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Released Opinions

February 18, 2013

This morning, the Supreme Court of Georgia released opinions in 16 cases, three of which are within the scope of our coverage. Summaries of the opinions released are below. The Court will also hear oral argument this morning and Wednesday.

S12A1599 City of Suwanee v. Settles Bridge Farm, LLC

This case is a direct appeal regarding the constitutionality of an ordinance adopted by the City of Suwanee. In 2006 and 2007, Settles Bridge Farm, LLC purchased a number of acres that were zoned high-density residential that did not require any special approval before construction of a school. A private school approached Settles Bridge Farm in 2008 and agreed to purchase the property. After learning of the contract, the City of Suwanee adopted a moratorium banning any new building permits and subsequently adopted an amendment requiring most construction in an area zoned residential must go through a special use review.

Settles Bridge Farm filed suit, alleging the ordinance was unconstitutional as applied to them and the trial court agreed. The trial court then awarded $1.8 million in damages in addition to more than $460,000 in interest and the City of Suwanee appealed.

The case was heard at oral argument on October 1, 2012.

On February 18, 2013, the Supreme Court unanimously reversed the trial court decision. Writing for the Court, Chief Justice Hunstein explained that the case was not ripe for judicial review because Settles Bridge Farm never applied for a Special Use Permit before suing the city. The failure to exhaust administrative remedies prevents judicial review of the claims. The application did not meet the exception for futility because the issue was not the same as the issue previously decided by the City–pessimism about such an application was not enough to meet the “futile” exception to the requirement to exhaust administrative remedies.

S12Q1936 Silliman v. Cassell

This case began as a bankruptcy case, but turns on the specific interpretation of a Georgia statute exempting some types of annuities from bankruptcy. Cassell inherited $220,000 from her aunt in 2008. Because she and her company were insolvent but still able to pay their debts at the time, Cassell purchased a single-premium fixed annuity that began making monthly payments to her in 2009. In 2010, Cassell filed for Chapter 7 bankruptcy and listed the annuity as property exempt from the bankruptcy estate. The trustee argued it was not exempt because it did not meet the requirements for exemption under Georgia law. The bankruptcy court disagreed, finding the annuity met the definition of “annuity” under Georgia law and the trustee appealed.

The Eleventh Circuit certified two questions to the Supreme Court of Georgia after finding there was substantial doubt about the correct answer under Georgia law. Those questions are:

  1. Is a single-premium fixed annuity purchased with inherited funds an “annuity” for the purposes of Ga. Code Ann. § 44-13-100(a)(2)(E)?
  2. Is a debtor’s right to receive a payment from an annuity “on account of . . . age” for the purposes of Ga. Code Ann. § 44-13-100(a)(2)(E) if the annuity payments are subject to age-based federal tax treatment, if the annuitant purchased the annuity because of her age, or if the annuity payments are calculated based on the age of the annuitant at the time the annuity was purchased?

The case was heard at oral argument on November 5, 2012.

On February 18, 2013, the Supreme Court answered the questions in a 6-1 decision (Melton dissenting). Writing for the majority, Presiding Justice Thompson found that “a single-premium fixed annuity purchased with inherited funds may qualify as an exempt annuity under § 44-13-100 (a) (2) (E) and that the determination of whether a right to receive payment from an annuity is ‘on account of’ age for purposes of § 44-13-100 (a) (2) (E) is not necessarily based on the existence of a single factor but requires consideration of a variety of factors pointing to the existence of a causal connection between the payee’s age and the right to payment.” Thus, the annuity in this case was exempt from the bankruptcy estate under the analysis set forth by the Court.

S12Q2067 Wells Fargo Bank, N.A. v. Gordon, Trustee

This case began as a bankruptcy case, but turns on the issue of whether “a deed to secure debt that lacks the signature of an unofficial witness on the deed’s signature page provides constructive or inquiry notice to a hypothetical bona fide purchaser where a rider to the security deed contains the necessary attestation of an unofficial witness.” In 2006, the Codringtons executed a security deed for a mortgage on property in College Park. They both signed the deed, along with a notary, but no unofficial witness signed the security deed. But the Waiver of Borrower’s Rights Rider contained the Codringtons’ signature, a notary’s signature, and an unofficial witness’ signature. Denise Codrington filed for Chapter 7 bankruptcy in 2008. The trustee (Gordon) filed this action in an effort to avoid Wells Fargo’s interest on the property. The Bankruptcy Court agreed with the trustee and Wells Fargo appealed. The District Court affirmed, finding a difference in incorporation of the contents of a document versus incorporation of the attestation. Wells Fargo appealed.

The Eleventh Circuit certified two questions to the Supreme Court of Georgia after finding there was substantial doubt about the correct answer under Georgia law. Those questions are:

  1. Whether a security deed that lacks the signature of an unofficial witness should be considered “duly filed, recorded, and indexed” as required by O.C.G.A. § 44-14-33, such that a subsequent hypothetical bona fide purchaser would have constructive notice when the deed incorporates the covenants, terms, and provisions of a rider that contains the attestations required by O.C.G.A. § 44-14-33 and said rider is filed, recorded, and indexed with the security deed?
  2. If the answer to question one (1) is in the negative, whether such a situation would nonetheless put a subsequent hypothetical bona fide purchaser on inquiry notice?

The case was heard at oral argument on November 6, 2012.

On February 18, 2013, the Supreme Court unanimously answered the certified questions in the negative. Writing for the Court, Justice Benham explained that the security deed was not in recordable form because it lacked the signature of an unofficial witness and thus cannot be considered “duly filed, recorded, and indexed.” Regarding the second question, because of the absence of any identification or description of the property subject to the security deed, the waiver would not put someone on notice.

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