Sherman v. Fulton County Bd. of Assessors

• Decision Date: 01 November 2010
• Docket Number: No. S10A0924.,S10A0924.
• Citation: 288 Ga. 88,10 FCDR 3479,701 S.E.2d 472
• Parties: SHERMAN v. FULTON COUNTY BOARD OF ASSESSORS et al.
• Court: Georgia Supreme Court

701 S.E.2d 472

288 Ga. 88

10 FCDR 3479

SHERMAN

v.FULTON COUNTY BOARD OF ASSESSORS et al.

No. S10A0924.

Supreme Court of Georgia.

Nov. 1, 2010.

John Floyd Woodham, Woodham and Associates LLC, Atlanta, for appellants.

Cary Ichter, Ichter Thomas, LLC., Cheryl Melissa Ann Ringer, Patricia Anne Roy, Ichter Thomas, LLC., Jerolyn Webb Ferrari, Robert David Ware, S. Renee Huskey, Ichter Thomas, LLC., Atlanta, for appellees.

Han Chun Choi, Sandra Zagier Zayac, Lewis C. Horne, Jr., Schiff Hardin, LLP, Robert D. Feagin, Atlanta, Thurbert E. Baker, Attorney General, R.O. Lerer, Deputy Attorney General, George S. Zier, Denise E. Whiting-Pack, Senior Assistant Attorneys General, for amici curiae.

CARLEY, Presiding Justice.

On June 26, 2009, John Sherman, a taxpayer and resident of Fulton County, filed on behalf of himself and all others similarly situated, a petition for declaratory judgment, injunction, and mandamus against the Fulton County Board of Assessors and its chief appraiser and members in their official capacities (FCBOA). The trial court permitted the Development Authority of Fulton County (DAFC) to intervene. In his petition, Sherman contends that the method of valuing leasehold estates arising from a local development authority sale-leaseback bond transaction is illegal, unconstitutional, ultra vires and constitutes a failure of FCBOA and DAFC (Appellees) to perform their duty.

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 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 anominal 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 seeks the following relief: a declaration that this valuation method, used by Appellees and allegedly codified in OCGA § 36-80-16.1(e), violates the Georgia and United States Constitutions; an injunction prohibiting Appellees from using this valuation method for purposes of determining the fair market value of leasehold estates created by a revenue bond transaction; and a writ of mandamus ordering Appellees to commence determining the actual fair market value of all existing leasehold estates and to reassess all such leasehold estates for all prior years that the valuation method at issue was used. The trial court entered an order granting a motion to dismiss filed by FCBOA and a motion for judgment on the pleadings filed by DAFC, and denying a motion for partial summary judgment filed by Sherman. Sherman appeals from that order, contending that the dismissal of the petition and the grant of judgment on the pleadings were erroneous.

The standard of review for the dismissal of a petition for failure to state a claim upon which relief may be granted is de novo, and " ' "all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party's favor." (Cit.)' [Cit.]" Southstar Energy Services v. Ellison, 286 Ga. 709, 710(1), 691 S.E.2d 203 (2010).

"(A) motion to dismiss for failure to state a claim upon which relief can be granted 'should not be sustained unless (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....' (Cit.)" [Cit.]

Southstar Energy Services v. Ellison, supra. "If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied. [Cits.]" Anderson v. Flake, 267 Ga. 498, 501(2), 480 S.E.2d 10 (1997).

" 'For the purposes of [a] motion [for judgment on the pleadings], all well-pleaded material allegations of the opposing party's pleading are to be taken as true, and all allegations of the moving party which have been denied are taken as false.' [Cit.]" Ware v. Fidelity Acceptance Corp., 225 Ga.App. 41, 44(3), 482 S.E.2d 536 (1997). A motion for judgment on the pleadings should "be granted only if ... the moving party is clearly entitled to judgment." Gulf American Fire & Casualty Co. v. Harper, 117 Ga.App. 356(1), 160 S.E.2d 663 (1968).

Construed in favor of Sherman, the petition alleges that Appellees, by using the above-referenced valuation method, have intentionally valued bond transaction leasehold estates for purposes of ad valorem taxation at less than fair market value. Sherman claims that Appellees' alleged undervaluation of these leasehold estates violates their duty 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...." OCGA § 48-5-306(a). He also alleges violations of several provisions in the Georgia and United States Constitutions, including the uniformity of taxation provision. The overriding issue in this case is whether the valuation method used by Appellees fairly and justly establishes the fair market value of a bond transaction leasehold estate such that the method is not "arbitrary or unreasonable."DeKalb County Bd. of Tax Assessors v. W.C. Harris & Co., 248 Ga. 277, 281(3), 282 S.E.2d 880 (1981).

Appellees have failed to show that they are clearly entitled to judgment and that no evidence may be introduced sufficient to grant the relief sought by Sherman. In fact, Sherman provided such evidence in the trial court in the form of an affidavit of a qualified expert real estate appraiser, which specifically opines that thevaluation method used by Appellees does not fairly and accurately determine the fair market value of a bond transaction leasehold estate and thus is arbitrary and unreasonable. In a previous dispute over the proper valuation method for determining the fair market value of real property for purposes of ad valorem taxation, this Court stated that, " [a]lthough the tax assessors or the property owners, or both, may be incorrect as a matter of fact, such determination cannot be made on motion for summary judgment...." Dougherty County Bd. of Tax Assessors v. Burt Realty Co., 250 Ga. 467, 469, 298 S.E.2d 475 (1983). See also Delta Air Lines v. Clayton County Bd. of Tax Assessors, 246 Ga.App. 225, 235(4), 539 S.E.2d 905 (2000) ("Determination of the fair market value of the property involved is generally a question for the trier of fact. [Cits.]"); J.C. Penney Co. v. Richmond County Bd. of Tax Assessors, 233 Ga.App. 399, 400-401, 504 S.E.2d 201 (1998) (" 'Just and fair valuation of property is a question to be determined by the factfinder.... (Cit.)' "). Clearly then, that determination can rarely be made under the more stringent standards applicable to motions to dismiss for failure to state a claim and motions for judgment on the pleadings.

It 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 for purposes of ad valorem taxation. See Rogers v. DeKalb County Bd. of Tax Assessors, 247 Ga. 726, 728(2), 279 S.E.2d 223 (1981) (" 'The object of the assessors must be to determine the fair market value of the property subject to taxation in the county and the methods employed may be varied if the object is attained.' [Cit.]"); Lamplight Court Apartments v. DeKalb County Bd. of Tax Assessors, 259 Ga.App. 642, 643(1), 577 S.E.2d 814 (2003) (" '[I]t is not impermissible under the uniformity of taxation provision of the constitution to apply different methods of arriving at the fair market value of tangible property.' "). However, this does not mean that the boards "can act with unlimited discretion...." Cross v. Miller, 221 Ga. 579, 581(1), 146 S.E.2d 279 (1965). The law still requires valuations to be just and fair between all taxpayers of the county. Cross v. Miller, supra. The valuation methods used must not be "arbitrary or unreasonable." DeKalb County Bd. of Tax Assessors v. W.C. Harris & Co., supra. Therefore, it cannot be said that, within the framework of the petition, no evidence could be introduced that would support a finding that the valuation method used by Appellees unfairly undervalues the fair market value of a bond transaction leasehold estate and thus is arbitrary or unreasonable.

Appellees contend that they have authority for the use of their valuation method pursuant to the decisions upholding similar valuation methods for bond transaction leasehold estates inDeKalb County Bd. of Tax Assessors v. W.C. Harris & Co., supra, and Coweta County Bd. of Tax Assessors v. EGO Products, 241 Ga.App. 85, 87-88(1), 526 S.E.2d 133 (1999). However, neither of those...