WCZ OBTAINS ATTORNEYS-FEES AWARD AGAINST RIALTO FOR GUARANTOR
WCZ recently obtained two favorable decisions from the Georgia Court of Appeals in favor of its client, an individual who had guaranteed several multi-million-dollar real-estate loans. In the two related cases, a Rialto subsidiary (“Rialto”) was found to have twice breached its Settlement Agreement with WCZ’s client and was ordered to pay the legal fees incurred by the client.
Attorneys Richard Capriola and Eric Coleman defended a guarantor in two related cases where a Rialto subsidiary alleged the guarantor violated a Settlement Agreement. Rialto’s subsidiary had purchased defaulted real-estate debt during the economic downtown. Rialto entered into a Settlement Agreement with the guarantor of the debt wherein Rialto agreed to accept certain payments over time in satisfaction of the personal guarantees. The guarantor agreed to make regular payments and to provide annual financial statements and tax returns.
Over a year into the payment schedule, even though the guarantor had made every payment on time, Rialto called a default and, relying on the portion of the Settlement Agreement that allowed Rialto to file a Consent Judgment in the event of a default, filed a seven-figure Consent Judgment against the guarantor. Rialto argued that the guarantor breached the Settlement Agreement by failing to submit his annual financial statements by certified mail, rather than regular mail. Rialto also argued that the guarantor had allegedly failed to disclose some assets prior to entering into the Settlement Agreement. Rialto immediately began aggressive collection efforts.
WCZ challenged Rialto’s judgment in court, and, just two weeks later, the Fulton County Superior Court vacated the Judgment. The court agreed that the difference between certified mail versus regular mail for the delivery of tax returns and other financial information was immaterial, particularly when all payments had been timely made. In addition to vacating the Judgment, the trial court ordered Rialto to reimburse the guarantor for his attorneys’ fees.
Shortly after the decision of the trial court had been finalized, the guarantor paid Rialto the remaining balance owed under the Settlement Agreement. Despite having been paid in full, Rialto refused to recognize the releases included in the settlement, and filed a new, separate lawsuit, against the guarantor.
WCZ again challenged Rialto’s legal claims and asked the court to summarily dismiss Rialto’s case because the Settlement Agreement had been fully performed by the guarantor when he made payment in full. After a lengthy court hearing, the trial court agreed with WCZ, and ordered all claims against the guarantor summarily dismissed. The court also ordered Rialto to pay the guarantor’s legal fees.
Rialto appealed both cases to the Court of Appeals of Georgia which affirmed the trial court’s decisions. In order to avoid further litigation with the guarantor, Rialto paid all of the guarantor’s legal fees for the appeal.
Attorneys Richard Capriola and Eric Coleman are part of WCZ’s litigation team. WCZ has experience in protecting the rights of both creditors and debtors in loan workouts, settlement agreements, and other financial litigation. If you are interested in speaking with Richard or Eric, you may call 404.844.5700.