Citing "sovereign immunity," attorneys for Peachtree City are

asking that a lawsuit brought against the city by Peachtree National Bank

seeking payment on nearly $1 million in bad loans made to the city's

Development Authority be dismissed.

A similar Motion to Dismiss has been filed in the case by the Peachtree

City Tourism Association, which was also named in the suit filed in August.

The bank sued the Development Authority, the city and the Tourism Association

to recoup the loans that have gone unpaid since November 2003, when the authority

gave up management of the Peachtree City Tennis Center and Frederick Brown

Jr. Amphitheater.

The money was allegedly taken out over a period of years by the DAPC and

used to fund operating expenses at the Peachtree City Tennis Center, which

is now being managed by the Tourism Association.

Without a revenue source, the DAPC has been unable to repay the loans.

In the suit, the bank accused the city of acting in bad faith to convert

the DAPC's $1.6 million in assets to the city's ownership, which

would shield them from being taken by the bank in return for failure to pay

off the loans.

The city has refused the pay the loans, which including accrued interest

now total $1.04 million, according to the suit.

Ted Meeker, attorney for Peachtree City, said the city is immune from the

lawsuit because the actions of the DAPC were independent of the city. Georgia

law "prohibits any obligation of a development authority from becoming

an obligation of a city," Meeker writes.

Additionally, the motion argues that the DAPC never had the legal authority

to take out "promissory notes" to begin with outside of the issuance

of bonds. Further, Meeker argues, the DAPC at the time of the loans was operating

outside the law because it lacked the authority to operate the tennis center

and amphitheater. A change in state law to allow development authorities

to run those types of venues wasn't passed in the legislature until

2003.

"The core of it is that the Development Authority took out the loans,

not the city," Meeker said. "We're not sure the Development

Authority could take out promissory notes to start with, and under no circumstances

does it appear a city can be held liable for the debt."

Regarding the Tourism Association, the bank suit alleged that the new management

group was operating as an "alter ego" to the DAPC and therefore "assumed

the use of the assets and former employees of the authority."

But Caryl Sumner Black, attorney for the Tourism Association, responded

in her Motion to Dismiss that "in actuality ... the Association Board

of Directors assumed nothing."

The association has no ownership of the facilities or assets, she said,

and "there is no unity of membership between the association and authority."

Instead, Sumner Black said, the Tourism Association is merely leasing the

venues from the city and has initiated a number of new policies and procedures

for their operation.

As of last week, the Development Authority had yet to file a response to

the suit, according to records at the Fayette County Courthouse.

A hearing on the Motions to Dismiss had been scheduled for Nov. 5 by Superior

Court Judge Paschal English, but Meeker said it will likely be continued

until December.

Meanwhile, the city has filed a response to another suit brought against

it in September by Group VI Corp. and Foley Designs claiming breach of contract

for nearly a quarter million dollars in unpaid change orders related to the

Tennis Center expansion.

The suit alleges that they together are owed nearly $229,000 for unpaid

expenses that were not part of the original $2.2 million contract with the

Development Authority to expand the Tennis Center.

In the response, Meeker denies most of the claims made in the lawsuit and

again argues that the Development Authority's former executive director

was acting independently and without the knowledge of the city in approving

the various change orders.

Meeker said a Motion to Dismiss the case was likely to be filed at a later

date as well.