City of Baldwin v. Woodard

• Decision Date: 20 May 2013
• Docket Number: No. S12G1842.,S12G1842.
• Citation: 743 S.E.2d 381,293 Ga. 19
• Court: Georgia Supreme Court
• Parties: CITY OF BALDWIN v. WOODARD & CURRAN, INC.

293 Ga. 19

743 S.E.2d 381

CITY OF BALDWIN

v.WOODARD & CURRAN, INC.

No. S12G1842.

Supreme Court of Georgia.

May 20, 2013.

Jessica Moore Lund, R. David Syfan, Hulsey, Oliver & Mahar, LLP, Gainesville, for appellant.

James Charles Weidner, Ernest Hal Woods III, Oliver & Weidner, LLC, Clarkesville, for appellee.

Rusi C. Patel, Susan J. Moore, Atlanta, amici curiae.

NAHMIAS, Justice.

Woodard & Curran, Inc. (“W & C”), an environmental engineering company, sued the City of Baldwin, Georgia, seeking damages on claims of breach of contract and quantum meruit. After a trial, a jury awarded W & C $203,000 in a general verdict that did not specify the basis for the damages. The Court of Appeals affirmed. See City of Baldwin v. Woodard & Curran, Inc., 316 Ga.App. 768, 730 S.E.2d 486 (2012). We granted certiorari to consider two issues: (1) whether the Court of Appeals erred in holding that quantum meruit is an available remedy against a municipality when the claim is based on a municipal contract that is ultra vires; and (2) whether the Court of Appeals erred in determining that the jury was properly allowed to consider the breach of contract claim based on an agreement the parties entered in May 2009. We conclude that the Court of Appeals erred in both respects, and we therefore reverse its judgment.

1. (a) In the spring of 2009, the City of Baldwin was planning to apply for federal government stimulus funds to improve the headworks and other components of its wastewater treatment plant. W & C, which was operating the plant for the City, wanted to assist the City in applying for the funds and hoped to design the plant improvements and provide services during their construction. To obtain the stimulus funds, the project had to be “shovel-ready” no later than November 1, 2009.

In May 2009, W & C presented the City's Mayor, Michael Kelley, with a document (the “May Agreement”) that said on its first page:

We will provide the supporting engineering documents for [the City's] funding application in order to convert this project from “fundable” to “funded” for a Lump Sum fee of $5000.... Under separate covers,we will be preparing a scope, budget, and schedule for the actual design work for the Headwords [sic] and associated improvements (including the Design Development Report for the overall plant) and also will submit a grant application to Rural Development to fund the development of a capital master plan for the water and wastewater systems.

Additional engineering fees will only be contracted once funding has been committed.

Section 6–9 of the City's Charter, which was enacted by the Georgia General Assembly in 1986, see Ga. L. 1986, p. 5578, says:

No contract with the city shall be binding on the city unless the contract is in writing, is signed after review by the city attorney, and is approved by the city council subsequent to its signature by the city attorney, with such council approval entered on the council journal.

The City Council consists of five members and the Mayor, Charter, § 2–1, and acts like approving contracts require the vote of at least three of the council members, Charter § 2–8, with the Mayor having the right to vote only “in the case of a tie vote among the council members voting,” Charter § 2–13.

On May 26, 2009, the May Agreement was approved by the City Council as required by the Charter. In accordance with the agreement, W & C prepared the City's funding application, including supporting engineering documents. Shortly before June 15, 2009, the funding agency informed W & C that the application for project funding was complete and approved. On June 23, W & C sent the City an invoice for its work on the “Headworks Design Funding Application,” which referenced a specific project number for those services. The City then paid W & C the $5,000 lump sum fee set forth in the May Agreement.

On June 15, based on the approval of the project funding application, W & C sent Mayor Kelley a second document labeled “Proposal for Professional Engineering Design Services” (the “June Proposal”). The June Proposal stated that W & C appreciated the City's asking W & C to “prepare a proposal for the design” of the wastewater plant improvements. The proposal then detailed the plant's deficiencies and W & C's plans for correcting them, estimating the total cost of the project to be $1,995,000. The proposal listed the services that W & C would provide, including conducting project meetings with the City and government agencies; ensuring that on-site measurements, surveys, and geotechnical core drilling necessary to complete the plant's new design would be conducted; completing the necessary environmental permitting applications; designing the project specifications; and overseeing the bidding phase of the project to ensure its appropriate completion. The proposal concluded by saying that W & C could complete the design work “within 8 to 12 weeks after receiving authorization to proceed”; that its services under the proposal would cost no more than $210,000; that the Mayor should “review this proposal” and “call [W & C] to discuss any questions or comments”; and that “[i]f everything is in order,” the Mayor should sign the proposal and return it to W & C to authorize it to proceed with the work.

After submitting the June Proposal, W & C stopped working on the project while waiting for authorization from the City to proceed. On August 19, W & C sent the Mayor an e-mail with an attached document that listed the requirements that still needed to be met for W & C's work on the project to proceed, including “approval by the City Council” of the June Proposal. On August 20, at a meeting attended by the Mayor, two of the five City Council members, and W & C Project Manager Bill King, Mayor Kelley signed the June Proposal under “Authorization to Proceed,” but he did not date the document. Instead, the date was later written in by a co-worker of Bill King at W & C.

The Mayor testified at trial, without dispute, that he did not date the document because he did not have authority to obligate the City by himself and that he explained to King and the others present that the June Proposal would not go into effect until it had been reviewed by the city attorney and voted on by the City Council. That same day, the Mayor signed and dated a certificate of readiness that was required by the funding agency, which King testified was essentially a promise to the agency that W & C and the City would “get this job done.” However, the June Proposal was never “signed after review by the city attorney, and ... approved by the city council subsequent to its signature by the city attorney, with such council approval entered on the council journal.” Charter § 6–9.

Nevertheless, after the Mayor signed the June Proposal, W & C began to work intensely on the tasks described in the proposal, hiring a surveyor, completing its design of the plant improvements, advertising the project for bids, and meeting with the bidders. Preliminary and final approvals for the project from the funding agency and other necessary agencies were obtained during the last two weeks of September. On September 28, King met with the Mayor and City Council, at the Mayor's request, to update them on the progress of the project. However, on October 21, 2009, the day before the project bids were to be opened, the City learned that the stimulus funds for which the City had been approved had been exhausted on other projects. The City never received any funding, and the wastewater plant improvements were never done.

In a letter sent to the City on November 17, 2009, W & C said that it had completed its work for the “Headworks Design” “in accordance with our contract dated June 15, 2009 and authorized by you on August 20, 2009.” The letter attached an invoice for $203,870.44; it specified a different project number than the invoice submitted for the May Agreement, and almost all the listed services were done between August 20 and October 23. The City denied payment, and this litigation ensued.

(b) In its complaint against the City, W & C alleged that the parties had entered two contracts. “On May 15, 2009, [the parties] entered into a written contract whereby ... [the City] was to pay [W & C] the sum of $5,000.00,” and “[o]n August 20, 2009, [the parties] entered a written contract whereby ... [the City] was to pay [W & C] a sum not to exceed $210,000.00.” W & C asserted that the City had failed to pay “under said contracts” and sought damages of $203,870.44 for breach of contract. W & C alternatively sought the same amount of damages pursuant to a claim for quantum meruit.

The City moved for summary judgment, contending that it had paid W & C the $5,000 due under the May Agreement and that, because the June Proposal had not been adopted in compliance with the City Charter's requirements, it was ultra vires under H.G. Brown Family L.P. v. City of Villa Rica, 278 Ga. 819, 607 S.E.2d 883 (2005), and could not support W & C's breach of contract or quantum meruit claims. After W & C admitted that it had been paid $5,000 under the May Agreement, the trial court granted summary judgment to the City on that breach of contract claim. The court also granted summary judgment to the City on W & C's breach of contract claim based on the June Proposal, ruling that the contract was ultra vires under H.G. Brown. However, the trial court denied the City's motion for summary judgment on W & C's quantum meruit claim, ruling that the claim could be based on work W & C did in reliance on the June Proposal.

In a subsequent pretrial order, W & C asserted two new theories of recovery based on the May Agreement. W & C now claimed that the “[u]nder separate covers” sentence of the May Agreement authorized W & C to perform the actual design work and oversee the bidding and construction of the plant improvements; W & C accordingly sought $203,870.44 in damages for breach of that part of the May...