SJN Props., LLC v. Fulton Cnty. Bd. of Assessors

• Decision Date: 27 March 2015
• Docket Number: No. S14A1493.,S14A1493.
• Parties: SJN PROPERTIES, LLC v. FULTON COUNTY BOARD OF ASSESSORS et al.
• Court: Georgia Supreme Court

296 Ga. 793

770 S.E.2d 832

SJN PROPERTIES, LLC

v.FULTON COUNTY BOARD OF ASSESSORS et al.

No. S14A1493.

Supreme Court of Georgia.

March 27, 2015.

Robert D. Feagin, John Floyd Woodham, Irwin W. Stolz Jr., Hurt Stolz, Athens, for Appellant.

Cary Ichter, Ichter Thomas, LLC, Cheryl Melissa Ann Ringer, Robert David Ware, Shalanda M.J. Miller, Atlanta, for Appellees.

Glenn R. Thomson, Clark Russell Calhoun, Alston & Bird, LLP, Atlanta, amici curiae.

Opinion

HUNSTEIN, Justice.

In 2009, John Sherman, a resident and taxpayer of Fulton County, filed suit, on behalf of himself and all others similarly situated, against the Fulton County Board of Assessors (hereinafter, “FCBOA”), along with its Chief Appraiser and each of its members in their official capacities, to challenge the FCBOA's method of valuing leasehold estates arising from a sale-leaseback bond transaction involving the Development Authority of Fulton County (hereinafter, “DAFC”).¹ As described in an earlier appeal arising from this same case, the sale-leaseback transaction at issue here was structured as follows:

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 multiyear 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 a nominal 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 v. Fulton County Bd. of Assessors, 288 Ga. 88, 89, 701 S.E.2d 472 (2010) (hereinafter, “Sherman I ”). Sherman claims that this so-called “50% ramp-up” methodology results in the valuation of the developers' leasehold estates at less than fair market value, in violation of defendants' statutory and constitutional duties to ensure that ad valorem taxes are assessed uniformly and at fair market value.

In October 2009, the trial court granted the defendants' motion to dismiss/motion for judgment on the pleadings, and, on appeal, this Court reversed. Sherman, 288 Ga. at 95, 701 S.E.2d 472. The Court held that the case was not subject to dismissal because, while there was no dispute as to the valuation methodology employed, there was no way to conclusively determine at that stage of the proceedings that such methodology actually resulted in a fair valuation of the leasehold estate. Id. at 93, 701 S.E.2d 472. This Court reasoned:

[Defendants] argue that their initial valuation of the fee simple estate follows an authorized appraisal approach and takes into account some of the factors referenced above, such as similarly leased properties in the area and the market rents in the area. However, a valuation of the fee simple estate is just the first step. [Defendants] will need to offer evidence as to how their method applied to the leasehold estate incorporates the requisite factors. They assert that we should just assume that every leasehold estate is worth 50 percent of its fee simple estate, but offer no evidence to support this assumption. Without such evidence, and in light of the affidavit filed by Sherman to the contrary, we are unable to determine, pursuant to DeKalb County Bd. of Tax Assessors v. W.C. Harris & Co., supra, that the valuation method used by [Defendants] is not arbitrary and unreasonable, and therefore the petition should not have been dismissed pursuant to OCGA § 9–11–12(b)(6).

Id.

After remand, SJN Properties, LLC (hereinafter, “SJN”) was added as a plaintiff in the action.² The plaintiffs filed an amended and restated class action petition, again seeking declaratory, injunctive, and mandamus relief with respect to the valuation methodology, and adding a claim seeking declaratory, injunctive, and mandamus relief with respect to a subset of DAFC-owned properties involved in these bond transactions, which, according to the plaintiffs, have improperly been treated as tax-exempt. Thereafter, the parties filed cross-motions for summary judgment, and the trial court granted the defendants' motions. Though we find error in the trial court's striking of two affidavits submitted by SJN, we nonetheless, for the reasons set forth below, affirm the grant of summary judgment to the defendants.

1. At the summary judgment hearing, the trial court struck as untimely two affidavits SJN had filed and served on the day before the hearing. The first is the affidavit of expert real estate appraiser J. Carl Schultz, Jr., comprised of 16 pages of testimony accompanied by more than 200 pages of supporting exhibits. The second is the affidavit of John F. Woodham, one of three attorneys of record for SJN; this affidavit is comprised of nine pages of testimony and approximately 150 pages of supporting exhibits. SJN filed these affidavits in the trial court and served them on the defendants on December 19, 2013, the day before the December 20, 2013 summary judgment hearing. Service was effectuated both by U.S. Mail and electronically; defendants' counsel received electronic copies of the affidavits at 5:24 p.m. on December 19. Concluding that these affidavits were untimely filed, the trial court declined to consider them.

SJN contends the trial court erred in striking the affidavits, claiming that they were filed and served in accordance with the Civil Practice Act. Though we find SJN's voluminous eleventh-hour filing discourteous, we are constrained to agree that this filing was technically in compliance with the requirements of the Civil Practice Act and thus that the trial court erred in striking the affidavits. OCGA § 9–11–56(c) authorizes a party against whom a summary judgment motion has been filed to serve affidavits in opposition to the motion at any time “prior to the day of hearing.” See also OCGA § 9–11–6(d) (governing motions generally, providing that “[o]pposing affidavits may be served not later than one day before the hearing”); Woods v. Hall, 315 Ga.App. 93(1), 726 S.E.2d 596 (2012) (vacating grant of summary judgment, finding that trial court erred in striking as untimely plaintiff's opposing affidavit, filed three days prior to hearing). Cf. Brown v. Williams, 259 Ga. 6(4), 375 S.E.2d 835 (1989) (opposing affidavit filed on day of hearing was untimely). The Court of Appeals has, in fact, held that opposing affidavits were timely where served on the day before the hearing only by U.S. Mail, such that the movant had not even received them as of the time of the hearing. See Kirkland v. Kirkland, 285 Ga.App. 238(2), 645 S.E.2d 626 (2007) (opposing affidavit served by mail on day before summary judgment hearing was timely and properly considered); Martin v. Newman, 162 Ga.App. 725(2), 293 S.E.2d 18 (1982) (same). Though we find the gamesmanship in such delayed filings distasteful, we cannot ignore the plain language of OCGA § 9–11–56(c), which, regrettably, allows parties to employ such tactics.³ The trial court therefore erred in refusing to consider the Schultz and Woodham affidavits in its adjudication of defendants' motions for summary judgment. In our de novo review of the evidence here, see Jones v. Kirk, 290 Ga. 220, 221, 719 S.E.2d 428 (2011), we will thus consider these affidavits, to the extent they are otherwise “admissible in the evidence [and] ... show affirmatively that the affiant is competent to testify to the matters stated therein.” OCGA § 9–11–56(e).

2. In reviewing the merits of a trial court's decision on a motion for summary judgment, “ ‘this Court conducts a de novo review of the evidence to determine whether there is a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.’ ” Jones, 290 Ga. at 221, 719 S.E.2d 428. As we stated in Sherman I,

[t]he overriding issue in this case is whether the valuation method used by [the defendants] fairly and justly establishes the fair market value of a bond transaction leasehold estate such that the method is not “arbitrary or unreasonable.” [Cit.]

Sherman, 288 Ga. at 90, 701 S.E.2d 472. The other issue, raised in the plaintiffs' amended petition on remand following Sherman I, is whether certain properties held in fee simple by the DAFC have been and continue to be unlawfully exempted from ad valorem taxation.⁴ In connection with the resolution of these issues, SJN seeks a declaratory judgment (a) affirming the invalidity of the 50% ramp-up valuation method, both as employed in connection with the bond transaction leasehold estates here and in general; and (b) establishing DAFC's liability for back taxes on various properties as to which it has been unlawfully afforded an exemption from ad valorem taxes. In addition, SJN seeks “a mandatory injunction and/or writ of mandamus” to (a) restrain the FCBOA from using the 50% ramp-up valuation method in assessing the value of bond transaction leasehold estates; (b) compel the FCBOA to re-appraise all existing leasehold estates at issue here using an appraisal approach that comports with...