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Reynolds v. CBb&T

Court of Appeals of Georgia, Fourth Division

September 22, 2017


          DILLARD, C. J., RAY, P.J. and SELF, J.

          Self, Judge.

         Willie T. Reynolds sued CB&T, a division of Synovus Bank ("CB&T"), for wrongful foreclosure, breach of contract, intentional and grossly negligent infliction of emotional distress, unjust enrichment, and promissory estoppel. CB&T moved for summary judgment on all claims, and the trial court granted its motion. As there are genuine issues of material fact supporting all claims, we reverse the trial court's grant of summary judgment to CB&T.

         Summary judgment is appropriate if the pleadings and evidence "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." OCGA § 9-11-56 (c). "We review a trial court's grant of summary judgment de novo and construe all inferences in the light most favorable to the nonmoving party." Olde Towne Tyrone, LLC v. Multibank 2009-1 CRE Venture, 326 Ga.App. 322, 323 (756 S.E.2d 558) (2014).

         Viewed in the light most favorable to Reynolds, the record shows that Reynolds borrowed $253, 371 from CB&T in order to construct his family's home. Reynolds executed a promissory note for the full amount, which was secured with a deed to secure debt pledging the property on which the home was being built as security for the loan. The promissory note was executed on June 18, 2012, and had a maturity date of June 18, 2013. Its stated purpose was for "construction." The note was renewed for a nearly identical amount on July 1, 2013, and December 9, 2013. On February 13, 2015, the amount of the loan renewed was $219, 625.93, with a maturity date of May 13, 2015. The note provided that "[a]ny changes to this note or any agreement securing this note must be in writing and signed by you and me."

         On July 7, 2015, Travis Hargrove, CB&T's attorney, sent a demand letter to Reynolds via certified mail, demanding payment of $222, 172.27, the balance owed on the note. On September 2, 2015, Hargrove sent Reynolds a certified mail notice that CB&T intended to foreclosure on the property and that a foreclosure sale would be held on October 6, 2015. Hargrove also included a copy of the foreclosure notice in that correspondence. Reynolds never claimed the letter. The notice of foreclosure ran in the local newspaper from September 9, 2015 to September 30, 2015, and a non-judicial foreclosure was conducted on October 6, 2015. CB&T was the highest bidder at the foreclosure sale, purchasing the home for $225, 334.24.

         Reynolds sued CB&T a month later, alleging that the bank had expressly agreed to extend or modify the note's maturity date until Reynolds could complete construction of the home and obtain a certificate of occupancy. At that point, Reynolds intended to obtain a permanent mortgage or seek to convert the note into a residential mortgage loan. In his verified interrogatory responses, Reynolds stated that from July 25, 2015, through September 30, 2015, CB&T advised Reynolds to keep building and that he should go ahead and finish the home. Reynolds was led to believe by CB&T and Hargrove that completing the house and acquiring a permanent mortgage was in the best interest of both parties. Reynolds further explained that CB&T employee, Scott Jackson, was attempting to modify the loan date when another division of the bank began foreclosure proceedings. He further stated that on July 27, 2015, attorney Hargrove stated that he "could finish the construction as it was going well and [a] CB&T Property Inspector came out several times to the property and agreed." Reynolds applied for a permanent mortgage in July and August 2015, but was denied because the default appeared on his credit report. Reynolds built the home himself and averred in his interrogatory responses that he spent over $70, 000 of his own money and personal labor on the project in reliance on CB&T's promise that he could complete construction of the home after his initial default. According to Reynolds, a professional appraiser "dispatched" by CB&T gave the house a value of "approximately $400, 000" which was $175, 000 more than the amount owed on the loan.

         The trial court granted CB&T's motion for summary judgment on all claims, ruling that (1) the foreclosure complied with the relevant statutes; (2) parol evidence cannot be admitted to alter or vary the terms of the promissory note; (3) Reynolds defaulted on the loan and, therefore, cannot recover for intentional infliction of emotional distress; (4) the existence of a written contract precludes a claim for unjust enrichment; and (5) Reynolds' claim for promissory estoppel fails because the alleged promise is vague and indefinite as to material terms such as the interest rate and maturity date. On appeal, Reynolds challenges these rulings.

         1. In two related enumerations of error, Reynolds contends that the trial court erred in granting summary judgment on his claims for wrongful foreclosure and breach of contract because CB&T's oral agreement to modify the due date of the loan to the date Reynolds completed the home and obtained a certificate of occupancy raises a genuine issue of material fact as to whether there was a mutual departure from the promissory note so as to constitute a quasi-new agreement between the parties. Reynolds claims he provided value in exchange for the extended loan date, including expending his own labor and money to complete the construction, thus increasing the property's value by at least $170, 000.

         Any modification of a promissory note must be in writing because it falls within the Statute of Frauds. The Statute of Frauds is codified at OCGA § 13-5-30, and provides that in order to be enforceable, various types of agreements must be "in writing and signed by the party to be charged therewith or some person lawfully authorized by him." Pursuant to OCGA § 13-5-30 (7), the promissory note had to be and was executed in writing. "As the [promissory note] had to be in writing under the [S]tatute of [F]rauds, so likewise, under the general rule, any proposed modification thereof, to be effective, must also have been in writing." (Citation and punctuation omitted.) Brooks v. Gwinnett Community Bank, 311 Ga.App. 806, 807 (717 S.E.2d 647) (2011). See also Jaraysi v. Sebastian, 318 Ga.App. 469, 475 (1) (c) (733 S.E.2d 785) (2012) ("'a contract which is required by the Statute of Frauds to be in writing can not be modified by a subsequent agreement in parol'"), overruled on other grounds by George v. Hercules Real Estate Svcs., 339 Ga.App. 843 (795 S.E.2d 81) (2016); S & A Indus. v. Bank Atlanta, 247 Ga.App. 377 (543 S.E.2d 743) (2000) (borrower's reliance on conversations "'to add to, take from or vary'" terms of promissory note, which met requirements of Statute of Frauds, barred by parol evidence rule).

         However, oral modification of a written contract subject to the Statute of Frauds, such as the promissory note here, may be effective "where a modification of the written contract has been agreed to by all parties, performed by one and accepted by the other. . . ." (Citations, punctuation and footnote omitted.) Jaraysi, 318 Ga.App. at 469, 475 (1) (c). "This result under the [S]tatute of [F]rauds comports with the general rule that a mutual departure from the terms of an agreement results in a quasi[-]new agreement suspending the original terms of the agreement until one party has given the other reasonable notice of its intent to rely on the original terms." (Citation and punctuation omitted.) Dobson v. Matt Owens Logging, Inc., 326 Ga.App. 879, 882 (755 S.E.2d 374) (2014). See also Eaves v. J.C. Bradford & Co., 173 Ga.App. 470, 471-472 (326 S.E.2d 830) (1987) (physical precedent only) (while mere breach by one party will not demonstrate the creation of a quasi-new agreement, the consent to enter a new agreement may be shown by the parties' course of conduct and is generally a question for a jury to determine). Mutual departure is codified at OCGA § 13-4-4 and provides:

Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given to the other of intention to rely on the exact terms of the agreement. The contract will be suspended by the departure until such notice.

See Wright Carriage Co. v. Business Dev. Corp. of Georgia, 221 Ga.App. 49, 52, n.1 (471 S.E.2d 218) (1996) ("Mutual departure affects only the particular terms at issue; other executory terms in the agreement remain in force."). See also Shalom Farms, Inc. v. Columbus Bank & Trust Co., 169 Ga.App. 145, 146-47 (1) (312 S.E.2d 138) (1983) ("[w]hile mutual departure from the terms of a contract, as in a quasi new agreement, mandates notice of the intention of one of the parties to return to the original terms before those terms can be enforced . . . it is only the particular terms encompassed in the quasi new agreement that are affected thereby, and the other terms of the original contract remain enforceable as written"). Further, although mutual departure ordinarily requires the receipt or payment of money, slight consideration may support a departure from the contractual terms. See AAF-McQuay, Inc. v. Willis, 308 Ga.App. 203, 220 (4) (c) (707 S.E.2d 508) (2011). "The question whether the parties' mutual conduct caused a waiver and effected a quasi-new agreement ordinarily is a question for the jury." (Punctuation and footnote omitted.) Vakilzadeh Enterprises v. Housing Auth. of DeKalb, 281 Ga.App. 203, 206 (635 S.E.2d 825) (2006). Moreover, "a provision in a contract against waiver of contractual rights may itself be found by the jury to have been waived." (Punctuation and footnote omitted.) Id.

         Reynolds claims that the parties by their course of conduct mutually departed from the terms of the original note as to the due date and that, therefore, CB&T could not declare him in default. According to Reynolds, CB&T agreed to modify or extend the due date of the loan to the date Reynolds completed the home and obtained a certificate of occupancy and the record supports this contention. Reynolds' interrogatory responses reflect that he expended personal funds and labor completing the home after CB&T and Hargrove reassured him the bank would either modify or extend the note's maturity date until he could complete construction and obtain a certificate of occupancy. There is some evidence that CB&T agreed with Reynolds to modify the due date of the original promissory note to the date of completion of the house and that CB&T accepted as consideration for that modification Reynolds' labor and personal expenditure. CB&T not only attempted to work with Reynolds to modify the due date, but sent out a property inspector to check on the progress of construction. See Wright Carriage, supra, 221 Ga.App. at 53 (1) ...

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