Powder Springs Holdings, LLC v. RL BB Acq Ii-Ga PSH, LLC.

• Court: Georgia Court of Appeals
• Writing for the Court: McMILLIAN
• Citation: Powder Springs Holdings, LLC v. RL BB Acq II-Ga PSH, LLC., 325 Ga.App. 694, 754 S.E.2d 655 (Ga. App. 2014)
• Decision Date: 06 February 2014
• Docket Number: No. A13A2471.,A13A2471.
• Parties: POWDER SPRINGS HOLDINGS, LLC et al. v. RL BB ACQ II–GA PSH, LLC.

325 Ga.App. 694

754 S.E.2d 655

POWDER SPRINGS HOLDINGS, LLC et al.

v.RL BB ACQ II–GA PSH, LLC.

No. A13A2471.

Court of Appeals of Georgia.

Feb. 6, 2014.

Robert J. Proctor, Alpharetta, for Appellants.

Womble, Carlyle, Sandridge & Rice, Michael Joseph Sullivan, Arthur Allen Ebbs, George William Long III, Atlanta, for Appellee.

McMILLIAN, Judge.

Powder Springs Holdings, LLC and others ¹ (collectively “ Powder Springs”) appeal from the trial court's order confirming the nonjudicial foreclosure sale of certain real property (the “Property”) by appellee RL BB ACQ II–GA PSH, LLC (“RL BB”). Powder Springs enumerates two errors, contending that the trial court erred by denying its motion to dismiss based on RL BB's failure to obtain a certificate of authority prior to instituting the confirmation proceedings, which it contends was required under OCGA § 14–11–711, and that the trial court erred by confirming the sale because RL BB failed to present evidence of the fair market value of the Property as of the date of foreclosure. As more fully set forth below, we now affirm.

For purposes of this appeal, the underlying facts are undisputed. In July 2006, Powder Springs executed a promissory note, as subsequently modified, in favor of Branch Banking and Trust Company (“BB & T”), which was guaranteed by several individuals and an LLC and secured by a deed to secure debt (collectively “loan documents”). In 2011, BB & T transferred, assigned and conveyed all its interest in the loan documents to Rialto Real Estate Fund, LP (“Rialto”), a Delaware Limited Partnership, and Rialto subsequently transferred, assigned and conveyed its interest in the loan documents to appellee RL BB. By this time the loan was in default, and RL BB instituted foreclosure proceedings pursuant to the power of sale contained in the security deed and thereafter conducted a foreclosure sale of the property securing the loan. Pursuant to OCGA § 44–14–161, RL BB then reported the sale to an appropriate superior court judge and filed the present confirmation petition. Following two hearings, the trial court confirmed the sale, and Powder Springs filed this appeal.

1. We first consider whether the trial court should have dismissed the confirmation petition because RL BB, a Florida limited liability company, was not authorized to transact business in Georgia.

Pursuant to OCGA § 14–11–702(a), a foreign limited liability company transacting business in this state is required to obtain a certificate of authority from the Georgia Secretary of State, subject to certain exceptions set forth in OCGA § 14–11–702(b). Further, OCGA § 14–11–711(a) prohibits a foreign limited liability company transacting business in this state from maintaining an action, suit, or proceeding in the courts of this state until it has obtained the required certificate.² Relyingon this section, Powder Springs moved to dismiss the confirmation petition, ³ arguing that RL BB admitted in the confirmation petition that it “does business” in Georgia. RL BB defended the motion, arguing that the only business it transacted in this state was in connection with the loan and foreclosure related to the confirmation petition, and that all of these activities fell within the exceptions listed in OCGA § 14–11–702(b). The trial court subsequently denied the motion without stating the specific basis for its decision.

On appeal, Powder Springs again relies solely on RL BB's “affirmative allegation” in its confirmation petition that it “does business in the State of Georgia,” arguing that this “admission in solemn judicio” relieved Powder Springs of presenting any other evidence to establish that RL BB was required to obtain a certificate of authority prior to availing itself of the courts of this state. See OCGA § 24–8–821⁴ (“Without offering the same in evidence, either party may avail himself or herself of allegations or admissions made in the pleadings of the other”).

Although it is true, as Powder Springs contends, that a party is estopped from contradicting a solemn admission in judicio, that rule applies only to admissions of fact and does not apply when the admission is merely the opinion or conclusion of the maker as to the law or fact. In other words, “[t]he rule as to admissions in judicio does not apply to legal conclusions but only to statements of fact.” In re Estate of Chambers, 261 Ga.App. 737, 740(1), 583 S.E.2d 565 (2003). Here, RL BB alleged that it “does business” in Georgia, but, without more, that does not prove that it was required to obtain a certificate of authority to transact business in this state. The statute specifically provides that certain specified business activities “shall not be considered to be transacting business in this state, for the purpose of qualification under this chapter,” thereby allowing a foreign limited liability company to engage in these business activities without having to obtain a certificate of authority. OCGA § 14–11–702(b). Thus, determining whether a foreign limited liability company is “transacting business” in this state within the meaning of OCGA § 14–11–702(a) also requires a determination of whether any of the exclusions listed in subsection (b) apply, and presents a mixed question of fact and law concerning whether the company is required to obtain a certificate of authority because it is “transacting” business in this state within the meaning of the statute. E.g., Mansell 400 Assoc. v. Entex Information Svcs., Inc., 239 Ga.App. 477, 482, 519 S.E.2d 46 (1999) (on motion for reconsideration) (party not bound by his admission that he “vacated” the premises because the “vacate” as used in the lease was a question of law for the court to determine).

In this case, the pleadings and evidence show only that RL BB conducted the following activities in Georgia: acquired the underlying loan documents, advertised and conducted the foreclosure sale, purchased the property at the foreclosure sale, reported the sale and filed the confirmation petition. Powder Springs did not present any evidence showing that RL BB transacted any other business in Georgia.⁵ A limited liability company is not considered to be transacting business in Georgia merely because it engages in activities of this type. See OCGA § 14–11–702(b).⁶ “A defendant bringing a motion in abatement[, such as the one asserted by Powder Springs,] has the burden of proving the facts necessary to support a judgment of dismissal.” Carrier 411 Svcs., Inc. v. Insight Technology, Inc., 322 Ga.App. at 170(1), 744 S.E.2d 356 (2013). This Powder Springs failed to do. Accordingly, the trial court did not err by denying the motion to dismiss. Id.

2. Powder Springs also contends that the trial court should have disregarded RL BB's appraiser's testimony concerning the value of the property because: (1) “the appraiser admitted [at the hearing] that he had no current opinion about the value [of the property] on the date of the foreclosure”; (2) the appraiser's testimony concerning the market value of Property was not the “product of reliable principles and methods”; and (3) the appraiser failed to apply “the principles and methods reliably to the facts of the case.” See OCGA § 24–7–702 (2013).⁷

As we have explained on several occasions,

the confirmation process, which is a condition precedent to an action for deficiency judgment, was intended to protect a debtor from a deficiency judgment when the involuntary sale brings less than the true market value. The law requires that, following an application for confirmation of a foreclosure sale under power of sale, the trial court hold a hearing to require evidence of the property's true market value and to pass upon the legality of the notice, advertisement, and regularity of the sale. The trial court's primary duty at a hearing is a judicial ascertainment that the property brought at least its true market value on the foreclosure sale.

(Citations and punctuation omitted.) Nicholson Hills Dev., LLC v. Branch Banking, etc., Co., 316 Ga.App. 857, 860(1), 730 S.E.2d 572 (2012). See also OCGA § 44–14–161. To fulfill its duty

the court shall require evidence to show the true market value of the property sold under the powers and shall not confirm the sale unless it is satisfied that the property so sold brought its true market value on such foreclosure sale. On appellate review, the test is not whether this court would have accepted appellant's expert appraisals as the most reliable and accurate, but whether the record contains any evidence to support the findings of the superior court that the property brought its true market value at the foreclosure sale.

(Citation and punctuation omitted.) Diplomat Constr., Inc. v. State Bank of Texas, 314 Ga.App. 889, 890–891(1), 726 S.E.2d 140 (2012).

At the final confirmation hearing, RL BB presented the testimony of Connie Richard Gragg, Jr., a certified general appraiser who was admitted without objection as an expert on commercial real estate evaluation. Gragg gave his opinion that the value of the property, which consisted of approximately 23 acres of undeveloped land zoned primarily for retail use in Powder Springs, Georgia, was approximately $1.8 million as of the date of the foreclosure sale. Further, Gragg testified at length concerning the method he used to appraise the property, why he chose that particular method, the market conditions affecting his appraisal, the factual information upon which he based his appraisal and other factors he took into account in reaching his opinion concerning the true market value of the property. Moreover, although Gragg testified that he prepared his appraisal report on May 13, 2011, approximately three weeks before the foreclosure sale on June 7, 2011, he unequivocally testified that he was familiar with the market conditions during the intervening weeks and that there had been no change in those conditions which would affect the value of the property.

During...