Friday, Oct. 22, 2004
City asks court to dismiss banks lawsuit
By J. FRANK LYNCH
Citing sovereign immunity, attorneys for Peachtree City are asking that a lawsuit brought against the city by Peachtree National Bank seeking payment on nearly $1 million in bad loans made to the citys Development Authority be dismissed.
A similar Motion to Dismiss has been filed in the case by the Peachtree City Tourism Association, which was also named in the suit filed in August.
The bank sued the Development Authority, the city and the Tourism Association to recoup the loans that have gone unpaid since November 2003, when the authority gave up management of the Peachtree City Tennis Center and Frederick Brown Jr. Amphitheater.
The money was allegedly taken out over a period of years by the DAPC and used to fund operating expenses at the Peachtree City Tennis Center, which is now being managed by the Tourism Association.
Without a revenue source, the DAPC has been unable to repay the loans.
In the suit, the bank accused the city of acting in bad faith to convert the DAPCs $1.6 million in assets to the citys ownership, which would shield them from being taken by the bank in return for failure to pay off the loans.
The city has refused the pay the loans, which including accrued interest now total $1.04 million, according to the suit.
Ted Meeker, attorney for Peachtree City, said the city is immune from the lawsuit because the actions of the DAPC were independent of the city. Georgia law prohibits any obligation of a development authority from becoming an obligation of a city, Meeker writes.
Additionally, the motion argues that the DAPC never had the legal authority to take out promissory notes to begin with outside of the issuance of bonds. Further, Meeker argues, the DAPC at the time of the loans was operating outside the law because it lacked the authority to operate the tennis center and amphitheater. A change in state law to allow development authorities to run those types of venues wasnt passed in the legislature until 2003.
The core of it is that the Development Authority took out the loans, not the city, Meeker said. Were not sure the Development Authority could take out promissory notes to start with, and under no circumstances does it appear a city can be held liable for the debt.
Regarding the Tourism Association, the bank suit alleged that the new management group was operating as an alter ego to the DAPC and therefore assumed the use of the assets and former employees of the authority.
But Caryl Sumner Black, attorney for the Tourism Association, responded in her Motion to Dismiss that in actuality ... the Association Board of Directors assumed nothing.
The association has no ownership of the facilities or assets, she said, and there is no unity of membership between the association and authority.
Instead, Sumner Black said, the Tourism Association is merely leasing the venues from the city and has initiated a number of new policies and procedures for their operation.
As of last week, the Development Authority had yet to file a response to the suit, according to records at the Fayette County Courthouse.
A hearing on the Motions to Dismiss had been scheduled for Nov. 5 by Superior Court Judge Paschal English, but Meeker said it will likely be continued until December.
Meanwhile, the city has filed a response to another suit brought against it in September by Group VI Corp. and Foley Designs claiming breach of contract for nearly a quarter million dollars in unpaid change orders related to the Tennis Center expansion.
The suit alleges that they together are owed nearly $229,000 for unpaid expenses that were not part of the original $2.2 million contract with the Development Authority to expand the Tennis Center.
In the response, Meeker denies most of the claims made in the lawsuit and again argues that the Development Authoritys former executive director was acting independently and without the knowledge of the city in approving the various change orders.
Meeker said a Motion to Dismiss the case was likely to be filed at a later date as well.
Copyright 2004-Fayette Publishing, Inc.