Bank’s Right to Recover: Court of Appeals affirmed grant of summary judgment

Hildebrand v. Bank of Am. NA, A14A1956

Georgia Court of Appeals, Civil Case (3/19/2015, 4/20/2015)

The two loans at issue were not “inextricably intertwined” such that one creditor’s failure to obtain conformation of a non-judicial foreclosure barred the second creditor’s right to recover in its suit on a note. 

The Court of Appeals affirmed the grant of summary judgment to Bank of America NA in its suit on a note against Janet Hildebrand, holding that the loan at issue was not “inextricably intertwined” with another loan such that the other creditor’s actions foreclosed the bank’s right to recover. Hildebrand borrowed $257,380 from the CDC Federal Credit Union to purchase a condominium. Under an “80-20” mortgage loan, Hildebrand signed two promissory notes, one for $205,100 and one for $51,280, each of which was secured by a separate deed on the property. After the sale closed, the credit union assigned the two notes to Taylor, Bean & Whitaker Mortgage Corp., which subsequently assigned the smaller note to Bank of America and the larger first mortgage note to Cenlar FSB. Hildebrand eventually defaulted on both loans, and Cenlar foreclosed on the first priority deed on the property. Bank of America sued Hildebrand seeking payment on the promissory note for the principal amount of $50,842, plus interest and attorneys’ fees.

On appeal, Hildebrand argued that the trial court erred in granting summary judgment to the bank because the two loans were “inextricably intertwined” and that the sale of the notes to different parties after the closing did not “unlink” them. Therefore, she asserted, the funds secured by the second promissory note constituted a deficiency that could not be collected because the foreclosure pursuant to the first security deed was not confirmed. The Court held that, because Hildebrand’s mortgage loans were held by different entities when Cenlar foreclosed on its first priority security deed, the loans were not inextricably intertwined. The notes were sold to different entities and neither deed had a “dragnet” clause expressly providing that the deed was intended to secure the payment of the note and any other debt owing to the grantee either then or later. Accordingly, the trial court did not err in granting summary judgment to Bank of America. In light of its holding and the fact that the viability of Hildebrand’s counterclaim alleging violations of the Fair Business Practices Act turned on whether her two loans were inextricably intertwined and thus whether Bank of America was justified in pursuing her for payment of the promissory note it held, the Court held that the trial court did not err in granting summary judgment to the bank on Hildebrand’s counterclaim. Branch, J., concurred in Division 2 and in the judgment.

As published by The Daily Report, 190 Pryor St. Atlanta, GA 30303 on 4/20/15.