A provision in a promissory note requiring payment of a fixed percentage as attorney’s fees upon breach is enforceable under South Carolina law; South Carolina law governed enforceability analysis where note was accepted by lender in South Carolina. PNC Bank Nat’l Ass’n v. GVTG, LLC, No. 14-11405, 2014 WL 5904740 (11th Cir. Nov. 14, 2014).
A promissory note evidencing a commercial loan provided that the note would be governed by the laws of South Carolina and recited that the lender had accepted the note in South Carolina. The note also provided that in the event of collection the lender would receive attorney’s fees of not less than 15% of the amount owed under the note. After the borrower defaulted, the lender filed suit in the United States District Court for the Northern District of Georgia.
On appeal from a summary judgment in favor of the lender awarding, among other things, 15% attorney’s fees, the Eleventh Circuit Court of Appeals rejected a claim that the lower court had erred in granting attorney’s fees in accordance with South Carolina law. Under Georgia’s choice-of-law rules, the law of the state in which the contract was made applies when execution, interpretation or validity of a contract is at issue. Because the note recited that it was accepted by the lender in South Carolina, South Carolina law governed the question of the enforceability of the note provision awarding a fixed percentage of attorney’s fees upon breach. The Court of Appeals found that, under South Carolina law, a contract term providing for a fixed amount of attorney’s fees on breach is enforceable. Accordingly, the Court of Appeals held that the district court did not err in awarding the lender attorney’s fees in accordance with the terms of the note.
