THI RD DI VI SI ON

BA RNES, P. J.

, BOGGS and BRA NCH, JJ.

N O T IC E : M otions for r e c ons i de r a tion m us t be

ph y sic a l ly r e ce iv ed i n our c le r k ’s offic e w ithin te n

da y s of the da te of de c is ion to be de e m ed tim e ly file d.

http://w w w .ga a ppe a ls .us /r ule s /

M ar ch 26, 2015



# I n th e Co u r t o f

A p p eals o f

G eo r g ia

A1 4 A2 13 8

. ALL STAR, INC., et a l

. v

. GEORGIA A TLANTA

AM USEM ENTS, LLC.

B R A N C H , J u d g e.

Al l St ar, In c., El i t e Am u s em en t

, In c., Id eal Am us em en t s

, In c., M i d t o wn

Ven di n g

, LLC, an d Ul tra Gro u p o f C o m p a n i es

, In c. (co ll ect i v el y “ ap p el l an t s ”),

ap p eal fro m an o rd er o f t h e Gwi n n et t Co u n t y Su p e ri o r Co u rt g ran ti n g s u m m ary

ju d g m en t ag ai n s t t h em an d i n fav o r o f Geo rg ia At l an t a A m u s em en t s

, LLC (“ GAA”),

o n t h e ap p el l an t s ’ cl ai m s fo r t o rt i o u s i n terferen ce wi t h co n t ract u al rel at i o n s

. At i s s u e

i n t h i s cas e i s O CGA § 5 0 -2 7 -7 0 et s eq

., wh ich is t h e m o s t recen t s tat u t o ry s ch em ereg u l at i n g t h e b o n a fi d e co i n -o p erat ed am u s em en t m ach i n e b u s i n es s i n t h is St at e. 1

Th e t ri al co u rt fo u n d th at t h i s l aw, wh i ch b ecam e effect i ve o n Ap ri l 1 0

, 20 1 3

, v o i d ed

cert ai n wri t t en co n t ract s an d /o r o ral ag reem en t s t h at fo ur of th e ap p el l an t s h ad wi th

t h ei r cu s t o m ers fo r t he p l acem en t o f c o i n -o p erat ed am u sem en t m ach i nes

. Th e t ri al

c o u r t r each ed t h i s co n cl u s i on ev en th o u g h t h e co n tract s at i s s u e p red at e t h e l aw’ s

en act m en t

. Bas ed o n t h i s h o l d i ng

, th e t ri al co u rt g ran t ed su m m ary ju dg m en t ag ai n s t

t h e ap p el l an t s o n t h ei r cl ai m s fo r t o rt i o us i n t erferen ce w i t h co n t ract u al rel at i o n s

. On

ap p eal fro m t h e s u m

m ary ju d g m en t o rd er, t h e a ppe llan t s co n t en d t hat OCGA § 5 0 -2 7

-

7 0 et seq

. s h ou l d n o t b e i n t erp ret ed s o as t o v oi d p reex i s t i n g c o n t ract s

. Fo r reas on s

ex p lai n ed m o re fu l ly b el o w, we ag ree. W e t h erefo re rev ers e t h e t ri al co u rt ’ s o rd er

g ran t i n g p art i al s u m

m ary ju d g m en t ag ai n st t h e ap pel l an t s

.

Th e rel ev an t fact s are l arg el y u n d i s pu t ed b u t wh ere an y d o ub t ex i s ted

, we h av e

co n st ru ed t h e reco rd i n fav or o f t h e a p p e l l an t s

, as t h e n o n -m o van t s

. See Th o mp so n

v. Lo vet t

, 3 2 8 Ga. Ap p

. 5 7 3 (7 6 0 SE2 d 2 4 6) (2 0 14 ) (o n a m ot i o n fo r s u m m a ry

1 Th e s t at u t e d efi n es “ b o na fi d e co i n op erat ed am u s em en t m ach i n es ” as “ ev ery

m ach i n e o f an y ki nd o r ch a r a c t e r u s e d b y t h e p u b li c t o p ro v id e am us em en t o r

en t ert ai n m en t wh os e o perat i o n req u i res t h e p ay m en t o f o r t he i n s ert i o n o f a co i n

, b i l l

,

o t h er m o n ey

, t ok en , t i ck et , card , o r s i m i l ar o b ject an d t h e res u l t o f wh o se op erat i o n

d ep en d s in wh o l e o r i n p art u po n t h e s k i ll o f th e p l ay er, wh et h er or no t i t affo rd s an

award t o a s u cces s fu l p lay er

. . . , an d w h i c h can b e l eg al l y sh i p p ed i n t ers t at e

acco rd i n g t o fed eral law.” OCGA § 5 0-2 7 -7 0 (b ) (2 ) (A).

2ju d g m en t

, we “ co ns t ru e t he ev i d en ce i n t h e li g h t m o s t fav o rab l e t o t h e n o n m o v an t ”)

( ci t at i o n o m it t ed ). Th e reco rd s h o w s t h at each o f t h e ap p el l an t s i s a co m p an y t h a t

o w n s co i n -o p erat ed am

u s em en t m ach i n es an d is i n t h e b u s i n es s o f l eas i n g t h o s e

m ach i n es t o t hi rd p art i es

. At i s s u e i n t h is cas e are “ Cl as s B” co i n -o perat ed am u s em en t

m ach i n es (“ Cl as s B m ach in es ”). 2 Pri o r t o Ap ri l 20 1 3

, al l o f t he ap p el l an t s o th er t h an

Id eal Am u sem en t s h ad w r i t t en ren t al co n t ract s an d / o r o ral ren tal ag reem en t s wi th

s p eci fi c b u s i n es s o wn ers (“ l o cat i o n o wn ers ”) fo r t h e p l acem en t o f o ne o r m o re Cl as s

B m a c h in es wi t h i n t hat b u si n es s

. 3 Each o f t h e wri t t en co n t ract s co n t ai n ed a cl au s e

2 Th e l aw d efi n es a Cl as s B m ach i n e as “ a b o n a fi d e co i n o p erat ed am u s em en t

m a c h i n e t h at al l o ws a s ucces s fu l p l ay er t o accru e p o i n t s o n t he m ach i n e an d c a r r y

o v e r p o i nt s wo n on o ne p l ay t o a su b s eq u en t p l ay o r p lay s

. . . an d [r] ewa r d s a

s u c c e s s f u l p l ay er i n co m

p li an ce wi t h t h e p ro v i s i o n s o f p arag rap h s (1 ) an d (2 ) o f

s u b s ect i o n (d ) o f Co d e Sect io n 1 6 -1 2 -3 5.” OCGA § 50 -2 7 -7 0 (b ) (4 ) (A). Th u s

, Cl as s

B m ach i n es m

u s t reward a p l ay er “ ex cl u s iv el y wi t h : (A) Fr ee rep l ay s ; (B)

M erch an d i se li m it ed to n o n cas h m erch an d is e, p ri zes

, t o y s

, g ift cert i f i c a t e s

, o r

n o v el t i es

, each o f wh i ch h as a wh o l es al e v al ue o f n ot m ore t h an $ 5 .0 0 recei v ed fo r

a s i n g l e p l ay o f t he g am e o r dev i ce; (C) Po i n t s

, t o k e n s

, v o u ch ers

, ti ck et s

, o r o t h er

ev i d en ce o f wi n ni n g s wh i ch m ay b e ex ch an g ed fo r [an y o f t h e fo reg o i n g ] reward s .”

OCGA § 1 6 -1 2 -3 5 (d ) (1 ). A d d i t i o n al l y

, p l ay ers o f Cl as s B m ach i n es “ m ay

accu m ul at e wi n n in gs fo r t h e[i r] s u cces s fu l p l ay

. . . t h ro u g h t ok en s

, v o u ch ers

, p o i nt s

,

o r t i ck et s [an d ]

. . . red eem accu m u l at ed to k en s

, vo u ch ers

, o r t i c k e t s fo r n o n cas h

m erch an d i s e, p ri zes

, to y s

, g i ft cert i fi cat es

, o r n o v el t i es s o l o n g as t h e am o u n t o f

t o k en s

, v o u ch ers

, o r t ick et s recei v ed d o es n o t ex ceed $ 5 .0 0 fo r a si ng l e p l ay .” OCGA

§ 1 6-1 2-3 5 (d ) (2 ).

3 Ap pel l an t Id eal A m

u sem en t s h ad t wo co n t ract s fo r t he p l acem en t o f Cl as s B

M ach i n es

. Each o f t h es e co nt ract s

, h o wev er, was ex ecu t ed o n o r aft er Ap ri l 1 0

, 2 0 1 3,

an d n ei t her al l eg ed ly v i o l at ed t h e s t at u t e at i s s u e. Acco rd i ng l y

, th es e co n t ract s were

n o t su b ject t o th e t ri al co u rt ’ s s u m m ary ju d g m en t o rd er an d a r e n o t at i s s ue o n t h i s

ap p eal

.

3t h at s et f

o r t h ho w t he rev en u e g en erat ed b y t he l eas ed m ach in es wo u l d b e d i v i d ed

b et ween t h e co m

p an y t h at o w n ed t h e m ach i n es (t h e “ m ach i n e o w n e r ” ) an d t h e

l o c a t i o n o wn er. Si m il arl y

, u nd er each o f t h e o ral ag reem en t s i n p lace, t h e l o cat i o n

o wn er h ad ag reed t o pay t h e m ach i n e own er a c e r t ai n percen t ag e o f th e rev en u e

g e n e r a t ed b y th e m ach i n e as ren t fo r t h e m ach i n e. Th e sp eci fi c ag reem en t s at i s s u e

are as fo l l o ws :

Al l S t a r

On No v em

b er 1

, 2 0 0 0

, Al l St ar en t ered i n t o a wri tt e n r e n t a l ag reem en t wi th

Fas t Fred d y ’ s, a g as s tat i o n an d co n v en i en ce s t o re l o cat ed i n Li l b urn

. Un d er th e t erm s

o f t h e t hi s ag reem en t

, Fas t Fred d y ’ s ag reed t o p ay Al l St ar 4 0 p ercen t “ o f t h e t o t al

g ro s s rev en ue” 4 g en erat ed b y t h e m ach i n e s a s ren t fo r t h e m ach i n es

, wi t h Fas t

Fred d y ’s ret ai ni ng 60 % o f th e rev en u e. Th e co n t ract was fo r a t erm o f s ev en y ears

an d i t co n t ai n ed an au t o m at i c ren ewal cl au se. Th at cl au se p ro v i d ed t h at t h e co n t ract

wo u l d au t o m at i cal l y ren e w fo r ad d i t i on al term s o f s ev en y ears un l es s o n e p art y

n o t i fi ed t h e o t h er, at l eas t 9 0 d ay s in ad van ce o f t h e ren ewal d at e, t h at i t was el ect i n g

4 Eac h o f A l l St ar’ s wri t t en co n t ract s p ro v id es t h at g ro s s rev en u e wi l l b e

cal cu l at ed aft er d ed u ct i o n s fo r an y am o un t s ex pen d ed by t h e l o c a ti o n o wn er o n

cert ai n i t em s , i n cl u di n g s al es t ax , o th er fees req u i red b y l aw t o b e p ai d t o t h e St at e,

an d refu n d s

.

4n o t t o ren ew. Th ere i s n o ev i d en ce i n t h e reco rd t h at ei t h er p a r t y ex erci s ed i t s ri g ht

o f n o n -ren ewal ; t h u s

, th e co n t ract ren ewed o n No vem b er 1 , 2 0 0 7

, fo r an ad d i t i o n al

s ev en -y ear t erm

.

On M arch 2 8

, 2 0 11

, Al l St ar en t ered a wri t t en ren t al ag reem en t w it h USA Fo o d

M art

, a g as s t at i on an d co n ven i en ce s t o re l o cat ed i n Carro l l t o n

. U n d er th e t erm s o f

t h i s ag reem en t , USA Fo o d M art ag reed t o p ay Al l St ar 7 0 p ercen t o f t h e t o t al g ro ss

rev en u e gen erat ed b y t h e m ach i n es

, wi t h USA Fo o d M art ret ai n i n g t h e rem ai n i n g 3 0

p ercen t . Th e co n t ract was fo r a t erm o f t h ree y ears

.

As o f A p ri l 20 1 3

, A l l St ar h ad an o ral ag reem en t wi t h Ti en d a Veracru z, a

Carro l l t on g ro cery

, an d t h e ag reem en t h ad b een i n p lace fo r ap p ro x im at el y o n e y ear.

Th ere i s n o ev i d en ce i n t h e re c o r d a s t o h o w t h e p art ies had ag reed t o s p l i t t h e

rev en u e fro m

t h e m ach i ne o r m ach i n es p l aced at t h i s l o cat i o n

.

El i t e Amu semen t

As o f Ap ri l 2 0 1 3

, El i t e h ad i n p lace o ral ag reem en t s fo r t he p l acem en t o f i t s

m ach i n es at fi v e d i fferen t l o cat i o n s : Di s co un t Fo o d m art in At l an t a; t h e BP g as s t at i o n

i n St o ck b ri d g e; Eas t Si d e To b acco i n Co n y ers ; Ol d Nat io n al Ho o k ah i n Ri v erd al e;

an d To b acco M o re i n At l an t a. El i t e’ s ag reem en t wi t h Di sco u n t Fo o d m art h ad b een

i n p l ace s ev en y ears ; i t s ag ree m e n t w i t h t h e St o ck b ri d g e BP h ad b een i n pl ace s ix

5y ears ; i t s ag reem en t wi t h Ol d Nat i on al Ho o k ah h ad b een i n p lace s ix m o n t h s ; an d i t s

ag reem en t s wi th Eas t Si d e To b acco an d To b acco Mo re h ad each b een i n p l ace fo r

t h ree m o n t hs

. Th ere i s n o ev id en ce i n t h e reco rd as t o ho w t he part i es h ad ag reed to

s p l i t t h e rev en u e fro m

t h e m ach i n e o r m ach i n es p laced at t h es e l o cat i on s

.

Mi d t o wn Ven d i n g

On Au g u s t 2

, 2 0 1 0

, M i d t o wn Ven d i n g en t ered i n t o t wo s ep arat e w ri t t en ren t al

ag reem en t s wi t h K ah l i d Am i n fo r t h e pl acem en t o f co i n -o perat ed am u s em en t

m ach i n es at t wo b u s i n es s es o wn ed b y Am in i n Fay et t ev i l l e: Paw P a w ’s S h el l an d

Co l em an Gro cery

. Bo t h o f t h e ag reem en t s p ro vi d ed t h at t h e b u s i n es s i n q u es t i o n

wo u l d p ay M i dt own Ven di ng 3 0 p ercen t “ o f t h e to t al g ro s s rev en u e” 5 g en erat ed by

t h e m ach i n es as ren t fo r th e m ach i n es

, wi t h t h e b u s i n es s es ret ai n i n g 7 0 percen t o f t h e

rev en u e. Each co n t ract was fo r a t erm o f 3 6 m o n t h s

.

On J u ly 1 8

, 2 0 11 , M i d t o wn Ven d in g en t ered a wri t ten ren t al ag reem en t wi th

B ad i U

. Zam an fo r t h e p l acem en t o f co i n -o p erat ed am u s em en t m ach i ne s i n t h e

Lak ev i ew Co u n try St ore, a b u s in es s o wn ed b y Zam an an d l o cat ed i n Fay et tev i l l e. Th e

5 E a c h of M i dtow

n V e n d i n g ’ s wri t t en co n t ract s p ro v id es t h at g ro s s rev en u e w ill

b e cal cu l at ed aft er ded u ct i o n s fo r an y am o u nt s ex p en ded b y t h e l o c a t i o n o wn er o n

cert ai n i t em s , i n cl u di n g s al es t ax , o th er fees req u i red b y l aw t o b e p ai d t o t h e St at e,

an d refu n d s

.

6ag reem en t p ro vi d ed t hat Zam an wo u l d p ay M i d t o wn Ven d i n g 3 0 p ercen t “ o f t h e t o t al

g ro s s rev en u e” gen erat ed b y t h e m ach i n es as ren t fo r t h e m ach i n es

, wi t h t h e Zam an

ret ai n i n g 7 0 p ercen t o f t h e rev en u e. Th is co n t ract was fo r a t erm o f 2 4 m o n t h s

.

Ul t r a Gr o u

p o f Co mp a n i es

On Au gu s t 1 4

, 2 0 0 8, Ul tra en t ered a wri t t en ren t al ag reem en t wi th M erch an t

In v es t m en t Gro u p fo r t h e p l acem en t o f co i n -o p erat ed am u s em en t m ach i n es i n a Ci t g o

Fo o d M art / Su no co i n Tu ck er. Un d er t h e t erm s of t h i s ag reem en t

, U l t ra was t o recei v e

3 0 p ercen t “ o f t h e to t al g ro s s rev en ue” 6 g en erat ed b y t h e m ach i n es as ren t fo r t h e

m ach i n es

, wi t h Ci t g o / Su n o co ret ai n i n g 7 0 p ercen t o f th e rev en u e. Th e co n t ract was

fo r a t erm o f t en y ears an d t h erefo re was i n effect u n t i l Au g u s t 1 4

, 2 0 1 8

.

On M ay 4

, 2 0 1 1

, Ul t ra en t ered i n t o a wri tt en l eas e ag reem en t w i t h FNR/ ENT,

In c. fo r t he p l acem en t o f co i n -o p erat ed am u s em en t m ach i nes i n a Tex aco s t at i o n i n

Eas t Po i n t ; On No v em

b er 1

, 2 0 1 1

, Ul t ra en t ered i n t o a wri t t en leas e ag reem en t wi th

E a st/W e st C onve nie nc e, In c. fo r t h e p l acem en t o f co in -o p erat ed am u s em e nt m a c hine s

i n a Ch ev ro n g as st at io n an d co n v en i en ce st ore l o cat ed i n Co n y ers

. T h at s am e d ay

,

Ul t ra al s o co n t ract ed w i t h Ki n g Pet ro

, In c. fo r t h e p l acem en t o f am u s em en t m ach i n es

6 Th e co n t ract p ro v i d es t h at g ro s s rev en u e wi l l b e cal cu lat ed aft er d ed u ct i on s

fo r an y am ou n t s ex p en d ed b y t h e l o cat io n o wn er on cert ai n i t em s

, i n cl u d i n g sal es t ax

,

o t h er fees req u i red b y

l aw t o b e p ai d t o t h e St at e, an d refu n ds

.

7i n a Sh el l s t at i on in St o n e M o u n t ai n

. Th es e ag reem en t s h ad i d en t i cal rev en u e t erm s

,

an d each p ro v i d ed t h at Ul t ra wo u l d recei v e 3 0 p ercen t o f t he “ n et rev en u e” 7 g en erat ed

b y t h e m ach i n es an d t hat th e l o cat i o n wo ul d ret ai n t he rem ai n i ng 70 p ercen t. Th e t erm

o f t h e ren t al ag reem en t fo r th e Eas t Po i n t Tex aco was t wo y ears

, wh i l e th e co n t ract s

fo r b o t h t h e Co ny ers Ch ev ro n an d t h e St o n e M ou n t ai n Sh el l h ad t en -y ear t erm s

.

As o f Ap ri l 2 0 1 3

, Ul tra h ad i n pl ace o ral ag reem en t s fo r t h e p l acem en t o f i t s

m ach i n es at fi v e d ifferen t l o cat i o n s : Ou r Co n ven i en ce St ore in At l an ta; St o p ’ n ’ Sav e

i n A t l an t a; t h e Sh el l gas s t at i on i n No rcro s s ; th e Tex aco g as s tat i on i n Decat u r; an d

At l an t a Fo o d M art i n Eas t Po i n t

. Ul tra’ s ag reem en t wi t h O u r Co n v en i en ce St o re h ad

b een i n p l ace n in e y ears ; i t s ag reem en t wi t h St o p ’ n ’ Sav e h ad b een i n p l ace ei g h t y ears

an d fi ve m o n t h s ; i t s ag reem en t w i t h t h e No rcro s s Sh el l h ad b een i n p l ace s ev en y ears

an d t h ree m o n t h s ; an d i t s ag reem en t wi t h t h e Decat u r Tex aco h ad b een i n p l ace fo r

s i x y ears an d 1 1 m on t h s ; an d i t s ag reem en t wi th t h e At l an t a Fo o d M art h ad b een i n

p l ace fo r s i x y ears

. Th ere i s n o ev i d en ce i n t h e reco rd as t o h o w t he p art i es h ad ag reed

t o s p l i t t h e rev en u e fro m

t h e m ach i n e o r m ach i n es p l aced at t h es e l o cat io n s.

7 Each o f t h es e ag reem en t s d efi ned n et rev en u e as th e “ g r o s s rev en ue”

g en erat ed b y t h e m ach i n es “ m i n u s t he do l l a r a m o u n t o f t h e n on cas h red em p t i on s

award ed .”

8Th e S t a t u t o ry S ch eme En a ct ed

b y HB 4 8 7

At t h e t i m e e a c h o f t h e fo reg o i n g co n t ract s was m ad e, no t hi n g i n t h e l aw

g o v ern i n g co i n -o perat ed am u s em en t m ach i n es ad d res s ed ho w t h e rev en u e fro m t h e

m ach i n es h ad t o b e d i vi de d

. Rat h er, t h e p art i es were free t o d i v i d e th e rev en u e an y

way t h ey ch o s e. In 2 0 1 3

, h o wev er, t h e l eg i s l at u re p as s ed H o u s e Bi l l 4 87 (“ HB 4 8 7 ”),

n o w co d i fi ed as OCGA § 50 -2 7 -7 0 et s eq

. On e o f t h e leg i s l at u re’ s s t at ed p u rp o s es o f

t h i s b i l l was t o “ s u p p o rt t h e n eed t o ed u cat e Geo rg ia’ s ch i l d ren t h ro ug h t h e HOPE

s ch o lars h i p p ro g ram an d pre-k i n d erg art en fu n d i n g a u t h o ri zed b y A rt i cl e I, Sect i o n

II, Parag rap h VIII o f th e [G e o r g i a] Co n st i tu t i o n .” OCGA § 50 -2 7 -7 0 (a). To

acco m pl i s h t h i s g o al

, t he l e g i s l a t u re req u i red t h e Geo rg i a Lo t tery Co rp o rat i o n to

acq u ire, no l at er t h an J ul y 1

, 2 0 1 4

, a Cl as s B acco u n t i n g t erm i n al t o wh ich al l Cl as s

B m ach i n es co u ld b e l i n k ed b y a co m m un i cat i o n s net wo rk

. O CGA § 5 0 -2 7 -1 0 1 (a).

Ad d i t i o n al l y

, th e l aw req u i res al l l o cat i o n o wn ers h o s t i n g Cl a s s B m ach i n es to

es t ab l i s h a b an k acco u n t wh ere al l p ro ceed s fro m t h es e m ach in es m u st b e d ep o s i t ed

,

s ep arat e fro m an y o t her fu n d s b el o n g i n g t o t h e l ocat i o n own er. OCGA § 5 0 -2 7 -1 0 2

(c). Beg i n n i n g s i x m o n t h s a ft er t h e L o t tery Co rp o rat i o n acq ui red t h e Cl as s B

acco u n t in g t erm i n al an d aft er “ s u cces s fu l t es t in g ” t h ereo f, l o cat io n o w n e r s are

req u i red t o t ran s m i t al l fu n d s d ep o s i t ed i n th ei r res p ect iv e Cl as s B b an k acco u n t s to

9t h e Lo t t er y C o rp o rat i o n

. Id

. Fo r t h e fi rs t fi s cal y ear fo l l o w i n g t h e “ s u cces s fu l

i m p l em en t at io n an d cert i fi cat i o n o f t h e Cl as s B acco u n t i n g t erm i n al ” t he Lo tt ery

co rp o rat i o n i s t o ret ai n 5 p ercen t o f t h e n et recei p t s recei v ed fro m t he l o cat i o n o wn ers

o f Cl as s B m ach i n es an d i s req u i red t o p ro vi d e 4 7 .5 p ercen t o f t h o s e n et recei p t s t o

t h e l o cat i o n o w n er an d 4 7 .5 percen t t o t h e m ach in e o wn er. OCGA § 5 0 -2 7 -1 0 2 (a).

In each fi s cal y ear fo l l o wi n g th e fi rs t y ear, t h e Lo tt ery Co rp o rat i on ’ s s h are of t h e n et

recei p t s “ s hal l i n creas e 1 p ercen t

, t ak en ev en l y fro m t he l o cat i o n o wn er . . . an d t h e

[m ach in e o wn er]

, t o a m ax i m u m o f 1 0 p ercen t .” OCGA § 50 -2 7 -1 0 2 (b ). Th u s

, by

ap p ro x i m at e l y J an uary 1

, 2 0 2 0

, t en p ercen t o f t h e n et pro ceed s fro m al l Cl as s B

m ach i n es wi ll g o t o t h e Lo t t ery Co rp o rat i o n

, wi t h th e l o cat i o n o wn er an d t h e m ach i n e

o wn er each recei v i n g 4 5 p ercen t o f t h e rem ai n i n g p ro ceed s

.

Th e s tat u t e al s o d ecl ared t h at fro m t h e t i m e o f HB 48 7 ’ s en act m e n t u n t i l t h e

i m p l em en t at io n o f t h e Cl as s B acco u n t i n g t erm i n al

, i t wo u l d co ns t i t u te an u n fai r

b u s i n es s p ract i ce fo r ei t her t h e m ach i n e own er o r t he lo cat io n o wn er “ t o ret ai n m o re

t h an 5 0 percen t o f t h e p ro ceed s g en erat ed b y an y Cl as s B m ach i n e.

. . .” OCGA § 5 0

-

2 7 -8 7.1 (1 ). Th e l aw al s o m ak es i t an u n fai r b u s i n es s p ract i ce fo r a l o cat i o n o wn er to

“ as k[ ]

, d e m a n d [ ], o r accep t [ ] ,” or fo r a m ach i n e o wn er t o p ro vi d e, “ an y t h i n g o f

v al u e, i ncl u d i n g b u t n o t l i m i t ed t o a l o an o r fi n an ci n g arran g em en t

, g i ft

, p ro cu rem en t

10fee, l eas e p ay m en t s

, rev en u e s h ari n g

, o r p ay m en t o f l i cen s e fees o r perm it fees fro m

a [m ach in e o wn er]

, as an i n cen t i v e, i n d u cem en t

, o r an y o t her co ns i d erat i o n t o l o cat e

b o n a fi de co i n op erat ed am u s em en t m ach i n es in t h at es t ab li s hm en t .” OCGA § 5 0 -2 7

-

8 7 .1 (3 ), (4 ). En g ag i n g in an y o f t h es e u n fai r bu s in es s p ract i ce s ub ject s a l o ca t i o n

o wn er o r a m ach i n e o wn er t o t h e rev o cat i on “ o f h i s o r h er s t at e b u s i n es s l i cen s e. . .

fo r a peri o d o f o n e t o fi ve y ears p er in ci d en t ” an d t o a fi n e o f “ u p t o $ 5 0 ,0 0 0 .0 0 p er

i n ci d en t .” OCGA § 5 0 -2 7 -8 7 .1 (3 ), (4 ).

Fi n al l y

, t h e n ew l aw al s o req ui res t h at al l ag reem en t s b et w een m ach i n e o wn ers

an d l o cat i o n o wn ers b e i n wr i t i n g

, O C G A § 5 0 -2 7 -8 7 (b ) (1 ), an d t h at t h es e

ag reem en t s b e o n fi l e i n b o t h t h e m ach i n e own er’ s an d t h e l o cat i o n o wn er’ s p l ace o f

b u s i n es s

. OCGA § 5 0-2 7 -8 7 (b ) (2 ). Ad d i t i o n al ly

, each su ch ag reem en t “ en t ered i n to

aft er Ap ri l 1 0, 20 1 3

, s h al l b e ex cl u s iv e a s b e t w e en on e b o n a fi d e co i n o p erat ed

am us em en t m ach in e [o wn er] an d o ne l ocat i o n o wn er o r l o cat i o n o p erat o r p er

l o cat io n .” OCGA § 5 0 -2 7 -8 7 (b ) (3 ).

Ap p el l a n t s’ At temp t

s t o Co mp l

y W i th HB 4 8 7

Fo l l owi n g t h e en act m en t o f H B 48 7

, Al l S t a r

, M i d t o wn Ven d in g

, an d Ul t ra

each ap p ro ach ed t h e l o cat i o n o wn ers wi t h w h o m t h ey h ad wri t t en ag r e e m e n t s an d

ex p lai n ed t o t h e l ocat i o n o wn ers t h at t h e law n ow g o v ern ed t h e rev en u e s p l i t an d t h at

11an y v i ol at i o n o f t h e l aw co u l d res u l t i n a s u b s t an t i al p en al t y

. Each o f t h es e

co m p an i es

, t h erefo re, as k ed t h ei r cl i en t s wi t h wh o m th ey h ad wri t ten ag reem en t s to

ex ecu t e a n ew ag reem en t (o r an am en d m en t t o t h e ex i s ti ng ag reem en t ), wh i ch wo u ld

refl ect t h e s t at u t o ri l y -m an d at ed rev en u e s p l i t

. Ad d i t i o n al l y

, Al l St ar, El i te, an d Ul t ra

each ap p ro ach ed t h e l o cat io n o w n ers wi t h wh o m t hey h ad o ral ag reem en t s an d as k ed

t h o s e o wn ers t o en t er a wri t t en l eas e ag reem en t wh i ch p ro vi d ed fo r a 5 0 / 5 0 rev en u e

s p l i t

. Each o f t h es e l o cat i o n o wn ers refu s ed t o ex ecu t e a n ew or am en d ed ag reem en t

,

al l eg ed l y b ecau s e t h ey h ad b een o ffered m o re l u crat i v e t erm s b y GAA. 8 Al l St ar,

E l i t e, M i dt o w n

, an d Ul tra each refu s ed t o m at ch t h es e t erm s b ecau s e t h ey b el i e v e d

t h em t o b e i l l eg al

. Des p it e t h e ex is t en ce o f t h e ag reem en t s t h en i n p l ace, t he cl i en t s

o f t h es e ap p el l an t s rem o v ed ap p el l an t s ’ m ach i n es fro m t h e i r res pect i v e b u s i n es s es

an d rep l aced t ho s e m ach i nes wi t h o n es o wn ed b y GAA.

8 Rep res en tat i v es o f Al l St ar, El i t e, an d Mi d t own each av erred t h at t h ei r

res p ect i ve cl i en t s i n fo rm ed t h em t h at GAA was o fferi n g t h e cl i en t 7 0 p ercen t o f t h e

m ach i n e rev en u e a n d a d d i t io n al i n cen t i v es t o si g n l eas e ag reem en t s wi t h GAA. A

rep res en t at i v e o f Ul t ra av erred t h at Ul t ra’ s cl i en ts h ad i n fo rm ed h im t hat GAA was

o fferi n g each o f t h e cl i en t s m ore t han 5 0 p ercen t o f t he m ach i n e rev en u e i f t h e cl i en t s

wo u l d l eas e t h ei r m ach i n es fro m GAA.

12Th e Cu r r en t La ws u i t

Al l St ar, El i t e, Id ea l, M i dt o wn

, an d Ul t ra fi l ed t h e cu rren t l aws u i t ag ai n s t GAA.

Bas ed o n t h e fo reg o i n g fact s

, t h e ap p el l an ts as s ert ed cl ai m s fo r t o rt i o u s in t erferen ce

wi t h co n t ract u al rel at i o ns an d t o rt i o u s i nt er f eren ce wi t h b u si n es s rel at i o n s

.

Ad d i t i o n al l y

, Mi d tow

n Ven d in g as s ert ed a cl ai m fo r des t ru ct i o n o f p ers on al p ro p ert y

,

b as ed o n t h e dam ag e d o n e t o o n e o r m o re o f i t s m ach i n es

. 9 Th e ap p el l an t s s o u g h t to

reco v er act u al an d p u n i t iv e d am ag es as wel l as at t o rn ey fees an d ex p en s es

.

GAA fi l ed a m o t i o n fo r p art i al s u m m ary ju dg m en t o n th e ap pel l an t s ’ cl ai m s fo r

t o rt i o u s i n t erferen ce wi t h co n t r a c t u al rel at i o n s

, arg u i ng t h at b ecau se each o f t h e

wri t ten a n d o ral ag reem en t s at i s s u e pro v i d ed fo r a rev en u e s p l it ot h er t h an 5 0 / 5 0,

t h o s e co nt ract s b e c am e i l l eg al o n Ap ri l 1 0

, 2 01 3

, th e d ay t h at HB 4 8 7 b ecam e

effect i v e. 1 0 Th u s

, GAA co n ten d ed t h at t he co n t ract s w ere v o i d an d u n en fo rceab l e as

9 Th e co m p l ai nt al so o ri g i n al l y n am ed GAA’ s own er, Nas i m ad i n H. Vi ran i

, as

a d efen d an t

, an d it co n t ai ned a co u n t s eek in g t o pi erce t h e co rp o rat e v ei l an d h o ld

Vi ran i p ers o n al l y l i ab l e. Th e ap p el l an t s al s o as s ert ed a cl ai m fo r b reach o f p u b l i c

d u t y

. Th e co u n t s eek i n g t o p i erce t h e co rp o rat e v ei l was d i s m i s s ed v ol u n t ari l y an d

wi t h o u t p reju d ice T h e co u nt as s ert i n g a cl ai m fo r breach o f p u b l i c d u t y was d i s m i s s ed

wi t h o u t preju d i ce vi a a co n s en t ord er. I n t h at sam e co n s en t o rd er, Vi ran i was

d i s m i s s ed a a d efen dan t

.

1 0 GAA al so s o u g h t s u m m ary ju d g m en t as t o t h e o ral ag reem en t s o n an

ad d it i o n al g ro u n d

. Sp eci fi cal l y

, GAA arg u ed th at b ecau s e HB 48 7 req u i red al l ren t al

ag reem en t s fo r Cl as s B m ach i n es t o b e i n wri t i n g

, t h e o ral ag reem en t s becam e v o id

o n t h e d ay

HB 4 8 7 wen t i n t o effect

.

13a m at t er o f l aw an d co u l d n o t s erv e as t h e bas i s o f a t o rt i o u s i n t erferen ce wi th

co n tract s cl ai m

. Th e t ri al co u rt g ra n t e d t h at m o t i o n

, fi n d in g t h at “ [a] n y ag reem en t s

[t hat ] d o no t p ro v i d e fo r a 5 0 / 5 0 [rev en u e] s p l i t ar e

. . . i l l e g al

, v o i d

, an d

u n en fo rceab l e” an d t h at “ [t ] h e Co u rt can no t refo rm t h e co n t ract s t o co m p o rt wi t h t h e

l aw.” Th us

, t h e t r i a l c o u rt co n cl u d ed t h at “ an y cl ai m fo r t o rt i o u s i n terferen ce wi th

co n tract s” as to th es e ag reem en t s fai l ed as a m at t er o f l aw. Th e ap p el l an t s n o w ap p eal

fro m t h i s o rd er.

As ap p el l an t s co n ced e i n t h ei r r e p l y b ri ef, t h ey h av e n o t ap peal ed t h e t ri al

co u rt ’ s ru l i n g as t o t he o ral ag reem en t s at i s su e i n t h i s cas e

. T h u s

, t h e co nt ro l l i n g

q u es ti o n i n t h i s ap p eal i s w h et h er HB 4 8 7 ren d ered t h e wri t t en co n t ract s at i s s u e v o i d.

In an al y zi n g t h i s q u es t i o n

, w e b eg in wi t h t h e fact t h at t h e co nt ract cl au s es of b o t h t h e

Geo rg i a an d t h e U n it ed St at es Co n s t i t u t i o n s fo rb i d t h e l eg i s l at u re fro m en act i n g “ an y

l aw i m p ai ri n g t h e o bl i g at i o n o f co n t ract s .” U.S. Co n s t

. A rt

. I, Sec. 1 0

, cl

. 1

. See al s o

Ga. Co n s t

. A rt

. I, Sec. I, Par. X (1 9 8 3 ). A l t ho u gh t h e Un i ted St at es Su p rem e Co u rt

h as h el d t h at t h i s p ro h i b i t i o n ap p l i es o n ly t o l aws wh i ch s u b s t a n t i al l y i m p ai r

co n tract s, Gen

. Mo to rs Co r p. v. Ro mei n

, 5 03 U. S. 18 1

, 1 8 6 -1 8 7 (II) (1 1 2 SCt 1 1 0 5,

1 1 7 LE2 d 3 2 8) (1 9 9 2); En er g y Res er ves Gr o u

p v. Ka n sa s Po wer

& Li g h t C o

., 4 5 9

U. S. 4 0 0

, 4 1 1 (II) (A) (1 0 3 SCt 6 9 7

, 7 4 LEd 2 d 5 6 9 ) (1 9 8 3 ), t he to t al d es t ru ct i o n o f

14a co nt ract m eet s t h i s req u i rem en t

. Acco rd i ng l y

, i f, as t h e t ri al co u rt fo u nd

, t h e l aw d id

d es t ro y th es e ag reem en t s

, we wo u l d b e ob l i g at ed t o rem an d t hi s cas e t o t he t ri al co u rt

fo r co ns i d erat io n o f wh et h er t h e l aw, as ap p l i ed t o p r e

- e x i st i n g co n t ract s wi t h a

rev en u e s p l i t o f ot h er t h an 50 / 5 0

, v i o l at es th e co n t ract s cl au s es o f t h e Co n st i t u t i on s

o f b o t h Geo rg i a an d t h e Un i t ed St at es

. 1 1 Al t ern at iv el y

, i f HB 48 7 d i d n o t v o i d t h e

co n tract s, t h en t h e s u m

m ary ju d g m en t o rd er m

u s t b e rev ers ed

.

W e s t art ou r an al y s i s wi t h t h e w el l -es t ab l i s h ed leg al pr i n c i p l e t h at t h e St at e

m ay ex erci s e i t s p o l i ce p o wers “ t o p ro t ect t h e li v es

, h eal th

, m o ral s

, co m fo rt

, an d

g en eral w el fare o f t h e p ub l i c.” Mo o r e v. Ga

. Pu b

. Svc. Co mm.

, 2 4 2 Ga. 1 8 2

, 1 8 3 (1 )

(2 4 9 SE2 d 5 4 9 ) (1 9 7 8 ) (p u n ct u at i o n o m i t t ed ). An d i t is “ accep t ed as a co m m o n p l ace

t h at t h e Co n t ract Cl au s e do es n ot o perat e t o o b li t erat e t h e p o l i ce p ower o f t h e St at es .”

Al l i ed St r u ct u r a l S teel Co

. v. Sp a n n a u s

, 4 3 8 U. S. 2 3 4

, 2 4 1 (II) (A) (9 8 SCt 2 7 1 6

, 5 7

LE2 d 7 2 7) (1 9 7 8 ). Th u s t h e St at e m ay

, i n th e ex erci s e o f i t s p o l i ce p o wers

, en act

1 1 GAA arg ues t h at ap p el l a n t s h av e wai v ed an y cl ai m t hat HB 4 8 7 i s

u n co ns t it u t i o n al b ecau s e t h ey fai l ed t o rai s e t h at cl ai m i n t h e co u rt bel o w i n res p o n s e

t o GAA’ s m o t i o n fo r p art i al s um m ary ju d g m en t. Th e ap p e l l a n t s

, h o wev er, are n ot

ch al l en g i n g t h e co ns t i t u ti on al i t y o f HB 4 8 7

. Rat h er, t h ey are as s ert i n g t h at t h e t ri al

co u rt erred in ap p l y i n g t h e s t at u te t o t he co n t ract s at i s s u e so as t o d es tr o y t h e m

, b ecau s e s u ch an i n t erp ret at i o n wo u l d ren d er HB 4 87 u n co n s t it u ti o n al as to

p reex i s t in g co n t ract s p ro v i d i n g fo r a Cl as s B m ach i n e rev en u e s pl i t o f o t h e r t h an

5 0 / 5 0

. In o t h er wo rd s, ap p el l an t s are arg u i n g t h at t h e tri al co urt ’s o r d e r creat ed a

q u es ti o n as t o t h e co n s t i t ut io n al i t y o f HB 4 8 7

.

15reg u l at i o n s t hat p lace reas o n ab l e res t rai n t s o n i n d i v i d u al s ’ freed o m t o co n tract

. See

En er g y Res er ves Gr o u

p

, 4 5 9 U. S. at 4 1 0 (II) (A) (“ [a] l t h o u g h t h e l an g u ag e o f t h e

Co n t ract Cl au s e i s faci al l y ab s o l u t e, i t s pro h i b i t io n m u s t b e acco m

m od at ed t o t h e

i n h eren t p o l ice p o wer of t h e S t a t e t o s afeg u ard t h e vi t al i n t eres t s of i t s p eo p l e”)

(ci t at i o n an d p u n ct u at i o n o m i t t ed ); Mo o r e

, 24 2 Ga. at 18 3 (1 ) (t h e St at e m ay ex erci s e

i t s p o l i ce p o wers ev en “ t h o u g h co n tract s p rev io us l y en t ered i n t o b et ween i n d i v i d u al s

m ay t h ereb y b e affect ed ”) (p u nct u at i o n o m i t t ed ).

As t h e U n it ed St at es Su p rem e Co urt h as reco g n i zed

, h o w ev er, “ p r i v a t e

co n tract s are n ot s u b

ject t o u nl i m i t ed m o di fi cat i o n u nd er t h e p o l i ce p o wer.” Un i t ed

S t a t es Tr u s t Co

. o

f New Y o r k v

. N e w J e r s ey

, 4 3 1 U

. S. 1

, 2 2 (IV) (9 7 SCt 1 5 0 5

, 5 2

LE2 d 9 2 ) (1 9 77 ). A cco rd i n g l y

, a n y l a ws t h at affect co n tract u al ri gh t s m u s t b e in

fu rt her a n c e o f a l eg i t im at e p u b l i c p u rp os e, as t h is “ gu aran t ees th at t he St at e i s

e x erci s i n g i t s p o l i ce p o wer, rat h er t h an p ro vi d i n g a b en efi t t o s p eci al i n t eres t s .”

En er g y Res er ves Gr o u

p

, 4 5 9 U.S. at 4 12 (II) (A) (fo o t n o t e o m i tt ed ). Pro v i d ed t h at t h e

g o v ern m en t has act ed i n fu rt h eran ce o f a l eg it i m at e p u b li c i n teres t

, p art i es t o p ri v at e

co n tract s wi l l b e req ui red t o ad ju s t t h ei r co n t ract ual “ ri g h t s an d res p o n s i bi l i t i es ” to

acco m m o d at e t h e l aw, s o l o ng as t h e req u ired ad ju s tm en t i s a reas o n ab l e m e an s o f

fu rt heri n g t h e p u b l i c p u rp o s e at is s u e. Id

. (ci t at i o n an d p un ct u at io n o m i t t ed ).

16M o reo v er, p art i es wh o co n t ract wi t h res p ect t o a reg u l at ed i n d u s t ry or en t erp ri s e en t er

t h o s e co n t ract s s u b

ject t o fu rt h er, reas o n ab l e reg ul at i o n ; wh en th e s u b ject o f t h e

co n tract i s reg u l at ed

, t h i s f act co n t ro l s

, t o s om e ex ten t

, t h e p art i es ’ reas o n ab l e

e xpe c ta tions unde r the c ontr a c t

. See Keys t o ne Bi t u m in o u s Co a l As s n

. v. DeBen ed i c tis

,

4 8 0 U. S. 4 7 0

, 5 0 3 -5 0 4 (IV) (1 0 7 SCt 1 2 3 2

, 9 4 LE2 d 4 7 2 ) (1 9 8 7 ); E ner g y Res er ves

Gr o up

, 45 9 U. S. at 4 0 8 -4 0 9 (I) (D); Un io n Dr y Go o d s Co

. v. Ga

. Pu b

. S

vc. Co rp

.,

1 4 2 Ga. 8 4 1 (8 3 SE 9 4 6 ) (1 9 1 4 ), aff’ d

, Un i o n Dr y Go o d s Co

. v. Ga

. Pu b

. S

vc. Co rp

. ,

2 4 8 U. S. 3 7 2 (3 9 SCt 11 7

, 6 3 LE 3 0 9 ) (1 9 1 9 ). In es s en ce, s u ch p art i es are p res u m ed

t o co n t ract wi t h th e k no wl ed ge t h at

, reg ard l es s o f t h e t erm s t h ey ag ree t o

, s u b s eq u en t

reas on ab l e reg u l at i o n m ig h t req u i re t h em t o am en d o n e o r m o re o f t ho s e t erm s . Id

.

In Un io n Dr

y G o od s

, t h e Geo rg i a Pu b l i c Serv i ce Co rp o rat i on (“ GPSC”) h ad

co n tract ed t o p ro v i d e Un i o n Dry Go o ds

, a m ercan t i le co m p an y

, wi th el ect ri ci t y at a

s p eci fi c rat e fo r a fi v e-ye a r p e r i o d

. 1 4 2

. Ga. at 8 4 2

. At t h e t i m e of t h e co n t ract

, t h e

Rai l ro ad Co m

m i s si o n o f Geo rg i a 1 2 h ad t h e au t h o ri ty t o reg u l at e p o w er rat es

, b ut

“ t h ere was n ei t h er s tat u t e no r ru l e o f t h e Rai l ro ad [C] o m m i s si o n reg u l at i n g rat es fo r

t h e s erv ice co n t ract ed fo r.” Id

. Aft er t h e c o n t r a c t h ad b een in effect fo r a y ear, t h e

1 2 Th e Rai l ro ad Co m

m i s si o n i s n o w kn o wn as t h e Pu b l i c Serv i ce Co m m i s s i o n.

See Geo r g i a Pu b l ic S

er vi ce Co mmi s s i o n v. At l a n t a G a s Li gh t Co

. , 2 05 Ga. 8 6 3,

8 7 0 -8 7 1 (1 ) (5 5 SE2 d 6 1 8 ) (1 9 4 9 ).

17GPSC ap p l i ed to th e Rai l ro ad Co m m i ss i o n fo r p erm i s s i o n t o im po s e a rat e i n creas e.

Th e Co m m i s si o n g ran t ed t h at ap p l i cat i o n an d “ p u b l i s h ed an ord er decl ari n g t h at t h e

s ch ed u l es o f rat es t h erei n co n t ai n ed

, u n t i l fu rt h er o rd er o f t h e Co m m i s s i o n

, s h al l b e

t h e m ax i m

u m s ch ed u l es o f rat es t o be ch arg ed b y t he Geo rg i a Pu b l i c S e rv i ce

Co rp o rat i o n fo r t h e cl as s es o f s erv i ce i n d i cat ed

. ” Id

. Th e m ax im u m r a t e s a l l o wed

u n d er t hes e s ch ed u l es were in ex ces s o f t h e rat es s p eci fi ed i n t he co n tract b et ween t h e

p art i es . Id

.

Aft er t h e Rai l ro ad Co m m i s si o n i s s ued it s o rd er, G PSC b eg an to b i l l t h e

m ercan t i l e co m

p an y at t h e m ax im

u m rat e al l o wed u n d er t h e rat e s ch ed u l e. Un i o n Dry

Go o d s th e n f

i l e d s u i t

, s eek i n g s p eci fi c p erfo rm an ce of t h e co n t ract

. W h en t h e t ri al

co u rt d en i ed Un i o n Dry Go o d ’ s req u es t f o r a n i n ju n ct i o n p ro h i b it i n g GPSC fro m

d i s co n t i n u i n g it s serv i ce u n l es s Un i o n Dry G o o d s p ai d t h e h ig h er rat e, t h e co m p an y

ap p eal ed

. Id

. T h e Geo rg i a Su prem e Co u rt no t ed t h at t h e “ p i v o tal q u es t io n ” o n ap p eal

was “ t h e effect o f t he [C] o m m i s s i o n ’ s o rd er o n t h e co nt ract b et ween t h e d r y g o o d s

co m p an y an d t h e p u bl i c s erv i ce co m p an y

. D i d i t em

p o w er t h e Geo rg i a Pu bl i c Serv i ce

Co rp o rat i o n t o d is reg ard t h e co n t ract ed rat e, an d ch arg e fo r t h e s erv ice at t h e

m ax i m u m rat e al l owed by t h e [C] o m m is s io n ? ” Id

. at 8 4 3

. Th e co u rt a n s we r e d t h i s

q u es ti o n i n t h e affi rm at i v e, n o t i n g t h at t h e St at e co u l d ex erci s e i t s p o l i ce p o wer to

18reg u l at e cert ai n i n d us t ri es “ an d th at t h e po wer i s n o t d es t ro y ed b ecau s e s u c h

reg u l at i o n s m ay t o s o m e ex t en t affec t t h e p o w er t o co n t ract

, o r ex i s ti n g co n t ract s .”

Id

. at 84 4

. Rat h er t h an fi n d i n g t h a t t h e co n t ract was v o i d ed by t h e rat e i n creas e,

h o wev er, t h e co u rt fo u n d t h at t h e p art i es w ere ex p ect ed to co n fo rm t h ei r co n t ract to

t h e l aw. Id

. at 8 4 4

. Th e co u rt reas o n ed t h at t h e rat e i n creas e d id n ot i n t erfere wi t h t h e

reas on ab l e ex p ect at i on s of t h e p art i es

, as t h ey were aware t h at t hey were co n t ract i n g

wi t h res p ect t o a reg u l at ed i n d u s t ry

. Id

. at 8 4 4 -8 4 7

. Th u s

, t h e p art i es w ere p res u m ed

t o kn o w t h at t h e St at e co u ld en act reg u l at i o ns

– i n cl u di n g rat e i n creas es

– t h at wo u ld

i m p act t h e co n t ract

. “ ‘ On e wh o s e ri g h t s

, su ch as t h ey are, are s u b ject to [s ]t at e

res t ri ct i o n

, can n o t rem o v e t h em fro m t h e p ower o f th e [s ] t a t e b y m a k i n g a co n t ract

ab o ut th em

. T h e co n t ract wi l l carry wi t h i t t he i n f i r m i t y o f th e su b

j ect -m at t er.’ ” Id

.

at 8 4 4

, ci t i n g H

u ds o n C o u n t

y Wa t e r Co

. v. McCa r t er

, 2 0 9 U. S. 3 4 9, 3 5 7 (2 8 SCt

5 2 9

, 5 2 LE 8 2 8 ) (1 9 0 5 ). In affi rm i n g t h e Geo rg i a Su p rem e Co u rt

, t h e Un i t ed St at es

Su p rem e Co u rt rel i ed o n th is s am e rat i o nal e. See Un i o n Dr y Go o d s Co

. , 2 48 U. S. at

3 7 5 -3 7 6

.

Al m o st 7 0 y ears l at er, t h e Un i t ed St at es Su p rem e C o u r t ap p li ed s i m i l ar

reas on i n g i n En er

gy Res er ves Gr o u

p

, 4 5 9 U. S. 4 0 0

. Th at cas e i n v o l ved t wo co n t ract s

fo r t h e i n t ras tat e p u rch as e o f g as fro m a sp eci fi c g as fi el d

. E a c h c o n tract co n t ai n ed

19t wo “ p ri ce es cal at o r” cl au s es

, o n e o f wh ich p ro v i d ed t h at i f an y g o v er n m en t al

au t h o ri t y fi x ed a p ri ce fo r an y n at u ral g as t h at was h i g h er t han t h e p ri ce s p eci fi ed in

t h e co n t ract

, t h e co n tract pri ce wo u l d b e i ncreas ed to th a t l e v e l

. 4 5 9 U. S. at 4 0 3.

Aft er t h e co n t ract s were ex ecu t ed

, t h e fed eral g o vern m en t en act ed a l aw t h at ch an g ed

t h e way i t reg u l at ed t h e p ri ce o f n at u ral g as

, rep laci ng t h e fed eral p ri ce co n t ro l s t h at

h ad b een es t ab l i s h ed u n d er t h e 1 9 3 8 Nat u ral Gas Act “ wi t h pri ce cei l in g s t h at ri s e

m o nt h l y b as ed o n ‘ an i nfl at i on ad ju s t m en t fact o r’ an d o t h er co n si d erat i on s .” Id

. at

4 0 5 -4 0 6 (I) (B). In res p o n s e, th e Kan s as s t at e l eg i s l at u re p as s ed a l aw t h at co n t ro l l ed

i n t ras t at e n at u ral g as p ri ces an d t h e co n t ract s at i s s u e b ecam e s u b ject t o t h e Kan s as

l aw. Id . at 4 0 7-4 0 8 (I) (C).

W h en t he s u p p l i er s o u gh t t o t e r m i n at e t h e co n t ract s b as ed o n t h e b u y er’ s

refu sal t o p ay t h e h i gh er g as rat e al l o wed un d er fed eral l aw, th e b uy er res p o n d ed t h at

t h e Kan s as act s erv ed t o a m e n d t h e p art i es p ri ce es cal at or cl au s e, as it l i m i t ed t h e

s u p p li e r t o t h e h i g h es t pri ce al l o wed u n der Kan s as l aw an d p ro h i b i t ed t h e s u p p l i er

fro m ch arg i n g t h e h i g h er rat e al l o wed un d er fed eral l aw. Id

. at 4 0 8 (I) (D). Th e t ri al

co u rt en t ered s u m

m ary j u d gm en t i n fav or o f t h e b u ye r, fi n d i n g t h at t h e Kan s as Act

d i d n o t v oi d t h e co n t ract s

, ev en t ho u g h i t am en ded t h e p ri ce t h at t h e s u p p li er co u ld

20ch arg e. Id

. at 4 0 9 (I) (D) Th e Kan s as Su p rem e Co urt affi rm ed t he t ri al co urt

, an d t h e

s u p p li er t h en ap p eal ed t o t h e Un i t ed St at es Su p rem e Co u rt

.

In affi rm i n g t h e d eci si o n o f th e Kan s as co u rt s

, t h e Su p rem e Co u rt ag reed t h at

t h e K an s as l aw was en act ed i n fu rt h eran ce o f l eg i t i m at e p ub l i c p urp o s es : t h e

p ro t ect i o n o f “ co n s u m ers fro m t h e es cal at io n o f n a t u ral gas p ri ces cau s ed by

d ereg u lat i o n ” an d t o co rrect “ t h e i m b al an ce b et ween th e i n t ers t a t e a n d i n t ras t at e

[n at u ral g as ] m ark et s .” Id

. at 4 1 7 (II) (C) (fo ot n o t e o m i t t ed )

. T h e c o u r t t h en fo u n d

t h at t h e l aw req u i red t he p art i es t o co n fo r m t h e i r co n t ract t o t h e n ew reg ul at i o n

. In

d o i n g s o

, t h e Co urt n o t ed t h at “ [s ] i gn i fi can t h ere i s t h e fact t h at t h e p a r t i e s are

o p erat i n g i n a h eav i l y reg u l at ed i n d u s t ry .” Id

. at 4 1 3 (II) (B) (fo ot n ot e o m i t t ed ). Th u s

,

t h e p art i es s h o ul d h av e reas o n ab l y an t i ci p at ed t h at fu tu re g o v ern m en t al reg u l at i o n

m i g h t o ccu r an d t hat s u ch reg u l at i o n co u l d i m p act t h e p art i es ’ co n t ract

. Id

. at 4 1 6 (II)

(B) (as th e co nt ract it s el f refl ect ed

, t h e s u p p l i er “ k n e w i t s co n t ract u al ri g h t s were

s u b ject t o al t erat io n b y s t at e p ri ce reg u l at io n

. Pri ce reg u l at i o n ex i s t ed an d was

fo res eeab l e as t h e t y

p e o f l aw t h at wo ul d al t er co n t ract o b l i g at i on s .”).

Tu rn i n g t o t h e cu rren t cas e, we n o t e t h at co i n -o p erat ed am u s em en t m ach i n es

“ h av e b een p erm i tt ed t o o p erat e i n t h i s s t at e o n ly b y t h e g r a c e o f t h e l eg i s l at u re. In

fact

, am us em en t m ach i n es h av e b een th e s ub ject o f freq u en t an d i n ten s i v e reg u l at i o n

21i n t hi s s t at e.” S t a t e o f Ga

. v. Ol d S

o u t h A mu s emen t

s

, 27 5 G a. 27 4

, 2 7 9 (3 ) (5 6 4 SE2 d

7 1 0 ) (2 0 0 2 ) (fo ot no t e o m i t t ed ). Th u s

, w h en i n t erp ret i ng l eg i s lat i o n wh i ch affect s a

ch an ge i n t h e reg u l at o ry sch em e g o v ern i n g th es e m ach i n es

, we l o ok t o “ cas es

i n v o l v i ng reg u l at ed i n d us t ri es ,” as t h ey “ are m o re o n p o in t ” t h an cas es i nv o l v i n g

i n d u s t ri es t h at are n o t s u b ject t o s u ch reg u l at i o n

. Id

. W e t h erefo re fi n d th e rat i o n al e

o f cas es s u ch as Un i o n Dr y Go o d s an d En er

g y Res er ves Gr o u

p t o b e ap p l icab l e t o t h e

i n s t an t cas e. Un d er t hat reas o n i n g , wh ere fu rt h er reg u l at i o n o f an al read y reg u l at ed

i n d u s t r y i m

p act s p ri v at e co n tract s

, t h e p art i es t o t ho s e co nt ract s wi l l b e req u i red to

ad ju s t t h ei r co n tract s t o t h e n ew reg u lat i o n, p ro v i d ed t w o co n d i t i o ns are m et

. Fi rs t

,

t h e reg u l at i o n m

u s t b e i n f

u r t h e r a n ce o f a l eg i t i m at e p u b l ic p u rp o s e. Seco n d

, t h e

reg u l at i o n m

u s t co n s t i t u t e a reas o nab l e m et h o d o f fu rt h eri n g t h at p u b li c p u rp o s e.

Ap p ly i n g t h e f

o r e g o i n g p ri n ci p l es

, we fi n d t h at HB 4 8 7 d i d n o t v o i d an y

co n tract s fo r t h e p l acem en t o f Cl as s B m ach i n es t h at ex i st ed p ri o r t o th e l aw’ s

en act m en t

, ev en i f t ho s e co nt ract s cal l ed fo r an u n ev en rev en u e s p l i t

. T h e

l eg i s lat u re’ s st at ed p u rp o s e fo r H B 4 8 7 ( en su ri n g ad eq u at e fu n d i n g fo r th e St at e’ s

HOPE Sch o l ars hi p an d p re-k i n d erg art en p ro g ram s) i s a l eg it i m at e o n e, d es i g n ed to

b en efi t t h e g en eral wel fare o f al l Geo rg i a’ s ci t i zen s

. See Pi t t s v. S t a t e

, 2 9 3 Ga. 5 1 1,

5 1 6 -5 1 7 (2 ) (7 4 8 SE2 d 42 6 ) (2 0 1 3 ) (“ en s u ri n g t h at t h e ch i l d ren res i di n g i n Geo rg i a

22are affo rd ed t he o p p o rt un i t y o f an ed u cat i o n ” i s a “ l eg i t i m ate g o vern m en t al i nt eres t ”).

Ad d i t i o n a l l y, t h e reg ul at o ry req u i rem en t s o f H B 4 8 7 w i t h res p ect t o Cl as s B

m ach i n es rep res en t a reas o n ab le m et h o d o f ach i ev in g t hi s p u rp o se, as t h ey “ wi l l ai d

i n t h e en fo rcem en t o f t h e t ax o b l i g at i o n s th at ari s e fro m t he o p erat io n o f b o n a f i d e

co i n o perat ed am

us em en t m ach i n e b u s i n es s es as wel l as p rev en t u n au t h o ri zed cas h

p ay o u t s .” OCGA § 50 -2 7 -7 0

. See Keys t o n e B i t u mi no u s Co a l As s n

. , 4 80 U. S. at 5 0 5

(“ we h av e rep eat ed ly h el d t h at u n l es s t h e St at e i s i t s el f a co n tract i ng p art y

, co u rt s

s h o u ld p ro p erl y d efer t o l eg i s l at i v e ju d g m en t as t o t he neces s i t y an d reas o nab l en es s

o f a p art i cu l ar m eas ure” t hat i m p act s co n t ract ri g h t s ) (ci t at io n s an d pu n ct u a t i o n

o m it t ed ).

23Fu rt herm o re, t h e p art i es t o th es e c o n t ract s en t ered th em wi t h t he k n o wl ed g e

t h at Cl as s B m ach i nes were s u b ject t o ch an g in g s t at e reg u l at i o n

. 1 3 An d i n terp ret i n g

HB 4 8 7 as req u i ri n g th e p art i es t o ad ju s t t h ei r co n t ract u al ri g h t s an d res p on s i b i l i ti es

t o th e new l aw d o es n ot s u bs t an t i al l y i m pai r an y p art y ’ s co n t ract ri g h ts . In d eed , t h e

l aw i m p act s o nl y o ne t erm o f t h e co n t ract

— t h e cl au s e p ert ai ni n g t o t h e r e v en u e

s p l i t

. A l l o t h er r i g h t s an d o b l i gat i o ns u n d er t h e co n t ract rem ai n u n ch an g ed

.

M o reo v er, t h e ch an g e affect ed b y th e l aw d o es n o t fav o r o n e p art y o v er t he o t h er

—

1 3 “ In 1 9 78

, t h e l eg i s l at u re ex em p t ed co i n -o perat ed

am u s em en t m ach i n es wh i ch award ed a p l ay er wi t h u p t o 1 5

free rep l ay s fro m t h e d efi n i t i o n o f a g am b l i n g d ev ice. Ga.

L.1 9 7 8, p

. 1 77 9

. Th i rt een y ears l at er, t h e m a c h i n es were

p erm i t t ed t o reward a p l ay er wi t h n o n cas h p ri zes

, t o y s an d

n ov el t i es

, h av in g a wh o l es al e val u e o f les s t h an $ 5

. Ga.

L.1 9 9 1, p

. 1 3 9 8

. In 1 9 9 6

, th e cap o n free rep l ay s w as

r e m o v ed an d p l ay ers were p erm i t t ed t o wi n no n cas h

‘ m erch an d i s e’ an d ‘ gi ft cert i fi cat es ’ n o t ex ceed i n g a

wh o les al e v a l u e o f $ 5

. Ga. L.1 9 9 6

, p

. 3 0 9

. In 19 9 9, th e

reward s y st em was ex p an d ed t o au t h o ri ze co m b i n at i on s o f

free rep l ay s

, m erch an d i s e, t o y s, gi ft cert i fi cat es

, n o v el t i es

,

p oi nt s

, v o uch ers an d t i ck et s . Ga. L.1 9 99 , p

. 1 22 4 .”

Ol d S ou t h Amu s emen t

s

, 27 5 Ga. at 2 7 9 (3 ), n

. 8. Ad d i t i o n al ly

, i n 2 0 0 1 t h e l eg i s l at u re

ad o pt ed t h e Vi d eo Po k er Act

, wh i ch o u t lawed as “ g am b l i n g d ev i ces ” a wi de v ari et y

o f v i d eo g am es wh i ch h ad been u s ed p rev i o u sl y i n t h e co in -o p erat ed am u s em e n t

m ach i n e b u s i n es s

. See OCGA § 1 6 -1 2 -2 0 ; OCG A § 1 6 -1 2 -3 5 ; OCGA § 4 8 -1 7 -1

(2 0 0 1). T h us

, t h ere were at leas t fi ve s i g n i fi can t l eg i s l at i v e ch an g es i n th e reg u l at i o n

o f co i n -o p erat ed am

u s em en t m ach i n es o v er an ap p ro xi m at el y 1 5 -y ear p eri o d

.

24rat h er, i t req u i res t h at b o t h p art i es t o t h e co n t ract recei v e eq ual co m p en s at io n f

r o m

t h e rev en u e g en erat ed b y Cl as s B m ach i n es

. Ad d i t io n al l y

, al t h o u gh t h e l aw m i g ht

o p e r a t e t o t ak e away

a co nt ract u al ad van t ag e t h at o ne o f t h e p art i es prev i o u s l y h ad

(i

. e., m o re t h an 5 0 p ercen t o f t h e rev en u e g en erat ed b y t h e m ach i n e o r m ach i n es b ei n g

l eas ed ), t h e p art y s u fferi n g t h at l o s s co u l d n o t reco u p t h at l o ss o n th e o p en m ark et i f

t h e p art y were freed fro m i ts cu rren t co n t ract

. An y l eg i t i m at e, n ew co n t ract s u ch a

p art y en t ered co u ld n ot p ro v i d e i t wi th m o re t h an 5 0 p ercen t o f th e m ach i n e rev en ue.

In l i g h t o f th e fo reg o i n g

, we fi n d t h at OCGA § 50 -2 7 -7 0 et s eq

. req u i res t h e

p art i es to an y wri tt en l eas e ag reem en t s fo r Cl as s B m ach i n es th at ex i s t ed p ri o r t o t h e

en act m en t o f HB 4 8 7 , an d wh i ch p ro v i d e fo r a rev en u e s p l it o f o t h er t h an 5 0 / 5 0 , t o

co n fo rm t h ei r co n t ract s to t h e n ew l aw. In o t h er w o rd s

, t h e p reex i s t i n g wri t t en

co n tract s rem ai n i n t act

, b u t b et ween Ap ri l 1 0

, 2 0 1 3 (t h e d ay HB 4 8 7 wen t i n to

effect ), an d t h e d at e o n wh i ch t h e Lo tt ery Co rp o rat i o n ’ s Cl as s B acco u n t i n g t erm i n al

b ecam e act i v e, t he p art i es t o th e co n t ract were req u i red t o s p l i t t h e rev en u e real i zed

fo rm an y Cl as s B m ach i n e o n an eq u al bas i s

. Aft er t h at t i m e, t he p art i es w ere t o s p l i t

t h e rev en u e as p ro v id ed i n OCGA § 5 0 -2 7 -1 0 2 fo r t h e d u rat i on o f t h e co n t ract t erm

.

Becau s e HB 4 8 7 d id n o t v o i d t h e wri t t en co n t ract s at is s u e i n t h i s c a s e

, t h e

o rd er o f t h e t ri al co u rt g ra n t i n g s u m m ary j u d gm en t i n fav o r o f GAA an d ag ai n s t

25ap p el l ants on the a ppe lla nts’ c la im s f

or t ort i o u s i n terferen ce wi t h co n t ract u al rel at i on s

i s rev ers ed

. Th e cas e i s rem an d ed fo r fu rt h er p ro ceed i n g s c o n si st en t wi th t h is o p i n i o n.

Ju d g men t r ever sed . Ba r n es , P. J., a n d

Bo g gs , J., co ncu r

.

26