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Synovus Bank v. Stevens Law Firm

United States District Court, D. South Carolina, Florence Division

August 26, 2019

SYNOVUS BANK, formerly known as NBSC a division of Synovus Bank, Plaintiff,
v.
STEVENS LAW FIRM, a/k/a Stevens Law Firm, PC, a/k/a The Stevens Law Firm, Professional Corporation; and JAMES P. STEVENS, JR., Defendants.

          ORDER

          R. Bryan Harwell, Chief United States District Judge.

         This matter is before the Court on Defendants Stevens Law Firm (“Stevens Law Firm”) and James P. Stevens (“Mr. Stevens, ” and collectively with Stevens Law Firm, “Defendants”) motion to dismiss Plaintiff Synovus Bank's (“Synovus”) complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1).[1] ECF No. 10. For the reasons discussed below, the Court denies Defendants' motion to dismiss.[2]

         Factual and Procedural History

         Synovus's complaint generally alleges the follwing: Synovus is a Georgia banking corporation with its principal place of business in Columbus, Georgia. ECF No. 1 (“Compl”) ¶ 1. Stevens Law Firm is a South Carolina corporation doing business in Horry County, South Carolina. Id. ¶ 2. Mr. Stevens is a citizen of Brunswick County, North Carolina. Id. ¶ 3.

         On about May 30, 2012, Stevens Law Firm executed a promissory note (“First Note”) to Synovus in the principal amount of $274, 104.43. Id. ¶ 11; ECF No. 1-1. The purpose of the First Note was to refinance an office building and consolidate debt. ECF No. 1-1 at 1. The First Note provided for 60 monthly payments, beginning on July 10, 2012, with a maturity date of June 10, 2017; the First Note was subject to five percent interest per year on the unpaid principal balance. Compl. ¶ 11; ECF No. 1-1 at 1. If Stevens Law Firm defaulted on the note, which included failing to make payment when due, the note indicated Stevens Law Firm was to pay the costs of any collection. Compl. ¶ 11; ECF No. 1-1 at 3.

         To secure the First Note, Mr. Stevens executed real estate mortgages in favor of Synovus on property located in Loris, South Carolina. Compl. ¶ 12; ECF No. 1-2.[3] Mr. Stevens also executed a guaranty in favor of Synovus whereby he guaranteed payment of the First Note and mortgages to Synovus, and agreed to pay all costs of collection on the First Note. Compl. ¶¶ 21-22; ECF No. 1-4. The First Note was modified by agreements between Synovus and Defendants dated May 1, 2017, and May 18, 2018. Compl. ¶ 13; ECF No. 1-3.[4] , [5] The modifications changed the interest rate on the First Note and extended the maturity date to May 1, 2019. Id.

         Stevens Law Firm failed to pay Synovus all amounts due under the First Note, and is therefore in default; Synovus has thus declared the entire balance owing due and payable. Compl. ¶ 15. As of May 9, 2019, the amount due under the First Note is $95, 218.79, plus interest, reasonable attorneys' fees, costs, and expenses. Id. ¶ 17.

         On about October 28, 2016, Stevens Law Firm executed another promissory note (“Second Note”) in favor of Synovus in the principal amount of $300, 000. Compl. ¶ 27; ECF No. 1-5. The purpose of the Second Note was renewal. ECF No. 1-5 at 1. The Second Note provided for six monthly payments beginning December 1, 2016, with a maturity date of May 1, 2017. Compl. ¶ 27; ECF No. 1-5 at 1. The Second Note was subject to a variable interest rate which began at 7.05 percent per year and could fluctuate daily. Id. The Second Note, like the First Note, provided if Stevens Law Firm defaulted on the note by inter alia failing to make payment when due, Synovus would be entitled to collection costs. Compl. ¶ 31, ECF No. 1-5 at 3. The Second Note was secured by the same real estate mortgages as the First Note. Compl. ¶ 28; ECF No. 1-2. Mr. Stevens also executed a guaranty in favor of Synovus indicating he guaranteed payment of the Second Note and collection costs. Compl. ¶¶ 36-37; ECF No. 1-6. The Second Note was subject to the same two modification agreements as the First Note, which changed the interest rate and extended the maturity date on the Second Note to May 1, 2019. Compl. ¶ 29; ECF No. 1-3.[6]

         Stevens Law Firm defaulted on the Second Note by failing to pay the amount due; Synovus thus declared the entire balance of the Second Note due and payable. Compl. ¶ 32. The amount due on the Second Note is $160, 941.24, plus interest, reasonable attorneys' fees, costs, and expenses. Id. ¶ 33.

         On May 14, 2019, Synovus filed the instant lawsuit in this Court against Defendants. Compl. Synovus's complaint brought causes of action for: (1) foreclosure based upon default on the First Note; (2) collection on the guaranty based upon default on the First Note; (3) collection on the Second Note; (4) collection on the guaranty on the Second Note; (5) reformation; and (6) receivership. Id.

         On July 5, 2019, Defendants filed a motion to dismiss Synovus's complaint in its entirety for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). ECF No. 10. Synovus responded. ECF No. 11. Accordingly, this matter is now ripe for decision before the Court.

         Standard of Review

         A party may file a motion to challenge a federal court's subject matter jurisdiction over a case. Fed.R.Civ.P. 12(b)(1). In deciding a motion under Rule 12(b)(1), the burden is on the plaintiff to show subject matter jurisdiction exists, and the Court may consider evidence outside the pleadings without converting the motion into a motion for summary judgment. Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). When ruling on a 12(b)(1) motion, the Court “should apply the standard applicable to a motion for summary judgment, under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact ...


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