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UNITED STATES v. WESTINGHOUSE CO.
The United States condemned certain premises for use by the Army for a term initially ending June 30, 1943, with an option to renew for additional periods during the existing national emergency. Respondent was lessee of a portion of the premises for a term expiring October 31, 1944, and incurred expenses for the removal of its personal property. Subsequently, the Government extended its occupancy for two additional yearly periods ending June 30, 1945. Held: Although the occupancy taken by the United States was initially for a period less than the remainder of respondent's term, respondent's removal expenses are not relevant in determining just compensation, since respondent's term had been exhausted by the Government's occupancy. Pp. 262-268.
(a) When there is an entire taking of a condemnee's property, be it a leasehold or a fee, the expenses of removal or relocation are not to be included in valuing what is taken. P. 264.
(b) Where the Government initially takes an occupancy for less than the outstanding term of a lease but later exercises a renewal option so as to exhaust the entire lease, this should be treated as a taking of the whole lease. Pp. 265-268.
(c) Where the Government initially takes an occupancy for less than the outstanding term of a lease with an option for extension, an award based on removal costs should be delayed until it is known whether the Government's occupancy has exhausted the tenant's leasehold. P. 268.
Roger P. Marquis argued the cause for the United States. With him on the brief were Solicitor General Perlman, Assistant Attorney General Vanech and Oscar H. Davis.
Milton J. Donovan argued the cause and filed a brief for respondent.
On February 18, 1943, the United States filed a petition in the United States District Court for the District of Massachusetts to condemn certain land and buildings in Springfield, Massachusetts, for use by the Army for a term initially ending June 30, 1943, with a right to renew for additional yearly periods during the existing national emergency, at the election of the Secretary of War. 1 On the same day the District Court authorized the United States to take immediate possession. The respondent, Westinghouse Electric and Manufacturing Company, was lessee of a portion of the condemned property, using it as a warehouse, under a lease dated January 19, 1942, for a term expiring on October 31, 1944. Respondent, in order to comply with the District Court's order of immediate possession, incurred expenses for the removal of its personal property. Subsequently, the Secretary of War exercised his right of renewal and extended the Government's occupancy for two additional yearly periods ending on June 30, 1945. Thus, although the [339 U.S. 261, 263] occupancy taken by the United States was initially for a period less than the remainder of respondent's term, the renewals eventually exhausted respondent's leasehold.
At the time of the initial taking as well as upon each yearly extension, sums were deposited into the District Court as estimated just compensation. It was stipulated that these sums represented the fair market value of the bare, unheated warehouse space taken, leaving open the question whether, as a matter of law, the removal costs incurred by the respondent were to be taken into account in computing just compensation for what was condemned. It was further stipulated that the removal expenses were both reasonable and necessary, and that, taking such removal costs into account, the market rental value of the premises was $25,600 greater on a sublease given by respondent to a temporary occupier than as bare unheated warehouse space.
The District Court ruled that removal expenses should be included in the measure of just compensation, and awarded to respondent the stipulated amount. 71 F. Supp. 1001. The Court of Appeals affirmed, Chief Judge Magruder dissenting. 170 F.2d 752. The disagreement was due not to differences of independent views but to conflicting meanings drawn from the decisions of this Court in United States v. General Motors Corp., 323 U.S. 373 , and United States v. Petty Motor Co., 327 U.S. 372 . The need for clarification led us to bring the case here. 336 U.S. 950 .
In this holding of what is just, within the requirements of the Fifth Amendment, the Court was scrupulously careful not to depart from the settled rule against allowance for "consequential losses" in federal condemnation proceedings. 323 U.S. at 379 et seq. When there is an entire taking of a condemnee's property, whether that property represents the interest in a leasehold or a fee, the expenses of removal or of relocation are not to be included in valuing what is taken. That rule was found inapplicable to the new situation presented by the General Motors case - inapplicable, that is, where what was to be valued was "a right of temporary occupancy of a building equipped for the condemnee's business, filled with his commodities, and presumably to be reoccupied and used, as before, to the end of the lease term on the termination of the Government's use." 323 U.S. at 380.
"There is a fundamental difference between the taking of a part of a lease and the taking of the whole lease. That difference is that the lessee must return to the leasehold at the end of the Government's use or at least the responsibility for the period of the lease which is not taken rests upon the lessee. This was brought out in the General Motors decision. Because of that continuing obligation in all takings of temporary occupancy of leaseholds, the [339 U.S. 261, 265] value of the rights of the lessees which are taken may be affected by evidence of the cost of temporary removal." 327 U.S. at 379-80.
Here, as in General Motors, the Government initially took over only part of an outstanding lease. But here the Secretary of War in fact continued the Army's occupancy of the premises beyond the expiration of Westinghouse's lease. Judged by the event, therefore, this case was unlike General Motors in that what the Government took was the whole of the lease. It was thus like Petty Motor. The formal difference between this case and Petty Motor was that in this case the Government began with an occupancy shorter than the outstanding lease with a contingent reservation for its extension, while in Petty Motor there was a contingent reservation to shorten an occupancy that nominally exhausted the lease.
To make a distinction between taking a part of a lease with notice that the period of occupancy may be [339 U.S. 261, 266] extended for the rest of the leasehold, and formally taking a whole leasehold with the right to occupy only a portion of it and throw up the rest, is to make the constitutional requirement for just compensation turn on a wholly barren formality. It is barren because a taking of a contingent occupancy by the Government could be cast in either form by those in charge of its condemnation proceedings without the slightest difference to the Government's interest. The reason for condemnation for a period shorter than a tenant's outstanding term with notice that extensions may absorb the balance of the term (i. e., the form in this case), or for condemnation formally for the whole of an unexpired leasehold with notice that the Government's occupancy may be terminated before the outstanding term has expired (i. e., the form in Petty Motor), is precisely the same. It is a recognition of the contingencies which may determine the duration of the emergency during which the Government seeks temporary occupancy of leased premises. And so it takes a flexible term, casting the burden of the contingency upon the ousted tenant.
Under either type of condemnation the United States may in fact move out before the ousted leaseholder's term has expired, thus imposing upon him the duty to return to the premises or make some other burdensome adjustment. In that event, he is placed in precisely the same boat as was the General Motors Corporation, and the cost of removal is therefore admissible in evidence "as bearing on the market rental value of the temporary occupancy taken." 323 U.S. at 383. Contrariwise, under either type of condemnation the Government may continue its occupancy throughout the tenant's term. In that event, the situation is governed by Petty Motor and removal costs may not be taken into account. The final severance of a lessee's occupancy as against a temporary interruption of an outstanding leasehold, even though not definitively [339 U.S. 261, 267] fixed at the outset, is a difference in degree wide enough to justify a difference in result.
The test of the outcome - is the Government merely a temporary occupier of an unexpired leasehold or has it absorbed the term of the lease? - has actuality behind it. Until events have made it clear, we cannot know whether the tenant will have to move back into his leased premises or make some other adjustment, and thus we cannot know whether the reason for the General Motors doctrine operates.
Condemnation for indefinite periods of occupancy was a practical response to the uncertainties of the Government's needs in wartime. Law has sufficient flexibility to accommodate itself to these uncertainties by making what is a relatively minor item await the event. To do so does not keep the litigation open longer than it has to be kept open, because the total award for the Government's occupancy cannot be determined until its duration is known. The usual rule for ascertaining value at the time of taking is not disrespected if one item is made a function of the future because only then can it be known whether that item forms a part of what has been "taken." The alternative is to require a forecast of the possibility that the tenant will have to move back into the premises. The factors on which such a forecast must be based are too contingent, too unique for guidance by experience, to permit rational assessment. This is a situation where the law should express "a judgment from experience as against a judgment from speculation." Tanner v. Little, 240 U.S. 369, 386 . Or, as it was put by Mr. Justice Cardozo for the Court in a relevant situation: "Experience is then available to correct uncertain prophecy. Here is a book of wisdom that courts may not neglect. We find no rule of law that sets a clasp upon its pages, and forbids us to look within." Sinclair [339 U.S. 261, 268] Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 698 .
An award based on removal costs will of course be delayed until it is known whether the Government's occupancy has exhausted the tenant's leasehold. But this presents no real administrative difficulties. That the essential facts here became known before the time for judicial determination hardly makes this case atypical. Even in the cases where the event is still open, the cost of moving out, insofar as it is to be reflected in just compensation, may be treated as a segregated item. Thus, its amount may be ascertained at an early stage of the judicial proceedings, but the judgment made conditional upon the outcome of the Government's occupancy. And rental payments due from the Government need not be postponed. So long as the duration of the Government's occupancy is undetermined, the District Court must necessarily retain the case for the periodic determination and payment of rental compensation. This is so in the absence of any problem arising out of removal costs. No unfairness or embarrassment to the displaced tenant is thus involved by leaving liability based on removal to await the event.
In the case before us, it was known at the time of trial in the District Court that respondent's term had been exhausted by the Government's occupancy. Accordingly, the judgment is reversed insofar as it awards $25,600 to respondent.
[ Footnote 1 ] The petition was filed under 201 of Title II of the Second War Powers Act of 1942, 56 Stat. 176, 177, 50 U.S.C. App. 632. This section authorized certain officials "to acquire by condemnation, any real property, temporary use thereof, or other interest therein," for purposes related to the war. Plainly it conferred power to condemn interests in realty normally purchased by private persons, including, of course, options to renew.
[ Footnote 2 ] This holding in the General Motors case was the Court's determination, without any congressional action, of what constituted "just compensation" under the Fifth Amendment.
[ Footnote 3 ] Problems relating to the valuation of renewal options are not before us on this record. It need hardly be said that provision for renewal does not necessitate the same rental for the renewed period as for the initial period. Whether a rental for each renewed period was initially fixed in this case is not disclosed by the stipulated facts.
Difficulties in resolving the controversy over removal costs are caused by a condemnation policy under which the Government, in taking temporary use of property, [339 U.S. 261, 269] also condemns an option to renew or shorten the period of use. While we have decided cases in which questions concerning options were raised, United States v. General Motors Corp., 323 U.S. 373 ; United States v. Petty Motor Co., 327 U.S. 372 , I think that the Court has not fully faced up to the implications of the optioning policy.
Valuation problems of the past have been simple contrasted to those the new policy imposes upon courts. Condemnation in the main was of title to physical properties, and the problem of just compensation was one of ascertaining the equivalent in money at the date of appropriation - a date that had already arrived. The courts were dealing with a single point of time and with facts and conditions which were at least in experience, not prophecy.
In recent years, the Government embarked upon a new type of condemnation. 1 It does not take title to the property and put into the pockets of the owners the current money equivalent. Instead, it keeps the owners' capital tied to their investments and pays them only an estimated value of its future use. This requires courts to predict values over a period of time.
Valuing time is the essence of much business and of most speculation. All options, futures, insurance contracts, leases, investments, deferred deliveries and commitments involve an appraisal of time. And though it takes us into the realm of pure conjecture, it may be possible, however unsatisfactorily, to fix values for rights of future occupancy if the period of the occupancy can be known.
The Government, however, has adopted the policy of expropriating for a "flexible term" by condemning a right [339 U.S. 261, 270] to shorten or to extend the use from time to time as may please it. This type of condemnation denies courts even a defined time period to evaluate, and it is small wonder that the Court concludes this leaves the factors too contingent and unique "to permit rational assessment." This raises the question whether Congress ever authorized a type of expropriation that can not be rationally compensated.
It is plain that Congress contemplated only such takings as were necessary. We should give this a broad construction; we may even go so far as to say that the necessity for a taking is a political or policy question not usually subject to judicial review. But the statute implies some foundation in necessity and nothing can be [339 U.S. 261, 272] less necessary than condemnation of an option to take property or its possession.
The United States needs no such option, for its inherent condemnation power, by its very nature, is a perpetual option to take, at any time, any property it needs. The effect of condemning an option to take at some future time is to increase the element of uncertainty and speculation in the liquidation of an award. Furthermore, such purpose is wholly one-sided. If, let us say, the price level should fall, the Government, even though it wants the property, is not bound to keep it on the option terms. That is the essence of option. But it may abandon the option and take the property under a new declaration, thereby getting a new valuation in the light of the lower price level. If, however, prices go up, the Government can use its condemned option to keep the owner from enjoying the rising value of his property as other owners may do. The taking of a term with an option to lengthen is therefore no more than a hedge against inflation.
This same one-sidedness inheres in the policy of taking a term with an option to shorten. Specific authority exists for government officials to dispose of surplus properties taken for war purposes; 7 indeed such authority is contained in the very statute under consideration. 8 Various officials are given power to "lease, sell, or otherwise dispose of" any properties taken by condemnation which become surplus or unnecessary. And so, if the Government condemned for a term with an option to shorten, and then determined that the property so taken was no longer necessary, it could sell, lease, or otherwise dispose of the remainder of the term at the then current market price. This it would certainly do if the price level had risen. But if prices had fallen, it could avoid the loss of trading [339 U.S. 261, 273] on the open market by exercising the option to shorten, cut down the term and put on the owner the burden of salvaging its surplus property. The taking of a term with an option to shorten is therefore no more than a hedge against deflation.
It seems unlikely that Congress intended to authorize such speculative transactions as result from an option to increase or decrease the time period. If we change the terms of the taking so that the time is known but the space is indefinite, the hazard to the Government becomes quickly apparent; if we had a declaration taking such part of a property as from time to time the Government would want, we would have to compensate on the basis that the taking was of the maximum within its terms. Such indefinite takings invite excessive awards, for the speculation involved is involuntary with the claimant and its outcome controlled by, and hedged in the interest of, the Government. Cf. United States v. Certain Parcels of Land, etc., 55 F. Supp. 257, 265.
I think we should hold the effort to condemn options to be a nullity for want of congressional authorization and determine claims for just compensation on the basis of the fixed term specified in the declaration. If the Government, upon expiration of the fixed term, desires [339 U.S. 261, 275] to continue in possession, it may file a new declaration of taking and have the value of that term fixed in the light of conditions that then prevail. If it abandons the property before the fixed term expires, it has surplus property on its hands to dispose of as it may choose. These are not, of course, very satisfactory results, but they would come nearer obeying the constitutional mandate of "just compensation" than the delayed decision course adopted by the Court.
[ Footnote 1 ] See Just, Condemnation Procedure During World War II, 12 Geo. Wash. L. Rev. 286; Dolan, Present Day Court Practice in Condemnation Suits, 31 Va. L. Rev. 9.
[ Footnote 3 ] Title II of the Second War Powers Act, 56 Stat. 177, 50 U.S.C. App. 632, the statute here involved, was amendatory to the Act of July 2, 1917 (40 Stat. 241), To Authorize Condemnation Proceedings of Lands for Military Purposes. As originally introduced, the 1917 Act contained authorization for only the condemnation of "any land, or right pertaining thereto." 55 Cong. Rec. 3632 (1917). But, upon the unexplained recommendation of the then Secretary of War, the words "temporary use thereof or other interest therein" were inserted after the word "land." See H. R. Rep. No. 83, 65th Cong., 1st Sess. (1917); 55 Cong. Rec. 3991, 4130-4131, 4263 (1917). These words were carried over by the amendatory Act without comment. See generally, Senate Committee Print, Statements in Executive Session on S. 2208, 77th Cong., 2d Sess. 6-7, 13-16; S. Rep. No. 989, [339 U.S. 261, 271] 77th Cong., 2d Sess. 4 (1942); Hearings before the House Committee on the Judiciary on S. 2208, 77th Cong., 2d Sess. 10, 15-23 (1942); H. R. Rep. No. 1765, 77th Cong., 2d Sess. 6 (1942); 88 Cong. Rec. 1639-1641, 1644-1645, 1647-1650, 1653-1656.
[ Footnote 4 ] See, e. g., testimony of Attorney General Biddle in Hearings before the House Committee on the Judiciary on S. 2208, n. 2, supra, at 19: "Mr. HANCOCK of New York. Is it possible under a condemnation act to acquire temporary use? "Mr. BIDDLE. Yes, sir. "Mr. HANCOCK of New York. In that case the title would revert back to the original owner after the temporary use. "Mr. BIDDLE. Yes. "Mr. HANCOCK of New York. But you can acquire property by a lease? "Mr. BIDDLE. Yes. You can condemn it for a certain length of time." (Emphasis added.) See also materials cited in nn. 2, 3, supra, and 5, 6, infra.
[ Footnote 5 ] E. g., Committee Print, n. 3, supra, at 6; S. Rep. No. 989, n. 3, supra, at 4; Hearings, n. 3, supra, at 10, 15-23; H. R. Rep. No. 1765, n. 3, supra, at 6.
[ Footnote 6 ] See 88 Cong. Rec. 1644-45, 1647-48, 1653. See also n. 4, supra.
[ Footnote 7 ] E. g., 54 Stat. 712, 50 U.S.C. App. 1171 (b).
[ Footnote 8 ] 54 Stat. 713; 56 Stat. 177. And see 88 Cong. Rec. 1648.

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In Love v. Fulton County Bd. of Tax Assessors, 2018 Ga. App. LEXIS 643 (Case No. A18A1778, decided on December 3, 2018), the Georgia Court of Appeals held that the trial court did not err in dismissing the plaintiffs’ claims seeking a writ of mandamus against the Fulton County Board of Tax Assessors (hereinafter “Board”).
Plaintiffs (taxpayers in Fulton County) had sought a writ of mandamus to compel the Board to investigate diligently under O.C.G.A. § 48-5-299 and determine whether the interest of the Atlanta Falcons Stadium Company in the Mercedes-Benz Stadium is subject to ad valorem taxation. The Court noted that the statute affords the Board discretion in the process it follows to investigate the taxability of property because the term “investigate diligently” is not statutorily defined. The Court also noted that mandamus relief would only be appropriate if the Board failed entirely to conduct an investigation into the taxability of the Stadium Company’s interest in the stadium. The Plaintiffs’ own amended petition and attached exhibits unequivocally demonstrated that the Board did investigate the issue and reached a decision thereon. The ultimate conclusion that the Board reached was that the property in question was not taxable since it was found to be a usufruct.
Ragsdale, Beals Seigler, Patterson & Gray, LLP.
Taxable Estate for Years on Non-Taxable Usufruct?
In Clayton County Bd. of Tax Assessors v. Aldease Atlanta Joint Venture, 2018 Ga. LEXIS 437, (Case No. S18A0430), decided on June 18, 2018), the Georgia Supreme Court affirmed the trial court’s grant of the retail operator’s motion for summary judgment in an ad valorem real property tax suit based on the ruling that their interests in the premises at issue constituted non-taxable usufructs. The comprehensive restrictions on the airport retailer’s right to use the leased space contained in the concession agreement were “fundamentally inconsistent with the concept of an estate for years” and therefore, the agreement at issue created a non-taxable usufruct and not a taxable estate for years. The Court also held that if the county was permitted to impose a property tax on the usufruct created by the concession agreement, it would violate the Georgia Constitution’s uniformity of taxability requirement since the county did not tax other usufructs or other possessory interests in its jurisdiction. Finally, the Supreme Court held that the trial court did not err in failing to find that the retailer owned leasehold improvements, as the retailer held only a usufruct and not an estate in real property..
In The City of College Park et. al. v. Paradies-Atlanta, LLC et al., 2018 Ga. App LEXIS 318, 2018 WL 2454708, (Case No. A18A0162, decided on June 1, 2018), the Georgia Court of Appeals affirmed the trial court’s grant of the retail operators’ motion for summary judgment in an ad valorem real property tax refund suit based on the ruling that their interests in the premises at issue constituted non-taxable usufructs. The Court noted the evidence which showed: the City of Atlanta, which owns Hartsfield-Jackson International Airport, entered into seven-year agreements with the retail operators in the airport; the agreements specifically provided that the rights thereunder constituted a usufruct which is not subject to levy or sale and that no estate passed out of the City; the City of Atlanta retained dominion and control over the parcels by prohibiting the operators from subletting, assigning, transferring or encumbering any of their rights under the agreements without the City’s consent; the agreements restricted the hours during which deliveries may be made and by whom, the type of services offered, the prices that may be charged for good and services, the hours during which the businesses must be open at the airport, contained detailed customer-service requirements, business record retention and immediate access by the City, numerous City policy compliance rules on equal employment, non-discrimination, ethics, conflicts of interest, maintenance and upkeep requirements of the premises, as well as maintenance of certain types of insurance coverage. Although the agreements provided that the retail operators were liable for all taxes levied and assessed against their interests, they did not specifically address ad valorem real property taxes. The Court characterized the retail operators use of the premises as having “numerous pervasive restrictions governing nearly all aspects of the retail operators’ rights” and affirmed the trial court’s ruling that their interests in the parcels constituted non-taxable usufructs.
In Hall County Bd. of Tax Assessors v. Westrec Properties, Inc., 2018 Ga. LEXIS 42 (Case No. S17A1421, decided on January 29, 2018), the Georgia Supreme Court affirmed the trial court’s grant of the taxpayers’ motion for summary judgment based on the county Board of Tax Assessors’ failure to send notice of a settlement conference within 45 days of its receipt of the taxpayers’ notices of appeal and before certification of the appeals, as required by the amendment to O.C.G.A. § 48-5-311 (g)(2), which went into effect on January 1, 2016. The Court held further that although the appeals were initially filed in the administrative process in 2015, the appeals were not considered filed until the date the taxpayers’ notices of appeal to Superior Court were filed with the Board of Tax Assessors, which was after the effective date of the new statutory amendment. The Court stated that the law means what it says: if the Board of Tax Assessors elects not to hold a settlement conference, the appeal terminates in the taxpayer’s favor, and if the taxpayer chooses not to participate in the conference, he loses the opportunity to seek fees and costs in Superior Court.
In Columbus Bd. of Tax Assessors v. Med. Ctr. Hosp. Auth., ___ Ga. ___, ___ S.E.2d ___ (Case No. S17G0091, decided October 16, 2017), the Georgia Supreme Court reversed the Court of Appeals’ decision which had affirmed the trial court’s decision that the hospital authority’s leasehold interest in a continuing care retirement facility was a “public property” and therefore, exempt from taxation. The Supreme Court held that the prior orders in the bond validation proceedings did not specifically decide the issue of taxability because the orders were not conclusive as to whether the leasehold interest of the hospital authority was “public property” for ad valorem property tax purposes; the superior court should have drawn its own conclusions about taxability. The case was remanded for a determination by the trial court as to whether the hospital authority held the leasehold interest for public purposes in furtherance of the legitimate functions of the hospital authority, rather than for private gain or income. Mere ownership of property by a hospital authority does not exempt it from property taxes; bond validation proceedings that establish that bonds have a public purpose do not inevitably establish that the property associated with the bonds is public property.
GA. COMP. R. & REGS. r. 560-11-10-.08(3)(b)1. has been amended to provide clarification as to the appropriate form to use when filing for freeport exemption. Subsection (i) provides that Form PT-50P, the "Business Personal Property Tax Return", is to be used for the return of business personal property, regardless of freeport. It was previously used when the property owner was not eligible for freeport exemption or did not desire to file an application for freeport exemption. Subsection (ii) provides that Form PT-50PF, the application for freeport exemption, is to be used only for the application for freeport exemption. It was previously used for the return of business personal property and as a simultaneous application for freeport exemption.
Have You Filed Your Appeal?
In May, Fulton County Tax Assessors sent out assessment notices that were dated May 19, 2017, and contained an appeal deadline of July 3, 2017. However, due to an error in procedures, the notices were not timely mailed out. The appeal deadline for those notices has been extended to July 10, 2017. Appeals that are mailed must contain a US Postal Service postmark (NO private meter stamps) of July 10th or earlier. Appeals filed online may be filed before 12:00 AM on July 11, 2017. In all counties in Georgia, property owners must timely file appeals of their assessment notices or will have no right to contest their tax bills.
All property owners will receive a new 2017 Property Assessment Notice in August. If you have already submitted an appeal, it will be voided. You will receive official notice from the Board of Assessors. A new 45-day appeal window will begin with the date of the new notices.
House Bill 285 proposes to revise the definition of fair market value as set forth in O.C.G.A. § 48-5-2. The bill relates to the property tax treatment of affordable housing. It provides that income tax credits may be considered in determining fair market value under the sales comparison approach if the tax assessor uses comparable sales that, at the time of the comparable sale, had unused income tax credits that were transferred in an arm’s length bona fide sale. It also provides that for such rent restricted properties, the income tax credits may be considered in determining fair market value if such income tax credits generate actual income to the record title holder of the property. As of this writing, the bill has passed the House and been favorably reported by the Senate.
In Heron Lake II Apartments LP v. Lowndes Cnty. Bd. of Tax Assessors Supreme Court of Georgia, Civil Case (9/12/2016, 9/22/2016) S16A0691, the Court held that the superior court properly found that O.C.G.A. § 48-5-2 subsection (3) (B.1), which excluded low-income housing income tax credits from consideration for the purpose of assessing ad valorem tax, was unconstitutional as violating the taxation uniformity provision of the Georgia Constitution, Ga. Const. of 1983, Art. VII, Sec. I, Par. III (a).
In Columbus, Georgia Bd. of Tax Assessors v. Med. Ctr. Hosp. Auth., ___ Ga. App. ___, ___ S.E.2d ___ (Case No. A16A00638, A16A0639, decided July 7, 2016), the Georgia Court of Appeals reiterated prior case law that held that hospital authority property is public property and is exempt from property taxes as long as the use of the property or its income furthers the legitimate functions of the hospital authority.
In Park Solutions, LLC v. DeKalb County Board of Tax Assessors, 2016 Ga. App. LEXIS 183, the Georgia Court of Appeals held that real property purchased in a judicial foreclosure at a Sheriff’s sale was an “arm’s length bona fide” sale under O.C.G.A. § 48-5-2(3), and the sale price constituted the maximum allowable fair market value for the next taxable year for the one- year valuation freeze.
In Monroe County Board of Tax Assessors v. Wilson, 336 Ga. App 404 (2016), the Georgia Court of Appeals held that tax appeals not tried at the first available term of court after filing should not be dismissed by the trial court.
It’s about that time of year again in Georgia – time to start thinking about ad valorem property tax filing deadlines. Personal property owners are required to file returns with the county tax assessors by April 1. County tax assessors mail out assessment notices to all property owners in Georgia in the April/May/June time frame. So whether you are a taxpayer who owns real or personal property or both, you should be on the lookout for assessment notices for each parcel of real property owned and each personal property account. Appeals must be filed within 45 days of the date of the assessment notice. If you fail to meet this deadline, it will be too late to appeal when you get your tax bill and are dissatisfied with the amount of taxes you owe.
In Glynn County v. Coleman, 2015 Ga. App. Lexis 675, the Georgia Court of Appeals reviewed the appropriateness of certification of a class seeking property tax refunds. The county governing authority asserted that the trial court erred in granting class certification in a class action of taxpayers who were seeking refunds of ad valorem property tax payments involving exemptions that had been allegedly miscalculated. The appellate court held that a class action against a county seeking property tax refunds is permissible under O.C.G.A. § 48-5-380, and the trial court did not err by granting class certification. The court also held that a county’s defense of sovereign immunity is not proper to avoid certification of a class.
In Ballard v. Newton County Board of Tax Assessors, 2015 Ga. App. Lexis 349, the Georgia Court of Appeals decided a case of first impression, namely, whether a tax sale qualifies as an “arm’s length bona fide sale” under O.C.G.A. § 48-5-2 (1). The Court held that a tax sale does not qualify as such under O.C.G.A. § 48-5-2 because a tax sale is a forced sale similar to a foreclosure sale (not a sale under normal conditions), and because the purchaser does not receive a fee simple title, but rather a defeasible fee interest evidenced by a tax deed. Consequently, the statutory one-year purchase price freeze of the tax assessment for arms’ length bona fide sales under O.C.G.A. § 48-5-2 (3) is inapplicable.
On May 6, 2015, Georgia Governor Nathan Deal signed House Bill 202 which makes a number of changes to the property tax laws. Some of the most significant changes concern the ad valorem provisions regarding arbitration in that O.C.G.A. §48-5-311 has been amended to allow for non-binding arbitration. The statute still requires the appealing taxpayer to provide a certified appraisal to the county board of tax assessors within forty-five (45) days of the date of the county’s mailing of the acknowledgment of receipt of the taxpayer’s appeal. In his or her award, the arbitrator considers the final fair market value submitted by the board of tax assessors at the hearing, the fair market value submitted by the taxpayer at the hearing, and the evidence supporting the values submitted by both parties. The arbitrator’s decision as to fair market value determines which party is responsible for payment of the fees and costs of the arbitrator. If the taxpayer's value is closest to the fair market value determined by the arbitrator, the county shall be responsible for the fees and costs of such arbitrator. If the value of the board of tax assessors is closest to the fair market value determined by the arbitrator, the taxpayer shall be responsible for the fees and costs of such arbitrator. The arbitrator’s decision is appealable to Superior Court within thirty (30) days of the date of delivery of the decision.
In CPF Ins. LLLP V. Fulton County Board of Tax Assessors, Case No. A14A2268, (March 3, 2015), the Georgia Court of Appeals held that it was error for the trial court to find that because the Federal Home Loan Mortgage Corporation is a governmental agency, its sale of real property did not qualify as an arm’s-length bona fide sale for property tax assessment purposes. The Court of Appeals also held that the trial court erred in holding that the sale price by Freddie Mac was not the maximum allowed fair market value for the succeeding tax year pursuant to O.C.G.A. § 48-5-2-(3). This statute clearly defines fair market value and has no language exempting sales involving governmental agencies; it applies to all sales of real property regardless of the identity of the parties as long as the sale is an arm’s-length, bona fide sale. O.C.G.A. § 48-5-2(.1) states that arm’s-length sales specifically include distress sales, short sales, bank sales, and sales at public auctions. Therefore, Freddie Mac’s financial loss as a result of the sale was insufficient to show that it was not acting in its own best interests. The Board of Tax Assessors had the burden of proving the sale involved either fraud or deceit, that there was some relationship or affiliation between Freddie Mac and the purchaser prior to the sale, or that Freddie Mac intended to benefit the purchaser in a way contrary to its own best interests.
In Fulton County Board of Tax Assessors v. Toro Properties VI, LLC, 210 Ga. App. LEXIS 613 (September 8, 2014), the Georgia Court of Appeals held that attorneys’ fee awards issued in tax appeal cases after the term of court in which the final judgments were issued did not amount to an unauthorized attempt by the trial court to modify final judgments outside the term of court in which they were rendered. The court held that there is no requirement for the trial court to expressly reserve in the final valuation orders the right to later issue a few award, and such fee awards do not frustrate the interest of judicial economy or violate public policy, because there is no time limitation dictating when a taxpayer must move or a court must award attorney fees.
In Hansen v. DeKalb County Board of Tax Assessors, 295 Ga. 385 (2014), the taxpayer initially attempted to obtain copies of public real property tax records from DeKalb County via tax appeal statute O.C.G.A. § 48-5-306(d). The county provided certain documents, but the taxpayer was not satisfied with the adequacy of the responses. The taxpayer then requested more specific documents which the county responded to again. Thereafter, the taxpayer requested a meeting with the Chief Appraiser and notified the county the meeting would be recorded pursuant to state statute. After the Chief Appraiser declined the request, the taxpayer filed a petition for mandamus and for an order under the Georgia Open Records Act (O.C.G.A. 50-18-71 et. seq.) The trial court denied the taxpayer’s mandamus. The appellate court held that the trial court ruled correctly; the Act’s enforcement provisions do not apply to requests for information made pursuant to tax appeal statutes. Furthermore, the taxpayer should have availed himself of the remedies available in the administrative tax appeals process of O.C.G.A. § 48-5-311.
Effective July 1, 2014, O.C. G. A. § 48-5-380 will provide that taxpayers may, but are no longer required to, submit a refund claim to the county governing authority prior to bringing suit for taxes which have been erroneously or illegally assessed or collected. If a taxpayer files a refund claim, the time period before which a refund suit may be filed has been shortened from the earlier of the governing authority's denial of the claim or ninety days following the filing of the claim, rather than a one year waiting time. The new legislation also provides that no suit for refund may be filed more than five years from the date of the payment of taxes.
The Georgia Legislature passed a bill during the 2014 session, which if signed or not vetoed by the governor, will be beneficial to low-income housing tax credit properties. The bill provides that for ad valorem property tax valuation purposes, the tax assessors shall apply rent limitations, operational requirements, and any other income tax or other regulatory restrictions associated with the use of the property as low-income residential rental property. The bill also provides, however, that such properties shall not be considered comparable properties for assessment or appeal of assessment of other properties.
New legislation in Georgia may impact commercial property owners who appeal their values for 2014 and future tax years. The law changes the method of calculation of the temporary tax bill. The previous law provided that if the bills were issued before the board of equalization rendered its decision, the bill would be based upon the higher of the return value for that year, or 85% of the year's value set by the county board of tax assessors. The new law provides a new calculation method if the tax bills are issued before the board of equalization hearing. Under the new procedure, the temporary value will be set to the lesser of: a) the valuation in the year preceding the year in which the appeal is filed, or b) 85% of the current year's value. Taxpayers pay 85% of the current year's value if the property has had structural improvements occur. Taxpayers also now have the option of electing to pay 100% of the current year's valuation if no property improvement has occurred. However, if taxpayers elect to pay less than 100%, the new law increases the maximum interest cap on taxes owed or refunds the county must pay for non-homestead property from $ 150 to $ 5,000 for the first sixty days. If the bill is not paid within 60 days after the postmark date of the new billing notice, the taxpayer shall owe additional interest at the rate of one percent per month until the bill is paid in full. If the refund is not paid within sixty days from the date of the final determination of value, additional interest shall accrue from the sixty-first day until paid at the rate of one percent per month with no limitation.
The Georgia Court of Appeals recently issued two decisions concerning exemptions for places of religious worship. In First Congregational Church v. Fulton County Board of Tax Assessors, 320 Ga. App. 868, 740 S.E.2d 798 (2013), the Court affirmed the trial court's holding that the First Congregational Church's parking lot was not entitled to exemption because it was primarily used for the purpose of securing income for the Church under a third-party parking lot lease. In DeKalb County Board of Tax Assessors v. Presbytery of Greater Atlanta, Inc., 320 Ga. App. 312, 739 S.E.2d 764 (2013), a church leased property at below-market leasing rates to another non-profit religious entity which used the property as a place of religious worship; the Court of Appeals affirmed the trial court's holding that the property was entitled to exemption.
The Development Authority of Fulton County, the Fulton County Board of Tax Assessors and a private developer of real property entered into a memorandum of agreement as to the valuation methodology the Board of Tax Assessors was to use in assessing ad valorem taxes on the property. The developer as lessee was to enter into a multi-year lease with the Development Authority (a tax exempt entity) as lessor/owner whereby the developer could acquire the fee simple interest in the property for a nominal amount at the expiration of the lease term. The memorandum provided that the Board would determine the fee simple market value of the property by the income approach and then determine the value of the manufacturer's leasehold interest by utilizing a "ramp-up schedule". That schedule would be based on the assumption that the value of the leasehold interest in the first year of the lease is 50 percent of the fee simple market value. The value would then increase by 5 percent each year as the lease term progresses and the manufacturer moves closer to receiving the benefit of its reversionary possessory interest in the property.
The Georgia Supreme Court previously held in Sherman v. Fulton County Bd. of Tax Assessors, 288 Ga. 88, 89, 701 S.E.2d 472 (2010) that in order to prove that a valuation method for valuing a leasehold estate was neither arbitrary nor unreasonable, there must be evidence establishing that the valuation method followed an authorized appraisal approach. The factors to be taken into account by the taxing Board are the terms and conditions of the lease, the nature and location of the property involved, the fair market value of similarly leased property and the prevailing rents in the area. Furthermore, after the initial valuation of the fee simple estate the taxing Board must then offer evidence that the ramp-up method employed incorporates the aforementioned factors.
In the recent case of Sherman v. Dev. Authority of Fulton County, A12A2111, (Ga. App.) March 22, 2013, the trial court's order contained only summary conclusions that contained no actual factual findings and conclusions of law which cited no legal authority or analysis as to how the conclusions were reached. On appeal, the Georgia Court of Appeals remanded the case to the trial court to enter a new order with specific factual findings and conclusions of law to explain why and how the appraisal method used by the Tax Assessors to value the leasehold estate is neither arbitrary nor unreasonable, and therefore legally valid.
O.C.G.A. § 48-5-2(3), which became effective January 1, 2011, provides that the sale amount for arm's-length transactions shall be the maximum allowable fair market value for property tax purposes for the next tax year. The effect of this new statute is that purchasers who acquired their properties during 2011 received assessment notices for the 2012 tax year from counties at values that were capped at a value that was no higher than the 2011 acquisition price. For tax year 2013, however, the restriction on valuation will not be applicable and county assessors will be permitted to review market sales and if in their opinion there is evidence to support an increase in value, they will have the authority to issue an assessment notice at a value that is higher than the purchase price. Readers can see more detailed information about this issue in the Southeast Real Estate Business Magazine in the October issue.
The Georgia Court of Appeals recently reiterated the long standing general principle that taxation is the rule, exemption from taxation the exception, and claims for exemption from taxation should be construed in favor of the State and against taxpayers in H.O.P.E. Through Divine Intervention Inc. v. Fulton County Bd. of Tax Assessors. Georgia Court of Appeals Case No A12A1100, November 16, 2012. This case held that a purely public charity was not entitled to tax exemption on certain property it owned because, for the tax years at issue, the charity owning the property, while constructing and renovating it, did not use it for the charitable pursuits of the owner. Since no individual or family had benefited from the charitable services of the taxpayer, the Court stated that it strictly construed taxation statutes and would not find an exemption unless it was clear that the legislature intended such exemption.
Modest property tax relief, in the form of legislation providing for the gradual reduction and elimination of the state property tax portion of the ad valorem tax levy, was passed by the Georgia House of Representatives and Senate and signed by the Governor in the 2010 session. This bill does not impact penalties, interest liabilities, and refund eligibility for prior tax years and begins to provide the intended relief with the 2012 property tax bills. The levy for tax year 2012 will be .20 mills, and further gradual reductions will occur each year thereafter until the state portion is eliminated in tax year 2016. Taxpayers will receive a notice on their property tax bills each year of this reduction. For the average homeowner this will have minimal impact, but for commercial property owners the tax savings could be substantial.
House Bill 100, signed by Governor Deal on April 19, 2012, creates an independent Georgia Tax Tribunal within the Office of State Administrative Hearings for aggrieved taxpayers to appeal decisions of the Georgia Revenue Commissioner. In addition to the various other types of appealable taxes, the jurisdiction of the Tax Tribunal for ad valorem property tax purposes is limited to only certain types of taxpayers under Chapter 5 of Title 48 - public utilities under Article 11 and airline companies under Article 12. Taxpayers filing actions with the Georgia Tax Tribunal will not be required to pay taxes admittedly owed on their due dates, and electing not to pay the taxes during the pending appeal shall not be grounds for dismissal of the appeal. Certain written decisions of the Tax Tribunal shall be appealable to the Superior Court of Fulton County.
The Georgia Court of Appeals recently issued two decisions interpreting certain provisions of the tax appeal arbitration statute. In Fulton County Board of Tax Assessors v. Greenfield Investment Group, LLC, (Case No. A11A1671, decided Nov. 17, 2011), the Court held that there are two 45- day periods specified in O.C.G.A.§ 48-5-311 (f) (3) (A). The first is the period following a board's receipt of the taxpayer's appraisal, within which the board must formally decide to accept or reject the taxpayer's appraised value. The second is the period following a board's decision to reject the appraised value, if it so decides, within which the board must certify the taxpayer's appeal to the superior court so that the arbitration process can begin. In Fulton County Board of Tax Assessors v. Fast Evictions, LLC, (Case Nos. A11A2155, A11A2156, A11A2157, decided Feb. 16, 2012), the Court of Appeals held that the language of O.C.G.A. § 48-5-311 (f) (3) (A) does not pertain to a time for taking action, but expressly specifies the effect of failure to take timely action (failure to timely accept or reject the taxpayer's appraisal value results in the certified appraisal value becoming the final value) and therefore, is a mandatory provision which must be enforced rather than a discretionary provision.
With Georgia approaching its second year in the new property tax regime, a few points are in order. First, the personal property tax return for business owners in Georgia is due on or before April 1 of 2012. While a real estate property tax return can be filed by April 1, it is now discouraged. The 45 day appeal period regarding real estate values now runs from the date of the annual property tax assessment notice sent to the taxpayer. This means that property tax attorneys and representatives, who have traditionally pro-actively filed returns asserting a lower value, must rely on timely receipt of the tax assessment notice from the client, who may not be schooled in the need to send them such notification. This is a good time to make sure that clients are aware of the changes and that the appropriate notification procedures are in place.
In an uncertain economic climate, and coupled with a declining or stagnant real estate market, the means to ensure reasonable and accurate personal property assessments should include the concept of obsolescence, both functionally and economically. Georgia regulations regarding property assessments by county boards of tax assessors require that any obsolescence be taken into account. Ga. Comp. R. & Regs. r. 560-11-10-.02 (d) (2010).
Functionality analysis applies uniformly regardless of economic conditions, especially for equipment. The tax return may incorporate an aspect of this concept in applied depreciation schedules. Poor economic times or other functionally-related drags on use may exaggerate the obsolescent component of the already depreciating asset.
Economic deterioration of markets, particularly long-term downward trends in specific industries, is an additional component of obsolescence. Educating the tax representative of the assessing body is essential due to lack of understanding or familiarity with the intricate and sometimes complex analysis required to apply economic obsolescence.
Taxpayers who intend to file property tax appeals for tax year 2011 should be aware of several new key definitions under the law effective January 1, 2011. Amendments to O.C.G.A. ' 48-5-2 provide that arm=s length bona fide sales shall now include distress sales, short sales, bank sales, and sales at public auction; the tax assessor in determining fair market value now must apply, rather than merely consider, bank sales, financial institution-owned sales, distress sales or any combination thereof, of comparable real property. Further, the transaction amount of the most recent arm=s length bona fide sale in any year shall be the maximum allowable fair market value for the next taxable year. These new definitions may prove beneficial for taxpayers owning property within taxing neighborhoods or jurisdictions containing the various forms of distress sales that tax assessors in the past deemed irrelevant. And, of course, any appeals must be filed properly and promptly within 45 days of the date of the notice.
In Muscogee County Board of Tax Assessors v. Pace Industries, Inc., (Ga. App. 2011), the Court of Appeals held that the statutory freeport exemption from personal property tax is determined by the location of the sale of the inventory, and not the location of the sale of finished goods incorporating the inventory. The applicant Pace Industries shipped barbeque grill bodies from its Arkansas plant to a warehouse in Columbus where they were stored, then sold and delivered as needed to a barbeque grill manufacturing company located in Columbus. The manufacturing company then incorporated the grill bodies into finished barbecue grills and shipped them to customers outside Georgia. The Court held that as far as Pace was concerned the final destination of the grill bodies for which it sought freeport exemption was the plant it sold them to in Columbus. Accordingly, the final destination for Pace’s inventory (the grill bodies) was not outside this state, and therefore the inventory was not entitled to freeport exemption under O.C.G.A. §48-5-48.2.
The Georgia Supreme Court ruled in favor of exemption for a nonprofit charitable institution even though it receives incidental rental revenues from the facility it owns and operates. The Court held that the property owner met all of the necessary criteria for exemption because it is an institution devoted entirely to charitable pursuits, the charitable pursuits are for the benefit of the public, and the use of the property is devoted to the charitable pursuits. The Court clarified the meaning of the 2007 amendment to the exemption statute by stating that the General Assembly must have intended to allow institutions that otherwise qualify as a purely public charity to use their property to raise income from activities that are not necessarily charitable in nature, as long as the primary purpose of the property is charitable and the income is used exclusively for the operation of the charity in pursuing its charitable purposes.
A new law effective January 1, 2011 provides a measure of protection for taxpayers who choose to use counsel. The new law relieves a taxpayer from the burden of keeping up with notices, hearing times, dates, certifications, and other official actions if the taxpayer authorizes the attorney in writing to act on his behalf.
For taxpayers who provide the written notice, all such communications will be provided to the attorney instead of to the taxpayer. This can be a safety net for taxpayers with multiple corporate locations or large corporate infrastructures as well as taxpayers with few locations who simply need assistance in the tracking of tax related matters.
The Georgia governor recently signed into law a bill which changes property tax appeals in several ways. The most significant change is that counties must issue assessment notices to all taxpayers every year. Return deadlines are changed to a uniform date of April 1st and appeal times are standardized to 45 days. The arbitration procedures have been overhauled, regional boards of equalization may be established by agreement between counties, and a new hearing officer procedure has been provided for which certain taxpayers may elect to use instead of the board of equalization or the new arbitration procedures. In addition, there are specified instances where income must be considered by the tax assessors in valuations, and certain business intangible items may not be considered. Parts of the bill went into effect upon signature by the governor; other parts do not become effective until January 1, 2011.
As we warned, 2009 was a critical year for Georgia taxpayers to be proactive in filing returns of fair value. Relatively few taxpayers did, despite pleas and plummeting property values, resulting in the predicted gnashing of teeth by taxpayers who received no property tax assessment reductions but higher tax bills from increased millage rates; they have no remedy.
One result is an unprecedented series of articles in the Atlanta Journal Constitution (ajc.com) running for eight consecutive days entitled "Why you're paying too much in property taxes." The Sunday article alone dominated the front page and four full interior pages. While the articles stress residential inequities between stated and actual property values, the same applies even more so to commercial and industrial valuations. Atlanta was especially impacted because of county-wide reassessments carried out in 2007 which impacted 2008 values before the plunge. Subsequent articles targeted each of the major Atlanta metropolitan counties and the responses and defenses of the county property tax officials regarding actions they took.
Owners and advisors waiting for new notices may be sadly disappointed because many counties may again not sent out new notices, hoping to keep existing values. If the value is the same, there is nothing to appeal, and the debacle of 2009 will be repeated in 2010, only worse. If you want the proper value on your property in Georgia, you must timely assert it and defend it.
It is an unusual year in Georgia for property tax billings. In years past by this time of year most property owners had some reasonable expectations about their property tax obligations. But this year a number of counties and cities in Georgia have not finalized or even issued their billings. Several metro area counties have issued temporary tax bills. In late August a Fulton County Superior Court granted a temporary collection order for county property tax bills, and in Gwinnett County temporary tax bills were recently mailed because the total millage rate has not been set by the county board of commissioners. A number of municipalities have not established their millage rates also. Most likely rebillings will occur and additional charges will be issued to taxpayers. However, some counties have not issued temporary billings, so taxpayers should review their bills carefully to determine the type of bill they received. Georgia does not permit appeals from bills, so whether the bill is a temporary one or not, there will be no further relief for those who have not already filed appeals from assessment notices.
The governor has signed three new bills affecting property tax issues in Georgia. S.B. 55, amending O.C.G.A. § 48-5-2, mandates that tax assessors consider foreclosure, bank and other financial institution owned sales, distress sales, and any combination of comparable real property transfers in determining fair market value. H.B. 233 (now O.C.G.A.§ 48-5B-1) provides a moratorium period for taxable years beginning January 1, 2009 and continuing until January 9, 2011. Property taxable values cannot be increased above 2008 values except under certain circumstances: property additions or improvements, ownership transfer, rezoning, subdivision, or combination which changes property use, property factual error corrections. This law does not take effect until tax year 2010 for counties that performed or contracted for a comprehensive county-wide revaluation. The third new law, S.B. 240 amends O.C.G.A. § 48-5-311 to provide for an optional binding arbitration procedure in which a single arbitrator will decide the property value in lieu of that determination being made by a board of equalization hearing or non-binding arbitration.
If no return is filed for 2009, it is as if the same property is returned as the preceding year and at its previous final evaluation. Those who disagree with last year=s evaluation and do not file returns will lose their appeal rights, a devastating mistake and major trap for taxpayers who expect a notice from which they can appeal. Values merely carry forward from year to year unless a return is filed in a timely manner, which is much earlier than the tax notices regarding any changes are mailed. Literally hundreds if not thousands of taxpayers will experience major surprises when they receive no notices but later do receive tax bills based upon the 2008 evaluation (and possibly at an even higher millage rate) and have no recourse.
Atlanta and other Georgia communities had dramatic upward revisions in property assessment valuations for commercial and industrial properties in 2008 despite major reductions in actual real estate values. Landowners and their representatives should reevaluate their properties= fair market values and act timely to assert and to establish those values with the taxing authorities, addressing problems early with capable advisors. Advisors should be proactive in informing and working with their clients early and aggressively. Unfairly high taxes can be the death knell for properties, resulting in lower values, forced sales and even foreclosure because of the inability to service the taxes, insurance based on the high values, and debt service where refinancing or restructuring is difficult if not impossible. The need for early action and professional involvement in the first month or two of the new year is essential for the property owner to have the best chance to establish a fair, current, sustainable and reasonable value.
Once a County Board of Equalization has rendered a decision on an administrative appeal, that value is used for the computation of tax liability during the pendency of a subsequent judicial appeal. Any overage is to be paid from November 15th of the tax year in question or the date that the final installment of the tax is due, plus interest at one percent per month, subject to a $150.00 limit O.C.G.A. § 48-5-311 (g)(4)(B)(iii).
Effective May 14, 2008, the statute was amended to provide that refunds shall be paid to the taxpayer within 60 days of the last date upon which an appeal may be filed or the date the final determination of value is established on appeal, whichever is later. Refunds paid after the sixtieth day accrue interest at the rate of one percent per month until paid. The prior statutory provision that provided that interest shall accrue for a period of no more than 180 days was deleted. O.C.G.A. § 48-5-311(m).
Did You File Your Appeal?
In mid-April, Fulton County Tax Assessors sent out assessment notices from the first complete revaluation of 24,000 commercial properties in more than fifteen years, with a median increase of 44%. Other Georgia counties also mailed out assessment notices or will be very soon. Property owners must timely file appeals of their assessment notices or will have no right to contest their tax bills. Because Fulton County completed a county-wide revaluation, its assessors have no deadline for determining whether a change is merited as a result of a taxpayer's appeal. If an assessors' office changes the assessment in response to an appeal, a new assessment notice is sent to the taxpayer which also must be timely appealed, or the change is final. Taxpayers should watch carefully for a supplemental change notice because the filing deadline is much shorter than the initial filing deadline. Simple errors in the appeal process can be costly.
In Monroe County, et al. v. Georgia Power Company, Case No. S07G1156, decided January 8, 2008, the Georgia Supreme Court ruled that for the taxation of public utilities, county boards of tax assessors lack the authority to alter the State Revenue Commissioner's determination of fair market value and its proposed apportionment, but do have the authority to alter the assessment ratio he proposes based on the most recent records uniquely available to each county.
In CSX Transportation, Inc. v. Georgia State Board of Equalization, et al., 128 S. Ct. 467, 552 U.S._____ (2007), the United States Supreme Court held that federal statutory law allows a railroad to attempt to show that state methods for determining the value of railroad property result in a discriminatory determination of true fair market value.
Taxpayers file returns of fair market value as of January 1 by either March 1 or April 1, depending upon the county. In most counties, returns must be received by the taxing authority by the deadline or postmarked by the US Postal Service (NO private meter stamps) by the deadline. Check with each county if postmarks are permitted. Applications for freeport exemption should also be filed at this time.
If you do not file a return, your property is deemed to be returned at last year's value.
Those who disagree with last year's value and do not file returns can lose appeal rights.
However, if a value was established by an appeal to arbitration or the Board of Equalization, the value carries forward for the next two years, unless it is returned at a different value or if changes to the property affect its value. If the final value in an appeal is satisfactory for the next year, then do not file a return.


Appeal from the Third District Court, Salt Lake County, Kenneth Rigtrup, J.
Gary H. Weight, Provo, for defendant and appellant.
David J. Jordan, Danny C. Kelly, Salt Lake City, for plaintiff and respondent.
This is an action by a creditor against a guarantor for amounts allegedly due on a written guarantee. The district court gave summary judgment enforcing the guarantee against the creditor. The issues on the guarantor's appeal are (1) whether there was a genuine issue of material fact as to whether the creditor orally released the guarantor and (2) whether the guarantor was discharged as a matter of law because the creditor, before seeking to enforce the guarantee, failed to exhaust his prior remedy by a commercially reasonable sale of property the debtor had given as security.
In early 1977, defendant and another individual executed a personal guarantee for the payment of all amounts due for goods Mountainland Sports had purchased or would purchase from plaintiff (creditor). Defendant could terminate the guarantee by providing 30-days' written notice to plaintiff, but defendant would remain liable for all goods purchased before termination.
In April, 1978, the balance due from Mountainland to plaintiff for purchases on open account was embodied in a secured note. Identifying himself as "director," defendant signed both documents in behalf of Mountainland: an installment promissory note by which Mountainland agreed to pay plaintiff $14,990.95 with interest at 12% annually, and an agreement in which Mountainland granted plaintiff a security interest in all its present and future inventory and accounts receivable. Defendant now contends that he executed these two documents in return for plaintiff's orally releasing him from his personal guarantee, thereby relieving him from liability for any debts of Mountainland. Plaintiff denies that it ever gave such a release.
After Mountainland made only partial payment on its note, on June 5, 1979, plaintiff took a default judgment against Mountainland for $16,511.41, plus interest. The court also ordered that all assets of Mountainland be sold and the proceeds applied to the judgment. Without alleging any attempt to realize on its rights under this judgment, plaintiff then brought this separate action to recover the full amount of the Mountainland debt from defendant on his guarantee.
Defendant argues that the existence or nonexistence of plaintiff's oral release of the guarantee constitutes a genuine issue of material fact that prevented the granting of summary judgment. Even if an oral release were proven, however, it would be unenforceable as a matter of law under the Statute of Frauds, which provides that "[e]very promise to answer for the debt, default or miscarriage of another" "shall be void unless such agreement, or some note or memorandum thereof, is in writing subscribed by the party to be charged therewith." U.C.A., 1953, § 25-5-4(2). Under the clear terms of this statute, defendant's guarantee was required to be — as it was — in writing and signed by him.
A promise to answer for the obligation of another . . . is deemed an original obligation of the promisor and need not be in writing . . . [w]here the promise, being for an antecedent obligation of another, is made upon the consideration that the party receiving it cancel the antecedent obligation, accepting the new promise as a substitute therefor. . . .
The quoted statute is inapplicable to this case since neither party argues that the guarantee cancelled Mountainland's existing obligation for goods received by it from plaintiff. In giving his guarantee, defendant did not substitute himself for Mountainland as sole debtor, nor did plaintiff, in receiving defendant's guarantee, agree to cancel the debt accumulated by Mountainland and look exclusively to defendant for payment.
By the same token, the release or revocation of an agreement to answer for the debt of another must also be in writing. It is well settled that if an original agreement is within the Statute of Frauds, any subsequent agreement which alters or amends it must also satisfy the requirements of the Statute. Zion's Properties, Inc. v. Holt, Utah, 538 P.2d 1319, 1322 (1975); Combined Metals, Inc. v. Bastian, 71 Utah 535, 569, 267 P. 1020, 1032 (1928). The alleged oral release obviously does not meet those requirements of enforceability. Neither does defendant allege or prove any acts done in reliance on or as part performance of the oral release that would remove it from the operation of the Statute. Therefore, the existence or nonexistence of an oral release does not constitute a genuine issue of material fact, and the trial court correctly held that plaintiff was entitled to judgment on this issue as a matter of law.
This conclusion makes it unnecessary to address defendant's argument that the parol evidence rule should not exclude evidence of the oral release.
Defendant also argues that the release was part of an accord and satisfaction, whereby Mountainland reduced its existing debt to writing in exchange for plaintiff's oral release of defendant's guarantee. But even so, the writing would only constitute consideration for the oral release. That the oral release was given for consideration does not advance defendant's argument, since the object and effect of the Statute of Frauds is to impose a requirement in addition to the common law requirement that an enforceable promise must be supported by consideration: namely, that the promise must be in writing. 73 Am.Jur.2d, Statute of Frauds § 514 (1974). Hence, even though given for consideration, an oral release is unenforceable as violative of the Statute of Frauds. Walton v. Piqua State Bank, 204 Kan. 741, 751-52, 466 P.2d 316, 325-26 (1970).
Defendant next contends that any judgment against him as guarantor is barred by the rule in FMA Financial Corp. v. Pro-Printers, Utah, 590 P.2d 803 (1979), that a guarantor is a "debtor" under Article 9 of the Uniform Commercial Code and is therefore entitled to reasonable notice of the nature and time of any disposition of the secured property. U.C.A., 1953, § 70A-9-504(3). Defendant argues that since plaintiff has not alleged any sale of the secured property and has failed to notify him of any intended disposition, plaintiff is precluded from obtaining judgment against him personally on his guarantee.
Our decision in Pro-Printers, supra, is inapposite to the facts in this case. In Pro-Printers, we barred a deficiency judgment against guarantors where the creditor already had repossessed the secured property and sold it at a private sale in a manner which was not commercially reasonable. The creditor had failed to give the guarantors notification of the sale, making it impossible for them to protect their subrogation rights and other interests in the outcome of the sale. The rule in Pro-Printers defines the duties of creditors who repossess collateral. In contrast, the instant case presents a threshold issue not decided in Pro-Printers, i.e., whether a creditor must exhaust its remedies against the debtor and the secured property before commencing an action directly against the guarantor.
As we said in Westinghouse Credit Corp. v. Hydroswift Corp., Utah, 528 P.2d 156, 158 (1974), whether a creditor has a duty to pursue the debtor or the security as a precondition to action against the guarantor "depends on the nature of the guarantor's promise." In that case, we found no such duty where the agreement provided that the guarantor "does unconditionally guarantee the payment, not merely the collection, of all indebtedness. . . ." Thus, a guarantee of payment is absolute, and the guaranteed party need not fix its losses by pursuing its remedies against the debtor or the security before proceeding directly against the guarantor. North Park Bank of Commerce v. Bottum, Utah, 645 P.2d 620; Westinghouse Credit Corp. v. Hydroswift Corp., supra; Hallstrom v. Buhler, 14 Utah 2d 111, 378 P.2d 355 (1963).
In contrast, a guarantee of collection is conditional only, the guarantor's liability being dependent upon the creditor's first exhausting its remedies against the debtor and any security before resorting to action against the guarantor. State Bank of Burleigh County v. Porter, N.D., 167 N.W.2d 527 (1969); Robey v. Walton Lumber Co., 17 Wn.2d 242, 135 P.2d 95 (1943). See also, 38 Am.Jur.2d, Guaranty §§ 22, 106, 110-11, 114 (1968).
The law of commercial paper employs an analogous distinction between the endorsements "payment guaranteed" and "collection guaranteed" on negotiable instruments. See section 3-416(1) and (2) of the Uniform Commercial Code, U.C.A., 1953, § 70A-3-416(1) and (2). See also, Broun v. Bank of Early, 243 Ga. 319, 253 S.E.2d 755 (1979); Floor v. Melvin, 5 Ill. App.3d 463, 283 N.E.2d 303 (1972); Brown University v. Laudati, 113 R.I. 299, 320 A.2d 609 (1974); Lutz v. Gatlin, 22 Wn. App. 424, 590 P.2d 359 (1979); 11 Am.Jur.2d, Bills and Notes § 534 (1963); Annot. 10 A.L.R. 4th 897 (1981).
The guarantee at issue in this appeal is an absolute guarantee of payment, not a mere guarantee of collection. It contains no express or implied condition on liability and no contractual requirement that the creditor seek satisfaction elsewhere before commencing action on the guarantee. The fact that the creditor obtained a judgment against the debtor but failed to allege execution on that judgment or exhaustion of his remedies against the debtor or the security does not alter the nature of the guarantor's independent obligation as a guarantor.
The district court was correct in holding that defendant is personally liable as a matter of law for Mountainland's entire debt to plaintiff. The summary judgment for plaintiff is affirmed. Costs to respondent.
HALL, C.J., and STEWART, HOWE and DURHAM, JJ., concur.


Dr. Gupta may have admitted to holding the instrument that nicked plaintiff’s vein but . . . .
There is no change in the judgment.
* Ashmann-Gerst, Acting P.J., CHAVEZ, J., HOFFSTADT, J.
APPEAL from an order of the Superior Court of Los Angeles County. David S. Cunningham, Judge. Affirmed.
Howard A. Kapp, Los Angeles, for Plaintiff and Appellant.
Horvitz & Levy LLP, S. Thomas Todd, and Emily V. Cuatto, Burbank, for Defendant and Respondent.
A plaintiff who sues and prevails at trial is statutorily entitled to prejudgment interest starting from the date she makes a settlement offer under Code of Civil Procedure section 998 (a so-called “998 offer”) as long as that offer is “valid,” and the subsequent verdict is “more favorable” than the rejected 998 offer. (Civ. Code, § 3291; Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 698 (Elrod).) A 998 offer is valid only if, among other things, the offeror knew that the offeree had reasonable access to the facts necessary to “intelligently evaluate the offer.” (Id. at pp. 699-700; Najera v. Huerta (2011) 191 Cal.App.4th 872, 878 (Najera).) What factors are relevant in deciding whether the offeree had enough facts to evaluate the offer? Although courts should evaluate the totality of the facts (Arno v. Helient Corp. (2005) 130 Cal.App.4th 1019, 1026 (Arno)), we conclude that three factors are especially pertinent: (1) how far into the litigation the 998 offer was made; (2) the information available to the offeree prior to the 998 offer’s expiration; and (3) whether the offeree let the offeror know it lacked sufficient information to evaluate the offer, and how the offeror responded. Applying these factors in this case, we conclude that the trial court did not abuse its discretion in finding that the plaintiff’s 998 offer was not made in good faith. We accordingly affirm the order denying plaintiff prejudgment interest.
In February 2012, Dionne Licudine (plaintiff) underwent gallbladder removal surgery. The surgery was performed by Dr. Ankur Gupta under the supervision of Dr. Brenden Carroll at defendant Cedars-Sinai Medical Center (Cedars). The surgery was intended to be minimally invasive, but Dr. Gupta nicked a vein inside the abdominal cavity and caused substantial internal bleeding. This necessitated a more invasive surgery that left plaintiff with a large scar, a month-long hospitalization and a chronic abdominal condition.
It was not until May 23, 2013 that plaintiff served her complaint on Cedars. Cedars filed its answer on June 6, 2013, along with a demand for written discovery and for a statement of damages.
The offer expired on July 16, 2013. (§§ 998, subd. (b)(2) [offer expires 30 days after it is made], 1013, subd. (a) [five additional days added for mailed offers].) Cedars did not accept the offer prior to its expiration.
A jury returned a total damages award of $7,619,457, comprised of $5,344,557 in economic damages and $2,274,900 in noneconomic damages. Pursuant to the statutory cap on noneconomic damages applicable in medical malpractice cases (Civ. Code, § 3333.2), the trial court reduced the noneconomic damages verdict to $250,000, yielding a total verdict of $5,594,557.
Plaintiff filed this timely appeal.
A 998 offer is valid only if it is made in “good faith.” (Elrod, supra, 195 Cal.App.3d at p. 698; Wear v. Calderon (1981) 121 Cal.App.3d 818, 821 (Wear); Regency Outdoor Advertising, Inc. v. City of Los Angeles (2006) 39 Cal.4th 507, 531 (Regency) [assuming “good faith” is required].) A 998 offer is made in good faith only if the offer is “‘realistically reasonable under the circumstances of the particular case’” (Elrod, at p. 698, quoting Wear, at p. 821)—that is, if the offer “carr[ies] with it some reasonable prospect of acceptance” (Regency, at p. 531).
In assessing whether the 998 offeror knew that the offeree had sufficient information to evaluate the offer (the second consideration), the offeree needs information bearing on the issue of liability as well as on the amount of damages because these are the issues upon which a verdict would rest and because the 998 offer, if accepted, would be in lieu of that verdict. (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 135 (Nelson) [liability relevant]; Barba v. Perez (2008) 166 Cal.App.4th 444, 450-451 (Barba) [damages relevant]; see generally Aynes v. Winans (1948) 33 Cal.2d 206, 211 (dis. opn. of Carter, J.) [“The essential issues for the jury [are] liability and amount of damages . . .”].) In assessing the information available to the offeree, courts are to look to all of the relevant circumstances. (Arno, supra, 130 Cal.App.4th at p. 1026.) The pertinent cases have nevertheless identified a number of specific circumstances to be examined.
Second, what information bearing on the reasonableness of the 998 offer was available to the offeree prior to the offer’s expiration? Information may be obtained (1) by virtue of prior litigation between the parties (Bender v. City of Los Angeles (2013) 217 Cal.App.4th 968, 989 [civil lawsuit against police followed criminal prosecution of plaintiff resulting in acquittal]); (2) through pre-litigation exchanges between the parties (Barba, supra, 166 Cal.App.4th at pp. 450-451 [pre-litigation letter explaining offeror’s medical expenses]; Aguilar v. Gostischef (2013) 220 Cal.App.4th 475, 482 [same]); (3) through post-complaint discovery in the case (Whatley-Miller, supra, 212 Cal.App.4th at p. 1113); or (4) by virtue of a pre-existing relationship between the parties that yields a “free flow of information” (Barba, supra, 166 Cal.App.4th at p. 450 [parties had “close, semi-familial relationship”]).
Plaintiff’s 998 offer to settle for $249,999.99 was undoubtedly within the “range of reasonably possible results” at trial. The jury’s $5,594,557 verdict constitutes prima facie evidence of such (Elrod, supra, 195 Cal.App.3d at p. 700), and Cedars has offered no evidence to the contrary.
Consequently, and as the trial court properly recognized, whether plaintiff’s 998 offer in this case was made in good faith turns entirely on the second consideration bearing on good faith—that is, on whether Cedars had sufficient information to assess whether plaintiff’s $249,999.99 offer was a reasonable one. The trial court did not abuse its discretion in concluding that Cedars lacked sufficient information. Each of the factors identified in the case law support the trial court’s determination.
As to timing, plaintiff made her 998 offer just 19 days after serving Cedars with her complaint and just five days after Cedars filed its answer.
As to the availability of information, Cedars had very little information available to it on the issues of liability and the amount of damages prior to the date plaintiff’s 998 offer expired. Plaintiff’s three-page complaint was “bare bones,” as it listed no specifics as to the injuries she suffered or the amount of damages she sought. Nor was this skeletal complaint fleshed out by the pre-litigation notice required by section 364, which would have set forth the “legal basis of [her] claim and the type of loss sustained, including [the] specific . . . nature of injuries suffered” (§ 364, subds. (a) & (b)), because plaintiff never filed such a notice. No depositions had been taken. But Cedars was not entirely bereft of information. Plaintiff had sent Cedars a letter the day before she made her 998 offer (1) stating that her doctors’ negligence was “self-evident” and that her “injuries are well documented and far exceed the” $250,000 cap on noneconomic damages, and (2) attaching photographs of plaintiff before and after the surgery. Plaintiff also provided some written discovery to Cedars prior to her offer’s expiration—namely, (1) she forwarded to Cedars her answers to the general interrogatories propounded by Dr. Carroll, but submitted to the trial court only the cover sheet for those answers and not the answers themselves, and (2) she responded to Cedars’s request for documents on the day before her 998 offer expired. Those responses contained no details on the issues of liability and the amount of damages except (1) to indicate that plaintiff was not making a claim for “lost earnings” and that plaintiff’s “earning capacity may be affected as [she] has had to delay starting law school for at least two years,” (2) to tell Cedars to contact plaintiff’s insurance carrier to obtain her medical bills, and (3) to tell Cedars to look at its own records. And Cedars also had in its possession plaintiff’s 9,662-page medical chart, which included (1) the operation report noting the nicked vein and internal bleeding, and (2) the records indicating her extended stay and care at the hospital.
The trial court did not abuse its discretion in concluding that this information, considered in its totality, did not provide Cedars with sufficient information with which to evaluate the reasonableness of plaintiff’s section 998 offer. On the question of liability, this information did not indicate which doctor (Dr. Gupta or Dr. Carroll) was responsible for any negligence or the extent to which plaintiff’s injuries were related to or exacerbated by any pre-existing medical conditions she might have. On the question of the amount of damages, this information did not speak at all to plaintiff’s pain and suffering, to the amount of her medical expenses (including any offset due to insurance), or to any possible loss in her earning capacity. Indeed, plaintiff’s response to Cedars’s request for documents indicated she was unsure whether she would suffer any loss of earning capacity.
Plaintiff responds that Cedars had sufficient information to evaluate her section 998 offer.
As a threshold matter, she argues that any absence of information regarding her economic damages is of no consequence because her 998 offer was an offer only to settle the noneconomic damages portion of her case for $249,999.99, which is just below the statutory cap for noneconomic damages in medical malpractice cases. We reject this argument because it contradicts the plain language of the 998 offer itself, which offers to “allow judgment to be taken against [Cedars] . . . in the amount of $249,999.99” without any hint that the offer would settle only part of the case. Even if we were to accept plaintiff’s invitation to retroactively rewrite her 998 offer, Cedars still lacked sufficient information to make an intelligent determination as to a reasonable amount of noneconomic damages for the reasons described above. What is more, plaintiff’s conduct in making an offer as to noneconomic damages that, in her counsel’s own words, was “one penny below” the statutory cap for such damages mere weeks after serving Cedars raises more than a specter of gamesmanship, which, as noted above, is antithetical to the legitimate operation of section 998.
However, none of these sources provided Cedars with sufficient information to evaluate plaintiff’s offer.
Plaintiff’s medical chart, as noted above, supplied some information regarding liability. But it left several issues unaddressed, including plaintiff’s loss of earning capacity and her pain and suffering.
Plaintiff provided no evidence that Cedars ever conducted a peer review regarding the operation. All she offers is her counsel’s assertion that “of course” Cedars did.
We cannot evaluate whether plaintiff’s answers to Dr. Carroll’s form interrogatories provided Cedars with sufficient information because those answers were never made part of the record in this case. Plaintiff asserts that she tried to make them a part of the record and that the trial court was wrong to deny her request to supplement her briefing with the interrogatory answers. Plaintiff’s request to supplement was, in effect, a motion to amend her pleading; as such, it was governed by section 473, subdivision (b). (Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 683-684 [request to supplement pleading so governed]; Puppo v. Larosa (1924) 194 Cal. 721, 724 [same, as to motion to tax costs].) The discretionary relief portion of this statute applicable here only permits a trial court to allow an amendment necessitated by an attorney’s mistake or inadvertence if it is an error that “‘anyone could have made’”; put differently, errors due to an attorney’s failure to “meet the professional standard of care, such as failure . . . to properly advance an argument” provide no basis to amend. (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.) In this case, plaintiff’s attorney told the trial court that he “didn’t see [the actual discovery responses forwarded to Cedars] as necessary,” and this statement confirms that the attorney’s decision to include the cover letter accompanying the responses but to omit the responses themselves was strategic and tactical rather than a mistake any layperson could have made.
Plaintiff’s criticism of Cedars’s objection lacks merit because the plain language of that document registered a general objection to the timing of plaintiff’s 998 offer that applied with equal force to the issues of liability and to the amount of damages. Cedars’s purported failure to use the words “liability” or “damages” did not somehow narrow the scope of its otherwise inclusive objection.
Plaintiff makes what boils down to three further categories of arguments for reversal.
She contends that Cedars effectively waived any right to object to the lack of information because it never asked her to extend the deadline of her section 998 offer. We reject this contention. Although a request for a continuance is one method by which a section 998 offeree may put the offeror on notice that it lacks sufficient information to evaluate the offer, it is not the only method of doing so; Cedars’s objection sufficed.
She asserts that the trial court erred in refusing to consider evidence that (1) Cedars’s attorney had a practice of making “boilerplate prematur[ity] claim[s]” to section 998 offers in other cases, and (2) Cedars would have rejected plaintiff’s 998 offer even if Cedars had possessed sufficient information to evaluate it. We reject each assertion. Cedars’s position regarding the timing of section 998 offers in other cases (and, relatedly, whether plaintiff was electing to disregard Cedars’s objection in this case in light of its position in the other cases) is neither here nor there because whether a party’s 998 offer is made in good faith turns on the particular circumstances of each case. (Arno, supra, 130 Cal.App.4th at p. 1024.) Further, what Cedars might or might not have done had plaintiff’s offer been valid does not affect whether the offer was valid in the first place; here, it was not.
And plaintiff posits that the trial court impermissibly required her to prove her good faith rather than requiring Cedars to prove its absence. As noted above, the law squarely places the burden on Cedars. (E.g., Elrod, supra, 84 Cal.App.4th at p. 700.) However, plaintiff’s position that the trial court shifted that burden is not supported by the record. At no point did the trial court indicate that the burden rested with plaintiff, and the questions the court posed to plaintiff during the hearing sought plaintiff’s input on how to refute the points Cedars had already made in support of its motion.
The order striking plaintiff’s request for prejudgment interest is affirmed. Cedars is entitled to its costs on appeal.