All Star, Inc. v. Ga. Atlanta Amusements, LLC.

332 Ga.App. 1

770 S.E.2d 22

ALL STAR, INC., et al.

v.GEORGIA ATLANTA AMUSEMENTS, LLC.

No. A14A2138.

Court of Appeals of Georgia.

March 26, 2015.

Reconsideration Denied April 13, 2015.

Joshua Barrett Belinfante, Kimberly K. Anderson, Craig G. Kunkes, Alexander Fraser Denton, for Appellants.

Sana M. Shoaib Ayubi, Christina Michelle Baugh, Steven Marc Kushner, Mark Van Spix, for Appellee.

Wimberly Lawson Steckel Schneider & Stine, Paul Oliver, amicus curiae.

Opinion

BRANCH, Judge.

All Star, Inc., Elite Amusement, Inc., Ideal Amusements, Inc., Midtown Vending, LLC, and Ultra Group of Companies, Inc. (collectively “ appellants”), appeal from an order of the Gwinnett County Superior Court granting summary judgment against them and in favor of Georgia Atlanta Amusements, LLC (“GAA”), on the appellants' claims for tortious interference with contractual relations. At issue in this case is OCGA § 50–27–70 et seq., which is the most recent statutory scheme regulating the bona fide coin-operated amusement machine business in this State.¹ The trial court found that this law, which became effective on April 10, 2013, voided certain written contracts and/or oral agreements that four of the appellants had with their customers for the placement of coin-operated amusement machines. The trial court reached this conclusion even though the contracts at issue predate the law's enactment. Based on this holding, the trial court granted summary judgment against the appellants on their claims for tortious interference with contractual relations. On appeal from the summary judgment order, the appellants contend that OCGA § 50–27–70 et seq. should not be interpreted so as to void preexisting contracts. For reasons explained more fully below, we agree. We therefore reverse the trial court's order granting partial summary judgment against the appellants.

The relevant facts are largely undisputed but where any doubt existed, we have construed the record in favor of the appellants, as the non-movants. See Thompson v. Lovett, 328 Ga.App. 573, 760 S.E.2d 246 (2014) (on a motion for summary judgment, we “construe the evidence in the light most favorable to the nonmovant”) (citation omitted).

The record shows that each of the appellants is a company that owns coin-operated amusement machines and is in the business of leasing those machines to third parties. At issue in this case are “Class B” coin-operated amusement machines (“Class B machines”).² Prior to April 2013, all of the appellants other than Ideal Amusements had written rental contracts and/or oral rental agreements with specific business owners (“location owners”) for the placement of one or more Class B machines within that business.³ Each of the written contracts contained a clause that set forth how the revenue generated by the leased machines would be divided between the company that owned the machines (the “machine owner”) and the location owner. Similarly, under each of the oral agreements in place, the location owner had agreed to pay the machine owner a certain percentage of the revenue generated by the machine as rent for the machine. The specific agreements at issue are as follows:

All Star

On November 1, 2000, All Star entered into a written rental agreement with Fast Freddy's, a gas station and convenience store located in Lilburn. Under the terms of the this agreement, Fast Freddy's agreed to pay All Star 40 percent “of the total gross revenue”⁴ generated by the machines as rent for the machines, with Fast Freddy's retaining 60% of the revenue. The contract was for a term of seven years and it contained an automatic renewal clause. That clause provided that the contract would automatically renew for additional terms of seven years unless one party notified the other, at least 90 days in advance of the renewal date, that it was electing not to renew. There is no evidence in the record that either party exercised its right of non-renewal; thus, the contract renewed on November 1, 2007, for an additional seven-year term.

On March 28, 2011, All Star entered a written rental agreement with USA Food Mart, a gas station and convenience store located in Carrollton. Under the terms of this agreement, USA Food Mart agreed to pay All Star 70 percent of the total gross revenue generated by the machines, with USA Food Mart retaining the remaining 30 percent. The contract was for a term of three years.

As of April 2013, All Star had an oral agreement with Tienda Veracruz, a Carrollton grocery, and the agreement had been in place for approximately one year. There is no evidence in the record as to how the parties had agreed to split the revenue from the machine or machines placed at this location.

Elite Amusement

As of April 2013, Elite had in place oral agreements for the placement of its machines at five different locations: Discount Foodmart in Atlanta; the BP gas station in Stockbridge; East Side Tobacco in Conyers; Old National Hookah in Riverdale; and Tobacco More in Atlanta. Elite's agreement with Discount Foodmart had been in place seven years; its agreement with the Stockbridge BP had been in place six years; its agreement with Old National Hookah had been in place six months; and its agreements with East Side Tobacco and Tobacco More had each been in place for three months. There is no evidence in the record as to how the parties had agreed to split the revenue from the machine or machines placed at these locations.

Midtown Vending

On August 2, 2010, Midtown Vending entered into two separate written rental agreements with Kahlid Amin for the placement of coin-operated amusement machines at two businesses owned by Amin in Fayetteville: Paw Paw's Shell and Coleman Grocery. Both of the agreements provided that the business in question would pay Midtown Vending 30 percent “of the total gross revenue”⁵ generated by the machines as rent for the machines, with the businesses retaining 70 percent of the revenue. Each contract was for a term of 36 months.

On July 18, 2011, Midtown Vending entered a written rental agreement with Badi U. Zaman for the placement of coin-operated amusement machines in the Lakeview Country Store, a business owned by Zaman and located in Fayetteville. The agreement provided that Zaman would pay Midtown Vending 30 percent “of the total gross revenue” generated by the machines as rent for the machines, with the Zaman retaining 70 percent of the revenue. This contract was for a term of 24 months.

Ultra Group of Companies

On August 14, 2008, Ultra entered a written rental agreement with Merchant Investment Group for the placement of coin-operated amusement machines in a Citgo Food Mart/ Sunoco in Tucker. Under the terms of this agreement, Ultra was to receive 30 percent “of the total gross revenue”⁶ generated by the machines as rent for the machines, with Citgo/Sunoco retaining 70 percent of the revenue. The contract was for a term of ten years and therefore was in effect until August 14, 2018.

On May 4, 2011, Ultra entered into a written lease agreement with FNR/ENT, Inc. for the placement of coin-operated amusement machines in a Texaco station in East Point; On November 1, 2011, Ultra entered into a written lease agreement with East/West Convenience, Inc. for the placement of coin-operated amusement machines in a Chevron gas station and convenience store located in Conyers. That same day, Ultra also contracted with King Petro, Inc. for the placement of amusement machines in a Shell station in Stone Mountain. These agreements had identical revenue terms, and each provided that Ultra would receive 30 percent of the “net revenue”⁷ generated by the machines and that the location would retain the remaining 70 percent. The term of the rental agreement for the East Point Texaco was two years, while the contracts for both the Conyers Chevron and the Stone Mountain Shell had ten-year terms.

As of April 2013, Ultra had in place oral agreements for the placement of its machines at five different locations: Our Convenience Store in Atlanta; Stop'n'Save in Atlanta; the Shell gas station in Norcross; the Texaco gas station in Decatur; and Atlanta Food Mart in East Point. Ultra's agreement with Our Convenience Store had been in place nine years; its agreement with Stop'n'Save had been in place eight years and five months; its agreement with the Norcross Shell had been in place seven years and three months; its agreement with the Decatur Texaco had been in place for six years and 11 months; and its agreement with the Atlanta Food Mart had been in place for six years. There is no evidence in the record as to how the parties had agreed to split the revenue from the machine or machines placed at these locations.

The Statutory Scheme Enacted by HB 487

At the time each of the foregoing contracts was made, nothing in the law governing coin-operated amusement machines addressed how the revenue from the machines had to be divided. Rather, the parties were free to divide the revenue any way they chose. In 2013, however, the legislature passed House Bill 487 (“HB 487”), now codified as OCGA § 50–27–70 et seq. One of the legislature's stated purposes of this bill was to “support the need to educate Georgia's children through the HOPE scholarship program and pre-kindergarten funding authorized by Article I, Section II, Paragraph VIII of the [Georgia] Constitution.” OCGA § 50–27–70(a). To accomplish this goal, the legislature required the Georgia Lottery Corporation to acquire, no later than July 1, 2014, a Class B accounting terminal to which all Class B machines could be linked by a communications network. OCGA § 50–27–101(a). Additionally, the law requires all location owners hosting Class B machines to establish a bank account where all proceeds from these machines must be deposited, separate from any other funds belonging to the location owner. OCGA § 50–27–102(c). Beginning six months after the Lottery Corporation acquired the Class B accounting terminal and after “successful testing” thereof, location...