Greene Cnty. Sch. Dist. v. Circle Y Constr., Inc.

• Decision Date: 29 May 2012
• Docket Number: No. S11G1170.,S11G1170.
• Citation: 12 FCDR 1765,728 S.E.2d 184,291 Ga. 111,281 Ed. Law Rep. 1244
• Parties: GREENE COUNTY SCHOOL DISTRICT v. CIRCLE Y CONSTRUCTION, INC.
• Court: Georgia Supreme Court

291 Ga. 111

728 S.E.2d 184

281 Ed. Law Rep. 1244

12 FCDR 1765

GREENE COUNTY SCHOOL DISTRICT

v.CIRCLE Y CONSTRUCTION, INC.

No. S11G1170.

Supreme Court of Georgia.

May 29, 2012.

J. Stanley Hawkins, Reagan G. Sauls, Harben, Hartley & Hawkins, LLP, Gainesville, for appellant.

Brenda H. Trammell, Madison, for appellee.

BENHAM, Justice.

In April 2008, the Greene County School District entered into a contract with Circle Y Construction whereby Circle Y was to provide construction management services for the construction projects undertaken by the School District. The contract did not have a termination date. When the School District terminated the contract in March 2009, Circle Y filed a complaint alleging, among other things, breach of contract. The School District filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted, contending in pertinent part that the contract was void because it was an illegal multi-year contract since it did not contain the provisions required by OCGA § 20–2–506(b). The trial court denied the motion to dismiss in a one-sentence order and, after granting interlocutory review, the Court of Appeals affirmed the trial court's ruling. Greene County School District v. Circle Y Construction, 308 Ga.App. 837 (1), 708 S.E.2d 692 (2011). We then granted the School District's petition for a writ of certiorari to the Court of Appeals.

OCGA § 20–2–506(b) authorizes a Georgia school system to enter into a multi-year contract for the acquisition of goods, materials, real and personal property, services, and supplies, but requires the contract to contain specified provisions.¹ Counties and municipalities are authorized to enter into similar multi-year contracts by OCGA § 36–60–13(a), which requires the contract to contain specified provisions that are nearly identical to those required by § 20–2–506(b). These statutes are the legislative means by which a school system or a local government may enter into a multi-year acquisitional contract without running afoul of the constitutional prohibition against a political subdivision of Georgia incurring “new debt” without voter approval. See 1983 Ga. Const., Art. IX, Sec. V, Par. I(a); Bauerband v. Jackson County Bd. of Commrs., 278 Ga. 222(1), 598 S.E.2d 444 (2004) (construing OCGA § 36–30–13). Article IX, Section V, Paragraph I(a) of the Georgia Constitution prohibits a “county, municipality, or other political subdivision” ² of Georgia from incurring any “new debt without the assent of a majority of the qualified voters of such county, municipality, or political subdivision voting in an election held for that purpose as provided by law.” “New debt” is a liability undertaken by a political subdivision that is “ ‘not to be discharged by money already in the treasury, or by taxes to be levied during the year in which the contract under which the liability arose was made.’... [Cit]. Therefore, if a [political subdivision] undertakes an obligation that extends beyond a single fiscal year, then a new ‘debt’ has been incurred within the meaning of the Georgia Constitution and requires voter approval.” Barkley v. City of Rome, 259 Ga. 355, 381 S.E.2d 34 (1989). New debt cannot be incurred by a political subdivision without the assent of a majority of its qualified voters. City of Decatur v. DeKalb County, 289 Ga. 612, 614, 713 S.E.2d 846 (2011). A multi-year acquisitional contract incurring new debt that is entered into by a political subdivision is void as a matter of law if it does not comply with the either OCGA § 20–2–506 or § 30–60–13. See Wasilkoff v. Douglas County, 227 Ga.App. 232, 233, 488 S.E.2d 722 (1997) (applying OCGA § 36–30–13(a)).

The Court of Appeals reviewed de novo the trial court's ruling on the School District's motion to dismiss, accepting as true all well-pled material allegations in the complaint and resolving any doubts in favor of Circle Y. Greene County School Dist. v. Circle Y Constr., supra, 308 Ga.App. 837, 708 S.E.2d 692. See also Kerr v. OB/GYN Assoc. of Savannah, 314 Ga.App. 40, 41, 723 S.E.2d 302 (2012) (the appellate court determines whether the complaint's allegations, when construed most favorably to the plaintiff, disclose with certainty that the plaintiff would not be entitled to relief under any state of provable facts). In response to the School District's contention that the complaint should have been dismissed because the multi-year contract was void as a matter of law, the Court of Appeals accepted as true the amended complaint's allegation that Circle Y's construction management services were to be performed on construction projects approved by Greene County voters in a referendum for an educational local option sales tax (“ELOST”), and ruled that the trial court was authorized to conclude that the parties' multi-year contract was not void. 308 Ga.App. at 838–839, 842, 708 S.E.2d 692. The appellate court then provided an alternate rationale to affirm the trial court's denial of the motion to dismiss, holding that the lack of the contractual provisions required by OCGA § 20–2–506(b) did not void the contract. In support of its alternate ruling, the Court of Appeals engaged in statutory construction of OCGA § 20–2–506(h), which provides that...