ESI Companies Inc. v. Fulton County

ESI Companies, Inc. contracted with Fulton County for the Replacement of Security and Life Safety Systems in the Fulton County Jail “Jail Project” without the inclusion in the contract price for sales and use taxes, because Fulton County’s bid instructions and requirement required the tax exclusion from the bid. When ESI could not get tax exemption status for sales and use taxes and was required to pay such to the State of Georgia, it sought to recover such taxes from Fulton County by this suit. The trial court granted summary judgment to Fulton County. Finding no error, we affirm. ESI does work in many states where tax exemption of a governmental entity can be assigned to any contractor doing work for such governmental entity. Prior to submitting its bid, ESI did not research the sales and use tax laws of Georgia or contact the Georgia Revenue Department to determine if it could obtain tax exemption, because it relied upon its own experience in other states and practices and custom in the trade from other states. The contract and the bid documents did not give or promise to give ESI tax exemption. The contract was silent as to who would bear the cost of the sales and use tax, but the bid documents instructed all bidders not to include sales and use taxes in their bids. Further, the normal language of this form AIA contract, indicating that the contractor must pay sales and use taxes, was omitted from the form contract. The Bidding Requirements clearly stated “All prices must exclude Georgia State sales taxes and all other taxes unless otherwise specified in writing by Fulton County.” The contract gave a fixed price for the work and said nothing about who would pay sales and use taxes under the contract.

ESI submitted its bid without any request for clarification regarding the payment of sales taxes or assignment of a tax exempt status and gave a bid excluding Georgia sales and use taxes. The ESI bid was accepted, and Fulton County drafted the contract. The total contract price was for $3,708,000. ESI made no request that the contract state that ESI was not liable for sales tax, that it would be assigned tax exemption, or that it would be indemnified if it had to pay sales or use taxes in performing the contract.