November 20, 2014 Session
Appeal from the Chancery Court for Williamson County No. 42540 Robbie T. Beal, Judge
Jonathan L. Miley (at oral argument), Nashville, Tennessee, and Carol A. Molloy (on brief), Lynnville, Tennessee, for the appellants, David A. Paczko and Barbara McCafferty Paczko.
Justin T. Hayden and David M. Smythe, Nashville, Tennessee, for the appellee, Synovus Bank.
W. Neal McBrayer, J., delivered the opinion of the Court, in which Frank G. Clement, Jr., P.J., M.S., and Richard H. Dinkins, J., joined.
W. NEAL McBRAYER, JUDGE
I. Factual and Procedural Background
On April 11, 2008, Barbara McCafferty Paczko, on behalf of herself and as attorney-in-fact for David A. Paczko, executed a Home Equity Line of Credit Agreement, containing a promise to pay to the order of The Bank of Nashville "the full amount of all advances." The line of credit agreement obligated The Bank of Nashville to make advances to the Paczkos, not to exceed at any one time the principal amount of $162, 850. The Paczkos secured their obligations under the line of credit agreement by executing a deed of trust, granting an interest in improved real property known as 2750 Rock Wall Road, and located in Nashville, Tennessee.
The Bank of Nashville merged with Synovus Bank ("Synovus") effective June 30, 2010. By both applicable law and the plan of merger,  Synovus was vested with "[t]he title to all real estate and other property owned by, and every contract right possessed by, each corporation or entity party to the merger . . . without reversion or impairment, without further act or deed, and without any conveyance, transfer, or assignment having occurred." Ga. Code Ann. § 14-2-1106(a)(2) (West 2003). Also by law, The Bank of Nashville ceased to exist as a separate legal entity. Id.
On August 10, 2010, an attorney on behalf of "The Bank of Nashville" sent a letter to the Paczkos declaring the line of credit agreement in default. The attorney also threatened acceleration of the indebtedness if the default was not cured. Later that year, Synovus charged-off the indebtedness and reported that information to the credit reporting bureaus.
On October 2, 2013, Synovus filed suit against the Paczkos in the Chancery Court for Williamson County, alleging a default in payment under the line of credit agreement. A month later, Synovus filed a motion for summary judgment. In support of the motion, Synovus submitted the affidavit of Leona Fox, a special assets officer for Synovus.
After the deadline for taking depositions and just over a month before the hearing on its motion for summary judgment, Synovus filed the affidavit of Betty Benoit, a senior vice president for The Bank of Nashville, which was identified as a division of Synovus. Ms. Benoit's affidavit authenticated certain documents related to the merger of The Bank of Nashville with Synovus. The affidavit also stated that the line of credit agreement was lost or destroyed and that, according to the business records of Synovus, the line of credit agreement had not been sold or assigned and that no other entity was entitled to enforce the line of credit agreement.
The Paczkos filed a motion to strike the affidavit as both untimely and deficient. The Paczkos asserted the affidavit was deficient because it did not set forth facts that would be admissible in evidence or show affirmatively that the affiant was competent to testify to the matters in the affidavit. The Paczkos also filed a request for a continuance of the hearing on the motion for summary judgment and an opportunity to depose Ms. Benoit.
On March 20, 2014, the Paczkos filed their response to the motion for summary judgment and a cross-motion for summary judgment. The exact basis for the cross-motion for summary judgment is unclear from the record. However, we can determine from Synovus's response to the cross-motion for summary judgment that the Paczkos argued that their debt was discharged or cancelled by virtue of the destruction of the line of credit agreement.
The trial court held a hearing on all pending matters on March 31, 2014. The court denied the motions to strike the affidavit of Ms. Benoit and for a continuance to conduct discovery. The trial court granted Synovus's motion for summary judgment, awarding a judgment against the Paczkos in the amount of $202, 242.93 plus post-judgment interest. In its ruling on the cross-motions for summary judgment, the trial court made the following findings:
(1) it is undisputed that the Defendants executed the Note; (2) it is undisputed that the Defendants failed to pay the Note; (3) it is undisputed that Plaintiff is successor by merger to The Bank of Nashville; (4) it is undisputed that the original Note was lost or destroyed; (5) there is no sworn proof before the Court that Plaintiff intentionally destroyed the Note or that Plaintiff ever intended to forgive or discharge the Note or waive any right to enforce the Note; (6) there is no sworn proof before the Court which would indicate that the unpaid balances of the Note, as set out in Plaintiff's business records, are incorrect or inaccurate in any way for purposes of Rule 56 of the Tennessee Rules of Civil Procedure; and (7) there is no sworn proof before the Court to indicate that the ...