Jean Moreau & Assocs., Inc. v. Health Ctr. Comm'n

• Decision Date: 13 January 2012
• Docket Number: Record No. 101352.
• Citation: 720 S.E.2d 105,283 Va. 128
• Court: Virginia Supreme Court
• Parties: JEAN MOREAU & ASSOCIATES, INC. v. HEALTH CENTER COMMISSION for the COUNTY OF CHESTERFIELD, d/b/a Lucy Corr Village.

283 Va. 128

720 S.E.2d 105

JEAN MOREAU & ASSOCIATES, INC.

v.HEALTH CENTER COMMISSION for the COUNTY OF CHESTERFIELD, d/b/a Lucy Corr Village.

Record No. 101352.

Supreme Court of Virginia.

Jan. 13, 2012.

William H. Shewmake (LeClaireRyan, on briefs), Richmond, for appellant.

Tara A. McGee, Assistant County Attorney (Jeffrey L. Mincks, County Attorney, on brief), for appellee.

Present: KINSER, C.J., LEMONS, GOODWYN, MILLETTE, MIMS, McCLANAHAN, JJ., and KOONTZ, S.J.

OPINION BY Justice LEROY F. MILLETTE, JR.

Jean Moreau & Associates, Inc. (Jean Moreau) brought this suit against The Health Center Commission for the County of Chesterfield (HCC or Commission), seeking a declaratory judgment and alleging claims for breach of contract and quantum meruit. The circuit court, on HCC's plea in bar, dismissed Jean Moreau's claims. It held that the breach-of-contract claim was barred because Jean Moreau did not comply with the contractual-claims procedure of the Virginia Public Procurement Act, Code §§ 2.2–4300 through 2.2–4377, and that the quantum meruit claim was barred by the doctrine of sovereign immunity because it arose out of HCC's exercise of a governmental function. For the reasons that follow, we will affirm the judgment of the circuit court.

I. BACKGROUND

In 1993, after finding “that the public health and welfare ... require[d] the acquisition, construction, and operation of public hospital facilities,” Chesterfield County established HCC “for the purpose of operating nursing homes, hospital or health center facilities.” Following its creation, HCC took over operation of Lucy Corr Village, a nursing-care facility, which had previously been managed by Chesterfield County. A few years later, in 1999, HCC expanded Lucy Corr Village to include an assisted-living facility. During this time, Lucy Corr Village was operating at a loss of approximately $1.5 million each year, so Chesterfield County was providing HCC with “financial assistance and subsidies for indigent care” to keep Lucy Corr Village solvent.

HCC decided to expand Lucy Corr Village again in 2002 to add an independent-living facility. Such a facility would allow Lucy Corr Village to become a continuing care retirement community (CCRC)—a community that offers several levels of health care on one campus: an independent-living facility, an assisted-living facility, and a nursing-care facility. A CCRC allows residents to “[a]ge in place,” living independently in single-family homes or apartments as long as possible and then transferring into skilled-care facilities when assistance with activities of daily living becomes necessary. In addition to making Lucy Corr Village a CCRC, an independent-living facility would allow the community “to be financially stable without the need for county subsidy.”

In 2004, HCC awarded Jean Moreau a five-year contract to plan and develop the independent-living facility, which would be named “Springdale at Lucy Corr Village.” Under the terms of the contract, Jean Moreau was to receive a monthly fee of $20,000. It also was to receive a “Development Fee” and a “Marketing Fee,” together totaling $2.25 million (but not to exceed 6% of HCC's expenditures on the project), after certain financing and construction conditions had been met. The “continuation of the terms ... of [the] contract beyond June 30 of any year [was] subject to its approval and ratification by [HCC].”

On May 4, 2006, HCC voted to “discontinue the contract with Jean Moreau ... as of June 30, 2006.” It sent a letter to Ms. Jean Moreau, Jean Moreau's president, on May 8, notifying her of the decision. Roughly one month later, on June 9, Ms. Moreau responded. In a letter to HCC, Ms. Moreau claimed that Jean Moreau was owed “development fees” that had been “deferred until the Bond financing.” She also said that she “wanted to give [HCC] a ‘heads up’ that [she] intend[ed] to seek legal remedy regarding these fees.”

Ten days later, on June 19, HCC sent a letter to Ms. Moreau responding to her “comments regarding unpaid fees due to Jean Moreau.” In that letter, HCC said that it believed that Jean Moreau had been fairly compensated in accordance with the terms of the parties' contract. If Ms. Moreau disagreed, it went on to say, then she should have her attorney submit in writing “the amount owed [and] the contractual term giving rise to an obligation to [Jean Moreau].”

Jean Moreau later submitted nine invoices to HCC for work performed during the 2005–2006 fiscal year. HCC paid the invoices on July 31, 2006. Almost three months later, on October 24, Jean Moreau's attorney sent a letter to one of HCC's members stating that Jean Moreau was willing to mediate the issue of the claimed deferred development fees. In a January 3, 2007 letter, HCC responded that it did not agree with the position Jean Moreau “appear[ed] to offer”—namely, that there were additional payments due under the contract—and that no basis for mediation had been provided.

Roughly two weeks after HCC rejected its offer to mediate, Jean Moreau brought this suit against the Commission, requesting declaratory judgment of the parties' rights and responsibilities under their contract, and asserting claims for breach of contract and quantum meruit. In its complaint, Jean Moreau alleged that HCC's termination of the parties' contract “did not relieve [the Commission] of paying [Jean] Moreau deferred compensation under the contract.” Jean Moreau sought $2.25 million.

HCC filed a plea in bar. It contended that the breach-of-contract claim was barred because Jean Moreau did not comply with the Procurement Act's contractual-claims procedure. HCC further argued that the quantum meruit claim was barred by the doctrine of sovereign immunity because: (1) as an entity created by a county, the Commission was entitled to absolute immunity; and (2) the development of Springdale was a governmental function.

After conducting a hearing and taking evidence, the circuit court sustained HCC's plea in bar. As for the breach-of-contract claim, the circuit court held that it was barred because Jean Moreau did not follow the Procurement Act's contractual-claims procedure. In particular, the circuit court found that, while Jean Moreau filed a notice of intent to file a claim with HCC in its June 9, 2006 correspondence, it subsequently failed to submit the claim or, in the alternative, submitted it beyond the 60–day limitations period provided under Code § 2.2–4363(C)(1). As for the quantum meruit claim, the circuit court disagreed that HCC was immune from the claim on the basis of absolute immunity. Nevertheless, the circuit court ultimately concluded that HCC was immune from the quantum meruit claim because the development and operation of Springdale were “actions taken in its governmental capacity.” The circuit court accordingly dismissed Jean Moreau's claims with prejudice.

Jean Moreau now appeals the dismissal of its claims, and HCC cross-appeals the circuit court's ruling that it was not entitled to absolute immunity.

II. DISCUSSION

We first consider whether Jean Moreau's breach-of-contract claim is barred. We then consider whether its quantum meruit claim is barred and, in doing so, address whether HCC enjoys absolute immunity.

A. Procurement Act

The Procurement Act establishes “the public policies pertaining to governmental procurement from nongovernmental sources.” Code § 2.2–4300. It requires that “[a]ll public contracts with nongovernmental contractors ... for the purchase of services ... shall be awarded” in accordance with its provisions, “unless otherwise authorized by law.” Code § 2.2–4303. There is no dispute in this case that the contract between HCC and Jean Moreau is a “public contract” under the Procurement Act.

“The General Assembly has imposed certain procedures and limitations on the processing and enforcement of contract claims which are subject to the Procurement Act.” Flory Small Business Dev. Ctr. v. Commonwealth, 261 Va. 230, 238, 541 S.E.2d 915, 919 (2001). Among the procedures it has prescribed is that

[c]ontractual claims, whether for money or other relief, shall be submitted in writing no later than 60 days after receipt of final payment; however, written notice of the contractor's intention to file a claim shall be given at the time of the occurrence or at the beginning of the work upon which the claim is based.

Code § 2.2–4363(C)(1). “These are mandatory, procedural requirements which must be met in order for a court to reach the merits of a case.” Flory, 261 Va. at 238, 541 S.E.2d at 919.

The circuit court concluded that Jean Moreau failed to submit a claim within 60 days after final payment, because its October 24 letter to HCC was “not a claim, [but rather] an invitation to settle.” “And, even if [that letter] were a claim,” the circuit court alternatively held, “it was more than 60 days since final payment was made on July 31st, 2006, [and was] therefore barred by the [Procurement Act].”

Jean Moreau contends that the circuit court was wrong because “HCC never provided notice of final payment,” and thus the 60–day limitations period in which to submit a claim never began to run. Jean Moreau further argues that, “even assuming the Court could treat the July 31, 2006 payment as ‘final payment’ for the purposes of § 2.2–4363,” its June 9 letter to HCC “assert [ed] a claim for the additional development fees on the Springdale project,” and “therefore satisfied the Procurement Act.”

We disagree. Nothing in Code § 2.2–4363 requires a public body to give notice that a payment is final before the 60–day limitations period begins to run, and Jean Moreau cites no other section of the Procurement Act that sets forth such a requirement. Nonetheless, HCC's May 8 and June 19 letters to Ms. Moreau notified Jean Moreau that, after the invoices from the 2005–2006 fiscal year were satisfied, the Commission would make no more payments under the parties' contract. In the May 8 letter, HCC said...