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Tuesday, March 24, 2009

Atlanta has its day in court, but little resolved

City Hall had three separate, unrelated civil cases before the Georgia Supreme Court that received rulings yesterday. The result was a mixed bag with no unexpected blows to city coffers – but no big victories either.

First, the least interesting case: The city was a co-defendant with the state in a wrongful death suit involving a passenger in a taxi that veered off the highway and hit a tree. The state DOT was sued for allowing a tree to remain too close to the Downtown Connector; the city was sued for a botched taxi safety inspection. The High Court ruled there was no compelling evidence to suggest the city was aware of inspection shortcomings. That's one win for the city.

Next up, a biggie: Atlanta has brought suit against a number of online hotel booking services – Expedia, Travelocity, etc. – because they don't collect the city-imposed hotel tax when accepting bookings. This is an industry-wide battle being waged by cities across the country over whether online companies are required to collect local taxes on the sales they facilitate.

Online retailers from Amazon to Zappos aren't required to collect state and local sales taxes when you make a purchase, so why should Orbitz have to collect local hotel/motel taxes when you go online to book a hotel room? That's the question at issue, anyway. A Fulton County judge had thrown out the city's suit on procedural grounds, but the Supremes ordered the lower court to take up the case. So everyone starts back at square one on an issue that likely won't be decided for years to come.

Finally, the city had a split ruling in a battle with Freddie Mac. Here's the set-up: Some guy with an unpaid water bill totaling $11,000 loses his property to the bank through foreclosure. Freddie Mac then buys the property from the bank and the city tries to go after the home-mortgage giant, arguing that there was a lien on the property to cover the outstanding debt.

The Court said two things: Yes, the city can place a lien on residential property in order to collect an unpaid water bill, but No, the next guy who buys the property isn't responsible for paying the last guy's bill. Typically, liens are paid off when a property changes hands – but in this case, the property wasn't sold, it was foreclosed upon by the bank, which effectively wiped out the lien before Freddie Mac became involved. If the city wants its $11,000, it's got to go after the guy who used the water.

Are you still reading this? If so, I'm guessing either you're a lawyer or you need to get a life. Cheers!

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