Georgia Court Of Appeals Holds That Sovereign Immunity Shields County From Contractor’s Claims Based Upon Unwritten Change Orders

by Pepper Hamilton LLP
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Fulton County v. Soco Contracting Company, Inc., 2017 Ga. App. LEXIS 568 (Ga. Ct. App., November 15, 2017) 

Fulton County contracted with SOCO Construction Company (“SOCO”) to build a cultural center near the Fulton County Airport.  The contract specified that the contract sum and the contract time could only be changed according to County procedure, which required “a written, bilateral agreement (Modification) between the County … and the contractor.”

Adverse weather conditions, design delays, change order requests, and a federal government shutdown allegedly delayed the project.  Despite the County’s program manager listing more than 30 change orders in the project’s change order evaluation log, the County never issued any written change orders, including any change orders extending the contract time to account for the delays.  The County also withheld payment from SOCO.

SOCO sued the County for breach of contract and bad faith performance of contract, and it sought attorney fees and injunctive relief. 

The parties filed cross-motions for summary judgment on all claims.  The County based its motion on the grounds that sovereign immunity barred any claims arising from unwritten change orders.  The trial court denied the County’s motion for summary judgment.  The trial court ultimately granted SOCO summary judgment on all claims based, in part, upon Requests for Admissions to which the County had failed to timely respond, and awarded SOCO attorney fees.

The County appealed the trial court’s decision to the Court of Appeals of Georgia (Fourth Division).  The Court of Appeals reversed the trial court’s summary judgment rulings and vacated and remanded the trial court’s ruling on attorney fees.

The Court of Appeals held that the County did not waive its sovereign immunity for claims arising from unwritten contract modifications.  The Court noted that “the doctrine of sovereign immunity has constitutional status and may be waived only by an act of the [Georgia] General Assembly or by the constitution itself.”  The Court agreed with the County’s argument that although it had a written contract with SOCO, it did not waive its sovereign immunity defense for claims arising from unwritten contract modifications, which did not follow the County’s procedure.

The Court specifically disagreed with the trial court’s finding that the parties complied with the County’s protocol.  The trial court had found that an exception to the protocol applied because “extraordinary circumstances” existed, which caused the County administrators to order the changed work to avoid delay.  The Court of Appeals noted a lack of evidence to support that conclusion.

The Court also disagreed with SOCO’s argument that the County had waived its sovereign immunity based upon the fact that the County had requested changes to the work, the parties’ conduct, and certain facts which were deemed admitted.  While acknowledging the harsh result, the Court held that “parties are presumed to know the law, and are required ‘at their peril’ to ascertain the authority of a public officer with whom they are dealing.”  The appeals court refused to create an exception to the rules regarding waiver of sovereign immunity based upon any reliance SOCO may have placed upon the County’s actions or the facts deemed admitted.   As a result, the Court dismissed all of SOCO’s claims arising from unwritten contract modifications.

To view the full text of the court’s decision, courtesy of Lexis®, click here.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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