Court Opinion

ID: 4186051
Source: CourtListenerOpinion
Date Created: 2017-07-13 20:01:33.982246+00
Date Added: 2024-06-11T07:47:21.743152
License: Public Domain

[DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 16-15656
                        Non-Argument Calendar
                      ________________________

                  D.C. Docket No. 4:15-cv-00250-HLM

CHATTANOOGA-HAMILTON COUNTY HOSPITAL AUTHORITY,
d.b.a. Erlanger Health System,

                                               Plaintiff - Appellee,

versus

WALKER COUNTY, GEORGIA,

                                               Defendant - Appellant.

                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Georgia
                     ________________________

                             (July 13, 2017)

Before TJOFLAT, WILSON, and WILLIAM PRYOR, Circuit Judges.

PER CURIAM:
       Erlanger Health System sued Walker County for breach of contract, and the

district court granted summary judgment to Erlanger on the claim. Walker County

appeals that ruling. After careful consideration of the record and the parties’

briefs, we affirm. 1

                                                I

       Erlanger, a public hospital authority in Tennessee, agreed to loan up to

$20 million to a hospital authority in Georgia. The Georgia hospital authority

planned to use the loan to fund a medical center which provides services in three

Georgia counties: Walker, Dade, and Catoosa. To facilitate the loan, the Georgia

hospital authority, Walker County, Dade County, and Catoosa County entered into

an intergovernmental agreement (the Agreement). The Agreement provides

Erlanger security for the loan; the Agreement states, “in the event of an uncured

default by the [Georgia hospital a]uthority under the [loan], Walker agrees to pay

to the [a]uthority or its assigns an amount equal to one-half (1/2) of the principal of

and interest then due and payable on the [loan].”

       A few years later, the Georgia hospital authority defaulted on the loan and

assigned to Erlanger its right under the Agreement to receive payment from

       1
          As a threshold matter, our court has jurisdiction to review Walker County’s appeal, and
the district court properly exercised subject-matter jurisdiction over this action. Shortly after
Walker County filed its appeal, our court asked the parties to submit statements on whether we
have appellate jurisdiction and on whether diversity jurisdiction exists. Based on the record and
the parties’ statements, we answer both questions in the affirmative.
                                                2
Walker County. But Walker County refused to pay, prompting Erlanger to sue

Walker County in district court for breach of the Agreement.

      The district court, in a 63-page order, granted summary judgment to

Erlanger on its breach-of-contract claim. It concluded that the Agreement is a

valid contract under Georgia law and that Walker County is liable to Erlanger

under the Agreement for $8,705,000 plus interest.

                                          II

      Walker County, in challenging the district court’s grant of summary

judgment to Erlanger, raises two arguments. First, it asserts that, under the

Intergovernmental Contracts Clause of the Georgia Constitution, the Agreement is

void. Second, Walker County claims that it is entitled to sovereign immunity.

Both arguments fail.

                                         A

      Under the Georgia Constitution’s Intergovernmental Contracts Clause, all

parties to an intergovernmental agreement must be Georgia governmental entities.

See Ga. Const. Art. IX, § III, Para. I(a); State v. Blasingame, 91 S.E.2d 341, 343–

44 (Ga. 1956). According to Walker County, this requirement voids the

Agreement because the Agreement affords contractual benefits to Erlanger, which

is not a Georgia governmental entity. However, the Intergovernmental Contracts

Clause prohibits only intergovernmental agreements that have a non-governmental

                                          3
entity as a party; it does not prohibit agreements between governmental entities

that confer benefits to third parties. See Cottrell v. Atlanta Dev. Auth., 770 S.E.2d

616, 624–25 (Ga. 2015) (rejecting a claim that an intergovernmental agreement

between two Georgia governmental entities was void because it “require[d one of

the entities] to reimburse . . . a private company”). And Erlanger, as Walker

County concedes, is not a party to the Agreement. Erlanger is merely a third party

who, by way of an assignment clause in the Agreement, has a right to receive

payments that Walker County promised to the Georgia hospital authority. The

Agreement is valid under Georgia law.

                                           B

      In Georgia, “sovereign immunity is . . . waived as to any action . . . for the

breach of any written contract,” Ga. Const. Art. I, § II, Para. IX(c), and this is an

action for the breach of a written contract (the Agreement). Even so, Walker

County asserts that it is entitled to sovereign immunity. The sovereign-immunity

waiver for written contracts, Walker County contends, does not apply here because

Erlanger is not a party to the Agreement. We disagree. “[B]y entering into the

[Agreement], [Walker County] waived the defense of sovereign immunity for any

breach of the [Agreement] for which it could be held liable,” including for

breaches alleged by third parties. See State Dep’t of Corrs. v. Developers Sur. &

Indemn. Co., 763 S.E.2d 868, 871 (Ga. 2014); Youngblood v. Gwinnett Rockdale

                                           4
Newton Cmty. Serv. Bd., 545 S.E.2d 875, 878 (Ga. 2001) (“To the extent [that

written agreements exist] conferring a benefit upon [the plaintiff] as an intended

beneficiary, the [governmental entity’s] sovereign immunity is waived.”).

                                         III

      The district court did not err in granting summary judgment to Erlanger on

its breach-of-contract claim. The Agreement is valid, and Walker County is not

entitled to sovereign immunity.

      AFFIRMED.

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