Federal Deposit Insurance Corporation v. Cobalt Partners, LLC et al

Filing 124

ORDER denying 89 Motion for Summary Judgment. Signed by Judge J. Randal Hall on 3/28/16. (cmr)

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION

CADLEROCK III,

LLC,

*
*

Plaintiff,

*

v.

*

CV 413-099

*

COBALT PARTNERS,

LLC;

ALVAREZ;

ADAM BEELER;

M.

JR.;

COOK,

TUTTLE,

II;

ALBERTO

*

RODNEY

*

WILLIAM M.

*

and CHARLES K.

WERK,*

Defendants.

*

ORDER

Presently

before

summary judgment

the

Court

(Doc. 89) .

is

Plaintiff's

motion

For the reasons below,

for

Plaintiff's

motion is DENIED.

I,

On January 3,
Coral

Gables,

("Cobalt")

Defendant

Cobalt

executed a promissory note ("note")

Decl.,

PL's Ex. D,

arrangement,

Georgia,

PL's

at

5.)

Ex.

("FNB")

A-l,

Alvarez,

Doc.

89-1,

1

- Allen Harper,

Beeler,

executed a personal,

Partners,

LLC,

to First National

in the amount of $1,000,000.

According to Plaintiff,

Cobalt's members

and Defendants

then

in exchange for cash to form a bank in

Florida,

Bank of Savannah,

(Roberts

2008,

BACKGROUND

Cook,

Tuttie,

unconditional

2;

Kistler Dep.,

as part of

this

Michael Kistler,
and Werk -

guaranty of

each

the note.

(Pi's.
PL's

Ex.

A-2,

Ex.

D,

Defendant

Doc.

Doc.

89-1;

89-8,

Cobalt,

with

Pi's Ex.

at

5-6.)

funds

PL's Ex. A-7,

Having

Doc.

failed

to

remaining

guaranties.

make

full

credit,

Doc.

a

payment

by

on

Card,

this

Georgia,

Ex.

A-8,

transfer,

capital
A-6,

2010,

Doc.

the

1 6.)

not

Doc.

fulfill

their

Nevertheless,

89-1;

Ex.

renewed

B,

note

Ex. A-8;

89-

renewed note's

and

purported

on September 16,
separate line of

Doc.

(Id. S[ 8;

89-2,

remained

at

6.)

satisfied

when the Superior Court of Chatham County,

ordered Kistler's line of credit to be restored.

Card,

call,

Defendant Cobalt defaulted,

did

the

reasons,

89-19.)

transferring money from Kistler's

until May 27,

Hist.

various

FNB treated the renewed note as paid in full.

Loan Hist.

Based

2009,

Defendants

for

Kistler Dep.,

(PL's Ex.

PL's Ex. N,

(Roberts Decl.

after

2009,

2009.

89-1;

maturity date of July 20,

the

Later,

89-2;

solicited through

renewed its note on January 20,
1;

B, Doc.

Ex.

(Loan

B at 6.)

Without payment for the renewed note, the Federal Deposit
Insurance Corporation

("FDIC"),

appointed as FNB's receiver on

June 25, 2010, ultimately filed its complaint on April 19, 2013,

alleging that Defendant Cobalt,
and

the

note,

other

were

outstanding

Dec.

St

10.)

named

Defendants,

as maker
as

jointly

and

severally

principal

and

interest.

Subsequently,

of the renewed note,

guarantors

liable

(CompL,

of

for

Doc.

the

renewed

the

note's

1;

Roberts

the Clerk entered default against

Defendants

the

instant

motion for summary judgment as to the other Defendants.1

(Docs.

43,

89,

93.)

responses

LLC,

Cobalt

and

Yet,

112,

("Cadlerock")

105,

and

108.)

(Docs.

Ill,

and

just

104,

(Docs.

instruments

Werk,

FDIC

Defendants

117,

118),

filed

began

Plaintiff

filing

their

Cadlerock

III,

acquired the FDIC's interest in the disputed

thus

Since
121),

as

the

replaced

that

the

time,

FDIC

Plaintiff

in

this

has

suit.

filed

(Docs.

two

replies

and the instant motion has become ripe for the

Court's consideration.

II,

Plaintiff's

motion

DISCUSSION

for

summary

judgment

will

be

granted

only if "there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law."

Fed.

Civ.

if

P.

could

56(a).

affect

In
the

substantive law.

248

(1986) .

Court

must

context,

outcome

of

Anderson v.

facts

the

are

suit

"material"

under

Liberty Lobby,

the

Inc.,

they

governing

477 U.S.

242,

In evaluating the contentions of the parties,
view

the

non-moving party,

Corp. , 475 U.S.
inferences

this

in

facts

in

Matsushita

the

Elec.

574, 587 (1986),
[its]

favor,"

light

most

Indus.

Co.

favorable

v.

R.

to

the
the

Zenith Radio

and must draw "all justifiable

United

States

v.

Four

Parcels

of

1 In compliance with Griffith v. Wainwright, 772 F.2d 822, 825 (11th Cir.
1985) (per curiam) , the Clerk provided these Defendants with notice of the
summary judgment motion, the summary judgment rules, the right to file
affidavits or other materials in opposition, and the consequences of default.
(Doc.

90.)

Real

Prop. ,

941

F.2d

1428,

1437

(11th

Cir.

1991)

(en

banc)

(internal punctuation and citations omitted).

Initially,
the Court,

motion.

How

to

proof

at

by reference to materials on file,

Celotex

carry
at

1115

the moving party bears the burden and must show

this

trial.

v.

Catrett,

burden

depends

Fitzpatrick v.

(11th Cir.

trial,

Corp.

1993).

fact:

credible

that

verdict

if not

who

317,

323

the

Atlanta,

City of

bears

2

(1986).

burden

of

F.3d 1112,

show affirmatively the absence of a

genuine issue of material
.

on

U.S.

for the

When the movant has the burden of proof

"that party must

evidence

477

the basis

.

.

it must support its motion with
would

controverted at

marks and citation omitted) .

entitle

trial."

Id.

it

to

a

directed

(internal

Put another way,

quotation

the moving party

must show that no reasonable jury could find for the non-moving
party on any of the essential elements of the case.
If —

the

non-movant

"with

may

significant,

existence

1116

and only if

of

a

—

the movant carries

avoid

summary

probative

triable

issue

of

judgment

evidence
fact."

its

Id.

initial burden,

by

coming

demonstrating

Fitzpatrick,

(internal quotation marks and citation omitted).

introduction of the non-movant's evidence,

be granted for

the moving party only if

evidence

is

still

directed

verdict

such
at

that

trial

-

the movant
that

is,

forward

2

the

F.3d at

After the

summary judgment will

"the combined body of
would be

such

that

entitled to
no

a

reasonable

jury could find for the non-movant."
the

non-movant

pleadings
Ross,

or

663

cannot

by

F.2d

carry

making
1032,

its

conclusory

1033-34

Id.

Importantly,

burden

by

relying

statements.

(11th

Cir.

however,

See

1981).

on

the

Morris

Instead,

v.
the

non-movant must respond with affidavits or as otherwise provided

by Federal Rule of Civil Procedure 56.
A.
In this case,

Georgia

it

Mut - Ins.

law

that

sits

Co. ,

of

the

F.

Med.

Supp.

when

a

Holdings,

2d

1249,

federal

Inc.

court

the choice-of-law rules

135

F.3d

750,

752

follows

the

traditional

guaranties

the

place

at

where

(11th

issue

they

were

Rehab
Ala.

decides
of

Inc.

to

v.

law

Federated

1998))).

rule

made,

state

the jurisdiction

Cir.

appear

v.
(N.D.

1258-59

(citing Boardman Petroleum,

Georgia

contractus,

the

307

applies

in which it

because

Benchmark

LLC,

2004) (providing
claims,

the choice of law rules of the forum state of

apply.

Solutions,

Applicable Law

of
be

Thus,

lexi

loci

governed

except

where

"by

it

appears from the contract itself that it is to be performed in a
State other than that in which it was made,

the

laws

Keener,
marks

of

582

that

sister

S.E.2d

and citation

84,

State

will

86 n.l

(Ga.

omitted) .

be

applied."

2003)

In spite

in which case

of

Convergys

(internal
this

. . .

rule,

v.

quotation
however,

Georgia courts will generally enforce contractual choice of law

provisions unless the applicable law "is

contrary to Georgia

public

policy"

substantial
Velten

or

the

relationship

to

Lippert,

985

Manderson & Assocs.,

Inc.

App.

v.

applicable
the

F.2d
v.

jurisdiction

parties

1515,

Gore,

or

1519

389

the

"has

no

transaction."

(11th

Cir.

S.E.2d 251,

254

1993);
(Ga.

Ct.

1989).

Because

city is

the

guaranties

Savannah,

Georgia,

indicate

and (2)

(1)

that

the

applicable

that the lending institution

is FNB, Georgia substantive law appears to govern.2 (Guaranties,
PL's

Ex.

A-2

through

A-6,

Doc.

89-1.)

However,

Plaintiff

contends that Florida law should be the substantive law applied
because
the

(1) each guaranty provides that it "shall be governed by

laws

of

consensus

the

of

State

the

in which

evidence

is

it

that

is
the

executed"

and

Guaranties

in the State of Florida in January 2 008" per "Ex.
"Ex.

G at 14-15."

(PL's Br.,

Doc.

89-37,

(2)

were

xx[t]he

executed

D at 5-7" and

at 6 n.l;

Guaranties,

PL's Ex. A-2 through A-6.)

After

reviewing

the

cited

evidence,

the

Court

finds

it

insufficient to demonstrate that the guaranties were executed in

Florida.

With the hope of obtaining more probative evidence on

this issue,
and

order

the Court could deny Plaintiff's motion as premature
further

briefing

and

evidence.

Yet,

because

Defendants deny - or provide that they cannot recall - executing

the guaranties, such a course of action would likely be futile.
2

The Court also notes that, in its complaint,

events

or

omissions

District of Georgia."

giving
(Doc.

rise

Plaintiff indicates that "the

to this action

1.)
6

occurred

in

the

Southern

(Beeler

&

Cook

Tuttle Resp.
to

Stat.

Resp.

to

to Stat.

Mat.

Mat.

Facts,

Facts,

Doc.

118-12,

and

Plaintiff's

prevail

as

Georgia

law

rule

Facts,

Doc.

circumstances

these

Mat.

Stat.

a

matter
is

loci

substantive law.

a

117,

J 2.)

the

Court

contractus

of

will

and,

SI

2;

when considering

statement

regardless

104-1,

S[ 2; Alvarez Resp.

Thus,

that

whether

apply

it

xxcan

Florida

the

or

background

consequently,

(PL's Reply I, Doc. Ill,

B.

xxIn

law

applied,"

lexi

of

of

Doc.

Georgia

at 3.)

Right to Enforce the Guaranties

suit

to

enforce

a

promissory

note,

a

plaintiff

establishes a prima facie case by producing the note and showing
that it was

executed."

756 S.E.2d 593,

596

L.D.F.

(Ga.

Ct.

Family Farm,

App.

2014).

Inc.

v.

Charterbank,

"Once that prima facie

case has been made,

the plaintiff

is

matter

the defendant

can establish a

of

law unless

entitled to

(internal quotation marks and citation omitted).

judgment as
defense."

a

Id.

"Similarly,

in

a suit on a personal guaranty, when the signature is admitted or
established,

production of

the instrument entitles the holder to

recover on it unless the defendant establishes a defense."3 Id.
On

July

judgment,
Christopher

1,

the

2015,

FDIC

Roberts,

in

support

submitted

of

the

"Vice-President

its

motion

unsworn
of

3 As used here, a ^holder" includes Mi) the holder of
nonholder in possession of the instrument who has the
(iii) a person not in possession of the instrument who
the instrument pursuant to [O.C.G.A. § 11-3-309]
418(d)]." See O.C.G.A.

§ 11-3-301.

for

summary

declaration
KeyBank

of

National

the instrument; (ii) a
rights of a holder; or
is entitled to enforce
or [O.CG.A. § 11-3-

Association,
behalf

of

(Roberts

d/b/a

the

KeyBank Real

[FDIC],

1

Decl.

as

1.)

Estate

Receiver

Therein,

Capital,

for

First

Roberts

as

Servicer on

National

stated

Bank."

that

he

had

attached (1)

"[a]

true and correct copy of the Renewed Note" and

(2)

and

correct

"[t]rue
11

(Id.

3,

5.)

copies

Additionally,

''access to and [was]

on November 11,

121-2,

Davies

1 1.)

Cadle

that

he

had

[FNB]

(Id. 5 1.)

2015,

that

the

guaranties

were

Company

indicated

Plaintiff submitted the unsworn
Nick Davies.

(Davies Decl.,

Within his declaration and attached exhibits,

indicated

Defendants'

Guaranties."

familiar with the business records of

declaration of its account officer,

Doc.

[Defendants']

Roberts

with regard to the Defendants."
Then,

of

II

Inc.

rights

to

the

transferred

("Cadle")

renewed

from

on August

the

27,

note

FDIC

2015,

from Cadle to Plaintiff Cadlerock on the same day.

and

to

and
(Id.

The

then
Stfl

2-

7.)

Viewing Plaintiff's evidence in the light most favorable to

Defendants

favor,

and

Plaintiff

''holder"

of

Although

Davies

instruments

specify

drawing

the

have

whether

has

all

failed

renewed

indicated
been

to

note

and

that

has

that

Defendants'

the
to

legal

in

it

of

their

is

the

guaranties.

rights

Plaintiff,

possession

Accordingly,

8

inferences

demonstrate

transferred

Plaintiff

instruments themselves.

justifiable

he

the

to

the

did

not

original

the Court cannot conclude

that

Plaintiff

instead
forth

find

that

prima

guaranties.4
S.E.2d 80,

is

the

"holder"

Plaintiff

facie

82-83

be a holder of a

has

evidence

See Jenkins
(Ga.

v.

Ct.

of

these

not

of

met

its

instruments

its

burden

right

to

Wachovia Bank,

App.

of

must

setting

enforce

the

Ass'n,

711

Nat'1

2011) (providing

and

that

negotiable instrument unless he has

one

cannot

"possession

of the instrument").

Additionally,

accurate

copies

documents

the

though

Roberts

the

instruments

of

FDIC

submitted,

these copies were made
FDIC

then

present

possessed.

outcome,

the

indicated

were

Roberts

Consequently,

Court

also

included

did

from the original

not

true

and

among

the

state

whether

instruments which the

while

questions

that

irrelevant

whether

the

to

the

renewed

note and Defendants' guaranties have been "produced."

4

Based on

its

in-brief

representations,

Plaintiff,

through

counsel,

has

physical possession of the original guaranties but does not have possession
of the renewed note.
(Pl.'s Reply I at 4; PL's Reply II at 3.)
Though
Plaintiff maintains that it has ^constructive possession" of the note, this

argument fails without evidence indicating that one of Plaintiff's agents has
actual possession.
See Midfirst Bank, SSB v. CW. Haynes & Co., 893 F. Supp.
1304, 1314 (D.S.C. 1994)(stating that a person constructively possesses an
instrument when "it is in the physical possession of his agent") (internal

quotation marks and citation omitted).

Thus,

even if the Court permitted

Plaintiff to submit the original guaranties as supplemental summary judgment
evidence,

the instant outcome would not change.

Ill,

CONCLUSION

Because Plaintiff has not established that

of

the

instruments

at

summary judgment (Doc.

ORDER
March,

ENTERED

at

issue,

the

Court

it

DENIES

is

its

the holder

motion

for

89).

Augusta,

Georgia,

this

<-^v-^

day

of

2016.

HONORSBDE J.

RAttDAL HALL

UNITED ^STATES DISTRICT JUDGE

SOUTHJK&r DISTRICT OF GEORGIA

10