
    In the matter of CHATHAM PARKWAY SELF STORAGE, LLC, Debtor.
    No. 12-42153.
    United States Bankruptcy Court, S.D. Georgia, Savannah Division.
    Signed March 3, 2014.
    
      Jon A. Levis, Jesse C. Stone, Merrill & Stone, LLC, Swainsboro, GA, for Debtor.
   OPINION AND ORDER ON MOTION TO COMPEL EXECUTION OF LOAN DOCUMENTS

LAMAR W. DAVIS, JR., Bankruptcy Judge.

Chatham Parkway Self Storage, LLC (“Debtor”) filed its Chapter 11 case on November 2, 2012. Dckt. No. 1. On November 1, 2013, Debtor filed this Motion to Compel Execution of Loan Documents (“Motion”) as contemplated by its plan of reorganization. Dckt. No. 264. After a hearing on the merits on December 11, 2013, followed by extensive negotiations and a second hearing on February 3, 2014, I enter the following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

On November 2, 2012 (the “Petition Date”), Debtor filed a voluntary petition under Chapter 11. Dckt. No. 1. Debtor is a Georgia limited liability corporation owned by Ben and Julie Farmer. Amended Disclosure Statement, Dckt. No. 161. Debtor owns a 4.92 acre tract of land in Chatham County, Georgia (the “Property”). Stipulation of Undisputed Facts, Dckt. No. 157, Exh. A. Since the Petition Date, Debtor has operated as a debtor-in-possession, collecting rents from a self-storage facility located on the Property. Dckt. No. 4. Ameris Bank (“Ameris” or the “Bank”), successor in interest to Darby Bank & Trust Co.(“Darby”), is the transferee and assignee of a loan document executed by Debtor in favor of Darby and holds a first-priority interest in the Property. Dckt. No. 57.

Debtor filed its first Plan of Arrangement on February 6, 2013. Dckt. No. 94. Ameris filed an objection to the plan on March 12, 2013. Dckt. No. 128. Debtor filed an Amended Plan of Arrangement on April 19, 2013, to which Ameris also filed an objection. Dckt. Nos. 160,201. The parties submitted to mediation on June 4, 2013, with the Honorable John S. Dalis, at which time a settlement was reached. Dckt. No. 215. Debtor incorporated the mediated settlement through an addendum attached to its Second Amended Plan of Arrangement filed June 19, 2013. Dckt. No. 218. The Second Amended Plan was later withdrawn by Debtor on June 26, 2013, and resubmitted with minor changes that same day. Dckt. Nos. 223, 225. The resubmitted Second Amended Plan of Arrangement (the “Plan”) was ultimately confirmed by the Court on July 22, 2013. Dckt. No. 242.

Paragraph Five (5) of the Addendum to Second Amended Plan of Reorganization (the “Addendum”) states:

By no later than the effective date of the Plan, the Debtor agrees to execute new loan documents in favor of Ameris which govern the terms of its repayment of Ameris’ secured claim as set forth in the Plan (as amended hereby), as well as the security for the indebtedness represented thereby (the “Secured Claim Loan Documents”). Ameris shall provide to the Debtor for review the Secured Claim Loan Documents not less than fifteen (15) days prior to the effective date of the Plan. The Secured Claim Loan Documents shall include, without limitation, provisions requiring the Debtor to deliver to Ameris:
a. Annual tax returns of the Debtor and all guarantors;
b. Annual personal financial statement for all guarantors;
c. Monthly profit and loss statements, balance sheets and site inspection reports (to be delivered quarterly); and
d. Other financial documents that are reasonable and customary for a commercial loan of this nature.

Addendum to Second Amended Plan of Reorganization, Dckt. No. 225. Pursuant to the terms of the Plan, the effective date of the Plan, and therefore the deadline for executing the Secured Loan Documents (“Loan Documents”), was September 6, 2013. Dckt. No. 256. The Court extended the deadline for Debtor to execute the Loan Documents from the effective date to September 13, 2013, due to Ameris providing the Loan Documents for review on August 27, 2013, some five (5) days after the August 22, 2013, deadline. Id.

Sometime after reviewing the Loan Documents provided by Ameris, Debtor submitted its own version of the Loan Documents to the Bank for execution. Dckt. No. 264. Because the parties could not agree on all the specific terms included in the Loan Documents, Debtor filed this Motion on November 1, 2013. Id. In the Motion Debtor asks the Court to compel Ameris to execute the Loan Documents as drafted by Debtor, or in the alternative, direct further mediation with Judge John S. Dalis, or in the alternative, hold a hearing and determine the appropriate terms to be included in the Loan Documents. Id.

CONCLUSIONS OF LAW

11 U.S.C. § 1142 governs implementation of a Chapter 11 plan, and subsection (b) of that section states in relevant part:

The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act ... that is necessary for the consummation of the plan.

“[Pjostconfirmation jurisdiction pursuant to § 1142(b) is generally restricted to protecting the confirmation order, ... and aiding in the plan’s execution.” Beal Bank, S.S.B. v. Jack’s Marine, Inc. (In re Beal Bank, S.S.B.), 201 B.R. 376, 379 (E.D.Pa.1996)(citing In re Greenley Energy Holdings of Pennsylvania, Inc., 110 B.R. 173, 180 (Bankr.E.D.Pa.1990); In re Dilbert’s Quality Supermarkets, Inc., 368 F.2d 922, 924 (2d Cir.1966)). One example of an application of § 1142 is “if the plan provides that a claim is to be secured by property of the estate, the court can order the debtor or such other person as may be necessary to execute a security agreement, mortgage, or similar instrument.” 8 Collier on Bankruptcy ¶ 1142.03 (16th ed. rev. 2013). Clearly if a court has the authority to order a party to execute an instrument simply because the plan calls for a claim to be secured by property of the estate, it would have that same authority to aid in a plan’s consummation by ordering the execution of an instrument expressly called for by the plan. As mentioned supra, the Addendum expressly states that Debtor will execute the Loan Documents in favor of Ameris based on the terms of repayment set forth in the Plan.

However, there are instances where courts refused to order the execution of an agreement referred to in the plan because the material terms of the agreement were not included in the plan. In re Modern Steel Treating Co., 130 B.R. 60, 65 (Bankr.N.D.Ill.1991) (“Neither the Plan itself, nor usage and custom aid the Court in determining what understanding, if any, the parties had reached. The document the [shareholders] ask us to require [another shareholder] and the Debtor to sign contains many conditions and requirements that are not mentioned in either the Plan or the Disclosure Statement, and are not necessary or even helpful to the Plan”).

Modem Steel is easily distinguishable from the case before the Court. Here, Debtor drafted four iterations of the Plan and an Addendum before the terms of repayment were sufficiently detailed and acceptable to both Ameris and Debtor. Moreover, the final terms and conditions were the direct result of a mediated settlement between the parties. The Addendum and other provisions of the Plan set forth the material terms of the loan repayment. They include such items as the secured claim amount, retention of the existing lien, treatment of the twelve (12) initial interest only payments, treatment of the remaining amortized payments, payment due dates, interest rates, final balloon payment, effects of prepayment, responsibilities of the guarantors, and consequences of default. Dckt. No. 225. Including such detailed material terms of repayment in the Plan coupled with a provision requiring the parties to execute Loan Documents based on these terms sufficiently demonstrates to the Court what understanding the parties reached. Therefore, I find that the Court has the authority under § 1142(b) to direct the parties to execute the Loan Documents to protect the confirmation order and aid in the plan’s execution.

The Court will now address the disputed terms and conditions contained in the exchanged versions of Loan Documents which are the subject of this Motion. As discussed supra, the confirmed Plan contains sufficient agreed-upon material terms to infer a meeting of the minds between the parties and a willingness to be bound by Loan Documents incorporating these terms. However, it is not reasonable to expect a plan of reorganization in bankruptcy to contain the amount of minute detail that is typically found in commercial loan documents. Presumably, this is why the Addendum called for the parties to execute Loan Documents after confirmation.

“[A] bankruptcy court may clarify a plan where it is silent or ambiguous.” Beal Bank, 201 B.R. at 380 (citing United States for the Internal Revenue Service v. APT Industries, Inc., 128 B.R. 145, 146 (W.D.N.C.1991)). Moreover, “[b]ankruptcy courts can also use this authority to ‘interpret’ plan provisions to further equitable concerns.” Beal Bank, 201 B.R. at 380. In Beal Bank, the debtor and Resolution Trust Corporation (“RTC”) began negotiations to modify the terms of repayment of its claim shortly after the bankruptcy court confirmed the debtor’s plan of reorganization. Id. at 378. During the negotiations, RTC agreed to assign its mortgage to Bombardier, a third party, upon satisfaction of its claim by Bombardier and the debtor, yet nothing from the negotiations was incorporated into the confirmed plan. Id. Before repayment of the claim, RTC sold the loan documents to Beal Bank. Id. Later, there was some dispute regarding the agreed-upon terms from the negotiations, and Beal Bank refused to assign the mortgage to Bombardier. Id.

“The dispute over the terms of the agreement had already delayed payment of the claim; without court intervention the confirmed plan ... would have failed.” Id. at 379. In affirming the bankruptcy court’s order requiring Beal Bank to assign its mortgage interest to Bombardier upon payment of its claim, the district court held that the order was “an exercise of [the bankruptcy court’s] continuing authority to supervise the plan. This requirement did not alter any provision of the Plan. Instead, the Court clarified the Plan on a matter on which it was silent.” Id. at 880; see also APT Indus., Inc., 128 B.R. at 147 (holding that the bankruptcy court’s order requiring the IRS to apply payments by the debtor to trust fund taxes first “did not change any material terms of the plan, but instead clarified the plan where previously it had been silent”); In re Collins, 184 B.R. 161, 154 (Bankr.N.D.Fla.1995)(allowing a “commercially reasonable” post-confirmation interest rate of 8% where the debtor’s plan “[did] not expressly provide for, or preclude, the payment of post-confirmation interest to the IRS”).

Here, the Plan is silent on the disputed terms and conditions that are the subject of this Motion. A court order supplying these missing terms and conditions would in no way alter a material term or provision of the confirmed Plan. “A confirmed plan of reorganization operates as a contract between a reorganized debt- or and its creditors.” In re Friedman’s, Inc., 356 B.R. 758, 765 (Bankr.S.D.Ga.2005)(Davis, J.). What is clear from this contract between Debtor and Ameris is that the parties desired and expected to execute Loan Documents, which at a minimum, contain the specific material terms outlined in the Plan. Moreover, because the extended deadline for executing the Loan Documents has passed, the parties are arguably in default of the Plan/contract. Therefore, I find that in order to protect the confirmation order and aid in the Plan’s execution, the Court has the authority to supply commercially reasonable terms and conditions to the Loan Documents where the Plan is silent and which do not alter any provision of the Plan.

I conclude that the Court has the authority under § 1142(b) to direct the parties to execute Loan Documents based on the agreed-upon terms and conditions included in Debtor’s confirmed Plan. The Court will resolve the remaining disputed terms and conditions where the Plan is silent as is necessary for consummation of the Plan.

Each party submitted drafts of the documents they respectively wish to employ. Debtor’s documents were dramatically different from those of the Bank, not in the sense that they are not fair, workable, and professionally drafted, but in the sense that the Bank’s preferred forms are uniformly used and familiar to it. The Bank urges that its “standard forms” be adopted, and while I reject the notion that they must be employed without change, I do agree that what it represents to be its standard forms is the better starting point for an item-by-item ruling.

Initially there were a dozen or more terms and provisions that the parties seemed intractably at odds over. As negotiations progressed and pre-trial conferences occurred, the parties, to their credit, narrowed the issues to four. The parties collaborated, drafted, and delivered to the Court an annotated version of the Commercial Promissory Note (the “Note”). A copy of that document is attached to this Order as Exhibit A. It illustrates the remaining issues with this explanatory note.
All highlighted language herein is contested by the Debtor. All other terms of this Note have been negotiated and agreed to by the Debtor and Bank. All footnotes contained in this version of the note are not in the “clean” version of the note, and are inserted in this version to provide the alternate language or alteration requested by the Debtor, in an attempt to highlight for the Court all issues remaining for adjudication. The footnotes are not intended to reargue the issues on the merits.

Exh. A, pg. 1. The first issue highlighted in the document relates to the provision entitled “Late Payment Charge.”

LATE PAYMENT CHARGE. If any required payment is more than 10 days late, then at Lender's option, Lender will assess a late payment charge of5.000% of the amount of the regularly scheduled payment then past due, subject to a maximum charge of $100.00 and a minimum charge of $5.00. {Debtor requests that the highlighted language be deleted and replaced with “Borrower shall have a ten (10) day grace period. In the event Borrower fails to make a payment within the grace period,...).

Exh. A, pg. 2, ¶ LATE PAYMENT CHARGE.

Ameris objects to the suggestion that a “grace period” for payments be imposed on it. Debtor insists that there should be a period during which no default can be declared. Debtor proposes that a grace period, matching the time frame during which no late payment fee is assessed, be inserted to protect it from a technical default. Because of the tortured history between the parties, Debtor feels itself at risk if a nominal delay in receipt of payment occurs, even if the cause is out of Debtor’s control, for example, a delay in the mail service. I agree with Debtor. While it seems highly unlikely that Ameris would act in the event of a very short delay, it is possible; therefore, I find that the grace period language suggested by Debtor shall be included in the final Note.

The remaining issues arise in the paragraph entitled “Events of Default.”

EVENTS OF DEFAULT. The occurrence of any one of the following events (each an ‘Event of Default’ or a ‘Default’) shall constitute an Event of Default:

(c) the death, dissolution, or termination of existence of Borrower or any Guarantor; (.Delete the highlighted text).

Exh. A, pg. 4, ¶ c.

A similar provision was part of the Darby Note. Debtor contends however that this is overreaching by Ameris. Because both guarantors have considerable business acumen, and because at any time Debtor’s owners could replace the current manager, who is also a guarantor, with professional management at a rate comparable to that of insider compensation, Debtor contends that the death of a guarantor would not ipso facto place Ameris at risk.

There is some evidence to support this argument. On the other hand, Ameris, like any lender, will have some justifiable concern if the person most involved in the day-to-day operation of the business is incapable of continuing his or her duties. The dedication and exertion that a founder is willing to invest into a business often transcends the degree of effort and sacrifice that a non-owner manager will devote to the same task. That is an intangible benefit to a lender of some consequence. Here, however, that factor is offset by the presence of two co-owners/guarantors who share the expertise, knowledge, and motivation that supply that benefit. If, tragically, both guarantors pass away while this Note is still in effect, Ameris’ point has considerably more power. On balance, I conclude that the event of default that relates to guarantors should be triggered only by the death of both guarantors.

Notwithstanding the foregoing, other Events of Default provisions, particularly the Material Adverse Change provision discussed infra, remain applicable throughout, regardless of whether Paragraph (c) is ever triggered.

(g) any lax lien, levy, writ of attachment, garnishment, execution., or similar item is or will be issued against the Collateral or which undischarged, unbounded, or undismissed for thirty days after it was issued; (Replace “thirty” with ‘'ninety’').

Exh. A, pg. 4, ¶ g.

Debtor’s expert’s testimony that in some cases he has experienced delays in excess of thirty days by governmental officials in clearing up disputes over tax compliance was persuasive; therefore, I rule that the ninety day period is reasonable and shall be incorporated into the Note.

(j) iJ there has been a material adverse change of condition oí the financial prospects of. Borrower or any Collateral. {Delete highlighted (ext).

Exh. A, pg. 4, ¶ j.

First, it is important to set out the similar terms that were part of the original Darby Note. It reads in relevant part:

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.

Promissory Note, Claim No. 4, Exh. A, pg. 1. The Adverse Change language in the proposed Note is similar to that of the Darby Note. However, the proposed Note deletes the “Insecurity” clause in its entirety. Debtor is concerned that the Adverse Change language as written may grant unfettered discretion to Ameris to declare Debtor in default based on a change in its situation that the Bank subjectively considers to be materially adverse. There is no evidence to presume that Ameris would behave in this manner, but given the troubled history between the parties, I find that the proposed language should be qualified with a standard of “reasonable belief’ or “in good faith.” Indeed, this qualification is consistent with the parameters of the “Insecurity” clause of the Darby Note. Therefore, the provision shall be amended to read:

(j) Lender reasonably believes there has been a material adverse change of condition of the financial prospects of Borrower or any Collateral.

The final issue argued at the hearing in this matter was Debtor’s principal, Ben Farmer’s, objection to inclusion of the phrase “without duress” in the “Agreement of Guarantors” portion of the Note. The provision reads:

Each Guarantor hereto (i) acknowledges reading and understanding this Note; (ii) consents to the execution, delivery and performance of this Note as a renewal of a portion of the indebtedness evidenced by Note 1588760, dated August 3, 2009 and executed by Borrower in favor of Darby Bank, in the initial principal amount of $5,920,371.00; (iii) ratifies and affirms all of his or her obligations under the original guaranty executed by such Guarantor dated August 3, 2009, as subject to the terms of the Fourth Amended Plan of Arrangement as confirmed in the Farmers Chapter 11 Case (as defined herein); (iv) agrees to furnish the Financial Statements to Lender as set forth herein; (v) agrees to those portions of this Note that apply to the Guarantors; and (vi) acknowledges that this Note has been freely executed without duress and after an opportunity to consult with counsel.

Exh. A, pg. 7 (emphasis added).

Considerable attention was devoted to this issue at the hearing. Ameris insisted that this phrase was necessary to ensure that no defense of duress could later be asserted if it had to enforce the Note. The Court had significant concern that ordering the “without duress” phrase to be retained and forcing Mr. Farmer to sign the Note in light of the concerns he expressed would be coercive. Mr. Farmer’s testimony on this point established the intense stress and financial pressure he has experienced. He described his state of mind as one of extreme duress. Yet, he stated that he would sign the Note as drafted if the Court so required. Ameris, of course, wanted to erase any possibility that Mr. Farmer could later claim duress as vitiating his obligations.

The hearing concluded without any resolution of this impasse. However, on February 5, 2014, Debtor’s counsel filed an affidavit from Mr. Farmer. Dckt. No. 277. In it he acknowledges that he misunderstood the legal implications of a claim of duress and now is agreeable to inclusion of the phrase “without duress” after consultation with his attorney. Id. This affidavit essentially ends the matter, but because the testimony viewed alone could be construed differently, I find it incumbent to examine whether Mr. Farmer’s earlier testimony fairly raises any issue of duress.

From his testimony and the history of this case, it is clear that Mr. Farmer has faced a financial crisis of immense proportions. He and Mrs. Farmer have navigated this case and their personal case, both of which have been difficult and contested throughout. This clearly would cause any reasonable person to experience an extreme amount of stress, which a layperson might equate with duress. However, the legal concept of duress, which could constitute a contractual defense, is quite different and requires much more.

Duress is codified under O.C.G.A. § 13-5-6, which states:

Since the free assent of the parties is essential to a valid contract, duress, either by imprisonment, threats, or other acts, by which the free will of the party is restrained and his consent induced, renders the contract voidable at the election of the injured party. Legal imprisonment, if not used for illegal purposes, does not constitute duress. (Emphasis added).

The Georgia Court of Appeals has held,

[ujnder Georgia law, duress consists of imprisonment, threats, or other acts, by which the free will of the party is restrained and his consent induced. “Business compulsion” or “economic duress” involves the taking of undue or unjust advantage of a person’s economic necessity or distress to coerce him into making a contract and is recognized as a contractual defense. A duress claim must be based on acts or conduct of the opposing party which are wrongful or unlawful. Georgia courts are reluctant to void contracts, and we have found no Georgia decision voiding a contract on the theory of economic duress. And, in any event, when the signer of an agreement is sophisticated in business matters and has access to and in fact obtains advice of counsel, the defense of duress is not available to void the contract.

Compris Techs., Inc. v. Techwerks, Inc., 274 Ga.App. 673, 682, 618 S.E.2d 664 (2005)(emphasis omitted)(quoting Cooperative Resource Center, Inc. v. Southeast Rural Assistance Project, Inc., 256 Ga.App. 719, 720-21, 569 S.E.2d 545 (2002)). Because there has been no evidence of wrongful or unlawful conduct, imprisonment, threats, or any other acts of that nature, clearly, the stress Mr. Fanner is feeling falls outside the scope of legal “duress.” At trial Mr. Farmer testified that he could not agree to the inclusion of the phrase “without duress” in the Note because of the adversarial relationship he has with the Bank. He further stated that the parties have been fighting over this language for months, and he felt missing the significance of every term in the Note could be detrimental to him. Certainly no one envies Debtor’s bargaining position, being in Chapter 11 and owing $6,000,000 to Ameris on a secured claim; however, “[o]ne may not void a contract on grounds of duress merely because he entered into it with reluctance, the contract is very disadvantageous to him, the bargaining power of the parties was unequal or there was some unfairness in the negotiations preceding the agreement.” Tidwell v. Critz, 248 Ga. 201, 204, 282 S.E.2d 104 (1981) (citation omitted) (internal quotation marks omitted); see also Chouinard v. Chouinard, 568 F.2d 430, 434 (5th Cir.1978) (“[T]he mere fact that a person enters into a contract as a result of the pressure of business circumstances, financial embarrassment, or economic necessity is not sufficient [to establish economic duress].”).

To establish a claim for economic duress, Debtor must show that the acts or conducts of Ameris were wrongful or illegal. Frame v. Booth, Wade & Campbell, 238 Ga.App. 428, 429, 519 S.E.2d 237 (1999) (“[An economic] duress claim ... must be based upon acts or conducts of the opposite party which are wrongful or unlawful”). This standard has not been met under the evidence before me. Ameris’ driving a hard bargain and insisting that Debtor, which owes $6,000,000, accept certain terms, conditions, and boilerplate material of its standard commercial loan documents can hardly be classified as wrongful or illegal conduct. Disregarding Mr. Farmer’s current financial situation and the adversarial nature of the parties’ relationship, it is certainly conceivable that if Mr. Farmer sought a comparable loan today from Am-eris or any other bank, he would be required to accept terms and conditions similar to those Ameris is now requesting.

Finally, Mr. Fanner testified that he has been in business for over forty years. With such vast experience, I find that Mr. Farmer is sophisticated in business matters. He has obtained the advice of skillful, experienced, and competent counsel and financial professionals. Accordingly, because Mr. Farmer has now, after consultation with his counsel, agreed that his concept of “duress” was legally imperfect and that the phrase can properly be included in the Note, and because on the merits I independently find that the circumstances do not amount to “duress,” 1 conclude that the phrase shall be included in the Note.

ORDER

Pursuant to the foregoing Findings of Fact and Conclusions of Law, it is the ORDER of this Court that Ameris amend the Note to incorporate the changes as set forth herein. Once the Note is amended, it is further ORDERED that Debtor and Ameris execute the Note within a reasonable period of time, not to exceed fourteen (14) days from the date the amended Note is presented to Debtor.

EXHIBIT A 
      
      . In each instance, the language from Debt- or’s footnotes providing the alternate language or alteration requested by Debtor appears in parentheses and in italics after the Bank’s original version.
     
      
      . In an email to the Court and opposing counsel preceding the filing of Mr. Farmer's affidavit, Debtor's counsel stated:
      I have informed Mr. Northup this morning, and wanted to inform Judge Davis, that Mr. Farmer has informed me that after reflection and further insight he no longer believes he would be executing the Note under duress and does not oppose the “without duress” the [sic] language in the Agreement of Guarantors. He believes his position was based on a his [sic] misunderstanding of the legal definition of "duress”. Therefore, the last issue raised in court by the Debtor/Borrower (deletion of the term "without duress”) is no longer an issue. I will provide a document to the Court with Mr. Farmer's signature indicating as such shortly.
     
      
      . The Frame Court acknowledged that an earlier decision of the Georgia Court of Appeals recognized "economic duress” as a form of duress but stated that it "[had] found no Georgia decision voiding a contract under this theory.” Frame v. Booth, Wade & Campbell, 238 Ga.App. 428, 430, n. 1, 519 S.E.2d 237 (1999).
     