First Citizens Bank and Trust Company, Inc. v. River Walk Farm, L.P., et al.

Summarized by Paul Avron , Berger Singerman LLP
10 years 6 months ago

Citation:

No. 14-14356 (11th Cir. Aug. 18, 2015).

Tag(s):

Ruling:

The Eleventh Circuit affirmed the District Court's finding that the assignee of underlying loans, promissory notes, deeds and guarantees had presented sufficient evidence to establish the damages it was owed resulting from a payment default by the obligor and the guarantors' failure to meet their contractual obligations.

Procedural context:

The District Court granted summary judgment in favor of First Citizens Bank & Trust Company (First Citizens) on its breach of contract action seeking to recover a deficiency judgment for the balance of funds due under a promissory note after First Citizens had foreclosed on and sold its collateral. The obligor, River Walk Farms, and the guarantors, appealed the adverse summary judgment ruling in favor of First Citizens to the Eleventh Circuit, which affirmed in an unpublished order.

Facts:

River Walk Farm (River Walk) borrowed approximately $6 million from Georgian Bank, and issued a promissory note in favor of Georgian Bank secured with security deeds to real estate. The loan was guaranteed by several entities and individuals; one of the corporate guarantors provided a security deed to real property as collateral for its guaranty. After Georgian Bank closed and entered receivership the FDIC entered into a Purchase and Assumption Agreement with First Citizens through which it became the holder of the loans, promissory note, security deeds and guarantees for the underlying loan. Subsequently, River Walk defaulted; neither River Walk nor the guarantors cured the default. First Citizens filed suit for breach of contract in Federal District Court seeking a deficiency judgment; it then moved for summary judgment supported by an affidavit from its Senior Vice President who was the former Executive Vice President of Georgian Bank. The District Court granted summary judgment for First Citizens based on the affidavit it had submitted. The Eleventh Circuit explained that First Citizens presented a prima facie right to judgment given that there was no dispute that it was the holder of the note, that the note and guaranties were duly executed and the loan was in default. The Eleventh Circuit then explained that River Walk offered no evidence upon which a jury could conclude that the damages set forth in the affidavit was incorrect, i.e., evidence to create a genuine issue for trial over the amount of damages, instead just arguing that the affidavit was insufficient to reflect the debt claimed by First Citizens. The Eleventh Circuit rejected the argument that First Citizens could not establish actual damages from the default because under the FDIC purchase agreement certain losses were shared between First Citizens and the FDIC, explaining that once First Citizens purchased the note it was entitled to enforce it according to its terms regardless of how much it paid the FDIC or how much monies it received from the FDIC under the shared-loss arrangement. As to the latter point, the Eleventh Circuit noted that First Citizens would not benefit from any "double recovery" due to its contractual obligation to remit funds to the FDIC. Next, the Eleventh Circuit rejected the appellants' contention that the District Court improperly determined the amount of damages by using a flat 15% rate for attorneys' fees instead of the amount actually incurred. The Eleventh Circuit explained that while language in the note regarding attorneys' fees was ambiguous, ordinary rules of contract construction supported the attorneys' fee determination made by the District Court. Finally, the Eleventh Circuit noted that under the guaranty, the guarantors "absolutely and unconditionally" agreed to pay all of the lender's costs and expenses, including attorneys' fees in connection with enforcement of the note.

Judge(s):

Carnes, Tjoflat and Wilson, Circuit Judges

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