Georgia Dep't of Cmty. Health v. Data Inquiry, LLC

Decision Date25 January 2012
Docket NumberNo. A11A2087.,A11A2087.
PartiesGEORGIA DEPARTMENT OF COMMUNITY HEALTH et al. v. DATA INQUIRY, LLC.
CourtGeorgia Court of Appeals

OPINION TEXT STARTS HERE

Samuel S. Olens, Atty. Gen., William Wright Banks, Jr., Robin Joy Leigh, Asst. Attys. Gen., for appellants.

Joyce, Thrasher, Kaiser & Liss, Ray Stallings Smith, III, Atlanta, for appellee.

ELLINGTON, Chief Judge.

The Georgia Department of Community Health (“the Department”) appeals from an order of the Superior Court of Fulton County that denied its motion to dismiss a complaint filed by Data Inquiry, LLC. According to the Department, the trial court erred in finding that Data Inquiry's claims were not barred by sovereign immunity.1 For the following reasons, we agree and reverse.

“On appeal, this Court reviews the denial of a motion to dismiss de novo. However, we construe the pleadings in the light most favorable to the plaintiff with any doubts resolved in [the plaintiff's] favor.” (Citations, punctuation and footnote omitted.) Liu v. Boyd, 294 Ga.App. 224, 668 S.E.2d 843 (2008).

So viewed, the record shows the following facts. In October 2007, Data Inquiry began negotiating a “Professional Services Agreement” (“the proposed agreement”) with Grace Lewis, a senior assistant attorney general for the State of Georgia, who was representing the Department. Under the proposed agreement, which was drafted by a Data Inquiry manager, Brian Carne, Data Inquiry was to provide various computer-related services, including collecting electronic data, at the offices of a third party that was involved in a civil suit with the Department (“the third party). The proposed agreement provided that, [s]ubject to [Data Inquiry] and Client approval, all services shall be rendered at such times and places as Client may request, and for a mutually agreeable period of time.” It also stated as follows:

This contract shall become effective upon execution by both Client and [Data Inquiry], but only after receipt by [Data Inquiry] of any required retainer [.] ... Failure to pay any required retainer will immediately render this contract null and void[.] ... Client agrees to furnish [Data Inquiry] forthwith a retainer fee of $15,000 against which any billable services as outlined herein are to be deducted[.]

In addition, the proposed agreement stated that

[t]his Contract, which each party acknowledges receipt of a complete copy, represents the entire agreement between [Data Inquiry] and Client, and it supersedes all prior written or oral communications or agreements between the parties.... There are no collateral agreements, stipulations, covenants, promises, inducements, or undertakings not expressed herein.... [This Contract] may not be modified except by a written document agreed to and signed by both [Data Inquiry] and Client that clearly indicates that such secondary written document is intended to modify this Contract in some specified manner.

Further, under the proposed agreement, before any Data Inquiry employee performed work under the agreement, he or she would have to sign a document entitled “Declaration and Agreement to be Bound,” in which he or she expressly agreed to abide by a separate document, a “Consent Protective Order” (“the protective order”), which, in turn, was to be executed by the Department and the third party and which contained no references to Data Inquiry.

On November 12, 2007, Data Inquiry employees began working pursuant to the proposed agreement, even though the Department had not yet sent it a signed copy of the proposed agreement or the $15,000 retainer required thereunder. Upon completing its work, Data Inquiry sent the Department an invoice for $25,066.96 for services provided and expenses incurred.

When the Department refused to pay the invoice, Data Inquiry filed a complaint against it for the alternative claims of breach of contract, unjust enrichment, and quantum meruit. The Department answered and raised the defense that the action was barred by sovereign immunity because it was not based upon a written contract; it also filed a motion to dismiss the complaint based on sovereign immunity and for failure to state a claim. Data Inquiry then filed an amended complaint with the following documents attached: (a) an unsigned copy of the proposed agreement; (b) an unsigned and incomplete draft of the protective order; (c) an unsigned copy of the “Declaration and Agreement to be Bound” to the protective order; and (d) a copy of the invoice from Data Inquiry to the Department for $25,066.96, dated November 25, 2008. In addition, Data Inquiry attached to its response to the Department's motion to dismiss three pages of e-mails between Carne, Lewis, and the third party. The e-mails were dated November 2 through 12, 2007, and they showed that the protective order was still in the drafting stages and that the Department and the third party were still negotiating its terms.

On April 15, 2011, the trial court denied the Department's motion to dismiss, concluding that the documents presented by Data Inquiry, including the unsigned proposed agreement, the unsigned draft of the protective order, the e-mails, and the invoice, “taken together[,] permit [Data Inquiry's] claims to go forward” under the waiver of sovereign immunity for actions based upon written contracts.

1. On appeal, the Department contends that the trial court erred in finding that Data Inquiry's breach of contract claim is based upon a written contract and, thus, the claim is not barred by sovereign immunity. We agree.

The Georgia Constitution provides that “sovereign immunity extends to the [S]tate and all of its departments and agencies,” 2 and that the State's sovereign immunity can only be waived by a constitutional provision or an Act of the General Assembly that specifically provides for such waiver and the extent thereof. Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). One of the Constitution's exceptions to the defense of sovereign immunity is for “any action ex contractu for the breach of any written contract now existing or hereafter entered into by the [S]tate or its departments and agencies.” (Emphasis supplied.) Ga. Const. of 1983, Art. I, Sec. II, Par. IX (c). It is axiomatic that [t]he party seeking to benefit from the waiver of sovereign immunity bears the burden of proving such waiver.” (Citations omitted.) Bd. of Regents, etc. of Ga. v. Doe, 278 Ga.App. 878, 881(1), 630 S.E.2d 85 (2006). Thus, in order to overcome the Department's assertion of sovereign immunity, Data Inquiry has the burden of showing that the contract sought to be enforced is in writing and contains all of the terms necessary to constitute a valid contract. Id.; Merk v. DeKalb County, 226 Ga.App. 191, 191–193(1), 486 S.E.2d 66 (1997).

(a) “To constitute a valid contract, there must be parties able to contract, a consideration moving to the contract, the assent of the parties to the terms of the contract, and a subject matter upon which the contract can operate.” OCGA § 13–3–1. “A contract is not complete and enforceable until there is a meeting of the minds as to all essential terms.” (Citation and punctuation omitted.) Harris v. Baker, 287 Ga.App. 814, 816, 652 S.E.2d 867 (2007).

As shown above, the proposed agreement expressly provides that it would not be effective until executed by both parties and until the Department paid the $15,000 retainer. Data Inquiry specifically admitted in its complaint that, at the time it performed its work, it had not received either a signed copy of the proposed agreement or the retainer. Further, Data Inquiry has failed to show that any person acting on behalf of the Department or the State has ever executed the proposed agreement.

Even so, the trial court concluded that Data Inquiry had met its burden of proving the existence of a valid written contract with the Department, relying upon Azarat Marketing Group v. Dept. of Administrative Affairs, 245 Ga.App. 256, 257–258(1), 537 S.E.2d 99 (2000). The court's reliance on Azarat constitutes error, however, because Azarat is clearly distinguishable on the facts from the instant case. In Azarat, the plaintiff sued the State for breach of contract, and the State failed to file a timely answer, thereby defaulting on the claim. Id. at 256(1), 537 S.E.2d 99. Because a defendant in default effectively admits each material allegation of the complaint except as to the amount of damages alleged, the State was deemed to have admitted the existence of a valid contract and the breach thereof. Id. at 257(1)(b), 537 S.E.2d 99. These admissions, when considered with additional evidence of written documents exchanged between the parties, were sufficient to meet the plaintiff's burden of creating a jury issue as to the existence of a written contract. Id. at 257–258(1)(b), 537 S.E.2d 99. Consequently, the State was not entitled to summary judgment on the basis of sovereign immunity. Id. at 258(1)(b), n. 3, 537 S.E.2d 99.

In contrast, the Department in this case did not default on Data Inquiry's complaint and, as such, cannot be deemed to have admitted the complaint's allegations. Thus, the ruling of Azarat is inapplicable here and does not relieve Data Inquiry of its burden of producing affirmative evidence to demonstrate that a valid written contract exists in order to establish a waiver of the Department's sovereign immunity. Bd. of Regents, etc. of Ga. v. Doe, 278 Ga.App. at 881(1), 630 S.E.2d 85; Merk v. DeKalb County, 226 Ga.App. at 191–193(1), 486 S.E.2d 66.

(b) Even if the undisputed evidence shows that no valid written contract between the parties actually exists, however, a court may still find that a valid written contract has been formed “when there are multiple signed, contemporaneous agreements between the parties which demonstrate their intent to enter into a binding contract and the individual documents, considered together, include all of the necessary terms of a contract.” (Citation...

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