# Carbo Ceramics, Inc. v. Board of Tax Assessors for Wilkinson County Georgi

> United States Bankruptcy Court, S.D. Texas · February 8, 2024

URL: https://www.frixlaw.com/law-library/cases/10462903

## Case

- **Court:** United States Bankruptcy Court, S.D. Texas
- **Decided:** February 8, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

February 08, 2024
Nathan Ochsner, Clerk
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

IN RE: §
§ CASE NO: 20-31973
CARBO CERAMICS, INC., et §
al., § CHAPTER 11
§
Debtors. §
§
CARBO CERAMICS, INC., §
§
Plaintiff, §
§
VS. § ADVERSARY NO. 21-3031
§
BOARD OF TAX ASSESSORS §
FOR WILKINSON COUNTY §
GEORGIA, et al., §
§
Defendants. §

MEMORANDUM OPINION AND ORDER
DENYING MOTION FOR RECONSIDERATION
CARBO Ceramics moves for reconsideration of the Court’s April
12, 2023, Memorandum Opinion. The Court has already considered and
rejected most of CARBO’s arguments. CARBO’s remaining arguments
fail. The motion for reconsideration is denied.
BACKGROUND
On April 12, 2023, the Court issued its Memorandum Opinion
holding that CARBO was not permitted to claim additional depreciation
in calculating payments in lieu of taxes (PILOTs) under its bond-for-title
agreement with Wilkinson County, Georgia. ECF No. 98 at 16. The
Court issued an order concurrently with its Memorandum Opinion. The
Court ordered the parties to file a status report explaining what issues
remained to be decided in this case. ECF No. 99. CARBO took this as
an opportunity to file a brief disagreeing with the Court’s opinion. ECF
No. 107. CARBO did not file a status report explaining what issues
remained.
The Court scheduled a hearing on June 21, 2023, to determine the
amount, if any, of attorneys’ fees and expenses to be awarded to the
Board of Tax Assessors for Wilkinson County, Georgia, and Wilkinson
County, Georgia. ECF No. 109. The Assessors and County failed to
timely file their exhibits for the hearing. The Court ordered the parties
to meet and confer to discuss the amount of litigation expenses incurred
by the Assessors and County due to their dispute with CARBO. The
Court allowed CARBO to file a motion for reconsideration explaining its
disagreements with the Court’s opinion. The parties have reached a
stipulation regarding the amount of litigation expenses incurred. ECF
No. 116 at 2. The Assessors’ and County’s entitlement to attorneys’ fees
is determined in a separate opinion.
The Court now decides CARBO’s motion for reconsideration. The
motion is denied.
JURISDICTION
The District Court has jurisdiction over this proceeding under 28
U.S.C. § 1334(a). Venue is proper in this District pursuant to 28 U.S.C.
§ 1409. This is a core proceeding under 28 U.S.C. § 157(b)(2). The
dispute has been referred to the Bankruptcy Court under General Order
2012-6.
DISCUSSION
The Federal Rules of Civil Procedure do not specifically provide
for motions for reconsideration. See Shephard v. Int’l Paper Co., 372
F.3d 326, 328 n.1 (5th Cir. 2004). A motion for reconsideration “may be
considered either a Rule 59(e) motion to alter or amend judgment or a
Rule 60(b) motion for relief from judgment or order.” Id. (citing
Hamilton Plaintiffs v. Williams Plaintiffs, 147 F.3d 367, 371 n.10 (5th
Cir. 1998)). Federal Rules of Civil Procedure 59(e) and 60(b) are made
applicable to bankruptcy proceedings under Federal Rules of
Bankruptcy Procedure 9023 and 9024, respectively.
If a motion for reconsideration is filed within 14 days of the
judgment or order of which the party complains, it is considered a Rule
59(e) motion; otherwise, it is treated as a Rule 60(b) motion. Shephard,
372 F.3d at 328 n.1. CARBO’s motion for reconsideration was filed over
two months after the Court issued its opinion and order. ECF Nos. 98,
117. CARBO’s motion must be decided under Bankruptcy Rule 9024,
which incorporates Rule 60(b). Fed. R. Bankr. P. 9024.
Rule 60 provides courts with a basis to make corrections when
they are based on clerical mistakes, oversights, or omissions, as well as
to grant relief to parties from a final judgment, order, or proceeding.
Fed. R. Civ. P. 60. Rule 60 states the basis for which a court can grant
relief to a party:
On motion and just terms, the court may relieve a
party or its legal representative from final judgment,
order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise or
excusable neglect;

(2) newly discovered evidence that, with
reasonable diligence, could not have been
discovered in time to move for a new trial
under Rule 69(b);

(3) fraud (whether previously called intrinsic
or extrinsic), misrepresentation, or
misconduct by an opposing party;

(4) the judgment is void;
(5) the judgment has been satisfied, released,
or discharged; it is based on an earlier
judgment that has been reversed or
vacated; or applying it prospectively is no
longer equitable; or

(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b)(1)–(6).
CARBO’s motion for reconsideration does not meet any of the
reasons justifying relief under Rule 60(b).
I. THE ASSESSORS’ PROOFS OF CLAIM DID NOT PRECLUDE ANY
CLAIM FOR PAYMENTS PURSUANT TO THE PARTIES’ MOU AND
LEASE AGREEMENTS
CARBO claims the Assessors’ proofs of claim “constitute judicial
admissions that BOTA’s claims against CARBO do not arise under
either the Lease or MOU.” ECF No. 117 at 4. CARBO quotes the
Assessors’ original and amended proofs of claim, which state that the
claim is not based on a lease and constitutes taxes or penalties owed to
governmental units. ECF No. 74-33 at 2–3; ECF No. 74-34 at 2–3.
CARBO also asks the Court to “clarify for the parties that BOTA’s
demands for additional payments constitute general, unsecured, pre-
petition Class 4 contract claims, and not priority claims for taxes, and
disallow BOTA’s secured priority tax Proof of Claim.” ECF No. 117 at
3. CARBO makes only two passing remarks on this issue and fails to
provide any supporting reasoning. ECF No. 117 at 3, 20.
Although a proof of claim may constitute a creditor’s judicial
admission, the only reasonable interpretation of the Assessors’ proofs of
claim is that they claim taxes against CARBO’s estate. See In re Perry,
394 B.R. 852, 857 (Bankr. S.D. Tex. 2008). This does not preclude the
Assessors’ claims against CARBO in this adversary proceeding. This
adversary proceeding adjudicated whether CARBO owes additional
payments in lieu of taxes under the parties’ MOU and lease agreements.
The issues set for trial in the parties’ joint pretrial statement were
limited to answering this question. ECF No. 69 at 5–6.
The contested issues of fact listed in the parties’ joint pretrial
statement included “[t]he functional obsolescence . . . applicable to the
personal property, machinery, and equipment at the McIntyre and
Toomsboro Plants,” “[t]he economic obsolescence” applicable to the
property, and “[t]he appropriate inutility penalty” applicable to the
property, and “[w]hether the Assessors have acted in bad faith, been
stubbornly litigious, or have caused CARBO unnecessary trouble and
expense, to warrant an award of litigation expenses . . . .” ECF No. 69
at 5–6; ECF No. 73 at 6. The contested issues of law to be adjudicated
included “CARBO’s legal entitlement to recover attorneys’ fees” and
“Wilkinson County’s right to recover penalties or attorneys’ fees.” ECF
No. 69 at 6–7; ECF No. 73 at 7. Although CARBO objected to the
Assessors’ proof of claim, its validity was never an issue set for
adjudication. ECF No. 34 at 10; see McGehee v. Certainteed Corp., 101
F.3d 1078, 1080 (5th Cir. 1996) (internal quotation marks omitted) (“It
is a well-settled rule that a joint pretrial order signed by both parties
supersedes all pleadings and governs the issues and evidence to be
presented at trial.” (quoting Branch–Hines v. Hebert, 939 F.2d 1311,
1319 (5th Cir.1991))).
The Court will not consider the validity of the Assessors’ proof of
claim.
II. THE ASSESSORS’ AND COUNTY’S COUNTERCLAIM IS NOT
DEFECTIVE
CARBO claims the Assessors’ counterclaim is defective. CARBO
argues that “BOTA . . . has no independent authority to sue for or collect
additional taxes or PILOT fees, a power that lies exclusively with the
county tax commissioner,” and the “Tax Commissioner, the
Development Authority and the County did not join in the
Counterclaim.” ECF No. 117 at 6.
The Assessors are a party to the MOU and are Wilkinson
County’s administrative agent in charge of assessing ad valorem taxes.
ECF No. 73 at 5; ECF No. 74-30 at 133, 148; Ga. Code Ann. §§ 48-5-299,
48-5-299.1. This adversary proceeding was brought to determine
whether CARBO owes additional payments or is entitled to a refund
under the parties’ bond-for-title agreement, which turns on the assessed
values of property subject to the MOU and lease. Wilkinson County, to
whom CARBO pays yearly PILOTs, is also a party to the counterclaim.
ECF No. 21 at 1; ECF No. 70-26 at 142; see, e.g., Ga. Code Ann. § 48-5-
233.
The Assessors and County are proper parties to litigate this
adversary proceeding.
CARBO also argues, because the Assessors’ counterclaim states a
claim for failure to pay ad valorem taxes, “it has not asserted . . . claims
for PILOT fees under the MOU . . . .” ECF No. 117 at 3. This is a
distinction without a difference. Under Federal Rule of Civil Procedure
8(a)(2), a pleading that states a claim for relief requires “a short and
plain statement of the claim showing that the pleader is entitled to
relief.” The Assessors’ counterclaim explains the parties’ bond-for-title
agreement and states a claim for payments owed under the agreement.
See ECF No. 21 at 8–15. The counterclaim sufficiently explains the
basis of the Assessors’ claim, irrespective of whether the Assessors chose
to use “PILOTs” or “ad valorem taxes” as the nomenclature for the
payments they claim to be owed. CARBO, who itself repeatedly referred
to the challenged payments as taxes, cannot seriously contest the use of
the phrase. See, e.g., ECF Nos. 1, 4, 73, 43.
The Assessors’ counterclaim is not defective.
III. THE ASSESSORS DID NOT WAIVE ANY CLAIMS DUE TO THE
PARTIES’ JOINT PRETRIAL STATEMENT
CARBO claims that the parties’ joint pretrial statement listed
four contested issues to be litigated at trial: the functional obsolescence
of certain property at CARBO’s plants, the economic obsolescence of the
property, the appropriate inutility penalty applicable to the property,
and whether the Assessors acted in bad faith to warrant an award of
litigation expenses in CARBO’s favor. ECF No. 117 at 6. CARBO argues
the Assessors did not assert any claims under the MOU or lease, or
claims for recovery of litigation expenses, and have thereby waived such
claims. ECF No. 117 at 6–7.
The Court does not see how the evidence collected at trial, or the
Court’s memorandum opinion, is inconsistent with the contested issues
of fact listed in the parties’ joint pretrial statement. The listed factual
issues were in dispute for the purpose of determining whether CARBO
failed to remit the amount of payments required under the MOU and
lease agreements. This turned on determining whether CARBO was
entitled to claim additional depreciation through obsolescence and
inutility. The evidence collected at trial was directed toward these
issues, which the Court ruled on in its Memorandum Opinion.
With respect to the Assessors’ claim for litigation expenses, no
waiver has occurred. Contrary to CARBO’s claim, the parties’ joint
pretrial statement specifically lists “Wilkinson County’s right to recover
penalties or attorneys’ fees” as a contested issue of law to be adjudicated.
ECF No. 69 at 7; ECF No. 73 at 7 (“right to recover penalties”). Although
the Assessors and County did not plead attorneys’ fees in their answer
and counterclaim (ECF No. 21), federal courts apply federal law in
determining whether a party sufficiently pled attorney’s fees. N.Y.
Pizzeria, Inc. v. Syal, No. 3:13-cv-00335, 2017 WL 1313759, at *3 (S.D.
Tex. Apr. 5, 2017). Under federal law, a claim for attorney’s fees must
be filed by motion “no later than 14 days after the entry of judgment.”
Fed. R. Civ. P 54(d)(2)(B)(i). This rule applies even if a prevailing party
has not sought fees in its pleadings, so long as “all the elements
justifying such relief” have been established. See Engel v. Teleprompter,
732 F.2d 1238, 1242 (5th Cir. 1984). The Court has not entered final
judgment. The parties have filed a joint report stipulating to the amount
of the Assessors’ and County’s litigation expenses. ECF No. 116. The
Court will make a separate determination of whether the Assessors and
County are entitled to these expenses.
The parties’ joint pretrial statement did not result in a waiver of
any of the Assessors’ and County’s claims.
IV. THE APRIL 12TH OPINION IS NOT A SUA SPONTE SUMMARY
JUDGMENT RULING
CARBO asserts that the Court’s opinion was effectively a
“summary judgment ruling issued sua sponte in favor of BOTA” because
the Court’s interpretations of the MOU, lease, and 2017 and 2018
agreements were made “without the benefit of a completed evidentiary
hearing.” ECF No. 117 at 16. CARBO claims that, accordingly, the
Court had to resolve every reasonable inference “in favor of the non-
movant (CARBO).” ECF No. 117 at 16. Specifically, CARBO argues:
The Court . . . had to assume that CARBO
would establish at trial that: (1) a force
majeure event that rendered it impossible for
it to operate the plants on a continuous 24-
hour basis and maintain the required
employment levels, (2) this condition arose in
2015 and remains in effect today, (3) CARBO’s
plants suffered substantial economic and
functional obsolescence which reduced their
fair market values in the amounts set forth in
CARBO’s appraisal reports, (4) if PILOT fees
for these years were determined in
accordance with Georgia law, then CARBO
would be entitled to refunds from the County
in the amounts it has requested plus interest,
and (5) by refusing to timely address
CARBO’s timely appeals in accordance with
Georgia law, BOTA acted in a stubbornly
litigious manner that authorizes the Court to
award CARBO its litigation expenses under
O.C.G.A. § 13-6-11.
ECF No. 117 at 16. CARBO does not provide any reasoning to support
this assertion. Regardless, CARBO’s assertion fails.
A summary judgment motion is a motion filed by a party to
dispose of claims on grounds that there is no genuine issue of material
fact with respect to the claims. See Fed. R. Civ. P. 56(a). It is a movant’s
burden to show that there is no genuine issue of material fact, thereby
requiring the court to view all facts and make all inferences in the light
most favorable to the nonmoving party. See Sossamon v. Lone Star State
of Tex., 560 F.3d 316, 326 (5th Cir. 2009) (citing Condrey v. SunTrust
Bank of Ga., 429 F.3d 556, 562 (5th Cir. 2005)); Plumhoff v. Rickard,
572 U.S. 765, 768 (2014).
The Court’s memorandum opinion decided contested factual
issues after the presentation of extensive evidence and argumentation.
Based on the evidentiary record, the Court determined that the MOU’s
valuation provisions governed and did not allow CARBO to take
additional depreciation due to an alleged force majeure event. ECF No.
98 at 16. The amount of payments CARBO owes as a result of its
inability to claim additional depreciation is uncontested and has been
admitted into evidence. ECF Nos. 74-19–74-28, 74-103.
The Court’s conclusions were not dependent on there being no
genuine issues of material fact with respect to the claims asserted by
CARBO or the Assessors. And contrary to CARBO’s assertion, CARBO
carried the burden of proof with respect to its claim for a refund on
PILOTs. ECF No. 34 at 9–10. The Court was not required to draw any
inferences in CARBO’s favor with respect to its claims.
The Court’s Memorandum Opinion, issued after an extensive
evidentiary hearing, is not a sua sponte summary judgment ruling.
V. THE COURT’S FINDINGS ARE SUPPORTED BY THE EVIDENTIARY
RECORD
CARBO raises assertions that various findings made in the April
12 memorandum opinion were unsupported by the evidentiary record.
The Court addresses these in turn.
CARBO first argues that the Court erred in finding that the
parties’ 2017 Settlement and subsequent conduct did not manifest an
intent to depart from or modify the terms of the MOU. ECF No. 117 at
16. In interpreting the language of the 2017 Settlement, the Court
found that the settlement merely recognized that there was a dispute
between the parties concerning the valuation of the property, to which
the settlement resolved only for PILOTs owed for the year 2017. ECF
No. 98 at 9. The Court found the language of the settlement was not a
modification of the MOU and did not indicate an intent to permanently
depart from the MOU’s terms. ECF No. 98 at 8–12. This same
reasoning applied to subsequent agreements. ECF No. 98 at 12. These
findings were supported by Georgia’s law of contract modifications and
the evidentiary record.
CARBO next argues that the Court erred in finding that the 2017
Settlement’s reference to “fair market value” only acknowledged “(i) that
the county did not concede that the figures agreed upon in the
Settlement represented the value required by the MOU, and (ii) that the
parties would return to the use of the regulations’ ‘fair market value’
figure applying the method agreed upon in the MOU moving forward.”
ECF No. 117 at 17. CARBO argues that the phrase 2017 Settlement’s
reference to “fair market value” implied an intent to depart from the
MOU’s valuation procedures and return to the procedures set forth
under Georgia law, which permit additional economic depreciation.
ECF No. 117 at 17, 19.
CARBO’s reasoning is unsupported by the record. We found that
the phrase “fair market value” was used only as a reference for the value
placed on property for taxation purposes and did not reflect an
agreement to permanently factor economic depreciation into the
valuation of the property moving forward. ECF No. 98 at 9.
CARBO next argues that the Court erred in finding that “[t]wo
key parties to the MOU (the Development Authority and the Board of
Education) did not sign the 2017 Settlement.” ECF No. 117 at 17–18.
CARBO claims that “the record contains unrebutted written evidence
that the County’s Board of Education and its Board of Commissioners
were fully aware of an expressly ratified the Agreement,” and “[h]ad
CARBO been allowed to continue presented its case, it would have
established that the County Attorney signed off on the Agreement on
behalf of the Development Authority,” which subsequently ratified the
agreement. ECF No. 117 at 18.
CARBO’s arguments, even if true, do not change the Court’s
conclusion. Even if all the parties to the MOU agreed to a settlement of
the 2017 PILOTs, the explicit language of the 2017 Settlement
demonstrates a lack of intent to act as a permanent modification of the
MOU’s valuation procedures. ECF No. 98 at 9–10; ECF No. 70-2 at 4
(“After January 1, 2017 the Board will assess all properties related to
this Settlement Agreement at their fair market values and the January
1, 2018 assessment values shall in no way be limited to the values
agreed to herein.”).
CARBO next argues that the Court erred in finding that that the
Assessors lacked authority to enter into the 2017 Settlement. ECF No.
117 at 19. CARBO quotes the memorandum opinion, where we stated,
“CARBO contends that, by that logic, the board of tax assessors did not
have the authority to enter into the 2017 Settlement without involving
those parties. . . . Even were CARBO’s contentions regarding that
authority valid, it would only mean that the 2017 Settlement was
invalid.” ECF No. 98 at 10–11, n.1. CARBO’s alleged finding is not one
the Court reached. The Court found that “the board of tax assessors had
the authority to agree to the Settlement.” ECF No. 98 at 11. The quoted
statement was provided only as an explanation of the implications of
CARBO’s arguments. ECF No. 98 at 10.
CARBO finally argues that the Court erred in making the
following findings: “CARBO disputes it failed to pay under the MOU or
according to the Settlement, so it cannot not rely on an argument that
the lease had terminated due to such a default” and “[n]or does CARBO
sufficiently deal with the legal effect of the fact that both parties
seemingly continued to act as though the lease had not terminated.”
ECF No. 117 at 18. CARBO argues that “neither CARBO nor BOTA
claimed that PILOT fees due under the MOU had to be calculated in a
manner different from what CARBO’s tax obligations would be under
Georgia law.” ECF No. 117 at 19. CARBO also argues that,
alternatively, “the parties stipulated in the Agreement that they would
henceforth value the properties at their ‘fair market value’ under
Georgia law and CARBO would no longer receive tax abatements and
incentives’ under the MOU, a clear indication that they mutually
departed from the MOU’s requirements.” ECF No. 117 at 19. CARBO
asserts that it would have ample evidence to rebut the Court’s findings
if it was allowed to continue presenting its case. ECF No. 117 at 19.
CARBO does not provide any new reason for the Court to
reconsider its conclusion that the MOU remains valid and binding.
CARBO’s arguments have been considered and rejected. ECF No. 98 at
12–16. CARBO had ample opportunities to present evidence to support
its claim that the parties agreed to permanently forego the benefits of
the MOU and return to the regular ad valorem tax structure under
Georgia law. CARBO did not do so because no such agreement exists.
The parties’ 2017 and 2018 settlements are in the record. Neither of
these agreements may be interpreted as supporting CARBO’s claim.
The Court explained this interpretation in detail in its Memorandum
Opinion. ECF No. 98 at 8–12.
CARBO claims that “the Court sua sponte concluded that the
MOU imposed a valuation and depreciation method completely different
from” Georgia law. ECF No. 117 at 7. CARBO asserts that “the MOU’s
methodology for depreciation does not conflict with Georgia law”
because the MOU requires valuation based on the APM, which allows
for “physical deterioration, functional and economic obsolescence.” ECF
No. 117 at 8. CARBO supports this argument by testimony at trial
stating that there is no inconsistency between the MOU and Georgia’s
valuation procedures, and if there were a consistency, Georgia’s
procedures control. ECF No. 117 at 8, 19.
There is no inconsistency between the MOU and Georgia’s
valuation procedures. The Court concluded that the MOU’s valuation
procedures were the same as the valuation procedures under Georgia
law, but the parties stipulated to forego the ability to claim additional
depreciation. ECF No. 98 at 4–8. The Court acknowledged that
Georgia’s tax regulations may allow an economic obsolescence deduction
under some circumstances. ECF No. 98 at 4–5. The Court concluded
that the MOU’s 24-hour operation requirement was a valuation
provision that provided an express exclusion foreclosing the possibility
of considering additional deprecation due to economic obsolescence
allowed under the regulations. ECF No. 98 at 5. CARBO offers no
reason to reconsider this finding.
The Court’s findings are supported by the evidentiary record and
Georgia law.
VI. CARBO’S REMAINING ARGUMENTS FAIL
The Court’s opinion concluded that the MOU’s language
foreclosed the ability of considering additional economic depreciation
due to a force majeure event. ECF No. 98 at 7–8. CARBO argues that
this finding is (1) contrary to the terms of the MOU, (2) conflicts with
the testimony of the drafter of the MOU, (3) undermines the purpose
and intent of tax abatement arrangements, (4) violates Georgia’s public
policy against implied forfeitures, (5) misapplies the effect of force
majeure under Georgia law, and (6) creates uncertainty for potential
participates in bonds-for-title arrangements. ECF No. 117 at 9–10.
The Court’s conclusion is not contrary to the terms of the MOU.
The Court found that the MOU’s force majeure provision applies only to
the minimum job requirement and CARBO’s alleged ability to claim
additional depreciation due to inutility and economic obsolescence was
in contravention with the language and intent of the MOU. ECF No. 98
at 6–8. CARBO attempts to support its argument by citing Paragraph
8.4 of the 2008 lease. ECF No. 117 at 11. The 2008 lease provides no
language permitting the suspension of performance in the event of a
force majeure. Paragraph 8.4 only provides for indemnity under
circumstances that have nothing to do with force majeure. ECF No. 70-
26 at 48–50.
CARBO also argues the Court erred in “suggesting that CARBO,
by failing to operate its plants on a 24/7 basis, was somehow in default
under the Lease.” ECF No. 117 at 11. This is not what the Court’s
opinion concluded. The Court found that the 24-hour operation
requirement in the MOU was a stipulation to the valuation procedures
to be used, not an express covenant for 24-hour operation. ECF No. 98
at 6–7. The Court stated that, if the provision was an express covenant,
then CARBO would have been in breach for failing to operate
continuously. ECF No. 98 at 7. This explanation was used only to
highlight the fact that, under equitable principles, CARBO would not be
permitted to benefit from a breach by factoring inutility into PILOT
payments while failing to operate continuously. ECF No. 98 at 7.
The Court’s opinion is also not contrary to the MOU drafter’s
testimony. Kevin Brown’s testimony did not conclude that the MOU
permits additional depreciation due to a force majeure event. See ECF
No. 87 at 264–68, 289–90. The testimony did not preclude a finding by
the Court that a force majeure event had no impact on CARBO’s duty to
pay the PILOTs under the valuation methods set out in the MOU. See
ECF No. 98 at 15–16.
CARBO next claims that the Court’s opinion violates Georgia’s
public policy against implied forfeiture because the Court allegedly
found that the “MOU implicitly but unconditionally forfeited CARBO’s
ability ever to claim additional depreciation in the form of physical,
economic, or functional obsolescence, a right otherwise available to
every taxpayer in Georgia.” ECF No. 117 at 13–14; see King Indus.
Realty, Inc. v. Rich, 224 Ga. App. 629, 635 (1997) (alteration in original)
(“[W]e may not imply such a forfeiture. ‘[T]he settled public policy of
this state is that forfeitures are not favored. While forfeitures are not
unlawful, the law does not favor them, and all ambiguities are to be
resolved against their existence.’” (quoting APAC-Georgia, Inc. v. Dept.
of Transp., 221 Ga. App. 604, 605 (1996))). CARBO misconstrues the
Court’s opinion. The Court never held that CARBO unconditionally
forfeited its ability to ever claim additional depreciation. On the
contrary, we held:
The MOU contemplated CARBO’s use of the
financial benefits it received to invest in the
plants so that they would continue to be
operational and continue to employ people in
the county. If that was no longer a feasible
goal for the reasons CARBO states in its
complaint and on the record, CARBO had the
ability to terminate the agreement, reacquire
the property, and return to a standard tax
structure. CARBO did not terminate the
agreement, so it was bound to the terms of the
MOU.
ECF No. 98 at 8. The Court concluded that CARBO was free to forego
the MOU’s benefits at any time and return to a standard tax structure,
which may permit additional depreciation. CARBO’s choice to continue
receiving the benefits of the MOU while foregoing its ability to claim
additional depreciation cannot be construed as an implied forfeiture.
CARBO next claims that the Court’s opinion “conflicts with
Georgia case law regarding the effect of a force majeure event on a
party’s obligation to operate continuously.” ECF No. 117 at 14. CARBO
relies on Hamilton Mill Theatre Dev. V. Regal Cinemas, Inc., 366 Ga.
App. 124 (2022). CARBO’s reliance on the case is misplaced. Hamilton
Mill involved the interpretation of the specific force majeure provision
in the parties’ lease agreement. Based on its interpretation of the
parties’ agreement, the Hamilton Mill court held that the force majeure
provision excused the tenant from operating its movie theater due to the
COVID-19 pandemic. See id. at 131-32. Hamilton Mill did not involve
any general Georgia law on force majeure. See id. This Court’s
memorandum opinion was based on its interpretation of the force
majeure provision in the parties’ MOU and is entirely consistent with
Hamilton Mill.
CARBO finally claims that the Court’s opinion creates “grave
uncertainty for all other Georgia taxpayers and country development
authorities participating in or contemplating similar bonds-for-title
arrangements.” ECF No. 117 at 10. Again, CARBO misconstrues the
Court’s opinion. The Court only interpreted the provisions of the parties’
specific MOU and lease agreements, finding that the parties did not
contract for the ability to claim additional depreciation based on a force
majeure event. Nothing in the Court’s opinion should be read to
preclude others from contracting for the ability to do so.
CONCLUSION
CARBO’s motion for reconsideration of the Court’s April 12, 2023,
Memorandum Opinion is denied.
SIGNED 02/08/2024
rr
_S/—4—
Marvin Isgur
United States Bankruptcy Judge

16/16

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10462903. Public record. Not legal advice.