FULTON CTY. BD. v. Saks Fifth Ave.

• Decision Date: 29 March 2001
• Docket Number: No. A00A2494.,A00A2494.
• Citation: 248 Ga. App. 836,547 S.E.2d 620
• Parties: FULTON COUNTY BOARD OF ASSESSORS v. SAKS FIFTH AVENUE, INC.
• Court: Georgia Court of Appeals

547 S.E.2d 620

248 Ga. App. 836

FULTON COUNTY BOARD OF ASSESSORS v. SAKS FIFTH AVENUE, INC.

No. A00A2494.

Court of Appeals of Georgia.

March 29, 2001.

Overtis H. Brantley, Vernitia A. Shannon, Atlanta, Rodney T. Floyd, Columbus, Brenda D. King, Atlanta, for appellant.

Webb, Tanner & Powell, Steven A. Pickens, Matthew P. Benson, Lawrenceville, for appellee. BLACKBURN, Chief Judge.

The Fulton County Board of Assessors (Board) appeals the trial court's grant of Saks Fifth Avenue, Inc.'s (Saks) motion for a protective order in connection with a personal property tax audit of its Fulton County location for tax years 1995 through 1998. The order allowed Saks to withhold confidential documents subpoenaed by the Board until such time as Mendola & Associates, LLC (Mendola), the private accounting firm hired by the Board to conduct the audit, entered into a confidentiality agreement concerning such documents with Saks.

In seven enumerations of error, the Board raises the following three arguments: (1) The trial court erred in granting Saks' motion for protective order because the confidentiality of the subpoenaed documents is protected under OCGA § 48-5-314, under the employment contract between Mendola and Fulton County, and by Mendola's responsibilities as a certified public accounting firm; (2) The trial court erred in finding both that Saks was not in contempt for failure to honor the Board's OCGA § 48-5-300 subpoena and that Saks' fear of disclosure of the confidential documents to third parties constituted a legal excuse which relieved it from complying with the subpoena; and (3) The trial court erred in failing to follow Wal-Mart Stores v. Bd. of Tax Assessors of Fayette County¹ and in ignoring the public policy implications of its ruling.

These issues turn on the underlying question of the authority of the Board to require the production of a taxpayer's confidential documents for investigative purposes. Also in question is the Board's right to seek contempt sanctions as a result of Saks' failure to honor the subject subpoena under the facts herein and the general authority of the trial court to issue a protective order. For the reasons set forth below, we vacate the trial court's ruling and remand the case for further proceedings consistent with this opinion.

Turning to the facts, Saks, an Alabama corporation, operates a department store in Fulton County, Georgia. In June 1999, the Board notified Saks that it was going to conduct a personal property audit of Saks' personal property tax returns for tax years 1995 through 1998. The Board assigned the audit to Mendola, an accounting firm with whom it had a contract to conduct such audits.

The Board is authorized to make such investigation as may be necessary to inquire into real and personal property owned in the county, to determine upon which such property all taxes due the state or the county have not been paid in full. See OCGA § 48-5-299. The Board is authorized to enter into employment contracts with persons, subject to the approval of the county governing authority, to assist the Board in the mapping, platting, cataloging, indexing, and appraising of taxable properties in the county; to make, subject to the approval of the Board, reevaluations of taxable property in the county; and to search out and appraise unreturned properties in the county. See OCGA § 48-5-298. In Eckerd Corp. v. Fayette County Bd. of Tax Assessors,² this court, relying upon our Supreme Court's holding in Sears, Roebuck & Co. v. Parsons,³ affirmed the right of the board of tax assessors to contract for third-party services pursuant to OCGA § 48-5-298.

In conducting the audit, Mendola requested that Saks produce certain financial and proprietary information or copies thereof. We note that Mendola, when acting as the agent of the Board, has no greater authority than the law provides to the Board. Saks responded that it would do so only if Mendola would sign a confidentiality agreement to protect the information. Saks sought agreement by Mendola that it would not disclose any information obtained by Mendola from it to any third parties and that Mendola would not use such information for any purposes other than conducting the subject audit, which conduct is prohibited by statute. Saks also requested that the Board and Mendola would return to Saks all information provided by it once the audit was completed. While this document return is not specifically required by statute, any other use of such documents or disclosure to third parties would be a violation of the law. Mendola refused to sign the agreement and insisted that Saks produce the documents although it had no lawful authority to do so.

Because Saks would not turn over the proprietary documents Mendola wished to review, the Board then served Saks with a subpoena, pursuant to OCGA § 48-5-300(a)(1), in the nature of a discovery vehicle, for the production of the documents which Mendola wished to review in connection with Fulton County personal property account no. 0015407, and what the subpoena described simply as "a matter there pending."

No on-premise review of documents had been attempted at that time, and no claim has been made by the Board evidenced through the record of this appeal of any failure of Saks to report property or to pay taxes. There was no hearing scheduled at 9:00 a.m. on October 14, 1999, the time the production of the proprietary documents was required at the Fulton County Board of Assessors' Office, 141 Pryor Street, S.W., Suite 1047, Atlanta, Georgia 30303, under the subpoena. This was the only location at which the taxpayer could be required to produce any lawfully required documents.

It is clear that no hearing was in fact scheduled in connection with the subject subpoena. The subpoena refers to no hearing, and the record contains no notice to the taxpayer of the claims of the Board as to taxes owed or laws violated, the subject matter of the hearing or the date thereof. The due process clauses of U.S. Const., 14th amend. and Ga. Const.1976, Art. I, Sec. I, Par. I (see Ga. Const.1983, Art. I, Sec. I, Par. I) require notice and a hearing by an administrative agency before any action may be taken which affects a citizen's constitutional or property rights, even though the Act granting the right to the Board provides for an appeal to the superior court. 1958-1959 Op. Atty. Gen., p. 1.

The Board has only that authority provided by law to access a taxpayer's confidential business records in the conduct of its on-premise investigative audit pursuant to OCGA § 48-5-299 or to subpoena those records authorized by OCGA § 48-5-300 to any lawfully scheduled hearing, meeting the requirements of due process. The Board has no statutory authority to issue subpoenas for discovery purposes in connection with tax audits pursuant to OCGA § 48-5-299 or to require a taxpayer to produce copies of such records for the use of the Board, except by subpoena to a lawfully scheduled hearing. A taxpayer is free to voluntarily provide copies of its records in the manner requested by the Board if it wishes to do so; however, the Board is not authorized to require the wholesale production of copies of a taxpayer's documents for the purpose of an off-premise fishing expedition into the affairs of the taxpayer. Discovery under the Civil Practice Act does not apply to a proceeding under the Administrative Procedure Act and is not otherwise authorized by law in this matter. See Hewes v. Cooler;⁴Ga. State Bd. of Dental Examiners v. Daniels.⁵

The Board's authority to require production of documents by a taxpayer, other than the on-premise inspection of records it is lawfully authorized to conduct pursuant to OCGA § 48-5-299, is limited to the production of documents pursuant to OCGA § 48-5-300, which provides:

(a)(1) Except as otherwise provided in paragraph (2) of this subsection, the county board of tax assessors may issue subpoenas for the attendance of witnesses and may subpoena of any person any books, papers, or documents which may contain any information material to any question relative to the existence or liability of property subject to taxation or to the identity of the owner of property liable to taxation or relevant to other matters necessary to the proper assessment of taxes lawfully due the state or county. Such subpoenas may be issued in the name of the board, shall be signed by any one or more members of the board or by the secretary of the board, and shall be served upon a taxpayer or witness or any party required to produce documents or records five days before the day upon which any hearing by the board is scheduled at which the attendance of the party or witness or the production of such documents is required. (2) The authority provided for in paragraph (1) of this subsection shall not apply to the following documents or records: (A) Any income tax records or returns; (B) Any property appraisals prior to the appeal process; (C) All insurance policies; or (D) Any individual tenant sales information. (b) If any witness subpoenaed by any county board of tax assessors fails or refuses to appear, fails or refuses to answer questions propounded, or fails or refuses to produce any books, papers, or documents required to be produced by an order of the board, except upon a legal excuse which would relieve the witness of the obligation to attend as a witness or to produce such documents before the superior court if lawfully required to do so, the person so failing or refusing shall be guilty of contempt and shall be cited by the board to appear before a judge of the superior court of the county. The judge of the superior court of the county shall have the same power and jurisdiction to punish the person failing or refusing to comply with the order for contempt and to require and compel the giving of the testimony or the production of the books and records as in cases of contempt

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