Chattanooga-Hamilton County Ho v. Walker County, Georgia

Filing

Opinion issued by court as to Appellant Walker County, Georgia. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

Case: 16-15656

Date Filed: 07/13/2017

Page: 1 of 5

[DO NOT PUBLISH]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:

Case: 16-15656

Date Filed: 07/13/2017

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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.
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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
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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
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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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