Bank of the Ozarks v. George Skarpalezos II, Inc. et al

Filing 43

ORDER denied as moot 41 Motion to Stay; granting in part and denying in part 24 Motion for Summary Judgment; and denying 27 Motion to Strike. Judgment is entered against Defendants George Skarpalezos II, Inc., Winnie M. Skarpalezos, Inc., George Skarpalezos, Inc., George Skarpalezos, Sr., and George Skarpalezos, II for the First Note Indebtedness. Signed by Chief Judge Lisa G. Wood on 2/28/2013. (csr) Modified on 2/28/2013.(csr)

In the Vnitth Otatto 3trtct Court
for the Soutbtrn Motrtet of deorgia
jrunbittk aibiion
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*
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Plaintiff,
*
*
vs.
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GEORGE SKARPALEZOS II, INC., WINNIE *
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M. SKARPALEZOS, INC., GEORGE
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SKARPALEZOS, INC., GEORGE
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SKARPALEZOS, SR., GEORGE
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SKARPALEZOS, II, and WINNIE M.
*
SKARPALEZOS,
*
*
Defendants.

BANK OF THE OZARKS,

CV 212-015

ORDER
Presently before the Court are a Motion for Summary
Judgment filed by Plaintiff, Bank of the Ozarks, see Dkt. No.
24, a Motion to Strike filed by Defendants, see Dkt. No. 27, and
a Motion to Stay on Account of Bankruptcy filed by Defendant
Winnie M. Skarpalezos, see Dkt. No. 41. For the reasons stated
below, Defendants' Motion to Strike is DENIED.

Dkt. No. 27.

Plaintiff's Motion for Summary Judgment is GRANTED in part and
DENIED in part. Dkt. No. 24. Plaintiffs' Motion is granted

with regards to all other Defendants except for Winnie M.
Skarpalezos, who is subject to an automatic stay in bankruptcy.
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Because she has already been granted an automatic stay, Winnie
N. Skarpalezos's second Motion to Stay on Account of Bankruptcy
is MOOT.

Dkt. No. 41.
BACKGROUND

Bank of the Ozarks seeks to recover on three notes executed
in favor of its predecessor, Oglethorpe Bank. See Dkt. No. 7.
Defendants in this case are three individuals (George
Skarpalezos II, George Skarpalezos, Sr., and Winnie M.
Skarpalezos) (collectively "Individual Defendants") and their
respective corporate entities, George Skarpalezos II, Inc.,
George Skarpalezos, Inc., and Winnie N. Skarpalezos, Inc.
(collectively "Corporate Defendants")
On or about October 29, 2009, the Corporate Defendants
executed the First Note in favor of Oglethorpe Bank for a
principal amount of $197,815.32. The Individual Defendants
signed Guaranty Agreements for the First Note. On June 9, 2010,
George Skarpalezos, Sr. executed the Second Note in favor of
Oglethorpe Bank for a principal amount of $445,000. No other
Defendants signed or guaranteed the Second Note. On September
2, 2010, George Skarpalezos, II, executed another note, the
Third Note, in favor of Oglethorpe Bank for $32,625.
LEGAL STANDARD

Under Federal Rule of Civil Procedure 56(a), summary
judgment is appropriate "if the movant shows that there is no
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genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." The court must view
the evidence and draw all inferences in the light most favorable
to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144,
157-59 (1970). The party seeking summary judgment must first
identify grounds that show the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24
(1986). To discharge this burden, the movant must show the
court that there is an absence of evidence to support the
nonmoving party's case. Id. at 325. The burden then shifts to
the nonmovant to go beyond the pleadings and present affirmative
evidence to show that a genuine issue of fact does exist.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
DISCUSSION
I. Defendants' Motion to Strike the Jones Affidavit

Defendants' sole opposition to Bank of the Ozarks's Motion
for Summary Judgment is that they object to the admissibility of
the Jones Affidavit. See Dkt. No. 26. Defendants contend that
because the affidavit was not based on Jones's personal
knowledge, the affidavit violates Federal Rule of Evidence 601
and cannot serve as a basis for a summary judgment motion under
Federal Rule of Civil Procedure 56. See Dkt. No. 26. This
argument, however, is unpersuasive.

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The Jones Affidavit can properly serve as a basis for
Plaintiff's summary judgment motion because it would be
admissible at trial. Jones acquired sufficient personal
knowledge of the facts in her affidavit by personally reviewing
the bank records. "The custodian of the records need not be in
control of or have individual knowledge of particular corporate
records, but need only be familiar with the company's
recordkeeping practices." United States v. Salgado, 250 F.3d
438, 452 (6th Cir. 2001) . Because Jones was not present when
Defendants signed the loan documents, she may not be qualified
to testify as to whether Defendants signed the documents.
However, Defendants have not contested the authenticity of the
signatures or suggested that the signatures on the documents are
forgeries.
Furthermore, the affidavit would be not be barred at trial
by the hearsay rules. Bank of the Ozarks argues that the
information in the affidavit falls within two hearsay
exceptions—the Business Records Exception under Rule 803(6) and
the Public Records Exception under Federal Rule of Evidence
803(8)—and this Court agrees.
"The general rule is that inadmissible hearsay cannot be
considered on a motion for summary judgment." Jones v. UPS
Ground Freight, 683 F.3d 1283, 1293 (11th Cir. 2012) (quoting
Macuba v. Deboer, 193 F.3d 1316, 1322 (11th Cir. 1999)).
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"Nevertheless, 'a district court may consider a hearsay
statement if the statement could be reduced to admissible
evidence at trial or reduced to admissible form." Id. (quoting
Macuba, 193 F.3d at 1323).
Jones would be competent at trial to testify about the
matters contained in her affidavit. The records Jones reviewed
to prepare her affidavit would satisfy the requirements for the
Business Records Exception. Under Federal Rule of Evidence
803(6), a record of an act, event, condition, opinion, or
diagnosis can be admitted if:
(A) the record was made at or near the time
by-or from information transmitted bysomeone 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 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.
In Paragraph 42, Jones states the information contained in
her affidavit is based on her personal knowledge and her review
of Bank of the Ozarks's Business Records that were "made
contemporaneously with the events reflected." Dkt. No. 24, Ex.
2, ¶[ 42-43.
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This satisfies Subpart (A). As for Subpart (B),

the affidavit specifically states that "[t]he Business Records
are kept in the normal course of the Bank's business." Dkt. No.
24, Ex. 2, ¶ 42. Subpart (C) is satisfied because the affidavit
states that "Bank of the Ozarks relies upon these Business
Records in the conduct of its regular business activities."
Dkt. No. 24, Ex. 2, ¶ 42. Jones also testified that she was the
custodian of these records, thus satisfying Subpart (D) . Dkt.
No. 24, Ex. 2, ¶ 40. Finally, as for Subpart (E) nothing
suggests a lack of trustworthiness.
Additionally, much of the information contained in the
affidavit also satisfies the Public Records exception under Rule
803(8). Jones' affidavit established that a significant portion
of the information contained in her affidavit was based on the
"payment history information" from the FDIC-R, acting as
receiver of Oglethorpe Bank. Dkt. No. 24, Ex. 2, ¶ 40. Thus,
the information contained in the Jones Affidavit would be
admissible at trial and can be relied upon for purposes of
summary judgment. See Fed. R. Civ. P. 56(c). Defendants'
Motion to Strike therefore is denied.
II. Bank of the Ozarks's Motion for Summary Judgment

Summary judgment in favor of Oglethorpe Bank is
appropriate. As a preliminary matter, Georgia law, governs this
breach of contract diversity action. See Goodwin v. George

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Fischer Foundry Sys., Inc., 769 F.2d 708, 711 (11th Cir. 1985).
Under Georgia law:
A plaintiff seeking to enforce a promissory
note establishes a prima facie case by
producing the note and showing that it was
executed. Once that prima facie case has
been made, the plaintiff is entitled to
judgment as a matter of law unless the
defendant can establish a defense."
Fielbon Dev. Co. v. Colony Bank of Houston Cnty., 660 S.E.2d
801, 805 (Ga. Ct. App. 2008).
Here, Bank of the Ozarks established its prima fade case
by submitting the loan documents, documents showing the transfer
of the loan documents to Bank of the Ozarks, and evidence
demonstrating that Defendants are in default. Defendants,
however, have failed to establish a viable defense.
Defendants have not admitted the execution of some of the
notes and whether they are in default, but that is not enough to
preclude summary judgment. In response to most of the
information contained in the Amended Complaint, Defendants
stated that they lacked sufficient knowledge or information to
form a belief. See Dkt. Nos. 14, 15, 16, 17, 18, 19. They
claimed they lacked sufficient information to form a belief as
to whether or not they ever executed the loans in question. In
response to most of Bank of the Ozarks's discovery requests for
admissions, Defendants stated that they "[did] not have [the]

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information at [the] time but reserve[d] the right to supplement
[the response]

."

See Dkt. No. 24.

These denials and responses based on Defendants' assertions
that they do not have enough information are insufficient to
establish a genuine issue of material fact. Under Federal Rule
of Civil Procedure 56(e) (2), "[w]hen a motion for summary
judgment is properly made and supported, the nonmoving party may
not rest on the mere denials or allegations in the pleadings,
but must set forth specific facts sufficient to raise a genuine
issue for trial." Graff v. Baja Marine Corp., 310 Fed. App'x
298, 301 (11th Cir. 2009); see also Gibson v. Mi. Greetinqs
Corp., 670 F.3d 844, 853 (8th Cir. 2012) ("To clarify, although
the burden of demonstrating the absence of any genuine issue of
material fact rests on the movant, a nonmovant may not rest upon
mere denials or allegations, but must instead set forth specific
facts sufficient to raise a genuine issue for trial.") (internal
citations omitted). Therefore, Defendants repeated claims that
they do not have sufficient information yet to form a belief is
insufficient to preclude summary judgment.
III. Stay on Account of Bankruptcy for Winnie M. Skarpalezos

On October 26, 2012, Winnie M. Skarpalezos filed a Notice
of Bankruptcy. See Dkt. No. 27. This Court granted her an
automatic stay on November 1, 2012. See Dkt. No. 39. On
December 12, 2012, Winnie M. Skarpalezos filed another Motion
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for Stay on Account of Bankruptcy. See Dkt. No. 41. Because of
the earlier order granting that request, this Court determines
that motion to be moot.
CONCLUSION

For the reasons stated above, Defendants' Motion to Strike
is DENIED.

See Dkt. No. 27. Plaintiff's Motion for Summary

Judgment, Dkt. No. 24, is GRANTED for all Defendants except for
Winnie M. Skarpalezos, who is subject to an automatic stay. The
Motion as to Winnie M. Skarpalezos is DENIED.

Additionally,

Winnie M. Skarpalezos's second Motion to Stay on Account of
Bankruptcy, Dkt. No. 41, is MOOT because of this Court's earlier
order granting such a request.
At this time, judgment is entered against Defendants George
Skarpalezos II, Inc., Winnie M. Skarpalezos, Inc., George
Skarpalezos, Inc., George Skarpalezos, Sr., and George
Skarpalezos, II for the First Note Indebtedness for the amount
of:
1.

$ 196,300.65 for unpaid principal;

2.

$ 29,989.78 for accrued interest;

3.

$ 2,253.97 for late charges; and

4.

$ 33,943.56 for attorneys' fees.

George Skarpalezos, Sr. is also liable on the Second Note
for the amount of:
1.
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$ 417,735.50 for unpaid principal;
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2.

$ 65,493.22 for accrued interest;

3.

$ 5,117.08 for late charges; and

4.

$ 72,484.31 for attorneys' fees.

George Skarpalezos, II is also liable on the Third Note for
the amount of:
1.

$ 30,747.24 for unpaid principal;

2.

$ 2,802.50 for accrued interest;

3.

$ 629.85 for late charges; and

4.

$ 5,032.46 for attorneys' fees.

SO ORDERED, this 28th day of February, 2013.

L SA GODBEY OD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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