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

Filing 145

ORDER granting in part and denying in part 137 Motion for Summary Judgment and finding as moot 139 Motion for Entry of Default. Plaintiff's motion for summary judgment is GRANTED as to Defendants Cobalt and Werk. The Clerk is DIRECTED to e nter judgment in favor of Plaintiff CadleRock and against Defendants Cobalt and Werk, jointly and severally, in the amount of $2,360,107.71. Because genuine issues of material fact remain as to Defendants Alvarez, Beeler, Cook, and Tuttle's liability, Plaintiff's motion for summary judgment is DENIED as to Defendants Alvarez, Beeler, Cook, and Tuttle. Signed by Judge J. Randal Hall on 03/13/2017. (maa)

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IN THE UNITED FOR THE STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA SAVANNAH DIVISION CADLEROCK III, LLC, * Plaintiff, CV v. 413-099 * COBALT PARTNERS, ALVAREZ; LLC; * ALBERTO ADAM BEELER; RODNEY * M. COOK, JR.; WILLIAM M. TUTTLE, II; and CHARLES K. * WERK, * Defendants. ORDER Presently before the for summary judgment.1 Court (Doc. is Plaintiff's 137.) renewed motion The Clerk of Court gave Defendants timely notice of the summary judgment motion and the summary judgment rules, of the right to file affidavits or other materials in opposition, and the consequences of default. 138.) Therefore, Wainwright, 1 Plaintiff 772 has Defendant Werk. July 15, this for F.2d also (Doc. notice 822, filed 825 a 139.) (11th renewed of Cir. 1985) for default motion Griffith (per v. curiam), judgment against Default was entered against Defendant Werk on after having been properly same served, (see docs. 92, 93), and failed to move to set aside the entry of default against Plaintiff's motion for default the requirements 2015 for his failure to appear, plead or otherwise defend against action Defendant Werk has him. the (Doc. reasons set forth in judgment against Defendant Werk fails the Court's Order denying Plaintiff's original motion for default judgment against Defendant Werk, namely that Plaintiff's complaint contains no allegations regarding who possesses the originals of the renewed note and the relevant guaranty and thus Defendant Werk has not admitted for the purposes of default judgment that Plaintiff is the "holder" of these instruments. (See Doc. 125.) Because Plaintiff has not limited the scope of its present renewed motion for summary judgment to specific defendants, however, the Court will consider Plaintiff's against Defendant Werk in its present summary judgment analysis. claims have been satisfied. Defendants Alvarez, Beeler, Cook, and Tuttle filed response briefs, and Plaintiff filed a reply brief.2 (Docs. 140, 141, opposition 143, has expired, consideration. relevant law, 144.) Upon and the The for the and time motion is the record consideration parties' of respective filing materials briefs, ripe in for evidence, Plaintiff's motion is GRANTED IN PART, DENIED IN PART. I. On January 3, in Coral Gables, ("Cobalt") Bank of 2008, BACKGROUND in exchange for a loan to form a bank Florida, Defendant Cobalt Partners, LLC, executed a promissory note in favor of First National Savannah, Georgia, ("FNB") in the principal amount of 2 Default was entered against Defendants Cobalt Partners, LLC ("Cobalt") and Werk on October 16, 2013 and July 17, 2015, respectively, for their failure to appear, plead or otherwise defend against this action after having been properly served. (See Docs. 42, 43, 92, 93.) Defendants Cobalt and Werk have failed to move to set aside the entry of default against them and - more importantly for the purposes of the Court's present analysis - have failed to respond to Plaintiff's prior or renewed motions for summary judgment. Plaintiff's present renewed motion for summary judgment, therefore, is deemed unopposed with respect to Defendants Cobalt and Werk. See LR 7.5, SDGa. ("Failure to respond within the applicable time period shall indicate that there is no opposition to a motion."). Accordingly, with respect to Defendants Cobalt and Werk, all material facts set forth in Plaintiff's statements of the material facts are deemed admitted for the purpose of this motion because Defendants Cobalt and Werk have not controverted them by filing their own statements of facts or any other materials in opposition. See LR 56.1, SDGa. ("All material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by a statement served by the opposing party."); see also Fed. R. Civ. P. 56(c). Nonetheless, in evaluating the contentions of the parties as to the other remaining Defendants, the Court must view the facts in the light most favorable to the non-moving parties and must draw all justifiable inferences in their favor. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (en banc). 2 $1,000,000.00.3 (Roberts Decl., Doc. Doc. 1.) to 128-7, financing Ex. According arrangement, Cobalt's 89-1, 1 2; Plaintiff, members - as and Werk unconditional, note.4 Doc. - each continuing then unlimited part Messrs. and Michael Kistler as well as Defendants Alvarez, Tuttle, Wheaton Aff., executed personal of this Allen Harper Beeler, Cook, an absolute, guaranty of the (Roberts Decl. 1 3; Wheaton Aff., Exs. 3-7; Kistler Dep., 89-8, at 21:4-25.) renewed the note.5 Having maturity On January 20, of Defendant Cobalt (Roberts Decl. 1 5; Wheaton Aff., Ex. 2.) failed to make date 2009, July 20, full payment by the 2009, Defendant renewed note's Cobalt defaulted thereon and the other Defendants did not fulfill their purported guaranties. 16, 2009, (Roberts Decl. 11 6-7.) Nevertheless, on September after forcing an advance of funds from Mr. Kistler's separate line of credit with FNB ("Kistler's LOC") and applying those funds to satisfy the amounts then-due under note, FNB treated the renewed note as paid in full.6 & Ex. 8; see also Docs. 89-2, 111-3.) renewed note paid off until May 27, FNB 2010, the renewed (Id. 11 8-9 considered the when FNB reinstated 3 Defendant Werk alone, in his capacity as managing member of Cobalt, executed the note. (Werk Dep., Doc. 89-11, at 27:9-32:3; Wheaton Aff., Ex. 1.) 4 Defendants Alvarez, Beeler, Cook, and Tuttle all deny having executed these personal guaranties. (See Alvarez Decl., Doc. 118-1, SI 12; Beeler Decl., Doc. 123, at 2-3, I 5; Cook Decl., Doc. 123, at 4-5, I 5; Tuttle Decl., Doc. 117, at 26-30, II 6, 12.) 5 Defendant Werk alone, in his capacity as managing member of Cobalt, executed the renewed note. (Werk Dep. at 27:9-32:3; Wheaton Aff., Ex. 2.) 6 As of September 16, 2009, there was due and payable under the renewed note the principal amount of $1,000,000.00, plus interest of $21,486.12 and late fees of $1,000.00. (Roberts Decl. I 8 & Ex. 8.) 3 the renewed note as it existed prior to FNB having funds from Kistler's LOC on September 16, 2009.7 1 9; see also Docs. 89-2, Without payment June 25, 2010, on April 19, named notes' Defendants Decl., renewed note, ("FDIC-R"), the Federal Deposit appointed as FNB's receiver on filed this action against Defendants alleging that Defendant Cobalt and the other were outstanding thereon.8 the ultimately 2013, (Roberts Decl. 111-3.) for Insurance Corporation advanced jointly principal, and severally interest, and liable other for the amounts due (Compl., Doc. 1; Roberts Decl. 1 10; see also Saville Doc. 128-6, SISI 2-3.) The Clerk of this Court subsequently entered default against Defendants Cobalt and Werk for their respective failures to appear, plead or otherwise 7 More specifically, Mr. Kistler filed a lawsuit against FNB in the Superior Court of Chatham County, Georgia for conversion and breach of contract based upon FNB's advancement of funds from Kistler's LOC to pay off the renewed note, namely Kistler v. First National Bank, Superior Court of Chatham County, Georgia, Case No. CV09-2222-MO (the "State Court Action"). (See Doc. 111-3; see also Doc. 89-2.) On March 26, 2010, Judge John E. Morse, Jr. entered an Order in the State Court Action in which he found that FNB was not entitled to exercise its set-off rights by advancing funds from Kistler's LOC to satisfy the renewed note and ordered that Kistler's LOC be reinstated without penalty. (Doc. 111-3, at 6-7.) Judge Morse further held that, based upon his ruling compelling the reinstatement of Kistler's LOC, the loan associated with the renewed note was in default and thus FNB could "pursue that loan and obtain a judgment as provided for under the terms of that transaction." (Id. at 7.) For a more detailed history of Mr. Kistler's interaction with the instant financing transaction, including the judgment obtained by the Federal Deposit Insurance Corporation as receiver for FNB against Kistler in relation to Kistler's LOC and his personal guaranty of the renewed note, see Kistler, et al. v. FDIC, Case No. 4:ll-CV-024 (S.D. Ga. 2013), at Doc. 40, as amended by Doc. 44. See also Kistler v. FDIC, Case No. 4:ll-CV-025 (S.D. Ga. , consolidated with Kistler et al. v. FDIC on Mar. 28, 2012). 8 Mr. Harper was originally named as a defendant in the instant suit, but the claims against him were dismissed without prejudice for lack of personal jurisdiction on August 26, 2013 pursuant to a stipulation between the FDIC-R and Mr. Harper. (Docs. 30, 34.) 4 defend against (Docs. 43, On 93; this July 1, 2015 responses acquired the guaranties unsworn (Doc. to having 42, in the account rights original motion Plaintiff to Cadlerock notes the On November 11, 2015, the served. Just as Defendants began interest its properly 92.) FDIC-R filed its motion, of been 79, subsequently replaced 108.) that 13, 89.) that declaration attested the FDIC-R's and (Docs. 105, after see also Docs. summary judgment. their action and FDIC-R filing III, LLC relevant in this suit. Plaintiff submitted the officer, the the for notes Nick and Davies, the who relevant guaranties were transferred from the FDIC-R to The Cadle Company II, Inc. 27, 2015. 1-4; see ("Cadle") and then from Cadle to Plaintiff (Davies 11/11/2015 Decl., Doc. 121-2, also Davies 05/18/2016 Wheaton Aff., Exs. 1-7.) Decl., On March 28, Doc. 2016, on August II 1-7 & Exs. 128-5, II 2-3; the Court denied Plaintiff's original motion for summary judgment.9 (Doc. 124.) On May 18, 2016, Plaintiff filed a motion seeking leave to file its present renewed motion for summary judgment,10 which the Court subsequently granted. (Docs. 128, 136.) 9 Specifically, the Court found that Plaintiff had failed to demonstrate that it was the "holder" of the relevant instruments as it had not specified in its supporting affidavits of record whether it was in possession of the originals of these instruments and thus had failed to demonstrate its prima facie right to enforce the instruments under Georgia law. (Doc. 124, at 710.) 10 In the exhibits to its renewed motion for summary judgment, Plaintiff's counsel attests that she is presently in possession of the originals of the notes and guaranties. (Wheaton Aff. M 2-4 & Exs. 1-7.) 5 II. SUMMARY JUDGMENT A. Plaintiff's STANDARD AND APPLICABLE LAW Summary Judgment Standard motion 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." Civ. P. 56(a). could affect In the substantive law. 248 (1986) . Court must Corp. , 475 U.S. in Prop., outcome of facts the are suit "material" under the Inc., if they governing 477 U.S. 242, In evaluating the contentions of the parties, the non-moving party, Real context, Anderson v. Liberty Lobby, view inferences this Fed. R. in the Matsushita Elec. 574, [its] 941 facts light most Indus. Co. favorable v. to the the Zenith Radio 587 (1986), and must draw "all justifiable favor," F.2d 1428, United 1437 States (11th v. Cir. Four 1991) Parcels of (en banc) (internal punctuation and citations omitted). Initially, the moving party bears the burden and must show the Court, by reference to materials on file, the basis for the motion. Celotex Corp. v. Catrett, How to carry this burden depends proof at trial. Fitzpatrick v. 1115 (11th Cir. 1993) . at trial, 477 U.S. 317, 323 (1986). on who bears the burden of City of Atlanta, 2 F.3d 1112, When the movant has the burden of proof "that party must show affirmatively the absence of a genuine issue of material fact: it must support its motion with credible evidence . . . that would entitle it to a directed verdict if not controverted at marks and citation omitted) . trial." Put Id. (internal quotation another way, 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. Id. If — and only if - the movant carries its initial burden, the non-movant "with may avoid significant, existence of a summary probative triable judgment evidence issue of fact." by coming demonstrating Fitzpatrick, 2 1116 (internal quotation marks and citation omitted). introduction of the non-movant's evidence, forward the F.3d at After the summary judgment will be granted for the moving party only if "the combined body of evidence is still directed verdict such at that trial the movant - that is, jury could find for the non-movant." the non-movant cannot carry its would such Id. burden be that 663 F.2d 1032, 1033-34 (11th Cir. no to a reasonable Importantly, however, by relying pleadings or by making conclusory statements. Ross, entitled 1981). on the See Morris v. Instead, the non-movant must respond with affidavits or as otherwise provided by Federal Rule of Civil Procedure 56. B. Applicable Law As noted in the Court's motion for summary judgment, Order on Plaintiff's the choice of law rules and the substantive law of Georgia apply in this case. at 5-7.) original (See Doc. 124, The choice of law rules of the forum state (here, Georgia) apply when Holdings, 1258-59 Inc. (N.D. Federated v. deciding Rehab Ala. Mut. law Solutions, 2004) Ins. state Co., (citing 135 claims. LLC, 307 Boardman F.3d 750, Benchmark Med. F. Supp. 2d Petroleum, 752 (11th 1249, Inc. Cir. v. 1998)). Because the notes each specifically state that "[t]he law of the state of Georgia will govern this note," 2), Georgia Computer law Scis. ("Absent a governs Corp., 621 contrary those F. instruments. App'x public (Wheaton Aff., 585, policy, See 589 Neibert (11th Cir. [Georgia v. Kupfer, guaranties 250 Ga. indicate that 106, 107 the (Ga. 1982))). applicable city will (quoting Because is v. 2015) courts] normally enforce a contractual choice of law clause." Carr Exs. 1- the Savannah, Georgia and that the lending institution is FNB,11 (Doc. 128-7, Exs. 3-7), instruments. 2003) Georgia substantive law appears to govern those Convergys v. Keener, 582 S.E.2d 84, 86-87 n.l (Ga. (holding that Georgia continues to follow the traditional rule of lexi loci contractus, whereby contracts are governed "by the law of the place where they were made, except where it appears from the contract itself that it is to be performed in a State other than that in which it was made, laws of that sister State will be applied." in which case the (internal quotation marks, citations, and formatting omitted)); but see Neibert, 621 F. App'x at 589. Because Plaintiff has not renewed its prior 11 The Court also notes that, in its complaint, Plaintiff indicates that "the events or omissions giving rise to this action occurred in the Southern District of Georgia." (Doc. 1.) 8 arguments that the the guaranties,12 lexi for loci laws of instruments as consequently, a suit should be applied to to Georgia substantive law well. III. "In state the Court will apply the background rule of contractus and, those another DISCUSSION enforce a promissory note, a plaintiff establishes a prima facie case by producing the note and showing that i t was executed." 756 S.E.2d 593, 596 Id. of law Inc. v. the defendant quotation marks can Charterbank, "Once that prima facie the plaintiff is entitled to unless (internal Family Farm, (Ga. Ct. App. 2014). case has been made, matter L.D.F. judgment as a establish and a citation defense." omitted). "Similarly, in a suit on a personal guaranty, when the signature is admitted or established, production of the instrument 12 In its original motion for summary judgment, the FDIC-R argued that Florida law should be the substantive law applied to the guaranties because: (1) each guaranty provides that it "shall be governed by the laws of the State in which it is executed/" and Guaranties were executed in (2) "[t]he consensus of the evidence is that the the State of Florida in January deposition testimony of Mr. Kistler and Defendant Werk. n.l; Wheaton Aff., Exs. 2008" (Doc. per 89-37, the at 6 3-7; see also Kistler Dep. at 5:12-7:24; Werk Dep. at 14:19-16:21, 27:9-30:2.) As noted by the Court in its Order denying Plaintiff's original motion for summary judgment, the Court finds the evidence provided by Plaintiff insufficient to demonstrate that the relevant guaranties were executed in Florida. (See Doc. 124, at 6-7.) Moreover, given that the relevant Defendants deny having executed the guaranties, the Court finds further briefing and/or discovery on this issue would be futile, particularly in light of Plaintiff's statement that it "can prevail as a matter of law regardless of whether Florida or Georgia law is applied." (Doc. Ill, at 3.) 9 entitles the holder to recover on it unless the defendant establishes a defense."13 Id. A. On July 1, 2015, summary judgment, of Christopher Association, behalf of the support of its original FDIC-R submitted the "Vice-President the [FDIC-R], 1 attached: (1) "[a] 1.) as Receiver of Therein, Mr. for KeyBank 5.) First Roberts Mr. National National Bank." stated that he had true and correct copy of the Additionally, for as Servicer on Renewed Note;" M[t]rue and correct copies of [Defendants'] II 3, motion unsworn declaration d/b/a KeyBank Real Estate Capital, Decl. (Id. in Roberts, (Roberts and (2) Defendants Cobalt And Werk Guaranties." Roberts attested that he had ''access to and [was] familiar with the business records of [FNB] with regard to the Defendants." (IcL_ 5 1.) On November 11, 2015, Plaintiff submitted the unsworn declaration of Mr. Davies, wherein he attests that the rights to the renewed note and Defendants' guaranties were transferred from the FDIC-R to Cadle on August 27, 2015, and then from Cadle to Plaintiff Cadlerock that same day. subsequently (Davies 11/11/2015 Decl. denied Plaintiff's II 2-7.) original motion The Court for summary judgment, finding that Plaintiff had failed to demonstrate that it 13 was the "holder" As used herein, of the renewed note and Defendants' a "holder" includes: "(i) the holder of the instrument; (ii) a nonholder in possession of the instrument who has the rights of a holder; or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to [O.C.G.A. § 11-3-309] or [O.C.G.A. § 11-3-418(d)]." See O.C.G.A. § 11-3-301. 10 guaranties because it had not specified whether possession of the original of the renewed note. Wachovia 2011) Bank, Nat'l (providing Ass'n, that one 711 S.E.2d cannot be 80, a it was in See Jenkins v. 82-83 holder (Ga. of a Ct. App. negotiable instrument unless he has "possession of the instrument"). On May summary 18, 2016, judgment, declaration of in support Plaintiff Mr. Davies, of its renewed submitted wherein he motion another attests that for unsworn Plaintiff received the originals of the notes from the FDIC-R on April 20, 2016 and had subsequently sent these instruments to its counsel of record.14 submitted Franchise attests 2015, (Davies 05/18/2016 Decl. the and that affidavit Asset the of Ms. Marketing FDIC-R II 4-5.) Linda S. Specialist" sold the notes April 19, 2016. submitted the attests that guaranties Cadle FDIC-R, on August (Saville Decl. affidavit she II 1, Plaintiff, 5, of its counsel, maintains the originals at her office in Statesboro, 6.) Ms. of & Exs. who 27, of on or about Plaintiff also Laura Wheaton, the notes who and the Georgia and has made them available for inspection by Defendants. 14 Mr. the "senior as evidenced by the allonges, and that the originals the notes were sent to Cadle's successor, 2-4 Saville, at to Plaintiff also (Wheaton Decl. II 1-7.) Davies also attached to his May 18, 2016 declaration copies of the original note and renewed notes, as well as allonges transferring the right to payment under these instruments from the FDIC-R to Cadle and from Cadle to Plaintiff. (Davies 05/18/2016 Decl., Exs. A & B. ) 11 Here, right Plaintiff to enforce has the met notes its and burden of Werk's establishing guaranty as its well as Defendants Cobalt and Werk's respective indebtedness thereunder. Given Plaintiff's recent possession of the filings, original it has fully demonstrated its instruments and therefore its entitlement to enforce them against Defendants Cobalt and Werk. See O.C.G.A. execution § of 11-3-301. these Plaintiff instruments by has way also of shown Defendant the proper Werk's own deposition testimony affirming that he did in fact execute the notes on behalf of Defendant guaranty of these notes. Plaintiff further Cobalt as well as his personal (Werk Dep., Doc. 89-11, at 27:9-32:3.) demonstrated that Defendants Cobalt and Werk have failed to make payments in accordance with the terms of the notes and Werk's guaranty defaults thereon. Ex. 1.) Cobalt and, consequently, (Davies 9/30/2016 Decl., their Doc. respective 143-1, Ifl 2-4 & Plaintiff also provided sufficient notice to Defendants and Werk of its intent to enforce provision of the notes and Werk guaranty.15 the attorney's fees (See Compl. 11 16- 15 Pursuant to the terms of the notes, in addition to principal, Plaintiff is also entitled to interest, late fees, loan-related fees, as well as attorney's fees in the amount of "15 percent of the principal and interest then owed." (See Wheaton Aff., Exs. 1, 2, 7.) Georgia law requires that attorney's fees provisions be enforced where "unquestionably satisfied." TermNet Merch. Servs., S.E.2d 745, 747 (Ga. 2003); the conditions Inc. v. Phillips, see also O.C.G.A. § 13-1-11. are 588 An attorney's fee provision must be enforced under O.C.G.A. § 13-1-11 where: "(1) the note's terms include an obligation to pay attorney fees; (2) the debt owed under the note has matured; (3) notice was given to the debtor informing him that if he pays the debt within ten days of the notice !s receipt, he may avoid attorney fees; (4) the ten day period has expired without payment of the principal and interest in full; TermNet, 588 and (5) S.E.2d at the debt is collected by or through an attorney." 747. All of these provisions are met here. 12 (See 17.) Moreover, evidence to Defendants rebut the Cobalt and Werk aforementioned have showings presented and have otherwise raised a defense against the enforcement of and/or Werk's material Werk's issues of liability guaranty, See Accordingly, under Chestatee Family State the the been duly executed terms and Farm, Bank, record there are not the notes no disputed genuine fact regarding Defendants Cobalt and respectively, L.D.F. ("Once guaranty. no summary Inc., 579 756 S.E.2d evidence of . . the notes judgment S.E.2d 11, 14 . shows is at (Ga. a due 596; Ct. Werk's thereon. Reece App. promissory a prima and is in default, and v. 2003) note has facie right to judgment is established and the burden shifts to the debtor to establish to an affirmative defense. establish a valid defense, Because the trial the [debtors] failed court properly granted summary judgment to the [creditor] on the notes." (citing Miller v. Calhoun/Johnson Co., 497 S.E.2d 397 (Ga. Ct. App. B. Defendants Alvarez, Beeler, Cook, Because Defendants Alvarez, Beeler, 1998))). & Tuttle Cook, and Tuttle deny signing their respective guaranties, however, a jury must decide In Georgia, "[a] whether they did in fact execute them. is not liable instrument." on an instrument O.C.G.A. § unless 11-3-401. the person While the person signed burden the of Compl. II 16-17.) See also Long v. Hogan, 656 S.E.2d 868, 869 (Ga. Ct. App. 2008) (holding that attorney's fees notice in complaint was sufficient to satisfy requirements of O.C.G.A. § 13-1-11) (citing Upshaw v. Flooring Co., 398 S.E.2d 749, 752 (Ga. Ct. App. 1990)). 13 S. Wholesale establishing the validity of a signature ultimately rests on the person claiming authentic and liability of its validity, authorized the "the unless purported signature the signer action and the is presumed to is to enforce signer is be the dead or incompetent at the time of trial of the issue of validity of the signature."16 of O.C.G.A § 11-3-308(a). authenticity is not easy, as Overcoming the presumption it requires the challenging party to produce "other evidence separate from the sworn denial of execution of the signature in defense of the forgery" and demonstrate that "there exist irregularities on the face of the negotiable notice Bank, Bank instrument under a reasonable 722 S.E.2d 884, of 1997)). Georgia At that v. 885 would place commercial a standard." (Ga. Ct. App. Parker, 486 summary judgment, reasonable 2012) S.E.2d 402, however, Lee person v. on SunTrust (citing Southtrust 405 (Ga. Ct. App. only a sworn denial of execution by the obligor is required to create a genuine issue of material fact for trial. See id. at 885-887 (denying summary judgment where obligor submitted affidavit denying execution of instrument). Here, viewing the evidence in the light most Defendants favor, and each drawing of the all justifiable aforementioned favorable to inferences Defendants in their disputes the 16 "If the validity of the signature [] is admitted or proved, a plaintiff producing the instrument is entitled to enforce the instrument against the defendant, unless the defendant establishes Bank, 722 S.E.2d 884, 885 (Ga. Ct. App. 2012) Newton v. Sibley, a defense." 615 S.E.2d 185 (Ga. Ct. App. 2005)). 14 Lee v. SunTrust (citing O.C.G.A. § 11-3-308(b); validity of varying his signature on his respective guaranty, degrees.17 declared that Most he "did assertively, not Plaintiff." (Tuttle Decl., assertively, Defendant sign Doc. the 117, Alvarez Defendant at has Tuttle guaranty 26-30, declared M albeit to has asserted 6, that 12.) he by Less does not recall "seeing" or "signing" the guaranty and that he "would not have knowingly signed an unlimited guaranty." Doc. 1 118-1, 12.) Finally, with the (Alvarez least Decl., amount of conviction, Defendants Beeler and Cook each declare as follows: "I admit do not personal that guaranty]. I signed I such never have any been document shown [i.e., the the supposed original of the document which supposedly bears my signature." 17 Here, while Defendants rely on unsworn - as opposed to sworn - declarations denying their execution of the guaranties, these unsworn declarations may be considered pursuant to the statutory exception found in 28 U.S.C. § 174 6. See id. (permitting unsworn declarations to substitute for sworn declarations where the declarant states therein, "in substantially the following form: . . . "I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct." (emphasis added)); see also Ballou v. Henri Studios, Inc., 656 F.2d 1147, 1153 (5th Cir. 1981) (holding that federal law controls all procedural matters, including evidential issues, in federal courts) (citing Johnson v. William C Ellis & Sons Iron Works, Inc., 609 F.2d 820 (5th Cir. 1980); Southern Pacific Transportation Co. v. Smith Material Corp., 616 F.2d 111 (5th Cir. 1980)); see also Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc) (Eleventh Circuit adopts as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981). While it is true that Defendants' respective unsworn statements are not models to be followed by others utilizing the exception provided by declarations Section are 1746, sufficient the to Court fall under finds the that Defendants' aforementioned unsworn exception as each is signed by the respective declarant and includes statements that they are made "under penalty of perjury" and "upon [the declarant's] personal knowledge." See, e.g. , Lelieve v. Oroso, 846 F. Supp. 2d 1294, 1299 n.2 (S.D. Fla. 2012) ("As the Former Complaint was signed and dated by Lelieve under penalty of perjury, the Court accepts Lelieve's Statement of Disputed Facts as supported insofar as Lelieve cites to statements made on personal knowledge in the Former Complaint." (citations omitted)). 18 Defendants Alvarez, Beeler, Cook, and Tuttle also note that seven high- ranking individuals at FNB - including the loan officer involved with the origination of the instant notes and guaranties, Mr. Isaac Jefferson Mulling 15 (Beeler 4-5, 1 Decl., 5.) Doc. 123, Moreover, at 2-3, each of SI 5; Cook these Decl., Doc. Defendants 123, states at that, while they "have paid money on bank loans relating to the failed effort to without start a a new bank in Coral full "knowledge 1 6; they have understanding of the done so alleged" (Tuttle Decl. 1 9; Alvarez Decl. 1 14; notes and/or guaranties. Beeler Decl. and Gables," Cook Decl. 1 6.) In response to these denials, summary judgment is nevertheless Plaintiff proper asserts because: (1) that these Defendants are estopped from disclaiming their signatures within their respective guaranties because of their failure to contest the guaranties at the time of the note's renewal; remitting funds to obtain the renewed note, and (2) by these Defendants ratified their respective guaranties. 1. Estoppel In support Citizens & S. 1981) . of its estoppel Nat'l Bank v. argument, Yeaqer Enters., Plaintiff cites 279 S.E.2d 674 to (Ga. In Yeager, the guarantors raised the defense of fraud to invalidate their guaranties only after renewing their promissory note. Id. at 675. Consequently, held that the guarantors' of estoppel by silence. the Supreme Court of Georgia fraud defense was waived by the rule Id. at 675-76. Central to the court's holding, however, was "the fact that the individuals who signed - have been convicted of bank fraud and/or false entries in bank records in connection with their activities while employed by FNB. See USA v. McMath, et al., Case No. 4:13-CR-03 (S.D. Ga. 2014). 16 the original and renewal notes as officers of the corporation are the same individuals who signed the guaranty agreements" and that the guarantors "concede [d] that the actions upon which the fraud known defense is based were execution of the renewal note." Georgia Supreme Court Id. stated that [to them] prior regarding righteousness of the guaranties. the the "any reasonable person would guaranties, [the bank's] the In light of this fact, consider the renewal of the underlying obligation, silence to an coupled with acknowledgement of the claim" as to both the notes and Id. Implicit to the Yeager court's holding was its finding that the guarantors at issue knew, or should have known, of the fraud on which they sought to invalidate their guaranties at the time they renewed their promissory note. Id. Thus, in order to estop Defendants from raising their present defense, must be similarly convinced that Defendants this Court knew - or at least should have known - of the forged guaranties at the time of the note's renewal. To this end, Plaintiff highlights the fact that the Defendants each paid $8,500.00 in order for the note to be renewed. Thus, Plaintiff is essentially arguing that these Defendants only made such payments because they knew of their absolute, unconditional personal guaranties of the note (i.e., that they knew or should have known of the factual basis upon which their present fraud defense relies at the time they paid 17 to renew enter the note) . judgment Court to in weigh While this Plaintiff's the is favor evidence a possible thereon and/or rationale, would to the inferences draw require in Plaintiff's favor, which the Court cannot do at this juncture.19 See Parcels of Plaintiff's Prop., rationale insufficient the Real forged for - the matter of law, though Court guaranties and forged, signature S.E.2d the conclude therefore 405, binding whether silence of the O.C.G.A. § 11-3-403 signature (Ga. v. Ct. T that a result, likely - Defendants be through "express principal," and is knew estopped, bind a is of as a implied O.C.G.A. § party when ratified, ratification," or from then the Parker, 486 the 10-6-52. acts See or also ("An unauthorized signature may be ratified small matters . . 1995) Sometimes, . will even "[s]light suffice Pioneer Concrete & B Scottdale Contractors, App. cannot signature presumption of ratification." Inc. As the most should for all purposes of this article."). circumstances 1437. Ratification unauthorized becomes at at it may be to an unauthorized if F.2d from raising their fraud defense. 2. "While 941 (internal Inc., quotation 462 to raise the Pumping Serv., S.E.2d 627, marks and 629 citation 19 While the notes state on their respective faces that they are secured by the personal guarantees of Defendants Alvarez, Beeler, Cook, and Tuttle, inter alia, (Wheaton Aff., Exs. 1 & 2), Plaintiff has put forth no evidence that these Defendants were actually aware of the notes' terms. Indeed, the only individuals who signed the notes were Defendant Werk and non-party Jeff Mulling. (Id.) 18 omitted). . or Id. Indeed, payment pursuant (citations circumstances, "with full retain[ed] 486 "[Ratifying conduct can include silence to an omitted) . however, knowledge of allegedly unauthorized agreement." The is ultimate whether all the test the material in the putative facts, instant guarantors, accept [ed] the benefits" of their personal guaranties. S.E.2d at Commercial 406; State see Bank, also 367 . . Jernigan S.E.2d 250, Auto 253 Parker, Parts, (1988) and Inc. v. ("[W]here a debtor voluntarily pays a part of an amount claimed to be due by his creditor the ground creditor on of a . for contract . which . fraud an in overdue the an debtor action seeks to against installment attack him on the he thereunder by is conclusively deemed to have waived . . . fraud if at the time of the partial payment he has knowledge of all the facts upon which he now bases his claim of fraud." (emphasis added) (citations omitted)). While it cannot reasonably be disputed that Defendants, members of Cobalt, enjoyed the benefits of the renewed as note, their knowledge of the material facts surrounding the guaranties at the time of the note's renewal argues that these Defendants "all being four defendants told renewal." paid the Note (Doc. 143, at less certain. had sufficient their that is they 12.) portion had Yet 19 of knowledge because the interest guaranteed the Plaintiff evidence was upon up provided for by Plaintiff - Defendants these viewed - does Defendants alleged not had personal respective in light actual or guaranties capital most necessarily call renewed on January 20, Ex. 2.) the demand the constructive at payments 2009. favorable the of time these conclusion knowledge they $8,500.00. (Roberts Decl. to of made The that their their note was 1 5; Wheaton Aff., The only evidence cited in support of these Defendants' supposed knowledge of their personal guaranties, email dated February 10, however, is an 2009, wherein an attorney representing Mr. Harper, Mr. W. Reeder Glass, wrote to these Defendants20 (and others) that "this loan [from FNB] you, jointly and severally, 20. "21 (Doc. Defendants February 89-12, Alvarez 24, 2009, and has now been extended to July at 2.) and While Mr. Tuttle's (Doc. is guaranteed by all seven of Glass did not deposit capital 89-27), call Plaintiff payments until admits that these "checks may have been sent as early as February 9 [2009]. "22 (Doc. 89-37, at 18; see also Docs. 89-21, 89-25.) Moreover, while Defendants Beeler and Cook's respective payments were made 20 Notably, Defendant Alvarez was not a direct recipient on this email. Doc. (See 89-12.) 21 Plaintiff has also submitted an additional email dated February 3, 2009 from Mr. Glass to several of these Defendants wherein he states that "I expect confirmation from [FNB] today that the loan has been extended until July 20, 2009. We will now begin to renegotiate the First National, First South and IBB loans guaranteed by some or all of you in order to create an integrated debt inconclusive structure." nature of this (Doc. 89-19 statement, (emphasis however, added).) the Court Given finds the it insufficient, without more, to have put these Defendants on notice of their own respective alleged guaranties of the notes. 22 Notably, while Plaintiff has submitted copies of Defendants Alvarez and Tuttle's respective checks representing their capital call payments, it has blocked the date and signature lines of these checks with a copy of the deposit slip related thereto. (See Doc. 89-27.) 20 after February 2009), that (docs. all 10, 2009 89-22, four of (i.e., 89-24), these by checks dated February 16, a reasonable jury could still find Defendants were unaware of the actual material terms of their alleged guaranties and thus did not have "knowledge claim of of all the fraud. established, at facts" upon Therefore, this which Plaintiff juncture, they has estoppel now not base their sufficiently by silence or ratification, and thus these Defendants are entitled to a trial on of the issue the validity of their supposed signatures on their respective guaranties. III. Upon due consideration, summary judgment Because no Defendants CONCLUSION (doc. genuine Cobalt 137) Plaintiff's renewed motion for is GRANTED IN PART, DENIED IN PART. issues and Werk's of material liability, fact remain Plaintiff's as to motion for summary judgment is GRANTED as to Defendants Cobalt and Werk.23 The Clerk is DIRECTED to enter CadleRock and against severally, judgment in favor Defendants Cobalt and Werk, in the amount of $2,360,107.71.24 of Plaintiff jointly and Because genuine issues of material fact remain as to Defendants Alvarez, 23 As summary judgment Defendant Werk, has been entered Plaintiff's renewed motion in favor of Plaintiff Beeler, against for entry of default judgment against Defendant Werk (doc. 139) is DENIED AS MOOT. 24 This includes $1,000,000.00 in principal, $1,052,267.57 in interest, and $307,840.14 in attorney's fees. (See Doc. 143-1, II 2-4; see also Doc. 1287, Exs. 1, 2, 7.) 21 Cook, and judgment Tuttle's is liability, DENIED as to Plaintiff's motion Defendants Alvarez, for Beeler, summary Cook, and Tuttle. ORDER ENTERED at Augusta, March, Georgia, this J<=* day of 2017. ho|iorab1le j. randal hall united States district judge southern district of georgia 22

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