7.2 Sovereign Immunity

• Library: Virginia Construction Law Deskbook (Virginia CLE) (2019 Ed.)

7.2 SOVEREIGN IMMUNITY

7.201 Purpose and Scope of Doctrine. The Commonwealth enjoys fairly broad protections under the doctrine of sovereign immunity. ¹ This doctrine serves many purposes, including

protecting the public purse, providing for smooth operation of government, eliminating public inconvenience and danger that might spring from officials being fearful to act, assuring that citizens will be willing to take public jobs, and preventing citizens from improperly influencing the conduct of governmental affairs through the threat or use of vexatious litigation. ²

Generally, the Commonwealth is immune both from actions at law for damages or from suits in equity to restrain or compel governmental action. ³

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Sovereign immunity is rooted in the ancient common law and was, originally, based on the monarchical, semi-religious tenet that "the King can do no wrong." In present times, the doctrine is justified as a rule of social policy, which protects the state from

burdensome interference with the performance of its governmental functions and preserves its control over state funds, property, and instrumentalities. The public service might be hindered and the public safety endangered if the supreme authority could be subjected to suit at the instance of every citizen, and consequently controlled in the use and disposition of the means required for the proper administration of the government. ⁴

The doctrine of sovereign immunity, or the concept of sovereignty in general, places various limitations and bars to claims and defenses that can be asserted against the Commonwealth and gives rise to certain rights that are peculiar to the Commonwealth. Some of them include:

1.	Generally, statutes of limitation do not apply to the Commonwealth. 5
2.	As with any action based on contracts, the statute of repose does not apply to the Commonwealth's construction contracts. 6

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3.	The Commonwealth is immune from actions based on equitable subrogation. 7
4.	The Commonwealth is immune from any type of quasicontractual relief, including actions based on quantum meruit or implied contracts. 8
5.	As a general rule, the Commonwealth is immune from actions seeking declaratory or injunctive relief. 9
6.	Waiver and estoppel do not apply to the Commonwealth, and the Commonwealth is not bound to a contract executed by its agent without legal authority. 10
7.	The bar of sovereign immunity may be raised for the first time on appeal because, if it applies, there is no subject matter jurisdiction over the Commonwealth. 11
8.	Absent an express statutory or contractual waiver of pre-judgment interest on contract claims, the Commonwealth and its agencies are immune from liability for this item of damages. 12
9.	Equitable defenses, such as laches and unclean hands, are no defense to a suit by the Commonwealth asserting a claim on behalf of the public. 13

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10.	Agencies of the Commonwealth are not bound by statutes of general application "no matter how comprehensive the language, unless named expressly or included by necessary implication." 14
11.	The Commonwealth is not liable for contracts implied-in-fact. 15

7.202 Waiver of Immunity in State Courts. A legal action may be brought against a governmental entity only if it has waived its sovereign immunity. Waiver can occur only under certain circumstances:

"[O]nly the legislature acting in its policy-making capacity can abrogate the Commonwealth's sovereign immunity." . . . A "'waiver of immunity cannot be implied from general statutory language'" but must be "'explicitly and expressly announced'" in the statute. . .

In the absence of such a waiver by the legislature, the courts of this Commonwealth do not have the necessary jurisdiction "to entertain [an] action." . . . Such subject matter jurisdiction cannot be waived by the Commonwealth or given to a court by agreement or inaction of the parties. Subject matter jurisdiction "can only be acquired by virtue of the Constitution or of some statute. Neither the consent of the parties, nor waiver, nor acquiescence can confer it. Nor can the right to object for a want of it be lost by acquiescence, neglect, estoppel or in any other manner . . . and the want of such jurisdiction of the trial court will be noticed by this court ex mero motu." ¹⁶

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In reviewing a statute to determine whether the General Assembly has waived sovereign immunity, a court will find a waiver only when the statutory language explicitly and expressly announces such a waiver. ¹⁷ Certain statutes are intended or deemed to be a waiver of the Commonwealth's immunity, allowing limited rights of recovery against the Commonwealth. Almost all construction or construction-related services are procured pursuant to, and governed by, the Virginia Public Procurement Act (the VPPA). ¹⁸ The VPPA constitutes a waiver of sovereign immunity by the public bodies of the Commonwealth. ¹⁹

Statutes waiving the Commonwealth's immunity are in derogation of the common law and, therefore, must be strictly construed. ²⁰ As a result, when these statutes set out the process for filing a contract claim against the Commonwealth, a plaintiff must strictly comply with any procedural requirements pertaining to the remedy or relief afforded by the statute. ²¹ In particular, the VPPA sets forth certain procedures and limitations on processing and enforcing contract claims that are subject to the VPPA. The Virginia Department of Transportation has its own statutory claims procedures in section 33.2-1101 et seq. of the Virginia Code. The specified procedures and limitations are mandatory procedural requirements that must be met in order for a court to reach the merits of a case. ²²

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Failure to allege and prove compliance with mandatory conditions precedent, whether they are contractual or statutory, is fatal to a contract claim and any suit thereon. ²³ Where a statute specifies the particular parties authorized to bring an action against the Commonwealth, a person or entity does not have standing unless the person or entity is one of those authorized parties, and when a party without proper standing brings a legal action, that action is a nullity, does not toll the running of the statute of limitations, cannot be amended, and must be dismissed with prejudice. ²⁴ For example, section 33.2-1101 sets out the requirements for a "contractor" to file suit against VDOT on a construction contract. ²⁵ Under the statute, which must be strictly construed, the term "contractor" is limited in its application to those entities "that have a direct contract with VDOT." ²⁶

As used in section 33.2-1101, the term "contractor" does not include persons or entities claiming under the contractor. ²⁷ Parties without an

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express contract with VDOT are not the "contractor," and any legal action brought by such a party is barred by sovereign immunity. ²⁸ Thus, a party who is the successor in interest to, or otherwise owns the rights of, a contractor has no standing to bring suit against VDOT in its own name, and any such suit is a nullity that must be dismissed. ²⁹

Counties, cities, towns, and various authorities, when performing governmental functions, enjoy the same protections of sovereign immunity as the Commonwealth. ³⁰ Accordingly, when contracting for construction of public buildings and improvements, local governmental entities waive their immunity. The waiver is based in part on the contract and in part on the principle that local governments performing proprietary functions may not be protected by sovereign immunity. ³¹ The distinction between governmental and proprietary functions does not apply to the Commonwealth. ³² Another important point for contractors to keep in mind is that private entities contract with the government at their own peril and, therefore, must determine whether the local government or its employee is authorized to execute the contract. Without proper authority, the approval or execution of a contract is an ultra vires act, making it null and void. ³³

7.203 Waiver of Immunity in Federal Courts. The Commonwealth's waiver of immunity to permit legal actions against it in its own courts does not necessarily operate as consent to be sued in federal court. ³⁴ Absent unequivocal consent, the Eleventh Amendment of the United States Constitution imposes, in the form of sovereign immunity, a constitutional limitation on the federal judicial power over states and bars suits against a state, either by its own citizens or by citizens of another state, based on state law claims for money damages and other relief. ³⁵ A state's constitutional

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interest in immunity encompasses not merely whether it may be sued but where it may be sued. ³⁶

The question of whether a governmental entity is to be accorded Eleventh Amendment immunity is guided by consideration of the two principal reasons...