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)

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