FI RST DI VI SI ON DOYLE, C. J.

, PHI PPS, P. J.

, and BOGGS, J.

N O T IC E : M otions for r e c ons i de r a tion m us t be ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a l s .us /r ule s

Febr uar y 23, 2016



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 5 A1 78 2 . KIM v . FIRST INTERCONTINENTAL BANK.

P H I P P S , Pres i d i n g J u dg e.

Ch an K. Ki m ap peal s fro m t h e t ri al co u rt ’ s fi n al ju d g m e n t a ward i n g Fi rs t

In t erco n t i n en t al Ba n k ( “ F I B” o r “ th e b an k ”) a s ecu ri ty i n t eres t i n cert ai n real

p ro p ert y . Fo r reas o n s t h at fo l l o w, we affi rm

.

Th i s cas e i s b efo re us fo r a s eco n d t im e. 1 Th e fact s , as fu ll y ou t l i n ed i n Ki m I

,

s h o w t h at Yo ng H o H an p urch as ed a s h o p p i n g cen t er i n Au g u s t a, Geo rg i a o n

Decem b er 2 2

, 1 9 9 9

. Pu rs u an t t o t h e pu rch as e an d s ub s eq uen t re f i n an ci n g

1 See Ki m v. F

i r s t I n ter co n t i nen t a l Ba n k

, 3 26 G a. A p p

. 42 4 (7 5 6 SE2 d 6 5 5 ) (2 0 1 4) ( Ki m I

).t r an s act i on s , Han g ran t ed Su n Tru s t Ban k Au g u s t a, N. A., s ecu ri ty d eed s o n t h e

p ro p ert y fo r $ 4 8 6 ,0 0 0 an d $ 9 0,9 0 0

. S unT r ust pr operl y reco rd ed t hes e secu ri t y d eed s

. 2

In J an u ary 2 0 0 6

, Han co n v ey ed to Ki m by warran t y d eed an un d i v id ed o n e-h al f

i n t eres t i n t h e p ro p ert y

. Th at sam e d ay , b o t h m en co n v ey ed th ei r i n t eres t b y warran t y

d eed to H&K Dean s Bri d g e Pro p ert i es , L LC. W h en t h es e co nv ey an ces o ccu rred

, t h e

Su n Tru s t s ecu ri t y d eed s were wi t h i n t h e c h a i n o f t i tl e, g i v i n g al l part i es n o t i ce o f

Su n Tru s t ’ s i n t eres t

. N ei th er Ki m n o r H&K reco rd ed t h ei r warran t y d eed s at t h e t i m e

o f co n vey an ce. 3

In Au g u st 2 0 0 6

, Han refi n an ced h i s d eb t

, t h i s t i m e w i t h FIB. He g ran t ed t h e

b an k a secu ri t y d eed o n t h e en t i re p arcel i n ex ch an g e fo r $ 62 0 ,0 0 0. FIB reco rd ed i t s

s ecu ri t y d eed

, al t h ou gh t h e d eed i n c l u d e d an i nco rrect d es cri p t i o n of t he p ro p ert y

.

Th e b an k al s o pai d o ff H an ’ s deb t t o Su n Tru s t

. At t h at p o i n t

, FIB h ad n o n o t i ce o f t h e

p ri o r co n v ey an c e s t o Ki m an d H&K b ecau s e th ei r warran t y d eed s h ad n o t b een

reco rd ed

. O v er t w o y ears l at er, o n No v em b er 2 6, 2 0 0 8

, Ki m an d H &K fi n al l y

2 Id . at 4 2 4 -4 2 5

.

3 Id . at 4 2 5

.

2reco rd ed t h ei r 2 0 06 warran t y deed s

. In J an u ary 2 00 9

, H & K co n v ey ed t h e p ro p ert y

b ack to Han an d Ki m

v i a warran t y d eed

. 4

FIB s u ed Han an d Ki m , s eek i n g refo rm at i o n o f i ts s ecu ri ty d eed t o co rrect t h e

l eg al des cri p t i o n of t h e pro pert y , as wel l as a d ecl arat i o n t h at , p u rs u an t t o eq u i t ab l e

s u b ro g at i o n , i t h el d a fi rs t p ri o ri t y l i en p o s i t i o n t o t he ex ten t i t s f u n d s w ere u s ed to

p ay o ff Han ’ s Su n Tru s t deb t

. Han di d no t an s wer s u it

, an d t he t ri al co u rt g ran t ed FIB

d efau l t ju d g m en t as t o h i m

. Th e t ri al co u rt al s o award ed FIB s u m m ary ju d g m en t o n

t h e cl ai m s ag ai n s t Ki m

. It refo rm ed t h e s ecu ri t y d eed

, n o t i n g t hat “ Ki m ’ s i nt eres t in

t h e Su bject Pro p ert y i s s u bject t o an d en cu m b ered b y [t h e refo rm ed ] Secu ri t y Deed

. . . s ai d d eed b ei n g fi led b efo re t h e reco rd at i o n o f an y i n t eres t i n t he Su b ject Pro p ert y

i n t o Defen d an t Ki m .” It al s o co n cl ud ed t hat FIB was en t i tl ed t o a d ecree o f eq u i t ab l e

s u b ro g at i o n

. Th e t ri al co u rt t h u s o rd ered : “ Fo r t h is ad d it i on al reas o n , . . . Defen d an t

Ki m ’ s i n t eres t i s s u bject t o an d en cu m b ered b y [FIB’ s ] Secu ri ty

Deed .”

Ki m ap p eal ed t h e t ri al co u rt ’ s o rd er. O n ap p eal

, we reject ed Ki m ’ s ch al l en g e

t o t h e refo rm at io n ru l i n g. 5 W e al s o u p h el d th e t ri al co u rt ’ s co n cl u s i o n t h at eq u i t ab l e

4 Id

.

5 Id . at 4 2 7 -4 2 8 (2 ).

3s u b ro g rat i o n ap p l i es h ere. 6 Bu t we fo u n d t h at t h e t ri al co u rt fai l ed t o p ro p erl y

cal cu l at e t h e s u b ro g at i on am o u n t

, ex p l ai n i n g t h at FIB “ i s en ti t led to s u b ro g at i o n o n l y

t o t h e ex t en t t he l o an p ro ceed s ex ten d ed to H an were u s e d t o s at i s fy t h e Su n Tru s t

d eed s to s ecu re deb t .” 7 W e t h u s v acat ed t h e t ri al co u rt ’ s ju dg m en t an d rem an d ed “ s o

t h at t h e t ri al co u rt m ay

s p eci fy t h e am o u n t t o wh ich [FIB] i s s u bro g at ed .” 8

On rem an d

, th e t ri al co u rt d et erm i n ed t h at FIB i s eq u i t a b l y s ub ro g at ed t o a

fi rs t -p ri o ri t y l i en i n t h e am o u n t o f $ 40 3 ,6 1 0.8 2

, t h e s u m FIB p ai d t o s at i s fy t h e

Su n Tru s t s ecu ri t y d eed s

. It fu rt h er fo u n d t h at Ki m ’ s in t eres t i n t h e en t i re p ro p ert y i s

en cu m b ered b y FIB’ s refo rm ed s ecu ri t y d eed

, wh ich ap p aren t l y s e cu res an am o u nt

t h at ex ceed s t he s u b ro g at ed i nt eres t

. Ki m ap p eal s t h i s n ew ru l i n g, as s ert i n g t h at

,

u n d er Ki m I

, FIB’ s s ecu ri t y i n t eres t d o es no t ex ten d b ey o n d $ 4 0 3 ,6 1 0

. 8 2

. He arg u es

t h at “ t h e en t i re Pro p ert y s h o u ld b e rel eas ed fro m t h e FIB s ecu ri t y d eed u po n p ay m en t

o f t h e am o u nt t o wh i ch FIB i s eq u it ab l y s u b ro g at ed .”

W e d i sag ree. In Ki m I

, we n o t o n l y ad d res s ed t h e eq u i t ab l e su b ro g at i o n i s s ue,

we ap p r o v e d t h e t ri al co urt ’ s ru li n g on FIB’ s refo rm at i o n cl ai m

. An d t h at ru l i n g

6 Id . at 4 2 5 -4 2 7 (1 ) (a).

7 Id . at 4 2 7 (1 ) (b ).

8 Id

.

4i n cl u d ed a d et erm in at i o n t h at K i m ’ s i n t eres t is s u b ject

– o r s ub o rd i n at e

– t o a

refo rm ed s ecu r i t y d eed

. In ad d i t i o n t o t h e fi rs t -p ri o ri t y l i en FIB eq u i t ab l y o b t ai n ed

b y p ay i n g o ff t h e Su n Tru s t d eb t s , t h erefo re, FIB h o l d s a reco rd ed s ecu ri t y d eed t h at

en cu m b ers t he en t i re pro pert y

. A l t h o u g h t h e p ro p ert y des cri p t i o n i n t h e o ri g i n al

s e c u ri t y d eed was i nco rrect

, t h e d eed h as n ow b een refo rm ed t o i n cl u d e t h e co rrect

d es cri p t io n

. 9 Th e refo rm ed d eed rel at es b ack t o Au g u s t 2 0 0 6

, wh en t h e p art i es

ex ecu t ed an d reco rd ed t h e o ri g i n al s ecu ri t y d eed

, an d t ak es p ri ori t y o v e r subseq u en t l y

fi led i n t eres t s , i n cl u di ng Ki m ’ s warran t y d e e d s f i l ed in 2 0 0 8 an d aft er t h e J an u ary

2 0 0 9 reco n v ey an ce. 1 0

FIB’ s in t eres t in t h e refo rm ed s ecu ri t y d eed i s n o t l i m i t ed b y t h e am o u n t to

wh i ch i t i s s u b ro g at ed

. On t h e co n t rary , th e refo rm ed d eed an d s u bro g at ed fi rs t

p ri o ri t y li en rep res en t d i fferen t i n t eres t s – o n e b as ed u p o n a d eed t o s ecu re d eb t an d

9 Id . at 4 2 7 -4 2 8 (2 ).

1 0 See B a yvi ew Lo a n S

er vi ci n g v. Ba xt er , 3 1 2 Ga. A p p

. 8 2 6

, 8 2 9 (7 2 0 SE2 d

2 9 2 ) (2 0 1 1 ) (“ It i s wel l es t ab li s h ed t h at a l i en tak es effect

, as ag ai n s t th e i n t eres t s o f

t h i rd p ers o n s wi t h o u t n ot i ce, fro m t h e ti m e i t i s fi l ed fo r reco rd i n t h e cl erk ’ s o ffi ce.”) (p u n ct u at i o n an d fo o t n o t e o m i t t ed ); Po t t er ’s Pr o p er t i es v. VNS Co r

p

. , 3 0 6 G a. Ap p. 6 2 1

, 6 2 4 (7 0 3 SE2 d 7 9 ) (2 0 1 0 ) (eq u i t y wi l l p erm i t refo rm at i on o f s ecu ri t y d eed ev en i f refo rm at io n al t ers l i en h o l d er p ri o ri t y ); DeGo l yer v. Gr een Tr ee S

er vi ci n g , 2 9 1 Ga. Ap p

. 44 4

, 4 4 7 (1 ) (6 6 2 SE2 d 1 4 1 ) (2 0 0 8 ) (refo rm at i o n o f s ecu ri t y d eed rel at es b ack

t o d at e o f s ecu ri t y

d eed ’ s ex ecu t i o n ).

5an o th er ari si n g i n eq ui ty

. 1 1 Acco rd i n g ly

, we fi n d n o m eri t in Ki m ’ s cl ai m t h at FIB i s

s ecu red o n l y

i n t h e am o un t t o wh i ch i t i s eq u i t ab l y s u b ro g at ed

.

Ju d g men t a f f i r m ed . Do yl e, C. J., a n d

Bo g g s , J., co ncu r

.

1 1 See Ki m I

, s u p ra at 4 26 (1 ) (a) (eq u it ab l e s ub ro gat i o n i s a rem ed y ari s i n g in

eq u it y t h at al l o ws FIB “ to s t ep i n t o t h e sh o es o f t h e o l d cred i t o r, Su n Tru s t

, i n t erm s

o f p ri o ri t y ”) (ci t at i o n an d p u n ct u at i o n o m i t t ed ).

6