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

M ar ch 16, 2016



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 5 A2 25 4 . YORK et al . v . RES-GA LJ Y, LLC.

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

RES-GA LJ Y, LLC (“ RES-GA”) s ued J i m L. Y o rk an d J o h n A. Dri l l ot

(co l l ect i v el y , “ t h e d efen d an t s ”) fo r am o un t s o wed o n s ev eral co m m erci al g u aran t i es

.

Th e t ri al co u rt g ran t ed s u m m ary ju d g m e n t t o RES-GA, an d t he d efen d an t s ap p eal

.

Fo r reas o n s t h at fo l l o w, we affi rm

.

Su m m ary ju d g m en t i s ap p ro p ri at e wh en t h e “ p l ead i n g s , dep o si t io n s , an s wers

t o i n t erro g at o ri es , an d ad m i s s i on s o n fi l e, t og et h e r wi t h t he affi d av it s , i f an y , s h o w

t h at t h ere i s n o g en u i n e i s s u e as to an y m at eri al fact an d t h at th e m o v i n g p art y i s

en t i t l ed t o a ju d g m en t as a m at t er o f l aw.” 1 W e rev i ew th e gran t of s um m ary ju d g m en t

1 Co mmu ni t

y & S ou t h e r n B a n k v. DCB In ves t men t s , 3 2 8 Ga. Ap p. 6 0 5 (7 6 0
SE2 d 2 1 0) (2 0 1 4) (p un ct u at i o n an d fo ot n o te o m i t ted ).d e no v o , co n s tru i n g th e ev i d en ce a n d al l reas o n ab le i n feren ces i n fav or o f t h e n o n

m o van t

. 2

So v i ewed

, t h e reco rd s ho ws t h at at v ari o u s po i n t s fro m 2 0 0 5 t o 2 0 0 9

, Th e

Co m m u n i t y Ban k (“ TCB”) l o an ed m o n e y t o s ev eral en ti ti es affi l i at ed wi t h t h e

d efen d an t s (“ t h e b o rro wers ”). As s e c u ri t y , t h e bo rro wers ex ecu t ed fi v e p ro m i s s o ry

n o t es an d g ran t ed TCB a s ecu r i t y i n t eres t i n real es t at e l o cat ed in DeKal b Co u n t y ,

Gwi n n et t Co un t y , an d Pau l di n g Co u n t y

. To fu rt h er s ecu re th e l o an s , t h e d efen d an t s

s i gn ed c o m m erci al g u aran t ies

, t h ro u g h wh i ch t h ey “ g u aran tee[d ] fu l l an d p u n ct u al

p ay m en t an d s at i s fact i o n o f t h e [i ] n d eb t ed n es s .” Th e p ro m i s s o ry n o tes an d g u aran ti es

were l at er as s i gn ed t o RES-GA.

W h en t h e b o rro w ers fai l ed t o p a y o f f t h e l o an s , RES-GA fo recl o s ed o n an d

b o u g h t t h e p ro p ert i es s erv i ng as co l l at eral . It t hen s o ug h t ju d ici al co n fi rm at i o n t h at

i t h a d p u rch as ed t h e p arcel s at fai r m ark et v al u e. Co u rt s in t h e co u nt i es wh ere t h e

p ro p ert i es were l o cat ed rev i ewed t h e s al es , an d each u l t i m at el y refu s ed to co n fi rm

2 Id . at 6 0 5 -6 0 6

.

2t h at RES-GA ha d p a i d f a i r m ark et v al u e. Two o rd ers d en y in g co n fi rm at i o n were

ap p eal ed t o t hi s Co u rt , an d we affi rm ed

. 3

RES-GA s u b s eq u en tl y s u ed t h e d efen dan ts as g u aran t o rs o f t h e am ou n t s s t i l l

o wed b y th e b o rro wers o n t h e p ro m i s s ory n ot es

. Th e d efen d an t s m o ved fo r s u m m ary

ju d g m en t

, arg u in g t h at b ecau s e RES-GA fai l ed t o s ecu re co n fi rm at i o n o f t h e

fo recl o s ure sal es , i t co u l d no t reco v er a d efi ci en cy ju d g m e n t

. RES-GA res p o n d ed

wi t h i t s o wn su m

m ary j u d g m en t m o t io n

. It ag reed t hat i t s o ug h t t he d efi ci en cy

b et ween t h e u n p ai d pri n ci pal i n d eb t ed nes s an d t h e p ri ce it p ai d fo r t h e pro p ert i es at

fo recl o s ure. Bu t i t cl ai m ed t h at t h e d efen dan t s had wa i v e d t h e co nfi rm at i o n

req u i rem en t

, perm i t t i n g reco very

. Th e t ri al co u rt g ran t ed RES-GA’ s m o ti o n , an d t h i s

ap p eal fo l l o w ed

.

Pu rs uan t t o OCGA § 4 4 -1 4 -1 6 1 (a),

W h en an y

real es tat e i s s o l d o n fo recl o s u re, wi t h o u t l eg al p ro ces s , an d

u n d er p o wers co nt ai n ed i n s ecu ri t y d eed s

. . . an d a t t h e s a l e t h e real

es t at e d o es n ot b ri n g t h e am o u n t of t h e d eb t s ecu red b y t h e d eed

, . . . n o

act i o n m ay b e t ak en t o o b t ai n a d efi ci en cy ju d g m en t u n l es s t h e p ers o n

i n s t i t u t i n g t h e f

o recl o su re p ro ceed i n g s s h al l

, wi t h i n 3 0 d ay s aft er th e

3 See RES -GA LJY v. So u t h Cr es t vi ew Dr ive

, 3 2 6 Ga. Ap p

. XXIII (A1 3 A1 8 1 0,
d eci d ed M arch 1 0

, 2 0 1 4 ); RES -GA LJY v. Y

. D. I., In c. , 3 2 2 Ga. Ap p

. 6 07 (7 4 5 SE2 d
8 2 0 ) (2 0 1 3 ).

3s al e, rep o rt t h e s a l e t o t h e ju d g e of t h e s up eri o r co urt o f t h e co un t y i n

wh i ch th e l an d i s l o cat ed fo r co n fi rm at i on an d ap p ro val an d s h al l ob t ai n

an o rd er o f co n fi rm at i on an d ap p ro v al t h ereo n

.

W i t h o u t d i s p u t e, R E S

- G A b o u g h t t h e pro p ert i es at i ss u e fo r l es s t h an t h e

am ou n t s o wed

. Al t h o u g h it s o u g h t co n fi rm at io n o f t h es e s al es , i t s effo rt s fai led

. RESGA co n ced es , t h erefo re, th at OCGA § 44 -1 4-1 6 1 (a) p rev en t s it fro m p u rs u i n g t h e

b o rro wers fo r an y d efi ci en cy

. It co n t en d s , h o w ev er, t h at i t can reco v er t h e d efi ci en cy

fro m t h e d efen d a n t s , wh o g u aran t eed p ay m en t u n d er t h e p ro m i s s o ry n ot es an d

wai v ed

, as p art o f t he g u aran t i es :

an y an d al l r i g h t s o r d efen s es b as ed o n s uret y s hi p o r i m p ai rm en t o f

co l l at eral i n cl u d i n g , bu t no t l i m i t ed t o , an y ri g h t s or d efen s es ari si ng b y

r e a s o n o f (A) t h e p ro v is i o n s o f O .C.G.A. Sect i o n 1 0-7 -2 4 co n cern i n g

Gu aran t or’ s ri g h t t o req u i re Len d er t o t a k e act i o n ag ai ns t Bo rro wer o r

an y “ o n e act i o n ” o r “ an ti -d efi ci en cy ” l aw o r an y o t her l aw wh i ch m ay

p rev en t Le n d e r f

ro m bri n g i n g an y act i o n , in cl u d i n g a cl ai m fo r

d efi ci en cy , ag ai n s t G u aran t o r, b efo re o r aft er Len d er’ s co m m en cem en t

o r co m p let i o n o f an y fo recl o s u re act i on , ei t h er ju d i ci al l y o r b y ex erci s e

o f a p o wer o f s al e

. . . . or (F) an y d efen s es g iv en t o g u aran t ors at l aw o r

i n eq u i t y o t h er t h an act u al p ay m en t an d perfo rm an ce o f th e

In d eb t ed n es s

.

4T h e t r i a l co u rt ag reed wi t h RES-GA, co ncl u d in g t h at t h e d efen d an t s h ad

wai v ed t h e co n fi rm at i o n d efen s e. W e fi n d n o erro r. As o ur Su p rem e Co u rt recen t l y

ex p lai n ed

, co m

pl ian ce wi t h OCGA § 4 4 -1 4 -1 6 1 (a) “ i s a co n d i ti o n preced en t t o t h e

l e n d er’ s ab i li t y t o pu rs u e a g u aran t o r fo r a d efi ci en cy aft er a fo recl o s u re h as b e e n

co n du ct ed

, b u t a g u aran t or ret ai n s t h e co n t ract u al ab i l i t y t o wai v e t h e co n d i t i o n

p reced en t req u i rem en t .” 4 T h e co n fi rm at i o n req u i rem en t

, t h erefo re, can b e wai v ed

. 5

An d p u rs u an t t o t h e gu aran t i es , t h e d efen dan t s ag reed t o wai v e “ an y an d al l ri g h t s o r

d efen s es b as ed o n s u ret y s h ip .”

On ap p eal

, t h e defen d an ts arg u e t h at t h e g u aran t i es “ d o n ot co nt ai n an ex p res s

o r cl earl y s t at ed wai v er o f t h e co n fi rm at i o n req u i rem en t ” b ecau s e a d efen se ari s i n g

o u t o f OCGA § 4 4 -1 4 -1 6 1 (a) i s n o t “ bas ed o n s uret y s hi p .” A c co rd i ng t o t h e

d efen d an t s , a d efen s e i s “ b as ed o n s uret y s h i p ” o n l y i f i t ap p ears w i t hi n t h e st at u t o ry

p r o v i s i o n s s et t i n g fo rt h a s u ret y ’ s ri g h t s an d o bl i g at i o ns

. 6 In th ei r v i ew, t h e

4 PNC Ba n k v. S

mi t h

,

__ _ Ga.

_ _ _ (3 ) (S1 5 Q 1 4 4 5

, d eci ded Feb

. 2 2

, 20 1 6 ). See
al s o DCB In ves t men t

s , s u p ra at 6 1 3 -6 1 4 ( 2 ) ( g u a r an t o r m ay wai v e co nfi rm at i o n
req u i rem en t ); HW

A Pr o p er t ies v. Co mmu n i t

y & S o u t h er n Ba n k

, 3 2 2 Ga. Ap p

. 8 7 7,
8 8 7 -8 8 8 (2 ) (b ) (7 4 6 SE2 d 6 0 9 ) (2 0 1 3 ) (s am e).

5 PNC Ba n k , s u p ra.

6 See OCGA § 1 0 -7 -2 0 et s eq

.

5co n fi rm at i o n r e q u i rem en t

, wh i ch i s p art o f t h e s t at u t o ry fram ewo rk g o v ern i n g

fo recl o s ures , rat h er t han s u ret y s h i p, fal l s o u t si d e t h e wai v er.

W e d is ag ree. T h e d efen d an t s ’ g u aran t i es are co nt ract s o f s u ret y s h i p

. 7 Su ch

co n tract s m

u s t b e s tri ct l y co n s t ru ed

, an d a “ s u ret y ’ s l i ab i l i t y wi ll n o t b e ex t en d ed by

i m p l i cat i o n o r i n t erp ret at i o n .” 8 Ul t i m at el y , h o wev er, co n s t ru ct io n o f a s uret y co n t ract

“ i s a q u es t i o n o f l aw fo r t h e co u rt b as ed o n t h e in t en t o f t h e p art i es as s et fo rt h i n t h e

co n tract

. ” 9 An d n ot h i n g i n t h e wai v er’ s l an g u ag e i n d i cat es t h at th e p art i es i n t en d ed

t o l i m i t i t s reach t o an y p art i cu l ar s t at u to ry d e f e n s e s

. By i t s p l ai n t erm s , th e p h ras e

“ d efen s es b as ed o n s u ret y s h i p ” m ean s ju s t t h at

– d efen s es b as ed o n o r ari s i n g o u t o f

a s u ret y sh i p

. 1 0

7 See OCGA § 1 0 -7 -1 (“ Th e co n t ract o f su ret y sh i p o r g u aran t y is on e wh ereb y

a p ers o n o b l i g at es h i m s el f t o p ay th e d eb t o f an ot h er in co n s i d erat i o n of a b en efi t fl owi n g t o th e su ret y o r i n co n si d erat io n o f cred i t or i n d u l gen ce o r ot h er b en efi t g i v en
t o h i s pri n ci p al .”). See al s o OCGA § 1 1 -1 -2 0 1 (b ) (3 9 ) (fo r p u rp o s e s o f t h e

co m m erci al co d e, t he t erm “ s u ret y ” i n cl u d es “ a g u ara n t o r o r o t h er s eco n d ary

o b l i g o r”).

8 OCGA § 1 0 -7 -3

.

9 Ci t r u s To wer Bo ul eva r d Ima g i n g Cen t er v. Da vi d S

. Owen s
, MD, PC

, 3 2 5 Ga. Ap p . 1 , 5 (1 ) (7 5 2 SE2 d 7 4 ) (2 0 1 3 ) (p u n ct uat i o n , fo o t n o t e, an d em p h as i s o m i t t ed ).

1 0 See i d

. at 8 (2 ) (a co n t ract i s n o t am bi g u o u s

– an d m

us t b e en fo rced

acco rd i n g t o i t s p l ai n t erm s

– “ wh ere, ex am i n i n g t h e c o n t ract as a w h o l e an d
affo rd i ng t h e wo rd s u s e d t h erei n t h ei r p l ai n an d o rd i n ary m ean i ng , t h e co n t ract i s

6Th e defen d an t s cl ai m t hat t h ey are n o t l i ab l e t o RES-GA b ecau s e a l en d er m u s t

co n fi rm a fo recl os u re s al e b efo re s u i n g a g u aran to r fo r a d efi ci en cy

. Th i s

co n fi rm at i o n d efen s e d ep en d s u p o n t h e d efen d an t s ’ st at us as a s u ret y or g uaran t o r.

By an y reas o n ab l e i nt erp ret at i o n , i t i s b as ed o n th e s u ret y s h i p an d i n cl u d ed wi t h i n t h e

wai v er, wh i ch ex p l ici t l y

ap p l i es t o d efen s es ari s in g fro m laws t h at p rev en t a l en d er

fro m p u rs u i n g a d efi ci en cy cl ai m ag ai n s t a g u aran t o r. To f ind ot herwi s e wo ul d res t ri ct

t h e wai v er b ey o n d i t s p l ai n m ean i n g

. 1 1 Th e tri al co urt

, t h erefo re, pro p erl y g ran t ed

s u m m ary ju d g m en t t o RES-GA. 1 2

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

.

cap ab l e o f o n l y o n e reas o n ab le i n t erp ret at i o n ”) (p u nct u at i o n an d fo o t n ot e o m i t t ed ).

1 1 See Dys o n v. W

as h i n gt o n Tel ep h o n e C o

. , 1 5 7 G a. 6 7

, 8 3 (1 2 1 SE 1 0 5 ) (1 9 2 3) (ap pel l ee’ s r e s t r ict i v e read i n g o f co nt ract un reas o n ab le wh ere n o t h i n g in

co n tract l an g uag e l i m i t ed pro vi s i o n i n m an n er ad vo cat ed by ap p el l ee). See al s o PNC

Ba n k

, s u pra (p erm i t t i n g wai ver o f a co nfi rm at i o n d efen s e “ creat es an ap p ro p ri at e b al an ce b et ween t he s t at u t o ry p ro t ect i on s o f t h e co n fi rm at i o n s t at u t e an d t he freed o m

o f a g u aran t o r t o en t er co nt ract s d eem ed b en efi ci al ”).

1 2 S e e D C B I nv e stm e n ts

, s u p ra (g u aran t o rs wai ved co n fi rm at i on d efen s e wh e r e ,

u n d er g u aran t y , t hey were res p o n s i b l e fo r d efi ci en cy fo l l o w i n g f o r e c l o s u re s al e,
reg ard l es s o f wh et her bo rro wer was d is c h a r g e d p u rs u an t t o st at ut e o r ju d i ci al
d eci s i o n ).

7