Barnes v. City of Atlanta
| Decision Date | 06 September 2005 |
| Docket Number | No. A05A0874.,No. A05A0873.,A05A0873.,A05A0874. |
| Citation | 620 S.E.2d 846 |
| Parties | BARNES et al. v. CITY OF ATLANTA. City of Atlanta v. Barnes et al. |
| Court | Georgia Supreme Court |
Irwin Stolz, Jr., Winburn, Lewis, Barrow & Stolz, P.C., Athens, Robert Feagin, Decker, Hallman, Barber & Briggs, Atlanta, for Appellant.
Lemuel Ward, City of Atlanta Law Department, Atlanta, Linda DiSantis, City Attorney, City of Atlanta Law Department, for Appellee.
The plaintiffs in a class action suit against the City of Atlanta (the "City") appeal from the orders of the trial court on their motions for attorney fees, partial money judgment, and amendment of class certification. The City has filed a cross appeal. We affirm for the reasons set forth below.
In 1999, a group of attorneys who practiced law in the City, including plaintiff Gary Barnes, demanded the City refund their payment of the City's occupational tax during the reporting periods 1998, 1997, and 1996. After more than a year passed from the date of their refund claim without payment by the City, Barnes and other named plaintiffs brought a class action complaint against the City on behalf of attorneys who had paid the City's occupational tax. The plaintiffs contended, among other things, that the City's occupational tax was an unconstitutional encroachment on the Supreme Court's authority to regulate the practice of law.
Order on Class Certification. The trial court divided the plaintiffs into two classes: those who had not requested a tax refund from the City pursuant to OCGA § 48-5-380 (Class I) and those who had requested a tax refund from the City pursuant to OCGA § 48-5-380 (Class II). The trial court granted class certification to Class I and Class II with respect to the plaintiffs' constitutionality claim, and granted class certification to Class II with respect to the plaintiffs' refund claim. However, the trial court denied class certification to Class I as to the plaintiffs' refund claim because the members of Class I were required to make a pre-litigation demand for a refund before pursuing the claim in superior court.
Order Granting Plaintiffs' Motion for Summary Judgment and Denying Defendant's Motion for Summary Judgment. On March 1, 2002, the trial court granted plaintiffs' motion for summary judgment and denied the City's motion for summary judgment in an order finding that the City's occupational tax as applied to attorneys was an unconstitutional precondition on the practice of law. This order was affirmed on appeal by our Supreme Court in City of Atlanta v. Barnes.1
Order on Plaintiffs' Motion for Entry of Partial Money Judgment. On remittitur, the trial court entered its September 17, 2003 order on plaintiffs' motion for entry of partial money judgment. In their motion, the plaintiffs argued that they had made a refund request on behalf of the Class I plaintiffs by filing the original class complaint, that the requisite waiting period had expired, and that the Class I plaintiffs had been converted into Class II plaintiffs who could now seek refunds. The trial court disagreed, inviting plaintiffs' counsel to file a motion to amend the purposes for which Class I was certified, but reiterating its earlier finding that the Class I plaintiffs must still exhaust their administrative remedies before maintaining a tax refund action, as required by OCGA § 48-5-380.
Order on Plaintiffs' Motion for Attorney Fees. On September 17, 2003, the trial court also entered its order on plaintiffs' motion for attorney fees. The trial court awarded plaintiffs' counsel attorney fees of 33 1/3 percent of the common fund, but provided that those who had opted out of the classes were not responsible for paying attorney fees.
Order on Plaintiffs' Motion to Alter and Amend Class Certification Order. On February 27, 2004, the trial court issued its order on plaintiffs' motion to amend the previous class certification order. The trial court amended the Class I certification to permit class counsel to request occupational tax refunds on behalf of the members of Class I, noting that the court had previously ruled that any refund request made by counsel without such approval was unauthorized.
Final Order. On September 22, 2004, the trial court designated its February 27, 2004 order on plaintiffs' motion to amend the class certification order as a final order. The trial court also held that refund requests made by plaintiffs' counsel on behalf of Class I had been made before counsel was authorized to do so, and that the statute of limitation "did not begin to run" until February 27, 2004.
Plaintiffs appeal from (i) the trial court's September 17, 2003 orders on plaintiffs' motions for entry of partial money judgment and attorney fees and (ii) the trial court's February 27, 2004 order on plaintiffs' motion to amend class certification, as clarified in the September 22, 2004 order. The City appeals from the trial court's February 27, 2004 order on plaintiffs' motion to amend class certification, as clarified in the September 22, 2004 order.
1. The plaintiffs contend the trial court erred by finding that (i) plaintiffs' counsel did not have the authority to demand a tax refund on behalf of all Class I members, (ii) the statute of limitation for Class I refund claims began to run on February 27, 2004, and was not tolled upon the filing of the class complaint, and (iii) those who opt out of the class action will not be responsible for attorney fees and expenses of litigation.
(a) OCGA § 48-5-380 applied to Class I's refund claim. A common thread running through the plaintiffs' arguments is that the pre-litigation claim for a refund contemplated by OCGA § 48-5-380 is not applicable to the claims of the Class I taxpayers, and so we will address this contention separately. OCGA § 48-5-380 establishes a procedure for a taxpayer to seek a refund of an erroneous or illegal collection of any tax or license fee by a county or municipality.2 Under the statutory scheme, the taxpayer must make a pre-litigation refund claim to the taxing authority.3 Thereafter, "[n]o action or proceeding for the recovery of a refund shall be commenced before the expiration of one year from the date of filing the claim for refund unless the governing authority of the county or municipality renders a decision on the claim within the one-year period."4
By definition, members of Class I had not made a pre-litigation claim for a refund of the City's occupation tax, and the trial court denied class certification to Class I on their refund claims for that reason. The trial court did not consider a refund action against the City by the Class I plaintiffs to be available under OCGA § 48-5-380 until February 27, 2004, the date of its order on plaintiffs' motion to amend the class certification order. The plaintiffs contend the trial court erred in so ruling because OCGA § 48-5-380 was not applicable to their claims, which they further contend had been properly asserted by both classes on the date of filing of the original class complaint. We disagree.
The plaintiffs characterize their initial complaint as a common law action for money had and received, and contend they had no need to rely on OCGA § 48-5-380 to sue for a refund. We have previously noted that the right to sue for refund was available under common law.5 But it does not follow that the plaintiffs could simply bypass OCGA § 48-5-380's requirement that the taxpayer demand a refund before proceeding to superior court by characterizing their action as one brought under authority of common law. "The statutory authorization to bring an action for a tax refund in superior court against a governmental body is an express waiver of sovereign immunity, and the State's consent to be sued must be strictly construed."6 Furthermore, in Barnes our Supreme Court characterized this action as brought under OCGA § 48-5-380.7 Inasmuch as OCGA § 48-5-380 applies to "any" tax levied by a municipal governing authority, including an "illegal collection," the statute governs the Class I refund claims, and the trial court was correct in applying the statutory requirement that members of Class I make a pre-litigation claim for a refund before bringing suit.
Relying on Barnes, the plaintiffs further contend that OCGA § 48-5-380 was inapplicable because their claim was brought as a class action. We disagree. At issue in Division 3 of Barnes was the City's claim that the trial court erred in certifying as a class action the refund claim of the Class II plaintiffs.8 The City relied on Henderson v. Carter,9 in which our Supreme Court, in reviewing a statute similar to OCGA § 48-5-380(c), had previously held that a class action was not authorized in a tax refund case. Our Supreme Court overruled Henderson, reasoning as follows:
10
The plaintiffs focus on the Court's statement that the statute does not provide for the "form of action to be utilized," and that a plaintiff in a class action that includes a claim for a tax refund is "unquestionably bringing an action for a refund, which is what the statute permits." They contend that the original class action complaint was therefore a permissible form of action on behalf of both classes. But at issue in Barnes was the trial court's certification of the refund claims of the Class II plaintiffs, who had made...
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