Georgia Easement Disputes

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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 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. These were denying Broad Street access and diminishing the value of its property. 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. Broad Street appealed. The appellate court’s analysis focused on whether a party is entitled to file an ejectment lawsuit to remove an encroachment from an easement. 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. Our number is (404) 382-9991.

Business Divorce Law

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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

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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/Notice of Foreclosure of Right to Redeem. In Georgia, you are entitled to bar/foreclose 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.  

We are normally willing to charge a fixed fee (depending on the circumstances of the tax deed) plus expenses. Expenses include title search (about $300), publication (about $150), sheriff’s service ($50/service), and certified mail ($6.80/envelope).

The average cost to foreclose/bar the right to redeem, including expenses, is approximately $1,500.

(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. Normally, the attorney’s fees are about $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 2,500 (this amount is approximate). Court costs are an additional $500 (filing fee is approximately $250 and service on each defendant is $50).

The total cost of a quiet title is about $5,000.

Getting Insurance to Pay When you Can’t Find the Negligent Driver

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When suing a negligent driver for injuries, the general rule in Georgia is that the negligent driver must be personally served with the legal paperwork—this means a sheriff must hand deliver the legal paperwork to the negligent driver. This undisputedly insures that the negligent driver is aware of the lawsuit. But what happens when the negligent driver’s whereabouts are unknown? For instance, the negligent driver has moved or is intentionally avoiding service.

While this isn’t a common problem, it occurs from time to time. From a personal injury standpoint, this becomes a critical issue when the negligent driver has insurance coverage but can’t be found. Is the insurance company still on the hook to provide coverage?

If the negligent driver can’t be personally served, Georgia law allows what is called service by publication. This is when notice of the lawsuit is published in the local newspaper. This is permitted when the person resides outside the state, or has departed from the state, or can’t, after due diligence, be found within the state, or conceals himself or herself to avoid the service of the summons. This language is found in O.C.G.A. § 9-11-4(f)(1)(A).

Sounds easy enough, but, as mentioned above, the important question is whether service by publication is sufficient to hold the insurance company liable. Like most legal questions, it depends …

Henderson v. James, A19A0632 (June 6, 2019), a Georgia Court of Appeals decision, faced the exact question. In this case, which involved whether an insurance company could be held liable on behalf of a negligent driver who couldn’t be personally served. Even though the negligent driver had been service by publication, the Court of Appeals ruled in favor of the insurance company, holding that service by publication gives a court personal jurisdiction (i.e., allows a recovery against the insurance company) if, and only if, all of the following apply:

(1) The lawsuit must involve a tort (a wrongful act or an infringement of a right leading to civil legal liability). Because injuries from motor vehicle collisions are considered torts, this is not an issue in these cases.

(2) The negligent driver must be a resident in the county where the lawsuit is filed and must be present within the county.

(3) The negligent driver must have actual knowledge of the lawsuit and must be intentionally avoiding being served with the legal paperwork.

Only if the evidence shows that all three of the above standards have been met will the insurance company be responsible for providing coverage. In Henderson, the injured party lost because the evidence before the court didn’t establish the second or third standards.

A trick used by the insurance companies is to file a motion to dismiss on this issue two years after the collision. In Georgia, there is a two-year statute of limitation. If the negligent driver isn’t properly served within the two years, then most of the time the case is dismissed. Generally, there are no second chances after the two years has expired.

Getting personal service within two years after the motor vehicle collision is critical. Please call us if you are injured in a motor vehicle collision. We have over 20 years’ experience dealing with these types of issues.

Another Georgia Excess Tax Sale Funds Case

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Republic Title Co. v. Freeport Title & Guar., Inc., A19A0274 (May. 29, 2019) concerns entitlement to excess funds remaining following a tax sale pursuant to OCGA § 48-3-3. We’ve discussed this in previous blogs. There isn’t much new here but the case does reinforce some tax deed principles of interest. In this case, the property owner at the time of the tax sale sought to collect excess tax sale proceeds following the tax sale. Also following the tax sale, a security deed holder on the property similarly sought the excess tax funds.

The owner filed a lawsuit seeking the excess tax funds, and, in the same lawsuit, sought to quiet the security deed holder’s lien as a cloud on title. The argument was the loan had matured for more than seven years and therefore wasn’t enforceable at the time of the tax sale. In Georgia, under O.C.G.A. § 44-14-80, title to real property conveyed to secure a debt or debts revert to the grantor the expiration of seven years from the maturity of the debt or debts or the maturity of the last installment thereof as stated or fixed in the record of the conveyance (this is the general rule).

Following the recommendation issued by a special master appointed in the case, the trial court ruled in favor of the owner; awarding the owner the excess tax funds and quieting title against the security deed holder. The Georgia Court of Appeals agreed. The Georgia Court of Appeals rejected the security deed holder’s argument that the special master didn’t have authority to issue a ruling on excess funds. And the security deed holder’s argument that the property owner lacked standing to bring a quiet title was likewise disregarded. Although the quiet title was filed by the owner after the tax sale, it was filed within the time period in which the owner had a right to redeem the property. Thus, the owner’s right to redeem was enough to give the owner standing to quiet title against the security deed holder.

If you have any questions regarding tax deeds, please call us at 404-382-9994.