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Georgia and a handful of other states recently passed laws requiring business owners to use E-Verify to validate their employees’ eligibility status. July 1 marked the final implementation of this law, which now affects all businesses employing more than 10 full-time workers. The E-Verify system is a free online system that crosschecks an employee’s I-9 information across databases belonging to the Social Security Administration and the Department of Homeland Security. With the E-Verify requirement, the onus is now on business owners to ensure that their employees have the legal documentation to work in the US.

HB 87 is part of a general trend in immigration, that started in Arizona with the passage of SB 1070 in 2010. The Georgia law looks beyond individuals to focus on the businesses employing them. If employers are found to have illegally hired workers without documentation, they may face large fines and even criminal or civil charges.

Business owners consider the law punitive and bad for Georgia’s economy. They argue that not only are the checks required burdensome to businesses, but they will likely prevent new business investment in the state. Businesses expected to be impacted by the law go beyond the agriculture, restaurant and construction industries to include fields like IT.

One bright spot in the HB 87 debate: several months ago a federal court struck down Section 7 of the law, which criminalized transporting or housing illegal workers. However, it remains to be seen how the remainder of HB 87 impacts Georgia’s economy and workforce. In the meantime, businesses are advised to speak with an employment law attorney if they have questions about the legality of new hires.

The economic downturn of 2008, along with the financial crisis in mortgage-backed securities, has resulted in insolvency and FDIC takeover of many local banks. These assets are ultimately sold by the FDIC to other banks to be serviced. Assuming that the FDIC loss share program will cover some losses sustained for toxic assets and bad debt, some banks have begun to very quickly and abruptly file lawsuits on many of them. In response to the sheer volume of debts, some banks adopted the practice of filing “Robo-Complaints and supporting “Robo-Affidavits.

But this tactic – an effort to gain quick judgments against debtors – may prove more of a burden than a benefit. Often banks and their counsel make mistakes or take shortcuts in obtaining the proper documentation or witnesses necessary to establish their claims. The result – unnecessary years of litigation. We will show you what mistakes are being made by certain lenders and their attorneys and what actions should be taken to better ensure a prompt judgment in their favor.

Make Sure You Have The Right Documents

Our firm has been involved in many commercial bank disputes, representing both Lenders and Borrowers in matters from foreclosures to loan and guaranty suits. While representing Borrowers, we have found instances of banks suing on promissory notes from the FDIC without providing documentation that the notes were assigned to them from the original failing bank. Only the holder of a promissory note may sue on that note. Because the original note was entered into by the original failing bank and the creditor, the new bank must show that that original promissory note  – and the rights to sue under that note - was assigned to it.

Proving promissory note assignment can be surprisingly complex, involving multiple transactions, each with their own documentation requirements. In some cases where banks have failed to prove assignments, they have been unable to enforce promissory notes. Even when a borrower has admitted on record to signing a note and failing to pay pursuant to it,  the court has been unable to give a judgment to the bank if it fails to prove it actually owns the note.

These simple administrative and clerical issues have prevented banks from collecting millions in outstanding debt purchased from the FDIC. If banks and their attorneys paid a more particular eye to these details, they would be better able to gain summary judgment on these promissory notes. However, because of the volume-based practice, the banks may walk away empty-handed – unless you include the bills from the creditor representation lawyers.

Make Sure You Have The Right People

Another problem that banks find in obtaining judgments is the absence of proper witnesses in signed affidavits of support, either for a  motion for summary judgment or at trial. Usually a bank will submit a Motion for Summary Judgment, in which it argues that with no material facts in dispute, the bank is entitled to a judgment in its favor based on the law of the state of Georgia. To do this, a bank submits an affidavit that is supposed to be based on the personal knowledge of the witness. However, some banks are failing to find witnesses that have any personal knowledge of the assignment transaction, the promissory notes being sued on, the actual calculations of the amount due, or any of the defenses or denials raised by the defendants. Additionally, many of these affidavits are, in fact, drafted by the attorneys and not reviewed by the affiant (the person who is signing the affidavit), making such affidavits inadmissible.

If the defense counsel scrutinizes closely enough the affidavit and documents provided by a bank in support of its motion for summary judgment, the defense counsel may find grounds to have the affidavit struck from the record, thus making the plaintiff not entitled to a judgment as a matter of law. The lender may be forced to go to trial on a case where the defendants have already admitted to signing the promissory notes and not paying.

The banks should spend more time ensuring that they have the proper documents and proper witnesses before proceeding with a lawsuit. Satisfying these requirements will make it much easier for the bank to obtain the summary judgment against the borrowers with lower attorneys fees and costs.

What Else Do You Need To Know?

With years of experience in commercial loan lawsuits, our firm has been successful in representing both lenders and borrowers. Ensuring that proper documentation and witnesses are in place before proceeding is one of the keys to a successful commercial loan case.

Interested in learning more about how to properly gain a summary judgment on commercial loans? Contact the creditor representation attorneys at our office at 404-348-4881.