DJ Mortgage, LLC v. Synovus Bank

BOGGS, Judge,

concurring in part and dissenting in part.

I agree that the trial court erred in granting summary judgment on appellants’ claims for failure to review requests for advances in a timely fashion and for failure to cooperate in the foreclosure process, since some evidence in the record supports these claims. And I agree that the trial court correctly granted summary judgment on appellants’ claim for termination of funding. However, I believe the trial court also correctly granted summary judgment on appellants’ claim for alleged wrongful recording of assignments. I therefore respectfully dissent to the reversal of summary judgment on that portion of appellants’ claim.

First, the construction of the contract provisions relating to the recordation of the bank’s assignment presents no ambiguity for resolution by a jury. As the majority acknowledges, the construction of a contract is a three-step process, and “if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity.” (Citation and punctuation omitted.) City of Baldwin v. Woodard & Curran, Inc., 293 Ga. 19, 30 (3) (743 SE2d 381) (2013). Only if that analysis fails may a jury consider the issue. Id. Here, application of the rules of contract construction eliminates any supposed ambiguity.

[T]he fundamental rule, the rule which swallows up almost all others in construing a contract, is to give it that meaning which will best carry into effect the intent of the parties. This is the object of the rules of interpretation, to discover the true intent of the parties, and in doing this we are to consider the language of the parties’ agreement with the surrounding circumstances. In construing contracts, courts should look to the substantial purpose which apparently influenced the minds of the parties, rather than at the details of making such purpose effectual.

(Citations and punctuation omitted.) McLendon v. Priest, 259 Ga. 59, 60 (376 SE2d 679) (1989). And in construing the contract, we “consider the background of the contract and the circumstances under which it was entered into, particularly the purpose for the particular language to be construed.” (Citations and punctuation omitted.) Horwitz v. Weil, 275 Ga. 467, 469 (569 SE2d 515) (2002).

Here, as the majority notes, the parties entered into a “Second Amended and Restated Loan and Line of Credit Agreement” in 2009. The expressed purpose was “to renew both the line of credit facility and the term promissory note facilities and refinancing said facilities *402in accordance with the terms and conditions contained in this Agreement.” It is undisputed that, by late 2008, the bank had become concerned about D J’s performance and slow payment. In an attempt to “shore up the bank’s interest in this loan,” the bank decided “to have transfers and assignments recorded.” In Georgia, a recording state, the bank has no protection without recordation. See OCGA § 44-2-2 (b).3

The 2009 agreement provides: “ ‘Transfer Documents’ shall have the meaning assigned to such term in the Collateral Assignment.” The parties executed a “Collateral Assignment” agreement in 2007, and modified it in 2008 and 2009. The original 2007 collateral assignment agreement parenthetically provides that the transfer documents shall be held in escrow. But that parenthetical provision is not part of the definition of “Transfer Documents,” which were already defined in the preceding sentence as “Underlying Loan Documents acceptable to Lender.” Rather, it explains what the parties agreed to with respect to the transfer documents in 2007.

The 2009 agreement substantially alters the bank’s treatment of the transfer documents. It defines “Note Receivable” provisions in different terms from those of the 2007 agreement. In 2009, a “Note Receivable” is redefined as a note, instrument or other obligation “which meets each of the following requirements.” One of the requirements is that the original of the “Underlying Note and Underlying Security Instrument. . . shall be recorded in the applicable jurisdiction.” (Emphasis supplied.) This new agreement superseded the terms of the same paragraph of the 2007 agreement, which provided only that the documents were to be “in recordable form.” As the trial court observed: “A contract containing a term inconsistent with a term of an earlier contract between the same parties is interpreted as including an agreement to rescind the inconsistent term in the earlier contract.” Williston on Contracts § 73:17. While the majority contends that this rule is “inapposite” because the adoption of the definition of “Transfer Documents” is a term of the 2009 agreement, this is not the case to the extent the provisions of the contracts conflict. 13 Corbin on Contracts § 71.1 (5) addresses the situation presented here: “[A] new contract may adopt and include a part of the antecedent one. Consequently, the two contracts must be construed together. Insofar as they are inconsistent, the later one prevails.” (Emphasis supplied.) See also Wallace v. Bock, 279 Ga. 744, 746 (1) *403(620 SE2d 820) (2005) (subsequent agreement not substituted contract but modification of original contract). The 2009 contract adopted the former definition of “Transfer Documents” only to the extent it did not conflict with the substantial revision of the 2007 provisions in 2009.

The other 2009 provisions pointed to by the majority are not in conflict with the recordation provision because they simply enumerate recordation as one of the broad and cumulative list of actions which may be taken at the bank’s option in the event of a default, or in order “to perfect [the] bank’s interest in the underlying security instrument.”

Considering the 2009 contract as a whole and in light of the parties’ intent at the time, no ambiguity remains. Recordation of the transfers was intended as part of the 2009 agreement, and was necessary to effectuate the new agreement. Any parol evidence regarding appellants’ intent is therefore irrelevant, particularly belated assertions that a party understood the contract differently. The majority’s reliance on OCGA § 13-2-4 is misplaced, because it “can have no application unless the contract is ambiguous. [Cit.]” Dorsey v. Clements, 202 Ga. 820, 822 (44 SE2d 783) (1947) (decided under former Ga. Code Ann. § 20-703). Here, as noted above, the rules of contract construction have eliminated any ambiguity.

Most importantly, however, undisputed evidence demonstrates that appellants waived any claim of wrongful recordation by their conduct under the terms of the contract.

A waiver may be express, or may be inferred from actions, conduct, or a course of dealing. Waiver of a contract right may result from a party’s conduct showing his election between two inconsistent rights. Acting on the theory that the contract is still in force, as by continuing performance, demanding or urging further performance, or permitting the other party to perform and accepting or retaining benefits under the contract, may constitute waiver of a breach. However, all the attendant facts, taken together, must amount to an intentional relinquishment of a known right, in order that a waiver may exist.

(Citations, punctuation and footnote omitted.) Smith v. Gordon, 266 Ga. App. 814, 815 (1) (a) (598 SE2d 92) (2004)

Here, as the majority acknowledges, it is undisputed that DJ instructed its attorney to record the transfer documents for all loans made after the 2009 agreement, and that those documents were *404recorded. The record includes closing instructions from DJ instructing its attorney to “Record Deed to Secure Debt” and “RECORD the Assignment of Security Deed and Allonge.” The majority, however, asserts that this repeated action in accordance with the terms of the 2009 contract was not a “voluntary” action because it “occurred at the bank’s direction and despite DJ’s objections.”

Decided November 22, 2013 Reconsideration denied December ll, 2013 Bondurant, Mixson & Elmore, H. Lamar Mixson, FredricJ. Bold, Jr., Jill Pryor, Bret R. Hobson, for appellants. Nelson, Mullins, Riley & Scarborough, Richard B. Herzog, Jr., S. Wade Malone, Jeffrey L. Mapen, for appellee.

Similarly, the appellant in Smith, supra, sought to avoid a clear waiver of a claim for breach of a contract provision “by claiming that he did not intentionally relinquish his known right” because he was obliged to execute the contract in order to avoid losing his investment. We rejected this argument, observing: “One may not void a contract on grounds of duress merely because he entered into it with reluctance, the contract is very disadvantageous to him, the bargaining power of the parties was unequal or there was some unfairness in the negotiations preceding the agreement.” (Citations, punctuation and footnote omitted.) Id. at 816.

DJ’s performance under the contract was not rendered “involuntary” because it objected to the recordation provision but nevertheless complied with it. DJ had the choice — though not perhaps a pleasant or easy one — to find another lender rather than renegotiate the terms of its existing loan. Instead, DJ chose to comply with the bank’s requirements and reap the benefits of the agreement. It thereby waived any claim it had for alleged breach. That the agreement was in some respects disadvantageous to DJ does not create a question of fact as to “voluntariness.” A party cannot negotiate, enter into and perform under a contract, only to later claim that it objected to some provision of the contract and thus retained a mental reservation to the terms of the agreement. Such a holding creates the risk that any disgruntled party may belatedly assert a lack of “voluntar/’ assent to a contract that it executed and performed. This is not the law in Georgia.

For these reasons, I respectfully dissent.

I am authorized to state that Judge Ray and Judge Branch join in this dissent.

The 2009 modification to the Collateral Assignment agreement recites that the intention of the parties was to improve the bank’s security in the refinancing.