CERTUSBANK NA v. MLJJ PROPERTIES LLC et al

Filing 34

ORDER granting 21 Motion for Summary Judgment. Ordered by Judge Clay D. Land on 08/05/2013.(aaf)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
CERTUSBANK, N.A., as successor *
by assignment to FIRST GEORGIA
BANKING COMPANY,
*
Plaintiff,

*
CASE NO. 3:12-cv-46 (CDL)

vs.

*

MLJJ PROPERTIES, LLC, MARTIN J. *
MULLIGAN,
and
LINDA
D.
CHAMBERLIN,
*
Defendants.

*
O R D E R

Sometimes
Using

litigation

litigation

for

is

such

used

purposes

to
is

delay

the

inevitable.

regrettable

but

not

prohibited as long as the positions asserted are not frivolous.
Defendants’
legitimate

avoidance
defense

in

of

its

this

legal

action

obligations

approaches

the

with

no

line

of

sanctionable conduct, but the Court declines to find their nonmeritorious

positions

to

be

frivolous.

The

Court

does

not

hesitate to conclude, however, that Plaintiff is entitled to
summary judgment on its claims.
In 2011, Defendants executed a Commercial Promissory Note
(“Note”) in the principal amount of $328,205.95, and Defendants
Martin Mulligan (“Mulligan”) and Linda Chamberlin (“Chamberlin”)
executed personal guaranties for repayment of the Note.

When

the Note matured, Defendants defaulted under the terms of the
Note and the guaranties.
After assignment of the Note to Plaintiff CertusBank, N.A.
(“CertusBank”), CertusBank demanded payment.
to

pay,

requiring

the

filing

of

this

Defendants refused

action

by

CertusBank.

Defendants do not contest that they are in default on the Note,
but they maintain that CertusBank has not presented sufficient
proof that the Note was assigned to it.

They also maintain that

a jury must determine the amount owed, even though a middle
school student could easily do the arithmetic to determine the
amount due based on the present record.

The present record

clearly establishes that the Note was assigned to CertusBank,
that Defendants are in default, and that the amount due is not
seriously

in

dispute.

Accordingly,

the

Court

grants

CertusBank’s Motion for Summary Judgment (ECF No. 21).
SUMMARY JUDGMENT STANDARD
Summary judgment may be granted only “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.”
Civ. P. 56(a).

In determining whether a

genuine

Fed. R.

dispute of

material fact exists to defeat a motion for summary judgment,
the evidence is viewed in the light most favorable to the party
opposing summary judgment, drawing all justifiable inferences in
the opposing party’s favor.

Anderson v. Liberty Lobby, Inc.,

2

477 U.S. 242, 255 (1986).

A fact is material if it is relevant

or necessary to the outcome of the suit.

Id. at 248.

A factual

dispute is genuine if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party.

Id.

FACTUAL BACKGROUND
On

January

Martin

Mulligan,

“Defendants”)
Georgia

14,

Defendants

and

executed

Banking

$328,205.95.

2011,

a

Company

Linda

the

Properties,

Chamberlin

promissory
in

MLJJ

note

original

in

LLC,

(collectively
favor

principal

of

First

amount

of

Compl. Ex. A, Note, ECF No. 1-1; Pl.’s Mot. for

Summ. J. Ex. A, Crawford Aff. ¶ 6, ECF No. 21-1; Mulligan Dep.
18:11-25, ECF No. 23; Chamberlin Dep. 9:22-10:11, ECF No. 24.
On that same date, Mulligan executed a personal guaranty for
repayment

of

all

sums

due

under

the

Mulligan Guaranty, ECF. No. 1-2.

Compl.

Ex.

B,

Chamberlin also executed a

personal guaranty on that same date.
Guaranty, ECF No. 1-3.

Note.

Compl. Ex. C, Chamberlin

The Note matured on March 15, 2011.1

Note 1.
The

Federal

Deposit

Insurance

Corporation

(“FDIC”)

was

appointed as receiver for First Georgia Banking Company after
the bank failed on May 20, 2011.

As part of the receivership,

the FDIC negotiated with CertusBank to take over outstanding

1

Hereinafter, the Court will refer to the Mulligan Guaranty and the
Chamberlin Guaranty collectively as “the Guaranties.”

3

loans of First Georgia Banking Company.

The FDIC executed an

Assignment of Loan Documents (“Assignment”) on November 7, 2011,
assigning all of its rights, title, and interest in the failed
bank’s loan documents to CertusBank.
Assignment, ECF No. 21-4.
in

this

Assignment

as

Crawford Aff. App’x 3,

The Note and Guaranties were included
evidenced

by

the

affidavit

of

Tom

Crawford, CertusBank’s Senior Vice President, and the recorded
Assignment.
contend

that

Assignment 1-2; Crawford Aff. ¶ 12.
their

loan

and

Guaranties

were

Defendants

never

properly

assigned to CertusBank because another employee of CertusBank,
Paul Sparks, allegedly without any legal authority to do so,
signed the Assignment as Receiver for the FDIC and on behalf of
Assignee CertusBank.
It is undisputed that CertusBank sent notice of non-payment
and demand for payment in full under the loan documents to the
Defendants on October 17, 2011.

Compl. Ex. D, Letter from M.

Wing to Defendants (Oct. 17, 2011), ECF No. 1-4.

This notice

included notice pursuant to O.C.G.A. § 13-1-11 that the bank
would enforce the portions of the Note providing for payment of
reasonable attorneys’ fees if Defendants did not pay the amount
due under the Note within ten days of receiving the notice. Id.
at 2.
It is also undisputed that Defendants have not paid the
amounts due under the Note.

Defs.’ Statement of Material Facts

4

¶ 12, ECF No. 27.

Furthermore, the present record establishes

that

21,

as

of

principal,

March

$16,824.02

2013,
in

Defendants

interest,

owed

and

$328,205.95

$500.00

in

in

fees.

Crawford Aff. App’x 2, Loan Payoff Statement (Mar. 21, 2013),
ECF No. 21-3.

It is also clear from the loan documents that

interest continues to accrue at a per diem rate of $59.26.
Crawford Aff. ¶ 17.

Id.;

Finally, under the terms of the Note,

Defendants are responsible for costs of collection, including
reasonable attorneys’ fees, in the amount of $34,558.00 as of
March 21, 2013.

Crawford Aff. ¶ 20.
DISCUSSION

Defendants admit that they signed the Note and guaranties
and that they are in default.

They argue, however, that a jury

must decide (1) whether the Note and Guaranties were properly
assigned to CertusBank and (2) the amount Defendants owe under
the Note.
Defendants argue that Paul Sparks signed the Assignment on
behalf of the FDIC and that he did not have authority to do so.
But, Defendants point to nothing in the record to support this
contention.

The record establishes that under a limited power

of attorney Paul Sparks was authorized to act on behalf of the
FDIC for the purpose of executing the Assignment.

Pl.’s Reply

in Supp. of Mot. for Summ. J. Ex. A, Limited Power of Att’y, ECF
No.

31-1

at

2.

Defendants’

argument

5

to

the

contrary

is

meritless.

No genuine factual dispute exists on this issue.

The Note and Guaranties were properly assigned to CertusBank.
See 685 Penn, LLC v. Stabilis Fund I, L.P., 316 Ga. App. 210,
211-12, 728 S.E.2d 840, 842-43 (2012); Salahat v. FDIC, 298 Ga.
App. 624, 628, 680 S.E.2d 638, 642 (2009).
Under

Georgia

law,

“[w]hen

signatures

are

admitted

or

established, production of the instrument entitles a holder to
recover

on

it

unless

the

defendant

establishes

a

defense.”

Burks v. Cmty. Nat’l Bank, 216 Ga. App. 155, 156, 454 S.E.2d
144, 145 (1995) (internal quotation marks omitted); see also
Caves v. Columbus Bank & Trust Co., 264 Ga. App. 107, 107-08,
589 S.E.2d 670, 671 (2003) (stating the same standard in an
action on a guaranty).

Defendants have no meritorious defense.

They admit that they signed the Note and Guaranties and that
they are in default.

Therefore, the holder of the Note and

Guaranties, which is CertusBank, is entitled to recover on the
Note and Guaranties.

Defendants are liable, as a matter of law,

for the amounts due.
Defendants’ final “Hail Mary” is that the amount owed under
the Note and Guaranties has not been established.

This argument

is as specious as Defendants’ contention that CertusBank is not
the holder of the Note.
relies

on

statement.

the

Note,

To establish the amount due, CertusBank
the

loan

history,

and

a

loan

payoff

Note; Crawford Aff. App’x 1, Loan History, ECF No.

6

21-2;

Loan

documents

Payoff

that

Statement.

CertusBank

Defendants

relies

hearsay and cannot be considered.

on

respond

constitute

that

the

inadmissible

The Court finds that these

records are business records and may be considered under Federal
Rule

of

Evidence

803(6).

Federal

Rule

of

Evidence

803(6)

provides as follows:
The following are not excluded by the rule against
hearsay, regardless of whether the declarant is
available as a witness . . . (6) Records of a
Regularly Conducted Activity. A record of an act,
event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by--or
from
information
transmitted
by--someone
with
knowledge;
(B) the record was kept in the course of a regularly
conducted
activity
of
a
business,
organization,
occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that
activity;
(D) all these conditions are shown by the testimony of
the custodian or another qualified witness, or by a
certification that complies with Rule 902(11) or (12)
or with a statute permitting certification; and
(E) neither the source of information nor the method
or circumstances of preparation indicate a lack of
trustworthiness.
The Court finds under the circumstances presented here that
“when

business

records

pass

from

a

predecessor

entity

to

a

successor entity under a merger or receivership, the successor
entity

is

able

predecessor.”

to

authenticate

the

business

records

of

its

Phillips v. Morg. Elec. Registration Sys., Inc.,

7

No. 5:09-cv-2507-TMP, 2013 WL 1498956, at *2 (N.D. Ala. Apr. 5,
2013); see also id. at *2-3 (citing United States v. Parker, 749
F.2d 628, 633 (11th Cir. 1984), and other cases addressing this
evidentiary issue and reaching the same conclusion).

The Court

finds that there is sufficient evidence that these records are
trustworthy and admissible for the purpose of establishing the
amount

due

Crawford’s

under

the

affidavit

Note.

See

adequately

Parker,

749

F.2d

at

633.

authenticates the records and

shows they are records maintained in the ordinary course of
business.

Crawford Aff. ¶¶ 2, 4-5, 23-24; see also Fed. R.

Evid. 803(6).
Defendants do not otherwise dispute the amount due under
the Note and Guaranties.

Moreover, they present no legitimate

argument as to why they are not liable to CertusBank for its
collection costs.
judgment.

Therefore, CertusBank is entitled to summary

See Hovendick v. Presidential Fin. Corp., 230 Ga.

App. 502, 505, 497 S.E.2d 269, 272-73 (1998) (“Once [the note
holder] introduced the Note and established a prima facie right
to judgment on the Note, the burden shifted to [the defendants]
to produce evidence showing a different amount owed and thereby
creating a jury issue . . . because [the defendants] introduced
no evidence showing that the amount claimed by [the note holder]
is incorrect and no evidence as to any other amount, there is no
[jury issue.]”) (citations omitted).

8

The present record establishes as a matter of law that
Defendants are individually and jointly liable to CertusBank as
follows.

As of March 21, 2013, Defendants owed $328,205.95 in

principal,
Crawford

$16,824.02

Aff.

¶

in

17;

interest,

Loan

Payoff

and

$500.00

Statement.

in

fees.

Additionally,

interest continues to accrue at a per diem rate of $59.26 until
the Note is paid in full.
Statement; Note 1.
March

21,

2013

to

Crawford Aff. ¶ 17; Loan Payoff

Per diem interest at the rate of $59.26 from
the

amounts to $8,177.88.

date

of

this

Order,

August

5,

2013,

Therefore, Defendants are jointly and

individually liable to CertusBank for the principal, interest,
and fees on the Note in the amount of $353,707.85.
CertusBank
including
(2010).2

is

attorneys’

also

entitled

fees,

to

pursuant

its
to

collection
O.C.G.A.

§

costs,
13-1-11

Section 13-1-11(a)(2) provides:

If such note or other evidence of indebtedness
provides for the payment of reasonable attorney's fees
without
specifying
any
specific
percent,
such
provision shall be construed to mean 15 percent of the
first $500.00 of principal and interest owing on such
note or other evidence of indebtedness and 10 percent
of the amount of principal and interest owing thereon
in excess of $500.00[.]
The Note allows for the recovery of “reasonable attorneys’ fees”
and caps the amount at 15 percent of the principal and interest
2

The current version of O.C.G.A. § 13-1-11 applies to contracts
entered into on or after July 1, 2011.
2012 Georgia Laws Act 725
(S.B. 181).
Because the Note and Guaranties were executed prior to
July 1, 2011, the former version of the statute applies in this case.

9

owed.

Note 2.

Since a percent is not specified, the Court

finds that CertusBank is entitled to 15 percent of the first
$500.00 owed (which is $75.00) plus 10 percent of the remaining
amount

owed

(which

is

$35,270.78)

for

a

total

award

of

attorneys’ fees of $35,345.78.3
CONCLUSION
CertusBank’s Motion for Summary Judgment (ECF No. 21) is
granted.

The Clerk shall enter judgment in favor of CertusBank,

N.A. and against Defendants, jointly and individually, in the
amount of $389,053.63.

IT IS SO ORDERED, this 5th day of August, 2013.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

3

This calculation takes into consideration the per
accrued from March 21, 2013 to the date of this Order.

10

diem

interest