David A. Wood v. Unified Government of Athens-Clarke County, Georgia

Case: 15-11707 Date Filed: 04/07/2016 Page: 1 of 9

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 15-11707
________________________

D.C. Docket No. 3:14-cv-00043-CDL

DAVID A. WOOD,
NANCY COCHRAN,
BOBBY SNIPES,
WENDELL FAULKNER,
on behalf of themselves and all
persons similarly situated,

Plaintiffs – Appellants,

versus

UNIFIED GOVERNMENT OF ATHENS-CLARKE COUNTY, GEORGIA,

Defendant – Appellee.
_______________________

Appeal from the United States District Court
for the Middle District of Georgia
_______________________

(April 7, 2016)

Before TJOFLAT and ROSENBAUM, Circuit Judges, and GOLDBERG, * Judge.

*
The Honorable Richard W. Goldberg, of the United States Court of International Trade, sitting
by designation.
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GOLDBERG, Judge:

In this putative class action, David A. Wood, Nancy Cochran, Bobby Snipes,

and Wendell Faulkner (“the Appellants”) allege that the Unified Government of

Athens-Clarke County, Georgia (“the ACC”) breached contractual obligations to

provide health benefits to eligible retirees. 1 Shortly after this suit began, the ACC

moved for partial judgment on the pleadings, arguing that the statute of limitations

bars the Appellants’ claims. The district court granted the ACC’s motion. After a

careful review of the record and the district court’s decision, and with the

assistance of oral argument, we reverse.

BACKGROUND 2

The Appellants are retirees of the ACC. David A. Wood served as an

electrician from 1976 until he retired in 2011. Nancy Cochran started as a

magistrate court clerk in 1982 and later served as an administrative assistant in the

fire department before retiring in 2009. Bobby Snipes first worked as a traffic

1
The Appellants included a claim for impairment of contract under the United States
Constitution. U.S. Const. art. I, § 10, cl. 1. On that basis, the district court exercised subject
matter jurisdiction pursuant to 28 U.S.C. § 1331 (2012). The Appellants also included state-law
claims for breach of contract and contract impairment under the Georgia Constitution. The
district court had supplemental jurisdiction over these claims pursuant to 28 U.S.C. § 1367. This
court has jurisdiction over the interlocutory appeal under 28 U.S.C. § 1292(b).
2
When considering a motion for judgment on the pleadings, the court “must accept all
facts in the complaint as true and ‘view them in the light most favorable to the nonmoving
party.’” Moore v. Liberty Nat’l Life Ins. Co., 267 F.3d 1209, 1213 (11th Cir. 2001) (citation
omitted).
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engineer when hired in 1973, but he was the deputy manager when he retired in

2012. Wendell Faulkner was a firefighter from 1977 until 2004, when he retired as

the fire chief of the ACC. All are aged 65 or older.

The ACC “promised each employee it hired before July 1, 2002, that in

return for a certain minimum number of years of employee services (usually 10

years),” the ACC “would provide cost-free health coverage for life at the same

level that the employee received on her last day of employment.” In other words,

the ACC promised to indemnify retirees for healthcare costs at the same level that

it indemnified them for healthcare costs on their last day of employment. Each

Appellant worked the requisite number of years and is eligible for indemnification.

Thus, the Appellants upheld their end of the deal.

But the Appellants allege that when the time came for the ACC to honor its

end, the ACC refused. Each Appellant insists that, on the day of his or her

retirement, the ACC covered all health insurance premiums. Yet ordinances

adopted in 2002 and 2013 now require the Appellants to elect Medicare at the age

of 65 and pay their own Medicare premiums. Through these ordinances, the ACC

also provides monthly contributions to the Appellants to purchase supplemental

insurance as an add-on to Medicare. That said, the supplement insurance

contribution is not enough for the Appellants to purchase supplemental insurance

that, when combined with their Medicare, provides a level of health-cost

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indemnification equal to the level provided on each Appellant’s last day of

employment. Consequently, the Appellants maintain that the ACC breached, and

continues to breach, its promise to provide the Appellants with healthcare benefits

for life at the same level that each Appellant received on his or her last day of

employment. As a result of these breaches, the Appellants allegedly suffer damage

in two ways: First, they must pay out-of-pocket for their Medicare premiums and,

second, they must incur additional healthcare costs “resulting from [the ACC’s]

refusal to have supplemental coverage providing the same level of indemnification

[the Appellants] received on the last day of their employment.”

We do not address the merits of the Appellants’ claims on appeal. Instead,

we review de novo the decision of the district court to grant partial judgment on the

pleadings. Mergens v. Dreyfoos, 166 F.3d 1114, 1116 (11th Cir. 1999). The court

concluded that (1) the Appellants’ contract claims accrued in 2002 with the

enactment of the ordinance, (2) the contract is entire and, therefore, (3) the

applicable statute of limitations bars the Appellants’ contract claims. 3 On appeal,

the Appellants argue that the contract is divisible, rendering actionable any

breaches occurring within the statute of limitations. We agree.

3
According to the parties, the statute of limitations is six years on claims for breach of
contract and contract impairment under the Georgia Constitution. The limitations period is two
years on claims for contract impairment under the United States Constitution.
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DISCUSSION

The question on appeal is simple—is the contract between the ACC and the

Appellants entire or divisible? If the contract is entire, “only one action may be

maintained for a breach,” and the statute of limitations runs from the breach. Ga.

Code Ann. § 13-6-14 (2015). To illustrate, if the ACC breached the contract in

2002 as the district court held, the statute of limitations began running in 2002.

Because the Appellants initiated this action in 2014, well beyond the limitations

period, the statute of limitations would bar their claims for the 2002 breach. On

the other hand, if the contract is divisible, the statute of limitations “runs separately

as to each” breach, allowing the Appellants to proceed with any breaches occurring

within the limitations period. Teachers Ret. Sys. of Ga. v. Plymel, 676 S.E.2d 234,

240 (Ga. Ct. App. 2009); see Ga. Code Ann. § 13-6-14 (“[I]f it is severable or if

the breaches occur at successive periods . . . an action will lie for each breach.”).

Accordingly, if the contract is divisible, it is irrelevant when the ACC first

breached the contract. It matters only that the successive breaches forming the

basis of the claims happened within the limitations period.

In Georgia, a contract is entire if “the whole quantity, service, or thing, all as

a whole, is of the essence of the contract, and if it appear[s] that the contract was to

take the whole or none.” Piedmont Life Ins. Co. v. Bell, 119 S.E.2d 63, 72 (Ga. Ct.

App. 1961). Put differently, an entire contract involves “a single sum certain.”

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Baker v. Brannen/Goddard Co., 559 S.E.2d 450, 453 (Ga. 2002). In contrast, a

contract is divisible “if the quantity, service, or thing is to be accepted by

successive performances.” Piedmont, 119 S.E.2d at 72. In Baker, the Georgia

Supreme Court held that a contract is divisible when it is “for an indefinite total

amount which [is] payable in installments over [an] uncertain period.” 559 S.E.2d

at 454. The court also reasoned that a contract is divisible when the plaintiff does

“not have an immediate claim for the entirety of all future unearned monthly

installments payable under the contract” as would, for example, a party to an entire

contract who may accelerate the remainder of the obligation. Id.

Based on the above criteria alone, the contract between the ACC and the

Appellants is divisible. Although the ACC made a single promise to provide

retirement healthcare benefits, the ACC can perform this promise only by

successive performances in the form of premium payments or other cost

indemnification or both. And the obligation to provide healthcare benefits

continues throughout the uncertain span of each retiree’s life. Further, the

unpredictable fluctuations in each retiree’s healthcare costs make even more

uncertain the ultimate amount that the ACC will owe each month. Thus, as with

divisible contracts, the contract here requires “successive” payments of healthcare

premiums and indemnification, Piedmont, 119 S.E.2d at 72, “for an indefinite total

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amount” over the “uncertain period” of each Appellant’s life, Baker, 559 S.E.2d at

454.

Moreover, the Appellants have no “immediate claim for the entirety” of the

contract, as they would if the contract were entire. The contract lasts for the life of

each Appellant and includes inherently unpredictable costs. Therefore, it is

impossible to know now the aggregated amount of a lifetime of health-cost

indemnification and healthcare premiums. For that reason, the Appellants can

pursue neither a “single sum certain” nor the “whole quantity, service, or thing,” as

could a party to an entire contract.

Even if these broad criteria alone provide an insufficient basis for resolving

this case, the Georgia Court of Appeals has addressed the divisibility of retirement-

benefits contracts. In City of Lafayette v. Bates, 507 S.E.2d 252 (Ga. Ct. App.

1998), the court viewed a benefits contract as entire. By contrast, in Plymel, 676

S.E.2d 234, the court viewed a different benefits contract as divisible. The contract

between the Appellants and the ACC is more like the divisible contract in Plymel

than the entire contract in Bates.

In Bates, the city promised to pay retirees “for accumulated unused sick

leave (up to 90 days) at their regular rate of pay at [the] time of retirement.” 507

S.E.2d at 253. The city eventually abolished this policy. Later, the plaintiff retired

and sued to recover the value of the unused sick days that he had accumulated by

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the time of his retirement. In sharp contrast to the Appellants here, the retiree in

Bates sought full performance of the entire contract by payment of a “single sum”

of a definite amount covering a definite period. Unsurprisingly, the court viewed

this as an entire contract. Id.

In Plymel, a class of retired public employees sued the defendant for

providing monthly pension benefits below the contractual level. 676 S.E.2d at

237. The court noted that, under the contract, the defendant “had a duty to pay

benefits in successive installments over the uncertain period of the [class]

members’ lives.” Id. at 241. The court held that the contract “‘is not entire,

because the contractual consideration at issue is not a single sum certain which

remained unpaid after a definite due date,’ but instead ‘was for an indefinite total

amount which was payable in installments over the uncertain period’ of the

member’s life.” Id. at 240 (quoting Baker, 559 S.E.2d at 454). To further support

its finding of divisibility, the court stated that the members “did not have an

immediate claim for the entirety of all future unearned monthly retirement benefits

payable under the contract,” as the amount of this benefit would vary depending on

each member’s lifespan. Id. (citation omitted).

The divisible contract in Plymel parallels the contract here. Both contracts

involve successive payments of an uncertain amount for an indefinite period of

time. And neither contract allows a plaintiff to recover the entirety of the

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breaching party’s obligation. In short, both contracts are divisible.4 Accordingly,

the statute of limitations “runs separately as to each payment [of healthcare

premiums and cost indemnification] when it becomes due.” Id. at 240. To that

end, the Appellants may pursue contract claims for each alleged breach occurring

within the limitations period.

CONCLUSION

For the foregoing reasons, we reverse the district court’s partial judgment on

the pleadings and remand for further proceedings consistent with this opinion.

REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.

4
Admittedly, the contract in Plymel involved regularly timed payments of a fixed value.
In contrast, the contract here involves intermittent indemnification or payment of unpredictably
varying costs. But this quality need not differentiate divisible contracts from entire contracts.
Georgia courts have found contracts divisible where the defendant owed intermittent payments
of varying values. See, e.g., Carswell v. Oconee Reg’l Med. Ctr., Inc., 605 S.E.2d 879, 880–81
(Ga. Ct. App. 2004) (holding divisible a contract requiring a doctor to pay a percentage of his
fluctuating profits to plaintiff–hospital). In fact, a varying payment obligation further
substantiates a finding of divisibility here. It amplifies the extent to which the ACC’s
performance ultimately involves “indefinite total amount[s].” Baker, 559 S.E.2d at 454.
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