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Released Opinions

June 8, 2016

On June 6, 2016, the Supreme Court of Georgia issued 17 opinions, of which four are within the scope of our coverage. Summaries of the cases and decisions are set forth below.

S15G1184 Barking Hound Village, LLC v. Monyak, et al.

In a unanimous opinion by Chief Justice Thompson, the Supreme Court of Georgia held that the measure of damages for the negligent killing of a pet dog includes both the animal’s fair market value at the time of loss plus interest and any medical or other expenses reasonably incurred in treating the animal. The Court reversed the portion of the Georgia Court of Appeals’ decision that limited the recoverable damages to the reasonable expenses incurred where the dog’s actual market value was minimal or non-existent.

One of the Monyak’s dogs was a mixed-breed rescue Dachshund. They boarded her and another of their dogs, a 13 year old mixed-breed Labrador retriever, at Barking Hound Village, where the Labrador’s medicine was erroneously administered to the Dachshund, which developed renal failure and died after months of treatment that included dialysis. In ruling on Barking Hound’s summary judgment motion, the trial court held that the dog’s actual value would include the reasonable medical and other expenses and non-economic considerations reflecting the dog’s intrinsic value. The Court of Appeals found that, as a rescue dog, the Dachshund had little or no value other than sentimental, so nothing relating to the dog’s intrinsic value could be recovered.

The Supreme Court reversed the decision of the Court of Appeals in part. It “f[ound] the Court of Appeals erred in deciding that an application of actual value to owner standard was the appropriate measure of recoverable damages, but additionally  find that a cap on all damages based on application of the fair market value standard as urged by [Barking Hound] is likewise incorrect.” The court noted that, more than 120 years ago, it had held that the measure of damages included “not only the full market value of the animal at the time of loss plus interest, but also expenses incurred by the owner in an effort to cure the animal.”

The Supreme Court rejected Barking Hound’s contention that the expenses of care were just part of the aggregate, which was limited to the animal’s value. It pointed to its prior decisions which establish that there is no cap on the allowable expenses of care.

The Supreme Court went on to agree with the Court of Appeals in rejecting the notion that the owner of a negligently or intentionally killed animal can recover for the animal’s sentimental value. Even so, it allowed that “opinion evidence, both qualitative and quantitative, of an animal’s particular attributes — e.g., breed, age, training, temperament, and use” should be just as admissible as similar evidence relating to other types of personal property. In the end, that evidence must relate to “the value of the dog in a fair market, not the value of the dog solely to its owner.”

S15G1804 Toyo Tire America Manufacturing, Inc. v. Davis, et al.

In a unanimous opinion by Justice Nahmias, the Supreme Court of Georgia held that a nuisance plaintiff can recover both past damages for discomfort and annoyance and prospective damages for the diminution in the value of their property attributable to future disruption and annoyance. The Court affirmed the judgment of the Court of Appeals.

In 2005, Toyo Tire constructed a manufacturing and distribution facility across the road from the home the Davises had and have been living in. After three expansions, the plant employed about 1,000 people and produced about 13,500 tires per year. A planned fourth expansion will increase both of those figures. The plant operates around the clock, with two 12-hour shifts a day. The Davises complain that the plant constitutes a nuisance, burdening them with light, noise, black dust, traffic, and unsightliness. They were unsuccessful in persuading Toyo Tire to buy their home, as it had done for two of their neighbors. So, they filed suit alleging nuisance and trespass and seeking damages.

The trial court denied Toyo Tire’s motion for summary judgment, which argued, among other things, that the Davises could not recover both for the diminution of their property’s value and for the discomfort and annoyance caused by the nuisance. Toyo Tire also attacked the sufficiency of the Davises’ evidence of causation. On interlocutory review, the Court of Appeals affirmed the trial court’s ruling in a divided seven-judge opinion.

The Supreme Court affirmed the judgment of the Court of Appeals. With respect to the testimony of the Davises’ expert witness, the court concluded that it was sufficient to support an inference of causation. It did not decide whether the expert’s opinion was sufficiently grounded to be admissible, leaving that to the trial court on remand, if that issue were raised. The court stated, “Viewed in its full context and with the charity required in the summary judgment setting,” the testimony of the Davises and their expert was sufficient.

With respect to the allowable damages, while Georgia law does not allow a double recovery for a single injury, the damages claimed were not duplicative. Recovery for disruption and annoyance compensates for the past aspects of an injury attributable to a nuisance, and the diminution in value reflects the future effects of the nuisance’s operation.  The court “adhere[d] to the long line of Georgia precedent holding that recovery for both the backward-looking personal injury to the occupant and the forward-looking injury to the owner’s property is available in a continuing nuisance case.” Because language in the Court of Appeals’ decision in Stanfield v. Waste Management of Georgia, 287 Ga. App. 810, 812, 652 S.E. 2d 815 (2007), was to the contrary, the Supreme Court overruled Stanfield, deeming it “a mistaken step off a long and firm path of Georgia law.”

S15G1808, S15G1811 Roseburg Forest Products Company, et al.  v. Barnes

In a unanimous opinion by Justice Melton, the Supreme Court held that a workers’ compensation plaintiff’s claims were barred by the statute of limitations and were not revived when Barnes sought untimely medical treatment for his injury. He lost the lower part of his left leg in an industrial accident in 1993. Barnes was fitted with a prosthetic leg and returned to light duty, going from temporary total disability status to permanent partial disability until 1998. The site changed hands in 2006, and Barnes continued working there until he was laid off in September 2009. After complaining of chronic knee pain in 2009, he received a new prosthesis in November 2011. In August 2012, Barnes submitted an application to go back on temporary total disability, and in November 2012 filed a separate claim asserting a new “fictional” new injury that would, statutorily, relate to a worsening of his original injury.

The Administrative Law Judge found the 2012 claims barred by the statute of limitations, and the State Workers Compensation Board and the trial court affirmed. The Court of Appeals, however, reversed, holding that the claims were timely.

The Supreme Court reversed the decision of the Court of Appeals. Barnes’ claim for the resumption of temporary total disability payments had to be brought within two years of the last weekly payment of benefits. Even if his injury was “catastrophic” and he could get TDD benefits indefinitely, Barnes still had to apply for them within two years of the last payment to enforce his rights. His fictional new injury claim was also untimely because it was not brought within one year of the end of his employment in September 2009. The court explained, “The fact that Barnes sought additional remedial treatment in December 2011 did not revive his claim that had already become time barred in November 2010.” It noted that allowing injured employees to revive stale claims by seeking remedial treatment after the statute of limitations has run conflicts with the goals of closure and finality that are part of the workers compensation system.

S15A0516 Mays v. Southern Resources Consultants, Inc.

In a unanimous opinion by Presiding Justice Hines, the Supreme Court reversed a trial court’s decision to grant temporary injunctive relief in part and vacated the other portions of the injunctive order. The underlying case was a business and trade secrets dispute that arose after the Georgia Department of Health and Developmental Disabilities allowed a Home Health Provider to continue serving an individual (S.F.) in the Department’s care following a change of the Residential Service Provider. Southern Resources Consultants (SRC) was the terminated Residential Service Provider, and Mays ran the home and cared for S.F. for both SRC and its successor. SRC filed suit for breach of confidentiality and non-compete provisions in its contract with Mays and for protection of trade secrets.

The trial court entered temporary injunctive relief directing Mays not to possess or distribute SRC’s confidential information, to stop providing services to S.F., and not to possess or distribute S.F.’s personal information. Mays appealed from the entry of the injunction, and the Supreme Court reversed the first portion of the injunction and vacated the other portions as moot. With respect to SRC’s confidential information, the Court found that Mays had already returned it before the injunction was entered, so the trial court’s direction to her to do it was a nullity. In addition, the Non-Compete provision in the parties’ contract had expired by its terms, so the rest of the injunction was moot. The Court remanded the case for further proceedings.


Released Opinions

May 25, 2016

On May 23, 2016, the Supreme Court of Georgia released 16 opinions, of which two are within the scope of our coverage. Summaries of the opinions and cases are set forth below.

S15G1205 Fulton County Board of Education, et al. v. Thomas

In a unanimous opinion by Justice Hunstein, the Supreme Court of Georgia held that a claimant who sustained an employment-related injury was entitled to compensation calculated to include work in the same line of employment for another employer during the statutory 13-week time period. The Court affirmed the judgment of the Court of Appeals, explaining “[u]nder the circumstances presented here, we agree with the Court of Appeals’ conclusion….”

Thomas was a school bus driver, who also drove new school buses from Atlanta to other parts of the country during the summer of 2011. She was injured shortly after the next school year started. The question was how to calculate her “average weekly wage” for workers’ compensation purposes: Does it include the money she earned driving buses for another employer during the summer?

O.G.G.A §34-9-260(1) provides that the average weekly wage includes money earned “in the employment for which he was working at the time of the injury, whether for the same or another employer, during substantially the whole of 13 weeks preceding the injury….” Here, Foster worked a bus driver for two employers sequentially during that 13 week period. While the Court of Appeals looked at the issue under its “concurrent similar employment” doctrine, the Supreme Court started from the premise that the statute used the word “employment,” not “employer.” It follows that the nature of the work controls.

The Supreme Court noted, “[T]he reported cases have, until now, uniformly involved circumstances in which the claimant was simultaneously employed with multiple employers at the time the injury occurred.” (Emphasis in original) It explained that the word “concurrent” does not appear in the statute, however, so there is “no basis in the text of the statute for requiring such simultaneity as an absolute condition to the doctrine’s application.” Instead, only “a ‘concurrence’ of similar jobs within the 13-week period” is required.

S15G1780 Georgia Department of Labor v. RTT Associates, Inc.

In a unanimous opinion by Justice Benham, the Supreme Court of Georgia held that a state agency’s actions in the course of administering a contract did not waive the State’s sovereign immunity. The Court reversed the decision of the Georgia Court of Appeals, which found that sovereign immunity had been waived by the agency’s conduct.

The 1983 Georgia Constitution waives the State’s sovereign immunity for “any action ex contractu for breach of any written contract … entered into by the state or its departments or agencies.” Ga. Const. of 1983, Art I, Sec. II, Par. IX (c). The Department of Labor and RTT entered into such a written contract that contained, among other things, provisions requiring that changes be in writing and  integrating all but RTT did not perform its obligations before the contract time expired. The Department did not terminate the contract immediately, but it ultimately did so and claimed against RTT’s performance bond. RTT filed suit for breach of contract, the trial court ruled in favor of the Department, and the Court of Appeals reversed.

The Supreme Court held that the Department’s conduct did not result in a waiver of sovereign immunity: “Even if the parties’ conduct after the expiration of the contract could be found to demonstrate an agreement between the parties to perform under the original contract, as a matter of law neither that conduct nor the internal documents created by DOL after the contract expired establishes a written contract to do so. Without a written contract, the state’s sovereign immunity from a contract action is not waived.”

The Court noted that the Court of Appeals erred in applying contractual cases involving private parties to state contracts. Insofar as a written contract is required for a waiver of sovereign immunity, so is a written contract modification. In addition, the Court disapproved or distinguished other cases on which RTT relied.

The Court explained that sovereign immunity and the constitutional requirement that state contracts and their modifications be in writing was designed to protect the state’s finances and to preclude the state from being assessed or exposed to unanticipated damages. As a result, the conduct of state employees, particularly after the expiration of the contract term, was not a basis for finding a waiver of the state’s sovereign immunity.

Released Opinions

May 10, 2016

On May 9, 2016, the Supreme Court of Georgia issued nine opinions, of which two are within the scope of our coverage. Summaries of the opinions and cases are set forth below.

S16A0177 Williford v. Brown

Although this case involves the application of family law, the Supreme Court’s decision also addresses a question of appellate jurisdiction. In a unanimous opinion by Justice Nahmias, the Supreme Court of Georgia held that it, rather than the Court of Appeals, should decide whether the “novel equitable remedy” sought was available under Georgia law. Holding that such relief is not available, the Court affirmed the trial court’s ruling on the merits. The Court observed, however, that the claimant expressly asked the trial court to craft a remedy using its equitable powers; that meant that the case came within the Court’s traditional equitable jurisdiction.

Significantly, the Court noted that the newly enacted Appellate Jurisdiction Reform Act of 2016 changes its traditional equitable jurisdiction. It explained that the Act vests the Court of Appeals with “appellate jurisdiction over ‘[a]ll equity cases, except those cases concerning proceedings in which a sentence of death was imposed or could be imposed and those cases concerning the execution of a sentence of death, as well as other categories of civil cases that currently come directly to this Court.” The Supreme Court will review such cases “only by writ of certiorari or if the Court of Appeals is evenly divided or certifies a question here.” As a result, the Act will likely cause “the need for Georgia’s appellate courts and appellate litigants to engage in many intricate jurisdictional analyses” of the sort presented in this case to “dissipate as of January 1, 2017.”

S16A0294 GeorgiaCarry.Org, et al. v. Atlanta Botanical Garden, Inc.

In a unanimous opinion by Justice Hunstein, the Supreme Court of Georgia held that the trial court improperly dismissed claims for declaratory and injunctive relief brought by the holder of a Georgia weapons carry license unhappy with the policy of the Botanical Garden.

Phillip Evans twice wore a handgun in a waistband holster to the Garden, but was stopped the second time and eventually escorted from the premises. He filed suit contending that O.C.G.A. § 16-11-27(c) authorizes him—and others similarly situated—to carry a weapon in the Garden. He sought declaratory relief to the effect that the Garden could not prohibit him from carrying a weapon and injunctive relief prohibiting the Garden from banning the carrying of weapons by licensees. The trial court dismissed the action, but the Supreme Court reversed in part and affirmed in part.

The Supreme Court rejected the contention that declaratory relief was inappropriate simply because the claim touched on a question of criminal law. The claim did not come from one whose criminal conduct was complete, who had been charged, or who had been convicted. In addition, it was not based on speculation because the Garden had already enforced its ban against Evans. Finally, the declaratory judgment claim would not require the Garden to act in a particular way. The practical effect of the claim was to seek a declaration of rights to the effect that Evens and other licensees may carry their weapons in the Garden.

The Supreme Court also held that a claim for an injunction that would prohibit the Garden from banning licensed individuals from carrying weapons within it was properly stated. Injunctive relief would not lie to prevent the Garden, a private party, from causing an arrest or prosecution of someone like Evans.

Released Opinions

April 27, 2016

On Tuesday, April 26, 2016, the Supreme Court of Georgia issued 13 opinions, of which three are within the scope of our coverage. Summaries of the opinions and cases are set forth below.

S15G1206 Kliesrath, et al. v. Davis, et al.

In a unanimous opinion by Chief Justice Thompson, the Supreme Court of Georgia vacated the judgment of the Georgia Court of Appeals, holding that it lacked jurisdiction to consider a direct appeal arising from the trial court’s denial of summary judgment to police officers asserting defenses of official and qualified immunity. As the court explained, in its March 25, 2016 decision in Rivera v. Washington, it concluded that any such appeals cannot proceed via direct appeal because they are interlocutory. Instead, any appeal from such a ruling must go through the interlocutory procedure of O.C.G.A.              § 5-6-34(b). Accordingly, the Court of Appeals should have dismissed the appeal.

S15G1885 McKinney, et al. v Fuciarelli

In a unanimous opinion by Chief Justice Thompson, the Supreme Court reversed the decision of the Georgia Court of Appeals, holding that a taxpayer retaliation lawsuit brought under the Georgia Taxpayer Protection Against False Claims Act, O.C.G.A.             §§ 23-3-122(b)(1) of which states that a civil action may be brought “upon written approval by the Attorney General,” requires such approval.

Fuciarelli was dismissed from his positions as assistant vice president for research and dean of the graduate school at Valdosta State University after he criticized the school for failing to comply with “laws, rules and regulations.” After the Board of Regents affirmed the University’s decision, Fuciarelli filed suit against University officials in their individual and official capacities under, among other things, the Taxpayer Protection Act. The trial court dismissed the Taxpayer Protection Act individual capacity claim on the ground that Fuciarelli did not obtain the Attorney General’s approval before filing suit, but the Court of Appeals reversed.

The Supreme Court reversed, concluding that the words “this article” apply to all claims under the Act, even those personal to the claimant, like Fucianelli’s. Accordingly, Fucianelli’s claim required Attorney General approval. The court rejected the contention that it would be absurd to read the statute that way. Whether the Attorney General should be put in the position of approving or disapproving an action against the State was a policy question for the Legislature to answer. Instead of answering that policy question, the court’s ruling “simply requires deference to the legislative prerogative of the General Assembly and adherence to the plain language of the TPAFCA.”

S16A0559 Clark v. Deal, et al. (and vice versa)

In an opinion by Justice Melton, the Supreme Court of Georgia held that Governor Deal had the right to appoint three new judges to the Georgia Court of Appeals and rejected the contention that the seats had to be filled by general election. When the General Assembly created the new seats, it provided that the term of the new judgeships would run from “January 1, 2016, and continuing through December 31, 2018, and until their successors are elected and qualified.” The court noted that, because the judges had already been sworn in, the only viable claim was one in quo warranto, but that claim failed.

While other portions of the 1983 Georgia Constitution call for the election of Court of Appeals judges, Art. VI, Sec. VII, Par. III of that Constitution “expressly” authorizes the filling of vacancies by appointment. The “appropriate rules of construction and the historical record” indicate that newly created seats count as a vacancy. Under the ordinary meaning of vacancy as “a public office without an incumbent,” the newly created seats were vacant. The court rejected the contention that only the vacancies listed in OCGA § 54-5-1 can be filled by appointment, reasoning that the drafters of the 1983 Constitution “appear to have intended that the term ‘vacancy’ be interpreted in a broad sense, as they gave the term no limitations.”

With respect to the historical record, when the Court of Appeals was expanded from six to seven members in 1960, and from seven to nine members in 1961, Governor Vandiver filled the newly created seats by appointment. Newly created seats were also filled by appointment when created in 1996 and, again, in 1999.

Justice Benham dissented, reasoning that “[a] newly created position cannot logically have an unexpired term that can be filled by appointment.” Accordingly, he believed that the seats should be filed through a general election.

Released Opinions

April 1, 2016

On March 25, the Supreme Court of Georgia issued six opinions, of which two are within the scope of our coverage. Summaries of the cases and opinions are set forth below.

S15G0887 Rivera v. Washington

S15G1092 Forsyth County v. Appelrouth, et al.

In a unanimous opinion by Presiding Justice Hines, the Supreme Court of Georgia held that a direct appeal from a trial court’s denial of a motion to dismiss on sovereign, qualified, or quasi-judicial grounds is not available. Instead, it reaffirmed the rule that the proper way to obtain appellate review of such a trial court ruling is to ask the trial court for a certificate of immediate review then file an application for interlocutory review. In these consolidated cases, the Court affirmed the decisions (Rivera: Appelrouth) of the Georgia Court of Appeals, but found them to be based on “flawed analyses.”

In Rivera’s case, Washington sued Rivera and her administrative assistant for issuing a warrant for failure to pay a fine that he already had paid. The trial court denied their motion to dismiss on sovereign and quasi-judicial grounds. Rather than seek an application for interlocutory appeal, Washington filed a direct appeal under the collateral order doctrine, relying on Board of Regents &c. of Ga. v. Canas, 295 Ga. App. 505, 672 S.E. 2d 471 (2009).

In Appelrouth’s case, Appelrouth sued Forsyth County and a neighboring landowner alleging that they were responsible for damage to his property. The neighboring landowner cross-claimed against the County, which sought to dismiss both the suit and cross-claim on sovereign immunity grounds. The trial court denied the County’s motion, and the County filed a direct appeal, relying on Canas just like Rivera had done.

In both cases, the Court of Appeals dismissed the appeal, reasoning that, because the trial court did not make a conclusive determination on the claim of immunity, Canas did not apply.

The Georgia Supreme Court noted that direct appeals are authorized only from a trial court’s final judgment, which means “the case is no longer pending in the court below.” Sosniak v. State, 292 Ga. 35, 36, 734 S.E. 2d 362(2012). The denial of a motion to dismiss on immunity grounds means that the case remains pending in the trial court.  Accordingly, unless an exception applies, a direct appeal is not authorized.

The collateral order doctrine does not provide the basis for a direct appeal from rulings like these. The Court explained,

“[T]he collateral order doctrine reflects a practical rather than a

technical construction of [the] statutes [governing appellate

jurisdiction], one that recognizes that a very small class of

interlocutory rulings are effectively final in that they finally

determine claims of right separable from, and collateral to,

rights asserted in the action , too important to be denied review and

too independent of the cause itself to require that appellate

consideration be deferred until the whole case is adjudicated.”

(Quoting State v. Cash, 298 Ga. 90, 92-93, 799 S.E. 2d 603 (2015)).

The Supreme Court noted that it had “specifically declined” to follow the federal rule allowing for direct appeals from rulings denying motions to dismiss based on qualified immunity. See Turner v. Giles, 264 Ga. 812, 450 S.E. 2d 421 (1994). The Court of Appeals’ decision in Canas, which was premised on the collateral order doctrine, reflected federal practice. The Supreme Court overruled Canas  “to the extent that it applied the collateral order doctrine to the immunity claim therein” as well as a multitude of other decisions of the Court of Appeals that allowed direct appeals under the collateral order doctrine for claims of sovereign, official, qualified, or other immunity.

For cases involving immunity claims, the Court explained that, in Turner v. Giles, it had recommended that “except in clear cases, the trial courts issue a certificate of immediate appealability under OCGA 5-6-34(b) for interlocutory orders denying dismissal or judgment on the basis of qualified immunity.” 264 Ga. at 813-14.  It reiterated, “[C]ourts should address motions on immunity issues as early as practicable and, if there is any substantial question,  permit an interlocutory appeal to proceed.”

S15G1183 Georgia Dep’t of Behavioral Health and Developmental Disabilities, et al. v. United Cerebral Palsy of Georgia, Inc., et al.

In a unanimous opinion by Justice Nahmias, the Supreme Court of Georgia held that providers and recipients of Medicaid services dissatisfied with their reimbursement rates and the services available had to exhaust the agency administrative review process before filing suit. It reversed the decision of the Georgia Court of Appeals, which held that an alleged lack of notice relieved the plaintiff providers and recipients of their obligation to follow the administrative review process.

Rather than following the administrative review process, providers and recipients of Medicaid services filed suit claiming that the agency failed to follow the required procedure before reducing the reimbursement rates paid to providers and limiting the services available to the recipients. The trial court dismissed the claims for failure to exhaust administrative remedies, but the Court of Appeals reversed.

The Supreme Court observed that the General Assembly saw the need for and provided “a robust administrative review process to address complaints — which the statute refers to as ‘appeals’ — by providers and recipients of Medicaid services, including disputes concerning reimbursement rates and service limitations.” That process provides for a hearing before an administrative law judge, followed by an appeal to the Commissioner of Community Health. It further allows for judicial review, “but only if the aggrieved party first ‘exhausts all the administrative remedies provided.”

The Supreme Court observed that the failure to exhaust administrative processes “ordinarily precludes judicial review.” That administrative process has benefits of its own. It protects the agency’s authority and allows it to correct its own mistakes. In addition, when judicial review begins, it does so with the benefit of a complete administrative record informed by agency expertise. Finally, the administrative process might resolve the claims.

“This Court has never recognized a wholesale exception to the exhaustion doctrine for alleged procedural errors by an administrative agency.” Instead, “generally speaking, procedural issues are subject to the exhaustion requirement just like substantive issues.”

Finally, after noting that the Court of Appeals relied on, among other things, Chatham County Bd. Of Tax Assessors v. Emmoth, 278 Ga. 144, 598 S.E. 2d 595 (2004), the Supreme Court disproved of any reading of Emmoth “suggest[ing] that a plaintiff need not exhaust administrative remedies whenever an administrative body has given her a notice of its decision without including statutorily required language regarding how to seek administrative review of that decision.”

Released Opinions

March 31, 2016

On March 21, the Supreme Court of Georgia issued 10 opinions, of which two are within the scope of our coverage. Summaries of the cases and opinions are set forth below.

S15G1177 Georgia Farm Bureau Mutual Insurance Co. v. Smith et al.

In a unanimous decision by Chief Justice Thompson, the Supreme Court of Georgia held that lead-based paint was not a “pollutant” within the terms of a commercial general liability policy (CGL) covering residential rental property. The Court reversed the decision of the Georgia Court of Appeals.

The case arose from a lawsuit filed by the mother of a child against her landlord seeking damages allegedly sustained by the daughter as the result of the ingestion of lead-based paint. The landlord sought a defense and coverage under his CGL policy covering the premises, and the carrier sought a declaratory judgment on the scope of its obligations. The carrier contended that, among other things, the CGL policy’s pollution exclusion clause relieved it of any obligation to defend and indemnify the landlord. In pertinent part, the policy excluded “pollution” from the scope of its coverage, and it defined a “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”

The trial court granted summary judgement to the carrier, holding that the pollution exclusion applied. The Court of Appeals, however, reversed, concluding that the exclusion was ambiguous in that a reasonable insured might have understood the exclusion to apply to certain forms of industrial pollution, rather than the ingestion of lead-based paint in a residence. It then construed the ambiguous provision against the insurer.

The Supreme Court reversed, holding that the exclusion was not ambiguous. It noted that the CGL policy “contains an absolute pollution exclusion clause which precludes any recovery for bodily injury or property damage resulting from exposure to any pollutant.” (emphasis in original) That “absolute” exclusion “substantially broadened” its application, came into practice in the mid-1980’s, and has been the subject of conflicting judicial decisions since then. The Georgia courts had, however, “repeatedly applied these [pollution exclusion] clauses outside the context of traditional environmental pollution.” In addition, the Georgia courts had applied the exclusion to pollutants that were not “explicitly named in the policy.” Thus, while lead-based paint was previously unaddressed, it fit within the Georgia courts’ treatment of the exclusion.

In Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E. 2d 90 (2008), the Court held that the same exclusion covered carbon monoxide within a rental home. It noted that Reed “controls the manner in which pollution exclusions in CGL policies are to be construed by the courts of this State.” Its approach, which looks at the plain language of the policy, governed here.

S15A1442 Gebrekidan v. City of Clarkston

In a unanimous decision by Justice Nahmias, the Supreme Court of Georgia held that the Georgia laws governing coin operated amusement machines (COAM) and businesses preempted those of the City. It reversed the judgment of the trial court, holding that the “direct effect” of the local ordinance was to “ban COAMs … where the State of Georgia allows them,” something that a local law cannot constitutionally do.

The City of Clarkston cited Gebrekidan for operating “coin-operated amusement machines in [a] retail store selling packaged beer, malt beverages and wine” in violation of a City ordinance. She asserted that Georgia Law preempts the City ordinance, but the municipal court and the Superior Court of DeKalb County denied her motion to dismiss. She was found guilty and fined.

Under the Uniformity Clause of the Georgia Constitution, general laws are to operate uniformly throughout the State with no special or local laws to duplicate them, “except that the General Assembly may by general law authorize local governments by local ordinance or resolution to exercise police powers which do not conflict with general laws.” Ga. Const. of 1983, Art. III, Sec. VI, Par. 4(a). Under implied preemption, the General Assembly’s intention can be inferred from the “comprehensive nature of the regulatory scheme.”

With respect to the “except” clause, the Court explained, “Where a comprehensive general law authorizes local legislation only on particular matters, … local ordinances that regulate matters outside the scope of that specific authorization do not come under the ‘except’ provision and remain impliedly preempted.” And, even where the General Assembly authorizes local legislation, the local laws cannot conflict with the general law.

The Supreme Court held that the local ordinance was impliedly preempted by O.C.G.A. §§ 50-27-70 through 50-27-104. It noted that, while there was an exception to Georgia’s criminal laws for certain coin operated games, that activity was otherwise “comprehensively regulated” by the statute. The Court stated, “In sum, the COAM laws, the text of which (aside from annotations) fills more than 35 pages of the Georgia Code, establish by general laws precisely the sort of comprehensive statutory scheme regulating a subject — COAMs and COAM businesses — on a statewide basis that we have previously found gives rise to implied preemption of local ordinances on the same subject.”

The Court rejected the City’s contention that its ordinance regulated the trade in and consumption of alcohol, not COAMs. It explained, “[I]n the preemption context it is not the reason for or purpose behind a local ordinance that controls. The proper focus is on the subject and operation of the general and local laws.” Finally, it held that the City’s ordinance does not fit within the exception because no general law authorized its promulgation, observing that the General Assembly “did not authorize local governments to flatly prohibit alcoholic beverage licenses from allowing COAMs on their premises or to penalize such businesses for doing so.”

Released Opinions

March 14, 2016

On March 7, 2016, the Supreme Court of Georgia issued 20 opinions, of which two are within the scope of our coverage. Summaries of the cases and opinions are set forth below.

S15G1007 Ames et al. v. JP Morgan Chase Bank NA, et al.

In a unanimous opinion by Justice Nahmias, the Supreme Court of Georgia held that residential borrowers challenging the non-judicial foreclosure sale of their property lacked standing to challenge the assignment of the security deed to that property. The court affirmed the decision of the unreported decision of the Georgia Court of Appeals.

When the Ameses purchased the property, they executed a security deed in favor of Washington Mutual Bank (WaMu). WaMu later went into receivership, and its interest was transferred to the Federal Deposit Insurance Commission. The FDIC then transferred the property to Chase, giving Chase a power of attorney to transfer any realty acquired to Chase. That power of attorney was time-bound and subject to “automatic revo[cation].” After the term of the power of attorney expired, Chase assigned the Ameses’ property to itself. When the Ameses defaulted, Chase initiated non-judicial foreclosure proceedings, which the Ameses sought to block in both Georgia state court and federal court in Florida challenging, among other things, the validity of the assignment.

The state trial court dismissed the Ameses’ challenge to the assignment, holding that they lacked standing, and they appealed. The federal court dismissed their action, and the Eleventh Circuit affirmed, holding, under Georgia law, that the Ameses lacked standing.

The Eleventh Circuit acted before the Georgia Supreme Court did, making the preclusive effect of that federal judgment an issue to be addressed.

The Supreme Court noted that, in their federal lawsuit, the Ameses asserted both federal question and diversity jurisdiction. Reasoning that the preclusive effect in diversity cases follows federal law, and noting that Florida law and federal law were “not incompatible” on the point, the court held that the Ameses lacked standing. It observed that, under both Florida and federal law, a pending appeal does not deprive a lower court judgment of its preclusive effect. The court held that the Eleventh Circuit’s judgment was binding on the Ameses.

While the Ameses lacked standing, their claims implicated the interests of “many other debtors, secured creditors, and assignees of those security deeds that are affected by this legal issue.” The Georgia Court of Appeals had held that others in the position of the Ameses lacked standing to challenge the assignment of their mortgages in Montgomery v. Bank of America, 321 Ga. App. 740 S.E. 2d 434 (2013), and Jurden v. HSBC Mortgage Corp., 330 Ga. App. 179, 765 S.E. 2d 440 (2014). Neither of those holdings was presented to the Supreme Court, so the court undertook to answer the question because of the importance of the issue.

In concluding that borrowers in a position like the Ameses lack standing to challenge the assignment of their mortgage, the Supreme Court observed that, while the courts are split, it was applying the law of Georgia. It noted that the assignment did not breach a duty owed to the Ameses under the law or the security deed. Georgia law “expressly authorizes the assignment of security deeds.” The Ameses’ deed “explicitly conveyed [their] property to WaMu and its ‘successors and assigns.’” As for the assignment, the Ameses were not a party to it, and they could be a third-party beneficiary to it only in part. While the Ameses might acquire new rights as the result of the assignment, they could vindicate only those new rights, not challenge the validity of the assignment.

The court explained that, if the Ameses had a problem with the assignment, they should tell the assignor, the FDIC. The FDIC could then have “intercede[d] to assert any rights that it believe[d] it ha[d].”

Finally, the Supreme Court rejected the Ameses contention that Chase failed to comply with O.C.G.A. § 44-14-1629a), which governs notice and the procedure for planned foreclosure sales. It noted that the statute does not require that the party providing notice be the secured creditor, nor does it give the debtor a “mechanism … to assert claims that the (potentially unnamed) secured creditor does not actually have a validly assigned deed.” The court explained, “Because Chase recorded its assignment as required and the Ameses have not brought a distinct challenge under this statute, we need not decide whether § 44-14-162(b) could ever provide a debtor with standing to challenge a foreclosure based on an unrecorded or facially invalid assignment.”

S15A1684 Atlanta Development Authority d/b/a Invest Atlanta v. Clark Atlanta University, Inc.

In a unanimous opinion by Presiding Justice Hines, with Justice Benham not participating, the Supreme Court of Georgia held that restrictions in a deed transferring property from Clark Atlanta University to Morris Brown College were valid and enforceable. It affirmed the ruling of the trial court, which found the provisions valid and enforceable.

In 1940, Clark Atlanta transferred three adjoining parcels of property totaling some 13 acres to Morris Brown College subject to the condition that the property would be used for “educational purposes, to wit: Undergraduate work in the fields of Arts and Sciences, except that nothing in this clause is to be construed as prohibiting [MBC] from offering graduate courses in Theology, if it chooses to do so.” The deed also provided for the reversion of the property to Clark Atlanta “or its successors” “if at any time the said [MBC] shall cease to use said property for the particular educational purposes above set forth ….”

In August 2012, Morris Brown College filed for bankruptcy under Chapter 11. In 2014, Morris Brown College asked the bankruptcy court for permission to sell part of its campus, including the property acquired in 1940, to Invest Atlanta. The bankruptcy court approved the sale, subject to the caveats that Morris Brown College could transfer only “whatever interest it has” and that Invest Atlanta could accept title only “subject to any alleged interest held and recorded by CAU.”

Clark Atlanta filed suit seeking to enforce the reverter clause, and Invest Atlanta moved to dismiss the complaint. In denying the motion to dismiss, the trial court held that the Restriction was valid, it applied to all three parcels of the property, and the proposed sale was not an appropriate use of the property. Invest Atlanta sought an interlocutory appeal, which the Supreme Court granted.

The Supreme Court held that the Deed’s restriction on use and reverter were valid and enforceable. While restrictions on alienation like this are generally invalid, this restriction was one in favor of a charitable entity for charitable purposes. The court explained, “Public policy favors giving the donor’s distinct charitable interest [in the perpetual use of the property for the designated purpose] greater weight than general prohibitions against the remoteness of vesting and restrictions on alienation.” The deed unambiguously applied to all three of the transferred parcels. In sum, “the structure and language of the Deed reflects the parties’ clear intent that the Property, in toto, comprise a donation to MBC of a unified tract of land for the one and only purpose expressed in the Deed, i.e., for the particular aspects of education set forth therein.”

The Supreme Court also concluded that Morris Brown College’s sale of the property was not within the range of allowable educational purposes. The Deed’s language limited the potential scope of allowable “educational use” to specific fields of study. In addition, the reversion was triggered when the property was used for a purpose other than “for the particular educational purposes above set forth.” The sale of the property, transforming it into proceeds that might be put to use for educational purposes, would still have to be for the specified educational purposes. “Moreover, once the property is alienated, MBC loses control over it for any purpose, and as to the sale proceeds, their use and eventual exhaustion would be pragmatically impossible to monitor in regard to any question of application of the Restriction and the Reverter.” In sum, Clark Atlanta has a valid reversionary interest in the property.