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DeKALB COUNTY SCHOOL DISTRICT v. GOLD

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Court of Appeals of Georgia.

DeKALB COUNTY SCHOOL DISTRICT et al. v. GOLD et al.

No. A12A0824.

Decided: November 20, 2012

Allegra J. Lawrence, Laurance Joseph Warco, Lee Alexander Peifer, for DeKalb County School District. Roy E. Barnes, John Frank Salter Jr., for Gold.

Elaine Ann Gold and Amy Jacobson Shaye are teachers for the DeKalb County School District. In 2009, the School District suspended its contributions to a tax-sheltered annuity plan, which Gold and Shaye allege was an employee-benefit plan established by the District as an alternative to the federal Social Security system. Gold and Shaye, on behalf of themselves individually and a class of similarly situated teachers (collectively, “Gold”), sued the School District, the Dekalb County Board of Education, and the members of the Board and the School District superintendent in their official capacities (collectively, the “District”), asserting claims for declaratory judgment, money had and received, unjust enrichment, promissory estoppel, conversion, breach of contract, and breach of the implied covenant of good faith and fair dealing. The District moved to dismiss Gold's complaint for failure to state a claim, arguing that the doctrine of sovereign immunity barred each of Gold's claims. The trial court denied the motion, and the District appeals. We agree with the District that sovereign immunity bars Gold's claims for declaratory judgment, money had and received, unjust enrichment, promissory estoppel, and conversion, and we conclude that the trial court erred in failing to dismiss these claims. We find that the trial court did not, however, err in denying the District's motion to dismiss Gold's claims for breach of contract and the associated implied covenant of good faith and fair dealing. Accordingly, we affirm in part and reverse in part.

Accepting Gold's well-pleaded material allegations as true,1 the complaint shows that on June 27, 1979, the Board voted to leave the federal Social Security system to pursue an alternative employee-benefits plan. Before voting to leave Social Security, the Board passed a resolution (the “1979 Resolution”) which stated, in relevant part, that “in the event of withdrawal from Social Security, funds currently budgeted for Social Security shall be used for the support of the alternative plan,” and that “before the budget is adopted each year, a determination shall be made as to the amount that would have been required for continued participation in Social Security during the current year.” The Board further resolved that the amount required “to continue funding Social Security shall be the amount budgeted to fund the alternative to social security, and that [the Board] will give a two year notice to the employees before reducing or terminating these funding provisions.”

In 1983, the Board established a “Tax Sheltered Annuity Plan (Alternative to Social Security)” (the “TSA Plan”), which according to the complaint, demonstrated the Board's intent to provide contributions approximating “that which the Board would be paying pursuant to the Social Security Act of 1934.”2 The TSA Plan provided that it “may be amended or terminated by the Employer at any time,” although “[n]o amendment or termination of the [TSA Plan] shall reduce or impair the rights of any Participant or his Beneficiary which have already accrued.” Following the establishment of the TSA Plan, it remained the Board's stated policy that it “shall give a two-year notice to employees before reducing the funding provisions of the Alternative Plan to Social Security.”

At an emergency meeting on July 27, 2009, the Board suspended the School District's payment of contributions to the accounts of employee-participants in the TSA Plan,3 effective for payroll periods commencing after July 31, 2009. On May 10, 2010, after it came to the Board's attention that it did not provide two year's notice before reducing the funding of the TSA Plan, the Board voted to waive the policy requiring the notice. On June 14, 2010, the Board voted to “eliminate provisions [of the Board's bylaws and policies] that are not part of the TSA Plan itself.” As of the filing of the amended complaint in June 2011, the contributions to the TSA Plan had not been restored.

The District filed a motion to dismiss Gold's amended complaint on the primary ground that Gold's claims were barred by sovereign immunity. The trial court denied that motion, and the District appeals.4

1. Gold's complaint includes claims for declaratory relief, promissory estoppel, conversion, unjust enrichment, and money had and received. The District contends that the trial court erred in failing to dismiss these claims as barred by the doctrine of sovereign immunity. We agree.

In reviewing these arguments, we recognize that a motion to dismiss for failure to state a claim pursuant to OCGA § 9–11–12(b)(6), as invoked by the District, should not be sustained unless “the allegations of the complaint reveal, with certainty, that the plaintiff would not be entitled to relief under any state of provable facts asserted in support of the complaint.”5 However, the District also argued in its motion that Gold's claims were barred by sovereign immunity and the motion, to that extent, was “based upon the trial court's lack of subject matter jurisdiction, rather than the merits of the plaintiff's claim.”6 Accordingly, Gold—the party seeking to benefit from the waiver of sovereign immunity—had the burden of proof to establish waiver.7 Our review of the trial court's denial of the District's motion to dismiss on sovereign-immunity grounds is de novo.8

The Board, the School District, the Board's members, and the superintendent9 enjoy sovereign immunity.10 Indeed, it is well established that the sovereign can not be sued in its own courts, or in any other court, without its consent and permission;11 but it may, if it thinks proper, “waive this privilege, and permit itself to be made a defendant in a suit by individuals․”12 The permission of the State is voluntary, and it follows, then, that the sovereign is at liberty to “prescribe the terms and conditions on which it consents to be sued․”13 In this respect, our Constitution provides that, except as specifically provided therein, “[t]he sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.”14 With these guiding principles in mind, we now turn to the District's enumerations of error.

(a) We first consider whether sovereign immunity bars Gold's declaratory-judgment claim. Gold seeks a determination of the District's obligation to fund “the Alternative Plan to Social Security, known as the TSA Plan, for the years 2009, 2010, 2011, and 2012.”15 She also seeks a declaration that the “freeze” on the District's contribution to the TSA Plan unconstitutionally deprived employees of benefits to which they had a vested right, and that the repeal of the two-year notice requirement unconstitutionally impaired an enforceable contract right owed by the District to Gold and other members of the class.

Our Constitution and statutes do not provide for a blanket waiver of sovereign immunity in declaratory-judgment actions; and this Court has found that “sovereign immunity is applicable to protect state agencies in declaratory judgment actions․”16 On the other hand, as our Supreme Court recently noted in Southern LNG, Inc. v. MacGinnitie,17 declaratory actions against the State have nevertheless been recognized in certain contexts.18 Accordingly, we must decide whether, in the context of the case sub judice, the State has waived its sovereign immunity to Gold's declaratory-judgment claim.

The State's sovereign immunity has been specifically waived by the General Assembly pursuant to OCGA § 50–13–10, which is part of the Administrative Procedures Act.19 Therein, the state has specifically consented “to be sued and has explicitly waived its sovereign immunity as to declaratory judgment actions in which the rules of its agencies are challenged.”20 Gold does not contend, however, that the State's consent to be sued under OCGA § 50–13–10 applies to the declaratory-judgment action at issue here, which Gold brought under the Declaratory Judgments Act.21

Gold contends, rather, that her declaratory-judgment claim is sustainable because she sought declaratory relief “correlative to an action arising from a breach of a written contract.” In support of her position, Gold relies upon this Court's decision in Upper Oconee Basin Water Authority v. Jackson County.22 In that case, Jackson County sued the Upper Oconee Water Basin Authority, a State subdivision, for declaratory judgment, breach of contract, specific performance, and injunctive relief.23 The Authority moved to dismiss the action on sovereign-immunity grounds and then appealed the trial court's denial of its motion.24 At issue in Upper Oconee was whether the Authority breached an intergovernmental water-supply contract,25 and our Constitution has specifically waived the State's sovereign immunity for “any action ex contractu for the breach of any written contract.”26

Indeed, we noted in Upper Oconee that “[i]t is clear that, nomenclature aside, the essence of the County's claim is for breach of the Agreement,”27 and “the fact that the County has expressly asked for the Authority's obligations under the Agreement to be determined and enforced does not change the essential nature of the claim here.”28 Accordingly, we concluded that the trial court did not err in refusing to dismiss the county's lawsuit on the basis of sovereign immunity.29

In this case, the differences between Gold's claim for breach of contract and her claim for declaratory judgment are more than a matter of mere nomenclature. Unlike in Upper Oconee, Gold seeks to recover damages for the breach of contract.30 Her declaratory-judgment action also seeks, inter alia, a declaration of the District's budgetary obligations. As Gold explained below, she “seeks clarity to the budgeting situation moving forward ․ In other words, there is more at stake than mere liability for a past debt.” It is apparent on the face of the complaint that Gold's declaratory-judgment claim seeks relief that goes far beyond an “action ex contractu for the breach of any written contract.”31 Accordingly, Gold cannot rely on Upper Oconee to show that the State has waived its sovereign immunity to her declaratory-judgment claim.

In an alternative argument, Gold maintains that sovereign immunity does not bar declaratory relief in suits challenging the constitutionality of legislative acts. Gold refers to numerous cases in which declaratory judgment was sought in conjunction with a request for injunctive relief.32 In IBM v. Evans,33 our Supreme Court recognized, in light of a long line of authority, that a suit for injunctive relief to restrain an illegal act is an exception to sovereign immunity.34 Here, in contrast, Gold is not seeking a declaratory judgment in conjunction with injunctive relief. And while Gold invokes constitutional principles, she does not present a facial challenge to the constitutionality of the Board's legislative acts.35 Rather, she claims that the District “operated” unconstitutionally in freezing the contributions to the TSA Plan and that the repeal of the two-year-notice provision unconstitutionally impaired the class members' contractual rights. An allegation that the State has violated a plaintiff's constitutional rights is not, in itself, sufficient to avoid the State's sovereign immunity.36

Finally, we note that a “primary purpose of the doctrine of sovereign immunity is the protection of the public purse.”37 Gold and the class members seek damages in the underlying action as well as a declaration as to the District's budgetary obligations, thus claiming monetary compensation for past actions and attempting to bind the District's fiscal discretion going forward. In light of the nature of the relief sought, and given that Gold cannot point to a specific waiver of the State's sovereign immunity as to her declaratory-judgment action, we conclude that, in this specific context, Gold has not shown that she can maintain an action for declaratory relief against the District. It follows, then, that the trial court erred in failing to dismiss Gold's declaratory-judgment claim.38

(b) The District further argues that because Gold does not identify a specific waiver of sovereign immunity for her claims of money had and received, unjust enrichment, promissory estoppel, and conversion, these claims must also be dismissed. We agree.

The State, as this Court has previously ruled, has not waived its sovereign immunity in actions for money had and received39 and unjust enrichment.40 More generally, we have also held that “[t]he General Assembly has enacted no statute waiving sovereign immunity for equity claims against the state.”41 Promissory estoppel is an equitable doctrine,42 and Gold does not point to any act of the General Assembly waiving the State's liability for her promissory-estoppel claim, which in this case seeks “damages that have resulted from ․ broken promises․”43

Gold contends that she has nevertheless set forth a viable claim of equitable relief because our Supreme Court held in Quillian v. Employees' Retirement System of Georgia44 that the Employees' Retirement System was estopped from denying benefits as they were established prior to Judge Quillian's retirement.45 The result in Quillian is qualified as “[u]nder the unique circumstances of this case,”46 and the decision makes no mention of sovereign immunity. As a rule, the decisions of our Supreme Court do not “stand for points that were neither raised by the parties nor actually decided in the resulting opinion․”47 Further, in Quillian the Employment Retirement System was estopped from denying benefits, but the Court does not characterize the underlying action as one for estoppel.48 Thus, we conclude that Gold cannot rely on Quillian to establish that the State has waived its sovereign immunity for actions based on unjust enrichment, money had and received, and promissory estoppel.

As to Gold's conversion claim, she alleges in her complaint that this is an action in tort.49 Pursuant to the Georgia Tort Claims Act (“GTCA”), the General Assembly has provided for a limited waiver of the State's immunity for tort claims.50 Gold does not contend on appeal, however, that she has any basis for showing that sovereign immunity for her conversion claim has been waived by the GTCA.51 And if the conversion claim can be characterized as equitable, it fails because Gold cannot point to a specific waiver of the State's sovereign immunity in this respect.52

In light of the foregoing, we find that the trial court erred in failing to grant the District's motion to dismiss Gold's claims for money had and received, unjust enrichment, promissory estoppel, and conversion.

2. Gold's complaint also includes an action for breach of contract and for the associated implied covenant of good faith and fair dealing. As we have previously noted, our Constitution waives the State's sovereign immunity for “any action ex contractu for the breach of any written contract.”53 Gold alleges that the School District and the Board breached their contractual obligations to the class “by deleting the two-year notice requirement that protected the Class's expectation of enjoyment of uninterrupted contributions to their retirement benefits in the TSA Plan.” In addition, the complaint alleges that the School District and the Board breached the implied covenant of good faith and fair dealing inherent to the alleged contract.

The District contends that the trial court erred in failing to dismiss Gold's contract claim because Gold fails to point to any written contract on which the claim rests; the Board's policies and resolutions do not have the full force and effect of law; and the retirement plan in this case was established by the TSA Plan which, under the terms alleged by the complaint, may be amended or terminated by the Board at any time. Gold responds that the 1979 Resolution and the Board's published policies became part of the class member's contract of employment when class members performed services while the 1979 Resolution and policies were in effect.

It is well-established that “a statute or ordinance establishing a retirement plan for government employees becomes a part of an employee's contract of employment if the employee contributes at any time any amount toward the benefits he is to receive, and if the employee performs services while the law is in effect․”54 Thus, “the payment of retirement benefits in compliance with our statutes is not a gratuity, but is an incidence of employment.”55 Further,

the ordinance or statute becomes part of the contract of employment and is a part of the compensation for the services rendered so that an attempt to amend the statute or ordinance and reduce, or eliminate, the retirement benefits the employee is to receive violates the impairment clause of the state constitution.56

Nevertheless, when the statute establishing the benefits plan provides that it is subject to change, “there [is] no contract that the plan of ․ benefits should never be changed.”57

We applied these principles to a retirement plan established by a school board in Murray County School District v. Adams.58 As in this case, the Murray County School System did not participate in the Social Security system.59 Given employee concerns, the Murray County Board of Education sought to establish a package of fringe benefits for its employees and, in furtherance of this purpose, approved a benefits plan presented by a program administrator.60 Thereafter, employees of the Murray County School System brought a class action against the Murray County School District and the Murray County Board of Education, challenging their decision to terminate the employer matching portion of the benefit plan.61 We concluded that the benefit plan became part of the employees' employment contract but that, because the document setting forth the plan terms provided that the employer had the full authority to administer the plan and to amend or terminate the plan at any time, the Murray County School Board had the right to modify the plan by terminating the employer's matching contributions.62

In characterizing the Murray County School Board's action in approving the employee-benefit package, we assumed, but did not decide, that it was a legislative action.63 The District contends that, therefore, no court has decided to treat the rules or policies of a school board as equivalent to a statute or ordinance establishing a retirement plan. However, a board of education is “a governing authority for the political subdivision which makes up the school district,” and as such, “it has the capacity to act as a legislative body, an executive body, and a judicial body.”64 The General Assembly has also provided that “[t]he county school superintendent and county board of education shall make rules to govern the county schools of their county.”65 And while the Board's legislative capacity is necessarily limited,66 the District does not point to any State statute or any State Board of Education rule, regulation, or policy67 which would expressly or implicitly restrict the Board's capacity to establish a retirement-benefits plan for School District employees. Accordingly, we conclude that, consistent with statutes and ordinances establishing retirement benefits for other government employees, the legislative acts of the Board establishing a retirement plan for the School District employees may become part of the employees' contract of employment.

The District also argues that if the Board's retirement-benefits plan could be part of the Class members' contract of employment, the complaint shows that the TSA Plan provides that it may be amended or terminated at any time, and it follows that, as in Adams, the challenged change to the benefit plan was not a breach of the employment contract.

But here, the complaint shows that the Board resolved in 1979 to give its employees two-year's notice before reducing or terminating the funding provision to the alternate plan for Social Security, and the TSA Plan is alleged to be designated the alternative to Social Security. If there are apparent inconsistencies between the specific-notice requirement of the 1979 Resolution, stated Board policies,68 and the amendment provision of the TSA Plan, a court is required under the rules of contract interpretation to attempt to give meaning to all provisions of the contract and look to “the whole contract ․ in arriving at the construction of any part.”69 And in the case sub judice, we cannot say, for purposes of the motion to dismiss,70 that the specific-notice provisions of the 1979 Resolution would, upon consideration of the entire contract of employment, yield to the amendment provisions of the TSA Plan.71 Accordingly, we find that Gold and the members of the class could possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of relief for breach of a written contract. It follows, then, that the trial court did not err in failing to dismiss Gold's claims for breach of contract and for breach of the covenant of good faith and fair dealing implied therein.72

In sum, we find that the trial court erred in denying the District's motion to dismiss Gold's claims for declaratory judgment, money had and received, unjust enrichment, promissory estoppel, and conversion. However, we conclude that the trial court did not err in denying the District's motion to dismiss Gold's claims for breach of contract and the implied covenant of good faith and fair dealing.

Judgment affirmed in part and reversed in part.

DILLARD, Judge.

ELLINGTON, C.J., and PHIPPS, P.J., concur.

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