Development Authority of Columbus v. Four Js Family, Lllp

FOURTH DIVISION
ELLINGTON, P. J.,
BRANCH and MERCIER, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
March 2, 2017
In the Court of Appeals of Georgia
A16A1741. DEVELOPMENT AUTHORITY OF COLUMBUS, JE-064
GEORGIA v. FOUR JS FAMILY, LLLP.
ELLINGTON, Presiding Judge.
Development Authority of Columbus, Georgia (“DACG”) appeals from the
trial court’s orders granting Four JS Family, LLLP’s motion for a preliminary
injunction enjoining the closing of the sale by DACG of certain downtown Columbus
commercial property and denying DACG’s motion to dismiss Four JS’s petition for
injunction and temporary restraining order. DACG claims that the trial court’s orders
are based on an erroneous finding that the Development Authorities Law, OCGA §§
36-62-1 through 36-62-14 (the “Act”), prohibits DACG from selling real property at
less than fair market value except as provided in OCGA § 36-62-6 (a) (7.1). For the
reasons set forth below, we agree with DACG and reverse.
This dispute arises out of DACG’s agreement to sell a 1.75 acre tract of
commercial property (the “Property”) in downtown Columbus to Vision Hospitality
Group, Inc. The record shows that the Property, which is currently used as a parking
lot, is located across the street from the Columbus Ironworks Convention and Trade
Center and also adjoins the Marriott Downtown Columbus Hotel, which is owned by
plaintiff Four JS. DACG acquired the Property from the City in 2009. The City, from
as early as 2001, and later, DACG, sought to have a hotel built and operated on the
Property to support the Trade Center. In early 2016, Vision and DACG entered into
an Agreement of Sale and Purchase (the “Sale Agreement”) providing for, among
other things, the sale of the Property to Vision for $50,000, and committing Vision,
upon satisfaction of certain conditions, to construct a 125-room hotel and a parking
garage thereon.
Four JS filed a petition for injunction and temporary restraining order seeking
to enjoin DACG and Vision from proceeding in furtherance of the Sale Agreement.
Four JS claimed that the DACG had violated OCGA § 36-62-6 by agreeing to sell the
Property, which had been valued at $3 million in 2001, for less than fair market value.
Four JS further asserted that it stood to be permanently and irretrievably harmed
because it had spent $1.25 million to purchase a property in downtown Columbus for
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the purpose of erecting a Hampton Inn hotel thereon, and that its opportunity to
obtain a Hampton Inn franchise could be lost because Vision had submitted a
competing franchise application founded on the Sale Agreement.
The trial court issued an order temporarily enjoining the closing of the Sale
Agreement and set a hearing for determination of whether the temporary restraining
order should be converted to a preliminary injunction. DACG moved to dismiss the
petition for failure to state a claim upon which relief could be granted. At the
subsequent hearing, the trial court first heard argument on the motion to dismiss, and
it then held an evidentiary hearing on the preliminary injunction. The trial court
granted a preliminary injunction enjoining the closing of the Sale Agreement until
further order of the court and, in a separate order, denied DACG’s motion to dismiss.
DACG appeals from these orders.
1. We first consider whether, as DACG contends, the trial court erred in
denying its motion to dismiss the petition pursuant to OCGA § 9-11-12 (b) (6) for
failure to state a claim. At issue, the parties agree, is whether development authorities,
such as DACG, are prohibited by statute from conveying real property at less than fair
market value absent compliance with OCGA § 36-62-6 (a) (7.1).
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“A motion to dismiss for failure to state a claim should not be granted unless
it appears to a certainty that the plaintiff would be entitled to no relief under any state
of facts which could be proved in support of his claim.” (Citation and punctuation
omitted.) Austin v. Clark, 294 Ga. 773, 775 (755 SE2d 796) (2014). In other words,
“[i]f, within the framework of the complaint, evidence may be introduced which will
sustain a grant of relief to the plaintiff, the complaint is sufficient.” (Citation and
punctuation omitted.) Id. On appeal, we “review de novo a trial court’s determination
that a pleading fails to state a claim upon which relief can be granted, construing the
pleadings in the light most favorable to the plaintiff and with any doubts resolved in
the plaintiff’s favor.” (Citation and punctuation omitted.) Babalola v. HSBC Bank,
USA, N.A., 324 Ga. App. 750 (751 SE2d 545) (2013).
In its petition, Four JS asserts that, while development authorities are
authorized to sell or otherwise dispose of real property under the Act, OCGA § 36-62-
6 (a) (7.1) sets forth certain mandatory requirements in the case that a development
authority disposes of real property for less than fair market value. Four JS alleges that
DACG failed to comply with the Act because its board voted to sell the Property at
less than fair market value without making a determination that the Property “no
longer can be used advantageously as a project for the development of trade,
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commerce, industry, and employment opportunities,” as required by OCGA § 36-62-6
(a) (7.1), and because a sale at less than fair market value must be made to the State.1
Rather, Four JS asserts, DACG’s board approved the sale of the Property “for a
project” and “for the stated purpose of building of a hotel by Vision.” The trial court’s
order denying DACG’s motion to dismiss (as well as its order granting the
preliminary injunction), consistently with Four JS’s contentions, found that the Act
does not provide for the sale of real property at less than fair market value except as
provided in OCGA § 36-62-6 (a) (7.1). DACG maintains that the trial court erred
because neither OCGA § 36-62-6 (a) (7.1), nor the similarly worded OCGA § 36-62-6
(a) (7), apply to real property which can be used advantageously as a project.
In resolving this question, “we look to the literal language of the statute, the
rules of statutory construction and rules of reason and logic, the most important of
which is to construe the statute so as to give effect to the legislature’s intent.”
1
In its appellate brief, Four JS also suggests that the Sale Agreement violated
the constitutional prohibition against gifts and gratuities. See Ga. Const. of 1983, Art.
III, Sec. VI, Par. VI (a) (1) (“Except as otherwise provided in the Constitution, (1) the
General Assembly shall not have the power to grant any donation or gratuity or to
forgive any debt or obligation owing to the public . . . .” ). However, the trial court
made no finding touching upon this question, which was not raised by the petition,
and we do not reach the issue here. See Lowery v. Atlanta Heart Assoc., P.C., 266 Ga.
App. 402, 404 (2) (597 SE2d 494) (2004).
5
(Citation omitted.) State v. Nix, 220 Ga. App. 651, 652 (1) (469 SE2d 497) (1996).
See OCGA § 1-3-1 (a) (“In all interpretations of statutes, the courts shall look
diligently for the intention of the General Assembly, keeping in view at all times the
old law, the evil, and the remedy.”). “[W]e apply the fundamental rules of statutory
construction that require us to construe a statute according to its terms, to give words
their plain and ordinary meaning, and to avoid a construction that makes some
language mere surplusage.” (Citations omitted.) Slakman v. Continental Cas. Co., 277
Ga. 189, 191 (587 SE2d 24) (2003).
The purposes of the Act “are to develop and promote trade, commerce,
industry, and employment opportunities for the public good and the general welfare
and to promote the general welfare of the state.” OCGA § 36-62-9. The term
“project,” which may include real property, is used throughout the Act and is defined
at great length in OCGA § 36-62-2 (6). The parties agree that the Sale Agreement was
signed in connection with a “project,” as defined under the Act.2
2
Under the Act, a “project” is defined to include, among other things, “Hotel
and motel facilities for lodging which also may provide meals, provided that such
facilities are constructed in connection with and adjacent to convention, sports, or
trade show facilities.” OCGA § 36-62-2 (6) (H) (vi).
6
OCGA § 36-62-6 provides for the powers of development authorities.
Thereunder, “[e]ach authority shall have all of the powers necessary or convenient to
carry out and effectuate the purposes and provisions of this chapter, including, but
without limiting the generality of the foregoing, the power[s]” set forth in OCGA §
36-62-6 (a). This includes, in pertinent part, the power under OCGA § 36-62-6 (a)
(6), “[t]o sell, lease, exchange, transfer, assign, pledge, mortgage, dispose of, or grant
options for any real or personal property or interest therein for any such purposes.”
OCGA § 36-62-6 (a) (6) does not place any restrictions on the sale of real property,
including the sales price, other than the sale be “for any such purposes,” and the
general purpose of the Act, as noted above, is to develop and promote trade,
commerce, industry, and employment opportunities. See OCGA § 36-62-9.
Four JS contends that the sale of the Property by the Authority at less than fair
market value would nevertheless fail to comply with OCGA § 36-62-6 (a) (7.1).
OCGA § 36-62-6 (a) (7) provides that an authority has the power:
Except as otherwise provided in paragraph (7.1) of this Code section, to
dispose of any real property for fair market value, regardless of prior
development of such property as a project, whenever the board of
directors of the authority may deem such disposition to be in the best
interests of the authority if the board of directors of the authority prior
to such disposition shall determine that such real property no longer
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can be used advantageously as a project for the development of trade,
commerce, industry, and employment opportunities.
(Emphasis supplied.).
OCGA § 36-62-6 (a) (7.1) provides that an authority has the power:
(7.1) Notwithstanding any other provision of this chapter to the contrary,
to dispose of any real property for fair market value or any amount
below fair market value as determined by the board of directors of the
authority, regardless of prior development of such property as a project,
whenever the board of directors of the authority may deem such
disposition to be in the best interests of the authority if the board of
directors of the authority prior to such disposition shall determine that
such real property no longer can be used advantageously as a project
for the development of trade, commerce, industry, and employment
opportunities and if title to such real property is to be transferred to the
state.
(Emphasis supplied.).
The plain language of the Act refutes Four JS’s argument that OCGA § 36-62-6
(a) (7.1) divides all dispositions of real property by an authority into two categories,
those that must be for fair market value, and those that may be for less than fair
market value and require a declaration by the board of the authority that the real
property can no longer be used advantageously as a project. Rather, reading
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subsections (a) (7) and (a) (7.1) together, those subsections provide that an authority
may sell real property at fair market value, without specific restriction as to the
purchaser, or it may sell real property to the State at or below fair market value, but,
in either case, only when “the board of directors of the authority prior to such
disposition shall determine that such real property no longer can be used
advantageously as a project for the development of trade, commerce, industry, and
employment opportunities.” OCGA §§ 36-62-6 (a) (7) and (a) (7.1). Because, as Four
JS concedes, the subject sale is for a project under the Act, and the board has not
determined the Property cannot be used as a project, the Sale Contract does not come
within OCGA § 36-62-6 (a) (7) or OCGA § 36-62-6 (a) (7.1).3
3
Nor would a sale of the Property at less than fair market value be inconsistent
with OCGA § 36-62-7. That provision provides a project acquired under the Act shall
not be operated by an authority or any municipal corporation, county, or other
governmental subdivision, and must be leased, sold, or managed by, one or more
persons, firms, or private corporations, but provides no requirement that any such sale
be made at fair market value. See Sherman v. Dev. Auth. of Fulton County, 317 Ga.
App. 345, 348 (2) n. 12 (730 SE2d 113) (2012) (“The projects developed pursuant to
the Act must be leased to, sold to, or managed by a private entity. OCGA § 36-62-
7.”). On the other hand, “[a]ny disposition of real property by an authority pursuant
to paragraph (7) of Code Section 36-62-6 shall be made to one or more persons,
firms, corporations, or governmental or public entities.” OCGA § 36-62-7. As
explained supra, a sale under OCGA § 36-62-6 (a) (7) must follow the determination
by the board that the real property cannot be used as a project, which is consistent
with the provisions of OCGA § 36-62-7 providing that such a sale may be made to
governmental or public entities, whereas a sale of a project must be to a private entity.
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To put the foregoing in more general terms, the Act sets forth a statutory
scheme which differentiates between real property used (or to be used) as a project
and real property which an authority’s board determines cannot be used as a project.
A sale by an authority of the latter would not come within the Act’s purpose of
developing and promoting trade, commerce, industry, and employment opportunities,
but is expressly allowed under conditions which require sales of such property to be
made at fair market value to parties other than the State. Thus, Four JS is not entitled
to relief on the ground that the DACG’s agreement to sell the Property at less than
fair market value “for a project,” as the petition alleges, constituted a violation of
OCGA § 36-62-6. It follows that the trial court erred in denying DACG’s motion to
dismiss the petition.
2. As the trial court erred in denying DACG’s motion to dismiss the petition,
it also erred in granting Four JS’s request for a preliminary injunction on the basis
that it was substantially likely that DACG’s sale of Property at less than fair market
value would violate OCGA § 36-62-6 (a) (7.1). See generally Meinhardt v.
Christianson, 289 Ga. App. 238, 243 (3) (656 SE2d 568) (2008) (order ruling on
motion for interlocutory injunction could not be affirmed as it rested on an erroneous
legal theory).
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Judgment reversed. Branch and Mercier, JJ., concur.
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