Citizens Trust Bank v. Lett et al
MEMORANDUM OF DECISION-re: Motion for Summary Judgment 30 . Pltf SHALL file an accounting with the court regarding the amount currently owed on the loan by 7/31/2015. Dft may file a response to that accounting by 8/10/2015. Signed by Judge James H Hancock on 7/14/2015. (AVC)
2015 Jul-14 AM 10:01
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
CITIZENS TRUST BANK,
SAMUEL C. LETT; CONSTANCE
J. LETT; and BAR “L” RANCH,
MEMORANDUM OF DECISION
The court has before it the January 8, 2015 Motion (Doc. # 30) for Summary
Judgment filed by Plaintiff Citizens Trust Bank. Pursuant to the court’s January 9,
2015, and February 17, 2015 orders (Docs. # 32 & 36), the Motion was deemed
submitted, without oral argument, on February 27, 2015. After careful consideration
of the briefs and evidence before the court, the Motion (Doc. #30) for Summary
Judgment is due to be granted for the following reasons.
I. Procedural History
Plaintiff Citizens Trust Bank commenced this action on September 10, 2013
by filing a complaint in this court alleging breach of contract under Alabama law.
(Doc. #1.) Plaintiff filed the instant Motion for Summary Judgment on January 8,
2015 asserting that it is entitled to judgment as a matter of law on the claim asserted
in the complaint.
Both parties have filed briefs and submitted evidence in support of their
respective positions. Plaintiff submitted a brief (Doc. #30) and evidence1 (Doc. #31)
in support of its own motion for summary judgment. On February 12, 2015,
Defendant filed a brief and evidence2 (Doc. # 33) in Opposition to Plaintiff’s Motion
for Summary Judgment. On February 24, 2015, Defendant filed a brief (Doc. # 37)
in reply to Defendant’s opposition.
II. Standards for Evaluating a Summary Judgment Motion
Under Federal Rule of Civil Procedure 56(c), summary 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 judgment as a matter of law.” Celotex Corp.
The Plaintiff submitted the following evidence in support of summary judgment:
deposition of Samuel C. Lett; December 2, 1997 note; deposition of Constance Lee; December 2,
1997 mortgage; Constance Lett’s responses to plaintiff’s discovery; Samuel Lett’s responses to
plaintiff’s discovery; June 2001 amendment to promissory note; November 1, 20016 Change in
Terms Agreement; February 1, 2007 Change in Terms Agreement; May 1, 2007 Change in
Terms Agreement; June 7, 2012 Change in Terms Agreement; affidavit of Daneil J. Hughlett;
The Defendant submitted the following evidence in opposition to summary judgment:
affidavit of Samuel C. Lett; excerpts of deposition of Samuel Lett; excerpts of deposition of
v. Catrett, 477 U.S. 317, 322 (1986); Chapman v. AI Transport, 229 F.3d 1012, 1023
(11th Cir. 2000). The party asking for 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 which it believes demonstrate the absence of a
genuine issue of material fact. See id. at 323. Once the moving party has met its
burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and by
its own affidavits, or by the depositions, answers to interrogatories, and admissions
on file, designate specific facts showing that there is a genuine issue for trial. See id.
The substantive law will identify which facts are material and which are
irrelevant. See 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. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.
1993). A dispute is genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. If the
evidence is merely colorable, or is not significantly probative, summary judgment
may be granted. See id. at 249.
The method used by the party moving for summary judgment to discharge its
initial burden depends on whether that party bears the burden of proof on the issue
at trial. See Fitzpatrick, 2 F.3d at 1115-17 (citing United States v. Four Parcels of
Real Property, 941 F.2d 1428 (11th Cir. 1991)(en banc)). If the moving party bears
the burden of proof at trial, then it can only meet its initial burden on summary
judgment by coming forward with positive evidence demonstrating the absence of a
genuine issue of material fact; i.e. facts that would entitle it to a directed verdict if not
controverted at trial. See Fitzpatrick, 2 F.3d at 1115. Once the moving party makes
such a showing, the burden shifts to the non-moving party to produce significant,
probative evidence demonstrating a genuine issue for trial.
If the moving party does not bear the burden of proof at trial, it can satisfy its
initial burden on summary judgment in either of two ways. First, the moving party
may produce affirmative evidence negating a material fact, thus demonstrating that
the non-moving party will be unable to prove its case at trial. Once the moving party
satisfies its burden using this method, the non-moving party must respond with
positive evidence sufficient to resist a motion for directed verdict at trial.
The second method by which the moving party who does not bear the burden
of proof at trial can satisfy its initial burden on summary judgment is to affirmatively
show the absence of evidence in the record to support a judgment for the non-moving
party on the issue in question. This method requires more than a simple statement
that the non-moving party cannot meet its burden at trial but does not require
evidence negating the non-movant’s claim; it simply requires the movant to point out
to the district court that there is an absence of evidence to support the non-moving
party’s case. See Fitzpatrick, 2 F.3d at 1115-16. If the movant meets its initial
burden by using this second method, the non-moving party may either point out to the
court record evidence, overlooked or ignored by the movant, sufficient to withstand
a directed verdict, or the non-moving party may come forward with additional
evidence sufficient to withstand a directed verdict motion at trial based on the alleged
evidentiary deficiency. However, when responding, the non-movant can no longer
rest on mere allegations, but must set forth evidence of specific facts. See Lewis v.
Casey, 518 U.S. 343, 358 (1996) (citing Lujan v. Defenders of Wildlife, 504 U.S.
555, 561 (1992)).
III. Relevant Undisputed Facts3
Defendant Samuel Lett is a resident of Selma, Alabama and is the sole owner
and director of Bar L Ranch, Inc., an Alabama corporation operated for the purposes
of a cattle ranch. (S. Lett Dep. at 16.) Defendant Constance Lee is the wife of
Samuel Lett and did not actively participate in the operations of Bar L Ranch. (C.
Lett Dep. at 11.) In December 1997, Samuel Lett requested a loan from Plaintiff
If the facts are in dispute, they are stated in a manner most favor to the non-movant. See
Fitzpatrick, 2 F.3d at 1115.
Citizens Trust Bank in the principal sum of $450,000 with an interest rate of ten
percent (10%) per annum. (S. Lett Dep. at 20-21; Def. Exh. B.) Samuel Lett and
Constance Lett signed the Promissory Note on December 2, 1997. (Def. Exh. B.; S.
Lett Dep at 23; C. Lett Dep. at 13.) The Note provided that the Letts would make
regular monthly payment of $4,342.60, beginning January 6, 1998, with a final
payment of the remaining amount due, if any, by the maturity date of December 6,
2017. (Def. Exh. B.) The Letts agreed to pay late fees/charges on any payment of
principal not paid within fifteen (15) days of the due date (which was later amended
to ten (10) days), and attorneys fees and costs incurred by Citizens Trust in any effort
to collect or enforce any obligation under the note. (Id.)
Additionally, the Letts executed a mortgage, where property located in Dallas
County, Alabama became security for the note. (Def. Exh. D.) The Letts agreed that
if they failed to maintain insurance on the property, pay property taxes, or maintain
the property free and clear of all liens, Citizens Trust could protect its interest and add
all amounts paid by it to the loan. (Id.; see also Def. Exhs. E & F.)
In June 2001, as a result of a dispute between the parties, and in settlement of
that dispute, the Letts executed an Amendment to the Promissory Note (“Amended
Note”). (Def. Exh. G.) The Amendment reduced the amount of the Note to $95,000
with interest charged on the unpaid principal in a yearly rate of eight and a half
percent (8 1/2 %). (Id.) Payment was due in monthly installments over a twenty year
In the years that followed, Citizens Trust repeatedly modified the Amended
Note. (See Def. Exhs. H, I, J & K.) The parties entered into the final modification
on June 7, 2012. (See Def. Exh. K.) The principal amount of the loan at this point
was $58,652.81. (Id.) The final modification extended the maturity date to August
10, 2012, and provided for one regular monthly payment of $931.21 on July 10, 2012,
and then one final balloon payment of all principal and interest due on August 10,
2012. (Id.) The final balloon payment was estimated to be at $58,813.13. (Id.)
The Letts made a payment of $931.21 on July 10, 2012, and again paid $931.21
on August 10, 2012. (Hughlett Aff.) That was the last payment on the Amended
Note. (Id.) Failure to make any payment when due constitutes an event of default
under the Note. (Def. Exh. B.) As of January 5, 2015, the total amount unpaid due
and owing on the Note was $87,837.65, consisting of the following: (1) $60,333.81
in principal; (2) $12,142 in late fee charges; and (3) $15,361 in interest. (Hughlett
Aff.) Interest has been accruing at a per diam rate of $17.27. (Id.)
IV. Applicable Substantive Law and Analysis
The only claim in this action is the one for breach of contract. The material
elements necessary to establish a cause of action for breach of contract under
Alabama law4 are: “(1) a valid contract binding the parties; (2) the plaintiff[’s]
performance under the contract; (3) the defendant’s non performance; and (4)
resulting damages.” Reynolds Metal Co. v. Hill, 825 So.2d 100, 105 –106 (Ala.
2002) (citing State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293, 303 (Ala. 1999)).
The undisputed evidence clearly establishes all four elements here.
Here, a valid contract binding the parties was executed by the Letts. A
promissory note is considered a valid, binding contract under Alabama law.
Bockman v. WCH, LLC, 943 So.2d 789, 795 (Ala. 2006). It is undisputed that
Citizens Bank performed under the contract in that it loaned the money to the Letts
and otherwise fully performed under the contract. It is also undisputed that the Letts
failed to perform under the terms of the note - they did not satisfy the note as of the
maturity date of August 10, 2012. Finally, the evidence establishes that Citizens
Trust has been damaged by the breach.
In an effort to avoid the consequences of their breach, the Letts contend that
Citizens Bank is not entitled to relief because Citizens Bank did not act in good faith.
Specifically, the Letts argue that Citizens Bank committed fraud by failing to extend
refinancing of the note, as had been previously done, and as had been orally promised
All documents provide that they shall be governed and construed in accordance with
Alabama law. (Def. Exhs. H, I, J, K.) It is undisputed that Alabama law controls.
in 1997. The court rejects Plaintiff’s argument for the following reasons.5
First and foremost, regardless of whether Citizens Trust acted in good faith,
Alabama law does not afford a remedy in contract for breach of an express of implied
duty to act in good faith. See Tanner v. Church’s Friend Chicken, 582 So.2d 449, 451
(Ala. 1991). In other words, bad faith is not actionable absent an identifiable breach
in the performance of specific terms of the contract. “There is no contractual cause
of action for breach of an implied duty of good faith that nebulously hovers over the
contracting parties, free from the specific terms of the contract.”
Martin/Alabama Power Licensee Association, Inc. v. Alabama Power Co., 601 So.2d
942, 944–945 (Ala. 1992) . Here, there is no identifiable breach in the performance
of the specific terms of the Note by Citizens Bank - the Letts do not even allege one.
Additionally, the court rejects the Lett’s argument6 that there was an oral
agreement whereby Citizens Trust would continue to modify the Note, indefinitely,
until it was paid in full, and that the Letts relied upon that statement. (S. Lett Dep.
The court also rejects Plaintiff’s arguments that the interest rate was exorbitant or that
Citizens Trust somehow had unclean hands.
The Letts couch this argument in terms of fraud. However, fraud is an affirmative
defense that must be pled with particularity in an Answer. Fed.R.Civ.P. 8(c) & 9(b). The
Answer here does not have a fraud defense. “Failure to plead a defense generally results in a
waiver of that defense.” Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir. 2010);
see Hassan v. U.S. Postal Serv., 842 F.2d 260, 263 (11th Cir. 1988) (“[T]he general rule is that,
when a party fails to raise an affirmative defense in the pleadings, that party waives its right to
raise the issue at trial.”).
at 34-35, 52-53.) The Letts admit that this alleged agreement was “oral” and “just an
across-the-table talk, conversation.” (Id. at 34-35.) Any alleged agreement to modify
the Note must be in writing or it is void under the Statute of Frauds. Alabama law
provides as follows:
[E]very agreement is void unless such agreement or some
note or memorandum thereof expressing the consideration
is in writing and subscribed by the party to be charged
therewith or some other person by him thereunto lawfully
authorized in writing:
(7) Every agreement or commitment to lend money, delay
or forbear repayment thereof or to modify the provisions of
such an agreement or commitment except for consumer
loans with a principal amount financed less than $25,000.
Ala. Code § 8-9-2(7). As such, any alleged agreement by Citizens Trust that it would
continue to modify the note to extend that maturity date until full repayment is void
under the Statute of Frauds.
In summary, the court finds that no material issues of fact remain and that
Plaintiff Citizens Trust Bank is entitled to judgment as a matter of law as to the
breach of contract claim asserted in the Complaint. Plaintiff SHALL file an
accounting with the court regarding the amount currently owed on the loan on or
before July 31, 2015. Defendant may file a response to that accounting on or before
August 10, 2015.
DONE this the 14th
day of July, 2015.
SENIOR UNITED STATES DISTRICT JUDGE
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