Fulton County, Georgia (County) entered into a contract with SOCO Construction Company, Inc. (SOCO) in 2013 to construct the Aviation Community Cultural Center. The contract contained a performance period of 287 days from NTP or the start of the work, whichever came first. The contract’s general conditions provided that changes in the performance period could be made due to changes in the scope of work, or delay events not the responsibility of SOCO. The specific change language required that, “the Contract Sum and the Contract Time may be changed only by approved Change Order pursuant to Fulton County Procedure 800-6…”
Fulton County Procedure 800-6 (800-6) requires that a change orders be a clearly defined “written, bilateral agreement” between the County and the Contractor. 800-6 allows for change orders for design deficiencies, unforeseen conditions, abnormal inclement weather, or owner directed changes to the work. Additionally, 800-6 provides for “Extraordinary Circumstances” where the County Manager may execute change orders before the Board of Commissioners can act in the event of “delay to the critical path schedule.”
SCCO began construction of the project on May 29, 2013 and achieved substantial completion a year later on May 29, 2014. SCCO claims that it could not achieve the performance period due to adverse weather, design driven delays, the untimely processing of change orders, and a federal government shutdown that impacted certain permits. As a result of these issues, the County’s program manager logged thirty change orders in its change log as of September 2014. SCCO was not able to provide bilaterally executed copies of the open change orders and admitted than no extension of time had been given by the County. Final retainage was withheld on the contract until January 2015 and an official Certificate of Substantial Completion was not issued until February 2015. As a result, SOCO filed suit against the County for breach of contract and bad faith.
The County filed a motion for summary judgement which stated the court lacked subject matter jurisdiction due to sovereign immunity which the lower court rejected. The County then appealed stating that although sovereign immunity may not apply to breach of contract actions, it was not waived for actions stemming from failure to follow change order procedures outlined within a contract.
To begin its analysis, the Court quoted the Georgia Constitution which states sovereign immunity is, “is hereby waived as to any action ex contractu for the breach of any written contract…” and “sovereign immunity of the [S]tate and its departments and agencies can only be waived by an Act of the General Assembly…” The Court then stated that the contract contained specific provisions for both obtaining a written change order and a means to bypass those provisions in the event of “extraordinary circumstances.” The lower court’s reasoning for rejecting the County’s motion for summary judgment was that SCCO change orders were required to avoid delay to the project schedule’s critical path which would fall under the “extraordinary circumstances” provision.
The Court rejected the lower court’s reasoning by pointing to the fact that the “extraordinary circumstances” provisions requires, “at a minimum” five specific procedures be followed which include a detailed description of scope and cost for the change, approval of the Purchasing agent, approval of the County Manager, 60 days after approval the change it shall be placed in the consent agenda, and timely processing of all change orders. Of the thirty open change orders claimed by SCCO, none of them followed any of the five procedures the Court found. The Court then referred back to previous rulings where it found sovereign immunity cannot be waived by the County’s actions outside of the written contract which would apply “to evidence [that] shows any agreements to extend did not meet the written contract requirement set forth in the applicable statute and constitutional provision relating to the waiver of sovereign immunity.”
Accordingly, the Court found it could not create an exception to the constitutional waiver of sovereign immunity due to SCCO’s reliance of the County’s requests for change orders or upon the County’s course of conduct. The Court remanded the case for further consideration.
FULTON COUNTY, GEORGIA v. SOCO CONTRACTING COMPANY, INC.
The author, Brendan Carter, is a contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law. He is the Director of Industry Advancement & Labor Relations with the AGC of Massachusetts based in Wellesley, MA. He may be contacted at 781.786.8916 or email@example.com.