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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-11998
Non-Argument Calendar
________________________
D.C. Docket No. 4:14-cv-00038-WTM-GRS
THE COASTAL BANK,
Plaintiff -
Counter Defendant,
AMERIS BANK,
Plaintiff - Appellee,
versus
G. GLEN MARTIN,
ARTHUR G. SCANLAN,
Defendants -
Counter Claimants -
Appellants.
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________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(November 20, 2017)
Before HULL, WILSON, and JULIE CARNES, Circuit Judges.
PER CURIAM:
G. Glen Martin and Arthur G. Scanlan (collectively, “Defendants”) were
investors in Sterling Bluff Investors, LLC and signed personal guaranties for a
promissory note executed by the company with The Coastal Bank—which later
merged with the plaintiff in this case, Ameris Bank (“Ameris”)—to buy real
property. 1 After Sterling Bluff Investors defaulted on its payments, Ameris
foreclosed on the property and held a public foreclosure sale. At the sale, Ameris
was the highest bidder and purchased the property.
In addition to foreclosing on the property, Ameris sought to recover the
difference between the purchase price of the property at the foreclosure sale and
the amount owed on the promissory note, an amount which is commonly referred
to as the deficiency. To recover this deficiency, Ameris filed the present lawsuit
1
Although The Coastal Bank and Ameris did not merge until after The Coastal Bank had
initiated this lawsuit, Ameris is now the plaintiff in this action and any reference to Ameris also
references any actions taken by The Coastal Bank.
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against Defendants, seeking to enforce the personal guaranties and recover the
deficiency remaining after the foreclosure sale. Ameris moved for summary
judgment, arguing that, per the terms of their guaranties, Ameris was entitled to
recover this deficiency amount. Defendants countered that Ameris could not
obtain a deficiency judgment or establish damages because the foreclosure sale
price had not been confirmed by a court as constituting the fair market value of the
property, which Georgia law generally requires as a prerequisite to obtaining a
deficiency judgment. Because the guaranties include a waiver provision that
expressly waives any defenses, including the statutory confirmation requirement,
the district court rejected Defendants’ argument and granted summary judgment in
favor of Ameris.
Defendants now appeal, asserting the same grounds they raised below before
the district court. But because we agree with the district court that Defendants’
guaranties waive the confirmation requirement prescribed by Georgia law, we
AFFIRM. Ameris also moves to dismiss the appeal as frivolous and requests
sanctions. We agree that Defendants’ appeal was frivolous and that costs and
reasonable attorneys’ fees associated with the appeal should be awarded.
Accordingly, we REMAND to the district court for a determination of these
amounts.
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I. Background
In July 2008, Sterling Bluff Investors, LLC executed a promissory note with
Ameris for $6,250,000, which was secured by the real property the company
planned to purchase with the proceeds. At the same time, the company’s investors,
including Defendants, signed personal guaranties for the note. Martin and Scanlan
guaranteed $1,562,500 and $1,000,000 in principal, respectively, plus interest and
costs. Apart from different liability limits, the two guaranties are identical.
Importantly, both contain a waiver of defenses provision that states that
Defendants:
waive[ ] any and all defenses, claims and discharges of [Sterling Bluff
Investors], or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the [Defendants] will not assert, plead or enforce against
[Ameris] any defense of waiver, release, statute of limitations, res judicata,
statute of frauds, fraud, [i]ncapacity, minority, usury, illegality, or
unenforceability which may be available to [Sterling Bluff Investors] or any
other person liable in respect of any Indebtedness, or any setoff available
against [Ameris] to [Sterling Bluff Investors] or any such other person,
whether or not on account of a related transaction.
The same section also notes that, in the event of foreclosure on the collateral,
Defendants will be liable for any deficiency, even if that deficiency would be
discharged by statute or judicial decision. Specifically, the guaranties state that:
[Defendants] expressly agree[ ] that the [Defendants] shall be and remain
liable, to the fullest extent permitted by applicable law, for any deficiency
remaining after foreclosure of any mortgage or security interest securing
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Indebtedness, whether or not the liability of [Sterling Bluff Investors] or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision. The [Defendants] shall remain obligated, to the fullest extent
permitted by law, to pay such amounts as though [Sterling Bluff Investors’]
obligations had not been discharged.
(Emphasis added).
Sterling Bluff Investors subsequently acquired seventy-two lots and fifty
resident memberships in The Ford Plantation subdivision that served as collateral
on the note. And, in 2011, Ameris and Sterling Bluff Investors renewed the note
and updated the principal balance to $5,625,000.
In March 2013, Sterling Bluff Investors defaulted on its payments to
Ameris. In response, Ameris notified the company of its default and accelerated
the debt. After Sterling Bluff Investors unsuccessfully attempted to file
bankruptcy, Ameris foreclosed on the collateral and purchased the property for
$3,800,000 at a public foreclosure sale held in December 2014. The $3,800,000
was applied to Sterling Bluff Investors’ outstanding debt, which left a deficiency of
roughly $2,500,000. Ameris filed in Georgia state court for confirmation that the
sale price reflected the fair market value of the property, but confirmation still has
not occurred. 2
2
The parties’ filings in the district court state that the confirmation hearing was scheduled for
June 2015, but neither the record nor the parties’ briefs indicate whether this hearing has ever
occurred.
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As noted, the district court granted Ameris’s motion for summary judgment
in its action to collect from Defendants the deficiency amount. Defendants now
appeal. 3
Ameris then moved to dismiss the appeal as frivolous and sanction
Defendants under Federal Rule of Appellate Procedure 38.
II. STANDARD OF REVIEW
We have jurisdiction to hear this appeal because it arises from a final
appealable order. 28 U.S.C. § 1291. “‘We review a district court’s grant of
summary judgment de novo,’ viewing all of the facts in the record in the light most
favorable to the non-movant.” Haynes v. McCalla Raymer, LLC, 793 F.3d 1246,
1249 (11th Cir. 2015) (quoting Skop v. City of Atlanta, 485 F.3d 1130, 1136 (11th
Cir. 2007)). 4 “Summary judgment is proper where ‘there is no genuine dispute as
3
This is actually Defendants’ second appeal in this case. Defendants appealed the district
court’s initial order granting summary judgment to Ameris. We dismissed that appeal for lack of
jurisdiction because the district court’s order was not a final appealable order as it left damages
and other relief undetermined. Ameris Bank v. Martin, No. 15-14285-GG (11th Cir. Nov. 13,
2015).
4
Defendants state in their briefing that they are appealing from both the district court’s
summary judgment order and its rulings on Defendants’ postjudgment motions to alter or amend
the judgment. But Defendants’ briefs fail to specify which exact ruling(s) or order(s) are being
challenged, though their analysis focuses on the district court’s reasoning in its summary
judgment order. Ultimately, this does not matter because the district court’s denial of
Defendants’ motions to amend or alter the judgment would also be reviewed de novo as
Defendants’ arguments turn solely on questions of law. See Barnes v. Broward Cty. Sheriff’s
Office, 190 F.3d 1274, 1276–77 (11th Cir. 1999).
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to any material fact and the movant is entitled to judgment as a matter of law.’” Id.
(quoting Fed. R. Civ. P. 56(a)). And, because this is a diversity action, we apply
Georgia law. See Nebula Glass Int’l., Inc. v. Reichhold, Inc., 454 F.3d 1203, 1212
(11th Cir. 2006). In doing so, we are bound by the rulings of the highest Georgia
state court when addressing state law issues. See Veale v. Citibank, F.S.B., 85 F.3d
577, 580 (11th Cir. 1996).
III. Discussion
A. Defendants’ Appeal
Defendants challenge both the grant of summary judgment in favor of
Ameris and the district court’s reliance on an affidavit from Ameris setting out the
damages. On the issue of summary judgment, Defendants argue (1) that Ameris
was required to confirm the sale price of the collateral to obtain a deficiency
judgment under O.C.G.A. § 44-14-161(a), (2) that the district court misinterpreted
Georgia law when it held that the guaranties waived the confirmation requirement,
(3) that the guaranties’ waiver of the confirmation requirement violates O.C.G.A.
§ 44-14-161(a), (4) that the guaranties’ waiver of the confirmation requirement is
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against Georgia public policy, and (5) that the guaranties’ waiver is so vague as to
be unenforceable.5
The district court correctly held that Defendants’ arguments are squarely
foreclosed by Georgia law. The district court relied on a decision by the Georgia
Court of Appeals, which held that so long as a party has waived its right to this
defense, “failure to obtain a valid confirmation of the foreclosure sale, pursuant to
O.C.G.A. § 44-14-161, does not impair [a creditor’s] authority to collect the
difference between the amount due on the note and the foreclosure sale proceeds
from [a debtor] based upon his personal guaranty.” HWA Properties, Inc. v.
Community & Southern Bank, 322 Ga. App. 877, 886 (2013). In HWA Properties,
the court concluded that the guarantor had waived this defense in the case before it.
And the waiver terms in HWA Properties are virtually, if not entirely, identical to
the waiver terms here. Id. at 886–87; see also Cmty. & S. Bank v. DCB
Investments, LLC, 328 Ga. App. 605 (2014) (holding that the confirmation
requirement was waived by terms indistinguishable from the terms of the waiver
provision in Defendants’ guaranties).
5
Defendants’ last argument that the waiver provision’s terms are so vague as to be
unenforceable was never presented to the district court. Thus, it was not properly preserved for
appeal. See Cont’l Tech. Services, Inc. v. Rockwell Int’l Corp., 927 F.2d 1198, 1199 (11th Cir.
1991) (“An argument not made is waived, whether based on federal law, the law of the forum
state, or the law of a foreign state.”) (citing Pruitt v. P.P.G. Indus., Inc., 895 F.2d 734 (11th Cir.
1990)). Even if considered, it is not persuasive.
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Lest there be uncertainty whether the intermediate appellate decision in
HWA Properties constitutes good law, the Georgia Supreme Court removed any
doubt with its subsequent decision in PNC Bank, Nat’l Ass’n v. Smith, 298 Ga 818
(2016). In that case, the Georgia Supreme Court addressed whether O.C.G.A.
§ 44-14-161(a)6 prohibits a creditor from obtaining a deficiency judgment against a
guarantor of a note secured by real property when there has been no judicial
confirmation that the foreclosure sale price reflects the fair market value of the
property. The court agreed that, per the statute and as a general rule, the need to
comply with § 44-14-161(a)’s requirement of judicial confirmation applies equally
to a debtor and to the guarantor of his debt: “Compliance with the requirements
contained in OCGA § 44-14-161 is a condition precedent to the lender’s ability to
pursue a guarantor for a deficiency after a foreclosure has been conducted.” Id. at
819. But when it came to the question whether one can waive the requirement of
6
The statute states:
When any real estate is sold on foreclosure, without legal process, and under powers
contained in security deeds, mortgages, or other lien contracts and at the sale the real
estate does not bring the amount of the debt secured by the deed, mortgage, or contract,
no action may be taken to obtain a deficiency judgment unless the person instituting the
foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of
the superior court of the county in which the land is located for confirmation and
approval and shall obtain an order of confirmation and approval thereon.
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the statute that the foreclosure sale must be judicially confirmed, the court
concluded that a debtor could not waive this protection, but a guarantor could.7
Specifically, the court reasoned that through its amendment of the pertinent statute,
the General Assembly had, as to a debtor, prohibited any waiver of the protections
of this confirmation statute, and thus judicial confirmation is a prerequisite to
pursuit of a deficiency judgment against the debtor. Id. at 823. Georgia law,
however, does not prohibit waiver of this protection by a guarantor of the debt.
“This no-waiver protection . . . [is] limited to original borrowers and current
owners, not guarantors.” Id. Thus, a guarantor could waive the protections of
§ 44-14-161, and when a guarantor does so, the absence of judicial confirmation of
the foreclosure sale does not bar the holder of the note from seeking a deficiency
judgment against the guarantor. Id. at 824.
As noted, the waiver language in the guaranty agreement is virtually
identical to language in agreements that the Georgia appellate courts have held to
constitute a waiver of the right to insist on judicial confirmation of a foreclosure
sale as a prerequisite to seeking a deficiency judgment. Accordingly, we agree with
the district court that Defendants did waive their right to this protection.
7
But see PNC Bank, 298 Ga. at 825 (Nahmias concurring) (expressing concern whether an
argument could be made that a debtor could also waive the protections of the statute).
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On the issue of damages, Defendants repeat this same argument, insisting
that the district court could not establish damages unless the foreclosure sale price
was confirmed as being the property’s fair market value. But, again, Georgia law
provides otherwise. Rejecting the guarantor’s argument that recognition of a
guarantor’s ability to waive § 44-14-161 would eviscerate the important
protections of that statute, the Supreme Court articulated a distinction between
debtors and guarantors. Specifically, guarantors are “most often, volunteers to the
transactions. As such, guarantors face neither the same disparity of bargaining
power nor the same type of risk as borrowers.” Id. at 822. That being so,
“freedom of contract is sacrosanct, and that freedom should not be limited absent
some important public policy reason.” Id. Finding no such important policy
reason, the court rejected the public policy argument of the guarantor before it.
Because “[w]e, of course, never second guess state supreme court decisions
about state law,” Patterson v. CitiMortgage, Inc., 820 F.3d 1273, 1277 n.2 (11th
Cir. 2016), PNC Bank controls the resolution of this case, and we therefore affirm
the district court’s grant of summary judgment to Ameris.
B. Ameris’s Motion to Dismiss and Impose Sanctions
Ameris has moved for us to dismiss Defendants’ appeal as frivolous and
impose sanctions. Rule 38 sanctions are “appropriately imposed against appellants
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who raise ‘clearly frivolous claims in the face of established law and clear facts.’”
Parker v. Am. Traffic Solutions, Inc., 835 F.3d 1363, 1371 (11th Cir. 2016)
(quoting Farese v. Scherer, 342 F.3d 1223, 1232 (11th Cir. 2003)).
At the time that Defendants filed their opposition to summary judgment in
the district court in 2015, the position they advanced had already been rejected by
the Georgia Court of Appeals in HWA Properties, Inc. v. Community & Southern
Bank, 322 Ga. App. 877 (2013). By the time that Defendants filed their present
notice of appeal, on May 1, 2017, the Georgia Supreme Court had issued its
decision in PNC Bank, Nat’l Ass’n v. Smith, 298 Ga 818 (2016), in which it
expressed its agreement with the Georgia Court of Appeals’ reasoning. If there
was any lingering doubt that Defendants’ position in this case was futile, the PNC
Bank decision clearly removed that doubt, and did so more than a year before
Defendants filed this appeal. In addition, multiple courts have issued decisions
citing to and relying on PNC Bank. See, e.g., CertusBank, N.A. v. Dunwoody, No.
5:14-CV-69 (LJA), 2016 WL 9087263 (M.D. Ga. Aug. 23, 2016); York v. RES-GA
LJY, LLC, 336 Ga. App. 253 (2016), aff’d 300 Ga. 869 (2017); Vance v. FD 2011-
C1 Grove Rd. Ltd. P’Ship, 340 Ga. App. 36 (2016); Nine Twenty, LLC v. Bank of
the Ozarks, 337 Ga. App. 180 (2016). Accordingly, Defendants should have been
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well aware that their appeal had no chance of success. For this reason, we award
Ameris costs and reasonable attorneys’ fees incurred to defend this appeal.
As to whether Defendants’ counsel should be held jointly responsible for
these fees, we have previously held an appellant’s attorneys jointly and severally
liable for Rule 38 sanctions for, among other things, failing to bring to this Court’s
attention a decision from a state supreme court that plainly foreclosed any chance
of the appeal’s success until after the decision was addressed by the appellee. See
Pelletier v. Zweifel, 921 F.2d 1465, 1523 (11th Cir. 1991). Defendants’ attorneys
did the same thing here. They advanced a position clearly foreclosed by governing
law and then failed to even mention the PNC Bank decision until after it had been
discussed in Ameris’s brief and motion for sanctions. Accordingly, we hold that
Defendants’ attorneys are jointly and severally liable. See also Taiyo Corp. v.
Sheraton Savannah Corp., 49 F.3d 1514 (11th Cir. 1995) (holding that a party and
its appellate counsel were “jointly and severally liable” for costs and fees under
Rule 38); Romala Corp. v. United States, 927 F.2d 1219, 1225 (Fed. Cir. 1991)
(concluding that “[f]rivolity in argument is no doubt attributable at least as much to
tactical decisions made by an attorney in writing briefs” and imposing joint and
several liability on an appellant’s attorneys). The district court should establish
these amounts on remand.
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Conclusion
The district court’s grant of summary judgment in favor of Ameris is
AFFIRMED, and the case is REMANDED to the district court for further
proceedings to determine costs and reasonable attorneys’ fees attributable to
Defendant’s frivolous appeal pursuant to Rule 38.
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