A foreign corporation is not deemed to be transacting business in Georgia under O.C.G.A. § 14-2-1501, and therefore is able to maintain a civil action in Georgia without obtaining a certificate of authority, when it agrees to (i) buy real property in Georgia; (ii) build a plant on that property; and (iii) use the plant to provide certain gaseous oxygen requirements pursuant to a Supply Agreement. Universal Industrial Gases, Inc. v. Action Industries, Inc. et al., A21A1183, 2021 WL 4451386 (Ga. Ct. App. Sept. 29, 2021).
By statute, a foreign corporation transacting business in this state is required to obtain a certificate of authority from the Georgia Secretary of State, subject to certain exceptions that include, as relevant here, “[c]onducting an isolated transaction not in the course of a number of repeated transactions of a like nature.” O.C.G.A. § 14-2-1501 (a), (b) (10). Further, a foreign corporation transacting business in Georgia may not maintain a proceeding in a Georgia court until it has obtained the required certificate. O.C.G.A. § 14-2-1502 (a).
A motion to dismiss for failure to obtain a certificate of authority to do business in Georgia is properly considered a motion in abatement, in which the defendant has the burden of proving the facts necessary to obtain a dismissal. Mfgs. Nat. Bank of Detroit v. Tri-State Glass, Inc., 201 Ga. App. 253, 253-254 (1), 410 S.E.2d 808 (1991).
Whether one is “transacting business” for purposes of the applicable statutes should be decided on a case-by-case basis “and not by application of a mechanical rule.” Winston Corp. v. Park Elec. Co., 126 Ga. App. 489, 495, 191 S.E.2d 340 (1972). Under such test it is the extent of activities by the foreign corporation in Georgia rather than the singleness that is considered, whether it be a construction enterprise or some other business. Id. at 496. Where the activities are minimal and unsubstantial in connection with only one contract and there is displayed no intention to continue these activities after completion of the single contract, the foreign corporation does not have to qualify because its contracts with Georgia relate to an isolated transaction. Id. If such activities are extensive in scope and involve a great deal of work over a period of time, then qualification is required despite all such activities being related to a single contract. Id.; Barker v. County of Forsyth, 248 Ga. 73, 75 (1), 281 S.E.2d 549 (1981) (“[A]n isolated transaction indicates no purpose of continuity of conduct whereas doing business implies an intent to conduct a continuous, as opposed to a temporary, business.”); Reisman v. Martori, Meyer, Hendricks, & Victor, 155 Ga. App. 551, 552 (1), 271 S.E.2d 685 (1980) (“[T]he purpose of [the predecessor to O.C.G.A. § 14-2-1501] is to require registration of foreign corporations which intend to conduct business in Georgia on a continuous basis, not as a temporary matter.”).
In Winston Corp., the Court of Appeals concluded that a party was not “transacting business” in Georgia for purposes of these statutes where he “was in Georgia completing a subcontract as a sole proprietor,” and, after incorporating his business in Tennessee, he “completed the performance of the contract as an individual and in connection therewith undertook additional work in the name of his foreign corporation without intention of doing any further business in Georgia other than the isolated transaction.” In a similar case, the Court of Appeals found a foreign LLC was not transacting business in Georgia where the foreign LLC merely acquired loan documents underlying a foreclosure sale at issue in a proceeding, advertised and conducted the sale, bought the subject property, reported the sale, and filed a petition to confirm the sale. Powder Springs Holdings, LLC, 325 Ga. App. at 696-697 (1), 754 S.E.2d 655. However, a foreign company was transacting business in Georgia when it spent over $20,000 (in the 1980s) designing, surveying, and planning a project for an alpine slide on a Georgia mountain; its staff members spent two weeks in Georgia accomplishing some of these tasks; and it entered into an agreement to buy and lease land on the mountain to operate both the slide and a scenic lookout. Barker, 248 Ga. at 73, 75 (1), 281 S.E.2d 549.
The trial Court found that Universal Industrial Gases, Inc. ("UIG"), was transacting business pursuant to the statute because (1) it requested consequential damages which the court reasoned depended on an expectation of profits to be derived from continuing business operations and (2) it had a single employee that was plant manager at the plant in Georgia. Universal Industrial Gases, Inc., 2021 WL 4451386 at *4.
The Court of Appeals reversed and remanded the matter. The Court of Appeals dismantled the first line of reasoning by stating that even if UIG sought lost profits, that would show at most that UIG potentially may have, at some point in the past, contemplated engaging in long-term business activities in Georgia, however, it does not shed any light on whether they actually transacted business in Georgia. Id. (emphasis in original). The Court notes that the statute bars a foreign corporation from “maintain[ing] a proceeding in any court in this state” only if the corporation is “transacting business” in Georgia, i.e., actively doing so, without a certificate of authority. Id. citing O.C.G.A. §14-2-1502(a). The plain language therefore does not encompass a foreign corporation that contemplates transacting business. Id. The Court also noted that "it is undisputed that UG has not owned the [plant] or the land on which it sits and has no rights under the [Supply Agreement]... since well before this action began." Id. at * 5.
As to the second line of reasoning, that a single employee in the State of Georgia is transacting business, the Court of Appeals relied on Roberts v. Chancellor Fleet Corp., for the finding that the presence in Georgia of a sales representative who solicited lease orders and made deliveries of leased equipment did not constitute “transacting business” in Georgia for purposes of the certificate-of-authority requirement. 182 Ga. App. 69, 70-71 (1), 354 S.E.2d 628 (1987).