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Nelson v. Hamilton State Bank

Court of Appeals of Georgia

March 20, 2015

NELSON
v.
HAMILTON STATE BANK

Note. Bartow Superior Court. Before Judge David K. Smith.

Howick, Westfall, McBryan & Kaplan, Louis G. McBryan, David A. Bikoff, for appellant.

Balch & Bingham, Matthew B. Ames, Walter E. Jones, for appellee.

OPINION

Page 114

Branch, Judge.

Jimmy R. Nelson signed a commercial promissory note in favor of Bartow County Bank (BCB) in the original principal amount of $2,977,019.70. Upon Nelson's default, Hamilton State Bank (HSB), the successor-in-interest to BCB, brought suit on the note. The trial court granted summary judgment to HSB for $2,866,990.37 plus post-judgment interest. On appeal, Nelson contests the amount of the indebtedness and asserts that there is a genuine issue of material fact as to whether HSB's actions directed at his business partner and cousin Dolph Nelson (" Dolph" ) impaired Nelson's ability to make payments to HSB. For the reasons that follow, we affirm the judgment of liability and reverse as to damages.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245 (1) (577 S.E.2d 564) (2003).

So construed, the record shows that Nelson and Dolph are each fifty percent owners of one or more corporate entities related to the family furniture business; that in 2005, two of the corporate entities entered into a $3.9 million loan with BCB with the final payment due on February 21, 2010 (the " furniture business loan" ); and that Nelson was on the board of directors of BCB during that entire time.

Meanwhile in March 2007, Dolph purchased a residence and obtained a purchase money loan for $586,729.50 from BCB. The associated security deed included a " dragnet clause," which provided that the real estate secured the residential loan and " any and all other and further indebtedness now owing or which may hereafter be owing, however incurred, to [BCB], its successors and assigns, by [Dolph Nelson] and [his] successors in

Page 115

title." [1] In November 2007, Dolph obtained an equity line of credit (ELOC) on the residence and used the proceeds to pay off the purchase money note on the residence. Although the purchase money loan was satisfied as a result, BCB did not cancel the original purchase money security deed that contained the dragnet clause.

Next, on June 7, 2010, Nelson and Dolph " renewed" the furniture business loan by each entering into personal loans with BCB: Nelson's [331 Ga.App. 420] loan, at issue in this case, was in the amount of $2,977,019.70; and Dolph's loan was in the amount of $2,980,336.97. Nelson avers that for several reasons, including certain banking regulations, BCB required personal loans instead of another commercial loan in the name of the furniture business entities. Thereafter, the furniture business made 16 monthly payments on each of the personal loans but none after October 2011.

In the meantime, in April 2011, BCB was closed by the Georgia Department of Banking and Finance; the Federal Deposit Insurance Company was appointed a receiver; and it assigned Nelson's promissory note to HSB. In October 2011, Dolph paid off the equity line of credit, and the furniture business made its last payments on the Nelson and Dolph 2010 promissory notes. Dolph learned several months later that HSB continued to hold an interest in his personal residence as security for payment of his 2010 $2.9 million note.

In March 2012, HSB brought separate suits against Nelson and Dolph for the unpaid balance on the two personal notes. The trial court separately granted summary judgment in favor of HSB in both cases. And Dolph, who is ...


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