Keith D. Jones v. Bank of America, N.A. , 564 F. App'x 432 ( 2014 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 13-12292
Non-Argument Calendar
D.C. Docket No. 1:12-cv-03855-TCB
KEITH D. JONES,
FLORESTINE EVANS JONES,
Plaintiffs - Counter Defendants - Appellants,
versus
BANK OF AMERICA, N.A.,
Defendant - Counter Claimant -Appellee.
Appeals from the United States District Court
for the Northern District of Georgia
(April 25, 2014)
Before TJOFLAT, PRYOR, and FAY, Circuit Judges.
PER CURIAM:
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The judgment of the district court is affirmed for the reasons set forth in its
April 19, 2013, Order, attached as Appendix A.
AFFIRMED.
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APPENDIX A
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
KEITH D. JONES and )
FLORESTINE EVANS JONES, )
) CIVIL ACTION FILE
Plaintiffs, )
) NUMBER 1:12-cv-3855-TCB
v. )
)
BANK OF AMERICA, N.A., )
)
Defendant. )
ORDER
This case comes before the Court on Defendant Bank of America,
N.A.’s motions for default judgment on its counterclaim [20] and for
summary judgment [25], and Plaintiffs Keith D. and Florestine Evans
Joneses’ motion for a determination as to reasonable attorney’s fees [21].
I. Background
On March 31, 2004, Plaintiffs purchased land and began building a
house at 5115 Northside Drive, NW, Atlanta, Georgia 30327. Plaintiffs
financed the property purchase and construction with BOA. The house was
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completed sometime in early 2008, and soon thereafter Plaintiffs
consolidated their acquisition and construction loans and entered into a
more conventional loan with BOA.
On April 21, 2008, the parties signed a new loan agreement. The loan
was evidenced by a $5 million promissory note executed by Plaintiffs in
favor of BOA. The note was collateralized by a security deed conveying to
BOA legal title to the Northside property.
On March 25, 2011, the note’s maturity date passed without the
parties reaching a new agreement and without Plaintiffs’ paying the
outstanding amount owed under the note. Several months later, on July
22, the parties executed a loan modification agreement, which stated that it
was effective as of March 25.
The loan modification agreement extended the maturity date of the
note to March 25, 2012, and Plaintiffs agreed therein that the extended date
was for the purpose of allowing them to repay the note, whether by sale,
refinance or other means. Plaintiffs also had to provide BOA with a copy of
the listing agreement evidencing that the property was listed for sale. In
addition, Plaintiffs agreed that the loan documents fully expressed the
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parties’ entire agreement and that they waived any claims and defenses
against BOA.
After executing the loan modification agreement, Plaintiffs defaulted
by failing to pay BOA the amounts due under the note and to pay property
taxes, the latter of which resulted in liens being filed against the property.
By letters dated October 11, 2011, and February 24, 2012, BOA notified
Plaintiffs that they were in default. After the loan matured on March 25,
2012, BOA attempted to negotiate another extension with Plaintiffs on the
condition that Plaintiffs pay the outstanding property taxes.
Despite indicating that they accepted BOA’s proposed terms for an
extension, including payment of the property taxes, Plaintiffs did not pay
the taxes. From March through August 2012, the parties continued
discussions but were ultimately unable to reach a resolution. Consequently,
on August 16, 2012, BOA sent a third default letter to Plaintiffs, and on
September 25, BOA sent a final demand for payment.
On November 2, Plaintiffs filed this action in the Superior Court of
Fulton County, Georgia. They aver claims for (1) fraud in the inducement
with respect to the consolidated loan, (2) negligent violation of O.C.G.A.
§ 45-17-8, (3) fraud in the inducement with respect to the loan modification
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agreement, (4) bad faith/willful and wanton misconduct, and (5) attorney’s
fees pursuant to O.C.G.A. § 13-6-11. That same day, BOA removed the
action to this Court.
On November 20, BOA filed an answer and counterclaim. In its
counterclaim, BOA seeks a judgment for the debt Plaintiffs owe, Plaintiffs’
specific performance of paragraph 7 of the security deed and section 7.7 in
the loan modification agreement, and attorney’s fees and expenses
pursuant to O.C.G.A. § 13-1-11 and the indemnity clause in the loan
modification agreement. Plaintiffs did not file a reply to BOA’s
counterclaim, and on January 3, 2013, BOA filed a motion for entry of
default. The next day, the Clerk entered default as to Plaintiffs on BOA’s
counterclaim.
On January 11, BOA filed a motion for default judgment on its
counterclaim. On January 24, Plaintiffs filed a response to the motion as
well as their own motion, in which they ask the Court to determine whether
BOA’s requested attorney’s fees are reasonable.
Plaintiffs remain in default, and as of February 12, 2013, they owe
BOA over $5 million, including attorney’s fees and other collection costs.
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On February 13, BOA filed a motion for summary judgment on Plaintiffs’
claims.
II. Discussion
Review of Plaintiffs’ briefs in opposition to BOA’s motions shows that
they do not oppose the motions in their entirety. The Court first discusses
what is unopposed and then what Plaintiffs dispute.
In its motion for default judgment, BOA seeks entry of judgment
pursuant to Federal Rule of Civil Procedure 55(b) on count one of its
counterclaim for the outstanding principal on the note, accrued interest,
and reasonable attorney’s fees and expenses. In its motion for summary
judgment, BOA seeks summary judgment on Plaintiffs’ claims and a
monetary judgment equal to the unpaid principal, accrued interest,
reasonable attorney’s fees, and property taxes and insurance coverage paid
by BOA.
Plaintiffs state that they do not dispute that (1) they owe BOA the
unpaid principal and accrued interest due under the promissory note, and
(2) the annual interest rate is three percent. Accordingly, the Court will
grant BOA’s motions to the extent that they seek a judgment awarding it
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the outstanding principal and interest, with interest accruing at three
percent per year.
Also, in their brief in opposition to BOA’s motion for summary
judgment, Plaintiffs have failed to respond to BOA’s arguments that it is
entitled to summary judgment on their claims. “[A] party’s failure to
respond to any portion or claim in a motion indicates such portion, claim or
defense is unopposed.” Kramer v. Gwinnett Cnty., Ga., 306 F. Supp. 2d
1219, 1221 (N.D. Ga. 2004). Also, “[w]hen a party fails to respond to an
argument or otherwise address a claim, the Court deems such argument or
claim abandoned.” Hudson v. Norfolk S. Ry. Co., 209 F. Supp. 2d 1301,
1324 (N.D. Ga. 2001). Consequently, Plaintiffs have abandoned their
claims. Accordingly, the Court will grant BOA’s motion for summary
judgment thereon.
Plaintiffs do challenge (1) BOA’s request for judgment for the
property taxes and insurance coverage BOA paid; (2) the portion of BOA’s
motion for default judgment that seeks judgment on its claims for specific
performance on certain contract provisions; and (3) BOA’s request for over
$500,000 in attorneys’ fees. Each argument is addressed below.
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A. Property Taxes and Insurance Coverage
Plaintiffs contend that BOA has failed to produce sufficient evidence
showing that it in fact paid the outstanding property taxes and the
insurance premiums. Their contentions are without merit. BOA has
offered through the affidavit of Joseph R. Linus, a senior vice president,
evidence that BOA paid $114,081.20 in overdue property taxes and $37,500
for insurance coverage after Plaintiffs let their fire insurance policy lapse.
Plaintiffs have pointed to no evidence that creates a genuine dispute of fact
as to these amounts.
However, BOA acknowledges in its reply brief in support of its motion
for summary judgment that Plaintiffs did subsequently renew the insurance
policy, and consequently they are entitled to a partial credit for the
insurance premium BOA paid. On April 12, BOA filed an update, through
the affidavit of Jennifer Banta, one of its employees. Banta testified that
BOA paid $37,500 for insurance coverage on Plaintiffs’ property, with an
effective date of August 15, 2012. In October 2012, Plaintiffs obtained new
insurance coverage, which caused BOA’s policy to be cancelled and BOA to
be issued a refund of $31,642.84. This reduces the judgment to which BOA
is entitled for the insurance coverage to $5,856.16. Accordingly, the Court
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will enter judgment in favor of BOA and against Plaintiffs in the amount of
$114,081.20 for unpaid property taxes and $5,856.16 for insurance
coverage.
B. Specific Performance of Portions of the Loan Documents
As stated above, BOA seeks a default judgment that requires Plaintiffs
to specifically perform three contract provisions: paragraph 7 of the
security deed, section 7.7 of the loan modification agreement, and the
indemnity clause in the agreement. Plaintiffs contend that BOA is not
entitled to this relief.
1. Paragraph 7 of the Security Deed and Section 7.7 of
the Loan Modification Agreement
Paragraph 7 of the security deed requires Plaintiffs to take any actions
necessary to correct any defects in the loan documents, and section 7.7 of
the loan modification agreement requires Plaintiffs to take any actions
necessary for BOA to have a perfected security interest in and title to the
property. Plaintiffs argue that BOA is improperly asking this Court to
require that they abide by provisions they have never disputed as valid and
that BOA has never sought to enforce.
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Specific performance is one of three remedies for breach of contract,
PMS Constr. Co. v. DeKalb Cnty., 257 S.E.2d 285, 287 (Ga. 1979), and BOA
has not pled that Plaintiffs breached the provisions it seeks specific
performance of. Indeed, it admits that it has not asked Plaintiffs to perform
under these provisions and doubts that it will have to. In addition, specific
performance is an equitable remedy that applies when “damages
recoverable at law would not be an adequate compensation for
nonperformance.” O.C.G.A. § 23-2-130. BOA has not pled that specific
performance is necessary because it lacks an adequate legal remedy. Thus,
the Court finds that BOA has not stated a claim for specific performance
upon which relief may be granted; consequently, the entry of default
judgment would be improper. See Chudasama v. Mazda Motor Corp., 123
F.3d 1353, 1371 n.41 (11th Cir. 1997) (“default judgment cannot stand on a
[counterclaim] that fails to state a claim”).
Perhaps BOA intended to plead the claim as a request for declaratory
judgment that these provisions were enforceable against Plaintiffs.
However, this request is not in the counterclaim, and more importantly, is
moot in light of Plaintiffs’ in judicio admission that paragraph 7 of the
security deed and section 7.7 of the loan modification agreement are valid
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and enforceable. Accordingly, the Court will deny BOA’s motions to the
extent they seek default judgment on count two of its counterclaim.
2. Indemnity Clause
With respect to the indemnity clause in section 7.16 of the loan
modification agreement, Plaintiffs agree that it is valid and that they are
bound thereby. However, they contend that BOA is not entitled to default
judgment on this clause if entry of default judgment “would actually
terminate or seek to terminate any of Plaintiffs’ claims against the Bank, as
those claims all sound in fraud, deceit and gross negligence.” This
argument is moot, though, in light of Plaintiffs’ subsequent abandonment
of their claims against BOA.
In addition, any relief sought by BOA pursuant to the indemnity
clause in count three is moot in light of Plaintiffs’ in judicio admission that
the clause is enforceable against them. Consequently, the Court will deny
this portion of BOA’s motion for default judgment.
Nonetheless, the Court does find that BOA is entitled to default and
summary judgment on count three of its counterclaim to the extent that it
seeks attorney’s fees and expenses pursuant to O.C.G.A. § 13-1-11. This is
discussed below.
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C. Attorney’s Fees
In both of its motions, BOA seeks attorneys’ fees and expenses related
to its collection efforts. Count three of its counterclaim presents two bases
for the fees and expenses (the indemnification clause and O.C.G.A. § 13-1-
11), and BOA explains that it seeks them pursuant to the indemnification
clause only in the event the fees provided by O.C.G.A. § 13-1-11 are not
adequate. As application of O.C.G.A. § 13-1-11 results in an award of over
$500,000 in fees and expenses, relief under the indemnification clause is
unnecessary, and the Court limits its analysis to the statutory basis for
relief.
The security deed, note and loan modification agreement all state that
BOA may seek attorney’s fees and expenses related to Plaintiffs’ default. In
count three of its counterclaim, BOA seeks the fees and expenses pursuant
to the note and modification agreement. The note provides,
If [BOA] has required [Plaintiffs] to pay immediately in full as
described above, [BOA] will have the right to be paid back by
[Plaintiffs] for all of its costs and expenses in enforcing this
Note to the extent not prohibited by applicable law. Those
expenses include, for example, reasonable attorneys’ fees.
The loan modification agreement provides that “[u]pon the occurrence of a
default or Event of Default, [Plaintiffs] agree[] to pay any additional
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attorneys’ fees and others fees and expenses upon request by [BOA] in
accordance with the terms of the Loan Documents,” and that Plaintiffs
“shall reimburse [BOA] for any reasonable costs and attorneys’ fees
incurred by [BOA] in connection with the enforcement or preservation of
any rights or remedies under this Agreement.”
Neither the note nor modification agreement provides for fees and
expenses equal to a certain percentage of the outstanding principal and
interest; consequently, O.C.G.A. § 13-1-11(a)(2) applies. Applying the
formula in subsection (a)(2), BOA contends that it is entitled to recover
over $500,000 in fees and expenses.
In their brief in opposition to the motion for default judgment,
Plaintiffs contend that this amount is unreasonable and that under
subsection (b)(1) they can ask the Court determine a reasonable amount.
Accordingly, Plaintiffs filed a motion for determination of reasonable
attorney’s fees.
BOA responds that subsection (b)(1) does not apply because the
former version of the statute applies to this case, which does not allow
courts to determine whether the statutory amount is reasonable. The Court
agrees.
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On May 2, 2012, an amended version of O.C.G.A. § 13-1-11 went into
effect. Among other things, the amended statute changed subsection (b) to
allow courts to determine whether the statutory amount—if greater than
$20,000—was a reasonable amount of attorney’s fees. The legislature
provided that the revised statute would apply only to contracts executed on
or after July 1, 2011. Act of May 2, 2012, 2012 Ga. Laws 725 (revising
O.C.G.A. §§ 13-1-11 & 16-1-12).
Plaintiffs contend that because the loan modification agreement was
entered into after July 1, 2011, the amended version of the statute applies,
and they can ask the Court to determine a reasonable amount of attorney’s
fees. However, accepting Plaintiffs’ argument would mean that the loan
modification agreement superseded the note, and thus its execution date
controls. This is contrary to the language of the loan modification
agreement and the parties’ intent.
“Where, after the execution of a promissory note, a renewal or new
note is executed for the same debt, it is the general rule that the second
instrument does not of itself operate as a . . . novation extinguishing the
first note, unless there is an agreement between the parties to that effect.”
Farmers & Merchants Bank of Charing v. Rogers, 189 S.E. 274, 276 (Ga.
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Ct. App. 1936); see also Remler v. Coastal Bank, 354 S.E.2d 79, 81 (Ga. Ct.
App. 1986) (because guarantor failed to present any evidence that parties
agreed that later note would act as novation to earlier note, earlier note was
not cancelled).
Here, the agreement explicitly states that it “shall not be construed to
be a novation of any of the Obligations owing to [BOA] under or in
connection with any of the Loan Documents,” which include the note. The
agreement also provides that the “rights and remedies of [BOA] under this
Agreement and the Loan Documents shall be cumulative and not exclusive
of any rights or remedies which it would otherwise have.” This language
makes clear that execution of the agreement did not supersede or cancel the
note. See id. at 80 (“when the language employed by the parties in their
contract is plain, unambiguous, and capable of only
one reasonable interpretation, . . . the language used must be afforded its
literal meaning and plain ordinary words must be given their usual
significance”). Consequently, the note’s execution date determines which
version of the statute applies—in this case the former version.
Because the note’s execution date controls, the Court bases BOA’s
recovery of attorney’s fees and expenses on the note’s provision providing
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for such, as opposed to the loan modification provisions. Thus, the Court
will deny Plaintiffs’ motion and grant BOA’s motions to the extent they seek
attorney’s fees under the note pursuant to O.C.G.A. § 13-1-11(a)(2).
III. Conclusion
Plaintiffs’ motion for a determination of reasonable attorney’s fees
[21] is DENIED.
Bank of America’s motion for default judgment [20] is GRANTED IN
PART and DENIED IN PART. It is GRANTED with respect to counts one
and three of its counterclaim and DENIED with respect to count two.
Bank of America’s motion for summary judgment [25] is GRANTED,
and Plaintiffs’ claims are DISMISSED WITH PREJUDICE.
On or before May 3, 2013, at noon, Bank of America shall email to the
Court (at alice_snedeker@gand.uscourts.gov) a proposed final judgment
that awards BOA the outstanding principal under the note, accrued interest
through May 3, the per diem rate of future interest at 3% per year (which
shall not be calculated on interest), $114,081.20 for property taxes,
$5,856.16 for insurance coverage, and attorney’s fees consistent with
O.C.G.A. § 13-1-11(a)(2). BOA shall include with its email a spreadsheet
that shows how it calculated the judgment amounts.
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IT IS SO ORDERED this 19th day of April, 2013.
Timothy C. Batten, Sr.
United States District Judge
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