MEMORANDUM OPINION

JAMES P. SMITH, Bankruptcy Judge.

PMF Enterprises, Inc. ("PMF") and KPB Enterprises, LLC ("KPB") were related entities operating a convenience store in Perry, Georgia. This matter arises from the objection by PMF to the claim of SouthCrest Bank, as successor in interest to Century Security Bank ("South-Crest"). As will be explained below, SouthCrest had no privity of contract with PMF, and the debtor with whom it did have privity, KPB, essentially had no assets. Accordingly, at the conclusion of the September 10, 2013, hearing1 on the claim objection, the Court deferred its ruling until the resolution of the Chapter 7 trustee's2 motion to substantively consolidate the cases of PMF and KPB. After the January 15, 2014, hearing on consolidation3, the Court granted the trustee's motion and substantively consolidated the cases. Therefore, the claim objection is now ripe for determination. Having considered the evidence, the parties' briefs and the relevant law, the Court now publishes its findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.

FACTS

Some time prior to August 30, 2007, Pierre Beauchamps4 ("Beauchamps") formed KPB, of which he is the sole member and manager. On August 30, 2007, KPB borrowed $1,960,000 from Century Security Bank ("Century") to purchase a convenience store and gas station. To secure the loan, KPB gave Century a security deed on the real property and a security agreement on inventory and other related personality. Beauchamps personally guaranteed the loan.

Shortly thereafter, Beauchamps formed PMF (of which he is the sole shareholder) to operate the convenience store. Beauchamps subsequently obtained commercial liability and property insurance from Catawba Insurance Company ("Catawba") in the name of "PMF Enterprises, Inc. d/b/a Superfood Mart".5 Thereafter, and notwithstanding the fact that Century's loan was to KPB, Century was added to the PMF-Catawba policy as a lien holder. The policy included limits of $400,000 for building coverage, $1,160,000 for fuel pumps and tanks, $280,000 for personal property/contents coverage and additional coverage for debris removal and business income.

A fire occurred at the store on November 28, 2008, causing substantial damage to the building, pumps and contents. Catawba paid PMF and Century, jointly, $400,000, representing the policy limit on the property damage to the building. Catawba also paid Century $76,526.93 under the fuel pumps and tanks coverage. However, Catawba refused to pay any further claims. Century applied a portion of the insurance payment to monthly installments due under the note from KPB and the balance was paid to BGN Restoration, LLC, which Beauchamps had hired to restore the building.6 No further payments were made on the note by either PMF or KPB. Accordingly, the note went into default. In addition, the insurance proceeds were insufficient to cover the entire cost of restoration. Accordingly, BGN ceased work on the restoration when it could not get paid.

Subsequently, in November 2009, PMF filed suit against Catawba in the State Court of Fulton County, Georgia ("The Fulton County Suit") seeking to recover amounts it claimed were owed under the insurance policy. PMF's complaint alleged, inter alia, that Catawba breached the insurance policy by failing to pay PMF its continuing operating expenses, which PMF contended included the monthly note payments owed by KPB to Century. PMF alleged that this had caused the mortgage to go into default and that, therefore, as consequential damages, Catawba owed PMF the entire amount due under the Century note.7

On February 1, 2010, KPB and PMF each filed voluntary Chapter 7 petitions. On March 31, 2010, SouthCrest (which was by then the holder of the Century claim against KPB) filed its motion for relief in the KPB case asking to foreclose on the real property on which the convenience store had been operating. An order granting relief was entered on April 28, 2010. Thereafter, SouthCrest foreclosed and confirmed the sale in state court.

On July 2, 2010, the trustee filed in the PMF case an application to employ the firm of Bullard & Wangerin, LLP to prosecute the PMF claim pending in the Fulton County Suit8. An order appointing that firm was entered on July 6, 2010.

On May 24, 2011, SouthCrest filed its own suit against Catawba in the State Court of Gwinnett County, Georgia ("Gwinnett County Suit") seeking amounts it claimed were due under the insurance policy. SouthCrest's complaint against Catawba sought damages, including $927,949.80, described in the complaint as "the deficiency owed to Plaintiff on its mortgage on the property".9

On March 16, 2012, SouthCrest and Catawba executed a "RELEASE OF ALL CLAIMS AND SETTLEMENT AGREEMENT" (the "SouthCrest Settlement") pursuant to which they settled the Gwinnett County Suit. Paragraph 9 provides, in part:

Further, Paragraph 11 provides:

Approximately two weeks later, the Fulton County Suit was tried before a jury. The jury returned a verdict in favor of PMF, awarding PMF $155,000 in damages for contents, $266,256 for lost net income, $22,800 for continuing operating expenses "excluding any mortgage expenses", $28,000 for debris removal, $60,000 as a bad faith penalty and $41,825.65 in attorney's fees. Although the transcript of the trial was not introduced at the September 10, 2013 claims dispute hearing, Kevin Wangerin, the attorney who tried the case for PMF's Chapter 7 estate, testified that the trial judge ruled that PMF was not obligated to make the mortgage payments because KPB owed the mortgage debt. Accordingly, the trial judge ruled that the jury could not consider the mortgage payments as part of PMF's operating expenses.10

On April 26, 2012, a "COMPROMISE AND SETTLEMENT AGREEMENT" (the "PMF Settlement") was entered in the Fulton County Suit by and between PMF, Beauchamps, KPB and Catawba, pursuant to which all of the claims between PMF and Catawba in the Fulton County Suit, as well as any claims which Beauchamps and KPB might have had against Catawba, were settled by Catawba paying PMF's Chapter 7 estate $550,000. The PMF Settlement referred to the SouthCrest Settlement and stated that:

On May 17, 2012, pursuant to Bankruptcy Rule 9019, the trustee filed in the PMF Chapter 7 case a motion to compromise the Fulton County Suit pursuant to the terms of the PMF Settlement. South-Crest objected to the motion, contending that the above quoted release language in the PMF Settlement misrepresented the terms of the SouthCrest Settlement because the SouthCrest Settlement did not settle or release SouthCrest's claims against PMF or KPB. SouthCrest pointed out that PMF and KPB were not parties to the SouthCrest Settlement, and argued that they were not intended beneficiaries thereof.

The parties agreed to strike all of the above quoted release language and added the phrase "assigned or other-wise" to the paragraph on page 3 of the PMF Settlement that now reads:

(Emphasis supplied). The PMF Settlement in that form was approved by order of this Court dated August 20, 2012.

SouthCrest filed in each Chapter 7 case a proof of claim asserting an unsecured claim of $927,949.80, representing the balance owed on the note from KPB after applying the proceeds from the sale of the foreclosed property. After receiving the $150,000 from Catawba pursuant to the SouthCrest Settlement, SouthCrest filed amended claims for $777,949.80 in each case. Thereafter, PMF and KPB objected to the claims contending, inter alia, that the debt had been settled as part of the SouthCrest Settlement.11

DISCUSSION AND ANALYSIS

PMF12 contends that South-Crest's claim against KPB was settled and assigned to Catawba pursuant to Paragraphs 9 and 11 of the SouthCrest Settlement. PMF further contends that this claim was then satisfied, discharged and released by Catawba pursuant to the PMF Settlement.

In re LJL Truck Center, Inc., 299 B.R. 663, 666 (Bankr.M.D.Ga.2003). In this case, PMF does not challenge execution of the note by KPB. Further, PMF acknowledges that, when these chapter 7 cases were filed, SouthCrest was the holder of the note. Accordingly, the burden is on PMF to establish a defense. O.C.G.A. § 11-3-308.

1. The Settlement Contracts.

A settlement agreement is a contract and is subject to the usual rules of statutory construction. LNV Corp. v. Studle, 322 Ga.App. 19, 20, 743 S.E.2d 578, 580 (2013). Under Georgia law, "The construction of a contract is a question of law for the court." O.C.G.A. § 13-2-1.

First Data POS, Inc. v. Willis, 273 Ga. 792, 794, 546 S.E.2d 781, 784 (2001). However, "... if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity." CareAmerica, Inc. v. Southern Care Corp., 229 Ga.App. 878, 880, 494 S.E.2d 720, 722 (1997). "Ambiguity in a contract is defined as duplicity, indistinctness or an uncertainty of meaning or expression." Horwitz v. Weil, 275 Ga. 467, 468, 569 S.E.2d 515, 516 (2002). As explained by the court in General Steel, Inc. v. Delta Building Systems, Inc., 297 Ga.App. 136, 138, 676 S.E.2d 451, 453-54 (2009):

Paragraph 9 of the SouthCrest Settlement is clearly ambiguous. By combining the phrase "satisfaction of South-Crest's claim pursuant to the mortgagee clause" with the phrase "including, but not limited to, the mortgage debt", there is a question as to whether the parties settled only SouthCrest's claim against Catawba under the insurance contract, or whether they also settled the mortgage debt itself, i.e. SouthCrest's claim against KPB. The meaning of Paragraph 9 becomes clear, however, upon considering "... the background of the contract and the circumstances under which it was entered into, particularly the purpose for the particular language to be construed". Hortman v. Childress, 162 Ga.App. 536, 537, 292 S.E.2d 200, 202 (1982).

The "mortgagee clause" referenced in the SouthCrest Settlement is found in Section F.2 of the insurance contract. That section provides:

(Emphasis supplied). Thus, SouthCrest's "claim pursuant to the mortgagee clause" was for only "covered loss of or damage to buildings or structures". SouthCrest had no claim against Catawba under the mortgagee clause to recover its mortgage claim against KPB. Therefore, it is clear that SouthCrest's claim "pursuant to the mortgagee clause" that was being satisfied did not include SouthCrest's claim against KPB. The reference in Paragraph 9 to the mortgage debt could only have been included to recognize that this demand had been made in SouthCrest's complaint.

PMF contends that SouthCrest did have a claim against Catawba for the mortgage debt pursuant to Section F.2.e. of the insurance contract. Section F.2.e. provides:

(Emphasis supplied). Clearly, SouthCrest could not make a demand under Section F.2.e that Catawba pay the mortgage debt and take an assignment thereof. Rather, payment of the mortgage debt was an "option" available to Catawba, which could be exercised by Catawba only if it denied payment to PMF because of PMF's acts or because PMF failed to comply with the terms of the insurance contract. However, the facts establish that Catawba refused to pay PMF the mortgage debt because it was not a covered loss and because PMF was not obligated on the debt, not because of PMF's acts or failure to comply with the insurance contract.

PMF argues that before Wangerin completed negotiations with Catawba on the PMF settlement, he called Richard Tisinger, the attorney who had represented SouthCrest in the Gwinnett County Suit, to ask Tisinger for clarification about the meaning of Paragraph 9 of the SouthCrest Settlement. Wangerin testified about this conversation at the claim dispute hearing. PMF argues that this testimony establishes that Tisinger understood that the mortgage debt was settled and assigned pursuant to Paragraphs 9 and 11.

Parol evidence is admissible to explain ambiguities. Willesen v. Ernest Communications, Inc., 323 Ga.App. 457, 464, 746 S.E.2d 755, 761 (2014) cert. denied. However, Wangerin's testimony was unclear as to whether Tisinger simply affirmed that the SouthCrest Settlement settled SouthCrest's claim against Catawba or whether it also settled (and assigned to Catawba) SouthCrest's claim against KPB. While Wangerin testified at length about his understanding of the SouthCrest Settlement (which is irrelevant to the issue at hand), when asked, "[N]ow, did you talk with him [Tisinger] specifically about the Release being applicable to PMF, for instance?", his response was:

(Emphasis supplied). Trial Transcript, p. 78.

On the other hand, Mike Low, Senior Vice President of SouthCrest Bank, testified that he was personally in charge of the negotiations between SouthCrest and Catawba and was giving Tisinger his instructions with respect thereto. Low testified that the mortgage debt had been obtained from the FDIC in an asset purchase agreement after Century failed. He testified that because of SouthCrest's obligations to the FDIC to recover all that it could on the mortgage debt, SouthCrest could not assign the mortgage debt to Catawba and release KPB without the FDIC's consent and that SouthCrest refused to ask the FDIC for its consent. The Court is convinced that Low's clear testimony as to SouthCrest's intent outweighs any vague testimony by Wangerin to the contrary.

Finally, "The construction placed upon a contract by the parties thereto, as shown by their acts and conduct, is entitled to much weight and may be conclusive upon them." Scruggs v. Purvis, 218 Ga. 40, 42, 126 S.E.2d 208, 209 (1962). PMF argues that, shortly after the SouthCrest Settlement was executed, PMF and Catawba submitted a consolidated pretrial order in the Fulton County Suit in which Catawba asserted, as part of its contentions in the case, that "because of Catawba's settlement with SouthCrest Bank, neither PMF nor KPB have any further obligations to Century Security Bank or SouthCrest Bank." PMF contends that this shows that Catawba understood that the SouthCrest Settlement satisfied the mortgage debt. However, in that same pretrial order, Catawba also stated that it "has agreed to make an additional payment to SouthCrest, as successor to the failed Century Security Bank, in the amount of $150,000, as mortgagee, representing the contents and inventory in the structure." (Emphasis supplied). Thus, Catawba took inconsistent positions in the pretrial order with respect to its understanding of the SouthCrest Settlement.

More revealing, however, is the fact that Catawba did not assert the mortgage debt as a counterclaim in the Fulton County Suit. At the pretrial stage of the Fulton County Suit, before the Fulton County Court ruled that PMF was not liable on the mortgage debt, PMF was seeking damages from Catawba in an amount equal to the mortgage debt, contending that, because of Catawba's failure to pay the mortgage payments, PMF was now liable on the mortgage debt. Had Catawba believed that it was the holder of the mortgage debt as a result of the South-Crest Settlement, surely it would have asserted in the pretrial order that the assigned mortgage debt was an offset against that damage claim. Since it did not, this Court concludes that Catawba did not believe that the mortgage debt had been settled and assigned to it by the SouthCrest Settlement.

In summary, this Court concludes that SouthCrest's claim against KPB was not discharged and settled under the South-Crest Settlement. In light of this conclusion, it is unnecessary for this Court to address PMF's contention that it was a third party beneficiary of the SouthCrest Settlement.

2. Accord and Satisfaction.

PMF contends that the South-Crest Settlement represents an accord and satisfaction which satisfies the mortgage debt. Under Georgia law:

O.C.G.A. § 13-4-101. The mortgage debt is evidenced by the note and security deed from KPB to Century which SouthCrest now holds. The SouthCrest Settlement, on the other hand, is an agreement between SouthCrest and Catawba. The SouthCrest Settlement between South-Crest and Catawba does not constitute a new agreement between SouthCrest and KPB. Accordingly, no accord and satisfaction has occurred.

3. Judicial Estoppel.

PMF next argues that South-Crest is judicially estopped from asserting its claim.

Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1273 (11th Cir.2010).

Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1285 (11th Cir.2002).

The doctrine of judicial estoppel does not apply in this case. In these consolidated Chapter 7 cases, SouthCrest is contending that the mortgage debt is a valid claim. SouthCrest has not taken an inconsistent position under oath in any prior legal proceeding. The inconsistent position taken by Catawba in the Fulton County Suit and Wangerin's inconsistent understanding of the meaning of the SouthCrest Settlement do not constitute inconsistent positions under oath by South-Crest.

4. Promissory Estoppel.

PMF next contends that the doctrine of promissory estoppel prevents SouthCrest from claiming the mortgage debt. Under Georgia law:

O.C.G.A. § 13-3-44(a). The classic law school example of promissory estoppel is when John promises that he will pay Bob an agreed upon sum if Bob will climb to the top of a flag pole. In reliance upon this promise, Bob begins climbing the pole. Immediately prior to Bob reaching the top, John tries to cancel the promise. Under promissory estoppel, John is estopped from revoking the promise because Bob has reasonably relied on the promise and acted to his detriment.

In this case, SouthCrest made no promise to PMF or KPB. While SouthCrest's counsel did discuss with Wangerin the terms of the SouthCrest Settlement, there is no evidence that SouthCrest's attorney made Wangerin any promise to do anything in return for Wangerin's reliance on those discussions. Since there was no promise made to PMF or KPB, promissory estoppel is not applicable.

5. Dismissal with Prejudice.

Finally, PMF contends that SouthCrest's dismissal with prejudice of the Gwinnett County Suit operates as an adjudication on the merits for res judicata purposes and bars SouthCrest from asserting the mortgage claim in the bankruptcy cases.

Waldroup v. Greene County Hosp. Authority, 265 Ga. 864, 865-66, 463 S.E.2d 5, 6-7 (1995).

SouthCrest's claim in the Gwinnett County Suit was a claim against Catawba on the insurance contract. South-Crest's claim in these bankruptcy cases is based on SouthCrest's claim on the note from KPB. Accordingly, because the claims in each matter arose from separate contracts, they are not identical causes of action. See Executive Fitness, LLC v. Healey Bldg. Ltd. Partnership, 290 Ga.App. 613, 615, 660 S.E.2d 26, 29 (2008) (a suit on a lease contract does not represent an identical cause of action as a suit on a note because the claims arise from two separate contracts). Accordingly, SouthCrest's dismissal of the Gwinnett County Suit does not bar its claim on the note from KPB.

CONCLUSION

For the reasons stated above, PMF's objection to the claim of SouthCrest is overruled.13 An order consistent with this memorandum opinion shall be entered.