Atlanta Metro Leasing, Inc. v. City of Atlanta

• Decision Date: 20 February 2020
• Docket Number: A19A2394
• Citation: 353 Ga.App. 785,839 S.E.2d 278
• Parties: ATLANTA METRO LEASING, INC. et al v. CITY OF ATLANTA.
• Court: Georgia Court of Appeals

353 Ga.App. 785

839 S.E.2d 278

ATLANTA METRO LEASING, INC. et al

v.CITY OF ATLANTA.

A19A2394

Court of Appeals of Georgia.

February 20, 2020

Kevin A Ross, Atlanta, for Appellant.

Amber Ali Robinson, Atlanta, Staci Jon'a Miller, for Appellee.

Hodges, Judge.

Atlanta Metro Leasing, Inc. and Checker Cab Co. (collectively, the "Appellants") appeal the trial court’s order granting the City of Atlanta’s (the "City") motion to dismiss their complaint. The crux of this appeal is whether the City’s issuance of taxicab Certificates of Public Necessity and Convenience ("CPNC"s)¹ and City permits created municipal franchise agreements and, if so, whether the City breached any such agreements by failing to enforce taxicab regulations against personal transportation network companies ("TNC"s), such as Uber and Lyft. These are questions of first impression in Georgia and appear to be fairly novel arguments in other jurisdictions as well. Based on the following reasons, we affirm the trial court’s dismissal of the Appellants’ complaint.

It is well settled under Georgia law that a trial court is authorized to dismiss a complaint under OCGA § 9-11-12 (b) (6) for failure to state a claim where the complaint lacks a legal basis for recovery. See Hill v. Bd. of Regents of the Univ. System of Ga. , 351 Ga. App. 455, 458 (1), 829 S.E.2d 193 (2019). A complaint lacks a legal basis for recovery if

(1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought.

(Citation omitted.) Villa Sonoma at Perimeter Summit Condo. Assn. v. Commercial Indus. Bldg. Owners Alliance , 349 Ga. App. 666, 667 (1), 824 S.E.2d 738 (2019). In considering dismissal under OCGA § 9-11-12 (b) (6), the trial court "must accept as true all well-pled material allegations in the complaint and must resolve any doubts in favor of the plaintiff." (Citation and punctuation omitted.) Hill , 351 Ga. App. at 455, 829 S.E.2d 193. "This court reviews a trial court’s ruling on a motion to dismiss de novo, viewing as true all well-pleaded material allegations in the complaint. However, we are under no obligation to adopt a party’s legal conclusions based on these facts." (Citations and punctuation omitted.) Villa Sonoma , 349 Ga. App. at 667 (1), 824 S.E.2d 738.

So viewed, the Appellants’ amended complaint alleges that in 1977, the City passed a vehicle for hire ordinance regulating the taxicab industry in the City. Pursuant to that City ordinance, taxicab companies, such as the Appellants, are required to possess two items to operate lawfully in the City: a CPNC and a permit issued by the City. The City authorized 1,600 CPNCs, which have risen in value from $100 when they were first issued in 1977 to approximately $80,000 by 2014. Atlanta Metro Leasing is the owner of approximately 140 CPNCs. Checker Cab possesses a taxicab permit issued by the City and utilizes Atlanta Metro Leasing’s CPNCs.

According to the Appellants’ amended complaint, property rights are associated with CPNCs, such that they could be leased, transferred by bequest, assigned, and pledged as collateral. Therefore, the Appellants conclude that the City’s issuance of CPNCs and taxicab permits constitute the entry of the City into municipal franchise agreements. The Appellants further conclude that although CPNCs are designated in the City ordinance as "licenses," both the CPNCs and taxicab permits "were in substance implied in fact contracts." To that end, the Appellants allege that

[a]n essential consideration provided by the City to the purchasers of the CPNCs [and permits] under these municipal franchise agreements and implied in fact contracts was the feature of exclusivity, i.e. that the city would take reasonable measures to enforce the ordinance such that unlicensed taxicab businesses in the City would be curtailed and minimized and CPNC values would be protected from diminution arising out of unlawful competition.

Beginning in 2012, various TNCs began operating in the City without CPNCs or taxicab permits. These rideshare companies connect passengers with drivers through smartphone applications. The Appellants allege that TNCs operated as unpermitted taxicab companies in the City. According to the Appellants, although the City initially issued citations to TNC drivers for violation of the City taxicab ordinance, at some point in 2014, "the City, acting through the Mayor’s Office, the Law Department and the Police Department made a deliberate policy decision to stop enforcing the law and to not issue any further citations to Uber, Lyft or similar companies or to their drivers." In December 2014, the Atlanta Taxicab Company Owners Association, on behalf of Checker Cab and other taxicab companies, made a written demand on the City to enforce the taxicab ordinance against Uber and Lyft, but the City refused.

In 2015, the Georgia General Assembly passed House Bill 225, which became effective July 1, 2015. This bill preempted local government regulation over portions of the vehicle for hire business and provided a legal basis for TNCs to operate in the City as vehicles for hire. The bill, however, did not include Hartsfield Jackson Atlanta International Airport, and, according to the amended complaint, the City failed to address any illegal operations of TNCs at the airport. It was not until 2016 that the City enacted an ordinance providing authorization for TNCs to operate at the airport.

The Appellants sued the City, seeking damages for breach of contract regarding the CPNCs and permits from 2014 until July 1, 2015, in the City and from 2014 until 2016 at the airport, as well as bad faith expenses under OCGA § 13-6-11. According to the Appellants, the City’s failure to enforce its taxicab ordinance against TNCs resulted in substantial losses to the Appellants, including diminished CPNC values and lost profits.

The City filed a motion to dismiss the Appellants’ amended complaint under OCGA § 9-11-12 (b) (6), arguing that the complaint failed to state a claim upon which relief could be granted. The City also asserted that the Appellants’ claims were barred by sovereign immunity and that damages, if any, were limited to acts or omissions occurring within a four-year statute of limitation. The trial court summarily granted the City’s motion to dismiss without specifying the basis for its ruling, and the Appellants appeal from that dismissal.

The Appellants raise three enumerations of error: (1) their complaint stated a cause of action for breach of a franchise agreement as to Atlanta Metro Leasing’s CPNCs; (2) their complaint stated a cause of action for breach of a franchise agreement as to Checker Cab’s taxicab permit; and (3) their expenses of litigation claim was required to be reinstated with their breach of contract causes of action. As previously stated, the Appellants focus their appeal on whether the City’s issuance of taxicab CPNCs and permits created municipal franchise agreements and, if so, whether the City breached any such agreements by failing to enforce taxicab regulations against TNCs. However, because "the applicability of sovereign immunity is a threshold determination, and, if it does apply, a court lacks jurisdiction over the case and, concomitantly, lacks authority to decide the merits of a claim that is barred[,]" we must first address the City’s contention that sovereign immunity bars the Appellants’ claims. (Footnote omitted.) McConnell v. Dept. of Labor , 302 Ga. 18, 19, 805 S.E.2d 79 (2017).²

1. The Georgia Constitution provides broad sovereign immunity:

Except as specifically provided in this Paragraph, sovereign immunity extends to the state and all of its departments and agencies. The sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.

Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). This immunity, also known as governmental immunity, protects all levels of governments, including municipalities, from legal action unless they have waived their immunity from suit. See OCGA § 36-33-1 ("it is the public policy of the State of Georgia that there is no waiver of the sovereign immunity of municipal corporations of the state and such municipal corporations shall be immune from liability for damages"). "The authority to waive the immunity of municipalities rests solely with the General Assembly and must be effected by statute." (Citation omitted.) Drumm v. George , 345 Ga. App. 760, 762, 814 S.E.2d 575 (2018).

Significantly, our legislature has provided that "[m]unicipal corporations shall not be liable for failure to perform or for errors in performing their legislative or judicial powers." OCGA § 36-33-1 (b). This waiver has been consistently interpreted to mean that municipal corporations have sovereign immunity against claims involving the performance, or failure to perform, "a governmental function[,] but may be liable for the negligent performance of their ministerial duties." (Citations omitted.) City of Atlanta v. Mitcham , 296 Ga. 576, 577-578 (1), 769 S.E.2d 320 (2015) ("municipal corporations are immune from liability for acts taken in performance of a governmental function"); see also Albertson v. City of Jesup , 312 Ga. App. 246, 249 (1), 718 S.E.2d 4 (2011) ("under Georgia law, municipal corporations shall not be liable for failure to perform or for errors in performing their legislative or judicial powers") (citations and punctuation omitted). The Georgia Supreme Court explained the difference between these two functions:

Governmental functions traditionally have been defined as those of a purely public nature, intended for the

...