Investa Services of GA, LLC Tax Execution Case

Anyone who deals with unpaid taxes in Georgia knows that Investa and/or entities affiliated with Investa play a significant role. A class action was filed against, among others, Investa. In this lawsuit, Investa et al. was accused of improperly levying on tax executions for delinquent property taxes based on initial tax assessments later reduced via a property tax appeal.

The trial court dismissed the lawsuit and an appeal was filed. See B.C. Grand, LLC v. Investa Services of GA, LLC, A19A1297 (GA Ct of App, October 29, 2019). On appeal, the court ruled in favor of Investa et al., finding that  B.C. Grand “failed to allege that the [Tax] Commissioner cancelled the tax executions or that they are void as a matter of law based on the post-issuance reduction in the tax assessment.” Because B.C. Grand failed to pay the taxes at issue while pursuing its appeal of the assessment and instead waited to receive a refund (which it did receive), the full amounts owed remained valid. And because B.C. Grand failed to plead the executions were void as a matter of law or were cancelled, Investa et al. were authorized to levy the executions at the full purchase price amount. Chalk one up for Investa.

New Georgia Supreme Court Ruling Limits Appellate Review of Jury Verdicts

The Georgia Supreme Court decision in Rockdale Hospital, LLC v. Evans clears the way for trial courts, without much in the way of appellate review, to retry cases if the judge believes the jury got it wrong. S18G1189, S18G1190 (October 7, 2019).

The case at issue involved a medical malpractice lawsuit in which a jury awarded $1.1 million dollars to for the injured party’s past medical bills, but zero damages for future medical expenses, past and future lost wages, and past and future pain and suffering. The injured party appealed to the Georgia Court of Appeals, arguing that awarding zero damages for pain and suffering was “clearly inadequate” based on the $1.1 million award for past medical bills. The Georgia Court of Appeals agreed the verdict was “clearly inadequate,” and instructed the trial court to retry the case. The decision makes sense because it seems impossible to have $1 million of medical treatment without, at the same time, experiencing significant pain and suffering.  

The Georgia Court of Appeals’ decision was appealed to the Georgia Supreme Court (the highest court in Georgia). The Georgia Supreme Court disagreed with the Georgia Court of Appeals and overruled its decision. The Georgia Supreme Court decided that whether or not to retry a case is almost always up to the trial judge, not the appellate courts. As long as the trial judge reasonably exercises his or her discretion, the appellate courts must go along with the judge’s decision regarding whether a jury verdict was clearly excessive or inadequate. The reasoning is that trial judges personally observed the witnesses and evidence, and are therefore in the best position to evaluate jury verdicts. The Court concluded that appellate courts have authority to set aside jury verdicts only when the verdict is so irrational as to be the obvious result of bias, corruption, or prejudice; this is characterized by the Court as an “extremely high” threshold. In other words, in most cases, appellate courts lack authority to review a trial court’s decision on this issue.

We’ll have to see how this ruling plays out, but in theory the decision cuts both ways because it potentially impacts both small and large verdicts. The takeaway is that in most instances, trial judges now get to decide if the verdict was too large or too small with little oversight from the appellate courts.

Georgia Easement Disputes

For those interested in easements disputes, a new case from the Georgia Court of Appeals is worth reviewing. Patel Taherbhai, Inc. v. Broad Street Stockbridge, LLC, A19A0820 (October 3, 2019). This case involves adjoining landowners, Patel and Broad Street, who got into a dispute regarding an easement the landowners’ predecessor-in-interests had agreed to. The easement was on Patel’s property and allowed Broad Street to go over Patel’s property to reach a public street.

Broad Street complained that Patel was blocking access to the easement. After back and forth between the parties’ attorneys, Broad Street filed an ejectment lawsuit against Patel. The lawsuit alleged Patel had constructed improper and unsafe encroachments on the easement, which were denying Broad Street access and diminishing the value of its property, and therefore the encroachments should be removed. Patel denied the alleged encroachments were blocking access, and, even if access was being blocked, Broad Street had consented to the encroachments by failing to timely object.

The trial judge agreed with Broad Street and ordered the encroachments ejected (i.e., removed) from the easement. An appeal was filed. The appellate court’s analysis focused on whether a party is entitled to file an ejectment lawsuit to remove an encroachment from an easement. Importantly, and in a well-reasoned decision, the appellate court determined that ejectment cannot be used in these situations. Instead, ejectment only applies when a party’s rightful possession to its property is being denied. Here, Patel’s alleged misconduct wasn’t occurring on Broad Street’s property (instead, it was occurring on Patel’s property) and therefore Patel wasn’t interfering with Broad’s Street’s possession of its property. This does not mean Patel is off the hook, only that the correct remedy is these cases is to file an action for damages and/or an injunction.

While many appellate decisions unfortunately provide little guidance, this thoughtful decision arrives at a ruling by carefully examining prior case law (going back to the 1800’s) and opinions expressed by real estate experts. In the end, lawyers (and landowners) now have a definitive understanding of how to handle situations in which an adjoining neighbor blocks an easement.

If you’re in a real estate dispute, please contact us for a free evaluation.

Business Divorce Law

A recent Georgia Appeals case shows the perils of not following the the language contained in an operating agreement. In Colquitt v. Buckhead Surgical Associations, LLC et al., A19A0466 (June 28, 2019), a dispute arose between doctors who had founded two LLCs: a medical practice and related surgery center. The LLCs included three managing members and two non-managing members. After a disagreement, one of the managers was removed for cause, in accordance with the operating agreement, by the two other managing members. The terminated member sued the LLCs and the other members, claiming breach of fiduciary duty, breach of contract, punitive damages, and attorney’s fees.

After several motions, the trial court dismissed all claims filed by the terminated member. The Court of Appeals reviewed the case and approved the trial court’s rulings. The takeaways are:

(1) The fiduciary duties of a managing member of an LLC can be reduced or eliminated by language in the operating agreement. In this case, the operating agreement limited breach of fiduciary duties to conduct that amounted to gross negligence and willful misconduct. The terminated manager’s claims against the other managers fell short of being gross negligence or willful misconduct.

(2) There can be no breach of fiduciary duty when the operating agreement allows the complained of activity. Here, the operating agreement stated that a majority of members could vote to terminate a member. Thus, there was no breach of fiduciary duty for following the terms of the operating agreement.  

(3) Only managing members owe fiduciary duties to the LLC or other members. Here two of the members were non-managing members and couldn’t, under any circumstances, be held liable for breach of fiduciary duty.

If you have questions surrounding a business divorce, please give us a call.

Tax Deed Services For Owners of Tax Deeds

If you own a tax deed, we offer two services related to tax deeds: (1) barring the right of redemption and (2) quiet title.

(1) Barring right to redeem. In Georgia, you are entitled to bar the right to redeem any time after one year has passed from the tax sale. Barment notices need to be sent to the owner of the property at the time of the tax sale and to any other party that holds an interest in the property. To identify who needs to get notice, we need to do a title examination. Below are our fees. 

We are normally willing to charge a fixed fee (depending on the circumstances of the tax deed) plus expenses. Expenses include title search, publication, and sheriff’s service. We don’t know for sure how much expenses are going to be, but the average is around $600.

(2) Quiet Title Against All the World. This is done after the barment is complete in order to obtain marketable title. A quiet title involves filing a lawsuit in the Superior Court of the county where the property is located. On these, we charge attorney’s fees on an hourly basis. Our hourly fee is $300 per hour and we require a retainer (exact amount depends on the situation). Normally, the attorney’s fees are about between $1,500 and $2,500, but like any lawsuit, we can’t quote an exact amount because the time required varies from case to case. In a quiet title, the court will appoint a special master: a special master is a local attorney who reviews the case and gives a recommendation to the court regarding title. The special master will cost an additional $1,500-2,500 (this amount is approximate). Court costs are an additional $500 (filing fee is approximately $250 and service on each defendant is $50).

(3) Adverse Possession: If you have adversely possessed the property for more than four years, you don’t have to do the first step (barment). Adverse possession means you have openly and continuously possessed the property (i.e, you or a tenant were actually in the property) and no one who owned an interest in the property objected.