FRT 2011-1 Trust v. eHealthscreen, LLC et al
Filing
118
ORDER dated March 31, 2016 is hereby withdrawn and is substituted with this Order re: 114 ORDER granting 55 Motion for Summary Judgment on Cross-Claim and Counterclaim to Cross-Claim; granting 57 Motion for Summary Judgment against Plaintiff ; denying 59 Motion for Partial Summary Judgment; and denying 65 Motion for Partial Summary Judgment against eHealthscreen, LLC. The Clerk of Court is DIRECTED to correct the docket to reflect that the Brysons are the Cross Claimants, while eHeal thscreen is the Cross Defendant, with respect to these claims. Plaintiff is hereby ORDERED to notify this Court within fourteen (14) days of the date of this Order as to whether it has any claim against the Brysons with which it seeks to proceed in this action. Signed by Chief Judge Lisa G. Wood on 4/19/2016. (csr)
3 the Eniteb btatto 38iotritt Court
for the boutbern 39isitrid of deorgta
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FRT 2011-1 TRUST,
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Plaintiff,
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V.
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CV 213-107
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eFIEALTHSCREEN, LLC; MACK W.
BRYSON; and JANE 0. BRYSON,
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Defendants.
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ORDER
This matter comes before the Court on several fully briefed
dispositive motions: Defendant eHealthscreen, LLC's
("eHealthscreen") Motion for Summary Judgment Against Plaintiff
FRT 2011-1 Trust ("Plaintiff") (dkt. no. 57); Plaintiff's Motion
for Partial Summary Judgment Against eHealthscreen (dkt. no.
65); eHealthscreen's Motion for Summary Judgment on Crossclaims
and for Partial Summary Judgment on Counterclaims to Crossclaims
(dkt. no. 55); and Defendants Mack W. Bryson ("Mack Bryson") and
Jane 0. Bryson's (collectively, the "Brysons") Motion for
Partial Summary Judgment on Crossclaims and Counterclaims (dkt.
no. 59).
For the reasons that follow, eHealthscreen's Motion for
Summary Judgment Against Plaintiff (dkt. no. 57) is GRANTED, and
AO 72A
(Rev. 8/82)
Plaintiff's cross-Motion for Partial Summary Judgment against
this Defendant (dkt. no. 65) is DENIED. Additionally,
eHealthscreen's Motion seeking summary judgment on the Brysons'
crossclaims and partial summary judgment on its counterclaims
(dkt. no. 55) is GRANTED. The Brysons' Motion for Partial
Summary Judgment on Crossclaims and Counterclaims (dkt. no. 59)
is thus DENIED.'
BACKGROUND
Plaintiff is a Delaware statutory trust that claims to have
a security interest in the Brysons' real property (the
"Property") and seeks to foreclose upon the same. See
eHealthscreen's SMF 2, ¶j 43-44; Pl.'s SMF,
111 61-62. The
' The docket sheet for this case shows that the Brysons, in addition
to being party-Defendants, are Cross Claimants and Cross Defendants,
based on their crossclaims against eHealthscreen. The Clerk of Court
is hereby DIRECTED to correct the docket to reflect that the Brysons
are the Cross Claimants, while eHealthscreen is the Cross Defendant,
with respect to these claims. To the extent that the docket lists
eHealthscreen as a Counter Claimant and the Brysons as Counter
Defendants on the basis of eHealthscreen's counterclaims, the docket
is correct and need not be changed.
2
Each movant has submitted a statement of material facts in support
of its pending motion. See Dkt. No. 55-3 (eHealthscreen's Statement
of Uncontested Material Facts, hereinafter "eHealthscreen's SMF 1");
Dkt. No. 57-5 (eHealthscreen's Statement of Uncontested Material
Facts, hereinafter "eHealthscreen's SMF 2"); Dkt. No. 59 (Brysons'
Statement of Undisputed Material Facts, hereinafter "Brysons' SMF");
Dkt. No. 65-2 (Plaintiff's Statement of Material Facts, hereinafter
"Pl.'s Sr4F"). The party opposing each motion has filed a response to
the statement of material facts. Dkt. Nos. 72, 75-1, 79-4, 80. While
the Court, for ease of exposition, cites only to the movants' factual
statements for the purposes of this Order, it does so only to the
extent that these statements are consistent with the responses and
specifically notes any factual contentions about which the parties
disagree.
A0 72A
(Rev. 8/82)
I
2
Brysons own and currently reside on the Property, which is
located in Waverly, Georgia. Brysons' SMF,
¶j 1-2.
eHealthscreen is a Florida limited liability company that also
purports to be a secured creditor of the Brysons and has
attempted to exercise its alleged rights in the subject
Property. eHealthscreen's SMF 1, ¶j 17-18, 30; Brysons' SMF, ¶
3; Pl.'s SMF, ¶ 6.
I. Mack Bryson's Equity Partnership in Healthscreen Disease
Management, LLC ("HSDM")
In May 2005, HSDM was formed and acquired Mack Bryson's
company, Currahee Health Benefits Solutions, Inc. Dkt. No. 71,
Ex. A (Affidavit of Mack Bryson, hereinafter "Mack Bryson
Aft."), ¶ 2. Mack Bryson became an equity partner with a twenty
percent share in HSDM and also agreed to serve as its Chief
Executive Officer. eHealthscreen's SMF 1, ¶ 1; Brysons' SMF, ¶
4. Aside from Mack Bryson, the equity members of HSDM included
Anthony Campbell ("Campbell"), J. Melvin Deese ("Deese"),
William McArthur ("McArthur"), and Charles Hendrix ("Hendrix").
Brysons' SMF, ¶ 3; Pl.'s SMF, ¶ 7.
A letter dated May 6, 2005, sets forth the agreed-upon
terms of Mack Bryson's relationship with HSDM. eHealthscreen's
SMF 1, ¶ 2. The letter states, in relevant part:
2.
AO 72A
(Rev. 8/82)
I
You will draw an advance of distributions in the
form of a salary in the amount of $25,000 per
month. You will not receive any further
distributions until each of the other equity
3
members of the [clompany have received
distributions in an amount equal to the amount of
distributions you have drawn. An adjustment for
reasonable salary compensation will be credited
in the calculations at such time of distribution.
11.
The [c]ompany
Massachusetts
the amount of
from the date
12.
The [c] ompany will transfer the title of the
[c]ompany[ - ]owned Chevrolet Silverado to you
once the bank loan secured by the vehicle is paid
in full.
13.
The [c]ompany will employ David Stephens at a
salary of $2500 per month for a period of time up
to 18 months.
will pay the premiums on your
Mutual Life insurance policy in
$2,305 per month for twelve months
hereof.
The amounts paid by the [c]ompany pursuant to
items numbered 11, 12, 13 above will be accrued on the
[clompany's books as an account receivable due from
you to the [c]ompany to be deducted from your future
equity member distributions.
Dkt. No. 55, Ex. A.
Upon Mack Bryson becoming an equity member, HSDM began
making the $25,000 monthly payment to him as an "advance of
distributions in the form of a salary," as well as the other
payments on his behalf as stipulated in paragraphs eleven,
twelve, and thirteen. eHealthscreen's SMF 1, ¶j 6-7. HSDM took
tax deductions for these payments, and state and federal taxes
were withheld from Mack Bryson's monthly paychecks. Mack Bryson
Aff.,
AO 72A
(Rev. 8/82)
1
1
8.
4
II. HSDM and eHealthscreen
The four equity members of HSDM other than Mack Bryson—
namely, Campbell, Deese, McArthur, and Hendrix—formed and became
partners of eHealthscreen in September 2006. Brysons' SMF, ¶ 4;
Pl.'s SMF, ¶ 8; Mack Bryson Aff., ¶J 6, 12. Mack Bryson was not
a member of eHealthscreen. Brysons' SMF, ¶ 4; Pl.'s SMF, ¶ 8;
Mack Bryson Aff., ¶ 6. HSDM and eHealthscreen were organized
and operated as entirely separate and distinct legal entities.
Brysons' SMF, ¶ 11. eHealthscreen nevertheless maintains that
it and HSDM operated as a joint venture, because it existed only
to provide services to HSDM. Dkt. No. 75-1, ¶ 11.
Hendrix served as President of eHealthscreen and oversaw
most of its day-to-day operations. Pl.'s SMF, ¶ 10. Campbell
was Vice Chairman of eHealthscreen and, as a licensed attorney,
also handled at least some of the company's legal and other
matters. Id. at ¶ 9. For example, according to McArthur,
Campbell was the only member who wrote documents or letters on
behalf of eHealthscreen. Id. at ¶ 56. As to some matters, the
other members needed to review and agree with Campbell's work
prior to him taking action; however, under certain
circumstances, the other members allowed Campbell to act on
behalf of eHealthscreen without their express, written
authority. Id. at ¶M1 9, 48.
AO 72A
(Rev. 8/82)
5
III. The Property and the Secured Promissory Note in Favor of
eHealthscreen
In July and September 2006, the Brysons refinanced the
Property with First Chatham Bank ("FCB") and, in doing so,
executed two deeds to secure debt granting liens on the Property
to FCB. eHealthscreen's SMF 2, ¶J 2-3; Pl.'s SMF,
11
3-4.
In November 2006, two members of HSDM informed Mack Bryson
that he needed to execute a secured promissory note agreeing to
pay eHealthscreen certain sums of money or else his relationship
with HSDM would be severed. eHealthscreen's SMF 1,
¶11
10, 15-
16. According to the HSDM members, they did so because HSDM had
been making steady "advance[s] of distributions in the form of a
salary" to Mack Bryson and other payments on his behalf as
contemplated in the May 6, 2005, letter, while "no distributions
were ever made to the members of HSDM." Id. at ¶j 3, 6-9.
Thus, the HSDM members required that Mack Bryson promise to pay
eHealthscreen these amounts, as well as any future amounts,
because HSDM ultimately had not made any equity member
distributions from which these amounts could be deducted. Id.
at ¶I 10-12.
The Promissory Note, dated November 27, 2006, states, in
pertinent part, as follows:
FOR VALUE RECEIVED, Mack W. Bryson, an individual
resident of 2310 Horsestamp Church Road, Waverly,
Georgia 31565 ("Borrower") promises to pay, on the
Maturity Date (defined below), to the order of
AO 72A
(Rev. 8/82)
I
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eHealthscreen, LLC, a Georgia limited liability
company ("Lender"), at such place as the Lender may
designate in writing, the principal sum of Five
Hundred Fifty[-] Seven Thousand Five Hundred
Eighty[-]One Dollars ($557,581.00) (the "Initial
Principal Amount"), which sum was outstanding as of
November 27, 2006(,] plus such further sums as may
have been or may hereafter be advanced by Lender to
Borrower as listed or to be listed on the Schedule of
Loans and Payments attached hereto, together with
interest on such principal sums. This Promissory Note
is referred to herein as the "Note." As used herein,
"Maturity Date" shall be the thirtieth (30th) day
succeeding receipt by the Borrower of a written demand
by Lender for payment hereunder.
Interest shall accrue on the principal sums
advanced under this Note from the date each advance of
principal was made as recorded on the Schedule of
Loans and Payments attached hereof until paid at the
annual rate of interest of eight percent (8). Unless
otherwise stated herein, all interest shall be due and
payable on the Maturity Date. All interest accruing
hereunder as to any advance of principal shall be
computed on the basis of actual days elapsed, over a
year of 365 days, from the effective date for the
Initial Principal Amount as to such amount and from
the date of each respective advance for all subsequent
loans.
The Initial Principal Amount is intended to
reflect, as the initial entry on the Schedule of Loans
and Payments, the sums advanced by Lender to Borrower
on or prior to the effective date hereof. As further
loans or advances have been made or are made by Lender
to Borrower, if any, such loans and advances shall be
recorded on this Note on the Schedule of Loans and
Advances. As payments are made of the sums due under
this Note, an entry of same shall be recorded on the
Schedule of Loans and Advances. Borrower shall
maintain a duplicate copy of the Schedule of Loans and
Advances, and periodically Lender and Borrower will
verify and reconcile the entries on such Schedule.
AO 72A
(Rev. 8/82)
7
7
I
Should it become necessary to collect this Note
through an attorney, by legal proceedings, or
otherwise, the undersigned[,] including endorsers,
promise(s) to pay all costs of collection, including
reasonable attorneys' fees.
This Note shall be secured by a Security Deed on the
[Piroperty located in the [C]ounty of Camden, [S]tate
of Georgia described on Exhibit "A" attached hereto
and made apart hereof. Lender shall have, in addition
to its remedies under this Note, all the remedies of a
holder of a security deed under the laws of the State
of Georgia.
Dkt. No. 54-2, pp. 1-2. The attached Security Deed conveys an
interest in the Brysons' Property to eHealthscreen as security
for Mack Bryson's payment on the Promissory Note. Id. at pp. 6,
8.
Mack Bryson signed the Promissory Note, and he and his wife
signed the Security Deed, in favor of eHealthscreen.
eHealthscreen's SMF 1, ¶l 17-18; Brysons' SMF, ¶ 6. In the
subsequent months, Mack Bryson's relationship with HSDM,
including his receipt of monthly payments, continued as it had
before. eHealthscreen's SMF 1, ¶ 20. Mack Bryson received
several additional payments from HSDM, and he initialed next to
the entries for these payments on the Schedule of Loans page of
the Promissory Note. See id. at ¶i 2l-26. As of December 20,
The Schedule of Loans and Payments shows that Mack Bryson never
initialed the final two entries, dated November 16, 2007, and December
20, 2007, dkt. no. 54-2, p. 5; however, the Brysons do not dispute
that Mack Bryson received payments after the last initialed entry on
October 18, 2007, and do not challenge the extent to which these
amounts are reflected on the Schedule of Loans and Payments page, see
eHealthscreen's SMF 1, ¶1 25-27.
8
AO 72A
(Rev. 8182)
2007, the amount of principal owed under the Promissory Note had
grown to $883,860. Id. at ¶ 27.
The Brysons maintain that since the beginning of Mack
Bryson's relationship with HSDM, all parties had understood
"that [his] compensation was to be a salary." Mack Bryson Aff.,
¶ 8. Mack Bryson contends that he "was never told [he] would
have to repay any of [the] salary paid to [him]" and "would
never have entered into an employment relationship with [HSDMJ
for the sole purpose of paying back a loan." Id. at ¶ 7.
Further, he asserts that "at the time of [his] hiring[,] there
were no discussions concerning what would occur if distributions
were not made to the other partners," and it was never
contemplated that eHealthscreen, a not-yet-formed company, would
have any involvement with or benefit from his employment
relationship with HSDM. Id. at ¶j 9-12. The Brysons allege
that they nevertheless executed the Promissory Note and Security
Deed in favor of eHealthscreen under duress and out of fear that
HSDM would otherwise terminate Mack Bryson's employment and
discontinue making payments to him. eHealthscreen's SMF 1, ¶j
10, 17-18.
IV. Refinancing and Subordination Issues
In early 2007, the Brysons sought to refinance their loan
secured by the first FCB lien on the Property and contacted
refinancing lender Resource Mortgage Banking, Ltd. ("Resource").
AO 72A
(Rev. 8/82)
9
eHealthscreen's SMF 2,
It 5-6; Pl.'s
SMF, ¶ 11.
Resource
retained a local attorney (the "closing attorney") to represent
its interests and handle the closing of the refinancing
transaction. eHealthscreen's SMF 2,
11
6-7; Pl.'s SMF,
¶ 11,
13. As an absolute condition precedent to extending funds to
the Brysons, Resource required that it receive a first-position
priority lien on the Property.
Pl.'s SMF, ¶ 14.
An updated
title abstract listed the following encumbrances in order of
priority: (1) the first FCB Security Deed recorded in July 2006;
(2) the second FCB Security Deed recorded in September 2006; and
(3) the eHealthscreen Security Deed recorded in January 2007.
eHealthscreen's SMF 2,
IT 10-11, 13;
Pl.'s SMF, ¶ 13.
The closing attorney contacted FCB and obtained an
agreement subordinating its second security interest in the
Property to Resource's prospective interest. eHealthscreen's
SMF 2, ¶J 9-11. The closing attorney then spoke with
eHealthscreen members Campbell and Hendrix in June 2007, and
Campbell made a handwritten note on a paper napkin stating that
eHealthscreen would subordinate its interest to the Resource
lien and faxed the note to the closing attorney. Id. at ¶ 24;
Pl.'s SMF,
It 15, 26-27. While neither party viewed the
handwritten note as a final subordination agreement, the closing
attorney immediately closed on the refinancing transaction, at
which time the Brysons executed a Security Deed granting
AO 72A
(Rev. 8/82)
10
Resource an interest in the Property. eHealthscreen's SMF 2, ¶J
28-31; Pl.'s SMF,
¶j 29, 31. Although the closing attorney had
planned to send a formal subordination agreement to
eHealthscreen after the closing, he did not do so until October
2010. eHealthscreen's SMF 2, ¶J 36, 39; Pl.'s SMF, ¶ 35.
eHealthscreen never signed the formal agreement. Pl.'s SMF, ¶
36.
V.
eHealthscreen's Attempt to Enforce Its Alleged Rights
HSDM had continued to make regular payments to Mack Bryson
until at least December 20, 2007, eHealthscreen's SMF 1, ¶ 28,
and terminated his employment on March 23, 2010, Brysons' SMF, ¶
7. Approximately one year later, on March 3, 2011,
eHealthscreen mailed Mack Bryson a demand letter seeking payment
of the principal balance of $883,860 under the Promissory Note.
eHealthscreen's SMF 1, ¶ 29; Brysons' SMF, ¶ 9. Mack Bryson
refused to comply with the demand for payment and denied that
eHealthscreen had any authority to enforce the Promissory Note
or to foreclose on the Property pursuant to the Security Deed.
eHealthscreen's SMF 1, ¶ 30; Brysons' SMF, ¶j 11-12. According
to the Brysons, there was no privity of contract between Mack
Bryson and eHealthscreen, and eHealthscreen never provided any
consideration, monetary or otherwise, in exchange for the
Promissory Note and Security Deed. Brysons' SMF, $1 10-11. On
AO 72A
(Rev. 8/82)
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11
December 30, 2011, Campbell, Deese, McArthur, and Hendrix
dissolved HSDM in the State of Georgia. Id. at ¶ 8.
VI.
Further Filings in the Property Records
In April 2013, an individual claiming to be a servicer for
Plaintiff recorded a Missing Assignment Affidavit in the
property records. Pl.'s SMF, ¶ 42. The affidavit states that
Resource has assigned to Plaintiff the Security Deed that the
Brysons executed in its favor, id. at ¶ 43, but that "[r]epeated
attempts to locate the original assignment or to obtain the
replacement assignment have failed," dkt. no. 57-3,
p. 3. The
affidavit indicates that the assignment "has been lost without
recording or inadvertently not prepared," Pl.'s SMF, ¶ 44, and
thus purports to give record notice that an assignment of this
interest actually took place, dkt. no. 57-3, p. 3. In October
of that year, eHealthscreen, attempting to document the alleged
priority of its lien, filed an Affidavit as to Facts Affecting
Title to Land asserting that it had not subordinated its
interest in the Brysons' Property to another lienholder. Pl.'s
SMF, tj 39, 43; Dkt. No. 93, Ex. J.
VII. Plaintiff's Filing of Suit
Plaintiff filed suit against eHealthscreen and the Brysons
in this Court on August 12, 2013, naming the Brysons as
Defendants only to the extent that Plaintiff's claims for relief
against eHealthscreen may affect their ownership interest in the
AO 72A
(Rev. 8/82)
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Property. Dkt. No. 1, ¶ 8. In count one of the Complaint,
Plaintiff seeks a declaratory judgment that its security
interest in the Brysons' Property takes priority over that of
eHealthscreen. Id. at TJ 37-47. Plaintiff's counts two through
four claim damages for breach of contract, promissory estoppel,
and fraud, respectively, based on eHealthscreen's alleged
agreement to subordinate its interest and subsequent refusal to
do so. Id. at ¶j 48-65. In count five of the Complaint,
Plaintiff requests an equitable subordination of eHealthscreen's
interest, so as to move Plaintiff to first priority lienholder
on the Property. Id. at It 66-73. Finally, in count five,
Plaintiff seeks to hold eHealthscreen liable for its attorney's
fees and litigation costs pursuant to O.C.G.A. § 13-6-11. Id.
at ¶ 74.
VIII. Pending Motions
On November 15, 2013, the Brysons filed an Answer to
Plaintiff's Complaint, as well as a Cross-Complaint against
eHealthscreen. Dkt. No. 11. Count one of the Brysons' CrossComplaint requests a declaratory judgment finding that the
Promissory Note between Mack Bryson and eHealthscreen is invalid
and unenforceable due to lack of consideration, and that
eHealthscreen thus has no authority to foreclose on the Property
under the related Security Deed. Id. at pp. 15-16. Count two
seeks preliminary, interlocutory, and permanent injunctions
AO 72A
(Rev. 8/82)
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against eHealthscreen's foreclosure on the Property, and count
three claims entitlement to attorney's fees and costs under
O.C.G.A. § 13-6-11. Id. at pp. 16-17.
eHealthscreen filed an Answer and various counterclaims in
response to the Brysons' crossclaims on December 6, 2013. Dkt.
No. 16. In addition to finding the Promissory Note and Security
Deed valid, eHealthscreen asks that the Court hold Mack Bryson
liable for breach of the Promissory Note, in the amount of
principal and interest due thereunder. Id. at pp. 7-8.
eHealthscreen also seeks the entry of a special lien on the
Property and payment of its attorney's fees and costs in
litigating the crossclaims and counterclaims. Id. at p. 8. The
Brysons filed an Answer to eHealthscreen's counterclaims raising
the affirmative defense of lack of consideration on December 24,
2013. Dkt. No. 20.
On August 26, 2014, eHealthscreen filed the instant Motion
for Summary Judgment in its favor on the Brysons' crossclaims.
Dkt. No. 55-1. eHealthscreen's Motion also requests partial
summary judgment on its counterclaim against Mack Bryson for
breach of the Promissory Note, specifically moving for summary
rulings in its favor on the issues of liability and amount of
principal but leaving the issue of interest, in addition to its
counterclaim for attorney's fees, for resolution upon the entry
of a final judgment in this case. Id. at p. 2. The Brysons
AO 72A
(Rev. 8/82)
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responded in opposition to eHealthscreen's Motion, dkt. no. 71,
and, on August 27, 2014, made their Motion for Partial Summary
Judgment on Crossclaims and Counterclaims, dkt. no. 59. The
Brysons move for a summary ruling on the issue of the validity
of the Promissory Note but do not address their crossclaims for
injunctive relief and attorney's fees. Dkt. No. 59.
eHealthscreen also filed its Motion for Summary Judgment on
all of Plaintiff's claims on August 26, 2014. Dkt. No. 57-1.
Plaintiff submitted a response to this Motion, dkt. no. 77, and
made its Motion for Partial Summary Judgment on its promissory
estoppel and equitable subrogation claims on September 2, 2014,
dkt. no. 65-1.
IX. Plaintiff's Submissions Regarding Its Interest in the
Property
In support of its briefing on these motions, Plaintiff has
filed several documents that were produced to the other parties
during the discovery period, or that were obtained by its
counsel during the briefing period and disclosed at that time.
See Dkt. No. 63-2; Dkt. No. 77, Ex. B; Dkt. No. 91; Dkt. No. 93,
Exs. A-B, G-I.
Specifically, Plaintiff has submitted a copy of its Answers
to eHealthscreen's discovery interrogatories, which are dated
March 24, 2014, and which were verified under oath as true by
DeWayne Chin, an authorized signatory of Fort Asset
AO 72A
(Rev. 8/82)
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Administrator LLC, Plaintiff's affiliate. Dkt. No. 63-2, P. 13.
In response to eHealthscreen's interrogatory regarding any
consideration that Plaintiff paid to Resource in exchange for
its alleged interest in the Property, Plaintiff stated the
following:
No consideration was given by [Plaintiff] to Resource
• . . • Plaintiff presumes consideration was given by
the secondary market purchaser (who is unknown to
Plaintiff) to Resource • . . . Plaintiff presumes
consideration was given by Thornburg Mortgage
Securities Trust 2007-5 to this secondary market
purchaser (unknown to Plaintiff) or one of possibly
multiple subsequent secondary market purchasers in the
chain of ownership interest (all of which are unknown
to Plaintiff up to Thornburg Mortgage Securities Trust
2007-5). FCOF UB Securities LLC & FCOF UST REQ LLC
paid approximately $17 million to the Thornburg
Mortgage Securities Trust 2007-5 securitization
trustee for 25 mortgage loans, including the subject
mortgage loan. FCOF UB Securities LLC deposited
mortgage loans, including the subject mortgage loan,
into a trust that it owned 100% of, FCOF TMST Trust.
In connection with a financing, FCOF UB Securities LLC
conveyed ownership of FCOF TMST Trust (including all
of its assets, which, in turn, included the subject
mortgage loan), to its affiliate FCOF PWL LLC. In
2011, in connection with [Plaintiff's] securitization,
FCOF TMST Trust distributed mortgage loans, including
the subject mortgage loan, to its parent FCOF PWL LLC.
FCOF PWL LLC sold mortgage loans, including the
subject mortgage loan, for cash to FORT Asset Funding
2011-1 LLC, the securitization depositor. FORT Asset
Funding 2011-1 LLC, in turn, deposited mortgage loans,
including the subject mortgage loan, to [Plaintiff].
Id. at pp. 7-8.
Plaintiff has also filed under seal the Sale and
Administration Agreement between FCOF PWL LLC, FORT Asset
Funding 2011-1 LLC ("FORT Asset Funding"), and Plaintiff. Dkt.
AO 72A
(Rev. 8182)
1
16
No. 77, Ex. B. As described in Plaintiff's interrogatory
response, the Sale and Administration Agreement reflects that
its signatories agreed on October 31, 2011, that FCOF PWL LLC
and other sellers would transfer certain mortgage loans to FORT
Asset Funding, and that Fort Asset Funding would sell the same
to Plaintiff. Id. at Ex. B, p. 13. The agreement contemplates
the sale, transfer, assignment, and conveyance of the mortgage
loans listed on the Mortgage Loan Schedule attached as Exhibit
A-i thereto; however, Plaintiff has not included the Mortgage
Loan Schedule with the copy of the agreement filed in this case.
Id. at Ex. B, Pp. 31-33, 69.
Plaintiff has also produced the original promissory note
and a certified true copy of the Security Deed executed by the
Brysons in favor of Resource in June 2007.
Dkt. No. 93, Exs. G,
I. Along with these documents is an original ailonge to the
note simultaneously executed by Resource's owner and President
at that time, Michael A. Covino ("Covino"). Id. at Ex. H. The
allonge describes the Property, the principal balance due on the
note, and the parties thereto, but Covino intentionally left
blank the field entitled, "pay to the order of." Id.
Additionally, Plaintiff has submitted a copy of a
Corporation Assignment of Deed of Trust that Covino executed
approximately one week later in the presence of a notary and
another witness. Id. at Ex. B. The Corporation Assignment of
AO 72A
(Rev. 8/82)
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Deed of Trust purports to grant, assign, and transfer Resource's
interest in the Property under the Security Deed, but, like the
allonge, leaves blank the space for identifying the assignee.
Id. Covino has since explained that the assignment "was
executed in blank with the understanding that at some point[,]
someone would fill it in that was in custody of it and in
custody of the note." Dkt. No. 91-1 (Deposition of Covino,
hereinafter "Covino Dep."), 42:9-12.
Further, Plaintiff has filed the original Corporation
Assignment of Deed of Trust that Covino executed but that
Plaintiff's counsel thereafter "completed" by filling in
Plaintiff's name as assignee during Covino's deposition on
February 12, 2015. Dkt. No. 93, p. 2 & Ex. A. Plaintiff states
that its counsel did so "[alt [its] instruction . . . , and with
no objection by . . . Covino, . . . to document the transfer
from Resource to Plaintiff in preparation for filing it in the
Camden County property records prior to foreclosure." Id. at p.
2. Covino testified that he had no objection to Plaintiff's
counsel writing Plaintiff's name and address in the blank space
intended for the assignee. Covino Dep., 30:17-22, 32:23-33:9.
Covino nevertheless testified that Resource had ceased all
operations in early
2008,
and that he had resigned his position
as President and sought to dissolve the entity at that time.
Id. at
AO 72A
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7:18-8:12.
When informed at his deposition that Resource
18
remains registered as a corporation in the State of New York,
Covino recognized that he "apparently" still holds the position
of sole owner. Id. at 8:7-12, 28:10-14. Even so, Covino
insisted that he no longer has authority to act on behalf of
Resource. Id. at 8:5-18 ("Q: Are you still [P]resident of
Resource? A: No, I resigned my position . . . . . Q: Do you
still have capacity to act on behalf of Resource? A: No."); see
also id. at 28:4-14, 33:18-21.
X.
eHealthscreen's Notice to the Court
On June 10, 2015, eHealthscreen filed a Notice to inform
the Court that the Supreme Court of Georgia had granted writ of
certiorari in the case of Ames v. JP Morgan Chase Bank, N.A.,
No. A14A2131 (Ga. Ct. App. Feb. 27, 2015), cert. granted, No.
S15G1007 (2015), and would likely take up the issue of standing
to challenge the validity of an assignment of a security deed.
Dkt. No. 101-1. This Court issued an Order directing the
parties to submit briefing regarding the impact, if any, that
the Ames decision might have on the disputed issues in this
case. Dkt. No. 104. Plaintiff thereafter filed a brief
distinguishing the standing issue in Ames from the issues here
and urging the Court not to delay deciding the instant motions
pending an outcome in that case. Dkt. No. 105. By contrast,
eHealthscreen and the Brysons characterize the Ames decision as
potentially relevant to eHealthscreen's ability to challenge
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Plaintiff's interest in the Property, see dkt. nos. 107-08, and
the Brysons specifically request that the Court withhold a
ruling in this case pending that decision, dkt. no. 108, p. 1.
STANDARD OF REVIEW
Summary judgment is required where "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." Fed. R.
Civ. P. 56(a) . A fact is "material" if it "might affect the
outcome of the suit under the governing law." FindWhat Inv'r
Grp. v. FindWhat.com , 658 F.3d 1282, 1307 (11th Cir. 2011)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). A dispute over such a fact is "genuine" if the
"evidence is such that a reasonable jury could return a verdict
for the nonmoving party." Id. In making this determination,
the court is to view all of the evidence in the light most
favorable to the nonmoving party and draw all reasonable
inferences in that party's favor. Johnson v. Booker T.
Washington Broad. Serv., Inc., 234 F.3d 501, 507 (11th Cir.
2000)
The party seeking summary judgment bears the initial burden
of demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) . To
satisfy this burden, the movant must show the court that there
is an absence of evidence to support the nonmoving party's case.
20
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Id. at 325. If the moving party discharges this burden, the
burden shifts to the nonmovant to go beyond the pleadings and
present affirmative evidence to show that a genuine issue of
fact does exist. Anderson, 477 U.S. at 257.
The nonmovant may satisfy this burden in two ways: First,
the nonmovant "may show that the record in fact contains
supporting evidence, sufficient to withstand a directed verdict
motion, which was 'overlooked or ignored' by the moving party,
who has thus failed to meet the initial burden of showing an
absence of evidence." Fitzpatrick v. City of Atlanta, 2 F.3d
1112, 1116 (11th Cir. 1993) (quoting Celotex Corp., 477 U.S. at
332 (Brennan, J., dissenting)). Second, the nonmovant "may come
forward with additional evidence sufficient to withstand a
directed verdict motion at trial based on the alleged
evidentiary deficiency." Id. at 1117. Where the nonmovant
attempts to carry this burden instead with nothing more "than a
repetition of his conclusional allegations, summary judgment for
the defendants (is] not only proper but required." Morris v.
Ross, 663 F.2d 1032, 1033-34 (11th Cir. 1981) (citing Fed. R.
Civ. P. 56(e)).
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DISCUSSION
I.
eHealthscreen's and the Brysons' Cross-Motions on the
Crossclaims and Counterclaims (Dkt. Nos. 55, 59)
eHealthscreen maintains that it is entitled to judgment as
a matter of law on the Brysons' crossclaims, as well as the
portions of its counterclaims pertaining to Mack Bryson's
liability and the amount of principal due on the Promissory
Note. Dkt. No. 55-1. eHealthscreen argues that the Promissory
Note is valid and enforceable, because it is signed by Mack
Bryson, and the Brysons fail to prove their affirmative defense
of lack of consideration. Id. at pp. 9-10. According to
eHealthscreen, the Promissory Note was supported by both past
and future consideration—namely, HSDM's payments to and on
behalf of Mack Bryson prior to the time of signing and its
promise to continue their relationship and make subsequent
payments to him. Id. at pp. 10-11. eHealthscreen notes that
although HSDM furnished the consideration for the Promissory
Note, eHealthscreen may sustain an action as promisee and thirdparty beneficiary of the note. Id. at pp. 11-14. eHealthscreen
thus requests that the Court find Mack Bryson liable for
$883,860, the amount of principal currently owed under the note.
Id. at pp. 17-19.
The Brysons contend that summary judgment is warranted in
their favor on the issue of the Promissory Note's validity as it
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pertains to both their crossclaims and eHealthscreen's
counterclaims. ]Jkt. No. 59. The Brysons assert that the
Promissory Note is invalid for lack of consideration, because
HSDM's past payments to Mack Bryson were a salary, not a loan,
and their existing employment agreement already ensured their
continued relationship and future payments. Dkt. No. 71,
pp. 3-
11. Further, the Brysons emphasize that eHealthscreen never
employed or made payments to Mack Bryson, and that HSDM and Mack
Bryson could not have intended eHealthscreen to be a third-party
beneficiary of their employment agreement because it was not in
existence when they entered into the contract. Dkt. No. 59, pp.
13-16. Nor is eHealthscreen a third-party beneficiary under the
Promissory Note, the Brysons argue, because it cannot be both a
promisee, and thus a party, to the contract, in addition to a
third-party beneficiary thereof. Dkt. No. 83,
pp. 6-7.
In an action on a promissory note under Georgia law, "a
claimant may establish a prima fade right to judgment as a
matter of law by producing the promissory note and showing that
it was executed." Gentile v. Bower, 477 S.E.2d 130, 133 (Ga.
Ct. App. 1996) (citing Jay Gleason Advert. Serv., Inc. v.
Gleason, 388 S.E.2d 43 (Ga. Ct. App. 1989)). Where a claimant
succeeds in demonstrating that a note is prima fade valid, the
burden shifts to the obligor to establish an affirmative defense
to enforcement. Id. (citing Kelly v. Pierce Roofing Co., 469
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S.E.2d 469 (Ga. Ct. App. 1996)). Failure of consideration is an
affirmative defense, and, if proven, the burden shifts back to
the claimant to show the nonexistence of any genuine issue of
fact as to the affirmative defense. Id. (citing O.C.G.A. § 911-8(c))
In the case at bar, eHealthscreen demonstrates a prima
facie right to judgment by producing a copy of the Promissory
Note executed by Mack Bryson in its favor on November 27, 2006.
See Dkt. No. 54-2, pp. 1-2; eHealthscreen's SMF 1, ¶J 17-18;
Brysons' SMF, ¶ 6. While the Brysons raise the affirmative
defense of lack of consideration, dkt. no. 71, pp. 3-11, their
argument in this regard lacks merit. As eHealthscreen shows,
the record contains sufficient evidence that HSDM furnished
consideration to support the agreement set forth in the
Promissory Note.
The consideration necessary for a valid promissory note is
that which is "sufficient to support a simple contract."
O.C.G.A. § 11-3-303(b).
"[Clonsideration is valid if any
benefit accrues to him who makes the promise, or any injury to
him who receives the promise." Edgar v. Edgar Casket Co., 187
S.E.2d 925, 926 (Ga. Ct. App. 1972). The fact that
consideration flows from a person other than the promisee, as in
this case, does not affect the promisee's right to enforce the
promise. Id. at 927 ("Where A. makes a promise to B., and the
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consideration therefor is furnished by C., the promisee, B., may
maintain suit thereon." (quoting Hawkins v. Cent. of Ga. Ry.
Co., 46 S.E. 82, 85 (Ga. 1903))).
Consideration may consist of "a promise of performance, to
the extent the promise has been performed." See O.C.G.A. § 113-303 (a) (1). Although an agreement may lack consideration when
made because the promisee is not bound to comply, "it becomes
binding when he subsequently furnishes the consideration
contemplated by doing what he was expected to do." Breed v.
Nat'l Credit Ass'n, 88 S.E.2d 15, 18 (Ga. 1955) (quoting Brown
v. Bowman, 46 S.E. 410 (Ga. 1903)) . "[I] f the promisee
accomplishes the object contemplated, then the promise is
It somewhat misses the mark to focus on whether eHealthscreen, as
payee on the Promissory Note, could also be a third-party beneficiary
of the same. In a third-party beneficiary situation, "[t]here must be
a promise by the promisor to the promisee to render some performance
to a third person[,] and it must appear that both the promisor and the
promisee intended that the third person should be the beneficiary."
Rowe v. Akin & Flanders, Inc., 525 S.E.2d 123, 125 (Ga. ct. App. 1999)
(second alteration in original) (quoting Se. Grading v. City of
Atlanta, 324 S.E.2d 776 (Ga. Ct. App. 1984)). As Mack Bryson issued
the note promising to pay a specified amount to eHealthscreen, see
dkt. no. 54-2, pp. 1-2, eHealthscreen became both the payee and
promisee under the note. While HSDM members negotiated the execution
of the Promissory Note, there is no dispute that eHealthscreen took
delivery of the note and attempted to exercise the right to payment
thereunder, see eHealthscreen's SMF 1, tj 10, 15-16, 29; Brysons' SMF,
¶ 9. See O.C.G.A. § 11-3-105(a) ("'Issue' means the first delivery of
an instrument by the maker or drawer, whether to a holder or
northolder, for the purpose of giving rights on the instrument to any
person."); Jones v. Phillips, 513 S.E.2d 241, 242-43 (Ga. Ct. App.
1999) (issuance, or delivery, of a promissory note is a prerequisite
to enforceability, and production of the note entitles a holder to
recover, absent a defense thereto). eHealthscreen is thus a party to
the Promissory Note, not a third-party beneficiary thereof, and may
sue to enforce Mack Bryson's obligations under the same.
AO 72A
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rendered valid and binding." Id. (quoting Hall v. Wingate, 126
S.E. 796, 807 (Ga. 1924)).
In return for his promise to pay eHealthscreen a specified
amount, HSDM agreed to continue its relationship with Mack
Bryson and to make further payments to him. See eHealthscreen's
SMF 1, ¶I 10, 15-16. The Brysons argue that this agreement
included no undertaking beyond the obligations that HSDM had
assumed at the outset of their employment relationship. See
Dkt. No. 71, pp. 3-11. However, as reflected in the May 6,
2005, letter, HSDM and Mack Bryson had neither defined a fixed
term for their relationship nor contemplated any right to
payment outside of that relationship. See Dkt. No. 55, Ex. A.
As a result, HSDM was not obligated to continue the relationship
and payments and could have terminated Mack Bryson and ceased
further payments at any time. Voyles v. Sasser, 472 S.E.2d 80,
81 (Ga. Ct. App. 1996) (agreement for indefinite term was
terminable at either party's will (citing Morris v. Park
Newspapers of Ga., Inc., 255 S.E.2d 131 (Ga. Ct. App. 1979))).
Indeed, it is undisputed that Mack Bryson signed the note in
November 2006 out of fear that HSDM would do precisely just
that. See eHealthscreen's SMF 1, ¶j 10, 17-18. When HSDM
followed through with its agreement to continue to employ Mack
Bryson and pay additional amounts to him, id. at ¶j 20-26, the
promise became binding, and the Promissory Note was then
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supported by sufficient consideration. See Breed, 88 S.E.2d at
17-18 (employer's promise of continued employment sufficient
consideration for existing employee's noncompetition agreement
where employee was terminable at will); cf. Glisson v. Glob.
Sec. Servs., LLC, 653 S.E.2d 85, 87 & n.8 (Ga. Ct. App. 2007)
(promise of continued employment did not constitute
consideration for noncompetition agreement where employer was
already contractually obligated to retain employee for term of
years) .
That Mack Bryson alleges to have signed the Promissory Note
under duress and out of fear of termination, see eHealthscreen's
SMF 1, ¶IJ 10, 17-18, does not change this result. Notably, the
Brysons did not raise duress as a defense to eHealthscreen's
counterclaims, see dkt. no. 20. See Gouldstone v. Life Inv'rs
Ins. Co. of Am., 514 S.E.2d 54, 56 (Ga. Ct. App. 1999) (duress
is affirmative defense). Even if the Brysons had properly
asserted this defense, their argument would fail, because there
is no evidence suggesting that HSDM made any threats of physical
or other harm that effectively deprived Mack Bryson of his free
will. See Miller v. Calhoun/Johnson Co., 497 S.E.2d 397, 399
(Ga. Ct. App. 1998) ("Duress which will avoid a contract must
While the Brysons point out that HSDM's commitment to Mack Bryson
was not explicitly stated in the Promissory Note, dkt. no. 83, p. 7,
it need not have been to constitute valid consideration. See Riddick
v. Evans, 274 S.E.2d 40, 41 (Ga. Ct. App. 1980) ("A recitation of
consideration in the instrument is not essential to recovery.").
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consist of threats of bodily or other harm, or other means
amounting to coercion, or tending to coerce the will of another,
and actually inducing him to do an act contrary to his free
will.' . . . . One may 'not void a contract on grounds of duress
merely because he entered into it with reluctance, the contract
is very disadvantageous to him, the bargaining power of the
parties was unequal or there was some unfairness in the
negotiations preceding the agreement." (quoting Tidwell v.
Critz, 282 S.E.2d 104 (Ga. 1981))).
Thus, the undisputed facts show that HSDM's agreement to
continue its relationship with and payments to Mack Bryson
provided adequate consideration for his promise to pay
eHealthscreen the stipulated amount. The Court need not
consider whether HSDM's past payments to Mack Bryson constituted
additional consideration in support of the Promissory Note. As
sufficient consideration was exchanged, the Promissory Note is
valid and enforceable by eHealthscreen, and Mack Bryson is
liable for any payments due thereunder.
As to the amount of Mack Bryson's liability, the undisputed
record facts support a finding that Mack Bryson owes
eHealthscreen a principal balance of $883,860. At the time of
signing the Promissory Note, Mack Bryson agreed to pay
eHealthscreen "the principal sum of . . . $557,581 . . . plus
such further sums . . . as listed or to be listed on the
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Schedule of Loans and Payments attached hereto, together with
interest on such principal sums." Dkt. No. 54-2,
P. 1. It is
undisputed that HSDM made regular payments to Mack Bryson until
at least December 20, 2007, and the Schedule of Loans and
Payments reflects that the principal balance as of that date was
$883,860. eHealthscreen's SMF 1, ¶J 27-28.
While Mack Bryson never initialed the final two entries on
the schedule, dkt. no. 54-2, p. 5, he does not dispute his
receipt of these payments or the accuracy with which they were
recorded on the Schedule of Loans and Payments, see
eHealthscreen's SMF 1, ¶j 25-27. Notably, the Brysons' briefing
on the instant motions focuses only on Mack Bryson's liability
on the note and does not attempt to challenge ellealthscreen's
representations as to the amount of such liability. See Dkt.
Nos. 59, 71, 83. Because there is no genuine dispute as to the
principal balance owed pursuant to the terms of the Promissory
Note, eHealthscreen is entitled to judgment as a matter of law
on its counterclaim for $883,860 in principal.
eHealthscreen's Motion for summary judgment on the Brysons'
crossclaims and partial summary judgment on its counterclaims is
thus GRANTED.
The Brysons' Motion for Partial Summary Judgment
on the crossclaims and counterclaims is DENIED in its entirety.
AO 72A
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II. Plaintiff's and eHealthscreen's Cross-Motions on
Plaintiff's Claims (Dkt. Nos. 57, 65)
eHealthscreen moves for summary judgment in its favor on
all of Plaintiff's claims, arguing, in part, that Plaintiff has
not proven that it has any rights under the Security Deed that
the Brysons granted to Resource. Dkt. No. 57-1, pp. 11-14.
Specifically, eHealthscreen argues that the Missing Assignment
Affidavit filed in the property records does not meet the
statutory requirements to create a presumption that an
assignment of that deed to Plaintiff ever occurred. Id. Even
if Plaintiff had proven its rights as assignee of that deed,
eHealthscreen asserts that Plaintiff's bases for alleging
priority and entitlement to damages-namely, breach of contract,
promissory estoppel, fraud, and equitable subrogration-lack
merit. Id. at pp. 14-32. eI-iealthscreen further contends that
in any event, Plaintiff is not entitled to an award of
attorney's fees, because a bona fide controversy exists between
the parties. Id. at pp. 32-33.
Plaintiff counters that eHealthscreen, as a stranger to the
alleged assignment between Resource and Plaintiff, has no
standing to challenge the validity of the same. Dkt. No. 65-1,
pp. 11-12.
Even so, Plaintiff goes on to argue that its
possession of the following documents, which its counsel
obtained and produced during the briefing period for these
AO 72A
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motions, renders eHealthscreen's argument concerning the Missing
Assignment Affidavit moot and proves that Plaintiff is the
proper assignee of the Resource Security Deed: (1) the original
promissory note and allonge, as well as the certified true copy
of the Security Deed, executed by the Brysons in favor of
Resource; (2) a copy of the Corporation Assignment of Deed of
Trust executed in blank by Covino on behalf of Resource; and (3)
the original Corporation Assignment of Deed of Trust that
Plaintiff's counsel filled in with Plaintiff's name, at
Plaintiff's direction and without any objection by Covino,
during this litigation. Dkt. No. 93, pp. 1-5. Although
Plaintiff contends that its holding of these documents obviates
further proof of its interest in the Property, Plaintiff
nevertheless argues that it demonstrates the chain of
consideration paid for the note and custody of the blank
assignment, through its verified Answers to interrogatories
discussing the Resource-Thornburg transfer and the subsequent
transfers leading up to Plaintiff and its filing of the Sale and
Administration Agreement between FCOF PWL LLC, FORT Asset
Funding, and Plaintiff. Id. at pp. 3-4. Additionally,
Plaintiff claims that it is entitled to judgment as a matter of
law on its claims of promissory estoppel and equitable
subrogation. Dkt. No. 65-1, pp. 14-28.
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A. eHealthscreen's Standing to Challenge Plaintiff's
Interest in the Property
As a general matter, one who is not a party to an
assignment of a security deed lacks standing to challenge its
validity under Georgia law. See Breus v. McGriff, 413 S.E.2d
538, 539 (Ga. Ct. App. 1991); see also McKinley v. Fed. Home
Loan Mortg. Corp., No. CV 212-124, 2013 WL 4501327, at *3 (S.D.
Ga. Aug. 22, 2013) (concluding that the plaintiff was a stranger
to the assignment of a security deed to the defendant and thus
lacked standing to challenge it); Bandele v. Deutsche Bank Nat'l
Tr. Co., No. 1:11CV4257TWT, 2012 WL 1004990, at *2 (N.D. Ga.
Mar. 22, 2012) (same). Courts have applied this principle to
preclude a debtor-plaintiff from affirmatively seeking to set
aside a foreclosure or obtain other relief from a creditordefendant based on the alleged invalidity of an assignment to
it. See, e.g., McKinley, 2013 WL 4501327, at *3; McFarland v.
BAC Home Loans Servicing, LP, No. 1:11CV04061RWS, 2012 WL
2205566, at *3 (N.D. Ga. June 14, 2012) . In other cases, courts
have found that this rule prevents a debtor-defendant who
previously treated a creditor-plaintiff's assignment as valid
from later attempting to raise invalidity of the assignment as
an affirmative defense. See Sutton v. Bank of Am.,
N.A., No.
1:11-CV-3765-CAP, 2012 WL 2394533, at *5 (N.D. Ga. Apr. 11,
2012) ("[In Breus, the] debtor was estopped from disclaiming
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[the] assignee's rights under assignment after treating [the]
assignee as having properly acquired the indebtedness." (citing
Breus, 413 S.E.2d at 539-40)); see also Merchant's Grocery Co.
v. Shawnee Mill Co., 72 S.E.2d 797, 800 (Ga. Ct. App. 1952)
(finding that the defendant was estopped from challenging the
plaintiff's standing to sue for breach of contract because it
had dealt with the plaintiff as it had with the assignor of the
contract)
However, at least one other district court in Georgia has
concluded that this principle does not apply where a party
challenges an assignment as a defense, rather than a basis for
affirmative relief, and the party has not previously treated the
assignment as valid. See LSREF2 Baron, LLC v. Alexander SRP
Apartments, LLC, 17 F. Supp. 3d 1289, 1306 (N.D. Ga. 2014). The
court in that case reasoned that "[i]t is [the plaintiff] who
has the burden of proving its case, and as one seeking to
recover on [an assignment], [the plaintiff] has the burden of
establishing that it has the legal authority to do so." Id.
This reasoning is consistent with the requirement in Georgia
that a plaintiff purporting to be an assignee of a contract—and
thus the real party in interest with the right to sue to enforce
the same—must prove that the assignment actually took place in
order proceed with its claim. See, e.g., Hutto v. CACV of
Cob., LLC, 707 S.E.2d 872, 874-75 (Ga. Ct. App. 2011); Green v.
P.O 72A
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33
Cavalry Portfolio Servs., LLC, 700 S.E.2d 741, 741-42 (Ga. Ct.
App. 2010); Wirth v. Cach, LLC, 685 S.E.2d 433, 434-36 (Ga. Ct.
App. 2009)
The rule limiting standing to challenge an assignment of a
security deed has no application in this case. Plaintiff
alleges that its right to sue to determine the priority of the
liens on the Brysons' Property derives from its status as
assignee of the Resource Security Deed. See Pl.'s SMF, ¶11 6162. eHealthscreen challenges the alleged assignment as a
defense to this action, not as a ground for obtaining
affirmative relief from Plaintiff. Notably, nothing in the
record suggests that eHealthscreen had any interaction with
Plaintiff prior to this litigation, much less treated Plaintiff
as the proper assignee of the Resource Security Deed. As a
result, it appears that eHealthscreen has standing to raise the
issue of whether Plaintiff meets its burden of proving that it
is the real party in interest with a right to sue on the
Security Deed.
The Georgia Supreme Court's decision to grant certiorari in
Ames, No. A14A2131, does not disrupt this conclusion. In Ames,
the debtor-plaintiffs filed suit to halt the defendant's
attempts to foreclose on their property, claiming that their
mortgage lender invalidly assigned the security deed executed in
its favor to the defendant. See No. A14A2131. The issue
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presented to the Georgia Supreme Court on appeal is whether the
Georgia Court of Appeals erred in holding that the debtorplaintiffs lack standing to challenge the validity of the
assignment of the security deed to the defendant. See id.
Significantly, nothing suggests that the Court will take up the
very different question of whether a lienholder-defendant has
standing to challenge the existence of an assignment where the
plaintiff claims to be the assignee of a security deed and
brings suit to determine the priority of their respective
interests. The Court, therefore, finds no basis upon which to
conclude that the Ames decision will impact eHealthscreen's
ability to question Plaintiff's interest in defending against
this priority action. 6
B. Plaintiff's Proof of the Alleged Assignment
In Georgia, "a security deed which includes the power of
sale is a contract[,] and its provisions are controlling as to
the rights of the parties thereto and their privies."
Montgomery v. Bank of Am., 740 S.E.2d 434, 436-37 (Ga. Ct. App.
2013) (alteration in original). "[A]n action on a contract
shall be brought in the name of the party in whom the legal
interest in the contract is vested." Hutto, 707 S.E.2d at 874
6
To the extent that the Brysons' briefing on Ames suggests that this
case should be stayed pending the Georgia Supreme Court's decision,
see dkt no. 108, p. 1, such a request is not properly before the
Court, see Fed. R. Civ. P. 7(b) (1) ("A request for a court order must
be made by motion.") and, even if it were, would be due to be denied
for the reasons discussed here.
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(alteration in original) (quoting O.C.G.A. § 9-2-20(a)). "A
party may assign to another a contractual right . . .
including the right to sue to enforce the right," Id. (quoting
Wirth, 685 S.E.2d at 433); however, an assignee suing to enforce
the right must put forth evidence "showing that [it] received a
valid assignment of contract rights making it the real party in
interest to sue on the contract," Green, 700 S.E.2d at 742
(citing Lau's Corp. v. Haskins, 405 S.E.2d 474 (Ga. 1991), and
Wirth, 685 S.E.2d at 433)
Relevant to the assignee-plaintiff's burden is that "an
assignment must be in writing" and "must identify the assignor
and assignee" for the contractual right to be enforceable by the
assignee. Hutto, 707 S.E.2d at 874 (quoting Wirth, 685 S.E.2d
at 433). With the respect to the transfer of a security deed in
particular, the writing must also "be signed by the grantee, or
if the deed has been previously transferred, by the last
transferee, and shall be witnessed as required for deeds."
Haynes v. McCalla Raymer, LLC, No. 1:11-CV-3149-TWT, 2014 WL
3908433, at *10 (N.D. Ga. Aug. 7, 2014) (citing O.C.G.A. § 4414-64; In re Cummings, 173 B.R. 959, 962 (Bankr. N.D. Ga. 1994)
2 Ga. Real Estate Law & Procedure § 21-45 (6th ed. 2011); and
Id. § 21-15 (noting that a security deed must meet all of the
requirements applicable to deeds generally, including that it
must name the grantor and grantee, include words of conveyance
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or grant, sufficiently describe the property conveyed, be
properly executed and attested, and be delivered)). Where, as
here, there have been multiple transfers of a contractual right,
there cannot be any "break in the chain of written assignments
necessary to establish that [the assignee is] the real party in
interest to bring the suit on the contract." Green, 700 S.E.2d
at 742 (citing Wirth 685 S.E.2d at 433).
1. Documents Executed by the Brysons and Resource in
2007
Plaintiff's production of the original promissory note
signed by the Brysons in favor of Resource, as well as the
original allonge to the note executed in blank by Covino, see
dkt. no. 93, exs. G-H, is insufficient to prove that Plaintiff
ever received a valid assignment of Resource's security interest
in the Brysons' real property. Rights pursuant to a promissory
note are distinguishable from those under a security deed. See
You v. JP Morgan Chase Bank, 743 S.E.2d 428, 432-33 (Ga. 2013)
("It is true that a promissory note is a negotiable instrument
subject to Article 3 of the 0CC. It is also true that Article 3
provides generally that only the holder of an instrument is
entitled to enforce the instrument. However, it is equally true
that, here, [the assignee) does not seek to enforce the note but
rather is enforcing its rights under the security deed, which is
not a negotiable instrument and is therefore not governed by
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Article 3. (citations omitted) (citing O.C.G.A. H 11-3-104, 113-301)). Plaintiff's possession of the note and allonge—even if
Plaintiff could prove a valid assignment of the same—does not
suggest in any way that Plaintiff ever obtained rights to the
Property pursuant to the related Security Deed.
Nor does Plaintiff's holding of a certified true copy of
the Security Deed signed by the Brysons in favor of Resource
suffice. See ]Jkt. No. 93, Ex. I. Georgia law is clear that any
transfer of a security deed must be in writing and meet certain
requirements to be valid. See O.C.G.A. § 44-14-64. Possession
of a certified true copy of the original Security Deed falls
short of demonstrating that any subsequent, valid assignment of
this deed to Plaintiff ever took place.
2. Corporation Assignment of Deed of Trust
Plaintiff's evidence of a copy of the Corporation
Assignment of Deed of Trust executed by Covino in blank, see
dkt. no. 93, ex. B, is insufficient to demonstrate any
assignment of the Resource Security Deed to Plaintiff. An
assignment of a security deed must identify the grantee, see
Haynes, 2014 WL 3908433, at *10, and, therefore, a security deed
assigned in blank is invalid, see Bald Mountain Park, Ltd. v.
Oliver, 863 F.2d 1560, 1562 (11th Cir. 1989); Etheridge v.
Boroughs, 74 S.E.2d 873, 875 (Ga. 1953). Additionally, a valid
transfer of a security deed must be signed by the grantee or the
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last transferee. See Haynes, 2014 WL 3908433, at *10. Here,
the Corporation Assignment of Deed of Trust executed by Covino
purports to transfer a security interest to an unidentified
party and is not signed by Plaintiff, the alleged grantee, or
FORT Asset Funding, the last alleged transferee preceding
Plaintiff. See Dkt. No. 93, Ex. B. 7 The assignment, therefore,
is incomplete and ineffective to transfer any interest as a
matter of law.
Plaintiff's attempt to have its counsel "complete" the
original Corporation Assignment of Deed of Trust to reflect a
transfer to Plaintiff, see id. at ex. A, does not cure the
deficiencies in this evidence. "It is settled law that a deed
presigned in blank cannot be completed without authorization
from the grantor." Bald Mountain Park, Ltd., 863 F.2d at 1562
(citing Etheridge, 74 S.E.2d at 873). While Covino denied
having any objection to Plaintiff's counsel filling in the
Corporation Assignment of Deed of Trust at his deposition, he
also testified that Resource is now defunct; that he has
resigned his position as President; and that he no longer has
any authority to act on its behalf. See Covino Dep., 7:18-8:12,
30:17-22, 32:23-33:9. Under these circumstances, no reasonable
It is unclear whether the reference to the "grantee" in O.C.G.A. §
44-14-64 is intended to refer to the grantee of the assignment or the
original grantee of the security deed. To the extent that it is the
latter, the Corporation Assignment of Deed of Trust nevertheless fails
because it does not contain Plaintiff's name or the signature of FORT
Asset Funding, the last alleged transferee.
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juror could find that Covino's opinion was representative of
that of Resource as an entity and thus constituted authorization
by the grantor to complete the assignment. Even if it did, the
assignment would still fail to contain the signature of FORT
Asset Funding, the last alleged transferee of the security
interest prior to Plaintiff.
3. Chain of Consideration
Plaintiff's submissions regarding the chain of
consideration paid for the Resource note and Security Deed also
falls short of showing any valid assignment of the Security Deed
to Plaintiff. An assignee proves a valid assignment of rights
by showing that there is no "break in the chain of written
assignments necessary to establish that (it is] the real party
in interest." Green, 700 S.E.2d at 742 (emphasis added) (citing
Wirth 685 S. E. 2d at 433). Moreover, "[t] estimony regarding the
contents of business records, unsupported by the records
themselves, by one without personal knowledge of the facts
constitutes inadmissible hearsay." Nyankojo v. N. Star Capital
Acquisition, 679 S.E.2d 57, 60 (Ga. Ct. App. 2009) (quoting
Ingles Mkts. v. Martin, 513 S.E.2d 536 (Ga. Ct. App. 1999)).
Plaintiff fails to put forth evidence of a chain of written
agreements of the Resource Security Deed and, instead, attempts
to prove these transfers primarily through its own certified
Answers to interrogatories. See Dkt. No. 93, pp. 3-4 & Ex. D.
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Notably, there is no evidence that the authorized signatory of
Fort Asset Administrator LLC who verified these Answers, dkt.
no. 63-2, P. 13, has personal knowledge that any of the alleged
transfers occurred.
While Plaintiff points to a copy of the Sale and
Administration Agreement between FCOF PWL LLC, FORT Asset
Funding, and Plaintiff, even this evidence is insufficient to
prove the final link in the alleged chain of assignments. An
assignment of a security deed must include a sufficient
description of the property conveyed. Haynes, 2014 WL 3908433,
at *10 (citing 2 Ga. Real Estate Law & Procedure § 21-15).
While the Sale and Administration Agreement purports to assign
and convey the sellers' interests in the mortgage loans listed
on a Mortgage Loan Schedule attached thereto, Plaintiff has
neglected to include the Mortgage Loan Schedule with the copy of
the agreement filed in this case. See Dkt. No. 77, Ex. B, pp.
31-33, 69. A reasonable juror viewing this evidence could not
conclude that FCOF PWL LLC and, in turn, FORT Asset Funding
transferred any mortgage lien on the Brysons' Property. See
Hutto, 707 S.E.2d at 875 ("[T]he Bill of Sale stated that it was
[an] assignment of 'certain accounts' listed in 'Exhibit A';
there is no document attached thereto labeled 'Exhibit
AL,] . . . . '[T]his evidence, even together with the reasonable
inferences from it, was insufficient to establish (a valid
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assignment of rights . . .
(last alteration in original)
1.1"
(quoting Nyankojo, 679 S.E.2d at 57)); Wirth, 685 S.E.2d at 491
("[Tihere is no contract or Appendix A appended to the Bill of
Sale which identifies [the debtor's] account number as one of
the accounts . . . assigned.")
•8
C. Conclusion
Plaintiff thus fails to come forward with evidence that it
is the assignee and thus the real party in interest with respect
to the Resource Security Deed. As Plaintiff's priority and
damages claims are premised upon its holding of a valid security
interest in the Brysons' Property, the Court need not inquire
further to conclude that Plaintiff cannot succeed in proving
these claims. Rather, because Plaintiff cannot show that it is
8
The Missing Assignment Affidavit filed in the property records, see
dkt. no. 57-3, p. 3, likewise fails to satisfy Plaintiff's burden at
this stage. A recorded affidavit that meets certain requirements and
sets forth facts or circumstances affecting title to land gives rise
to a rebuttable presumption that the facts stated therein are true.
See O.C.G.A. § 44-2-20. The Missing Assignment Affidavit in this case
states that Resource assigned the Security Deed to the Property to
Plaintiff, Pl.'s SMF, ¶ 43, but that "(r]epeated attempts to locate
the original assignment or to obtain the replacement assignment have
failed," dkt. no. 57-3, p. 3. As the record reflects, Plaintiff's
counsel later obtained the documents pursuant to which Plaintiff
alleges to have received an assignment of the Security Deed, thus
rebutting any presumption that the assignment cannot be found because
it was lost or never prepared. Indeed, Plaintiff recognizes that its
subsequent production of these documents renders this basis for
proving its interest as assignee moot. See Dkt. No. 93, p. 5 ("Given
that the original assignment, now completed, has been put in the
record, eHealthscreen's arguments about the validity of the Missing
Assignment Affidavit[ and] the existence of the assignment[] . . . are
now moot.").
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the proper party to pursue these claims, summary judgment in
favor of eHealthscreen is appropriate. See Benson v. Asset
Acceptance, LLC, 712 S.E.2d 83, 84 (Ga. Ct. App. 2011) (citing
Hutto, 707 S.E.2d at 875; Green, 700 S.E.2d at 742; and Wirth,
685 S.E.2d at 435-36). eHealthscreen's Motion as to Plaintiff's
claims is thus GRANTED, and Plaintiff's cross-Motion on the same
is DENIED.
CONCLUSION
In light of the foregoing, eHealthscreen's Motion for
Summary Judgment on Crossclaims and for Partial Summary Judgment
on Counterclaims to Crossclaims (dkt. no. 55) is GRANTED in its
entirety. The Brysons' Motion for Partial Summary Judgment on
Crossclaims and Counterclaims (dkt. no. 59) is DENIED. The
Clerk of Court is DIRECTED to enter the appropriate judgment on
the Brysons' crossclaims against eHealthscreen and to terminate
the Brysons as Cross Claimants and eHealthscreen as a Cross
Defendant in this case. With respect to eHealthscreen's
counterclaims, the Court finds only that eHealthscreen is
entitled to a ruling in its favor on the issues of liability and
amount of principal, and, therefore, these claims and parties
remain pending for resolution of interest and attorney's fees at
a later date.
Further, eHealthscreen's Motion for Summary Judgment
Against Plaintiff (dkt. no. 57)
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is GRANTED, and Plaintiff's
43
Motion for Partial Summary Judgment against this Defendant (dkt.
no. 65) is DENIED.
The Clerk of Court is DIRECTED to enter the
appropriate judgment as to these claims and to dismiss
eHealthscreen as a Defendant in this case. As Plaintiff named
the Brysons as Defendants based only the possibility that
Plaintiff's claims against eHealthscreen might have impacted
their ownership interest in the Property, Plaintiff is hereby
ORDERED to notify the Court within fourteen (14) days of the
date of this Order as to whether it has any claim against the
Brysons with which it seeks to proceed in this action.
SO ORDERED,
this 19 day of April, 2016.
LISA GODBEY WOOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
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