On September 12, 2016, the Supreme Court of Georgia issued opinions in 32 cases, four of which are within the scope of our coverage.
S16A0691 Heron Lake II Apartments, L.P. v. Lowndes County Board of Tax Assessors
In a unanimous decision by Presiding Justice Hines, the Supreme Court of Georgia held that OCGA § 45-5-2(3)(B.1), which excludes low-income housing income tax credits from consideration in the assessment of ad valorem taxes, is unconstitutional because it violates the tax uniformity provision in the 1983 Georgia Constitution. It concluded, “[I]nasmuch as OCGA § 45-5-2(3)(B.1) exempts these tax credits from consideration in determining the fair market value of the properties at issue, the statute grants special treatment for ad valorem tax purposes and creates a subclass of tangible property other than as permitted by the State Constitution.” The Supreme Court affirmed the judgment of the trial court.
In pertinent part, the Georgia Constitution mandates, “[A]ll taxation shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax.” Ga. Const. of 1983, Art. VII, Sec. 1, Para. 3(a). It further splits taxable property into “tangible property and one or more classes of intangible property including money.” Id., Para. 3(b)(1). The court has previously concluded that “tangible property” is a single class of property which includes both real and personal property. Blevins v. Dade Cty. Bd. of Tax Assessors, 288 Ga. 113, 702 SE 2d 145 (2010). In the light of the Georgia Constitution’s identification of certain classes of tangible property, “the General Assembly has no authority to establish different classes or subclasses of tangible property other than as fixed” in the Constitution. Id., 288 Ga. at 114.
The tax credits in question are granted for a period of ten years in exchange for the property owners’ agreeing to lease their rental units to eligible low-income tenants at below-market rates set by the Georgia Department of Community Affairs for periods of 30 years or more. While the credits are in place, the owner’s ability to sell or exchange the property is limited. The owner must get the approval of the Department, and the new owner must agree to assume the requirements and restrictions contained in the governing covenants.
The Supreme Court rejected the property owners’ contention that the tax credits were intangible personal property that can constitutionally be assessed and taxed on a different basis from real estate. It explained, “[T]he very existence of tax credits is inextricably bound with the ownership of real estate.”
Pointing approvingly to the reasoning in the decision of the Georgia Court of Appeals in Pine Point Housing, L.P. v. Lowndes County Board of Tax Assessors, 254 Ga. App. 197, 561 SE 2d 860 (2002), the court noted that real property is assessed at its fair market value, which is the price reached at arms-length by a knowledgeable buyer and a willing seller. That price would include both the tax credits and the restrictive covenants that travel with them. As the Court of Appeals noted, when the property is sold, the tax credits are part of what is conveyed. The Supreme Court rejected the suggestion that the tax credits are like goodwill, another intangible: “Even if tax credits, considered artificially in isolation, are intangible in nature, they do not, in fact, exist in isolation – they are wholly dependent upon and are not viable apart from the real estate giving rise to them.”
S16A0682 Chatham County, et al. v. Massey
In a unanimous decision by Justice Benham, the Supreme Court of Georgia held that Massey, the Clerk of the Chatham County Superior Court, is entitled to be paid not only the longevity and cos-of-living increases mandated by state law but also to county cost of living increases provided by local legislation. In so doing, it rejected the County’s argument that the local law was unconstitutional. The court affirmed the judgment of the trial court.
S16A1115 Webb v. Reeves, et al.
In a unanimous decision by Justice Blackwell, the Supreme Court of Georgia rejected a caveator’s challenge to the probate of a will. It concluded that the evidence was sufficient to demonstrate the testator’s capacity when the will was made.
As the Supreme Court noted, beginning with notices of appeal filed on or after January 1, 2017, “[a]ll cases involving wills” will be within the appellate jurisdiction of the Court of Appeals.
S16G0664 SunTrust Bank v. Venable
In a unanimous decision by Chief Justice Thompson, the Supreme Court of Georgia held that a deficiency action arising from the purchase of an automobile is subject to the four year statute of limitation applicable to the sale of goods, not the six year statute applicable to written contract actions. The court affirmed the decision of the Court of Appeals.
Venable bought a car and financed it through SunTrust. In November 2007, she stopped making payments. SunTrust repossessed the vehicle, and sold it at auction for less than the amount remaining on the loan, leaving a deficiency. It filed its deficiency action in October 2012.
The Supreme Court noted that contracts for the sale of goods include both contracts that involve only the sale of goods and contracts that “contain a blend of sale and non-sale elements ‘if the dominant purpose behind the contract reflects a sales transaction.’” It concluded that the evidence surrounding the transaction showed that the primary purpose of the contract was for the sale of a good. In addition, the deficiency action sought the recovery of the full purchase price. It rejected the contention that the retention of a security interest changed the nature of the contract from one for the sale of goods. It reasoned “the mere presence of a secured transaction aspect within a contract” does not “automatically” turn it the contract into a written contract subject to the six year statute of limitation.