Vision Bank v. Foley et al
Filing
36
ORDER granting 22 Motion for Summary Judgment. Signed by Judge Callie V. S. Granade on 4/20/2012. (mab)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SE PROPERTY HOLDINGS, LLC,
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Plaintiff,
v.
JOHN B. FOLEY, IV, and
LAUREN M. FOLEY,
Defendant.
CIVIL NO. 11-00189-CG-C
ORDER
This matter is before the court on the motion for summary judgment of the
plaintiff, SE Property Holdings, LLC (“SEPH”). SEPH is the successor in interest to
the original plaintiff in this action, Vision Bank. This court previously granted
Vision Bank’s motion to substitute party (Doc. 29), which served to designate SEPH
as the plaintiff after it merged with Vision Bank. See Doc. 28-1. Because the
plaintiff’s motion for summary judgment was filed before SEPH succeeded Vision
Bank, however, this court will address the parties’ arguments as they were stated
by the parties in their motions and briefs. After consideration of the parties’ briefs
in support and in opposition (Docs. 23, 27, and 34), and for the reasons enumerated
below, the court finds that SEPH’s motion for summary judgment is due to be
GRANTED.
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I.
(a)
FACTUAL BACKGROUND
LOCAL RULE 7.2(b)
As an initial matter, Local Rule 7.2(b) states with regard to a party opposing
summary judgment that “if it is contended that there are material factual disputes,
[the opposing party] shall point out the disputed facts appropriately referenced to
the supporting document or documents filed in the action.” The defendants have
not done so, and therefore the court presumes that there exist no disputed material
facts in the case. Accordingly, the court adopts the factual allegations contained in
Vision Bank’s “Suggested Determinations of Law and Order” (Doc. 25). See Patton
v. City of Hapeville, Ga., 162 Fed. App’x. 895, 896 (11th Cir. 2006).
Thus, the facts of the case are as follows: as part of a loan transaction in
September 2009, John Foley executed a “Multipurpose Note and Security
Agreement” in the principal amount of $379,634.03 (“Loan #93955” also referred to
as “the Note”). (Doc. 1-6). Loan #93955 was scheduled to mature on November 30,
2010. Id. at 1. The Note is a form contract, with the applicable provisions checked.
By its terms, the Note is due on demand or, if no demand, then “[p]rincipal and
interest are payable in 13 equal installment payments, amortized over 240
payments, in the amount of $2,738.68 each, commencing on October 30, 2009 and
continuing monthly thereafter, and one (1) final payment consisting of the full
amount of principal and all accrued interest remaining due and payable on
November 30, 2010.” Id. at 1. The Note gives Vision Bank the right to accelerate
the maturity of the Note if the borrower defaults. Among the listed events of
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default is “fail[ure] to make a required payment when due.” Id. The Note also
contains provisions regarding post-maturity interest, which states:
Post-Maturity Interest Interest will accrue after maturity on
the unpaid balance of this note on the same basis as interest
accrues prior to maturity unless a specific post maturity rate is
agreed to in the next sentence.
Id. The next sentence is checked and states that “interest will accrue at the rate of
18.00% per year on the balance of this note not paid at maturity, including maturity
by acceleration.” Id. Finally, in the event of default, the Note permits Vision Bank
to recover reasonable costs and attorney’s fees incurred in attempting to collect the
debt. Id.
On approximately January 3, 2010, Foley executed a “Modification,
Extension, Change in Terms Agreement” which modified the variable interest rate
on Loan #93955 but did not change the loan’s maturity date. (Doc. 1-7). In October
2010, Foley did not make the monthly payment as required by the loan agreement,
and the bank subsequently declared Loan #939500 in default on November 9, 2010.
(Doc. 24-1, p. 3). As of February 10, 2012, the total amount owed on Loan #93955,
including the principal, pre-default interest, and post-default interest, was
$466,406.02. Id.
Foley also executed a second “Multipurpose Note and Security Agreement,”
this one with his wife, Lauren, in the principal amount of $474,795.51 (“Loan
#301700,” also referred to as “the second Note”). (Doc. 1-9). Loan #93955 was
scheduled to mature on November 30, 2010. Id. at 1. The second Note is also a
form contract, with the applicable provisions checked. By its terms, Loan #301700
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is due on demand or, if no demand, then “[p]rincipal and interest are payable in 13
equal installment payments, amortized over 360 payments, in the amount of
$2,873.33 each, commencing on October 31, 2009 and continuing monthly
thereafter, and one (1) final payment consisting of the full amount of principal and
all accrued interest remaining due and payable on November 30, 2010.” Id. at 1.
The second Note contained the same provisions with regard to acceleration of
maturity, the definition of a default, and post-default interest as described in Loan
#939500, supra.
On approximately January 3, 2010, the Foleys executed a “Modification,
Extension, Change in Terms Agreement” which modified the variable interest rate
on Loan #301700 but did not change the loan’s maturity date. (Doc. 1-10). The
Foleys subsequently failed to pay the loan when it matured in November 2010, and
Vision Bank accordingly declared loan #301700 to be in default on December 10,
2010. (Doc. 24-1, pp. 4-5). Vision Bank then foreclosed on the property securing the
note on July 15, 2011. Id. Vision Bank applied a credit of $329,500.00 to the
amounts due on Loan #301700. Id. at 5.
Two weeks after the foreclosure, Vision Bank sold the foreclosed property to
SEPH for $399,500.00 and applied a further $70,000 credit to the amount due on
Loan #301700 (representing the difference between the sale price to SEPH and the
foreclosure amount). Id. As of February 10, 2012, the total amount owed on Loan
#301700, including the principal, pre-default interest, and post-default interest was
$144,263.19. Id. at 6.
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II.
SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(a) provides that summary judgment shall
be granted “if the movant shows that there is no genuine dispute as to any material
fact and that the movant is entitled to judgment as a matter of law.” The trial
court’s function is not “to weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). “The mere existence of some evidence to
support the non-moving party is not sufficient for denial of summary judgment;
there must be ‘sufficient evidence favoring the nonmoving party for a jury to return
a verdict for that party.’” Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002)
(quoting Anderson, 477 U.S. at 249). “If the evidence is merely colorable, or is not
significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at
249-250. (internal citations omitted).
The basic issue before the court on a motion for summary judgment is
“whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.”
See Anderson, 477 U.S. at 251-252. The moving party bears the burden of proving
that no genuine issue of material fact exists. O'Ferrell v. United States, 253 F.3d
1257, 1265 (11th Cir. 2001). In evaluating the argument of the moving party, the
court must view all evidence in the light most favorable to the non-moving party,
and resolve all reasonable doubts about the facts in its favor. Burton v. City of
Belle Glade, 178 F.3d 1175, 1187 (11th Cir. 1999). “If reasonable minds might
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differ on the inferences arising from undisputed facts, then [a court] should deny
summary judgment.” Hinesville Bank v. Pony Exp. Courier Corp., 868 F.2d 1532,
1535 (11th Cir. 1989) (citing Mercantile Bank & Trust v. Fidelity & Deposit Co., 750
F.2d 838, 841 (11th Cir. 1985)).
Once the movant satisfies his initial burden under Rule 56(a), the nonmoving party “must make a sufficient showing to establish the existence of each
essential element to that party's case, and on which that party will bear the burden
of proof at trial.” Howard v. BP Oil Co., 32 F.3d 520, 524 (11th Cir. 1994)(citing
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Otherwise stated, the nonmovant must “demonstrate that there is indeed a material issue of fact that
precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608
(11th Cir. 1991). The non-moving party “may not rely merely on allegations or
denials in its own pleading; rather, its response .... must be by affidavits or as
otherwise provided in this rule be set out specific facts showing a genuine issue for
trial.” Vega v. Invsco Group, Ltd., 432 Ded. App’x. 867, 870 (11th Cir. 2011). “A
mere ‘scintilla’ of evidence supporting the [non-moving] party’s position will not
suffice; there must be enough of a showing that the jury could reasonably find for
that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citation
omitted). “[T]he nonmoving party may avail itself of all facts and justifiable
inferences in the record taken as a whole.” Tipton v. Bergrohr GMBH-Siegen, 965
F.2d 994, 998 (11th Cir. 1992). “Where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party, there is no genuine issue for
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trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986) (internal quotation and citation omitted).
III.
LEGAL ANALYSIS
In support of its motion for summary judgment, SEPH has presented signed
copies of the two Notes and appurtenant modification agreements. (Docs. 1-6, 1-7,
1-9, and 1-10). SEPH has also presented an affidavit from Karen Harmon, Vision
Bank’s Vice President for Operations and now SEPH’s Assistant Secretary,
attesting that the two Notes are in default, that demand has been made, and setting
forth the outstanding balances. See Doc. 24-1.
(a)
PROOF OF THE ELEMENTS OF BREACH OF CONTRACT
The defendants argue that summary judgment is inappropriate because
Vision Bank has failed to sufficiently establish that it fully performed its obligations
under Loan #939500 and Loan #301700. (Doc. 27). Specifically, the defendants
assert that there is no evidentiary proof that Vision Bank ever actually loaned any
money to them under either loan. Id. at 2. This argument is belied by the two loan
documents themselves, each of which recites the amount of the respective loan, and
states that “I [,borrower,] have received all of this principal sum.” (Doc. 1-6, p. 1
and Doc. 1-9, p. 1). Loan #93955 is signed by John Foley alone and Loan #301700 is
signed both by John and Lauren Foley. Id. This clearly establishes both the
existence of a valid contract binding Vision Bank and the Foleys, as well as Vision
Bank’s performance under the two loan agreements. See Vision Bank v. 145, LLC,
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2011 WL 5289070, *4 (S.D. Ala. 2011) (noting that a creditor proves its performance
by showing that it loaned money to the debtor).
As for the remaining elements of breach of contract, Vision Bank has
provided the affidavit of its Vice President of Operations, Karen Harmon, who
states that John Foley failed to make the monthly payment as required by Loan
#93955 in October 2010 and that the loan was declared to be in default in November
2010. (Doc. 24-1, p. 3). Harmon also states that Loan #301700 reached maturity
without payment by John and Lauren Foley. Id. at 4. Finally, Vision Bank also
asserts that it was damaged by the Foleys’ nonperformance, and provides case law
to support the proposition that the requisite element of damage is met when a
lender is not repaid. (Doc. 23, p. 12) (citing Vision Bank v. 145, LLC, 2011 WL
5289070, *4 (S.D. Ala. 2011).
The Foleys have not disputed these allegations, beyond their conclusory
assertion that “Vision Bank has not established the required elements for breach of
contract through admissible evidence.” (Doc. 27, p. 2). This argument holds no
water. No reasonable jury could possibly find for the Foleys under the facts recited
above.
(b)
ALLEGED FAILURE TO MITIGATE DAMAGES
John Foley also opposes summary judgment with regard to Loan #93955 on
the ground that Vision Bank failed to mitigate its damages by not foreclosing on his
property and instead allowing interest to accrue from the date that the loan was
declared to be in default until the present. (Doc. 27, p. 3). In support of this rather
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conclusory legal proposition, Foley cites but one case, the facts of which bear no
resemblance to the facts of the case at bar. The cited case, Britton v. Doehring, 242
So.2d 666 (Ala. 1970), arose out of an automobile collision and hinged on whether
the plaintiff’s failure to wear a seatbelt was admissible evidence of her failure to
mitigate damages. Id. at 672. This case tells the court nothing about a bank’s
purported duty to foreclose upon property within a given period of time, rather than
allowing interest to accrue. If Foley wishes to pursue such a legal theory, it is
incumbent upon him to perform the necessary research and develop that argument,
rather than citing to a solitary, inapposite case and expecting this court to fill in the
gaps. See Vision Bank v. Merritt, 2010 WL 5474161, *4 (S.D. Ala. 2010) (citing
Federal Ins. Co. v. County of Westchester, 921 F.Supp. 1136, 1139 (S.D.N.Y. 1996)
(“Under the adversary system, it is counsel’s responsibility to explain why these
points have legal merit; the Court does not serve as counsel’s law clerk.”).
Additionally, while Vision Bank does have the right to foreclose, foreclosure
is not a condition precedent to recovery. See Doc. 1–6, p. 2, “Additional Terms of the
Security Agreement,” ¶13 and Doc. 1-9, p. 2, “Additional Terms of the Security
Agreement,” ¶ 13) (setting out Bank's rights under security agreement in event of
default).
(c)
THE AMOUNT OF POST-JUDGMENT INTEREST
Post-judgment interest in a civil case is determined by 28 U.S.C. § 1961(a)
which provides that the rate of interest “shall be calculated from the date of the
entry of the judgment [ ] at a rate equal to the weekly average 1–year constant
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maturity Treasury [bill] ... for the calendar week preceding the date of the
judgment.” Id.; see also G.M. Brod & Co., Inc. v. U.S. Home Corp., 759 F.2d 1526,
1542 (11th Cir. 1985) (holding that § 1961 applies in diversity cases). Vision Bank
contends that a different rate applies in this instance—the 18% default interest rate
specified in the Note. The issue is actually twofold: (1) Can the parties override the
statutory rate by agreement? (2) If so, does the contract in this case demonstrate
such an agreement?
Although the Eleventh Circuit has never addressed the issue, the consensus
among courts that have is that parties may agree to a different post-judgment
interest rate. See, e.g., FCS Advisors, Inc. v. Fair Finance Co., Inc., 605 F.3d 144,
148–49 (2nd Cir. 2010); In re Riebesell, 586 F.3d 782, 794 (10th Cir. 2009); Cent.
States, Se. & Sw. Areas Pension Fund v. Bomar Nat'l, Inc., 253 F.3d 1011, 1020 (7th
Cir. 2001); In re Lift & Equip. Serv., Inc ., 816 F.2d 1013, 1018 (5th Cir. 1987);
Carolina Pizza Huts, Inc. v. Woodward, 67 F.3d 294 (4th Cir. 1995) (unpublished
table decision). However, “federal law requires ‘language expressing an intent that
a particular interest rate apply to judgments or judgment debts' to be ‘clear,
unambiguous and unequivocal.’ ” Jack Henry & Associates, Inc. v. BSC, Inc., 753
F.Supp.2d 665, 670 (quoting FCS Advisors, 605 F.3d at 148). This requirement
arises from the principal that the debt is extinguished upon entry of judgment and a
new debt, a judgment debt, is created. Id. “The parties must explicitly state that
they are agreeing to a postjudgment interest rate.” Id.
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The loan agreements in this case do not contain the type of “clear,
unambiguous and unequivocal language” necessary to circumvent the statutory
interest rate. Here, the parties merely agreed that “interest will accrue at the rate
of 18.00% per year on the balance of this note not paid at maturity, including
maturity by acceleration.” (Doc. 1-6, p. 1 and Doc. 1-9, p. 1). Vision Bank argues
that “post-maturity” includes all times after the entry of judgment. (Doc. 23, p. 14).
Similar arguments have been uniformly rejected. See, e.g., In re Riebesell, 586 F.3d
at 794 (contract's default interest rate provision not sufficient to override statutory
rate); Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96, 102 (2nd Cir. 2004)
(contractual agreement adding 15% interest rate to arbitration award from “date
payment was due” did not override statutory rate); Jack Henry, 753 F.Supp.2d at
670–72 (interest rate applicable to past due amounts insufficient). Because Loan
#93955 and Loan #301700 do not contain an express provision for a post-judgment
interest rate, Vision Bank is entitled to post-judgment interest only to the extent
provided by § 1961(a).
(d)
ATTORNEYS’ FEES AND COSTS
Vision Bank also argues that it should recover from the Foleys all of its
reasonable expenses incurred to collect this debt. As a reasonable expense, Vision
Bank seeks attorneys' fees in the amount of $27,530.00 and expenses of $927.18. In
support thereof, Vision Bank provides the affidavits of it counsel, Ashley Swink and
its expert, Charles J. Fleming. (Doc. 24-2 and Doc. 24-3, respectively).
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In the paragraph entitled “Attorneys Fees and Other Collection Costs”, the
promissory note provides as follows:
If I am in default and you have to sue or take other steps to
collect or secure this note, I agree to pay you reasonable costs. If
the original amount financed is greater than $300 and if you
refer this note to an attorney who is not your salaried employee,
I agree that these costs include a reasonable attorney’s fee.
(Doc. 1-6, p. 2, “Additional Terms of the Note,” ¶12 and Doc. 1-9, p. 2, “Additional
Terms of the Note,” ¶12). Based on the unambiguous terms of the note, along with
the affidavits of Swink and Fleming, the court finds that Vision Bank is entitled to
recover costs and reasonable attorneys fees. See Peppertree Apartments, Ltd. v.
Peppertree Apartments, 631 So.2d 873, 878 (Ala. 1993) (“The intention of the
parties controls when a court construes the terms of a promissory note, and that
intention is to be derived from the provisions of the contract, if the language is plain
and unambiguous.”); see also Doc. 24-2 and Doc. 24-3.
In regard to the reasonableness of the fees and expenses submitted, the Court
must consider and address the relevant factors under Alabama law.1 Lolley v.
Citizens Bank, 494 So.2d 19 (Ala. 1986) (vacating judgment pertaining to attorneys'
fees for collection of a promissory note where the record did not disclose what
factors the court considered in reaching its decision).
The complete list of criteria used in the estimation of the value of an
attorney's services under Alabama law includes the following: (1) the nature and
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The complaint was brought on a basis of diversity jurisdiction, thus, the laws of the
State of Alabama apply. Additionally, both loan agreements provide that Alabama law will
apply. (Doc. 1-6, p. 2, ¶13 and Doc. 1-9, p. 2, ¶13).
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value of the subject matter 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 weight of his responsibilities; (6)
the measure of success achieved; (7) the reasonable expenses incurred; (8) whether
a fee is fixed or contingent; (9) the nature and length of a professional relationship;
(10) the fee customarily charged in the locality for similar legal services; (11) the
likelihood that a particular employment may preclude other employment; and (12)
the time limitations imposed by the client or by the circumstances. Wachovia Bank,
National Ass’n v. Johnson, 2009 WL 1383315, *5 (S.D. Ala. 2009) (quoting Van
Schaack v. AmSouth Bank, N.A., 530 So.2d 740, 749 (Ala. 1988). Of course, not all
of the criteria will be applicable.
As stated, supra, the Foleys did not address the issue of fees or expenses in
their opposition brief, and thus, did not provide the court with any evidence to
dispute Ms. Swink’s or Mr. Fleming’s affidavits. Thus, upon consideration of the
affidavit and the relevant factors set forth above, the Court finds that the attorneys'
fees and expenses are reasonable under the circumstances. Swank and Fleming
outline their knowledge of the length of the attorney-client relationship between
Vision Bank and Phelps Dunbar for the collection of this debt; the fees and expenses
charged to Vision Bank and the customary fee charged to similar business clients by
firms in the Mobile area for similar litigation; and the services performed for Vision
Bank consisting of the preparation and filing of the lawsuit and the motion for
summary judgment. See Docs. 24-2 and 24-3.
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“The court, either trial or appellate, is itself an expert on the question and
may consider its own knowledge and experience concerning reasonablen and proper
fees and may form an independent judgment with or without the aid of witnesses.”
Norman v. Housing Authority of City of Montgomery, 836 F.2d 1292, 1303 (11th
Cir. 1988) (citations omitted). This court finds no reason to dispute or question
Swink’s or Fleming’s opinion, a conclusion that is bolstered in part by the fact that
the defendants did not see fit to do so themselves. Accordingly, summary judgment
is GRANTED in favor of Vision Bank as to its claim for a reasonable attorneys' fee
and expenses. By separate document, judgment shall be entered against John B.
Foley, IV and Lauren M. Foley in the amount of $27,530.00 for attorneys' fees,
expenses in the amount of $927.18, and expert fees in the amount of $275.00.
IV.
CONCLUSION
Upon consideration of the evidence, and for the reasons enumerated above,
the Court finds that there is no genuine dispute as to any material fact regarding
plaintiff’s claim and it is entitled to judgment as a matter of law. Accordingly,
Vision Bank/SEPH’s motion for summary judgment as to Counts III and IV are
GRANTED.
DONE and ORDERED this 20th day of April 2012.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE
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