IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

January 10, 2018 Session

VININGS BANK v. HOMELAND COMMUNITY BANK ET AL.

Appeal from the Circuit Court for White County

No. CC2513 Jonathan L. Young, Judge

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No. M2016-02403-COA-R3-CV

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The key issue on appeal is the scope of a dragnet clause under Georgia law. Mortgagors 

refinanced debt secured by their real property with a new lender. Although the new 

lender sent the original mortgagee the requested payoff amount, the original mortgagee 

refused to release its deed of trust. The original mortgagee claimed that the real property 

was also security for other debts by virtue of an unrecorded instrument signed by one of 

the mortgagors that contained a dragnet clause. The mortgagee sought a declaratory 

judgment that its unrecorded instrument had priority over the deed of trust recorded by 

the new lender. The new lender counterclaimed, seeking the statutory penalty for the 

mortgagee’s failure to release its deed of trust and recovery of attorney’s fees and 

expenses. The trial court concluded that the unrecorded instrument was unenforceable 

and not effective as to the new lender due to a lack of actual notice. The court also 

ordered the original mortgagee to release its deed of trust and awarded the new lender the 

statutory penalty and attorney’s fees. On appeal by the original mortgagee, we conclude 

that the unrecorded instrument was enforceable, but under Georgia law, the dragnet 

clause was limited to the debts of the mortgagor who signed the instrument. Because of 

the lack of actual notice, the unrecorded instrument was not effective as to the new 

lender. Despite the new lender being a defendant in the declaratory judgment action, the 

new lender’s counterclaim for the statutory penalty entitled it to an award of attorney’s 

fees. We affirm the decision of the trial court as modified. 

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed as 

Modified and Case Remanded

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G.

CLEMENT, JR., P.J., M.S., and RICHARD H. DINKINS, J., joined.

Stephen C. Knight and Nader Baydoun, Brentwood, Tennessee, for the appellant, Vinings 

Bank.

06/28/2019
2

William J. Butler, McMinnville, Tennessee, for the appellee, Homeland Community 

Bank.

Donald Capparella and Candi Henry, Nashville, Tennessee, for the appellees, Forrest 

Clark Cantrell, Jr. and Mark R. Cantrell.

OPINION

I. 

A.

Although the property at the center of the present dispute is located in White 

County, Tennessee, some of the parties call Georgia home, and the events leading up to 

this appeal began there.

1

 In 2006, Georgia residents, Dr. Clark Cantrell, a pediatrician, 

and his wife, refinanced debt on their home (the “Georgia Property”). They obtained a 

loan for $177,070.50 from Unity National Bank (the “Georgia Loan”). To secure their 

obligation, Dr. and Mrs. Cantrell signed a “deed to secure debt” in favor of Unity for the 

Georgia Property.2 Unity’s interest was junior to an interest already held in the Georgia 

Property by Wells Fargo Bank. The following year, Unity assigned the Georgia Loan 

along with the security deed to Vinings Bank, a Georgia state-chartered bank. 

In 2008, Dr. Cantrell sought to consolidate his personal debts by obtaining a loan 

directly from Vinings Bank for $85,977.25 (the “Tennessee Loan”). Dr. and 

Mrs. Cantrell signed a promissory note for that amount, which provided that the 

Tennessee Loan would be secured by “real property known as 518 Cedar Lane Sparta, 

TN 38583” (the “Sparta Property”). Dr. Cantrell jointly owned the Sparta Property with 

his brother, Mark Cantrell, so when it came time to sign a deed of trust for the Sparta 

Property, Dr. Cantrell and Mark Cantrell signed along with their wives (the “Vinings 

Deed of Trust”). 

 

1 The parties do not dispute the trial court’s factual findings. So we have drawn much of the 

factual background from the trial court’s findings of fact. 

2 A deed to secure debt, also known as a security deed, is “unique to the State of Georgia.” 3 GA.

JUR. Property § 23:1, Westlaw (database updated May 2019). It “conveys legal title solely for the 

purpose of securing a debt.” Id.; see Shumate v. McLendon, 48 S.E. 10, 11 (Ga. 1904). The grantor 

retains an equitable estate consisting of a right to possession and a right of redemption. 3 GA. JUR. 

Property § 23:1. Once the debt is paid in full, legal title passes back to the grantor. Nw. Carpets, Inc. v. 

First Nat’l Bank of Chatsworth, 630 S.E.2d 407, 409 (Ga. 2006); Ga. Code Ann. § 44-14-60 (West, 

Westlaw current through laws effective as of June 1, 2019). 
3

The Vinings Deed of Trust specifically provided that it secured repayment of the 

Tennessee Loan, including any renewals, extensions, or modifications of the Tennessee 

Loan, and the performance of any “covenants and agreements” under the Vinings Deed 

of Trust or the Tennessee Loan. The Vinings Deed of Trust made no mention of the 

Georgia Loan. The Vinings Deed of Trust was also quite specific about its release:

Upon payment of all sums secured by [the Vinings Deed of Trust], Lender 

shall release [the Vinings Deed of Trust]. Lender may charge Borrower a 

fee for releasing [the Vinings Deed of Trust], but only if the fee is paid to a 

third party for services rendered and the charging of the fee is permitted 

under Applicable Law. 

In addition to the Vinings Deed of Trust and central to this appeal, Vinings Bank 

also required Mark Cantrell to separately sign an “Owner’s Consent to Pledge of 

Collateral” (the “Owner’s Consent”). The Owner’s Consent referenced other 

indebtedness of Dr. and Mrs. Cantrell beyond the Tennessee Loan and included an 

acknowledgment that the Sparta Property would also secure the other indebtedness. In 

pertinent part, the Owner’s Consent provided as follows: 

Undersigned agrees that [the Sparta Property] shall secure, and that a 

security interest in [the Sparta Property] shall exist and will continue to 

exist in Lender’s favor as security for any and all indebtedness, obligations 

or liabilities of every kind and nature of [Dr. and Mrs. Cantrell,] or of the 

undersigned, to Lender, howsoever evidenced, whether now existing or 

hereafter arising, either direct or indirect, joint or several, as maker, 

endorser, guarantor, surety or otherwise and any and all extensions or 

renewals thereof, including reasonable attorney’s fees if any of said debt is 

collected by or through an attorney at law.

Despite the language of the Owner’s Consent, Dr. and Mrs. Cantrell never agreed 

that the Sparta Property would secure all their debts to Vinings Bank. A clause, such as 

the one quoted from the Owner’s Consent, that “purports to include within the coverage 

of the deed of trust all present and future indebtedness owed by the borrower to the lender 

in addition to the specific debt being secured by the deed of trust” is known as a “dragnet 

clause.” In re Lemka, 201 B.R. 765, 767 n.2 (Bankr. E.D. Tenn. 1996), cited in Home 

Fed. Bank, FSB v. First Nat’l Bank, 110 S.W.3d 433, 436 (Tenn. Ct. App. 2002). 

Vinings Bank later claimed that, “[d]ue to a drafting error,” the Vinings Deed of Trust 

did not include a dragnet clause or language similar to that of the Owner’s Consent. 

Vinings Bank recorded the Vinings Deed of Trust in White County, Tennessee. 

But it never recorded the Owner’s Consent. While Vinings Bank did later record a 

modification to the Vinings Deed of Trust, the modification did not add a dragnet clause. 

The modification reflected a change in the maturity date of the Tennessee Loan. 
4

Otherwise, “[a]ll other terms and conditions of the [Vinings] Deed of Trust . . . 

remain[ed] in full force and effect.”

B.

In 2010, Dr. Cantrell lost his job. And Wells Fargo Bank began foreclosure 

proceedings on the Georgia Property. Seeking to avoid a foreclosure on his residence, 

Dr. Cantrell contacted both Wells Fargo and Vinings Bank about consenting to a private 

sale of the Georgia Property for less than the total outstanding debt. The parties 

characterized this as a “short sale.”3 

On July 1, 2010, Mark Adams, an assistant vice president with Vinings Bank,

emailed Dr. Cantrell with the conditions under which Vinings Bank would cancel its deed 

to secure debt of the Georgia Property. The email also addressed Vinings Bank’s 

expectations concerning the outstanding debt, including the Tennessee Loan:

Instead of writing a narrative, let me just hit the high points like this. 

Please call me if something does not make sense. . . . 

 Please confirm/verify that the foreclosure has been postponed as early 

tomorrow as possible – Monday is a holiday and will be too late. 

 Clark Hungerford[, chief credit officer of Vinings Bank,] would like to 

schedule a meeting as soon as possible with you at the bank to discuss 

everything. 

 We will draft an agreement for you to sign concerning the short sale 

issues. This agreement will state in a nutshell that after you sign, we 

will release our lien on the deed to your house but not the debt. Any

outstanding balance will be considered an unsecured loan to you. It 

will also state that as long as you continue to make payments as 

scheduled on both loans, [Vinings Bank] will not exercise any rights 

against the [Sparta Property]. Furthermore, [Vinings Bank] will not 

release the deed on the [Sparta Property] until all debts you have with 

the bank have been retired.

 If Wells Fargo allows Vinings Bank to have some of the proceeds 

from the short sale, [Vinings Bank] will reduce your balance with 

[Vinings Bank] by the same amount.

 

3 Traditionally, a “short sale” is a sale of borrowed securities. Short Sale, BLACK’S LAW 

DICTIONARY (10th ed. 2014). In this context, “[a] short sale is a real estate transaction in which the 

property serving as collateral for a mortgage is sold for less than the outstanding balance on the secured 

loan.” Shaw v. Experian Info. Sols., Inc., 891 F.3d 749, 752 (9th Cir. 2018). In some instances, due to 

the consumer’s financial difficulties, the mortgage lender will also agree not to collect from the consumer 

the balance of the loan not satisfied from the proceeds of the short sale. Id. But, as this case illustrates, 

sometimes the mortgage lender looks to the consumer to pay any outstanding balance. 
5

I’m sure there is more, but those are the most important things for you to 

think about. 

Although Mr. Adams’s assertion that Vinings Bank would not release the Vinings Deed 

of Trust on the Sparta Property “until all debts” owed by Dr. Cantrell were “retired” 

conflicted with the terms of the Vinings Deed of Trust, Dr. Cantrell did not challenge the 

assertion. 

During this time, Vinings Bank apparently also intimated to Dr. Cantrell that it 

might have to foreclose on the Sparta Property. While Dr. Cantrell and Mark Cantrell coowned the Sparta Property, they acquired it from their parents, who still lived on the 

property. Anxious to spare their parents the possibility of being evicted from their home

following a foreclosure, the brothers decided to pay the Tennessee Loan through a 

refinancing. 

On July 22, 2010, Dr. Cantrell emailed Mr. Adams at Vinings Bank to request that

wiring instructions and the payoff amount for the Tennessee Loan be sent to his brother, 

Mark. Mr. Adams responded indicating that it would be the following day before he 

could get the payoff information. Additionally, he added the following caveat regarding 

the release of the Vinings Deed of Trust: 

Please let [Mark Cantrell] know that we will accept the payoff but will not 

release the lien on your folks’ house[, the Sparta Property,] at least until 

after you talk with [Mr. Hungerford]—or possibly until after the dust settles 

from the . . . short sale [from the Georgia Property], or all of your debts 

here are retired. I just have no way of knowing that answer at this time. 

The next day, as requested, Mr. Adams sent an email to Mark Cantrell, which included 

the payoff and wiring instructions as attachments. In the body of the email, Mr. Adams 

included an almost identical caveat regarding the release of the Vinings Deed of Trust. 

Although Mark Cantrell later acknowledged receiving the attachments, he claimed that he 

did not read the body of Mr. Adams’s email. 

On July 26, 2010, Dr. Cantrell and Mark Cantrell borrowed the funds to pay the 

Tennessee Loan from Homeland Community Bank in McMinnville, Tennessee (the 

“Homeland Loan”). They also executed a deed of trust in favor of Homeland (the 

“Homeland Deed of Trust”) for the Sparta Property, which was recorded in White 

County, to secure the Homeland Loan.

Homeland made the Homeland Loan anticipating that, after making the payoff to

Vinings Bank, it would have a first priority interest in the Sparta Property. A title search 

ordered by Homeland and obtained prior to the closing of the Homeland Loan revealed 
6

the Vinings Deed of Trust—which, again, only indicated that the Sparta Property would 

serve as security for the Tennessee Loan—as the only significant cloud on the Sparta 

Property’s title. Likewise, despite Mr. Adams’s cautions, Dr. Cantrell and Mark Cantrell 

also expected that the Vinings Deed of Trust would be released. Dr. Cantrell later 

testified that, had he known that the Sparta Property would be security for all his 

obligations to Vinings Bank, he “wouldn’t have made that loan with Vinings.” 

The same day as the Homeland Loan, Homeland wired the payoff to Vinings 

Bank. Although it is undisputed that the amount wired satisfied the Tennessee Loan, 

Vinings Bank did not release the Vinings Deed of Trust. Surprisingly, after the closing 

of the Homeland Loan, no one checked the register’s office in White County to verify 

their expectations that the Vinings Deed of Trust would be released. 

In late 2011, after several failed attempts, Dr. and Mrs. Cantrell finally sold the 

Georgia Property. Vinings Bank received only $6,000 from the sale, which left over 

$160,000 owing on the Georgia Loan. Still, to facilitate the sale, Vinings Bank canceled 

its deed to secure debt on the Georgia Property. 

Sometime in 2013, Dr. Cantrell had a meeting with Mr. Hungerford about his 

outstanding debt to Vinings Bank. And “that’s when the conversation again came up 

about putting Mom[4]out of the house, which [Dr. Cantrell] thought had been rectified.” 

Dr. Cantrell hired an attorney, and on July 10, 2013, his attorney sent an email to 

Mr. Hungerford concerning the outstanding debt on the Georgia Loan. It requested “that 

Vinings Bank cease from threatening to foreclose on the property where [Dr. Cantrell’s]

mother resides in Tennessee[, the Sparta Property].” The email also insisted that 

Mr. Hungerford release the Vinings Deed of Trust and advised that Vinings Bank had an 

obligation to do so under both Tennessee and Georgia law. 

On October 21, 2013, counsel for Mark Cantrell, on behalf of his client and 

Homeland, sent a letter to counsel for Vinings Bank again requesting release of the 

Vinings Deed of Trust. The letter also referenced the possibility of statutory penalties for 

the failure to release the Vinings Deed of Trust. The final demand letter came on 

December 6, 2013. Counsel for Homeland’s letter requested that Vinings Bank release 

the Vinings Deed of Trust “within the next five (5) working days.” 

C.

Vinings Bank did not even allow five calendar days to pass before filing a 

declaratory judgment action in the Circuit Court for White County, Tennessee. Vinings 

Bank named as defendants Homeland, the Cantrell brothers, and their wives. The action 

 

4 At some point, their father passed away. 
7

sought a declaration from the court that the Vinings Deed of Trust secured the Georgia 

Loan and took priority over the Homeland Deed of Trust as to the Sparta Property. 

The action also sought relief specific to Dr. Cantrell and Mark Cantrell. Vinings 

Bank initially requested damages for fraudulent misrepresentation and an award of 

attorney’s fees under the loan documentation and Georgia statute. Later, through an 

amended pleading, Vinings Bank added a claim for breach of an Errors and Omissions 

Agreement that Dr. Cantrell and Mark Cantrell had executed in connection with the 

closing of the Tennessee Loan.5 The Errors and Omissions Agreement obligated the 

Cantrell brothers to cooperate and adjust for “clerical errors” in any loan documents as 

necessary to enable Vinings Bank “to sell, convey, seek guaranty or market” the 

Tennessee Loan. Vinings Bank claimed that the Errors and Omissions Agreement 

required the Cantrell brothers to cooperate with the “correction” of the Vinings Deed of 

Trust and to consent to the addition of a dragnet clause to the document. 

Homeland answered and asserted counterclaims against Vinings Bank and crossclaims against Dr. Cantrell and Mark Cantrell. Homeland sought a declaratory judgment 

that the Homeland Deed of Trust had priority over the Vinings Deed of Trust. And it 

requested that a statutory penalty be awarded as a result of Vinings Bank’s failure to 

release the Vinings Deed of Trust and recovery of attorney’s fees and costs. See Tenn. 

Code Ann. § 66-25-102(b) (2015). If the court determined that Vinings Bank had priority 

over the Homeland Deed of Trust, Homeland alleged that the Cantrell brothers were 

liable under theories of intentional misrepresentation and breach of contract. According 

to Homeland, the Cantrell brothers had misrepresented the amount required to cause a 

release of the Vinings Deed of Trust and the existence of a superior lien breached the 

warranty of title contained in the promissory note they signed as part of the Homeland 

Loan. 

The Cantrell brothers’ answers denied knowledge that the Vinings Deed of Trust 

secured any debt other than the debt expressly referred to in the Vinings Deed of Trust—

the Tennessee Loan. Additionally, Mark Cantrell and his spouse, Connie Cantrell, 

asserted defenses to the enforcement of the Owner’s Consent. 

Following a one-day bench trial, the court issued its order, which included 

extensive findings of fact and conclusions of law. On the competing requests of Vinings 

Bank and Homeland for declaratory relief, the court determined that Vinings Bank was 

not entitled to its requested declaratory judgment. Because the Owner’s Consent was not 

recorded, the court concluded that it was “null and void” as to Homeland as a subsequent 

 

5 The record on appeal does not include an order from the trial court authorizing the amended 

pleading. The trial court did consider claims alleged in Vinings Bank’s “First Amendment to Complaint,” 

but no party has raised the consideration of such claims as an issue on appeal.
8

creditor. The court found that Homeland did not have “actual notice” of the Owner’s 

Consent prior to the recording of the Homeland Deed of Trust. It also concluded that 

Vinings Bank was obligated to release the Vinings Deed of Trust under both its terms and 

by Tennessee statute. So the court granted Homeland a declaratory judgment that the 

Homeland Deed of Trust was “the only valid security interest on the Sparta Property as of 

the date of the payoff.” And it ordered Vinings Bank to immediately release the Vinings 

Deed of Trust. It further awarded Homeland a statutory penalty as a result of Vinings

Bank’s failure to timely release the Vinings Deed of Trust and determined that Homeland 

was entitled to an award of its reasonable expenses, including attorney’s fees and costs, 

incurred in seeking the release of the Vinings Deed of Trust.6 

The court next considered whether the Owner’s Consent was valid and binding 

against Mark Cantrell. The court concluded that it was not for various reasons. It 

determined that the Owner’s Consent was unconscionable and violated both Georgia’s 

“Open-End” Clauses Statute, see Ga. Code Ann. § 44-14-1(b) (West, Westlaw current 

through laws effective as of June 1, 2019), and Georgia’s Statute of Frauds, see Ga. Code 

Ann. § 13-5-30 (West, Westlaw current through laws effective as of June 1, 2019). Even 

if the Owner’s Consent was valid and binding, the court held that Vinings Bank waived 

enforcement of the agreement by having the Cantrell brothers sign the Vinings Deed of 

Trust. It described the dragnet clause in the Owner’s Consent and the language in the 

Vinings Deed of Trust, stating that the Sparta Property was security for the Tennessee 

Loan, as “contradictory terminology.” And when providing the payoff, Vinings Bank 

only provided the balance of the Tennessee Loan rather than the outstanding balance of 

all debt owed by Dr. and Mrs. Cantrell. Based on the same facts, the court also 

determined that Vinings Bank was equitably estopped from enforcing the Owner’s 

Consent. 

The trial court dismissed Vinings Bank’s claims and Homeland’s cross-claims 

against the Cantrell brothers based on misrepresentation. It explained that neither bank 

presented evidence of false representations concerning a material fact. The court further 

noted that, even if false representations had been made, Vinings Bank could not 

demonstrate reliance. Moreover, because Vinings Bank’s claim of priority failed, the 

court reasoned that Homeland could not demonstrate injury from any misrepresentation

by the Cantrell brothers. 

Finally, the court concluded that the Errors and Omissions Agreement did not 

afford Vinings Bank relief. The court described the omission of the dragnet clause in the 

Vinings Deed of Trust as something more than a “clerical error.” Neither of the Cantrell 

brothers intended for the Vinings Deed of Trust to include a dragnet clause. 

 

6

In a separate order, the trial court ordered Vinings Bank to pay Homeland the total sum of 

$96,839.57 for its reasonable attorney’s fees and expenses and court costs. 
9

II. 

On appeal, Vinings Bank raises three issues for our review. First, we consider 

whether the trial court erred in determining that the Owner’s Consent was invalid and 

unenforceable. Second, we consider whether Homeland had actual notice of the Owner’s 

Consent such that it was effective as to Homeland. Finally, we consider whether the trial 

court erred in awarding Homeland its attorney’s fees, expenses, and court costs under 

Tennessee Code Annotated § 66-25-102. As part of the final issue, we address 

Homeland’s request for attorney’s fees, expenses, and costs incurred on appeal. 

Because judgment was entered following a bench trial, in reviewing the issues

raised, we presume that the trial court’s findings of fact are correct unless the evidence in 

the record preponderates against them. Tenn. R. App. P. 13(d). Evidence preponderates 

against a finding of fact if the evidence “support[s] another finding of fact with greater 

convincing effect.” Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 

(Tenn. Ct. App. 2001). Here, our review is limited to the trial court’s conclusions of law 

because Vinings Bank “does not contest the trial court’s findings of fact.” We review 

conclusions of law de novo, with no presumption of correctness. Kaplan v. Bugalla, 188 

S.W.3d 632, 635 (Tenn. 2006).

A.

In considering whether the Owner’s Consent was valid and enforceable, the trial 

court applied Georgia law. The Owner’s Consent provided that it would “be governed 

and construed in accordance with the laws of the State of Georgia.” And none of the 

parties contest the application of Georgia law. So we apply Georgia law as well.7 

1. Unconscionability 

The trial court first determined that the Owner’s Consent was unconscionable. 

Under Georgia law, “[a]n unconscionable contract is one abhorrent to good morals and 

conscience . . . where one of the parties takes a fraudulent advantage of another[,] an 

agreement that no sane person not acting under a delusion would make and that no honest 

person would take advantage of.” Mallen v. Mallen, 622 S.E.2d 812, 816-17 (Ga. 2005) 

 

7

If enforceable, the extent to which the Owner’s Consent impacts the title to Tennessee realty is 

governed by Tennessee law. See King v. King, 48 S.E.2d 465, 470 (Ga. 1948) (“Law governing the title 

and disposition of land is exclusively subject to the laws of the State where it is situated.”); Watkins v. 

Watkins, 22 S.W.2d 1, 3 (Tenn. 1929) (“[T]he methods in which a charge may be fixed upon the land . . . 

must be determined in conformity to the lex situs.”); P.H. Vartanian, Law Governing Validity and 

Construction of, and Rights and Obligations Arising under, a Lease of Real Property, 15 A.L.R.2d 1199 

(1951) (“The general principle is well settled that rights in and title to real property are governed by the 

law of the situs of such property.”). 
10

(quoting William J. Cooney, P.C. v. Rowland, 524 S.E.2d 730, 732 (Ga. Ct. App. 1999)) 

(alterations in original). 

As already noted, by the Owner’s Consent, Mark Cantrell agreed:

that [the Sparta Property] shall secure, and that a security interest in [the 

Sparta Property] shall exist and will continue to exist in [Vinings Bank’s]

favor as security for any and all indebtedness, obligations or liabilities of 

every kind and nature of [Dr. and Mrs. Cantrell,] or of the undersigned, to 

[Vinings Bank], howsoever evidenced, whether now existing or hereafter 

arising, either direct or indirect, joint or several, as maker, endorser, 

guarantor, surety or otherwise and any and all extensions or renewals 

thereof, . . . .

In determining the Owner’s Consent was unconscionable, the court found that “no

evidence was introduced that [Mark Cantrell] knew of the Georgia Loan, nor was he 

informed by Vinings Bank or any other party that the Sparta Property could possibly be 

used as collateral for the Georgia Loan or any other debt of his brother.” The finding 

suggests that Vinings Bank took advantage of Mark Cantrell in obtaining his agreement 

to pledge the Sparta Property by not disclosing all of the liabilities of Dr. and 

Mrs. Cantrell in addition to the Tennessee Loan.

Even on the facts found by the trial court, we cannot conclude that the Owner’s 

Consent is unconscionable. If anything, the Owner’s Consent put Mark Cantrell on 

notice of other debt owing by Dr. and Mrs. Cantrell. And the Owner’s Consent was clear 

in that it included “indebtedness, obligations or liabilities of” Dr. and Mrs. Cantrell that 

might arise after the date of the Owner’s Consent. Further, “[i]t is well settled that . . . 

‘dragnet’ clauses regarding future advances are valid and enforceable in [Georgia].” 

Tedesco v. CDC Fed. Credit Union, 306 S.E.2d 397, 399 (Ga. Ct. App. 1983). 

2. Open-End Clauses Statute

The trial court next determined that the Owner’s Consent violated Georgia’s 

“Open-End” Clauses Statute.8 As described in the statute, “open-end” clauses are dragnet 

clauses. Cf. id.; GA. REAL ESTATE FINANCE AND FORECLOSURE LAW § 2.3, Westlaw

(database updated Oct. 2018). The statute limits the breadth of such clauses as follows: 

(b) . . . [T]he operation of “open-end” clauses contained in real estate 

mortgages or deeds conveying realty as security for a debt, which clauses 

 

8 Vinings Bank does not challenge the trial court’s determination that the Owner’s Consent is a 

real estate mortgage or deed conveying realty as security for a debt within the meaning of the “OpenEnd” Clauses Statute. 
11

provide that, in addition to securing the debt named or described in the 

instrument, such instruments or the property thereby conveyed shall also 

secure any other debt or obligation that may be or become owing by the 

mortgagor or grantor, is limited to other debts or obligations arising ex 

contractu, as distinguished from those arising ex delicto, between the 

original parties to the security instrument.

Ga. Code Ann. § 44-14-1(b) (emphasis added). The trial court concluded that the 

Owner’s Consent violated the statute because neither Mark Cantrell nor Vinings Bank 

was an “original party” to the Georgia Loan, which was made by Unity National Bank to 

Dr. and Mrs. Cantrell and later assigned to Vinings Bank.

Vinings Bank submits that the trial court misinterpreted the statute. According to 

Vinings Bank, the statute is not concerned with the original parties to the underlying 

secured debt. Instead, section 44-14-1(b) is concerned with the original parties to “the 

security instrument.” We agree, but Vinings Bank contends “the security instrument” 

refers to the Vinings Deed of Trust signed by the Cantrell brothers and their wives. 

Because “[t]he Georgia Loan is a debt owed by Dr. Cantrell to Vinings Bank,” Vinings 

Bank posits that “[t]he Georgia Loan is therefore a ‘debt or obligation’ between the 

‘original parties to the security agreement[, the Vinings Deed of Trust].’” 

Vinings Bank’s argument misapplies the statute. Properly read, “the phrase 

[“original parties”] simply means that a dragnet clause in a security deed limits the 

operation of the security deed to debts of the parties to the security deed.” Willis v. 

Rabun Cty. Bank, 291 S.E.2d 715, 717 (Ga. 1982) (interpreting an earlier version of the 

“Open-End” Clauses statute). Although Vinings Bank submits that the “security deed” 

or “the security instrument” under the facts of this case is the Vinings Deed of Trust, the 

Vinings Deed of Trust does not contain an open-end clause. The open-end clause is 

found only in the Owner’s Consent, so the Owner’s Consent is “the security instrument” 

to which the statute refers. 

By virtue of the Open-End Clauses Statute then, the dragnet clause in the Owner’s 

Consent is limited to debts of Mark Cantrell to Vinings Bank. Because the Georgia Loan 

was not a debt or obligation of Mark Cantrell, the dragnet clause in the Owner’s Consent 

could not serve to mortgage or convey the Sparta Property as security for the Georgia 

Loan. 

3. Statute of Frauds 

The trial court also concluded that the Owner’s Consent violated Georgia’s Statute 

of Frauds. Georgia Code Annotated § 13-5-30, Georgia’s Statute of Frauds, requires an 

agreement to answer for the debt of another to “be in writing and signed by the party to 

be charged.” Ga. Code Ann. § 13-5-30(2). To satisfy the statute of frauds, the court 
12

determined that the Owner’s Consent had to identify the Georgia Loan, the amount due, 

and the time for payment. 

In the case of guaranties, Georgia has interpreted the writing and signature 

language in the statute of frauds to mandate “identif[ication of] the debt, the principal 

debtor, the promisor, and the promisee.” John Deere Co. v. Haralson, 599 S.E.2d 164, 

166 (Ga. 2004) (citing Schroeder v. Hunter Douglas, Inc., 324 S.E.2d 746, 747 (Ga. Ct. 

App. 1984); Roach v. C.L. Wigington Enters., 539 S.E.2d 543, 544 (Ga. Ct. App. 2000)). 

As the Georgia Court of Appeals explained, such writings must “identify the debt which 

is the subject of the promise, indicate knowledge of both the amount promised to be paid 

and the time the debt becomes due.” Brzowski v. Quantum Nat’l Bank, 717 S.E.2d 290, 

292 (Ga. Ct. App. 2011) (quotation omitted). 

Although the Owner’s Consent does not appear to be a guaranty, Vinings Bank 

does not argue the Georgia Statute of Frauds is inapplicable. Instead, assuming for the 

sake of argument that it qualifies as a guaranty (or promise to answer for the debts of 

another), Vinings Bank argues that the Owner’s Consent is sufficiently specific under 

Georgia law. 

Both the Georgia Supreme Court and the Georgia Court of Appeals have found 

open-end clauses, such as the one here, to satisfy the statute of frauds. See, e.g., John 

Deere Co., 599 S.E.2d at 165 (identifying the debt as “past and/or future extension of 

credit” to the principal debtor); Brzowski, 717 S.E.2d at 293 (identifying the debt as 

“Present and Future Debt” of the principal debtor). In a case relied on by the trial court, 

Tampa Investment Group, Inc. v. Branch Banking and Trust Co., Inc., the Georgia 

Supreme Court determined that guaranties identifying the applicable debts as “any and all 

notes and other indebtedness” owed by the borrowers to the lender “now or hereafter” 

sufficient under the statute of frauds. 723 S.E.2d 674, 679-80 (Ga. 2012). 

The language employed in Tampa Investment Group, Inc. is similar to that used in 

the Owner’s Consent. So we conclude the Owner’s Consent satisfied the statute of 

frauds. The writing identified each of the relevant parties and identified the debt as “any 

and all indebtedness, obligations or liabilities of every kind and nature of [Dr. and 

Mrs. Cantrell,] or of the undersigned, to [Vinings Bank], howsoever evidenced, whether 

now existing or hereafter arising.” 

4. Waiver and Equitable Estoppel

Lastly, the trial court concluded that, even if the Owner’s Consent was legally 

valid, Vinings Bank waived its right to enforce it or is equitably estopped from enforcing 

it. Because we conclude that the Owner’s Consent, although limited, was nonetheless 

valid, we examine the trial court’s basis for determining that waiver and equitable 

estoppel apply. Specifically, the court stated that Vinings Bank could not enforce the 
13

Owner’s Consent because it contained “contradictory terminology” to the Vinings Deed

of Trust and Vinings Bank only gave the outstanding balance of the Tennessee Loan as 

the payoff amount when requested by the Cantrell brothers. 

Georgia “law will not infer the waiver of an important contract right unless ‘the 

waiver is clear and unmistakable.’” Vratsinas Constr. Co. v. Triad Drywall, LLC, 739 

S.E.2d 493, 496 (Ga. Ct. App. 2013) (quoting Accurate Printers, Inc. v. Stark, 671 S.E.2d 

228, 232 (Ga. Ct. App. 2008)). “And because waiver is not favored under the law, the 

evidence relied upon to prove a waiver ‘must be so clearly indicative of an intent to 

relinquish a then known particular right or benefit as to exclude any other reasonable 

explanation.’” Id. (quoting D.I. Corbette Elec., Inc. v. Venture Constr. Co., 231 S.E.2d 

536, 538 (Ga. Ct. App. 1976)). When, as here, the facts establishing the waiver are 

undisputed, “waiver becomes a question of law.” Id. (quoting Goldsmith v. Peterson, 703 

S.E.2d 694, 697 (Ga. Ct. App. 2010)).

We conclude the undisputed facts do not establish a waiver by Vinings Bank. 

Although the language of the Vinings Deed of Trust and the Owner’s Consent described 

the secured indebtedness differently, the differing language does not evidence a clear 

intent to forego any contract rights. Instead, as the court found from the testimony of 

Mr. Adams, the different language in the two documents suggests a mistake made in 

preparation of the Vinings Deed of Trust. Likewise, the payoff amount provided by 

Vinings Bank is not indicative of an intent to relinquish a right. Both immediately before 

and in transmitting the payoff amount, Mr. Adams advised the Cantrell bothers that 

Vinings Bank may not release the Vinings Deed of Trust until all of Dr. Cantrell’s debts 

were “retired.”

For much the same reasons, we conclude that Vinings Bank was not equitably

estopped from enforcing the Owner’s Consent. For equitable estoppel to apply, the 

following elements must be present:

(1) conduct amounting to a false representation or concealment of material 

facts, or, at least, which is calculated to convey the impression that the facts 

are otherwise than, and inconsistent with, those which the party 

subsequently attempts to assert; (2) intention, or at least expectation, that 

such conduct shall be acted upon by the other party; (3) knowledge, actual 

or constructive, of the real facts . . . .

Bell v. Studdard, 141 S.E.2d 536, 540 (Ga. 1965). Here, the first element was not 

present. The parties do not dispute that Vinings Bank communicated the accurate amount 

to pay off the Tennessee Loan. And the court found that, on at least two occasions to 

Dr. Cantrell and one occasion to Mark Cantrell, Mr. Adams expressed that Vinings Bank 

would not release the Vinings Deed of Trust upon receipt of the payoff. Something more 
14

had to happen, either further discussions or payment of all outstanding debt. Both 

Dr. Cantrell and Mark Cantrell were informed of this but chose to proceed anyway. 

B.

Although our holding limits the application of the dragnet clause in the Owner’s 

Consent to the debts of Mark Cantrell to Vinings Bank, we still consider whether any 

interest in the Sparta Property created by the Owner’s Consent is effective against 

Homeland. As the trial court noted, unregistered instruments are “null and void as to 

existing or subsequent creditors of . . . the makers without notice.” Tenn. Code 

Ann. § 66-26-103 (2015).

9

 “Instruments” in this context includes, among other things, 

“mortgages and deeds of trust” and an “agreement to . . . mortgage, pledge, . . . 

encumber, . . . or otherwise affect . . . real property.” Id. § 66-24-101(a)(8), (26)(A)

(Supp. 2018). While conceding that the Owner’s Consent was not registered, Vinings 

Bank contends that Homeland had notice of the Owner’s Consent. Unregistered 

instruments are effective between the parties to the instrument, including their heirs and 

representatives, and other persons “having actual notice” of the instrument, except as 

otherwise provided by statute. Id. § 66-26-101. 

Vinings Bank submits that Homeland had actual notice of the Owner’s Consent by 

virtue of its dealings with the Cantrell brothers. According to Vinings Bank, the Cantrell 

brothers in obtaining the necessary payoff information for the Tennessee Loan acted as 

agents for Homeland, and while acting as agents, the brothers were “repeatedly notified 

by Vinings that the [Sparta] Property was security not only for the Tennessee Loan, but 

also for the Georgia Loan.” So Vinings Bank contends that the agents’ actual knowledge 

of the Owner’s Consent should be imputed to Homeland. See RESTATEMENT (THIRD) OF 

AGENCY § 5.03 (2006) (“For purposes of determining a principal’s legal relations with a 

third party, notice of a fact that an agent knows or has reason to know is imputed to the 

principal if knowledge of the fact is material to the agent’s duties to the principal . . . .”). 

Vinings Bank’s argument fails for a number of reasons. But we focus on only 

two. First, the argument cannot overcome the trial court’s factual finding that Homeland 

had no actual notice of the Owner’s Consent. Vinings Bank accepts that finding. 

Second, as Homeland points out, Vinings Bank did not raise or argue its agency theory in 

the trial court. As an appellate court, “we are limited in authority to the adjudication of 

issues that are presented and decided in the trial courts.” In re Adoption of E.N.R., 42 

S.W.3d 26, 32 (Tenn. 2001). A party may not raise an issue for the first time on appeal. 

 

9 Under an early nineteenth century version of the statute, unregistered instruments were null and 

void even against creditors with notice of the instrument. Wright v. Black, 17 S.W.2d 917, 918 (Tenn.

1929). Although the language of statute has changed over the years to reflect that notice affects creditors 

as well as bona fide purchasers, unregistered instruments may continue to be null and void against 

creditors with actual notice. See Texas Co. v. Aycock, 227 S.W.2d 41, 45 (Tenn. 1950).
15

In re Estate of Smallman, 398 S.W.3d 134, 148 (Tenn. 2013); see also Welch v. Bd. of 

Prof’l Responsibility, 193 S.W.3d 457, 465 (Tenn. 2006) (“It has long been the general 

rule that questions not raised in the trial court will not be entertained on appeal.”). 

Vinings Bank makes an alternative argument that was raised in the trial court. The 

second argument is that Homeland had inquiry notice of the Owner’s Consent based on 

the Vinings Deed of Trust and the communications made by Vinings Bank in connection 

with providing the payoff for the Tennessee Loan. Inquiry notice “occup[ies] . . . a 

middle ground between constructive notice and actual notice.” Blevins v. Johnson Cty., 

746 S.W.2d 678, 683 (Tenn. 1988). In Tennessee, inquiry notice is treated “as a variant 

of actual notice.” Id. 

We conclude that Vinings Bank’s second argument is unavailing. Even if inquiry 

notice was sufficient, an issue we need not decide, Homeland did not have inquiry notice. 

Nothing in the Vinings Deed of Trust indicates or suggests that further inquiry by 

Homeland was necessary. The Vinings Deed of Trust does not reference the Owner’s 

Consent. And the Vinings Deed of Trust specifically provided that it secured repayment 

of the Tennessee Loan, including any renewals, extensions, or modifications of the 

Tennessee Loan, and the performance of any “covenants and agreements” under the 

Vinings Deed of Trust or the Tennessee Loan. Vinings Bank’s statements that it would 

not release the Vinings Deed of Trust upon receipt of the payoff for the Tennessee Loan 

were not made to Homeland. And the statements were not shared with Homeland. In 

addition, there was no proof presented that Vinings Bank ever referenced the Owner’s 

Consent in any of its communications with the Cantrell brothers prior to the closing of 

the Homeland loan. 

III.

The final issue raised by Vinings Bank concerns the trial court’s award of 

attorney’s fees and expenses to Homeland. Vinings Bank contends that the award was 

not authorized under the statute relied on by the court, Tennessee Code Annotated § 66-

25-102. Homeland requests an award of attorney’s fees, expenses, and costs incurred on 

appeal under the same statute. So we address the final issue and the request together.

Resolving the issue and addressing the request require statutory interpretation. See

ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL 

TEXTS 53 (2012) (“Every application of a text to particular circumstances entails 

interpretation.”). Statutory interpretation is a question of law, which we review de novo. 

Wallace v. State, 121 S.W.3d 652, 656 (Tenn. 2003). When a statute’s language is 

unambiguous, we look to the statute’s plain language. Carson Creek Vacation Resorts, 

Inc. v. Dep’t of Revenue, 865 S.W.2d 1, 2 (Tenn. 1993). The words are given their 

natural, ordinary meaning “in the context in which they appear in the statute and in light 

of the statute’s general purpose.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 526 (Tenn. 
16

2010). But, when a statute’s language is subject to several interpretations, we also 

consider the broader statutory scheme, the statute’s general purpose, and other sources to 

ascertain legislative intent. Wachovia Bank of N.C., N.A. v. Johnson, 26 S.W.3d 621, 624 

(Tenn. Ct. App. 2000).

By statute, “[w]hen a debt secured by a . . . deed of trust . . . has been fully paid or 

satisfied, the mortgagee . . . who has received payment or satisfaction of the debt[] must 

satisfy the record by a formal deed of release.” Tenn. Code Ann. § 66-25-101(a) (2015). 

Under Tennessee Code Annotated § 66-25-102, if the mortgagee fails to enter a “proper 

release of record after having been fully paid,” the party that made the payment may 

request in writing that the mortgagee enter the release. Id. § 66-25-102(a). If the 

mortgagee fails to enter the release within 45 days of its receipt of the request, the 

mortgagee must “forfeit” $100 to the requesting party. Id. If the requesting party makes 

a second request and the release is not entered after 30 days from the second request, the 

mortgagee must forfeit “a sum not to exceed” $1,000. Id. § 66-25-102(b). If “suit is 

instituted to collect either or both of the forfeitures,” the mortgagee is “liable to the party 

instituting suit for all reasonable expenses, attorney fees, and the court costs incurred in 

the action.” Id. § 66-25-102(c). 

We apply the statute to underlying circumstances that are not in dispute. The 

amounts paid by Homeland satisfied the Tennessee Loan. By its terms, the Vinings Deed 

of Trust was security for the Tennessee Loan and no other indebtedness.

10

 Statute 

required the release of the Vinings Deed of Trust when the underlying debt was paid, but 

so did the terms of the deed of trust. Under the Vinings Deed of Trust, Vinings Bank 

agreed to execute a release “[u]pon payment of all sums secured by this Security 

Instrument.” But despite receiving the payoff and written requests from Homeland as 

required by Tennessee Code Annotated § 66-25-102, Vinings Bank never recorded or 

provided a release. 

Still, Vinings Bank contends that Homeland was not entitled to recover its 

attorney’s fees and expenses in the trial court nor is it entitled to fees and expenses on 

appeal. Tennessee Code Annotated § 66-25-102(c) provides that a mortgagee is “liable 

to the party instituting suit for all reasonable expenses, attorney fees, and the court costs 

incurred in the action.” See id. § 66-25-102(c) (emphasis added). Thus, according to 

Vinings Bank, fees and expenses are only available to a party that institutes a suit by 

filing a complaint. See Tenn. R. Civ. P. 3 (“All civil actions are commenced by filing a 

complaint with the clerk of the court.”). According to Vinings Bank’s brief, “a party 

does not institute a suit by filing a counterclaim.” 

 

10 As noted above, the Vinings Deed of Trust was also security for the performance of any 

“covenants and agreements” under the Vinings Deed of Trust. But Vinings Bank did not contend any 

covenants and agreements under the Vinings Deed of Trust had been unfulfilled. 
17

We have not had occasion to interpret the attorney’s fees and expenses provision 

of Tennessee Code Annotated § 66-25-102. The statute is penal, rather than remedial, in 

nature. Kitts v. Kitts, 189 S.W. 375, 376 (Tenn. 1916). So the statute “should be strictly 

construed.” Id. But see SCALIA & GARNER, supra, at 356 (“Strict constructionism, as 

opposed to fair-reading textualism, is not a doctrine to be taken seriously.”). 

Considering the context in which the phrase “the party instituting suit” is used and 

the general purpose of Tennessee Code Annotated § 66-25-102, we conclude that the 

phrase “the party instituting suit” includes a party asserting a counterclaim. The reported 

federal cases cited by Vinings Bank might lead one to the opposite conclusion. But 

ultimately, the federal cases are distinguishable in that they involve interpretation of, 

admittedly similiar, language in the context of a different statute with a different 

purpose.

11

 From a textual standpoint, the word “suit” refers to “[a]ny proceeding by a 

party or parties against another in a court of law.” Suit, BLACK’S LAW DICTIONARY (10th 

ed. 2014). In that sense of the word, a counterclaim can be referred to as a “countersuit.” 

See, e.g., Advanced Photographic Sols., LLC v. Nat’l Studios, Inc., 352 S.W.3d 431, 439 

(Tenn. Ct. App. 2011) (quoting testimony of a threatened countersuit); Henry Cty. Med. 

Ctr. v. Gronski, No. 02A01-9412-CV-00279, 1996 WL 507504, at *5 (Tenn. Ct. App. 

Sept. 9, 1996) (stating the defendant “prevailed on his countersuit”); Deposit Recovery 

Corp. v. Santini, 765 S.W.2d 764, 769 (Tenn. Ct. App. 1988) (describing counterclaims 

as the “countersuit”); Wachovia Bank & Tr. Co., N. A. v. Glass, 575 S.W.2d 950, 952 

(Tenn. Ct. App. 1978) (referring to a “cross complaint” as a “countersuit”); Grinnell Fire 

Prot. Sys. Co. v. W. C. Ealy & Assocs., Inc., 552 S.W.2d 747, 749 (Tenn. Ct. App. 1977)

(referring to the countersuit of defendant for damages); see also Counterclaim, BLACK’S 

LAW DICTIONARY (10th ed. 2014). So filing or asserting a counterclaim might be 

described as instituting a suit or a countersuit. 

But the purpose of the statute is the more compelling argument for interpreting the 

phrase “the party instituting suit” as including a party asserting a counterclaim. In 

addition to providing a mechanism for obtaining a release of a deed of trust, the purpose 

of the statute is to penalize “the holder of any debt secured by real property” who “fails to 

enter a proper release of record after having been fully paid.” Tenn. Code Ann. § 66-25-

102(a). Given that purpose, we see no basis for distinguishing between claims asserted in 

complaints and claims asserted in counterclaims. Under Vinings Bank’s interpretation, a 

mortgagee that wrongfully refused a request to release its deed of trust could escape 

liability for attorney’s fees and expenses by racing to the courthouse to file suit first. See

Tenn. R. Civ. P. 13.01 (designating some counterclaims as compulsory). 

 

11 See Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n v. Pelella, 350 F.3d 73, 77 & 86 (2d 

Cir. 2003); Int’l Bhd. of Elec. Workers, Local 336 v. Illinois Bell Tel. Co., 496 F.2d 1, 2 & 3 (7th Cir. 

1974).
18

Under Tennessee Code Annotated § 66-25-102(c), if a counterclaim is filed to 

collect the forfeitures for failure to enter a proper release of record, the counterclaimant 

may seek recovery of reasonable attorney’s fees, expenses, and costs. We grant 

Homeland’s request for attorney’s fees, expenses, and costs incurred on appeal. 

IV. 

We conclude that the Owner’s Consent to Pledge of Collateral signed by Mark 

Cantrell was not unconscionable and satisfied Georgia’s statute of frauds. On the 

undisputed facts, we also conclude that neither waiver nor equitable estoppel prohibited 

enforcement of the Owner’s Consent. But Georgia’s “Open-End” Clauses Statute limited 

the dragnet clause in the Owner’s Consent to debts of Mark Cantrell to Vinings Bank. 

The trial court properly concluded that the Owner’s Consent was “null and void” as to 

Homeland Community Bank because it lacked actual notice of the agreement. And 

Homeland Community Bank was entitled to recovery of its attorney’s fees, expenses, and 

costs. Thus, we affirm the judgment of the trial court as modified. We remand this case

to the trial court for a determination of a reasonable amount of attorney’s fees, expenses, 

and costs to be awarded to Homeland Community Bank and for such further proceedings

as may be necessary and consistent with this opinion. 

_________________________________

W. NEAL MCBRAYER, JUDGE