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State of Ga. Dep't of Corr. v. Developers Sur. & Indem. Co.

The State waived its sovereign immunity in a case involving a claim asserted by the subrogee of a roofing company on a construction contract with the Georgia Department of Corrections.

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This Court granted certiorari to the Court of Appeals in State Dept. of Corrections v. Developers Sur. and Indem. Co., 324 Ga. App. 371 750 SE2d 697 2013, to consider whether the State’s sovereign immunity is waived for a claim asserted by a surety on a contract with the State. See 1983 Ga. Const. Art. I, Sec. II, Para. IX.1 For the reasons which follow, we find that it is, and accordingly, we affirm the judgment of the Court of Appeals.2

The facts as found by the Court of Appeals are the following. The Georgia Department of Corrections “GDOC” entered into a construction contract “Contract” with Lewis Walker Roofing “Walker Roofing” to re-roof several buildings at Valdosta State Prison. The Contract contained two “no assignment” clauses,3 and as a prerequisite to contracting with GDOC, Walker Roofing was required to obtain payment and performance bonds. It obtained such payment and performance bonds from Developers Surety and Indemnity Company “Developers Surety”. Walker Roofing and Developers Surety had previously signed a general agreement of indemnity in favor of Developers Surety that included a provision in which Walker Roofing assigned to Developers Surety the company’s right to payment under bonded contracts as security against any losses that Developers Surety might suffer under a bond. GDOC was not a party to the indemnity agreement. The bonds required Developers Surety, upon default of Walker Roofing, to “promptly remedy the default or defaults or to promptly perform the contract in accordance with its terms and conditions.” It also specified that Developers Surety was to give GDOC notice “within twenty-five 25 days after receipt of a declaration of default of the surety’s election either to remedy the default or defaults promptly or to perform the contract promptly.”

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