# Atlanta Metro Leasing, Inc v. City of Atlanta

> Court of Appeals of Georgia · February 20, 2020

URL: https://www.frixlaw.com/law-library/cases/11192300

## Case

- **Court:** Court of Appeals of Georgia
- **Decided:** February 20, 2020
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11192300

## How later opinions describe it (automated extraction)

- holding that expenses of litigation cannot be recovered if appellant does not prevail on its underlying substantive claims

## Opinion text

THIRD DIVISION
DILLARD, P. J.,
GOBEIL and HODGES, JJ.

NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules

February 20, 2020

In the Court of Appeals of Georgia
A19A2394. ATLANTA METRO LEASING, INC. et al v. CITY OF
ATLANTA.

HODGES, Judge.

Atlanta Metro Leasing, Inc. and Checker Cab Co. (collectively, the

“Appellants”) appeal the trial court’s order granting the City of Atlanta’s (the “City”)

motion to dismiss their complaint. The crux of this appeal is whether the City’s

issuance of taxicab Certificates of Public Necessity and Convenience (“CPNC”s)1 and

City permits created municipal franchise agreements and, if so, whether the City

breached any such agreements by failing to enforce taxicab regulations against

personal transportation network companies (“TNC”s), such as Uber and Lyft. These

are questions of first impression in Georgia and appear to be fairly novel arguments

1
A CPNC is commonly known as a “medallion” in many foreign jurisdictions.
in other jurisdictions as well. Based on the following reasons, we affirm the trial

court’s dismissal of the Appellants’ complaint.

It is well settled under Georgia law that a trial court is authorized to dismiss a

complaint under OCGA § 9-11-12 (b) (6) for failure to state a claim where the

complaint lacks a legal basis for recovery. See Hill v. Bd. of Regents of the Univ.

System of Ga., 351 Ga. App. 455, 458 (1) (829 SE2d 193) (2019). A complaint lacks

a legal basis for recovery if

(1) the allegations of the complaint disclose with certainty that the
claimant would not be entitled to relief under any state of provable facts
asserted in support thereof; and (2) the movant establishes that the
claimant could not possibly introduce evidence within the framework of
the complaint sufficient to warrant a grant of the relief sought.

(Citation omitted.) Villa Sonoma at Perimeter Summit Condo. Assn. v. Commercial

Indus. Bldg. Owners Alliance, 349 Ga. App. 666, 667 (1) (824 SE2d 738) (2019). In

considering dismissal under OCGA § 9-11-12 (b) (6), the trial court “must accept as

true all well-pled material allegations in the complaint and must resolve any doubts

in favor of the plaintiff.” (Citation and punctuation omitted.) Hill, 351 Ga. App. at

455. “This court reviews a trial court’s ruling on a motion to dismiss de novo,

viewing as true all well-pleaded material allegations in the complaint. However, we

2
are under no obligation to adopt a party’s legal conclusions based on these facts.”

(Citations and punctuation omitted.) Villa Sonoma, 349 Ga. App. at 667 (1).

So viewed, the Appellants’ amended complaint alleges that in 1977, the City

passed a vehicle for hire ordinance regulating the taxicab industry in the City.

Pursuant to that City ordinance, taxicab companies, such as the Appellants, are

required to possess two items to operate lawfully in the City: a CPNC and a permit

issued by the City. The City authorized 1,600 CPNCs, which have risen in value from

$100 when they were first issued in 1977 to approximately $80,000 by 2014. Atlanta

Metro Leasing is the owner of approximately 140 CPNCs. Checker Cab possesses a

taxicab permit issued by the City and utilizes Atlanta Metro Leasing’s CPNCs.

According to the Appellants’ amended complaint, property rights are

associated with CPNCs, such that they could be leased, transferred by bequest,

assigned, and pledged as collateral. Therefore, the Appellants conclude that the City’s

issuance of CPNCs and taxicab permits constitute the entry of the City into municipal

franchise agreements. The Appellants further conclude that although CPNCs are

designated in the City ordinance as “licenses,” both the CPNCs and taxicab permits

“were in substance implied in fact contracts.” To that end, the Appellants allege that

3
[a]n essential consideration provided by the City to the purchasers of the
CPNCs [and permits] under these municipal franchise agreements and
implied in fact contracts was the feature of exclusivity, i.e. that the city
would take reasonable measures to enforce the ordinance such that
unlicensed taxicab businesses in the City would be curtailed and
minimized and CPNC values would be protected from diminution
arising out of unlawful competition.

Beginning in 2012, various TNCs began operating in the City without CPNCs

or taxicab permits. These rideshare companies connect passengers with drivers

through smartphone applications. The Appellants allege that TNCs operated as

unpermitted taxicab companies in the City. According to the Appellants, although the

City initially issued citations to TNC drivers for violation of the City taxicab

ordinance, at some point in 2014, “the City, acting through the Mayor’s Office, the

Law Department and the Police Department made a deliberate policy decision to stop

enforcing the law and to not issue any further citations to Uber, Lyft or similar

companies or to their drivers.” In December 2014, the Atlanta Taxicab Company

Owners Association, on behalf of Checker Cab and other taxicab companies, made

a written demand on the City to enforce the taxicab ordinance against Uber and Lyft,

but the City refused.

4
In 2015, the Georgia General Assembly passed House Bill 225, which became

effective July 1, 2015. This bill preempted local government regulation over portions

of the vehicle for hire business and provided a legal basis for TNCs to operate in the

City as vehicles for hire. The bill, however, did not include Hartsfield Jackson Atlanta

International Airport, and, according to the amended complaint, the City failed to

address any illegal operations of TNCs at the airport. It was not until 2016 that the

City enacted an ordinance providing authorization for TNCs to operate at the airport.

The Appellants sued the City, seeking damages for breach of contract regarding

the CPNCs and permits from 2014 until July 1, 2015, in the City and from 2014 until

2016 at the airport, as well as bad faith expenses under OCGA § 13-6-11. According

to the Appellants, the City’s failure to enforce its taxicab ordinance against TNCs

resulted in substantial losses to the Appellants, including diminished CPNC values

and lost profits.

The City filed a motion to dismiss the Appellants’ amended complaint under

OCGA § 9-11-12 (b) (6), arguing that the complaint failed to state a claim upon

which relief could be granted. The City also asserted that the Appellants’ claims were

barred by sovereign immunity and that damages, if any, were limited to acts or

omissions occurring within a four-year statute of limitation. The trial court summarily

5
granted the City’s motion to dismiss without specifying the basis for its ruling, and

the Appellants appeal from that dismissal.

The Appellants raise three enumerations of error: (1) their complaint stated a

cause of action for breach of a franchise agreement as to Atlanta Metro Leasing’s

CPNCs; (2) their complaint stated a cause of action for breach of a franchise

agreement as to Checker Cab’s taxicab permit; and (3) their expenses of litigation

claim was required to be reinstated with their breach of contract causes of action. As

previously stated, the Appellants focus their appeal on whether the City’s issuance

of taxicab CPNCs and permits created municipal franchise agreements and, if so,

whether the City breached any such agreements by failing to enforce taxicab

regulations against TNCs. However, because “the applicability of sovereign immunity

is a threshold determination, and, if it does apply, a court lacks jurisdiction over the

case and, concomitantly, lacks authority to decide the merits of a claim that is

barred[,]” we must first address the City’s contention that sovereign immunity bars

the Appellants’ claims. (Footnote omitted.) McConnell v. Dept. of Labor, 302 Ga. 18,

19 (805 SE2d 79) (2017).2

2
“For convenience of discussion, we have taken the enumerated errors out of
the order in which [the Appellants have] listed them[.]” Foster v. Morrison, 177 Ga.
App. 250 (1) (339 SE2d 307) (1985).

6
1. The Georgia Constitution provides broad sovereign immunity:

Except as specifically provided in this Paragraph, sovereign immunity
extends to the state and all of its departments and agencies. The
sovereign immunity of the state and its departments and agencies can
only be waived by an Act of the General Assembly which specifically
provides that sovereign immunity is thereby waived and the extent of
such waiver.

Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). This immunity, also known as

governmental immunity, protects all levels of governments, including municipalities,

from legal action unless they have waived their immunity from suit. See OCGA § 36-

33-1 (“it is the public policy of the State of Georgia that there is no waiver of the

sovereign immunity of municipal corporations of the state and such municipal

corporations shall be immune from liability for damages”). “The authority to waive

the immunity of municipalities rests solely with the General Assembly and must be

effected by statute.” (Citation omitted.) Drumm v. George, 345 Ga. App. 760, 762

(814 SE2d 575) (2018).

Significantly, our legislature has provided that “[m]unicipal corporations shall

not be liable for failure to perform or for errors in performing their legislative or

judicial powers.” OCGA § 36-33-1 (b). This waiver has been consistently interpreted

to mean that municipal corporations have sovereign immunity against claims

7
involving the performance, or failure to perform, “a governmental function[,] but may

be liable for the negligent performance of their ministerial duties.” (Citations

omitted.) City of Atlanta v. Mitcham, 296 Ga. 576, 577-578 (1) (769 SE2d 320)

(2015) (“municipal corporations are immune from liability for acts taken in

performance of a governmental function”); see also Albertson v. City of Jesup, 312

Ga. App. 246, 249 (1) (718 SE2d 4) (2011) (“under Georgia law, municipal

corporations shall not be liable for failure to perform or for errors in performing their

legislative or judicial powers”) (citations and punctuation omitted). The Georgia

Supreme Court explained the difference between these two functions:

Governmental functions traditionally have been defined as those of a
purely public nature, intended for the benefit of the public at large,
without pretense of private gain to the municipality. The exemption
from liability for governmental functions is placed upon the ground that
the service is performed by the corporation in obedience to an act of the
legislature, is one in which the corporation has no particular interest and
from which it derives no special benefit in its corporate capacity.
Ministerial functions, in comparison, are recognized as those involving
the exercise of some private franchise, or some franchise conferred upon
the municipal corporation by law which it may exercise for the private
profit or convenience of the corporation or for the convenience of its
citizens alone, in which the general public has no interest.

(Citations, punctuation, and footnote omitted.) Mitcham, 296 Ga. at 578 (2). “The

determination of whether a function is governmental or ministerial in character for

8
purposes of municipal sovereign immunity focuses broadly on the nature, purpose,

and intended beneficiaries of the function performed by the municipal corporation.”

(Citations omitted.) Id. at 581-582 (2).

In this case, the City was operating in its legislative or judicial capacity,

performing a governmental as opposed to ministerial function, when it determined

that TNCs should not be held to the same regulations as taxicabs and stopped

enforcing taxicab regulations against TNCs. See generally Calloway v. City of

Warner Robins, 336 Ga. App. 714, 715-716 (1) (a) (783 SE2d 175) (2016) (a City’s

issuance of a permit or license is a governmental function); see also Bond v. City of

Royston, 130 Ga. 646 (61 SE 491) (1908) (municipality not liable for enforcement of

ordinance when acting in furtherance of a public function or duty); Rivers v. City

Council of Augusta, 65 Ga. 376 (1880 Ga. LEXIS 204) (1880) (a city is not liable for

damages in adopting an ordinance and subsequently repealing or suspending it). The

Appellants argue that in refusing to enforce the ordinance against TNCs, the City

intended the furtherance of its own private or pecuniary interests, exercising the

City’s private functions primarily for revenue and promotion of municipal welfare.

However, “these allegations must be treated as mere conclusions of the pleader, no

facts being alleged to show that the city was seeking ‘the furtherance of its private or

9
pecuniary interests.’” Bond, 130 Ga. at 648. As in Bond, “[i]t does not appear that the

municipality, as such, either was or could legally have been engaged in any business

which the parties whom it is alleged the ordinance was intended to affect could have

come into competition with.” Id.

Moreover, although the City received revenue for the sale of CPNCs,

“[w]hether the enterprise turns a profit, or only an incidental profit is not the

controlling point; what is significant is the character of the [enterprise] as ‘primarily

a source of revenue’ rather than being used primarily for the benefit of the public

regardless of incidental generation of revenues.” (Citation omitted.) Atlanta v.

Chambers, 205 Ga. App. 834, 836 (2) (424 SE2d 19) (1992); see also Cornelisen v.

Atlanta, 146 Ga. 416, 419 (91 SE 415) (1917) (public character of duties not affected

by purely incidental profit from city’s operation of park). As is more fully discussed

in Division (1) (a) (ii), a review of the applicable ordinance demonstrates that

obtaining a CPNC was a prerequisite to obtaining a business license and was required

to promote public safety and convenience, not to provide the City with pecuniary

gain. See Atlanta City Ordinance 162-56 (a); see also OCGA § 36-60-25 (a) (as

originally enacted in 2007) (stating counties and cities “may” require taxicab owners

to obtain a CPNC to operate and “may” require such owners to pay a regulatory fee).

10
In fact, the Appellants’ argument is nonsensical since the City would have received

more revenue by enforcing the applicable ordinance against TNCs.

In order to avoid the defense of sovereign immunity due to the exercise of the

City’s legislative or judicial powers, the Appellants have couched their claims as a

breach of contract action against the City. The issue of whether there was a written

contract is critical in this case because the Georgia Constitution provides for the

waiver of sovereign immunity in cases involving written contracts: “The state’s

defense of sovereign immunity is hereby waived as to any action ex contractu for the

breach of any written contract now existing or hereafter entered into by the state or

its departments and agencies.” Ga. Const. of 1983, Art. I, Sec. II, Par. IX (c); see also

Precise v. City of Rossville, 261 Ga. 210, 211 (1) (403 SE2d 47) (1991) (“municipal

immunity is not a valid defense to an action for breach of contract”). However, it is

well established that, in the context of a contract action, sovereign immunity is

waived only as to actions based on written contracts; an implied contract will not

support a waiver of sovereign immunity. Watts v. City of Dillard, 294 Ga. App. 861,

863 (1) (670 SE2d 442) (2008); see also Drumm, 345 Ga. App. at 762. Likewise,

sovereign immunity will generally bar not only unwritten contracts, but also “a

lawsuit for damages upon quasi-contractual theories of liability in the absence of a

11
written contract.” Layer v. Barrow County, 297 Ga. 871 (1) (778 SE2d 156) (2015).

We, therefore, must determine whether the Appellants correctly assert that the City’s

issuance of taxicab CPNCs created valid written contracts or franchise agreements

granting them freedom from competition from those not possessing a CPNC.

In this regard, Georgia law is clear:

To constitute a valid contract, there must be parties able to contract, a
consideration moving to the contract, the assent of the parties to the
terms of the contract, and a subject matter upon which the contract can
operate.

OCGA § 13-3-1. “A contract is not complete and enforceable until there is a meeting

of the minds as to all essential terms.” (Citation omitted.) Drumm, 345 Ga. App. at

762. “In order that it may allege an agreement, a petition must set forth a contract of

such certainty and completeness that either party may have a right of action upon it.”

(Citation omitted.) Weathers v. Dieniahmar Music, LLC, 337 Ga. App. 816, 822 (2)

(788 SE2d 852) (2016); see also Laverson v. Macon Bibb County Hosp. Auth., 226

Ga. App. 761, 762 (487 SE2d 621) (1997).

The Appellants, as the parties seeking to benefit from the waiver of sovereign

immunity, possessed the burden of establishing the existence of a valid written

contract with the City and any resulting waiver of immunity. Watts, 294 Ga. App. at

12
863; see also Williams v. Dept. of Corrections, 338 Ga. App. 719, 720 (1) (791 SE2d

606) (2016). We conclude that they failed to do so in this case.

(a) The Appellants first assert that the City, by issuing CPNCs to Atlanta Metro

Leasing under OCGA § 36-60-25 and Atlanta City Ordinance 162-62, entered into

written franchise agreements with Atlanta Metro Leasing. According to the

Appellants, these written franchise agreements included an implied promise by the

City that it would support exclusivity and market value provisions by enforcing

taxicab regulations and removing unlawful taxicabs from the streets, and, in fact, the

City enforced these regulations before making a conscious decision not to require

TNCs to comply with the regulations. The Appellants argue that by allowing TNCs

to operate in the City without CPNCs, the City breached the franchise agreements by

destroying the market exclusivity that CPNC owners formerly enjoyed, diminishing

the market value of CPNCs, and decreasing their profits. There are multiple problems

with this theory, and even when all of the Appellants’ factual allegations in their

amended complaint are accepted as true, the Appellants have failed to establish the

existence of a valid, written contract which would waive the City’s sovereign

immunity.

13
(i) Ability to contract. We first must ascertain whether the City possessed the

ability to enter into a contract or franchise agreement with Atlanta Metro Leasing.

Central to this determination is whether a CPNC is characterized as a franchise or a

license because a license is a permit, while “[a] franchise is a contract creating

property rights.” City of Macon v. Alltel Communications, 277 Ga. 823, 830 (596

SE2d 589) (2004). “The prevailing rule is that unless the power is expressly conferred

by the legislature, a municipal corporation can not grant to any person, firm or

corporation an exclusive privilege or monopoly.” (Citations and punctuation omitted.)

Macon Ambulance Svc. v. Snow Properties, 218 Ga. 262, 265 (2) (127 SE2d 598)

(1962). We, thus, turn to the applicable statute and ordinance in this case.

OCGA § 36-34-2 (7) (A) gives municipalities

[t]he power to grant franchises to or make contracts with railroads, street
railways, or urban transportation companies, electric light or power
companies, gas companies, steam-heat companies, telephone companies,
water companies, and other public utilities for the use and occupancy of
the streets of the city, for the purpose of rendering utility services, upon
such conditions and for such time as the governing authority of the
municipal corporation may deem wise and subject to the Constitution
and the general laws of this state.

This statute has been construed as permitting a city to enter into franchise agreements

with public service corporations, like utility companies. See City of Summerville v.

14
Ga. Power Co., 205 Ga. 843, 844 (1) (55 SE2d 540) (1949) (statute authorizes a

franchise “granted by a city council to a public-service corporation”). The Appellants

apparently concede that taxicab companies do not fall within the ambit of “public

service corporations;” however, they argue that such companies qualify as “urban

transportation companies.”

OCGA § 36-34-2 does not define “urban transportation companies,” and the

Appellants do not cite any statutes or cases defining this phrase or addressing a

franchise given to such a company. Instead, the Appellants cite a number of older

cases from foreign jurisdictions for the proposition that “franchises are a means for

a municipality to authorize use of its roads and streets for transportation for hire

services provided by private businesses.” None of those cases, however, address a

taxicab company. See City and County of San Francisco v. Market Street R. Co., 73

P2d 234, 237 (Cal. 1937) (addressing whether street railway companies possessing

franchises pursuant to specific statutes and charters were obligated to pay a license

tax); Jarrell v. Orlando Transit Co., 167 So. 664, 665-666, 667-668 (Fla. 1936)

(affirming an order that enjoined a taxicab company from violating a franchise given

by the City of Orlando to a bus company pursuant to a specific Act authorizing “an

exclusive franchise for the use of the streets of the said city for the operation of

15
automobile busses[;]” the court distinguished taxicab companies that are designed for

individual transportation and do not operate on fixed routes); McCutcheon v.

Wozencraft, 255 SW 716, 718-719 (Tx. 1923) (reversing dismissal of mandamus

action seeking to compel the City to allow electors to vote on a proposed ordinance

to grant a franchise to a street railway enterprise employing busses to operate over the

streets of the city because “[t]he [city] charter specifically gives the electors the right

to grant or withhold franchises which appropriate portions of the street for the

purpose of transportation for hire”).

In fact, each of those cases addresses franchises given to companies providing

a comprehensive system of transportation which would benefit the City and require

large capital to create the designated routes, not companies designed for individual

transportation that do not operate on fixed routes. For example, McCutcheon, 255 SW

at 718-719, specifically stated,

municipalities are generally given control over public thoroughfares
within their territorial limits and in the exercise of this control a
municipality has the right by ordinance to grant a license for conducting
any lawful business upon the streets which would tend to public comfort
or convenience and would not unreasonably impair the use of the streets
for the purposes of their dedication. The granting of such a right by
ordinance which could be exercised by anyone complying therewith
would be an exercise of the police powers of the city. The right thus
granted would ordinarily constitute a license and would be subject to

16
regulation and revocation by the city. There is a marked distinction,
however, between the right thus granted and the right to use definite or
designated portions of the public thoroughfares such as is acquired by
street railways and water, light, heat, power, gas, steam and other similar
enterprises, and this distinction is now well recognized in the
jurisprudence of this country; the latter class of rights being very
generally held to be franchises.

Because taxicabs do not use definite or designated portions of the public

thoroughfares, but rather tend to offer public comfort and convenience, we agree with

the City’s characterization of its issuance of a CPNC as a license, subject to

regulation and revocation by the City, rather than a franchise bestowed to an urban

transportation company. See generally Hadley v. City of Atlanta, 232 Ga. App. 871,

872-874 (1) (502 SE2d 784) (1998) (annual renewal charge on CPNCs is a regulatory

fee and not a tax because “it acts effectively as a precondition, or license, for

engaging in the occupation”).

The Appellants further cite Atlanta City Ordinance 1-102 (c) to support their

contention that the City possessed the authority to enter into franchise agreements

with Atlanta Metro Leasing. Section 1-102 (c) (10) gives the City express power

[t]o grant franchises or make contracts for public utilities and public
services as provided by law. The council may prescribe the rates, fares,
regulations, and standards and conditions of service applicable to the
service to be provided by the franchise grantee or contractor, insofar as
not in conflict with such regulations by the Public Service Commission,

17
and may grant franchises and rights-of-way throughout the streets and
roads. . . .

The Appellants argue that the use of the word “fares” “demonstrate[s] clearly that

transportation related franchises were expressly authorized under this charter

section.” While we agree with this assertion, we disagree with the Appellants’

implication that taxicab companies constitute “public utilities and public services.”

As stated above, such entities generally encompass companies providing

comprehensive systems for the benefit of the City, not companies, such as Atlanta

Metro Leasing, that provide benefit to limited individuals and do not operate on fixed

routes.

In addition, Atlanta City Ordinance Section 1-102 (c) (2) empowers the City

to license and regulate “privileges, occupations, trades, and professions and to

provide for the manner and method of payment of such licenses and taxes[.]”

Likewise, Section 1-102 (c) (36) empowers the City to license and regulate “vehicles

operated for hire in the city” and “to limit the number of such vehicles[.]” Thus, the

ordinance language supports our conclusion that the issuance of a CPNC is a license,

rather than a franchise.

18
The appellants argue that because a franchise is a contract creating property

rights, see Macon Ambulance Svc., 218 Ga. at 265 (2), and because Georgia law

recognizes property interests in CPNCs, a CPNC is properly classified as a franchise

rather than a license. Indeed, OCGA § 36-60-25 (b), as originally enacted in 2007,

stated as follows:

Each certificate of public necessity and convenience or medallion issued
at any time by a county or municipal corporation shall be fully
transferable pursuant to a purchase, gift, bequest, or acquisition of the
stock or assets of a corporation to any person otherwise meeting the
requirements of the applicable local ordinance. Each such certificate of
public necessity and convenience or medallion may be used as collateral
to secure a loan and each lending institution making such a loan shall
have all rights of secured parties with respect to such loan.

Although the statute was amended in 2015, the amendment did not alter the ability

to transfer a CPNC or use a CPNC as collateral to secure a loan. The City of Atlanta

likewise recognizes certain property rights intrinsic to CPNCs. Sections 162-62 (a),

(d), and (e) of the City of Atlanta Vehicle for Hire Ordinance provide for the

transferability of CPNCs through bequests and the pledging of such instruments as

collateral for loans. Thus, there are property interests inherent in CPNCs. See

generally Atlanta Taxicab Co. Owners Assn. v. City of Atlanta, 281 Ga. 342, 343-347

(2) (638 SE2d 307) (2006) (finding that the one-year Georgia residency requirement

19
to qualify for a CPNC violated the Commerce Clause of the United States

Constitution because the ordinance served “as an immediate infringement on the

property rights enjoyed by all members of the Association” to sell or lease a CPNC

to a non-Georgian).

However, although CPNC owners are able to transfer their CPNCs and use

them as collateral for certain loans, thus contributing to the development of a

secondary market wherein CPNCs historically have attained significant value, that

does not change the fact that taxicab companies are not “public utilities and public

services” with which the City may enter into franchise agreements. Contrary to the

Appellants’ argument, the City’s issuance of a CPNC does not constitute a franchise

agreement; “CPNC holders merely possess a license to participate in the highly

regulated taxicab market that is subject to regulatory change.” (Citation and

punctuation omitted.) Dennis Melancon, Inc. v. City of New Orleans, 703 F3d 262,

273 (III) (A) (4) (5th Cir. 2012); see also Macon Ambulance Svc., 218 Ga. at 266 (2)

(“the operation of vehicles for hire on the city streets is a privilege rather than a right,

with the privilege being withheld or bestowed as the governing authorities of the

municipality see fit to reasonably regulate their use under the police power for the

welfare and protection of the general public”); Associated Cab Co. v. City of Atlanta,

20
204 Ga. 591, 593 (50 SE2d 601) (1948) (“[t]he transportation of passengers for hire

in a taxicab upon the streets of a city is not an inherent right, but a privilege which the

municipality, in the exercise of its discretion, may grant or refuse”) (citation and

punctuation omitted); Delta Cab Assn. v. City of Atlanta, 44 FSupp3d 1243, 1246

(III) (B) (N.D. Ga. 2014) (Atlanta’s “regulatory scheme for taxicab permitting is

rationally related to a legitimate municipal objective” and ordinance requirements

serve legitimate governmental interests).

Despite the property rights inherent in CPNCs, we conclude that a CPNC is

better characterized as a license, rather than a franchise. We further conclude that

neither OCGA § 36-34-2 nor Atlanta City Ordinance 1-102 authorized the City to

enter into franchise agreements with Atlanta Metro Leasing through the issuance of

CPNCs.

(ii) Creation of any alleged contract. Even if this Court were to find that the

City was authorized to enter into franchise agreements with Atlanta Metro Leasing

through the issuance of CPNCs, “the authority to enter into such agreements does not

mean that there is a franchise agreement between the City and [Atlanta Metro

Leasing].” (Emphasis supplied.) City of LaGrange v. Troup County Elec. Membership

Corp., 200 Ga. App. 418, 420 (1) (408 SE2d 708) (1991). We must determine

21
whether the language of the applicable statute and City ordinances created a

contractual agreement and whether the City assented to the creation of such a

contractual agreement when it issued the CPNCs. It is well settled that statutes and

ordinances generally do not create contracts. As the United States Supreme Court has

noted,

the principal function of a legislature is not to make contracts, but to
make laws that establish the policy of the state. Policies, unlike
contracts, are inherently subject to revision and repeal, and to construe
laws as contracts when the obligation is not clearly and unequivocally
expressed would be to limit drastically the essential powers of a
legislative body.

(Citation omitted.) Nat. R. Passenger Corp. v. Atchison, Topeka & Santa Fe R. Co.,

470 U. S. 451, 466 (II) (A) (105 SCt 1441, 84 LE2d 432) (1985). “Thus, the party

asserting the creation of a contract must overcome this well-founded presumption,

and we proceed cautiously both in identifying a contract within the language of a

regulatory statute and in defining the contours of any contractual obligation.”

(Citation omitted.) Id.

The first step in determining whether a statute or ordinance gives rise to a

contractual obligation is to examine the language of the statute or ordinance. Nat. R.

Passenger Corp., 470 U. S. at 466 (II) (A). Absent expression of an actual intent of

22
the City to bind itself, the statute or regulation is “undoubtedly a scheme of public

regulation” rather than a private contract to which the City is a party. Id. 466-467 (II)

(A). We thus turn to the statute and City ordinances at issue to ascertain whether the

language employed in those laws, and the City’s issuance of CPNCs pursuant to those

laws, created a franchise agreement between the City and Atlanta Metro Leasing.

OCGA § 36-60-25 (a), as originally enacted in 2007, stated as follows:

Each county and municipal corporation may require the owner or
operator of a taxicab or vehicle for hire to obtain a certificate of public
necessity and convenience or medallion in order to operate such taxicab
or vehicle for hire within the unincorporated areas of the county or
within the corporate limits of the municipal corporation, respectively,
and may exercise its authority under Code Section 48-13-9 to require
such owners or operators to pay a regulatory fee to the county or
municipal corporation. The General Assembly finds and declares that
any county or municipality exercising the powers granted in this Code
section is legitimately concerned with the qualifications and records of
drivers of taxicabs and other vehicles for hire; with the location,
accessibility, and insured state of companies operating taxicabs and
other vehicles for hire; and with the safety and comfort of taxicabs and
other vehicles for hire. Without limitation, each such county or
municipality may exercise the powers granted in this Code section by
ordinance to the same extent as the ordinances reviewed by the Georgia
Court of Appeals in the case of Hadley v. City of Atlanta, 232 Ga. App.
871, 875 (1998), and each certificate of public convenience and
necessity issued under those ordinances shall remain in full force and
effect.

23
This language does not manifest a clear and unequivocal expression of an actual

intent that a municipality binds itself to or contracts with taxicab companies by

issuing CPNCs. In fact, the statute specifically uses permissive “may” language and

states that CPNCs are required to promote public safety and convenience, not to

confer specific property interests to CPNC owners or create franchise agreements

with the City.

The City Ordinance language likewise does not manifest a clear and

unequivocal expression of an actual intent on the part of the City to bind itself

contractually to taxicab companies. Atlanta City Ordinance 162-56 (a) states:

No vehicle for hire shall be operated on the highways of the city until its
owner or lessee has obtained for such vehicle a valid certificate of public
necessity and convenience, and until the company with which it is
affiliated has obtained a business license from the city. No such business
license shall be issued until the CPNC and company permits have been
issued by the department.

The plain language of this ordinance specifically refers to a CPNC as a prerequisite

to obtaining a “business license,” rather than a contractual or franchise agreement. As

our Georgia Supreme Court made clear, “[h]olders of a CPNC must comply with

Chapter 162 of the City Code, pursuant to the provisions of which the City regulates

the taxicab industry.” Atlanta Taxicab Co. Owners Assn., 281 Ga. at 342. Although

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Atlanta City Ordinance 162-61 (a)’s limitations on the number of taxicab CPNCs

issued by the City has the effect of limiting the number of taxicab drivers, it does not

create a franchise or impose exclusivity within the taxicab industry. See generally

Dennis Melancon, Inc., 703 F3d at 273 (III) (A) (4) (finding that ability to limit

number of CPNCs “evidences that CPNCs are issued for the purpose of promoting

the public convenience and necessity, and not for the purpose of conferring upon the

holder any proprietary interest”) (citation and punctuation omitted).

Here, the Appellants can point to no language in either the statute or City

ordinances expressing a clear and unequivocal intent by the City to create a

contractual commitment; thus, the Appellants cannot establish that the City assented

to any contract under OCGA § 13-3-1. The Appellants likewise refer to no case law

to support their contention that the laws, or the issuance of the CPNCs pursuant to

those laws, created a contractual or franchise agreement. In addition, unlike

contractual obligations, the terms of OCGA § 36-60-25 and the Atlanta City

Ordinances, which govern the rights conferred by CPNCs, can be modified, amended,

or repealed unilaterally by the State or City at any time without the assent of taxicab

CPNC owners, thus defeating the notion that by issuing CPNCs the City entered into

binding agreements promising perpetual exclusivity in the for hire transportation

25
market. See City of LaGrange, 200 Ga. App. at 419-420 (1) (a license, as opposed to

a franchise, is not a contract and may be abrogated). The Appellants, at best, had a

unilateral expectation that the City would enforce the regulations and would not

diminish the market value of the CPNCs, not the mutual assent required to create a

binding contractual obligation.

Moreover, the Appellants’ argument that a question of fact exists as to whether

the City intended its ordinances to create private contractual rights is unpersuasive.

First, as stated previously, unless the regulations specifically express an actual intent

of the City to bind itself and assent to a contract, the statute or regulations are

“undoubtedly a scheme of public regulation” rather than a private contract to which

the City is a party. Nat. R. Passenger Corp., 470 U. S. at 467 (II) (A). No such

language is included in the statute or ordinances at issue in this case.

In addition, as the Appellants point out, only a handful of cases have discussed

contractual obligations in the context of taxicab CPNCs or permits, and all of them

have found that City regulations did not create binding contractual obligations. See,

e.g., Joe Sanfelippo Cabs v. City of Milwaukee, 839 F3d 613, 616 (7th Cir. 2016)

(rejecting breach of contract claim regarding taxicab permits because “ordinances are

not contracts, let alone perpetual contracts” and the City did not promise never to

26
rescind or amend the ordinance, so taxicab companies had no reason to believe the

ordinance would continue perpetually); Newark Cab Assn. v. City of Newark, 235

FSupp3d 638, 647 (III) (A) (D. N. J. 2017) (dismissing breach of contract claim

because taxicab companies failed to demonstrate that language in City regulations

created a contractual obligation to support exclusivity and medallion market values

by removing unlawful taxicabs from streets); Boston Taxi Owners Assn. v. City of

Boston, 180 FSupp3d 108, 119-120 (II) (b) (3) (D. Mass. 2016) (holding that breach

of contract suit claiming the City destroyed market exclusivity owned by medallion

holders failed to state a claim upon which relief could be granted because applicable

laws and regulations were not bilateral agreements and there was no promise of

exclusivity for medallion holders).3 We find the analyses in these cases compelling.

In conclusion, the terms of the applicable statute and ordinances in this case

demonstrate that no written contract or franchise agreement between the City and

Atlanta Metro Leasing was created when the City issued CPNCs to the company.

“Under these circumstances, we simply cannot say that [the Appellants] met [their]

burden of proving the essential elements of a written contractual agreement between

3
Although the parties have exhaustively discussed exclusivity and breach of
contract in their briefs, we cannot address those issues given the applicability of
sovereign immunity and our lack of jurisdiction.

27
[Atlanta Metro Leasing] and the City sufficient to support [its] breach of contract

claim or the City’s waiver of the immunity defense.” Watts, 294 Ga. App. at 863-864.

Because there has been no waiver of the City’s sovereign immunity in this case, the

trial court lacked subject matter jurisdiction to consider Atlanta Metro Leasing’s

breach of contract claim based on the City’s issuance of CPNCs, and we affirm the

court’s dismissal of that claim.

(b) The Appellants next assert that because taxicab permits “are interwoven

with CPNCs, these permits are appropriately defined as a franchise.” The gravamen

of the Appellants’ argument is that taxicab company operations were only authorized

if CPNCs were amassed at a certain threshold; thus, “CPNCs were integrally

interwoven into taxicab company permits in a way that demands an intellectual

conclusion that these permits are franchises in substance.” Based on our conclusion

in Division (1) (a) that the issuance of CPNCs did not create written franchise

agreements between the City and Atlanta Metro Leasing, sovereign immunity also

bars the Appellants’ breach of contract claim regarding taxicab permits, and the trial

court correctly dismissed that claim.

2. Based on our holding in Division 1, the Appellants’ expenses of litigation

claim need not be reinstated. See Home Depot U.S.A. v. Wabash Natl. Corp., 314 Ga.

28
App. 360, 374 (7) (724 SE2d 53) (2012) (holding that expenses of litigation cannot

be recovered if appellant does not prevail on its underlying substantive claims).

Judgment affirmed. Dillard, P. J., and Gobeil, J., concur.

29

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11192300. Public record. Not legal advice.