Travelers Casualty & Surety Co. of America v. Arkansas State Highway Commission

120 S.W.3d 50, 353 Ark. 721, 2003 Ark. LEXIS 366
CourtSupreme Court of Arkansas
DecidedJune 19, 2003
Docket02-1259
StatusPublished
Cited by17 cases

This text of 120 S.W.3d 50 (Travelers Casualty & Surety Co. of America v. Arkansas State Highway Commission) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Travelers Casualty & Surety Co. of America v. Arkansas State Highway Commission, 120 S.W.3d 50, 353 Ark. 721, 2003 Ark. LEXIS 366 (Ark. 2003).

Opinion

Annabelle Clinton Imber, Justice.

This case involves an interpretation of sovereign immunity as guaranteed by Article 5, section 20, of the Arkansas Constitution. Appellant Travelers Casualty and Surety Company of America (Travelers) filed a declaratory judgment action against the Arkansas State Highway Commission and the Arkansas State Highway and Transportation Department (referred to hereinafter collectively as “the Highway Commission”) in order to determine whether it was liable on a surety performance bond with the Highway Commission after the principal had allegedly defaulted on a construction contract. The circuit court ruled that the action was barred by the doctrine of sovereign immunity. We affirm.

In November of 1997, Fru-Con Construction Company (Fru-Con) entered into a highway construction contract with the Arkansas State Highway Commission. The contract, identified as the White River Bridge Replacement near De Vails Bluff, for US Highway 70, Job No. 060599, required Fru-Con to complete a bridge replacement on Highway 70. Travelers issued a statutory performance bond in the amount of $13,982,784.80 for the purpose of securing Fru-Con’s performance under the White River Bridge Contract.

After four years, the Highway Commission claimed that FruCon had failed to perform its responsibilities in a timely manner under the contract with respect to the construction of a coffer dam for one of two bridge piers in the White River. The Highway Commission terminated the right of Fru-Con to proceed under the contract effective April 4, 2002. The Highway Commission then made demand upon Travelers, as surety on the bond, to assure the performance of completion of the contract. In response to its termination, Fru-Con filed a claim with the Arkansas Claims Commission for breach of contract seeking $9,000,000. The performance bond provided for a sixty-day suspension to allow Travelers to investigate the matter and engage a completion contractor. After the suspension, the bond also allowed Travelers another thirty days to actively engage in the resumption of the White River project. The initial suspension expired on June 3, 2002; however, by mutual agreement the suspension period was extended to June 13, 2002.

On June 13, 2002, Travelers notified the Highway Commission that it was not going to assume the performance of completion of the White River project. On the same day, Travelers filed suit in the Pulaski County Circuit Court seeking a declaratory judgment that it was not hable to the Commission on its statutory performance bond. On July 15, 2002, or two days after Travelers’s time to engage a completion contractor had expired, the Highway Commission engaged Jensen Construction Company as the completion contractor for the White River project.

The Highway Commission filed a motion to dismiss on grounds that it enjoyed sovereign immunity from suit because it operated as a branch of the State. Travelers acknowledged that the Highway Commission was a state agency but contended that because the complaint prayed for declaratory relief, and not damages, sovereign immunity was not implicated. The circuit court conducted a hearing on the matter, and ruled that the Highway Commission enjoyed sovereign immunity from the action at bar. The circuit court dismissed the complaint pursuant to Ark. R. Civ. P. 12(b)(1), (2), (6), and (8). It is from the order dismissing its complaint that Travelers appeals.

Two points of error have been raised on appeal. First, Travelers argues, as it did below, that state sovereign immunity is not applicable because Travelers only seeks a declaration of its obligations to the State. For its second point, Travelers argued in its opening brief that a declaratory judgment action is the proper vehicle to settle the issue of liability on the performance bond. Both parties now concede that the circuit court did not rule on that issue; hence that issue is not properly before this court. As we have stated repeatedly, a party’s failure to obtain a ruling is a procedural bar to this court’s consideration of the issue on appeal. Bell v. Beshears, 351 Ark. 260, 92 S.W.3d 32 (2002).

Sovereign Immunity

Travelers acknowledges on appeal, as it did at the trial-court level, that the Highway Commission is a state agency, and that generally state agencies are immune from suit in the State’s courts. Nonetheless, Travelers contends that sovereign immunity does not strip the circuit court of jurisdiction to hear an action for declaratory judgment. In response, the Highway Commission disputes that contention, stating the complaint filed by Travelers sets forth a suit against the State of Arkansas such that the circuit court lacks jurisdiction.

In reviewing the circuit court’s decision on a motion to dismiss under Ark. R. Civ. P. 12(b)(6), this court treats the facts alleged in the complaint as true and views them in the light most favorable to the party who filed the complaint. Arkansas Tech Univ. v. Link, 341 Ark. 495, 17 S.W.3d 809 (2000). In testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed. Id. However, Arkansas law requires fact pleading, and a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief. Id. Furthermore, sovereign immunity is jurisdictional immunity from suit, and jurisdiction must be determined entirely from the pleadings. Department of Human Servs. v. Crunkleton, 303 Ark. 21, 791 S.W.2d 704 (1990).

The Arkansas Constitution provides the State with sovereign immunity. Article 5, section 20, of the Arkansas Constitution provides that: “The state of Arkansas shall never be made a defendant in any of her courts.” The law of sovereign immunity is well established in Arkansas. Often, an analysis of Arkansas’s sovereign immunity starts with Pitcock v. State, 91 Ark. 527, 121 S.W. 742 (1909), where we explained that “a sovereign State cannot be sued except by its own consent; and such consent is expressly withheld by the Constitution of this State.” 91 Ark. at 535, 121 S.W. at 745. Sovereign immunity is jurisdictional immunity from suit, and where the pleadings show the action is one against the State, the trial court does not acquire jurisdiction. Brown v. Arkansas State HVACR Licensing Bd., 336 Ark. 34, 984 S.W.2d 402 (1999). However, sovereign immunity can be waived when the State is the moving party seeking affirmative relief. Arkansas Dep’t of Human Servs. v. State, 312 Ark. 48, 850 S.W.2d 847 (1993). Additionally, there are exceptions to immunity where a state agency’s action is illegal, or when a state agency officer refuses to do a purely ministerial act required by statute. Commission on Judicial Discipline & Disability v. Digby, 303 Ark. 24, 792 S.W.2d 594 (1990).

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Bluebook (online)
120 S.W.3d 50, 353 Ark. 721, 2003 Ark. LEXIS 366, Counsel Stack Legal Research, https://law.counselstack.com/opinion/travelers-casualty-surety-co-of-america-v-arkansas-state-highway-ark-2003.