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Wells v. Regions Bank

Court of Appeals of Georgia, Fourth Division

June 20, 2019

WELLS
v.
REGIONS BANK.

          DOYLE, P. J., COOMER and MARKLE, JJ.

          MARKLE, JUDGE.

         Susan Wells[1] appeals from the trial court's order granting summary judgment to Regions Bank and denying her motion for summary judgment in Regions Bank's breach of contract suit for money due on a line of credit following foreclosure of the property. On appeal, Wells argues that the trial court erred because Regions Bank was required to seek judicial confirmation of the foreclosure before filing the breach of contract suit. After a thorough review of the record, and for the reasons that follow, we affirm the trial court's order denying Wells's motion for summary judgment, vacate the trial court's order granting summary judgment to Regions, and remand the case for further proceedings.

         "On appeal, we review the grant or denial of summary judgment de novo, construing the evidence and all inferences in a light most favorable to the nonmoving party." (Citation omitted.) LeCroy v. Bragg, 319 Ga.App. 884, 885 (1) (739 S.E.2d 1) (2013).

         So viewed, the record shows that in 1998, Susan and her then-husband Gordon Wells (collectively "the Wellses") purchased property in Gainesville, Georgia. The following year, they obtained a construction loan in the amount of $459, 750 to build a house on the property, and they executed a security deed in favor of Regions using the property as collateral. Later that year, they modified this loan to increase the amount of funds to $479, 200.

         In May 2002, the Wellses opened a revolving line of credit in the amount of $100, 000. They executed a second security deed in favor of Regions, using the same property to secure the loan. They used these funds to repair stucco and make other home improvements. The following month, the Wellses purchased the adjacent lakefront property.

         In 2005, they opened a second line of credit ("the 2005 line of credit"), and Regions modified the May 2002 security deed to increase the amount of the loan to $240, 000 to reflect the new line of credit. This 2005 line of credit was used to pay off the initial line of credit obtained in 2002 and build a dock on the adjacent property.[2]

         Susan and Gordon divorced in 2008. Under the terms of the divorce settlement, Gordon retained the marital property and was to remove Susan's name from the mortgage and sell or refinance the property.

         Although the Wellses initially made all the payments on the 2005 line of credit, Gordon experienced financial problems after the divorce and ceased making payments, leaving a debt in excess of $200, 000. In 2010, Regions entered into a forbearance agreement with the Wellses regarding the outstanding debt on the 2005 line of credit. In this agreement, the Wellses promised to make monthly payments with a final balloon payment due at the end of the term. Additionally, per the terms of this agreement, any default would result in the entire amount being due immediately in full. Gordon made the payments under the forbearance agreement as required until August 2012 when he defaulted.

         During this same time, Gordon also failed to make the required payments on the construction loan. As a result of the default on the construction loan, Regions foreclosed on the property, selling it at public auction by deed under power of sale for $335, 000. Regions then filed a breach of contract action against the Wellses, seeking to collect on the outstanding amount of the 2005 line of credit under the forbearance agreement.

         Both Regions and Susan moved for summary judgment.[3] Susan argued that the failure to seek judicial confirmation of the foreclosure waived any right to collect the debt under OCGA § 44-14-161 (a) and barred the instant breach of contract claim. In response, Regions argued that the confirmation requirement in OCGA § 44-14-161 (a) did not apply because the instant suit was not a post-foreclosure deficiency action, and the two loans at issue were not inextricably intertwined such that confirmation would be required. Thus, Regions argued that it was entitled to summary judgment on its breach of contract claim.

         Following a hearing, the trial court denied Susan's motion and granted Regions's motion.[4] The trial court found that Regions's suit was not a deficiency action, and the construction loan and 2005 line of credit were not inextricably intertwined because they did not serve the same purpose, and therefore confirmation was not required under OCGA § 44-14-161 (a). Thus, the trial court concluded that the Wellses breached the forbearance agreement and were liable for the outstanding debt.[5] This appeal followed.

         In a series of inter-related arguments, Susan contends that the trial court erred in denying her motion for summary judgment and in granting Regions's motion because the loans were inextricably intertwined, and thus the instant suit was barred by the failure to seek judicial confirmation of the foreclosure sale.[6] We conclude that Susan has raised a factual issue that precluded summary judgment.

         "A deficiency judgment is the imposition of personal liability on mortgagor for unpaid balance of mortgage debt after foreclosure has failed to yield full amount of due debt." (Citation omitted.) Iwan Renovations, Inc. v. North Atlanta Nat. Bank, 296 Ga.App. 125, 127 (1) (673 S.E.2d ...


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