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AGRI-AFC LLC v. Everidge

United States District Court, M.D. Georgia, Macon Division

January 30, 2019

AGRI-AFC, LLC, Plaintiff,
v.
RONALD JOE EVERIDGE, III; RABBIT RIDGE FARMS, INC.; RONALD J. EVERIDGE, JR.; DADDY RABBIT FARMS, INC.; and JEANNA D. EVERIDGE, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT

          TILMAN E. SELF, III, JUDGE.

         The following facts are undisputed. In 201');">15, Defendants Ronald Everidge, Jr. (“Ron”), Jeanna Everidge (“Jeanna”), and their son Ronald Everidge, III (“Tripp, ” now deceased)[1');">1" name="FN1');">1" id="FN1');">1">1');">1] farmed several tracts of land through their businesses, Defendants Daddy Rabbit Farms, Inc. (“Daddy Rabbit”) and Rabbit Ridge Farms, Inc. (“Rabbit Ridge”), collectively referred to as the “Everidge Entities” or “Entities.” Ron and Jeanna are husband and wife, and Tripp was their son. Ron is the sole shareholder and president of Rabbit Ridge, Jeanna is the sole shareholder and president of Daddy Rabbit, and Tripp assisted his father in farming for Rabbit Ridge. Essentially, Plaintiff Agri-AFC, LLC alleges that Defendants executed four promissory notes in 201');">15, paid for farming products with proceeds from the promissory notes, used those farming products, and then defaulted on the notes after they became due in 201');">16.[2]

         A. The “Tripp Note”

         On May 6, 201');">15, Tripp allegedly executed an “Input Finance Agreement containing Loan Agreement, Promissory Note, and Security Agreement” by which he borrowed $1');">150, 000.00 from The Cooperative Finance Association, Inc. (“CFA”) in order to cover expenses incurred in dealing with Plaintiff, a seller of farming products. [Doc. 46-6, 1');">1');">p. 1');">1');">1');">1');">p. 1');">1, Section A(2)]. On June 2, 201');">15, Tripp and CFA allegedly modified the Input Finance Agreement to increase the line of credit to $250, 000.00. [Id. at p. 7]. The loan came due on February 1');">15, 201');">16. [Id. at p. 4]. On April 1');">12, 201');">16, CFA sent a letter to Tripp informing him that he was in default on the loan and owed the principal amount of the loan ($250, 000.00) in addition to $1');">11');">1');">1');">11');">1, 559.22 in interest accrued as of the date of the letter. [Doc. 46-1');">13');">1');">13, 1');">1');">p. 1');">1');">1');">1');">p. 1');">1]. When Tripp failed to pay the amount due, CFA sent him a second letter on May 2, 201');">16, reminding him that the he was in default on the loan and updating the accrued interest amount to $1');">13');">1');">13, 1');">121');">1.71');">1. [Id. at p. 3]. A month later, CFA filed the instant action against Tripp for breach of contract, seeking to recover the principal amount of the loan, accrued interest, and attorney's fees and costs. [Doc. 1');">1].

         CFA assigned the Note to Agri-AFC on August 1');">1, 201');">17, [Doc. 46-7], and the Court substituted Agri-AFC for CFA as the plaintiff in this action [Doc. 40]. Plaintiff amended its Complaint and now seeks recovery relating to the Tripp Note under two theories. First, Plaintiff asserts a breach of contract claim based solely on the terms of the Tripp Note as modified. [Doc. 46, Count XI]. Plaintiff alleges that either Tripp or Ron could be liable for this breach of contract claim because, if Tripp did not sign the Note himself, Ron signed it and is liable as Tripp's agent. [Id. at Count XIV]. Alternatively, Plaintiff alleges that, if Tripp did not sign the Note himself, he is still liable for the amount owed under the Note because Ron signed it with Tripp's apparent authority. [Id. at Count XV]. Under the second alternative, Plaintiff alleges that, if Tripp did not sign the Note himself and if Ron did not sign the Note at all or do so with Tripp's apparent authority, Tripp is still liable for the amount owed under the Note because he ratified any unauthorized signature by accepting goods paid for with proceeds from the Note. [Id. at Count XVI].

         Plaintiff also alleges that, if Tripp is not liable under the terms of the Note, he is liable on a theory of open account because he accepted goods paid for with proceeds from the Note but did not pay CFA back for the advanced funds. [Id. at Count XII]. But Plaintiff alternatively alleges that, if the facts show that Tripp did not accept the goods paid for with funds advanced from the Tripp Note, Daddy Rabbit and/or Rabbit Ridge are liable because they accepted those goods and used them. [Id. at Counts X, XVII].

         Under both theories (breach of contract and unjust enrichment/open account), Plaintiff also argues that it is entitled to attorney's fees and expenses. [Id. at Count XIII].

         B. The “Daddy Rabbit Note”

         On May 1');">18, 201');">15, Jeanna purportedly executed an “Input Finance Agreement containing Loan Agreement, Promissory Note, and Security Agreement” in her individual capacity and as president of Daddy Rabbit. [Doc. 46-2]. Under the terms of the agreement, Jeanna and Daddy Rabbit jointly borrowed $250, 000.00 from CFA in order to cover expenses incurred in dealing with Plaintiff. As with the Tripp Note, this Daddy Rabbit Note matured on February 1');">15, 201');">16. [Id. at p. 4]. On April 1');">12, 201');">16, CFA notified Jeanna and Daddy Rabbit that they were in default on the Daddy Rabbit Note and owed $250, 000.00 in principal and $1');">13');">1');">13, 665.30 in interest as of the date of the letter. [Doc. 46-1');">11');">1');">1');">11');">1, 1');">1');">p. 1');">1');">1');">1');">p. 1');">1]. On May 2, 201');">16, CFA sent Jeanna and Daddy Rabbit a second letter regarding their default and updating the accrued interest amount to $1');">15, 227.81');">1. [Id. at p. 3].

         CFA assigned the Daddy Rabbit Note to Plaintiff on August 1');">1, 201');">17, [Doc. 46-3], and Plaintiff filed suit against Jeanna and Daddy Rabbit approximately three months later [Doc. 46]. Plaintiff seeks to recover under two theories. First, Plaintiff asserts a breach of contract claim based solely on the terms of the Note. [Doc. 46, Count I]. Plaintiff alleges that, under this breach of contract theory of recovery, Jeanna and Daddy Rabbit are jointly liable for the total principal and accrued interest on the Note, plus attorney's fees and costs under Georgia law. [Id. at Counts I, III]. However, Plaintiff alleges that, if Jeanna did not sign the Note herself, Ron signed it and is liable as Jeanna and Daddy Rabbit's agent. [Id. at Count IV]. Alternatively, Plaintiff alleges that, even if Jeanna did not sign the Note herself, she and Daddy Rabbit are still liable for the amount owed under the Note because Ron signed it with their apparent authority. [Id. at Count V]. In the second alternative, Plaintiff alleges that, if Jeanna did not sign the Note herself and if Ron did not sign the Note at all or did not do so with Jeanna and Daddy Rabbit's apparent authority, Jeanna and Daddy Rabbit are still liable for the amount owed under the Note because they ratified any unauthorized signature by accepting goods paid for with proceeds from the Note. [Id. at Count VI].

         Plaintiff also alleges that, if Jeanna and Daddy Rabbit are not liable under the terms of the Note, they are liable for unjust enrichment or on a theory of open account because they accepted goods paid for with proceeds from the Note but did not pay CFA back for the advanced funds. [Id. at Count II]. Plaintiff also seeks attorney's fees and expenses under this theory. [Id. at Count III].

         C. The “Rabbit Ridge Note”

         On the same day Jeanna allegedly executed the Daddy Rabbit Note, Ron executed an identical $250, 000.00 note (hereinafter the “Rabbit Ridge Note”) in his individual capacity and as president of Rabbit Ridge Farms. [Doc. 46-4]. The relevant terms were the same as those in the Daddy Rabbit Note and the Tripp Note. CFA sent two letters to Rabbit Ridge and Ron on April 1');">12 and May 2, 201');">16, informing them that they had defaulted on the Note. [Doc. 46-1');">12]. CFA also assigned the Rabbit Ridge Note to Plaintiff on August 1');">1, 201');">17. [Doc. 46-5].

         Plaintiff filed suit against Ron and Rabbit Ridge on October 27, 201');">17, seeking to recover under the terms of the Rabbit Ridge Note and under a theory of unjust enrichment/open account. [Doc. 46]. First, Plaintiff alleges that Ron and Rabbit Ridge are liable for breaching the loan agreement by failing to pay the amount due under the terms of the Note. [Id. at Count VII]. Second, Plaintiff alleges that, if Ron and Rabbit Ridge are not liable under the terms of the Note, they are liable for unjust enrichment or on a theory of open account because they accepted goods paid for with proceeds from the Note but did not pay CFA back for the advanced funds. [Id. at Count VIII]. But Plaintiff alternatively alleges that, if the facts show that Ron and/or Rabbit Ridge did not accept the goods paid for with funds advanced from the Rabbit Ridge Note, Daddy Rabbit is liable because it accepted those goods and used them. [Id. at Count X].

         D. The “Jeanna Note”

         Finally, on August 21');">1, 201');">15, Jeanna purportedly executed a second loan agreement, this time with Producers Credit Corporation, in her individual capacity and as president of Daddy Rabbit. [Doc. 46-1');">14]. Under the terms of the agreement, Jeanna and Daddy Rabbit borrowed $250, 1');">144.00 and posted their crops (present and future), farming equipment, and crop inputs (i.e. seeds, fertilizer, chemicals, and other products used in the growing and harvesting of crops), among other instruments and future payments, as collateral. [Id. at p1');">1');">p. 1');">1');">1');">1');">p. 1');">1, 5]. The loan matured on February 1');">1, 201');">16. [Id. at 1');">1');">p. 1');">1');">1');">1');">p. 1');">1]. At some point prior to May 1');">13');">1');">13, 201');">16, Producers Credit Corporation assigned this “Jeanna Note” to Plaintiff, who informed Jeanna and Daddy Rabbit on that date that they were in default on the loan. [Doc. 46-1');">16].

         Plaintiff is suing Jeanna and Daddy Rabbit in relation to the “Jeanna Note” under a breach of contract theory and an open account theory. [Doc. 46]. First, Plaintiff alleges that Jeanna and Daddy Rabbit are liable for principal and accrued interest under the terms of the Note. [Id. at Count XVIII]. However, if Jeanna did not sign the Note, Plaintiff alleges that Ron is liable as Jeanna and Daddy Rabbit's agent for signing the Note. [Id. at Count XX]. In the second alternative, Plaintiff alleges that if Ron signed the Note on Jeanna and Daddy Rabbit's behalf, Jeanna and Daddy Rabbit are liable because Ron signed the Note with their apparent authority. [Id. at Count XXI]. In the third alternative, Plaintiff argues that Jeanna and Daddy Rabbit are liable for breach of contract because, even if the Note was not signed by Jeanna or by someone with apparent authority, Jeanna and Daddy Rabbit ratified the agreement by accepting goods paid for with funds from the Note. [Id. at Count XXII].

         Plaintiff further alleges that, if Jeanna, Daddy Rabbit, and/or Ron are not liable under a breach of contract theory, Jeanna and Daddy Rabbit are liable under a theory of open account for accepting goods paid for with funds from the Jeanna Note. [Id. at Count XIX].

         E. The Parties' Motions for Partial Summary Judgment

         Plaintiff moves for summary judgment on two of the three open account claims against Jeanna and Daddy Rabbit [Doc. 46, Counts II, X]; on the open account claim against Tripp [id. at Count XII]; and on one of the two open account claims against Rabbit Ridge [id. at Count XVII]. Plaintiff also moves for summary judgment on the breach of contract and attorney's fees claims against Ron and Rabbit Ridge [id. at Counts VII, IX].

         In response, Jeanna and Daddy Rabbit cross-move for summary judgment on all of the open account claims against them [id. at Counts II, X, XIX].[3] Jeanna and Daddy Rabbit also seek summary judgment on the breach of contract claims [id. at Counts I, V, VI, XVIII, XXI, XXII] and the claim for attorney's fees against them [id. at Count III].[4" name="FN4" id= "FN4">4]

         For the following reasons, the parties' Partial Motions for Partial Summary Judgment [Docs. 69, 77] are both GRANTED IN PART. Additionally, Jeanna and Daddy Rabbit's Motion to Strike the Testimony of Dianne Peterson [Doc. 78] is GRANTED.

         DISCUSSION

         A. Standard of Review

         A party is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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.” Fed.R.Civ.p. 56(c).[5] As to issues for which the movant would bear the burden of proof at trial, the “movant must affirmatively show the absence of a genuine issue of material fact and support its motion with credible evidence demonstrating that no reasonable jury could find for the non-moving party on all of the essential elements of its case.” Landolfi v. City of Melbourne, 51');">15 Fed.Appx. 832, 834 (1');">11');">1');">1');">11');">1th Cir. 201');">13');">1');">13) (citing Fitzpatrick v. City of Atlanta, 1');">11');">1');">1');">11');">11');">12');">2 F.3d 1');">11');">1');">1');">11');">11');">12, 1');">11');">1');">1');">11');">11');">15 (1');">11');">1');">1');">11');">1th Cir. 1');">1993)). As to issues for which the non-movant would bear the burden of proof at trial, the movant may (1');">1) simply point out an absence of evidence to support the non-moving party's case or (2) provide “affirmative evidence demonstrating that the [non-movant] will be unable to prove its case at trial.” United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys., 41');">1 F.2d 1');">1428');">941');">1 F.2d 1');">1428, 1');">1438 (1');">11');">1');">1');">11');">1th Cir. 1');">1991');">1) (citing Celotex Corp. v. Catrett, 477 U.S. 31');">17');">477 U.S. 31');">17, 325 (1');">1986)).

         Once the movant satisfies its burden, the burden shifts to the non-movant, who must “go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact exists.” Porter v. Ray, 461');">1 F.3d 1');">13');">1');">131');">15');">461');">1 F.3d 1');">13');">1');">131');">15, 1');">13');">1');">1320 (1');">11');">1');">1');">11');">1th Cir. 2006) (citing Fitzpatrick, 2 F.3d at 1');">11');">1');">1');">11');">11');">15-1');">17) (emphasis added). “A factual dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Four Parcels, 941');">1 F.2d at 1');">1437 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242');">477 U.S. 242, 248, (1');">1986)).

         The standard of review for cross-motions for summary judgment does not differ from the standard applied when only one party files a motion. See American Banks Ins. Grp. v. United States, 408 F.3d 1');">13');">1');">1328');">408 F.3d 1');">13');">1');">1328, 1');">13');">1');">1331');">1 (1');">11');">1');">1');">11');">1th Cir. 2005). “Cross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.” United States v. Oakley, 44 F.2d 1');">1553');">744 F.2d 1');">1553, 1');">1555 (1');">11');">1');">1');">11');">1th Cir. 1');">1984) (internal quotation marks and citations omitted). The Court will consider each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration. See American Bankers, 408 F.3d at 1');">13');">1');">1331');">1. However, “[a] court need not permit a case to go to a jury . . . when the inferences that are drawn from the evidence, and upon which the non-movant relies, are implausible.” Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 743 (1');">11');">1');">1');">11');">1th Cir. 1');">1996) (internal quotations omitted).

         B. Plaintiff's Open Account Claims

         In Georgia, an action on open account is a simplified method by which a supplier can recover for goods or services that have been provided to the defendant and for which the defendant has not paid. See Altacare Corp. v. Decker, Hallman, Barber & Briggs, P.C., 1');">12');">730 S.E.2d 1');">12, 1');">14 (Ga.Ct.App. 201');">12) (quoting Five Star Steel Constr., Inc. v. Klockner Namasco Corp., 4 S.E.2d 783');">524 S.E.2d 783, 785 (Ga.Ct.Ap1');">1');">p. 1');">1');">1');">1');">p. 1');">1999)). Such an action is only appropriate where there is a contract (either express or implied) between the parties and there are no disputes other than the defendant's nonpayment for the goods or services supplied by the plaintiff. Scott v. Prestige Fin. Servs., Inc., 1');">13');">1');">13 S.E.2d 61');">10');">81');">13');">1');">13 S.E.2d 61');">10, 61');">12 (Ga.Ct.App. 201');">18).

         Plaintiff brought a similar open account claim against each Defendant. Plaintiff argues that Defendants' answers, which generally deny liability on the open account claims, should be stricken as insufficient under Ga. Code Ann. § 9-1');">10-1');">11');">1');">1');">11');">12. In the alternative, Plaintiff argues that there are no issues of material fact as to four of the six open account claims, and the only matter to be resolved on those four claims is Defendants' nonpayment for the goods supplied to them. Defendants, on the other hand, argue that there are questions of fact regarding their receipt of the invoiced crop inputs and their agreement to the prices in the invoices.

         1');">1. Defendants' Compliance with Ga. Code Ann. § 9-1');">10-1');">11');">1');">1');">11');">12

         First, Plaintiff argues that it is entitled to summary judgment on its open account claims against Jeanna, Daddy Rabbit, Rabbit Ridge, and Tripp (Counts II, X, XII, XVII) for Defendants' failures to comply with the pleading requirements of Ga. Code Ann. § 9-1');">10-1');">11');">1');">1');">11');">12, which states:

Whenever an action is brought on an open account and the same is verified by the plaintiff as provided by law, the answer either shall deny that the defendant is indebted in any sum or shall specify the amount in which the defendant admits he may be indebted and it shall be verified as required by law.

         Under Georgia law, answers that do not adhere to Ga. Code Ann. § 9-1');">10-1');">11');">1');">1');">11');">12 should be stricken, and the claimant is entitled to summary judgment on his open account claims. Scott, 81');">13');">1');">13 S.E.2d at 61');">12; see also Nelson v. Mexicana de Jugos y Sabores, 1');">102');">229 S.E.2d 1');">102, 1');">102 (Ga.Ct.Ap1');">1');">p. 1');">1');">1');">1');">p. 1');">1976).

         The District Court for the Northern District of Georgia recently considered whether this pleading standard is binding on parties to federal-court diversity cases and determined that it is not. See Meunier Carlin & Curfman, LLC v. Scidera, Inc., 4 F.Supp.3d 1');">1269');">324 F.Supp.3d 1');">1269, 1');">1282-83 (N.D.Ga. 201');">18). Under the Supreme Court's jurisprudence in Hanna v. Plumer, 460');">380 U.S. 460 (1');">1965), the federal courts are required to apply a Federal Rule of Civil Procedure where it applies and may only disregard a Rule if it is found to be unconstitutional or if it would modify, enlarge, or abridge a substantive right under the Rules Enabling Act. Meunier, 4 F.Supp. 3d');">324 F.Supp. 3d at 1');">1282 (citing Hanna, 380 U.S. at 471');">1). With regard to responsive pleading, the Federal Rules require only that a responding party “(A) state in short and plain terms its defenses to each claim asserted against it; and (B) admit or deny the allegations asserted against it by an opposing party.” Fed.R.Civ.P. 8(b)(1');">1). Denials, in particular, need only be specific enough as to “fairly respond to the substance of the allegation.” Id. at (b)(2). Because Rule 8 governs responsive pleading standards and conflicts with the heightened pleading standards of Ga. Code Ann. § 9-1');">10-1');">11');">1');">1');">11');">12, Rule 8 controls in this case.

         In their answers, Defendants deny each of Plaintiff's open account allegations. See [Doc. 52, ¶¶ 69, 70, 78, 79, 1');">100, 1');">102; Doc. 51');">1, ¶¶ 31');">1, 32, 69, 70]. These denials are sufficient to comply with the requirements of Rule 8, and Plaintiff's request that Defendants' answers be stricken for failing to comply with the state statute is denied.

         2. Open Account Claims Against the Everidge Entities

         Having found that Defendants' answers meet the pleading standards for open account claims, the Court turns to whether open account is a proper method of recovery in this case. A plaintiff states a prima facie claim on open account by (1');">1) attaching to its complaint an “invoice showing the goods shipped, the price, and the balance due, ” (2) tendering the authenticated invoice into evidence, and (3) presenting testimony that the invoice remains unpaid. Imex Int'l, Inc. v. Wires Eng'g, s.r.j., 583 S.E.2d 1');">11');">1');">1');">11');">17, 1');">120-21');">1 (Ga.Ct.App. 2003) (citations omitted).

         Once the plaintiff makes a prima facie showing of open account, the burden shifts the defendant to present “specific facts to refute the plaintiff's proof.” American Arbitration Ass'n v. Bowen, 743 S.E.2d 61');">12, 61');">14 (Ga.Ct.App. 201');">13');">1');">13) (emphasis added) (citation omitted). To do so, the defendant must establish that there is a bona fide dispute as to the terms of the contract, his receipt of the goods, the amount of the invoice, the failure of consideration, or some other fact other than nonpayment. Imex, 583 S.E.2d at 1');">121');">1; see also Altacare Corp., 730 S.E.2d at 1');">14 (quoting Five Star Steel, 524 S.E.2d at 785) (“[W]hen there is a dispute that goes to either assent to the services, terms of the contract, what work was performed, the quality of the performance, or cost, then suit on account is not the proper procedure for suit, because there is a factual issue other than nonpayment on the account.”).

         There can be no question in this case that there was at least an implied contract between Plaintiff and the Everidge Entities since Defendants admit that Plaintiff provided crop inputs and Defendants accepted at least some of them. See Id. at 1');">120 (“An action for an open account on invoice is an action on implied contract where the seller fully performed on a unilateral contract by delivery of the goods and where the purchaser either expressly or impliedly promised to pay by acceptance of the goods shipped.”). Further, Plaintiff presented invoices that have been tendered into evidence and authenticated by Plaintiff's Director of Credit, Dee Dee Mears. [Doc. 69-4]. Mears also avers that the invoices remain outstanding. [Id. at ¶ 8].

         Accordingly, the burden now shifts to Defendants to rebut the presumption that the invoices are correct and that they received the goods included on the invoices. First, Defendants argue that there can be no suit on open account because there is a question of fact as to which Entity received and used the goods listed in the invoices. They base this purported question of fact on the discrepancies between the names on the hand tickets and the names on the invoices, and on Plaintiff's “very unorthodox ‘business ...


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