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Vinings Bank v. Brasfield & Gorrie, LLC

Court of Appeals of Georgia, Fourth Division

July 9, 2014

VININGS BANK
v.
BRASFIELD & GORRIE, LLC

Editorial Note:

This opinion is uncorrected and subject to revision by the court.

MILLER, Judge. Doyle, P. J., and Dillard, J., concur.

OPINION

Miller, Judge.

This case arises from a defaulted $1.4 million business loan that Vinings Bank (" the Bank" ) made to Wagener Enterprises, Inc. (" WEI" ). As partial collateral for the $1.4 million loan, WEI granted the Bank a security interest in all of its accounts and accounts receivable, including WEI's contract to provide drywall services work for general contractor Brasfield & Gorrie (" B& G" ) on multiple construction projects. After WEI defaulted on the loan, the Bank filed suit against B& G, seeking to collect on WEI's accounts receivable and alleging conversion. B& G filed a counterclaim for conversion, and the parties subsequently filed cross-motions for summary judgment. The Bank appeals, contending that the trial erred in (1) denying its motion for summary judgment in its action to recover money from B& G, and in granting partial summary judgment to B& G; (2) denying its motion for summary judgment on its conversion claim; and (3) denying its motion for summary judgment on B& G's counterclaim for conversion. Discerning no error, we affirm.

It is well established that on appeal of a grant of summary judgment, the appellate court must determine whether the trial court erred in concluding that no genuine issue of material fact remains and that the party was entitled to judgment as a matter of law. This requires a de novo review of the evidence. Summary judgment is appropriate when the court, viewing all the facts and evidence and reasonable inferences from those facts in a light most favorable to the non-movant, concludes that the evidence does not create a triable issue as to each essential element of the case.

(Citations omitted.) Rubin v. Cello Corp., 235 Ga.App. 250, 250-251 (510 S.E.2d 541) (1998).

So viewed, the evidence shows that the Bank made the loan to WEI in August 2009. As collateral, WEI granted the Bank a security interest in " all of [WEI's] accounts, accounts receivable, instruments, and other receivables of any kind or nature, whether or not evidenced by any instrument or chattel paper, and whether earned or unearned." The security interest also obligated WEI to deliver accounts that were " free and clear of any lien." That same month, the Bank filed a UCC-1 Financing Statement to perfect its security interest in WEI's accounts.

In 2010 and 2011, WEI entered into a dozen subcontracts (" the subcontracts" ) with B& G, each related to a different construction project. The record shows that WEI performed pursuant to these contracts, submitted invoices on the projects throughout 2010 and 2011, and was regularly paid by B& G for its work. Before WEI went out of business, some of the construction projects were completed, and WEI's final bills had been submitted to B& G and paid. Other projects were not yet complete. In September 2011, B& G learned that WEI was going out of business and abandoning its work on unfinished construction projects.

After WEI defaulted on the loan in August 2011, the Bank froze WEI's deposit accounts and applied the funds in those accounts toward the principal due on the loan. According to the Bank, B& G owed WEI approximately $700,000 for work that had been completed and invoiced prior to the end of September 2011. In October 2011, the Bank sent notice to B& G that it had an interest in WEI's accounts and accounts receivables. B& G responded that some of the funds in WEI's accounts were funds paid by B& G, which may be due to some of WEI's suppliers and subcontractors, and B& G could not determine any amount due and payable to WEI until after B& G arranged for completion of the abandoned projects and after WEI's subcontractors and suppliers were paid.

Thereafter, acting pursuant to the express terms of the subcontracts, B& G made no further payments to WEI until it could determine the costs to complete WEI's work and pay WEI's laborers, subcontractors, and suppliers. B& G also stopped payment on its outstanding checks to WEI.

In September 2012, the Bank filed suit against B& G, alleging that B& G owed money to WEI and thus, under the security deed, owed money to the Bank. B& G filed a counterclaim for conversion of funds in WEI's frozen accounts, which were due to WEI's subcontractors and suppliers.

In granting partial summary judgment to B& G, the trial court found, as a matter of law, that WEI, and therefore the Bank, was not entitled to payment under the subcontracts until WEI's subcontractors and suppliers were paid and until the completion costs of finishing the work abandoned by WEI were applied to the value of the completed work. The trial court denied the Bank's motion for summary judgment, finding an issue of fact regarding whether WEI had any right to further payments (i.e. whether any accounts receivables existed) from B& G.

1. The Bank contends that the trial court erred in denying its motion for summary judgment and in granting partial summary judgment to B& G on the issue of the ...


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