitled to a credit for the amount for
which the property sold at foreclosure, the court and the plaintiff agree. (Doc. 42). Any judgment
rendered will reflect such credit. For that reason, and because the case will go to trial, there is no
reason to “amend” the motion for summary judgment. That motion will be denied. The
defendant is not entitled under theories of recoupment or setoff to a credit for the value of, or
expenses associated with, any improvement. “Recoupment . . . is a reduction or rebate by the
defendant of part of the plaintiff's claim because of a right in the defendant arising out of the
same transaction.” Finish Line v. J.F. Pate & Associates Contractors, Inc., 90 So. 3d 749, 754
(Ala. Civ. App. 2012) (internal citations and emphasis omitted). This defense “authorizes the
recovery of any damages sustained by the defendant, which grow out of, or are connected with,
the matters set forth in the plaintiff’s complaint, and in breach of the contract upon which his suit
is founded, or in violation of any duty imposed by the contract.” Ewing v. Shaw, 83 Ala. 333,
335, 3 So. 692, 693 (1888). The defendant argues that he is entitled to “recoupment” of the
$250,000.00 in improvements he made because of Synovus’s alleged breach of contract. (Doc.
39 at 29). He writes that “Synovus shirked its responsibilities under the Note Modification
Agreement, yet still enjoys the value of the improvements made.” (Doc. 39 at 30). As shown
21

As noted by the plaintiff in its motion to amend, the exact amount of the
deficiency affects not only the credit to be given the defendant, but also the interest
charged after the date of the sale. Accordingly, even though there is no dispute as to
the amounts owing through September 17, 2013, until the deficiency issue is
determined, the remaining amounts of damages cannot be determined. The issue of
the amount of damages from September 18, 2013, onward will also go to trial.
C.

The Unjust Enrichment Claim (Count II)

The plaintiff agrees that “[i]f the Court determines that summary judgment is
appropriate on Count I, then dismissal of Count II is warranted, as that Count presents
Synovus’[s] claim for unjust enrichment which is pled in the alternative to Count I.”
(Doc. 36 at n. 10). Accordingly, summary judgment will be denied as to Count II, and
that claim will be dismissed with prejudice.
IV.

CONCLUSION
Based on the foregoing, it is hereby ORDERED, ADJUDGED, and

DECREED as follows:
above, the plaintiff breached no terms of the Note Modification Agreement. The defendant is not
entitled to recoup the $250,000.00 in improvements. The concept of “setoff” involves “mutual
debts arising from unrelated transactions.” Finish Line v. J.F. Pate & Associates Contractors,
Inc., 90 So. 3d 749, 754 (Ala. Civ. App. 2012) (internal citations and emphasis omitted). As the
defendant contends that the improvements were part of the consideration for the extension on the
maturity date of the loan, the two transactions are not unrelated, so there is no “setoff.” Even if
they were unrelated, as shown above, Synovus is under no contractual obligation to pay these
amounts.
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1.

The motion to amend the motion for summary judgment is DENIED.

2.

As to Count I (breach of promissory note), the court expressly

determines that there is no genuine issue of material fact that there was a
contract, that the plaintiff performed under the contract, that the defendant did
not perform, and that the plaintiff was damaged because of the defendant’s
non-performance. The plaintiff’s motion for summary judgment is GRANTED
on those issues.
3.

As to Count I, the court also expressly determines that there is no

genuine issue of material fact that, as of September 17, 2013, the plaintiff had
incurred damages in the amount of $3,733,969.36. Summary judgment is
hereby GRANTED on that issue.
4.

There remains a genuine issue of material fact as to the amount of the

deficiency and the exact amount of damages after September 17, 2013, through
the date of judgment. The plaintiff’s motion is DENIED as to those issues, and
the case will proceed to trial on those issues alone.
5.

Summary judgment is DENIED as to Count II (unjust enrichment), and

that claim is DISMISSED with prejudice.
6.

An order will follow setting this case for a final pre-trial conference.

23

DONE and ORDERED this 2nd day of July, 2014.

VIRGINIA EMERSON HOPKINS
United States District Judge

24