Sjn Properties, LLC. v. Fulton County Board of Assessors ( 2015 )

296 Ga. 793FINAL COPY
S14A1493. SJN PROPERTIES, LLC v. FULTON COUNTY
BOARD OF ASSESSORS et al.
HUNSTEIN, Justice.
In 2009, John Sherman, a resident and taxpayer of Fulton County, filed
suit, on behalf of himself and all others similarly situated, against the Fulton
County Board of Assessors (hereinafter, “FCBOA”), along with its Chief
Appraiser and each of its members in their official capacities, to challenge the
FCBOA’s method of valuing leasehold estates arising from a sale-leaseback
bond transaction involving the Development Authority of Fulton County
(hereinafter, “DAFC”).1 As described in an earlier appeal arising from this same
case, the sale-leaseback transaction at issue here was structured as follows:
A bond transaction leasehold estate is created when a local
development authority, in accordance with its redevelopment
powers, enters into a bond transaction agreement with a private
developer of certain real property. The local development authority
issues revenue bonds under a financing program to the developer,
who conveys to the authority fee simple title to the property. The
development authority and the developer then enter into a multi-
year lease arrangement whereby the authority, as owner, leases the
property to the developer. The resulting lease payments are used by
1
Shortly after the petition was filed, the DAFC successfully moved to intervene
as a defendant in the case.
the local development authority to make the principal and interest
payments on the revenue bonds. The terms of the agreement allow
the developer to repurchase the fee simple estate for a nominal
amount once the revenue bonds are paid down or retired.
As part of the transaction, the parties enter into a written
agreement that sets forth a specific method for determining the fair
market value of the resulting leasehold estate held by the private
developer. The method estimates the initial fair market value of the
leasehold estate to be 50 percent of the fair market value of the fee
simple estate. The estimated value of the leasehold estate is then
“ramped up” by five percent per year. By the eleventh year, the
leasehold estate is valued at 100 percent of the fair market value of
the fee simple estate.
Sherman v. Fulton County Bd. of Assessors, 288 Ga. 88, 89 (701 SE2d 472)
(2010) (hereinafter, “Sherman I”). Sherman claims that this so-called “50%
ramp-up” methodology results in the valuation of the developers’ leasehold
estates at less than fair market value, in violation of defendants’ statutory and
constitutional duties to ensure that ad valorem taxes are assessed uniformly and
at fair market value.
In October 2009, the trial court granted the defendants’ motion to
dismiss/motion for judgment on the pleadings, and, on appeal, this Court
reversed. Sherman, 288 Ga. at 95. The Court held that the case was not subject
to dismissal because, while there was no dispute as to the valuation
methodology employed, there was no way to conclusively determine at that
2
stage of the proceedings that such methodology actually resulted in a fair
valuation of the leasehold estate. Id. at 93. This Court reasoned:
[Defendants] argue that their initial valuation of the fee
simple estate follows an authorized appraisal approach and takes
into account some of the factors referenced above, such as similarly
leased properties in the area and the market rents in the area.
However, a valuation of the fee simple estate is just the first step.
[Defendants] will need to offer evidence as to how their method
applied to the leasehold estate incorporates the requisite factors.
They assert that we should just assume that every leasehold estate
is worth 50 percent of its fee simple estate, but offer no evidence to
support this assumption. Without such evidence, and in light of the
affidavit filed by Sherman to the contrary, we are unable to
determine, pursuant to DeKalb County Bd. of Tax Assessors v. W.C.
Harris & Co., supra, that the valuation method used by
[Defendants] is not arbitrary and unreasonable, and therefore the
petition should not have been dismissed pursuant to OCGA § 9-11-
12 (b) (6).
Id.
After remand, SJN Properties, LLC (hereinafter, “SJN”) was added as a
plaintiff in the action.2 The plaintiffs filed an amended and restated class action
petition, again seeking declaratory, injunctive, and mandamus relief with respect
to the valuation methodology, and adding a claim seeking declaratory,
injunctive, and mandamus relief with respect to a subset of DAFC-owned
2
In December 2013, Sherman moved to be dropped as party to the proceedings,
ostensibly for health reasons, leaving SJN as the sole plaintiff in the case.
3
properties involved in these bond transactions, which, according to the
plaintiffs, have improperly been treated as tax exempt. Thereafter, the parties
filed cross-motions for summary judgment, and the trial court granted the
defendants’ motions. Though we find error in the trial court’s striking of two
affidavits submitted by SJN, we nonetheless, for the reasons set forth below,
affirm the grant of summary judgment to the defendants.
1. At the summary judgment hearing, the trial court struck as untimely
two affidavits SJN had filed and served on the day before the hearing. The first
is the affidavit of expert real estate appraiser J. Carl Schultz, Jr., comprised of
16 pages of testimony accompanied by more than 200 pages of supporting
exhibits. The second is the affidavit of John F. Woodham, one of three
attorneys of record for SJN; this affidavit is comprised of nine pages of
testimony and approximately 150 pages of supporting exhibits. SJN filed these
affidavits in the trial court and served them on the defendants on December 19,
2013, the day before the December 20, 2013 summary judgment hearing.
Service was effectuated both by U. S. Mail and electronically; defendants’
counsel received electronic copies of the affidavits at 5:24 p.m. on December 19.
Concluding that these affidavits were untimely filed, the trial court declined to
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consider them.
SJN contends the trial court erred in striking the affidavits, claiming that
they were filed and served in accordance with the Civil Practice Act. Though
we find SJN’s voluminous eleventh-hour filing discourteous, we are constrained
to agree that this filing was technically in compliance with the requirements of
the Civil Practice Act and thus that the trial court erred in striking the affidavits.
OCGA § 9-11-56 (c) authorizes a party against whom a summary judgment
motion has been filed to serve affidavits in opposition to the motion at any time
“prior to the day of hearing.” See also OCGA § 9-11-6 (d) (governing motions
generally, providing that “[o]pposing affidavits may be served not later than one
day before the hearing”); Woods v. Hall, 315 Ga. App. 93 (1) (726 SE2d 596)
(2012) (vacating grant of summary judgment, finding that trial court erred in
striking as untimely plaintiff’s opposing affidavit, filed three days prior to
hearing). Cf. Brown v. Williams, 259 Ga. 6 (4) (375 SE2d 835) (1989)
(opposing affidavit filed on day of hearing was untimely). The Court of
Appeals has, in fact, held that opposing affidavits were timely where served on
the day before the hearing only by U. S. Mail, such that the movant had not even
received them as of the time of the hearing. See Kirkland v. Kirkland, 285 Ga.
5
App. 238 (2) (645 SE2d 626) (2007) (opposing affidavit served by mail on day
before summary judgment hearing was timely and properly considered); Martin
v. Newman, 162 Ga. App. 725 (2) (293 SE2d 18) (1982) (same). Though we
find the gamesmanship in such delayed filings distasteful, we cannot ignore the
plain language of OCGA § 9-11-56 (c), which, regrettably, allows parties to
employ such tactics.3 The trial court therefore erred in refusing to consider the
Schultz and Woodham affidavits in its adjudication of defendants’ motions for
summary judgment. In our de novo review of the evidence here, see Jones v.
Kirk, 290 Ga. 220, 221 (719 SE2d 428) (2011), we will thus consider these
affidavits, to the extent they are otherwise “admissible in the evidence [and] . .
. show affirmatively that the affiant is competent to testify to the matters stated
therein.” OCGA § 9-11-56 (e).
2. In reviewing the merits of a trial court’s decision on a motion for
summary judgment, “‘this Court conducts a de novo review of the evidence to
3
We note that the Federal Rules of Civil Procedure, on which our Civil
Practice Act is modeled, see Ambler v. Ambler, 230 Ga. 281 (1) (196 SE2d 858)
(1973), currently require the service of opposing affidavits no later than seven days
prior to a hearing. Fed. R. Civ. P. 6 (c) (2). The current rule is more stringent than
the prior version, which required only that opposing affidavits be served at least one
day before the hearing. See Charles Alan Wright et al., 4B Fed. Prac. & Proc. Civ.
§ 1170, n. 3 (4th ed., updated Jan. 2015).
6
determine whether there is a genuine issue of material fact and whether the
undisputed facts, viewed in the light most favorable to the nonmoving party,
warrant judgment as a matter of law.’” Jones, 290 Ga. at 221. As we stated in
Sherman I,
[t]he overriding issue in this case is whether the valuation method
used by [the defendants] fairly and justly establishes the fair market
value of a bond transaction leasehold estate such that the method is
not “arbitrary or unreasonable.” [Cit.]
Sherman, 288 Ga. at 90. The other issue, raised in the plaintiffs’ amended
petition on remand following Sherman I, is whether certain properties held in
fee simple by the DAFC have been and continue to be unlawfully exempted
from ad valorem taxation.4 In connection with the resolution of these issues,
SJN seeks a declaratory judgment (a) affirming the invalidity of the 50% ramp-
up valuation method, both as employed in connection with the bond transaction
leasehold estates here and in general; and (b) establishing DAFC’s liability for
back taxes on various properties as to which it has been unlawfully afforded an
exemption from ad valorem taxes. In addition, SJN seeks “a mandatory
4
Specifically, SJN claims that various properties held by the DAFC fall within
certain categories specified under state law as ineligible for exemption from ad
valorem taxes. See OCGA §§ 36-62-3, 36-62-2 (6) (H) (vi), (J) and (K).
7
injunction and/or writ of mandamus” to (a) restrain the FCBOA from using the
50% ramp-up valuation method in assessing the value of bond transaction
leasehold estates; (b) compel the FCBOA to re-appraise all existing leasehold
estates at issue here using an appraisal approach that comports with state law
and to issue assessments for the collection of back taxes on such estates to the
extent they have been previously under-appraised; and (c) compel the FCBOA
to issue ad valorem tax assessment notices to the DAFC as to its non-tax-exempt
properties for prior years and to commence such assessments for future years.
(a) We first address SJN’s claims regarding the allegedly non-tax-exempt
status of certain properties held by the DAFC. In support of its claims in this
regard, the only evidence SJN has offered is the affidavit testimony of John
Woodham, its own counsel of record. In his affidavit, Woodham identifies
various properties owned by the DAFC which he claims constitute either office
building or hotel facilities that are specifically excluded from the tax exemption
afforded to most development authority-owned property. See OCGA §§ 36-62-
3, 36-62-2 (6) (H) (vi) and (J). Woodham designates these properties via
handwritten notations in the margins of a list of DAFC-owned properties,
purportedly obtained from the FCBOA during discovery, attached as an exhibit
8
to his affidavit. In the affidavit, Woodham attests that he “personally reviewed
the property record information” regarding the designated properties and opines
on this basis that these properties are not tax exempt. SJN offers no other
evidence in support of its claims in this regard.
Setting aside the questionable ethics of Woodham’s assumption of the role
as witness in a case he is prosecuting as counsel of record,4 we find that
Woodham’s “testimony” is insufficient to create an issue of material fact on
SJN’s claims in regard to the tax-exempt status of the DAFC-owned properties
at issue. See, e.g., Pfeiffer v. Ga. Dept. of Transp., 275 Ga. 827, 828-829 (2)
(573 SE2d 389) (2002) (once a defendant on motion for summary judgment
exposes an absence of evidence to support the plaintiff’s case, the plaintiff must
then “‘point to specific evidence giving rise to a triable issue’”). Entirely absent
is any factual basis for the conclusion that any of the properties in question
actually possess the characteristics of an “office building” or “hotel facility” as
defined in OCGA § 36-62-2 (6) (H) (vi) and (J). Woodham’s “testimony” on
this issue is nothing more than legal arguments lacking in evidentiary support;
4
See Georgia Rules of Professional Conduct, Rule 3.7 (“[a] lawyer shall not
act as advocate at a trial in which the lawyer is likely to be a necessary witness”).
9
his affidavit is simply a legal brief cloaked under the solemnity of an oath. The
fact that SJN could apparently find no witness or documentary evidence that
would substantiate its claims on this issue, other than the self-serving so-called
“testimony” of its own attorney, demonstrates the propriety of summary
judgment on these claims. We therefore affirm the grant of summary judgment
as to these claims.
(b) We now consider SJN’s claims regarding the FCBOA’s use of the
50% ramp-up formula in assessing the value of the bond transaction leasehold
estates held by the private developers who are parties to the bond transactions
here.
(i) Claims for injunctive relief. As an initial matter, the defendants
contend, citing this Court’s recent decision in Georgia Dept. of Natural
Resources v. Center for a Sustainable Coast, 294 Ga. 593 (755 SE2d 184)
(2014), that SJN’s claims for injunctive relief are barred by sovereign immunity.
We agree. In Sustainable Coast, this Court held that sovereign immunity, in its
current incarnation under this State’s Constitution, may be waived only by an
act of the General Assembly. Id. at 598-601. Accordingly, we overruled
precedent that had previously recognized a common law exception to sovereign
10
immunity for suits seeking injunctive relief against the State. Id. at 593, 599-
602 (overruling Intl. Bus. Machines Corp. v. Evans, 265 Ga. 215 (453 SE2d
706) (1995)). Thus, after Sustainable Coast, injunction actions against the State,
including those against State employees in their official capacity, see id. at 599,
n. 4, may proceed only where such actions are expressly authorized under our
Constitution or by a statute evincing the legislature’s express intent to permit
claimants to seek injunctive relief against the State. Accordingly, SJN’s claims
for injunctive relief are barred by sovereign immunity.
(ii) Claims for mandamus relief. Sovereign immunity does not, however,
preclude SJN’s claims for mandamus relief. See Southern LNG, Inc. v.
MacGinnitie, 290 Ga. 204 (719 SE2d 473) (2011).5 Our mandamus statute
expressly authorizes claimants to seek relief against a public official “whenever
. . . a defect of legal justice would ensue from [the official’s] failure to perform
or from improper performance” of “official duties.” OCGA § 9-6-20. SJN, as
a citizen and taxpayer of Fulton County, clearly has standing to seek the type of
mandamus relief it requests here. See OCGA § 9-6-24 (conferring standing to
5
Were we to hold otherwise, mandamus actions, which by their very nature
may be sought only against public officials, would be categorically precluded by
sovereign immunity.
11
seek mandamus relief on any person “interested in having the laws executed and
the duty in question enforced”); Southern LNG, Inc. v. MacGinnitie, 294 Ga.
657 (2) (755 SE2d 683) (2014) (corporate taxpayer had standing to sue for
mandamus to compel State Revenue Commissioner to recognize it as a “public
utility” for ad valorem tax purposes).6
In order to be entitled to mandamus relief, a claimant must establish that
“(1) no other adequate legal remedy is available to effectuate the relief sought;
and (2) the applicant has a clear legal right to such relief.” Bibb County v.
6
We note that we have previously held that OCGA § 9-6-24 and its predecessor
statute confer standing to seek enforcement of public duties not only via mandamus
but also by injunction. See, e.g., Arneson v. Bd. of Trustees of Employers’
Retirement System of Ga., 257 Ga. 579 (2) (b), (c) (361 SE2d 805) (1987) (taxpayers
generally have standing to seek to enjoin public officials from committing ultra vires
acts); Griggs v. Green, 230 Ga. 257 (1) (197 SE2d 116) (1973) (taxpayer had standing
to seek to enjoin taxing authorities from proceeding under allegedly void and illegal
tax digest); Head v. Browning, 215 Ga. 263 (2) (109 SE2d 798) (1959) (taxpayers had
standing to seek to enjoin State Revenue Commissioner from issuing liquor license
to defendant). In none of these cases did we address sovereign immunity, likely due,
at least in part, to their timing in relation to the evolution of our doctrine of sovereign
immunity and whether judicially-created exceptions to the doctrine – such as that for
injunction actions – were recognized as valid. See Sustainable Coast, 294 Ga. at 597-
599 (examining history of sovereign immunity from its adoption in our common law
in 1784, to its constitutionalization in 1974, and subsequent changes with the
adoption of the Georgia Constitution of 1983 and further amendments in 1991).
Insofar as these and similar cases permitted the prosecution of injunction actions
against state officials, they now stand abrogated by Sustainable Coast; however, to
the extent these cases simply confirmed a taxpayer’s standing to seek to enforce a
public duty by way of some viable cause of action, they remain good law.
12
Monroe County, 294 Ga. 730, 734 (2) (755 SE2d 760) (2014). Pretermitting
whether another adequate legal remedy is available here, we conclude, as
explained below, that SJN has failed to come forth with evidence of a clear legal
right to the relief it is seeking.
A clear legal right to the relief sought may be found only
where the claimant seeks to compel the performance of a public
duty that an official or agency is required by law to perform. . . .
Where performance is required by law, a clear legal right to relief
will exist either where the official or agency fails entirely to act or
where, in taking such required action, the official or agency
commits a gross abuse of discretion.
Id. at 735. Here, SJN seeks to compel the FCBOA to fulfill its statutory duty in
relation to the assessment of ad valorem taxes within its jurisdiction. The
essence of this duty is to see that all taxable property within the county is
assessed and returned at its fair market value and that fair market values as
between the individual taxpayers are fairly and justly equalized so that each
taxpayer shall pay as nearly as possible only such taxpayer’s proportionate share
of taxes.
13
OCGA § 48-5-306 (a); see also Ga. Const. of 1983, Art. VII, Sec. I, Par. III
(requiring uniformity in taxation). As to the fulfillment of this duty, we have
held:
Tax assessors are authorized to fix the fair market value of
property for taxes from the best information obtainable. This does
not require the tax assessors to use any definite system or method,
but demands only that the valuations be just and that they be fairly
and justly equalized among the individual taxpayers . . . according
to the best information obtainable.
(Citations and punctuation omitted.) Colvard v. Ridley, 218 Ga. 490, 490 (1)
(128 SE2d 732) (1962); accord Sherman, 288 Ga. at 91 (“[i]t is clear that county
boards of tax assessors are not required to use any particular appraisal approach
or method when determining the fair market value of property”).
In sum, the FCBOA’s duty is to assess all taxable properties within its
jurisdiction at fair market value, utilizing the “best information obtainable.” In
support of their motions for summary judgment, the defendants have adduced
the testimony of two expert real estate appraisers, both of whom opine that the
50% ramp-up formula is an analytically sound approach that comports with
standard appraisal practice and, in the words of one of these witnesses,
“represents an appropriate, reasonable, and non-arbitrary simplified method of
14
arriving at the fair market value for tax purposes of the leasehold interest[s]” at
issue. This Court has in fact previously endorsed the concept of a formula for
the valuation of leasehold estates in property held in fee simple by a county
development authority. See DeKalb County Bd. of Tax Assessors v. W.C.
Harris & Co., 248 Ga. 277, 280-281 (3) (282 SE2d 880) (1981) (“[w]e do not
find the method of valuation utilized . . . to be an arbitrary or unreasonable one,
and . . . the trial court did not err in approving the formula adopted in these
cases”); see also Coweta County Bd. of Tax Assessors v. EGO Products, Inc.,
241 Ga. App. 85, 87 (1) (526 SE2d 133) (1999) (noting with approval county
board of tax assessors’ “long-standing policy of taxing leasehold interests in real
property that are the subject of a financing agreement . . . at 50 percent of the
appraised value for the term of the lease”).
Not surprisingly, SJN’s expert appraiser disagrees with the defendants’
experts, contending that, because of the structure of the bond transaction and the
terms of the operative agreements, virtually 100% of any leased property’s value
resides in the leasehold at all times during the term of the lease and that use of
the 50% ramp-up formula thus systematically underestimates the value of the
15
leasehold estate.7 However, this witness, while assailing in the abstract the
assumptions underlying the 50% ramp-up formula, admitted at his deposition
that he has not actually appraised any of the leasehold estates involved in this
case. Critically, when this witness was asked point-blank whether the assessed
values of any of the properties at issue here in any given tax year were incorrect,
he replied that he did not know.
In the end, though much ink is spilled in the parties’ debate over whether
the 50% ramp-up formula, in the abstract, is the best — or even a valid —
methodology for valuing the leasehold estates here, SJN’s mandamus claims fail
for the simple reason that it has adduced no evidence that any actual assessment
of any particular property has been or is other than at fair market value. SJN has
thus failed to adduce any evidence that the FCBOA has failed to comply with
its legal duty to “see that all taxable property within the county is assessed and
returned at its fair market value.” OCGA § 48-5-306 (a). On the evidentiary
7
We note that the defendants moved in the trial court to exclude the testimony
of SJN’s expert as lacking the prerequisites for admissibility of expert testimony
under OCGA § 24-7-702 (b). As the trial court did not rule on this motion, we have
no occasion to review this issue and thus assume for present purposes that this
testimony would be admissible at trial.
16
record presented, SJN’s claims for mandamus relief cannot withstand summary
judgment.
(iii) Claims for declaratory relief. We have previously left unresolved the
question of whether sovereign immunity generally bars claims against the State
for declaratory relief. See Southern LNG, 290 Ga. at 205-206 and n. 1
(expressly sidestepping issue of whether declaratory judgment actions against
the State are generally barred by sovereign immunity, but noting that this Court
has in the past in certain contexts permitted declaratory judgment actions to
proceed against state agencies and officials). But see DeKalb County School
Dist. v. Gold, 318 Ga. App. 633, 637 (1) (a) (734 SE2d 466) (2012) (holding
that “[o]ur Constitution and statutes do not provide for a blanket waiver of
sovereign immunity in declaratory-judgment actions”). Under the rationale of
Sustainable Coast, it appears that, absent a statutory provision affording
claimants an express right to seek declaratory relief against the State, sovereign
immunity would bar such claims. See Gold, 318 Ga. App. at 637 (noting that
OCGA § 50-13-10 provides for specific waiver of sovereign immunity for
declaratory judgment actions challenging state agency administrative rules).
17
Because this significant legal issue has received little attention in these
proceedings and because these claims can be disposed of on other grounds, as
discussed below, we decline to definitively resolve it here.
Our Declaratory Judgment Act, OCGA § 9-4-2, provides that
the superior courts may declare rights and other legal relations of
any parties petitioning for declaratory relief in “cases of actual
controversy,” or when “the ends of justice require that the
declaration should be made.” The purpose of the Act is “to settle
and afford relief from uncertainty and insecurity with respect to
rights, status, and other legal relations.” OCGA § 9-4-1. The
proper scope of declaratory judgment is to adjudge those rights
among parties upon which their future conduct depends.
Fourth Street Baptist Church of Columbus v. Bd. of Registrars, 253 Ga. 368,
369 (1) (320 SE2d 543) (1984). Accordingly, declaratory relief is proper only
where the party seeking such relief faces some uncertainty or insecurity as to
rights, status, or legal relations, upon which its future conduct depends. See,
e.g., Baker v. City of Marietta, 271 Ga. 210, 214 (1) (518 SE2d 879) (1999)
(“[w]here the party seeking declaratory judgment does not show it is in a
position of uncertainty as to an alleged right, dismissal of the declaratory
judgment action is proper”); Fourth Street Baptist Church of Columbus, 253 Ga.
at 369 (claims for declaratory relief were properly dismissed, where plaintiffs
18
“face[d] no uncertainty or insecurity with respect to their voting rights, nor any
risk stemming from undirected future action”); Henderson v. Alverson, 217 Ga.
541 (123 SE2d 721) (1962) (declaratory judgment action could not be
maintained where plaintiff failed to allege need for guidance as to his future
conduct but rather merely sought declaration that legislative enactment was
void). Here, SJN faces no uncertainty or insecurity as to any of its own future
conduct, but rather seeks an adjudication only of issues that will impact the
future conduct of the FCBOA. As such, SJN’s claims for declaratory relief
cannot be maintained, and summary judgment was properly granted thereon.
In summary, though we find error in the trial court’s striking of the
Schultz and Woodham affidavits, we nonetheless, for the foregoing reasons,
affirm the grant of summary judgment to the defendants as to all of SJN’s
claims.
Judgment affirmed. All the Justices concur.
Decided March 27, 2015.
Mandamus. Fulton Superior Court. Before Judge Baxter.
19
Robert D. Feagin, John F. Woodham, Hurt Stolz, Irwin W. Stolz, Jr., for
appellant.
Ichter Thomas, Cary Ichter, Cheryl M. Ringer, R. David Ware, Shalanda
M. J. Miller, for appellees.
Alston & Bird, Glenn R. Thomson, Clark R. Calhoun, amici curiae.
20