SYNOVUS BANK v. QUAIL LAKE DEVELOPERS LLC ET AL

Filing 66

ORDER granting 33 Motion for Summary Judgment. 1. The Motion for Summary Judgment (Doc. 33 ) is GRANTED on the issue of liability only. Plaintiff shall file an affidavit with a complete and current account of all damages. 2. Defendants' Counterclaims are dismissed with prejudice. Signed by JUDGE RICHARD SMOAK on 10/18/2012. (jcw)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION
SYNOVUS BANK, formerly known
as Columbus Bank and Trust Co., as successor
in interest through name change and by merger
with Coastal Bank and Trust of Fla. F/K/A
Bank of Pensacola,
Plaintiff,
v.

CASE NO. 3:12-cv-132-RS-EMT

QUAIL LAKE DEVELOPERS, LLC.,
CRAIG R. SIMS, and
DANIEL YANNETTE,
Defendants.
_________________________________________/
ORDER
Before me are Synovus Bank’s Motion for Summary Judgment (Doc. 33),
Defendants’ Response (Doc. 46), Synovus Bank’s Reply (Doc. 56), and
Defendants’ Surreply (Doc. 60).
STANDARD OF REVIEW
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.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S. Ct. 2505, 2512 (1986).
The moving party has the burden of showing the absence of a genuine issue as to
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any material fact, and in deciding whether the movant has met this burden, the
court must view the movant’s evidence and all factual inferences arising from it in
the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398
U.S. 144 (1970); Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).
Thus, if reasonable minds could differ on the inferences arising from undisputed
facts, then a court should deny summary judgment. Miranda v. B & B Cash
Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992) (citing Mercantile Bank
& Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir. 1985)). However,
a mere ‘scintilla’ of evidence supporting the nonmoving 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) (citing
Anderson, 477 U.S. at 251).
BACKGROUND
The background of this action is largely undisputed. Quail Lake Developers,
LLC (“Quail Lake”) purchased property in Escambia County, Florida, in 2005. On
April 16, 2007, Quail Lake refinanced the property and executed a promissory note
to the Bank of Pensacola, a predecessor to Synovus Bank, for over $1.3 million.
The note was renewed on May 23, 2008, December 19, 2008, and January 21,
2010. Defendants Sims and Yannette executed continuing guaranties with the
original note and each renewal. When the January 21, 2010 note matured on

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January 21, 2011, Synovus unilaterally extended the maturity date through April
21, 2011. The maturity date was again unilaterally extended by Synovus through
July 21, 2011. Synovus’ policies permitted it to unilaterally extend the maturity
dates only twice. Accordingly, Synovus and Defendants entered into negotiations
to further extend the maturity date. Defendants claim that there was an agreement
formed in July of 2011 that Synovus would extend the loan for 90 days and then
the loan would be amortized on a 15-year, 4.5% fixed interest schedule with a five
year balloon, and Defendant Sims would supply property located in North Carolina
as collateral. On August 9, 2011, Synovus sent a letter to Quail Lake and Sims
outlining the terms and conditions it would be willing to consider for renewal of
the loan. On August 15, 2011, Quail Lake executed and delivered to Synovus a
promissory note in the principal amount of $992,446.77, with a maturity date of
November 15, 2011. The note provides that it is to be construed under Florida law.
Sims and Yanette contemporaneously executed guaranties, which provide that they
are to be construed under Georgia law. Quail Lake made the monthly interest
payments as required, but failed to make the payment due at maturity.
Defendants claim that when the original note was executed in 2007, the
Bank of Pensacola assured Quail Lake that the loan would be renewed annually.
They also claim that Synovus refused to renew the note in November of 2011
pursuant to the parties’ agreement, and instead would only renew the note if Sims

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cross-collateralized a property subject to a separate loan with Synovus, which
would result in over-collateralization of the loan at issue here. Accordingly,
Defendants argue, Synovus is estopped from calling the note due and is liable for
both negligent and fraudulent misrepresentation. Synovus has moved for summary
judgment on its claims for defaulted promissory note against Quail Lake and
breach of guaranty by Sims and Yannette as well as the counterclaims.
ANALYSIS
Defendants do not dispute that the note is due and has not been paid. They
instead rely on five affirmative defenses: breach of fiduciary relationship based on
“financial guidance as to the Defendants’ business ventures,” estoppel for violation
of agreement to continue financing, unclean hands, accounting, and accord and
satisfaction.
In his affidavit in opposition for Synovus’ motion for summary judgment
(Doc. 48), Sims stated that he has “had an extensive lending relationship with the
Plaintiff bank with a proven track record of payment,” and that “Synovus, or its
predecessors, . . . fraudulently induced Quail Lake, Yannette, and [Sims] to enter
into the banking relationship with the Bank of Pensacola, based on the Bank’s
representations that the Bank was financially secure and would continue the
banking relationship with [them] and renew [their] loans annually.” Doc. 48, ¶¶ 56. Further, “[i]n reliance on Synovus’ representation that it would continue to

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renew the loan annually, and while the terms of the renewal were being drawn up
as agreed to by the parties, the managing members of Quail Lake, Daniel Yannette
and [Sims], in [their] individual capacities, executed the Guaranties.” Id. at ¶ 9.
Defendants first argue that Synovus has breached its fiduciary duties to them
and are therefore estopped from enforcing the terms of the note and guaranties.
However, under Florida law, it is clear that a lender does not ordinarily owe
fiduciary duties to its borrower. “Generally, the relationship between a bank and
its borrower is that of creditor to debtor, in which parties engage in arms-length
transactions, and the bank owes no fiduciary responsibilities.” Capital Bank v.
MVB, Inc., 644 So. 2d 515, 518 (Fla. 3d DCA 1994). The fact that a borrower
trusted a lender, without more, does not create a fiduciary relationship. See Azar v.
Nat’l City Bank, 2009 WL 3668460, at *2 (M.D. Fla. 2009) (citing American
Honda Motor Co., Inc. v. Motorcycle Information Network, Inc., 390 F. Supp. 2d
1170, 1179 (M.D. Fla. 2005)). To impose fiduciary duties on a lender, the bank
must know or have “reason to know of the customer’s trust and confidence under
circumstances exceeding an ordinary commercial transaction.” Capital Bank, 644
So. 2d at 521. A lender’s long standing business relationship with a borrower,
without more, cannot transform the lender-borrower relationship into a fiduciary
one. See, e.g., Klein v. First Edina Nat’l Bank, 293 Minn. 418, 196 N.W. 2d 619
(1972) (cited repeatedly in Capital Bank, 644 So. 2d 515).

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Without citing any authority, Defendants argue that whether a fiduciary
relationship exists is a determination for the fact finder to make at trial. However,
as with any other factual dispute, this issue can be resolved on a motion for
summary judgment if there is no genuine issue as to any material fact.1 I find that,
even construing the evidence in the light most favorable to Defendants, the
relationship between them and Synovus was an ordinary lender-borrower
relationship, so Synovus and its predecessors owed no fiduciary duties to
Defendants.
Three of the other four affirmative defenses - estoppel for violation of
agreement to continue financing, unclean hands, and accord and satisfaction - are
based on the contentions that Defendants were assured that the note would be
renewed annually and that Defendants and Synovus had reached an agreement
regarding renewal of the loan in late 2011. The counterclaims are also based on
those contentions. Although Defendants argue that the Bank of Pensacola
represented to them that it was financially secure and would renew the loan
annually, there is no allegation that this “misrepresentation” was in writing. There
is also no allegation that any agreement reached regarding renewal of the loan in
late 2011 was in writing.

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In fact, it could be resolved even on a motion to dismiss. In Azar v. National City Bank, 2009 WL 3668460, at *2
(M.D. Fla. 2009), the plaintiff’s fiduciary duty claim was disposed of on a motion to dismiss where he “[had] not
asserted anything more than a longstanding relationship between himself and the bank and his trust in the bank’s
employees to guide him in making financial decisions.”
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Florida law provides that a “debtor may not maintain an action on a credit
agreement unless the agreement is in writing, expresses consideration, sets forth
the relevant terms and conditions, and is signed by the creditor and the debtor.”
Fla. Stat. § 687.0304. “‘Credit agreement’ means an agreement to lend or forbear
repayment of money, goods, or things in action, to otherwise extend credit, or to
make any other financial accommodation.” Id. The plain language of section
687.0304 makes clear that the term “credit agreement” includes a representation to
renew a loan. A loan renewal is a means to “forbear repayment.” Forbearance is
the “act of refraining from enforcing a right, obligation, or debt.” Black’s Law
Dictionary 294 (3d pocket ed. 2006). By renewing a loan, the creditor agrees to
make payments due at a later date. The creditor refrains from enforcing their right
to collect debt on a certain date and agrees to a right to collect on a future date.
Further, section 687.0304 provides that “credit agreements” include “mak[ing] any
other financial accommodation.” Certainly, this expansive definition includes any
purported oral representations to renew loans. Based on the plain language of the
statute, Defendants cannot maintain any action based upon Synovus or its
predecessors’ oral representations regarding annual renewal of the loan or any
purported agreement reached before they signed final 90-day extension and
guaranty agreements. Accordingly, each of Defendants’ counterclaims must be
dismissed.

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Finally, the parol evidence rule precludes consideration of oral agreements
which contradict the terms of a valid contract. See, e.g., Solary v. Webster, 35 Fla.
363, 373 (1895); Ga. Code § 13-2-2 & 24-6-1. This is because “reliance upon
alleged oral misrepresentations is unreasonable and unjustified where the
subsequently executed written document does not contain the alleged
representations or promises.” Jaffe v. Bank of Am., N.A., 667 F. Supp. 2d 1299,
1321 (S.D. Fla. 2009), aff'd, 395 F. App’x 583 (11th Cir. 2010). Thus,
Defendants’ argument that the note was to be renewed annually and that an
agreement had been reached requiring Synovus to continue to finance the loan is
without merit. Accordingly, the estoppel, unclean hands, and accord and
satisfaction affirmative defenses fail. Synovus has provided an accounting, which
was requested by Defendants as a final affirmative defense.

IT IS ORDERED:
1. The Motion for Summary Judgment (Doc. 33) is GRANTED on the issue of
liability only. Plaintiff shall file an affidavit with a complete and current account
of all damages.
2. Defendants’ Counterclaims are dismissed with prejudice.

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ORDERED on October 18, 2012.
/s/ Richard Smoak
RICHARD SMOAK
UNITED STATES DISTRICT JUDGE

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