State Bank of Texas v. Patel

Summarized by Michael Pugh , Thompson, O'Brien, Kemp & Nasuti, PC
14 years 5 months ago

Citation:

State Bank of Texas v. Patel, No. 11-11268

Tag(s):

Ruling:

The Eleventh Circuit affirmed entry of summary judgment in favor of State Bank of Texas ("Bank") and denial of the Patels' motion for judgment on the pleadings. The Eleventh Circuit found that (1) Bank's lawsuit against the Patels as guarantors was not an action for a deficiency judgment because at the time Bank filed suit on the Patels, Bank had no deficiency to recover because Bank had not conducted a non-judicial sale of its property; therefore O.C.G.A. 44-14-161(a) was not triggered; and (2) Bank's attempts to enforce the guaranty action cannot form a basis of a tortious interference counterclaim asserted by the Patels.

Procedural context:

Appeal of district court's order denying Appellants' motion for judgment on the pleadings and granting summary judgment in favor of Appellee.

Facts:

On January 16, 2002, Diplomat Construction Inc. ("Diplomat") borrowed funds from Integrity Bank ("Integrity") and executed a promissory note payable to Integrity. The promissory note was secured by real property. The appellants, Mukesh and Rajesh Patel ("the Patels") personally guaranteed Diplomat's obligations under the loan. On August 29, 2008, the Federal Deposit Insurance Corporation took over Integrity and sold all of Integrity's interest in the loan to the appellee, State Bank of Texas ("Bank"). After Diplomat failed to make payments under the loan, Bank notified Diplomat of its intent to conduct a non-judicial foreclosure of the real property securing the loan. Prior to the scheduled non-judicial foreclosure sale, Diplomat filed bankruptcy. Bank alleged that Diplomat's bankruptcy filing stayed the non-judicial foreclosure. Bank elected to file suit against the Patels as guarantors of the loan on May 12, 2009. The bankruptcy court entered an order granting relief from stay to allow Bank to exercise its state law and contractual rights. On April 6, 2010, Bank conducted a non-judicial foreclosure sale of the real property securing the loan. On May 3, 2010, Bank filed a verified report of non-judicial foreclosure sale and petition for confirmation of non-judicial sale in the Superior Court of Fulton County, Georgia. The Patels contended that Bank improperly sued them for breach of guarantees before it confirmed the foreclosure sale in violation of O.C.G.A. 44-14-161(a). On appeal, the Patels argued that the district court erred by finding that Bank's lawsuit was not a deficiency judgment. Bank contended that because it had yet to foreclose on the property, and thus had no deficiency to recover, the suit was not a deficiency action. The Patels also argued on appeal that Bank was not entitled to summary judgment on the Patels' tortious interference counterclaim. The Patels argued that Bank's lawsuit had caused third-party lenders not to enter into business relations with them and the negative publicity in the business community that resulted from the calling in of the guarantees, well before the lawsuit was filed, caused problems with Diplomat's lenders.

Judge(s):

Barkett, Marcus and Wilson

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!