PNC Bank, National Association v. Mobile Sheet Metal Co., Inc. et al

Filing 25

Order re: 14 MOTION for Judgment on the Pleadings filed by PNC Bank, National Association is GRANTED as to liability only. PNC Bank is entitled to recover from Mobile Sheet Metal the outstanding principal, late charges, accrued unpaid interest, and attorney fees, as set forth under the terms of the promissory note, which calculations, previously provided to the court, are to be supplemented by PNC Bank and filed in the form of a proposed order of final judgment, no later than Aug ust 12, 2014; Any objections are due 14 days after proposed final judgment is filed at which time court will take the proposed order of final judgment under submission; ( Responses due by 8/12/2014, Replies due by 8/26/2014., Motion to be taken under submission on 8/26/2014.). Signed by Magistrate Judge Sonja F. Bivins on 8/5/2014. (mjn)

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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION PNC BANK, NATIONAL, ASSOCIATION, et al., * * * * * * * * * * * Plaintiff, vs. MOBILE SHEET METAL CO., et al., Defendants. CIVIL ACTION NO. 14-00153-B ORDER This action is before the Court on Plaintiffs’ Motion for Judgment on the Pleadings. (Doc. 14). The motion has been briefed and is now ripe for resolution. I. Background Plaintiffs PNC Bank, National Association (“PNC Bank”) and its Bank”) predecessors made loans to (collectively referenced Mobile Metal (“Mobile Sheet Metal”). Sheet as “PNC Company, Inc. (Doc. 1 at 3; Doc. 1-3). On December 2, 2010, the outstanding loans were consolidated, and Mobile Sheet Metal executed a promissory note evidencing its indebtedness to PNC Bank for $387,094.68. (Doc. 1-3 at 2). Individual Defendants David B. Brown and Linda executed J. Brown guaranty agreements for the consolidated loan, and in addition, the loan was secured by two mortgages that have been recorded in Mobile County. (Docs. 1-4, 1-5, 1-8, 1-11). consolidated loan is in PNC Bank claims that the default and guaranties have not been satisfied. that the personal (Doc. 1 at 4). PNC Bank also asserts that as of April 1, 2014, the sum owed was $371,282.67, which consisted of principal in the amount of $325,954.63, accrued interest in the amount of $24,291.81 and late charges in the amount of $21,036.23. (Doc. 1 at 6, Doc. 19). According to PNC Bank, interest accrues at the rate of $65.64 from April 1, 2014 through the present, authorized and by that the interest promissory and late notes, charges with are interest increasing from 7.45% to 18% after default. (Docs 1 at 6, Doc. 19 at 2). Defendants filed an answer, wherein they admitted the truth of “all material Plaintiffs’ complaint. Plaintiffs’ individual thus, this Motion case (Doc. 11). for Defendants has individual Defendants. allegations” Judgment filed been a in Following the filing of on the Suggestion stayed contained with (Docs. 16, 18). Pleadings, of the Bankruptcy; respect to the Mobile Sheet Metal filed a response to the motion and admitted that PNC Bank is entitled to judgment against Mobile Sheet Metal in the amount of $325, 954.63, plus reasonable interest, and that PNC Bank is entitled to the security 2 pledged by Mobile Sheet Metal, Baptist namely Church property Subdivision, located Mobile at Lot County. 2, Central (Doc. 17). Mobile Sheet Metal also contends that it should receive credit for the value of the property that was pledged as collateral. Mobile Sheet Metal also disputes PNC’s assertion that it is entitled to the sum of $21,036.23 as late charges and to accrued interest through May 12, 2014 in the sum of $26,983.05. (Id.) II. Analysis After the pleadings are closed, but early enough not to delay trial, pleadings. a FED. party R. may CIV. move P. for on the “Judgment 12(c). judgment on the pleadings is appropriate when there are no material facts in dispute, and judgment may be rendered by considering the substance facts.” 1367, of pleadings and any judicially noticed See Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1370 allegations construed party. the in (11th in Cir. the the 1998). complaint light most Under are Rule accepted favorable to 12(c), as the true all and nonmoving Crumpton v. Stephens (In re Northlake Foods, Inc.), 715 F. 3d 1251, 1255 (llth Cir. 2013). The undersigned finds as a threshold matter, that Mobile Sheet Metal has waived any argument regarding the compilation of late charges or accrued interest because in 3 its answer, allegations” Admissions binding on it expressly contained in an the in answer party who admitted the are “the complaint. deemed makes material (Doc. judicial them. 11). admissions, See Best Canvas Prods. & Supplies, Inc. v. Ploof Truck Lines, Inc., 713 F. 2d 618, 621 (llth Cir. 1983) ("[A] party is bound by the admissions in his pleadings."); see also Shuler v. Ingram & Assocs., 441 Fed. Appx. 712, 719 (llth Cir. 2011)(a party is bound admissions probative by the are admissions proof value.). in possessing Further, his pleading the aside highest from its and such possible conclusory assertion in its response denying the appropriateness of PNC Bank’s claimed late fees and interest, Mobile Sheet Metal has set forth no grounds for contesting the late fees or interest. Moreover, the promissory note (attached to PNC Bank’s complaint) clearly provides that if a payment is 10 days or more late, Mobile Sheet Metal will be charged 5.00% of the unpaid portion of the regular payment, and that upon default, the interest rate increases from 7.25% to 18% per annum unless prohibited by law 1 . 1 (Doc. 1-3 at The Alabama legislature has expressly clarified that there is no maximum rate of interest for loan transactions whose original principal balance exceeds $2000. See Ala. Code § 8-8-5(a)(“Any person or persons [or] corporations. . . may agree to pay such rate or rates of interest for the loan. . . of money. . . as such person [or] corporation. . . may 4 2). Accordingly, Mobile Sheet Metal’s assertion regarding the late fee and interest are without merit. Turning next to Mobile Sheet Metal’s argument that PNC Bank is required to foreclose on the collateral first and credit it with the amount obtained for such collateral, this argument jurisdiction. has been flatly rejected in this See Whitney Bank v. Point Clear Dev., LLC, 2012 U.S. Dist. LEXIS 83869, *19, 2012 WL 2277597, *5 (S.D. Ala. June 18, 2012)(Steele, C.J.). In Whitney Bank, the Court observed: [C]ompelling a lender to foreclose on collateral instead of suing to recover unpaid debts (in the absence of any contract provision imposing such a condition precedent) would stretch the concept of mitigation beyond all reasonable boundaries. See, e.g., SE Property Holdings, LLC v. Foley, 2012 U.S. Dist. LEXIS 55853, 2012 WL 1382523, *4 (S.D. Ala. Apr. 20, 2012) (rejecting argument that lender had a duty to mitigate damages by foreclosing on property rather than allowing interest to accrue at default rate); REL Development, Inc. v. Branch Banking & Trust Co., 305 Ga. App. 429, 699 S.E.2d 779, 781-82 (Ga. App. 2010) (where contract provisions give lender the right to choose between foreclosure and filing suit, “the bank was under no duty to appellant to proceed against the collateral to collect payment,” such that “the bank had no obligation to mitigate its damages in relation to the collateral”); Fifth Third Bank v. Canvasser, 2011 Mich. App. LEXIS 1054, 2011 WL 2347707, *2 (Mich. App. June 14, 2011) (finding determine, notwithstanding any law of this state otherwise prescribing or limiting such rate or rates of interest; provided that the original principal balance of the loan. . . is not less than $2000”). 5 no merit to defendants’ contention that plaintiff lender breached duty to mitigate by suing instead of foreclosing on collateral, reasoning that “plaintiff suffered damages as soon as the promissory notes were defaulted on; foreclosure is merely one possible remedy, and under the contracts, plaintiff had its choice of remedies. Electing one rather than another does not per se constitute a failure to mitigate.”). Besides, Alabama courts have expressly declined to impose any such mandatory duty of foreclosure in the mortgage context. See Triple J Cattle, Inc. v. Chambers, 551 So. 2d 280, 282 (Ala. 1989) (“Upon a default by the mortgagor, the mortgagee has three remedies, and he may pursue any one or all of them until the debt is satisfied.... He is not required to foreclose the mortgage first, but may bring his action on the note alone.”). Id. at 5. setoff is interest Mobile thus rate Sheet without on Metal’s merit. default assertion regarding Accordingly, specified in the the a 18% parties’ promissory note is lawful and enforceable and shall be used as the basis for computing all interest accruing from date of default through the date of judgment. In addition to unpaid principal, interest and late fees, PNC Bank seeks an award of attorney’s fees and costs. “Alabama follows the American rule, whereby attorney fees may be recovered if they are provided for by statute or by contract. . .” (Ala. 2009) Jones v. Regions Bank, 25 So. 3d 427, 441 (citations omitted). A review of the promissory note clearly reflects that PNC Bank is entitled to an award of reasonable attorney’s 6 fees incurred in connection with this action. (Doc. 1-3 at 3). For these reasons, PNC Bank’s Motion for Judgment on the Pleading is GRANTED as to liability only. PNC Bank is entitled to recover from Mobile Sheet Metal the outstanding principal, attorney late fees, charges, as set accrued forth unpaid under the interest, and terms the of promissory note, which calculations, previously provided to the court, are to be supplemented by PNC Bank and filed in the form of a proposed order of final judgment, no later than August 12, 2014. Any objections to such calculations are due 14 days after the proposed order of final judgment is filed. At the end of such 14 day period, the proposed order will be under submission. ORDERED this 5th day of August, 2014. /s/ SONJA F. BIVINS UNITED STATES MAGISTRATE JUDGE 7

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