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Hampton v. Bank of LaFayette
Citations: 259 Ga. App. 677; 578 S.E.2d 486; 2003 Ga. App. LEXIS 231Docket: A02A1912
Court: Court of Appeals of Georgia; February 14, 2003; Georgia; State Appellate Court
Judge Phipps ruled in favor of The Bank of LaFayette, affirming the trial court's summary judgment against Evelyn Hampton, who was sued to enforce her guarantee of two promissory notes from her daughter, Lynn Patterson. Hampton contended that a bankruptcy confirmation order for Patterson barred the bank's lawsuit; however, the court found that Hampton's guarantee was not addressed in Patterson's bankruptcy proceedings. The promissory notes required payments of $18,347.04 and $3,445.20, with Hampton as a cosigner. After Patterson defaulted and filed for Chapter 13 bankruptcy, the bank, which had not filed a proof of claim, did not receive payment for the notes, resulting in Patterson's discharge of the debts. Hampton argued that the confirmed bankruptcy plan, which prioritized cosigned debts, should prevent the bank from pursuing her for payment. The court clarified that the discharge in bankruptcy only applies to debts included in the plan, and because Hampton's guarantee was not part of that plan, the bank was entitled to seek recovery from her. The ruling emphasized that while a bankruptcy plan can prioritize certain unsecured claims, it cannot unfairly discriminate among classes of claims. In *In re Ramirez*, the court ruled that debtors failed to demonstrate that separating cosigned debt into its own class and prioritizing it over other unsecured debts did not unfairly discriminate against other creditors. Patterson's bankruptcy plan did not recognize her mother, Hampton, as a guarantor, which meant the requirements of 11 USCS § 1322(b)(1) were not satisfied, leaving the guarantor's liability intact. Hampton's argument was also rejected under 11 USCS § 524(e), which states that a discharge for a principal debtor generally does not discharge the guarantor. This principle was upheld in *United States v. Kurtz*, where the discharge of a primary obligor did not affect a guarantor's liability. In contrast, cases like *Stoll v. Gottlieb* and *Republic Supply Co. v. Shoaf* resulted in the cancellation of guarantors' liabilities due to explicit provisions in their plans. The current case mirrored *Hellvig v. Gen. Motors Acceptance Corp.*, where the bankruptcy plan did not address the guarantor's liability, confirming that the bank was entitled to summary judgment against Hampton. Both parties sought sanctions against each other for frivolous motions, which were denied. The judgment was affirmed, noting that only one of Patterson's promissory notes was included in her bankruptcy proceeding. The principle that a confirmed plan is res judicata applies broadly, barring relitigation of issues that could have been raised in bankruptcy, unless there is a basis for objection within the plan.