S & A Industries, Inc. v. Bank Atlanta

Per curiam. S & A Industries, Inc. filed suit against Bank Atlanta1 in connection with the bank’s attempts to collect on a line of credit opened by S & A. Both parties moved for summary judgment. The trial court denied S & A’s motion and granted in part and denied in part the bank’s motion. We now consider the parties’ cross-appeals in response to that order. S & A is a Georgia corporation engaged in hotel renovations. Daoud Shakkour is the president of the company and the third-party defendant in this action. In early 1996, Shakkour agreed to loan $20,000 to David Wade, a business acquaintance, to enable him to meet the payroll at his company, Wade Electric Supply Company, Inc. Wade was the president and sole shareholder of Wade Electric. Shakkour gave Wade a check without requiring any written loan agreement, without requiring interest and without obtaining any information regarding Wade Electric’s financial situation. At that time, Wade Electric owed money to First Capital Bank and was in the process of negotiating with Bank Atlanta for a replacement loan of $400,000. The loan was to be guaranteed by the U. S. Small Business Administration. In the course of these negotiations, it was determined that Wade Electric needed an infusion of $300,000 to qualify for the SBA loan. Shakkour was approached to put up the necessary money for Wade Electric. Shakkour had previously written a letter to First Capital Bank stating that he intended to make a $300,000 capital investment in Wade’s company, although at deposition he stated that he signed the letter in blank. On February 21, 1996, Bank Atlanta issued a loan commitment — 378 — letter, agreeing to make Wade Electric a $400,000 SBA loan. The loan commitment was expressly contingent, however, on the receipt by Bank Atlanta of “satisfactory evidence that not less than $300,000 cash has been injected into the business as an equity injection from Daoud Shakkour, a Standby Creditor.” To facilitate this transaction, Wade Electric opened an account at Bank Atlanta. And in that regard, the company provided Bank Atlanta with a corporate resolution showing that Wade and Shakkour, along with two other individuals, were authorized to withdraw funds from the account. At around the same time, S & A had applied for and received a commitment from Bank Atlanta to increase the company’s line of credit from $200,000 to $400,000. On March 6,1996, at the closing on the increased line of credit, Shakkour signed, on behalf of S & A, a promissory note in the amount of $402,000.2 He also signed a personal guaranty and gave the bank a security deed on the property he owned at 141 Sams Street in Decatur. Subsequently $300,000 was drawn from S & A’s line of credit and deposited into Wade Electric’s account at Bank Atlanta. Bank Atlanta contends that the funds were withdrawn at Shakkour’s authorization with the intention of making a capital investment in Wade Electric so that it could qualify for the SBA loan. But S & A contends that Shakkour made that authorization only because Purdy Richardson, president of Bank Atlanta, assured him that he would get the money back at the closing on Wade Electric’s SBA loan. In his deposition, Shakkour testified that shortly after the closing on S & A’s loan, he met with Wade and Richardson to discuss the SBA loan. He states that he learned for the first time at this meeting that Wade Electric required $300,000 to close the loan. Although initially reluctant, Shakkour states that he agreed to the loan because Richardson told him that the money was going to stay in the bank and merely be used to show that Wade Electric had the necessary funds available to it at the time of closing. According to Shakkour, Richardson said that after the closing, the funds would be returned to S & A’s account. Richardson denies making any such representations. Wade Electric’s SBA loan closed on March 21,1996. The previous day, Shakkour had signed the SBA-required standby agreement, acknowledging that the $300,000 was a loan and agreeing that he would not attempt to collect on this loan, with certain exceptions, without the prior written consent of Bank Atlanta. Shortly after the loan closed, Wade Electric withdrew the $300,000 from its Bank Atlanta account in order to pay off certain — 379 — outstanding corporate debts. Subsequently, Wade Electric filed a bankruptcy petition and obtained a discharge of its corporate debt under Chapter 7. Despite the fact that Shakkour obtained a promissory note from Wade Electric two months earlier on all monies loaned, neither Shakkour nor S & A asserted their interest in the bankruptcy proceedings. Meanwhile, interest payments began to accrue on the S & A line of credit beginning June 6, 1996. And on June 14, Bank Atlanta began sending S & A delinquent payment notices. In response, S & A made 11 monthly payments of interest totaling $29,697.75 between June 1996 and March 1997. None of the payments were made under objection or protest. The line of credit matured on March 6,1997, but S & A and Bank Atlanta entered into a modification agreement whereby the maturity date was extended until June 30, 1997. Nevertheless, S & A failed to repay the outstanding balance due on the note and subsequently filed this action. Bank Atlanta, in turn, asserted a counterclaim and filed a third-party complaint against Shakkour. S & A appeals from the denial of its motion for summary judgment, and Bank Atlanta appeals from the partial denial of its motion. Case No. A00A1398 We first address S & A’s appeal and must note initially that S & A has failed to comply with Court of Appeals Rule 27 (c) (1), which requires that the sequence of argument in a brief follow the enumerations of error and be numbered accordingly. S & A enumerates ten errors, but the sections of its argument are not numbered, and many . of the headings do not directly correlate with the enumerated errors. As we have held: Rule 27 (c) (1) is more than a mere formality. It is a requirement which this Court imposes to ensure that all enumerations of error are addressed and to facilitate review of each enumeration. By failing to comply with the rule, the appellant has hindered the Court’s review of [its] assertions and has risked the possibility that certain enumerations will not be addressed. Accordingly, to the extent that we are able to discern which of the enumerations are supported in the brief by citation of authority or argument, we will address those enumerations. Pursuant to Court of Appeals Rule 27 (c) (2), however, all other enumerations will be treated as abandoned. (Citation and punctuation omitted.) Desmond v. Troncalli Mitsubishi, 243 Ga. App. 71-72 (532 SE2d 463) (2000). — 380 — 1. S & A contends that the terms of the note were usurious and that the trial court erred in denying its motion for summary judgment on this issue. We reject that contention for the reasons set forth in the special concurrences below. 2. S & A also argues that the trial court erred in finding that the Statute of Frauds did not apply to the oral authorization to withdraw $300,000 from its line of credit. S & A asserts that the oral withdrawal was a commitment to lend money and thus was required to be in writing under the Statute of Frauds. OCGA § 13-5-30 (7). The trial court found, however, that the transaction at issue in the case was the loan by Bank Atlanta to S & A and that transaction was evidenced by the written promissory note signed by Shakkour on behalf of his corporation. Therefore, the trial court reasoned, no violation of the Statute of Frauds occurred. We agree. When Shakkour verbally authorized the withdrawal of $300,000 from S & As line of credit, he simply executed the loan to which the bank had already contractually agreed and which was controlled by the parties’ promissory note. It is the enforcement of that note which Bank Atlanta seeks and which S & A seeks to avoid. And it is undisputed that the note meets the requirements of the Statute of Frauds. OCGA § 13-5-30 (7). Nothing in that promissory note required that authorizations for withdrawals be in writing. And Shakkour has pointed to no other document requiring such a written authorization. In fact, the record shows that both Shakkour and his business partner had given oral authorization for withdrawals from the account, both prior to and after the $300,000 withdrawal at issue in this case. Nor does the lack of any contemporaneous written agreement evidencing the transfer of $300,000 from Shakkour to Wade Electric3 affect the validity of the S & A promissory note. Although in the absence of such a writing, Shakkour may have had difficulty enforcing Wade Electric’s obligation to repay that amount, it has no effect on S & A’s obligations under the note to Bank Atlanta. 3. S & A also contends that the trial court erred in holding that evidence of Richardson’s representations, which Shakkour claims induced him to authorize the $300,000 withdrawal, were inadmissible under the parol evidence rule. S & A asserts that because the authorization to withdraw the $300,000 was oral, the parol evidence rule does not bar such evidence. But in making this argument, S & A is, in effect, simply attempting to avoid its obligations under the promissory note. To the extent — 381 — that S & A is relying on these conversations “to add to, take from or vary” the terms of its promissory note with Bank Atlanta, it is barred by the parol evidence rule.4 OCGA § 13-2-2 (1). See, e.g., Devin Lamplighter, Ltd. v. American Gen. Finance, 206 Ga. App. 747, 749 (2) (426 SE2d 645) (1992) (parol evidence will not be used to impose conditions which are not apparent from the face of a note showing an unconditional promise); Ga. Higher Ed. Assistance Corp. v. Geldon, 187 Ga. App. 798 (371 SE2d 449) (1988) (“It is axiomatic that parol evidence cannot be admitted to vary or alter the terms of a promissory note.”).5 It is true that S & A asserted a claim of fraud and the parol evidence rule applies only in the absence of fraud, mistake or accident. See, e.g., Vandegriff v. Hamilton, 238 Ga. App. 603, 604 (519 SE2d 702) (1999). But the trial court granted Bank Atlanta’s motion for summary judgment on S & A’s fraud claim. Although S & A enumerated this ruling as error, it failed to support this enumeration with any argument or citation to authority, and it is deemed abandoned under Court of Appeals Rule 27 (c). See Desmond v. Troncalli Mitsubishi, 243 Ga. App. 71. Therefore, any oral representations by the bank with regard to the withdrawal cannot be considered to alter the terms of the note. And the trial court did consider evidence of the conversation in ruling on S & A’s tort claims, where such evidence was relevant. Therefore, we find no error. 4. S & A further asserts that the trial court erred in granting Bank Atlanta summary judgment on its claim of negligence. S & A asserted that the bank negligently failed to return the $300,000 withdrawal following the closing on Wade Electric’s SBA loan. We note that to the extent that S & A is asserting a claim for negligent breach of an oral contract, that claim fails: A defendant’s mere negligent performance of a contractual duty does not create a tort cause of action; rather, a defendant’s breach of a contract may give rise to a tort cause of action only if the defendant has also breached an independent duty created by statute or common law. (Citation omitted.) Traina Enterprises v. RaceTrac Petroleum, 241 Ga. App. 18, 19-20 (1) (525 SE2d 712) (1999). — 382 — Accordingly, in making this argument, S & A relies upon the common law rule regarding voluntary undertakings: “Where one undertakes an act which he has no duty to perform and another reasonably relies upon that undertaking, the act must generally be performed with ordinary and reasonable care. [Cit.]” (Emphasis supplied.) Stelts v. Epperson, 201 Ga. App. 405, 407 (411 SE2d 281) (1981). And this is true even though the undertaking was completely gratuitous and no consideration existed for the promise or undertaking so as to support a contractual claim. Id. Because this claim was decided on Bank Atlanta’s motion for summary judgment, we must view the evidence with all reasonable inferences and conclusions in favor of S & A. Lamb v. Salvage Disposal Co. &c., 244 Ga. App. 193 (535 SE2d 258) (2000). Therefore, we must assume that Richardson told Shakkour that the $300,000 withdrawal on S & A’s line of credit would be returned at the Wade Electric closing and further assume that this statement is binding upon Bank Atlanta itself. Even relying upon these assumptions, however, S & A must establish that Shakkour reasonably relied upon Richardson’s statement. But Shakkour signed a corporate resolution that authorized three of Wade Electric’s officers and Shakkour himself to withdraw funds from the Wade Electric bank account. Although Shakkour contends that he does not recall signing the authorization, he does not dispute that his signature appears on the document. And even though Shakkour speculated that he may have signed the document in blank, he must be charged with knowledge of its contents. See Hall v. World Omni Leasing, 209 Ga. App. 115, 117 (2) (433 SE2d 297) (1993). Therefore, at the time Shakkour authorized the withdrawal of $300,000 from the S & A account, he knew the funds were being transferred to the Wade Electric account, even if just for the purposes of the SBA loan. And he knew that Wade Electric could access those funds. Moreover, under that authorization, Shakkour himself had the authority to access the account and, thus presumably, could have obtained the return of the money. Under these circumstances, we hold as a matter of law that Shakkour could not have reasonably relied upon any undertaking or representations made by Richardson on behalf of the bank to return the funds to S & A. See generally Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547, 549 (1) (487 SE2d 70) (1997). 5. S & A also asserts that the trial court erred in denying its motion for partial summary judgment on Bank Atlanta’s claim for attorney fees. (a) The company first contends that it should not be held liable for attorney fees because Bank Atlanta failed to give the required notice under OCGA § 13-1-11. But based upon our review of the — 383 — bank’s August 27, 1997 notice letter, we conclude that the bank substantially complied with the notice provisions of OCGA § 13-1-11. The language of the letter was sufficient to put S & A on notice of the bank’s intent to collect attorney fees under the note and to give S & A the opportunity to pay the debt without incurring such fees. The notice was, therefore, sufficient. See Gen. Elec. Credit Corp. &c. v. Brooks, 242 Ga. 109, 118-119 (249 SE2d 596) (1978). (b) S & A next asserts that Bank Atlanta’s recovery of attorney fees should be limited to the fees actually incurred up to the statutory maximum of 15 percent of principal and interest. We agree. OCGA § 13-1-11 (a) (1) provides for the enforcement of attorney fees provisions in promissory notes “up to but not in excess of 15 percent of the principal and interest owing” on the note, provided the note is collected by or through an attorney after maturity. Accordingly, so long as the attorney fee provision of a promissory note does not violate the strictures of OCGA § 13-1-11 (a), it is enforceable. But the statute does not mandate the recovery of 15 percent attorney fees in every case. Here, S & A agreed that if Bank Atlanta hired an attorney to collect the promissory note, S & A would “pay any fee, not to exceed 15 percent of the principal and interest then owed that [Bank Atlanta incurred], plus court costs. . . .” Under this language, S & A is obligated to pay only attorney fees actually incurred by the bank up to 15 percent of the principal and interest. Therefore, the bank’s maximum recovery for attorney fees is 15 percent, and it must establish that it has actually incurred fees in that amount in order to recover the maximum. But see Rodgers v. First Union Nat. Bank &c., 220 Ga. App. 821, 824 (2) (470 SE2d 246) (1996) (allowing recovery of 15 percent attorney fees where contract so provided). Therefore, because we find that if Bank Atlanta can establish liability under the promissory note, it would be entitled to recover actual attorney fees incurred up to the 15 percent limit set forth in the note, we hold that the trial court properly denied S & A’s motion for partial summary judgment on this ground. (c) S & A also contends that Bank Atlanta should be precluded from recovering its attorney fees because to date it has failed to produce documents showing the fees it has incurred. We find no error in the trial court’s failure to grant S & A’s motion on this ground. Prior to the summary judgment order, Bank Atlanta was contending that it was entitled to a flat 15 percent attorney fee without having to prove actual fees incurred. The parties must now proceed in light of our affirmance of the trial court’s order. — 384 — Case No. A00A1399 6. Bank Atlanta contends that the trial court erred in failing to address its summary judgment motion as to S & A’s claim for attorney fees under OCGA §§ 13-6-11 and 9-15-14. The bank asks us to reverse the trial court’s order to the extent that it fails to grant its motion for summary judgment on these issues. The final section of the trial court’s order states that it is addressing “Counts VIII, XVIII, XIX, XX and X” of S & A’s complaint headed, respectively, Statute of Frauds, Lack of Mutuality, Lack of Consideration, Promissory Estoppel and Note Not a Negotiable Instrument. The trial court granted Bank Atlanta’s motion for summary judgment on each of these counts. Then, under the same heading, the order reads: “Upon a thorough review of the record, S & A’s claims of bad faith and for attorneys fees and litigation expenses pursuant to OCGA § 9-15-14 (Counts XXIII and XVI, respectively) are also hereby DENIED.” This language, therefore, explicitly denies S & A the right to pursue its claims for attorney fees. And although the order does not specifically rule on Bank Atlanta’s motion for summary judgment as to these two counts, the only possible construction to be placed on this language, especially in light of the trial court’s other rulings, is that the trial court intended to grant summary judgment to the bank on S & A’s attorney fees claims. Therefore, no action on the part of this Court is required. 7. Bank Atlanta also contends that the trial court erred in holding that a jury issue existed as to whether Shakkour was authorized to withdraw $300,000 in corporate funds in order to make a personal loan. Although Shakkour as president of S & A may have had actual or apparent authority to authorize a withdrawal from the corporate account for corporate uses, we agree with the trial court that a jury issue exists as to whether he had authority to withdraw such funds for his own personal use. A question exists as to whether Bank Atlanta was aware that the loan was from Shakkour personally, and thus whether the bank was entitled to rely on Shakkour’s apparent authority to bind the corporation. For example, the bank’s loan commitment to Wade Electric was expressly made contingent upon “satisfactory evidence that not less than $300,000 cash has been injected into the business as an equity injection from Daoud Shakkour, a Standby Creditor.” (Emphasis supplied.) And no evidence exists of a corporate authorization specifically approving the loan of corporate funds to Wade Electric. Thus, we adhere to the rule that “[q]uestions of the existence and extent of an agent’s authority are generally for the triers of fact.” (Citations and punctuation omitted.) Hunter v. — 385 — Roberts, 199 Ga. App. 318, 319 (2) (404 SE2d 645) (1991). Similarly, a further jury issue exists as to whether S & A’s later actions served to ratify the withdrawal. See Rains v. Dolphin Mtg. Corp., 241 Ga. App. 611, 614-615 (4) (525 SE2d 370) (1999) (“Whether a ratification occurred is generally a question of fact for the jury. [Cit.]”). Accordingly, we affirm the trial court’s denial of Bank Atlanta’s motion on this ground. Judgment affirmed. Johnson, C. J., Pope, P. J., Andrews, P. J., Blackburn, P. J, Smith, P. J., Ruffin, Eldridge, Barnes, Miller, Ellington, Phipps and Mikell, JJ, concur specially. Footnotes [1] S & A also named David Wade, president of Wade Electric Supply Company, Inc., as a defendant in this action. [2] S & A had furnished Bank Atlanta with a corporate resolution authorizing the increase in the line of credit from $200,000 to $400,000 and giving Shakkour authority to sign a $402,000 note binding the corporation. [3] S & A asserts that the trial court erroneously describes this transfer as a capital investment. But whether the transaction is termed a loan or a capital investment has no effect on the terms of the underlying promissory note. [4] Moreover, the promissory note itself provides that any modifications of the agreement must be in writing. [5] A corollary to that axiom is that there is no bar to evidence that does not vary or alter the terms of the note. Therefore, the parol evidence did not bar evidence of the oral authorization itself because the authorization did not vary or alter the terms of the parties’ note, but rather effectuated those terms.