CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA, PURSUANT TO O.C.G.A. § 15-2-9. TO THE SUPREME COURT OF GEORGIA AND ITS HONORABLE JUSTICES:

In this case we must determine under what circumstances, if any, a Georgia municipality may contractually indemnify a private party for loss, damage, or liability arising in connection with a public works project involving the private party's land. The district court granted summary judgment in favor of a municipality that had entered into such an agreement on the ground that it was ultra vires. Because the resolution of this appeal turns on questions of first impression under Georgia law, we certify it to the Supreme Court of Georgia for review. Questions CERTIFIED.

The facts of this case, which are not in dispute, were succinctly stated in our earlier opinion, CSX Transp., Inc. v. City of Garden City, 235 F.3d 1325, 1326 (11th Cir.2000) ("CSX I"):

In 1996, the City of Garden City, Georgia (Garden City or the City) decided to install water and sewer lines along the public rights-of-way that ran across, under, and parallel to CSX Transportation, Inc.'s (CSX) railroad tracks. The City contracted with CSX to use CSX's rights-of-ways and agreed to indemnify CSX for any damages arising out of the City's use of the rights-of-way. Under the contract, the City agreed to maintain insurance to cover the indemnity obligations it had assumed.

Garden City employed ARCO, Inc. as the general contractor for this project which employed CARLCO Trucking, Inc. as a sub-contractor. On October 9, 1997, a CARLCO employee drove a tractor-trailer truck to the City's work site to remove equipment. As he crossed CSX's tracks, his truck stalled on the tracks where it was hit by a National Railroad Passenger Corporation (Amtrak) passenger train. CSX paid damages to passengers on the train and sued Garden City for indemnification under their agreement. Garden City filed a third-party claim against its contractor, ARCO.

The City moved for summary judgment, claiming that the indemnity agreement was void for a number of reasons. The district court granted the motion, concluding that the agreement constituted an impermissible waiver of the City's sovereign immunity in the absence of any evidence that the City had liability insurance that would cover the indemnity claim. Id. at 1329. On appeal, CSX1 moved to supplement the record "to show that Garden City participates in the Georgia Interlocal Risk Management Agency (GIRMA) fund." Id. at 1330. We observed that the indemnification agreement, "in effect, required the City to waive its sovereign immunity vis-a-vis CSX in connection with any claims against CSX arising out of the City's construction project," id. at 1329, but that "Georgia law ... forbids a city from waiving its sovereign immunity unless it has insurance to fund any liability it might thereby incur." Id. Relying on our "inherent equitable power to allow supplementation of the appellate record if it is in the interests of justice," we granted the motion. Id. at 1330, 1331. Expressing no opinion in the outcome, we "remand[ed] the case to the district court so that it [could] consider [the City's participation in the GIRMA fund] before determining whether Garden City effectively waived its immunity by its agreement to indemnify CSX." Id. at 1331.

On remand, the district court stated the issue as "whether the City is legally authorized to contractually waive its immunity by purchasing insurance to indemnify CSX against third party liability claims." R7-87 at 3-4. Finding that "CSX ha[d] pointed to no express authority for a contract enabling CSX to hold the City liable for negligence claims against CSX," id. at 7-8, "that the Georgia legislature was interested in permitting, contingent on the purchase of insurance, a way for injured members of the public to `sue city hall' for negligence damages ..., not contract-based damages, and most certainly not contract damages flowing from the `tort indemnification' of third parties like CSX," id. at 8 (footnote omitted), and that "contractual indemnification ... is a considered choice the Georgia legislature should make ... not a federal court sitting in diversity," id. at 9, the court concluded that the indemnification contract was ultra vires and granted summary judgment in favor of the City.2 Id. at 9. After certification pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, CSX timely appealed.3

"This court reviews a grant of summary judgment de novo, applying the same standards as the district court." O'Ferrell v. United States, 253 F.3d 1257, 1265 (11th Cir.2001). Though the material facts are not in dispute here, we must determine whether the indemnification agreement is void ab initio as a matter of law. In accordance with Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938), we review the district court's decision in light of Georgia law. "Where there is any doubt as to the application of state law, a federal court should certify the question to the state supreme court to avoid making unnecessary Erie `guesses' and to offer the state court the opportunity to interpret or change existing law." Mosher v. Speedstar Div. of AMCA Int'l, Inc., 52 F.3d 913, 916-17 (11th Cir.1995) (footnote omitted). Because this case presents a question of first impression under Georgia law, we seek guidance from the Supreme Court of Georgia and certify the questions set out below.

Georgia "[m]unicipalities are creatures of the legislature. They possess only such powers as are expressly delegated to them by the legislature. They possess no inherent powers." Koehler v. Massell, 229 Ga. 359, 191 S.E.2d 830, 833 (1972). As such, Georgia courts "have long acknowledged that municipal corporations have only limited power to enter into contracts." Precise v. City of Rossville, 261 Ga. 210, 403 S.E.2d 47, 49 (1991). While "[a] municipal corporation may bind itself by, and cannot abrogate, any contract which it has the right to make," Williams v. City Council of West Point, 68 Ga. 816, 816 (1882), it has no power to enter into a contract if it is not authorized by charter or by legislative grant. Barrett v. City of Atlanta, 145 Ga. 678, 89 S.E. 781, 782 (1916). There must be express or implied authority. See Forsyth County v. Childers, 240 Ga.App. 819, 525 S.E.2d 390, 392 (1999). "If a contract is beyond the power or competence of the local government, then the contract is termed ultra vires and is void." Precise, 403 S.E.2d at 49. Even "`complete performance of such contract on the part of [the other party] will not prevent the municipal corporation from pleading its want of power or the illegality of the contract.'" City of Warm Springs v. Bulloch, 212 Ga. 149, 91 S.E.2d 13, 14 (1956) (quoting City Council of Dawson v. Dawson Waterworks Co., 106 Ga. 696, 32 S.E. 907, 907 (1899)). Here, Garden City argues that the indemnification agreement is ultra vires and void on several grounds.

First, the City argues that the indemnity agreement constitutes an impermissible waiver of the municipality's sovereign immunity. "The common law doctrine of sovereign immunity, adopted by [Georgia] in 1784, protected governments at all levels from unconsented-to legal actions." Gilbert v. Richardson, 264 Ga. 744, 452 S.E.2d 476, 478 (1994) (footnote omitted). By statute, municipalities are clothed with immunity and shielded from "liab[ility] for failure to perform or for errors in performing their legislative or judicial powers." O.C.G.A. § 36-33-1(b) (2000).4 Thus, "[i]n Georgia a municipal corporation is not liable in damages for injuries arising from the exercise of a governmental function." Boone v. City of Columbus, 87 Ga.App. 701, 75 S.E.2d 338, 339 (1953). "The General Assembly may waive the immunity of counties, municipalities, and school districts by law." Ga. Const. art. IX, sec. II, para. IX. Relying on this provision, with two exceptions relating to the purchase of liability insurance, "the General Assembly... declares it is the public policy of the State of Georgia that there is no waiver of the sovereign immunity of municipal corporations of the state and such municipal corporations shall be immune from liability for damages." O.C.G.A. § 36-33-1(a). Generally, "a municipality cannot ratify the unlawful acts of its subordinate officials done in pursuance of its governmental functions so as to make itself liable for such acts." Boone, 75 S.E.2d at 340. Accordingly, "[a] municipal corporation shall not waive its immunity by the purchase of liability insurance, except as provided in Code Section 33-24-51, or unless the policy of insurance issued covers an occurrence for which the defense of sovereign immunity is available, and then only to the extent of the limits of such insurance policy." O.C.G.A. § 36-33-1(a).5

Since these two code sections are the only ones to waive municipal immunity, the more specific question we need answered is whether the validity of an agreement by a Georgia municipality to contractually indemnify a private party is first even controlled by O.C.G.A. § 36-33-1(a).6 If so, we then ask the effect of § 36-33-1(a) on the indemnification agreement. In this case, the City purchased a GIRMA liability policy.7 The Georgia Supreme Court has held that such a policy constitutes the purchase of liability insurance within the meaning of § 36-33-1(a), after having concluded that the statutory provision to the contrary remained unconstitutional. See Gilbert, 452 S.E.2d at 482.8 We are uncertain, however, whether the policy "covers an occurrence for which the defense of sovereign immunity is available." O.C.G.A. § 36-33-1(a).

The City indemnified and held CSX harmless from any and all liability, loss, and damage it suffered in connection with the project, unless solely the fault of CSX, including the negligence of others for which the municipality would otherwise not be liable.9 Thus, it exposed itself to liability for "occurrences" for which the sovereign immunity defense, absent waiver, would be both available10 and unavailable11 in a pure tort action. If § 36-33-1(a) is to be read for its plain meaning, then, waiver of sovereign immunity as to the former would be permissible as, presumably, would an indemnity agreement to that effect, whereas waiver as to the latter would be impermissible as, presumably, would an indemnity agreement to that effect. Yet, Garden City's indemnity agreement covers them all.12

In addition to the absence of any express authority in § 36-33-1(a) as to the validity of a municipality's indemnification agreement, there is no binding case law on the subject.13 To complicate matters even further, there are at least two, diametrically opposed policy arguments. On the one hand, "[c]ities [should] be able to induce the CSX's of the world to cooperate in public works projects such as in the case sub judice by entering into contractual indemnity agreements." R7-87 at 8. On the other hand, "one modern purpose of the [sovereign immunity] doctrine is to `preserve the protection of the public purse.'" Gilbert, 452 S.E.2d at 481 n. 7 (citation omitted). Because "there is no provision of law for raising the funds with which to pay a claim not authorized or recognized by law[, i]t stands to reason that a municipal corporation cannot make an illegal act legal by a simple act of waiver. In doing so, it would be encroaching on the powers of the State, of which it is only a creature." Boone, 75 S.E.2d at 340. Otherwise, as Garden City points out, "corrupt or merely inept public officers could subject the public to untold financial liability." Appellee's Br. at 16. These rationales apply equally to waivers of sovereign immunity in tort actions and indemnity agreements having the same effect. Thus, even if § 36-33-1(a) were to control the question of the validity of municipal indemnity agreements, we decline to decide the operation of the provision as applied to the facts of this case, since they involve unsettled questions of state law and public policy and, accordingly, certify the question to the justices of the Georgia Supreme Court for their review.

Supposing that the indemnity provision here does not constitute an impermissible waiver of Garden City's sovereign immunity, and, therefore, is not ultra vires on this ground, we must nevertheless consider other possible grounds under state law that might bar the City's indemnification of private parties. See J.E. Riley Inv. Co. v. Commissioner, 311 U.S. 55, 59, 61 S. Ct. 95, 97, 85 L. Ed. 36 (1940) ("Where the decision below is correct it must be affirmed by the appellate court though the lower tribunal gave a wrong reason for its action."); Magluta v. Samples, 162 F.3d 662, 664 (11th Cir.1998) (per curiam) ("[W]e may not reverse a judgment of the district court if it can be affirmed on any ground, regardless of whether those grounds were used by the district court."); Turner v. Am. Fed'n of Teachers Local 1565, 138 F.3d 878, 880 n. 1 (11th Cir.1998) ("We must affirm the judgment of the district court if the result is correct even if the district court relied upon a wrong ground or gave a wrong reason.").

Garden City argues two additional grounds for voiding the indemnity provision: it creates both an unlawfully lengthy obligation and an unlawful public debt.14 Under Georgia law, "[o]ne council may not, by an ordinance, bind itself or its successors so as to prevent free legislation in matters of municipal government." O.C.G.A. § 36-30-3(a). In Screws v. City of Atlanta, 189 Ga. 839, 8 S.E.2d 16 (1940), the Georgia Supreme Court extended the prohibition to contracts. Id. at 20 (holding that a contract between a city and a private party whereby the former agrees to supply free water to the latter for a period of twenty-five years is void).

Consideration of whether municipal contracts are subject to the prohibition ... involves at least 4 questions: (1) Is the contract governmental in nature and hence subject to the prohibition, or proprietary and hence not subject to the prohibition? (2) If governmental in nature, is the contract subject to an exception? (3) If not, is the contract subject to ratification and has it been ratified? (4) If not, is the municipality estopped from relying on the statutory prohibition?

City of Powder Springs v. WMM Props., Inc., 253 Ga. 753, 325 S.E.2d 155, 158 (1985) (footnote omitted).

It is clear that the installation and maintenance of sewers is a governmental function. Barr v. City Council of Augusta, 206 Ga. 750, 58 S.E.2d 820, 822 (1950). Whether a municipality's agreement to indemnify private parties ultimately violates § 36-30-3(a), however, appears to be a question of first impression in Georgia.15 Though the contract in which the indemnity provision at issue here is contained is "year-to-year, subject to the right of either party hereto to terminate at the end of any one (1) year term by written notice," R4-58, Ex. A at 2, § 2.3, it is unclear to us whether the act of indemnification itself, if the need so arose, would "prevent free legislation in matters of municipal government," O.C.G.A. § 36-30-3(a), especially in light of the certain delays inherent in litigation, or whether the act would constitute a "`reasonable time beyond the official term of the officers entering into the contract for the municipality'" permitted by "`[t]he weight of authority.'" Unified Gov't of Athens-Clarke County v. North, 250 Ga.App. 432, 551 S.E.2d 798, 803(2001) (citation omitted). Accordingly, we certify the question to the Georgia Supreme Court.

The second, other ground asserted by the City to void the indemnification agreement is that it creates an unlawful public debt. The Georgia Constitution prohibits any municipality from "incur[ring] any new debt without the assent of a majority of the qualified voters ... voting in an election held for that purpose as provided by law." Ga. Const. art IX, sec. V, para. I(a).

Whenever a political subdivision undertakes a liability which is "not to be discharged by money in the treasury, or by taxes to be levied during the year in which the contract under which the liability arose was made," such a debt is created. Therefore, if a municipality 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, 35 (1989) (citation omitted).16 As with the statutory provision precluding the binding of legislative successors, we are uncertain whether a city's indemnification agreement constitutes a fiscal obligation extending beyond a single year. Accordingly, we certify this question as well.

Even if the indemnification agreement here is not void as an unlawful waiver of sovereign immunity, binding of successors, or creation of a new public debt, that does not end the inquiry. As we have explained, there must be express or implied authority in order for a municipality to enter into a binding contract. See Forsyth County, 525 S.E.2d at 392. CSX does not argue that express authority exists for municipal indemnity contracts. Rather, they argue that the requisite authority is implied from express constitutional and statutory authority to provide sewer services as well as the authorization contained in the City's charter to enter into contracts for the provision of such services.17 "A municipal corporation, unless restricted by its charter, has power to enter into any necessary contract for the accomplishment of a corporate purpose.... [S]uch power necessarily implies the right to do all things which may be required for the proper execution of such power." Mayor of Washington v. Faver, 155 Ga. 680, 117 S.E. 653, 656 (1923) (citation omitted).

Where, by statute, jurisdiction over a subject-matter is conferred upon county authorities, and therein the power to do certain things is expressed, the further power to contract in regard to that subject-matter is to be implied; and a part of this implicit power is the authority to use discretion as to the details of such contracts, subject only to the limitations imposed by the statutes or public policy of the state.

Wright v. Floyd County, 1 Ga.App. 582, 58 S.E. 72, 72 (1907) (cited with approval in Smith v. Bd. of Comm'rs, 244 Ga. 133, 259 S.E.2d 74, 77 (1979)).18

CSX relies on Hancock County v. Williams, 230 Ga. 723, 198 S.E.2d 659 (1973) (per curiam) ("Williams I") to argue that this implied authority includes indemnity agreements. In that case, the plaintiffs brought an action "to recover for the death of their mother who was drowned when the automobile in which she was a guest passenger ran into ... an artificial impoundment of water ..., on a road which ran directly into such lake without any warning sign." Id. at 660. The plaintiffs filed a claim against the power company that owned the road and the lake. They also filed a claim against a county government that had previously entered into an easement contract with the power company for use of the road and, in that contract, had agreed to indemnify the power company "for any damages arising out of the use of such easement by the county." Id. at 660, 661. The power company filed a cross claim seeking indemnification from the county, and the county moved to dismiss both the claim and the cross claim. Finding that the county was authorized by statute to provide recreational facilities for its residents, the court held that "the contract was authorized [and b]eing an authorized contract, the action would lie thereon" and, accordingly, affirmed the trial court's order overruling both of the county's motions. Id. at 661. In doing so, the court noted that it was not required to first determine whether a state statute, providing for the county's sovereign immunity and its waiver, was unconstitutional as alleged because "[t]he complaint as finally amended set forth a cause of action against [the county] based upon the contract which was valid." Id. (emphasis added). Thus, by implication, the court in Williams I refused to dismiss the suit on the ground that the plaintiffs were third-party beneficiaries to the indemnification contract between the county and the power company. See O.C.G.A. § 9-2-20(a) ("As a general rule, an action on a contract ... shall be brought in the name of the party in whom the legal interest in the contract is vested, and against the party who made it in person or by agent."); § 9-2-20(b) ("The beneficiary of a contract made between other parties for his benefit may maintain an action against the promisor on the contract.").

In Williams v. Georgia Power Co., 233 Ga. 517, 212 S.E.2d 348, 350 (1975) ("Williams II"), however, on a post-judgment appeal by the plaintiffs after a jury had returned a verdict for the power company and the county, the court did decide the constitutional question, concluding that the statutory provision providing for the county's sovereign immunity was not unconstitutional. It also found that, since there was no specific statutory authority waiving the county's sovereign immunity and no ground to maintain a nuisance action against the county, the trial "court [had] correctly charged the jury that the only liability of the county was under its indemnity contract with the power company." Id. at 351.

In Dekalb County v. Gibson, 146 Ga.App. 573, 246 S.E.2d 692, 692-93 (1978), the parent of a child who drowned at a county swimming pool brought a wrongful death action against the county predicated on allegations of negligence and nuisance as well as an action as a third-party beneficiary to a contract allegedly created between the county and the child when he paid admission to the pool. After finding no basis for the nuisance claim and no statute waiving the county's immunity to the tort claim, the court concluded that Williams I would not permit the third-party breach of contract claim because there, presumably unlike in Gibson, "the county had entered into an indemnity contract under statutory authority with [the power company] and this contract authorized the suit against the county." Id. at 693. "In the absence of statutory authority to maintain this suit [either as a tort or contracts claim], the doctrine of sovereign immunity completely bars this claim." Id. Thus, Williams I appears to hold that, irrespective of whether sovereign immunity exists, if a county contract is generally authorized, a third-party beneficiary action may be had, while Gibson holds that, absent express statutory authority, a third-party breach of contract claim against a county is barred by sovereign immunity. In other words, Gibson seems to suggest that statutory authority to enter into the contract waives sovereign immunity, while Williams I appears to suggest that statutory authority permits the contract and that sovereign immunity is not even an issue.

In Miree v. United States, 242 Ga. 126, 249 S.E.2d 573 (1978), the matter was again addressed. The Georgia Supreme Court, in answering certified questions from the former Fifth Circuit, concluded that plaintiffs, who had brought an action against a county government to recover for injuries sustained as a result of the crash of a Lear jet taking off from an airport operated by the county under contract with the Federal Aviation Administration, were not third-party beneficiaries to that contract because "[t]he county's exposure of liability ... is too broad to permit a contention that every injured party was an intended beneficiary under the public contract in this case." Id. at 574, 575, 576, 579. In doing so, the court first felt compelled to observe that, after "review[ing] the record and the assignments of error in" Williams I, "[t]he subsequent decision of this court in that same case, [Williams II], limiting the holding in the earlier decision, is a correct pronouncement of the law, and anything that was said in the first decision contrary to the pronouncement made in the second decision will not be followed." Id. at 579.

Prior to reading Miree, we understood that Williams I, Williams II and Gibson all endorsed the same basic proposition that, because the indemnity contract between the county and the power company was valid as implied by statutory authorization of the activity giving rise to the contract in the first instance, the plaintiffs's third-party contract claim was also authorized. We do not understand how Williams II limits the holding of Williams I. We also are unsure as to what effect this limitation, if any, has on the validity of the indemnity provision itself, irrespective of the validity of a third-party contract claim brought by plaintiffs seeking, in contracts, what they are barred by sovereign immunity from recovering in a tort action. Furthermore, even if these cases do assume that a county may agree to indemnify a private party for the county's own negligent acts, it is not clear whether the argument presented in this case, that such agreements are void in themselves, was squarely before the court in these other cases. It is also not clear whether such an agreement would also be permissible if the county agreed to indemnification for the negligent acts of other parties in addition to its own.19

Thus, we cannot readily agree with CSX that these cases consistently recognize the principle that a municipality's implicit authority "`to enter into contracts necessary and proper to carry into effect [its] powers,'" Wright, 58 S.E. at 74 (citation omitted), extends to indemnity agreements with private parties. The pattern of these holdings is confusing to us. Therefore, we certify this question to the Georgia Supreme Court.

After thorough review of Georgia law, we find that these issues remain unsettled and unaddressed and, therefore, certify the following questions:

1. MAY A GEORGIA MUNICIPALITY CONTRACTUALLY INDEMNIFY A PRIVATE PARTY FOR ANY AND ALL LOSS, DAMAGE, AND LIABILITY ARISING IN CONNECTION WITH A PUBLIC WORKS PROJECT INVOLVING THE PRIVATE PARTY'S LAND?

2. IF NOT, IS THERE ANY LOSS, DAMAGE, OR LIABILITY ARISING IN CONNECTION WITH A PUBLIC WORKS PROJECT INVOLVING A PRIVATE PARTY'S LAND FOR WHICH A GEORGIA MUNICIPALITY MAY CONTRACTUALLY INDEMNIFY THE PRIVATE PARTY?

This appeal ensued after the district court granted summary judgment in favor of a municipality, finding that the municipality's agreement to indemnify a private party for any and all loss, damage, and liability arising in connection with a public works project involving the private party's land interest was ultra vires and, consequently, void. Because of the important issues involving sovereign immunity and municipal authority to contract, we have decided to certify the above-styled questions to the Georgia Supreme Court. Neither the phrasing used in these questions, nor our own analyses, should limit the Supreme Court's analyses or answers. To assist in its consideration of the questions, the entire record, along with the briefs of the parties, shall be transmitted to the Supreme Court of Georgia. Until the Supreme Court responds to our certified questions, all relevant proceedings in this appeal are STAYED.

QUESTIONS CERTIFIED.