Helton et al v. Vision Bank
Order granting 19 MOTION for Partial Summary Judgment filed by Vision Bank as to Count One of its Counterclaim against Plaintiff/Counterclaim Defendant J. Philip Helton. Signed by Judge Kristi K. DuBose on 8/25/2011. (cmj)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
J. PHILIP HELTON,
J. PHILIP HELTON REAL ESTATE AND )
) CIVIL ACTION NO. 10-00563-KD-N
This matter is before the Court on the Defendant/Counterclaim-Plaintiff Vision Bank’s
Motion for Partial Summary Judgment as to Count One of its Counterclaim (Doc. 19),
Plaintiff/Counterclaim-Defendant J. Philip Helton’s Response thereto (Doc. 21), and Vision Bank’s
Reply (Doc. 26). Upon consideration, and for the reasons set forth herein, Vision Bank’s motion for
partial summary judgment is due to be GRANTED.
On September 13, 2010, Plaintiffs J. Philip Helton (“Helton”) and J. Philip Helton Real
Estate and Development, Inc. filed a complaint in the Circuit Court of Baldwin County, Alabama,
against Defendant Vision Bank, demanding among other things a declaration pursuant to Alabama’s
Declaratory Judgment Act, Alabama Code §§ 6-6-220 to -232, that a promissory note executed by
Helton in favor of Vision Bank was unenforceable. (Doc. 1-2 at 5-6). Plaintiffs served their
complaint on September 16, 2010, and Vision Bank timely removed the case to this Court on
October 14, 2010. (Doc. 1).1
On October 21, 2010, Vision Bank filed its answer and simultaneously asserted a
counterclaim against Helton for breach of contract (Count One). (Doc. 5). Vision Bank filed its
Motion for Partial Summary Judgment on its counterclaim on July 15, 2011. (Doc. 19). Helton’s
response (Doc. 21) and Vision Bank’s reply (Doc. 26) have been timely filed, and the motion is now
ripe for consideration.
Standard of Review
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). Rule 56(c) governs procedures and provides as follows:
(1) Supporting Factual Positions. A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits
or declarations, stipulations (including those made for purposes of
the motion only), admissions, interrogatory answers, or other
(B) showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.
(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party may
object that the material cited to support or dispute a fact cannot be presented in a
form that would be admissible in evidence.
(3) Materials Not Cited. The court need consider only the cited materials, but it may
consider other materials in the record.
(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose
a motion must be made on personal knowledge, set out facts that would be
On August 11, 2011, per the parties’ joint stipulation, Plaintiffs’ declaratory judgment claim
against Vision Bank was dismissed without prejudice. (Docs. 22, 24).
admissible in evidence, and show that the affiant or declarant is competent to
testify on the matters stated.
Fed. R. Civ. P. 56(c).
Vision Bank, as the party seeking summary judgment, bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those portions of the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.
Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986)). If the non-moving party fails to make a sufficient showing on an
essential element of its case with respect to which it has the burden of proof, the moving party is
entitled to summary judgment. Celotex, 477 U.S. at 323. In reviewing whether the non-moving
party has met its burden, the court must stop short of weighing the evidence and making credibility
determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed,
and all justifiable inferences are to be drawn in its favor. Tipton v. Bergrohr GMBH-Siegen, 965
F.2d 994, 998-99 (11th Cir. 1992) (internal citations and quotations omitted), cert. denied, 507 U.S.
In November 2004, Vision Bank made two loans to PK Management, LLC (“PK”), a limited
liability company in which Helton was a partner. (Doc. 1-2 at 3, ¶ 4; Doc. 21-2 at 3, ¶ 3). In
connection with the loans, Helton and other individuals associated with PK executed personal
guaranties. (Doc. 1-2 at 4, ¶ 5). PK subsequently defaulted on its obligations, and Vision Bank
foreclosed on property that secured the loans. (Id., ¶ 6). The foreclosure proceeds were insufficient
to satisfy PK’s debt, and Vision Bank sought to collect the balance from Helton and the other
guarantors. (Id., ¶ 7). Helton professed an inability to pay the amount that Vision Bank sought from
him. (Doc. 21-2 at 3, ¶¶ 7-8). On March 20, 2008, in lieu of filing suit against Helton, Vision Bank
permitted Helton to execute a Promissory Note in the principal amount of $436,000 in its favor. (Id.,
¶ 8). The Promissory Note provides that it is governed by the laws of the State of Alabama, that
failure to make payments of principal and interest within 10 days of when they become due is an
occurrence of default, and that Vision Bank is entitled to costs and “reasonable actual attorneys’
fees” incurred in collecting or attempting to collect on the Note. (Doc. 19-2 at 3-5, ¶¶ 4, 6 & 8).
Vision Bank claims, and Helton does not refute, that Helton has failed to make certain scheduled
payments pursuant to the Promissory Note and Vision Bank’s demand for such payment. (Doc. 19-2
at 2, ¶ 4). As of July 15, 2011, the date upon which Vision Bank made its motion for partial
summary judgment, the balance owed under the Promissory Note was $468,990.05, consisting of
$398,435.67 of principal, $26,460 in accrued/unpaid interest, $36,509.43 of default interest, late
charges in the amount of $546.09, and $7,038.86 for other charges/fees. (Id., ¶ 5). Interest
continues to accrue at the rate of $35.97 per diem. (Id.).
“[A] federal court in a diversity case is required to apply the laws, including principles of
conflict of laws, of the state in which the federal court sits.” Manuel v. Convergys Corp., 430 F.3d
1132, 1139 (11th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
(1941)). Alabama courts hold that contract claims are governed by the laws of the state where the
contract was made, unless the contracting parties chose a particular state’s laws to govern their
agreement. Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 506 (Ala. 1991). Whereas the
Promissory Note was executed in Alabama and expressly declares that it “shall be governed by the
laws of the State of Alabama,” (Doc. 5-1 at 3, ¶ 8), the Court will apply Alabama law to Vision
Bank’s contract-based counterclaim.
Breach of Contract
Under Alabama law, the essential elements of a cause of action for breach of contract are the
existence of a valid contract binding the parties; plaintiff’s performance under the contract;
defendant’s nonperformance; and damages. See, e.g., Jones v. Alfa Mut. Ins. Co., 875 So. 2d 1189,
1195 (Ala. 2003). Helton challenges only the first of the four elements, the existence of a valid
contract, arguing that the Promissory Note was unsupported by true consideration and was executed
under coercion and duress. Helton’s arguments are without merit.
Helton claims that he received nothing from Vision Bank in exchange for execution of the
Promissory Note. (Doc. 21 at 6). The Court disagrees. As Vision Bank correctly notes in its
papers, forbearance from suit has long been recognized by Alabama courts as valid consideration
supporting a contract. See Pretl v. Ford, 723 So. 2d 1, 5 (Ala. 1998). Though Vision Bank could
have sued Helton for failing to honor his personal guaranty on the 2004 loans, it chose not to.
Instead, Vision Bank negotiated a new agreement with Helton, the terms of which are expressed by
the Promissory Note. Vision Bank’s decision not to sue Helton in 2008 is fair and valuable
consideration to support that agreement.
Nonetheless, Helton suggests that consideration was lacking because, in executing the
Promissory Note, he merely undertook to do something that he was already obligated to do: make
good on his existing debt to Vision Bank. In support of this argument, Helton cites a decision of the
Court of Civil Appeals of Alabama that referenced the “established principle that the doing or
undertaking to do that which one is already under a legal obligation to do by his contract is no
consideration for a secondary, subsequent contract.” (Doc. 21 at 5 (quoting Griffin v. Hardon, 456
So. 2d 1113 (Ala. Civ. App. 1984)). But Helton ignores that the consideration for the Promissory
Note was provided by Vision Bank, which was under no obligation to forgo an immediate suit for
specific performance of the personal guaranty. Furthermore, the Alabama Supreme Court has
considered and expressly rejected the very argument that Helton advances, holding that forbearance
by a creditor is adequate consideration for a second agreement to pay a balance due and owing
without anything more being required of the debtor:
We recognize that a mere promise to pay an antecedent debt is not generally
regarded as consideration. We also recognize, however, the following
An extension of the time of payment of an obligation constitutes in legal
effect a forbearance to sue and . . . is a sufficient consideration for a guaranty
of the obligation. Any delay is a detriment or inconvenience to the creditor or
obligee and also a benefit to the debtor in that he is afforded further
opportunity to meet the obligation, and to support the promise of the
guarantor, a consideration moving to him need not be established.
Grant v. Southtrust Bank of Baldwin Cnty., 512 So. 2d 914, 916 (Ala. 1987) (internal citation
Helton claims that the Promissory Note is unenforceable because it was executed under
economic duress and as the result of coercion. (Doc. 21 at 7-9). To establish economic duress,
Helton must show “‘(1) wrongful acts or threats; (2) financial distress caused by the wrongful acts or
threats; and (3) the absence of any reasonable alternative to the terms presented by the wrongdoer.”
Newburn v. Dobbs Mobile Bay, Inc., 657 So. 2d 849, 852 (Ala. 1995). This he cannot do. The
“wrongful act” prong is not satisfied unless the victim has acted in response to unlawful or
unconscionable pressure. Id. Here, Helton’s claim fails at the outset because, to the extent that
Helton felt compelled to execute the Promissory Note lest he be sued, such pressure was neither
unlawful nor unconscionable. Alabama courts have consistently recognized “‘the well-settled
general rule that it is not duress to institute or threaten to institute civil suits, or take proceedings in
court, or for any person to declare that he intends to use the courts wherein to insist upon what he
believes to be his legal rights.’” Choksi v. Shah, 8 So. 3d 288, 293 (Ala. 2008) (quoting Neuberger
v. Preferred Acc. Ins. Co. of N.Y., 89 So. 90, 92 (Ala. Ct. App. 1921)). Indeed, Alabama courts
have gone so far as to declare that “[i]t is never duress” to threaten a resort to legal proceedings to
collect on a valid debt. Id. (emphasis added).
Whereas the Promissory Note was supported by consideration, and whereas Helton’s
execution was not obtained by duress or coercion, the Court finds that a valid contract did exist
between the parties. In the absence of any disputes as to Vision Bank’s performance under the
contract, Helton’s breach, and resulting damages, Vision Bank is entitled to summary judgment on
its breach of contract counterclaim.
Accordingly, it is ORDERED that Vision Bank’s Motion for Partial Summary Judgment
(Doc. 19) is GRANTED as to Count One of its Counterclaim against Plaintiff/CounterclaimDefendant J. Philip Helton.2
DONE and ORDERED this the 25th day of August 2011.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
The Court declines Vision Bank’s invitation to enter a partial final judgment before attorneys’
fees and related costs are calculated. See Doc. 19 at 1 n.1. Accordingly, Vision Bank is
ORDERED to file and serve, on or before August 29, 2011, whatever materials it deems necessary
and appropriate to support its claim for costs and fees. Helton is ORDERED to file and serve any
response on or before September 6, 2011, at which time the Court will take under submission the
issue of costs and fees.
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