Sanchez v. State

Justice JONES

concurring in part and dissenting in part.

I concur in the Court’s opinion, except for part IIIB, pertaining to the issue of interest on Sanchez’ back pay. I dissent with respect to part IIIB, wherein the Court holds that the IDOC is protected against having to pay interest on Sanchez’ back pay by virtue of the doctrine of sovereign immunity. The holding is in error because the State may not enter into a contract and then assert sovereign immunity when the other contracting party seeks redress under the contract.

The Court cites University of Utah v. Twin Falls County, 122 Idaho 1010 , 842 P.2d 689 (1992) as authority for the proposition that the doctrine of sovereign immunity precludes an interest award in this case. However, the University of Utah ease did not involve a contract. Indeed, in that case the Court noted:

An alternate way to find consent to payment of interest may be by virtue of an express or implied contractual provision, but that method is immaterial here. Bond v. State, 70 Wash.2d 746 , 425 P.2d 10 (1967).

122 Idaho at 1018 , 842 P.2d at 697 .

In Bond v. State, the ease cited to by this Court in the University of Utah case, the Washington Supreme Court stated:

However, the generally recognized rule ... is that a state is not liable for interest in any case except where expressly, or by a reasonable construction of a contract or statute, it has placed itself in a position of liability.

425 P.2d at 11 . The Washington Supreme Court followed up on this ruling in Architectural Woods, Inc. v. State, 92 Wash.2d 521 , 598 P.2d 1372 (Wash.1979) holding that, while the state “cannot be held to interest on its debts” without its consent, the entry of the state into an authorized contract provides such consent and waives sovereign immunity. According to that court:

It is our opinion that the consent to liability for interest which was required under the rule of [a previous case] can be an implied consent, and is not limited to the express statutory or contractual consent, which was required by subsequent cases. It is our further opinion that by the act of entering into an authorized contract with a private party, the State, absent a contractual provision to the contrary, thereby waives its sovereign immunity in regard to the transaction and impliedly consents to the same responsibilities and liabilities as the private party, including liability for interest.

598 P.2d at 1375 . Of particular interest is the Washington Supreme Court’s reliance on Grant Construction Co. v. Burns, 92 Idaho 408 , 443 P.2d 1005 (1968). The court stated:

In finding an implied consent by the State to be sued on authorized contracts, we agree with the reasoning of the Idaho Supreme Court in Grant Constr. Co. v. Burns, 92 Idaho 408 , 443 P.2d 1005 (1968). In that case, the state of Idaho claimed that it could not be held liable for damages arising from its breach of contract because the State had not expressly waived its immunity from suit. There existed no express statute under which the State could be sued for breach of contract. However, the Idaho Supreme Court held that a waiver of sovereign immunity in such a situation could be implied.

Id. at 1376. The court further supported its decision by citing to the opinion of the Indiana Supreme Court in Carr v. State ex rel. Coetlosquet, 127 Ind. 204 , 26 N.E. 778 (1891).

Interestingly, the Idaho Supreme Court cited to the same Indiana Supreme Court decision in reaching its conclusion in the Grant Construction case that sovereign immunity did not apply to contracts entered into by the State of Idaho. The Court quoted from the Carr case, as follows:

‘In entering into the contract it [the state] laid aside its attributes as a sovereign, and bound itself substantially as one of its citizens does when he enters into a contract. *247 Its contracts are interpreted as the contracts of individuals are, and the law which measures individual rights and responsibilities measures, with few exceptions, those of a state whenever it enters into an ordinary business contract * * *. The principle that a state, in entering into a contract, binds itself substantially as an individual does under similar circumstances, necessarily carries with it the inseparable and subsidiary rule that it abrogates the power to annul or impair its own contract. It cannot be true that a state is bound by a contract, and yet be true that it has power to cast off its obligation and break its faith, since that would invoke the manifest contradiction that a state is bound and yet not bound by its obligation. * * * ”

Grant Construction, 92 Idaho at 412 , 443 P.2d at 1009 . The Court went on to say:

Courts in other jurisdictions are in accord with the ruling of the Supreme Court of Indiana and have held, in effect, that where the legislature has by statute authorized the state to enter into certain contracts, the state upon entering into such a contract thereby consents to be sued if it breaches the contract to the damage of the other contracting party---We agree with this principle. To deny the right to sue in such a contractual situation would be to deprive the damaged contracting party of property without due process of law. U.S. Const. Amendments 5 and 14. Accordingly, we hold that where, as here, the state has entered into a contract pursuant to legislative authorization, the state has consented to be sued for alleged breaches of its contractual responsibilities and cannot invoke the protection of sovereign immunity.

92 Idaho at 412-413 , 443 P.2d at 1009-1010 . The Court continued:

We therefore hold that where the state has waived immunity to be sued by entering into and assuming legislatively authorized contractual obligations, it incurs legal rights and responsibilities similar to those of the individual citizen, and an action for breach of contract against the state may be brought in the district court, which is the proper tribunal for adjudicating all eases in law and equity.

Id.

The Grant Construction decision was part of an effort to overcome the old world mindset that the sovereign could do no wrong. In several decisions beginning in 1950, the Court pummeled the doctrine of sovereign immunity on a number of fronts. This Court’s effort to trim back the sovereign immunity doctrine was discussed in Smith v. State, 93 Idaho 795, 802 , 473 P.2d 937, 944 (1970), as follows:

This Court has already acted to limit the doctrine of sovereign immunity. In the case of Renninger v. State, 70 Idaho 170 , 213 P.2d 911 (1950) the Court refused to follow the doctrine of sovereign immunity in eases involving the taking of private property by the state and where the owner seeks recovery by inverse condemnation. In the recent case of Grant Construction Co. v. Burns, 92 Idaho 408 , 443 P.2d 1005 (1968) this Court abolished the doctrine of sovereign immunity in contract actions. In view of all these indications which unequivocally demonstrate that sovereign immunity is looked upon with disfavor by all three branches of our state government and the noticeable trend evidenced in other jurisdictions, we hereby hold that the doctrine of sovereign immunity is no longer a valid defense in actions based upon tortuous acts of the state or any of its departments, political subdivisions, counties, or cities, where the governmental unit has acted in a proprietary as distinguished from a governmental capacity.

In other words, sovereign immunity does not act as a shield when the government engages in the type of activities engaged in by private parties, such as entering into contractual arrangements. This is a contract action and sovereign immunity simply does not apply.

When the State, or a private party, hires an individual to perform services, a contract of employment comes into being. Here, Sanchez was employed by IDOC under an employment contract. 5 Under the contract, *248 IDOC was required to pay wages to Sanchez at specified times each month. Those wage payments ceased when Sanchez was improperly terminated. Sanchez successfully instituted proceedings in the Commission to obtain reinstatement and payment of the wages that would have been owing, had the employment contract not been wrongfully terminated. Had Sanchez been an employee of a private party, he would have been entitled to interest on each increment of the unpaid wages from the time the same became due. DeWitt v. Medley, 117 Idaho 744, 748 , 791 P.2d 1323, 1327 (Ct.App.1990) (employee entitled to prejudgment interest on unpaid wages under I.C. § 28-22-104(1)). An award of interest is proper in order to compensate Sanchez for the loss of use of this money. Dillon v. Montgomery, 138 Idaho 614, 617 , 67 P.3d 93, 96 (2003). The district court properly awarded Sanchez interest on his back pay and that award should be upheld on this appeal.

. There is no doubt that IDOC has legislative authority to contract for employment of correctional officers. Each year IDOC receives legislative authorization to employ and pay its personnel. See e.g. 2006 Idaho Session Laws, ch. 301, *248 authorizing IDOC to employ and pay up to 1554.4 full-time equivalent employees.