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Reese Developers Inc. v. First State Bank

There is no legal requirement that precludes a secured creditor from obtaining a judgment and levying on the debtor's property, rather than foreclosing on the property securing the debt.

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Reese Developers, Inc. and Thomas D. Reese collectively “the Reese debtors” appeal from a grant of summary judgment to First State Bank, a secured creditor that brought an action for payment on a promissory note and guaranty. In their sole enumeration of error, the Reese debtors contend that the Bank should have been required to foreclose on the property securing the debt before pursuing a judgment on the note. While acknowledging that as a general rule, the Bank is entitled to its choice of remedies, the Reese debtors argue that special circumstances exist which justify an exception in this case. We are unpersuaded and affirm. The following facts are undisputed. On February 11, 2008, Reese Developers executed a promissory note in favor of the Bank in the principal amount of $4,163,800 based upon a renewal of a prior loan. Under the terms of the note, Reese Developers agreed to repay the principal amount of the debt, with interest accruing at a variable rate per annum. The note was separately secured by a deed to secure debt, which pledged as collateral a 196.62-acre tract of land located on Snapping Shoals Road in Henry County, and a personal guaranty for repayment executed by Thomas D. Reese.

The Reese debtors subsequently defaulted on the note and guaranty. The Bank filed suit against the Reese debtors to obtain a judgment on the note, plus interest, late fees, attorney fees and court costs. In their answer to the complaint, the Reese debtors admitted the indebtedness, but claimed that the Bank was required to foreclose on the property securing the debt and obtain judicial confirmation of the foreclosure sale prior to seeking a judgment. The Bank filed a motion for summary judgment, which the trial court granted. We discern no error.

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