Opinion ID: 76107
Heading Depth: 2
Heading Rank: 2

Heading: Void on Other Grounds

Text: 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 s tate law th at might b ar the City ’s indem nification of priva te parties. See 14 J.E. Riley Inv. Co. v. Commissioner, 311 U.S. 55, 59, 61 S. Ct. 95, 97 (1940) (“Where the decision below is correct it must be affirmed by the appellate court though the low er tribun al gave a w rong re ason fo r its action.” ); Magluta v. Samples, 162 F.3d 662, 66 4 (11th Cir. 1998) (per cu riam) (“[W]e may not reverse a judgment of the district court if it can be affirmed on any ground, regardless of wheth er those g round s were u sed by th e district co urt.”); 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 w rong reason.”). Garden City argues tw o additio nal grou nds for voiding the indem nity provisio n: it creates b oth an u nlawfu lly lengthy obligatio n and an unlaw ful pub lic 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 Screw s v. City o f Atlanta, 8 S.E.2d 16 (Ga. 1940), the Georg ia Supr eme Co urt exten ded the p rohibitio n to con tracts. Id. at 20 (holding 14 In its first motion for summary judgment, the grant of which was on appeal in CSX I, the City also contended, in addition to its sovereign immunity argument, that the indemnity agreement “impermissibly grants a gratuity[] and violates public policy.” 235 F.3d at 1330 n.8. Since we remanded the case “for reconsideration of the issue of immunity in view of the existence of the GIRMA policy,” we did not “consider the issues of unlawful obligation and public debt as they may depend on the existence of insurance coverage.” Id. We found, however, “no merit in the remaining arguments advanced by the City.” Id. Thus, we do not consider them here. 15 that a con tract betw een a city an d a priva te party w hereby th e forme r agrees to supply f ree wate r to the latter for a per iod of tw enty-five years is vo id). 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. WM M Props., Inc., 325 S.E.2d 155, 158 (Ga. 1985) (footno te omitted ). It is clear that the installation and maintenance of sewers is a governmental function . Barr v. C ity Coun cil of Au gusta, 58 S.E .2d 820 , 822 (G a. 1950 ). Wheth er a mun icipality’s ag reemen t to indem nify priv ate parties u ltimately violates § 36-30 -3(a), ho wever , appears to be a qu estion of first impr ession in Georgia.15 Thou gh the co ntract in w hich the in demnity provisio n at issue h ere is contained is “year-to-year, subject to the right of either party hereto to terminate at the end o f any on e (1) year term by w ritten notic e,” R4-5 8, Ex. A at 2, § 2.3 , it is unclear to us wh ether the a ct of inde mnificatio n itself, if the need so arose, w ould 15 In City of Douglas, the Georgia Court of Appeals voided a contract entered into by a municipality to pay damages to the owner of land, upon which the municipality had been granted an easement for the purpose of running a sewer line, because it went beyond the term of office of the council executing the contract and was not otherwise a covenant running with the land. 137 S.E.2d at 359-62. Unlike that case, the train/truck collision giving rise to our case actually took place within the term of office of city officials who approved the agreement. 16 “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 c onstitute a “‘reason able 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 o f Athen s-Clark e Coun ty v. No rth, 551 S.E.2d 798, 803 (Ga. Ct. App. 2001) (citation omitted). Accordingly, we certify the question to the Georg ia Supr eme Co urt. 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 provid ed by law .” Ga. C onst. art IX , sec. V, p ara. 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 con tract under which the liability arose was m ade,” suc h a debt is created. T herefor e, if a mun icipality undertakes an obligation that extends beyond a single fiscal year, then a new “d ebt” has b een incu rred w ithin the m eaning o f the Ge orgia Constitu tion and requires voter ap proval. 17 Barkley v. City of Rome, 381 S.E.2d 34, 35 (Ga. 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 extendin g beyon d a single year. Ac cording ly, we cer tify this qu estion as w ell. Even if the indemnification agreement here is not void as an unlawful waiver of sove reign im munity, b inding o f success ors, or cr eation of a new p ublic debt, that does not end the inquiry. As we have explained, there must be express or implied a uthority in order fo r a mun icipality to en ter into a b inding c ontract. See Forsyth Coun ty, 525 S .E.2d at 3 92. CS X doe s not arg ue that ex press au thority exists for municip al indem nity contr acts. Rath er, they arg ue 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, 16 Municipalities are permitted by statute “to enter into multiyear lease, purchase, or lease purchase contracts of all kinds for the acquisition of goods, materials, real and personal property, services, and supplies, provided that,” inter alia, “[t]he contract shall state the total obligation of the . . . municipality for the calendar year of execution and shall further state the total obligation which will be incurred in each calendar year renewal term, if renewed.” O.C.G.A. § 36-6013(a)(3). While a contract pursuant to, and meeting all the conditions of, § 36-60-13 “would fall outside the purview of Art. IX, Sec. V, Par. I since it does not constitute a ‘debt,’” Barkley, 381 S.E.2d at 35, the indemnity provision here clearly does not, and could not, accurately state Garden City’s total obligation, and, therefore, is not exempt from the constitutional provision. 17 The Georgia Constitution provides in part that any “municipality . . . may exercise the following powers and provide the following services: . . . [s]torm water and sewage collection and disposal systems.” Ga. Const. art. IX, sec. II, para. III (a)(6). The statutory authority provides: 18 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, 117 S.E. 653, 656 (Ga. 1923) (citation omitted). Where, by statute, jurisdiction over a subject-matter is conferred upon county a uthorities , and ther ein the po wer to d o certain th ings is express ed, the fu rther po wer to c ontract in regard to that subje ctmatter 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. Wrigh t v. Floyd Coun ty, 58 S.E. 72, 72 (Ga. Ct. App. 1907) (cited with approv al in Smith v. Bd. of Comm’rs, 259 S.E.2d 74, 77 (Ga. 1979)). 18 In addition to the other powers which it may have, any municipal corporation shall have the power under this chapter: (1) To acquire by gift, by purchase, or by the exercise of the right of eminent domain, to construct, to reconstruct, to improve, to better, and to extend any water system or sewage system, or both, within the municipal corporation; (2) To acquire by gift, by purchase, or by the exercise of the right of eminent domain any lands, easements, rights in lands, and water rights in connection therewith . . . . O.C.G.A. § 36-34-5. 18 Recognizing the differences between municipalities and counties, the court neverthless “believe[d] that the measure of [a county’s] contractual capacity, in relation to any subjectmatter expressly conferred by statute, is not different from that of other public corporations.” Wright, 58 S.E. at 74-75. 19 CSX relies on Hancock County v. Williams, 198 S.E.2d 659 (Ga. 1973) (per curiam) (“William s I”) to argu e that this im plied auth ority inclu des inde mnity agreements. In that cas e, the plain tiffs brou ght an ac tion “to rec over fo r the death of their mother who w as drowned w hen the automobile in wh ich 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 aga inst the po wer co mpany that ow ned the r oad 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 pow er company filed a cross claim seek ing inde mnificatio n from the coun ty, and the county moved to d ismiss 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 w as autho rized [an d b]eing an autho rized con tract, the actio n wou ld lie thereon” and, accordingly, affirmed the trial court’s order overruling both of the county’s motion s. 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 20 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 William s 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 powe r comp any. See O.C.G.A. § 9-2-20(a) (“As a general rule, an action on a contract . . . s hall be br ought in the nam e of the p arty in w hom th e legal inter est in the contr act is vested , and aga inst the pa rty who made it in person or by ag ent.”); § 9-2-20 (b) (“Th e benefic iary of a co ntract ma de betw een othe r parties fo r his benefit may maintain an action against the promisor on the contract.”). In Williams v. Georgia Power Co., 212 S.E.2d 348, 350 (Ga. 1975) (“Williams II”), however, on a postjudgment 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 w as no sp ecific statuto ry autho rity waiv ing the co unty’s so vereign immun ity and no ground to maintain a nuisance action against the county, the trial “court [had] co rrectly cha rged the jury that th e only liab ility of the co unty w as unde r its indemnity contract with the power company.” Id. at 351. 21 In Dekalb County v. Gibson, 246 S.E.2d 692, 692-93 (Ga. Ct. App. 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 nuisanc e as well a s an action as a third- party ben eficiary to a contract a llegedly created b etween the coun ty and the child w hen he p aid adm ission to th e pool. After findin g no basis fo r the nuisance c laim and no statute waiving the county’s immun ity to the tor t claim, the c ourt con cluded th at William s I would not perm it the third- party bre ach of co ntract claim because there, pre sumab ly unlike in Gibson, “the county had entered into an indemnity contract under statutory author ity with [the power com pany] and this contract authorized the suit against the county.” Id. at 693. “In the absen ce of statu tory auth ority to m aintain this suit [either as a tort or co ntracts claim ], the doctr ine of so vereign immun ity comp letely bars this claim.” Id. Thus, William s I appears to hold that, irrespective of whether sovereign immunity exists, if a county contract is generally authorized, a thirdparty 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 sove reign im munity. In other word s, Gibson seems to suggest that statutory authority to enter into the contract waives sovereign immunity, while William s I 22 appears to suggest that statutory authority permits the contract and that sovereign immunity is not even an issue. In Miree v. United States, 249 S .E.2d 5 73 (G a. 1978 ), the matte r was ag ain addressed. The Georgia Supreme Court, in answering certified questions from the former Fifth C ircuit, con cluded th at plaintiffs , who h ad brou ght an ac tion again st 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 p arty was an intend ed bene ficiary un der the p ublic con tract in this case.” Id. at 574, 5 75, 576 , 579. In doing s o, the cou rt first felt co mpelled to observe that, after “review[ing] the record and the assignments of error in” William s I, “[t]he sub sequen t decision of this co urt in that s ame case , [William s 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 un derstoo d that William s I, Williams II and Gibson all endor sed the sa me basic propo sition that, b ecause th e indem nity contract between the county and the power company was valid as implied by 23 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 William s I. We also are unsure as to wh at effect this limitation, if any, has o n the valid ity of the in demnity provision itself, irrespective of the validity of a third-party contract claim brought by plaintif fs seekin g, in con tracts, wh at they are b arred by sovereig n immu nity from re coverin g in a tort a ction. Fu rthermo re, even if these case s do assu me that a county may agree to indemn ify a private party for the county’s own neg ligent 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 wh ether suc h an agr eement w ould also be perm issible if the county a greed to indemnification for the negligent acts of other parties in addition to its own.19 Thus, w e canno t readily ag ree with CSX that these cases con sistently recogn ize the prin ciple that a m unicipality ’s implicit au thority “‘to e nter 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 19 We find Garden City’s argument, that these cases are distinguishable because they involve counties and not municipalities, unpersuasive because a county’s authority to waive its sovereign immunity is less than that of a municipality. See O.C.G.A. §§ 33-24-51, 36-33-1(a). 24 pattern o f these ho ldings is c onfusin g to us. T herefor e, we cer tify this qu estion to the Geo rgia Su preme C ourt. After th oroug h review of Geo rgia law , we find that these is sues rem ain unsettled and unaddressed and , therefore, certify the following questions:
INDEMNIFY A PRIVATE PARTY FOR ANY AND ALL LOSS, DAMAGE, AND LIABILITY ARISING IN CONNECTION WITH A PUBLIC WORKS PROJECT INVOLVING THE PRIVATE PAR TY’S LAND?
ARISING IN CONNECTION WITH A PUBLIC WORKS PROJECT INVOLVING A PRIVATE PAR TY’S LAND FOR WHICH A GEORG IA MUNICIPALITY MAY CONTRACTUALLY INDEMNIFY THE PRIVATE PARTY?