## Facts

- In March 2020, PraultShell, Inc. executed a promissory note in favor of River City Bank for $952,473.82, with a maturity date of April 3, 2021.
- The loan funded construction and operation of a brew pub and restaurant and was secured by a lien on two parcels of real property, including business fixtures, equipment, and furniture.
- Trent Prault, Roger Shell, Jay Shell Entertainment, Inc., and Rome City Brewing Co., LLC each signed an “absolute, present, unconditional, and continuing” guaranty of payment of the note.
- PraultShell stopped making payments in 2021. River City sent a demand letter declaring the loan in default, but the note and guaranties were not paid.
- In July 2021, River City sued PraultShell and the guarantors for breach of the note, breach of the guaranties, and attorney fees, and later moved for summary judgment.
- PraultShell and Trent Prault opposed summary judgment, asserting defenses of impossibility/impracticability and frustration of purpose based on COVID-19 executive orders that temporarily closed or restricted bar and restaurant operations, along with claimed staffing and supply shortages that allegedly made operation of the business nearly impossible.
- After a hearing, the trial court granted summary judgment to River City and entered a total judgment of $918,031.20 (principal, interest, late charges, and attorney fees).
- PraultShell and Trent Prault appealed, arguing that fact issues existed on their defenses, damages, and attorney fees, and that summary judgment was premature.

## Issues

1. Whether PraultShell and Trent Prault raised a genuine issue of material fact that COVID-19-related shutdown orders and related business disruptions made repayment legally impossible or impracticable, or frustrated the purpose of the note and guaranties.
2. Whether River City proved the amount owed under the note and guaranties as a matter of law, or whether a triable dispute existed as to principal, interest, and late charges.
3. Whether the attorney-fee award was authorized by the contracts and Georgia law (including OCGA § 13-1-11), and whether fees were limited to River City’s actual fees incurred.
4. Whether the trial court ruled on summary judgment too early because additional discovery was needed.

## Decision

- The Court of Appeals of Georgia affirmed the grant of summary judgment to River City Bank.
- The court held that the evidence of COVID-19 shutdowns and related operational problems, even if severe, did not create a triable issue that repayment of a monetary obligation was objectively impossible or legally excused.
- The court rejected frustration of purpose because the asserted events did not destroy the basic value of the bargain so as to discharge liability on the note or the unconditional guaranty obligations.
- The court concluded River City supported its claimed indebtedness with competent evidence, and appellants did not present admissible evidence creating a material factual dispute on the amount due.
- The court upheld the attorney-fee award, ruling that contractual, percentage-based attorney-fee provisions may be enforced under OCGA § 13-1-11 and are not automatically capped at actual fees billed.
- The court found summary judgment was not premature because appellants did not identify specific discovery likely to produce evidence creating a genuine issue for trial.

## Legal Principles

- A promissory note and an unconditional guaranty of payment are enforced according to their terms; a guarantor who promises unconditional payment generally remains liable upon the borrower’s default.
- Under Georgia law, impossibility/impracticability requires more than economic hardship; the defense applies only where performance is objectively impossible and not avoidable by reasonable prudence (see OCGA § 13-4-21).
- Government restrictions and market disruptions that make a business less profitable or harder to operate do not, without more, discharge a borrower’s or guarantor’s duty to pay money.
- Frustration of purpose is narrowly applied and requires an unforeseen event that defeats the contract’s principal purpose; reduced usefulness or increased difficulty is not enough.
- On summary judgment to collect a debt, a lender may prove the amount due with affidavits and business records showing the balance of principal, interest, and charges; the opposing party must respond with specific, admissible evidence to show a genuine factual dispute.
- Contractual attorney-fee provisions in notes and guaranties may be enforced under OCGA § 13-1-11 when statutory notice and calculation requirements are met; recovery is not limited to proof of the creditor’s actual invoices.
- A claim that summary judgment is premature fails absent a concrete showing of what discovery is needed and how it would create a material fact dispute.

## Conclusion

The Court of Appeals of Georgia affirmed summary judgment for River City Bank on a defaulted commercial note and unconditional guaranties, holding that COVID-19-related closures and operational disruptions did not excuse repayment, the bank proved the amount owed, the contractual attorney-fee award was proper under Georgia law, and the record did not support delaying summary judgment for further discovery.


PraultShell, Inc. v. River City Bank, 880 S.E.2d 616 (2022)