BENHAM, Justice.
This case involves a written contract between a vendor and a state agency that contained form language stipulating that amendments had to be in writing and executed by the agency and the contractor. The vendor asserts that the contract was extended by course of conduct as well as by certain internal writings created by the agency. By the terms of Georgia's constitution, the state waives its sovereign immunity for breach of contract when it enters into a written contract.
The record shows appellant Georgia Department of Labor (DOL) entered into the contract in question with appellee RTT Associates, Inc. (RTT) for the purpose of engaging RTT to develop certain computer software. A representative of both parties executed the written contract. The contract identified the beginning date to be March 1, 2012, and the expiration date, or "Date of Completion," to be June 30, 2012.
DOL made one progress payment to RTT for the work involved in the first of four milestones in the contract, along with an advance toward the second milestone payment even though DOL claims that work was never delivered. In order to accommodate a change in federal law that impacted the desired software design, DOL executed an internal project change request by which it sought and was granted authority to increase the cost of the contract by $12,000. The change request, approved on June 12, 2012, states it does not impact the contract schedule. An internal purchase order, dated July 17, 2012, was prepared to support this change to the contract, and the purchase order references a contract date of August 30, 2012. In response to another change in federal law, a second internal project change request involving a $7,000 change to the scope of the contract was submitted on September 14 and approved on September 17, 2012. Neither of these change request documents was executed by RTT and no evidence exists that shows RTT was provided a copy of these documents at any time prior to the filing of RTT's lawsuit. No written amendment to the contract was executed by either party to extend the expiration date of the contract or modify any other contract term. RTT admits it did not complete the required work on or before the executed contract's expiration date.
The record reflects that even after the contract's stated expiration date, the parties continued to communicate and work together with respect to development and delivery of a workable software product that satisfied DOL's requirements. By letter dated April 3, 2013, however, DOL notified RTT that it was in breach of the contract for its failure to deliver a functional product that complied with the contract requirements, and that the contract was immediately terminated. Also on that date, DOL made a written claim against the performance bond. In a May 7, 2013, meeting between the parties' representatives, DOL informed RTT that it would not utilize RTT's software.
RTT filed suit against DOL seeking damages for, among other things, breach of contract. In its complaint, RTT asserted DOL improperly terminated the contract because it failed to give notice of a claim of default and an opportunity to cure default before termination, as required by the terms of the contract. After certain claims and counterclaims were disposed of by the trial court's orders, and after conducting an evidentiary hearing, the trial court granted DOL's motion for summary judgment on all remaining claims. The trial court concluded RTT had failed to carry its burden of proof that the contract had been extended or amended by a writing executed by both parties, as required by the terms of the contract. Instead, the trial court found that "[a]t best, the record evidences [DOL's] willingness to not hold [RTT] to the delivery deadline contained in the written [c]ontract." Therefore, the trial court concluded, sovereign immunity was not waived, as required by constitutional and statutory provisions, beyond the required completion date of the contract.
RTT timely appealed, and the Court of Appeals reversed the grant of summary judgment to DOL, finding, inter alia, that evidence of the parties' course of conduct created a question of fact as to whether the parties waived or extended the required completion date as well as the provision that the contract could be amended only in writing. RTT Associates, Inc. v. Georgia Dept. of Labor, 333 Ga.App. 173, 178(1), 775 S.E.2d 644 (2015). Consequently, the Court of Appeals held the trial court erred in concluding, as a matter of law, that RTT's claims were barred by the doctrine of sovereign immunity. Id. at 179(1), 775 S.E.2d 644. This Court granted DOL's petition for writ of
To summarize, RTT failed to complete its contractual obligations before the contract expired. Even if the parties' conduct after the expiration of the contract could be found to demonstrate an agreement between the parties to continue to perform under the original contract, as a matter of law neither that conduct nor the internal documents created by DOL after the contract expired establishes a written contract to do so. Without a written contract, the state's sovereign immunity from a contract action is not waived.
1. The Georgia Constitution addresses the waiver of the state's immunity from liability for breach of contract as follows:
Ga. Const. of 1983, Art. I, Sec. II, Par. IX (c) and (e). Accordingly, since the DOL is an agency of the state
The burden of demonstrating a waiver of sovereign immunity rests upon the party asserting it. Bd. of Regents, etc. v. Barnes, 322 Ga.App. 47, 49-50(2), 743 S.E.2d 609 (2013) (addressing the claimant's duty to establish the existence of a written contract in order to claim waiver of sovereign immunity, and holding that an implied contract will not support a waiver under the sovereign immunity provisions of the Georgia Constitution); Georgia Dept. of Community Health v. Data Inquiry, LLC, 313 Ga.App. 683, 685(1), 722 S.E.2d 403 (2012) (same). See also Bd. of Regents, etc. v. Daniels, 264 Ga. 328, 329, 446 S.E.2d 735 (1994) (addressing the claimant's duty in a tort action to demonstrate waiver of immunity through the state agency's purchase of liability insurance covering the claim). Whether sovereign immunity has been waived under the undisputed facts of this case is a question of law, and this Court's review is de novo. See Georgia Dept. of Natural Resources v. Center for a Sustainable Coast, Inc., 294 Ga. 593, 596(2), 755 S.E.2d 184 (2014). For reasons more fully set forth below, we find RTT has failed to meet its burden of showing waiver of sovereign immunity.
2. Citing, with one exception, cases involving contract disputes in which the state was not a party, the Court of Appeals ruled that contractual obligations may survive the end of a written contract; that parties may modify the terms of a written contract by mutual consent and without a writing; and that the contracting parties may waive a provision that the contract may be modified only in writing. See RTT Associates, supra, 333 Ga.App. at 177-178(1), 775 S.E.2d 644. While private parties, however, may be able to modify and extend written contracts by manifesting their intent to do so even without a written agreement, the enforceability of a contract against the state is governed by the constitution and by statute. In order for sovereign immunity to be waived with respect to contract actions against the state, the contract must be in writing. The Court of Appeals erred in extending general common law rules of contract in a manner that creates contract liability against a state agency for an agreement
Even if, as the Court of Appeals concluded, DOL and RTT waived, through their course of conduct, the provision that the contract could be amended only in writing and similarly waived or extended the required completion date, this conduct could not have waived DOL's sovereign immunity. In Bd. of Regents, etc. v. Tyson,
General rules of contract law that might otherwise support a claim for breach of contract damages between private parties, however, will not support a claim against the state or one of its agencies if the contract is not in writing so as to trigger the waiver of sovereign immunity. See PMS Construction Co., Inc. v. DeKalb County, 243 Ga. 870, 257 S.E.2d 285 (1979). In PMS Construction, this Court held that a party may not recover for breach of contract from a county based upon an implied contract, nor upon a claim of quantum meruit for the value of services provided, because of the statutory requirement that a contract with a county must be in writing pursuant to what is now OCGA § 36-10-1 (requiring public works contracts with a county to be in writing and entered on the county's minutes). Id. at 872(2), 257 S.E.2d 285. Similarly, we hold that general contract rules may not be applied to create a waiver of sovereign immunity where the contract is not in writing as required by the constitution and by OCGA § 50-21-1. "The doctrine of sovereign immunity requires that the conditions and limitations of the statute that waives immunity be strictly followed...." Bd. of Regents, etc. v. Barnes, supra, 322 Ga.App. at 50(2), 743 S.E.2d 609 (implied contract will not support a waiver of sovereign immunity). Regardless of the parties' course of conduct, that conduct was ineffective to waive sovereign immunity since waiver of sovereign immunity for a breach of contract action requires a written contract. This contract had expired before RTT fully performed under it. We note that all the conduct and internal documents relied upon by RTT came after the contract's expiration date, so that DOL's waiver of immunity had already expired.
As noted, only one of the cases relied upon by the Court of Appeals, to support its conclusion that a contractual requirement that modifications must be in writing may be waived by course of conduct, involved a breach of contract claim against an entity with sovereign immunity, namely a county.
RTT relies upon other Court of Appeals cases to support its assertion that a state agency may waive sovereign immunity by its waiver of certain contract terms. As illustrated below, these cases are either distinguishable or are hereby disapproved.
In Dept. of Transportation v. Dalton Paving & Construction, Inc.,
In State Hwy. Dept. v. Wright Contracting Co.,
In sum, the Court of Appeals erred when it applied common law principles regarding the ability of parties to modify or waive contract provisions by their conduct or manifest intent to the issue of whether DOL waived, by its conduct, its sovereign immunity from RTT's claims. Only the General Assembly, and not the courts, has authority to waive sovereign immunity. See Georgia Dept. of Natural Resources v. Center for a Sustainable Coast, Inc., supra, 294 Ga. at 599, 755 S.E.2d 184 and cases cited therein.
3. It follows that the Court of Appeals also erred in concluding that an issue of fact remains to be determined with respect to whether certain actions and statements by DOL employees effectively extended the terms of the written contract, thereby defeating DOL's claim of sovereign immunity. In support of its conclusion that a jury could find sovereign immunity was waived by course of conduct, the Court of Appeals points to DOL's continued acceptance of new editions of the software RTT delivered after expiration of the completion date; to DOL's statement in its letter sent well after the expiration of the completion date notifying RTT that the contract was (only then) "terminated immediately" and further stating the contract had been extended multiple times to allow RTT to complete and deliver a satisfactory product; and to DOL's correspondence to the surety company stating the same.
In this case, the written contract specified a completion date on which the contract expired, and required that amendments to it must be in writing. To permit immunity to be waived by an unwritten extension of the contract created by the course of conduct of DOL employees would be to authorize a state agency, itself, to waive sovereign immunity, by means other than entering into a written contract. A state agency's statutory authority to enter into contracts does not trigger the consent of the General Assembly for that agency to be sued, ex contractu, unless it is a written contract as required by OCGA § 50-21-1. See Op. Atty. Gen. 66-261 (advising the Board of Regents that even though it has statutory authority to enter into contracts, it has no authority to enter into a contractual obligation to assume tort liability for a third party, under a hold harmless clause of a lease, that would waive that agency's sovereign immunity). See also Op. Atty. Gen. 80-67 (advising the Georgia
Even if the actions, statements, or conduct of DOL employees could be found by a trier of fact to have extended the RTT contract and waived the requirement that it could be amended only in writing, whether DOL waived sovereign immunity beyond the terms of the written contract is not an issue of fact; it is an issue of law. As a matter of law, sovereign immunity was not and could not be waived by DOL's actions that occurred after the date the written contract expired. Even the internal pay requests and purchase order prepared after the date the contract expired do not serve as evidence that would either create a contract sufficient to waive sovereign immunity pursuant to OCGA § 50-21-1 or serve to extend the original written contract that had expired because these documents are not executed by both parties and are not otherwise sufficient to create an enforceable contract. See Bd. of Regents v. Tyson, supra, 261 Ga. at (1), 404 S.E.2d 557; Georgia Dept. of Community Health v. Data Inquiry, LLC, supra, 313 Ga.App. at (1)(b), 722 S.E.2d 403. The same rule would apply to any admissions made by DOL employees that the contract had been extended, when the evidence shows any agreements to extend did not meet the written contract requirement set forth in the applicable statute and constitutional provision relating to waiver of sovereign immunity. Consequently, the Court of Appeals erred in concluding that an issue of fact was created as to whether the actions, statements, or conduct of DOL employees could be found to have waived the agency's sovereign immunity.
The constitutional provision expressly reserving the power to waive sovereign immunity to the legislature "does not allow for exceptions" to be created by the courts. Georgia Dept. of Natural Resources v. Center for a Sustainable Coast, Inc., supra, 294 Ga. at 599-600, 755 S.E.2d 184. Thus, no exception to the rules regarding waiver of sovereign immunity may be created by the courts in this case based upon any reliance RTT may have placed upon the parties' continued communications regarding the incomplete software project after the expiration of the written contract. Any work that may have been performed after the contract expired was not performed pursuant to a written contract and cannot support a claim against DOL due to the bar of sovereign immunity. While this result may seem harsh, parties are presumed to know the law, and are required "at their peril" to ascertain the authority of a public officer with whom they are dealing. City of Atlanta v. Black, 265 Ga. 425, 426, 457 S.E.2d 551 (1995) (despite the presumptive plenary authority of private sector attorneys to negotiate settlements between parties, plaintiffs in an action against the City of Atlanta were presumed to know that the authority conferred on the city attorney to enter into a monetary settlement of their claim was expressly limited by city ordinance).
"[A] fundamental purpose of sovereign immunity is the protection of state funds." Georgia Dept. of Corrections v. Couch, 295 Ga. 469, 480(2)(b), 759 S.E.2d 804 (2014). It follows that one of the purposes of the constitution's requirement that contracts must be in writing in order to invoke the state's waiver of sovereign immunity is to protect the state from exposure to unanticipated damages. As DOL asserts, to permit agency employees to create open-ended pledges of the state's credit that cannot be determined by examination or audit of written agency contracts would potentially violate the state's budgeting process
Judgment reversed.
All the Justices concur.