Key Points

  • The Georgia Court of Appeals affirmed dismissal of a former tenant's claims against the California State Teachers' Retirement System on sovereign immunity grounds.
  • The breach of contract claim failed because CalSTRS was not a signatory to the lease and no one acting for it was shown to be involved with the agreement, so no contract-based waiver of immunity applied.
  • The court extended immunity on the tort claims as a matter of comity because California's Government Claims Act and Georgia's Tort Claims Act are conceptually identical, citing University of Iowa Press v. Urrea and Franchise Tax Board v. Hyatt.
  • The court held that the Eleventh Amendment arm-of-the-state analysis did not apply and that Francis waived her request for jurisdictional discovery by never raising it in the trial court.
  • The court vacated the with-prejudice dismissal and remanded with direction to enter the sovereign-immunity dismissal without prejudice, because it rests on lack of subject matter jurisdiction.

The Georgia Court of Appeals on Monday held that the California State Teachers' Retirement System cannot be sued in Georgia by a former tenant who blamed marijuana smoke from a neighboring unit for her declining health. The court ruled that the California pension system kept its sovereign immunity even though the tenant alleged it owned the company that ran her apartment complex.

Judge Gobeil wrote for the three-judge panel, and Dillard, P. J., and Pipkin, J., concurred. The panel affirmed the dismissal of Bridget Francis's claims against the retirement system, known as CalSTRS. It vacated one part of the trial court's judgment, however, because the dismissal had been entered with prejudice.

The decision means that a Georgia court may extend a sister state's immunity to that state's agency out of comity, the practice by which one state's courts give effect to another state's laws out of respect rather than legal obligation, when the two states' immunity statutes match. The panel also held that the plaintiff must plead and prove any waiver of immunity. It rejected the argument that Georgia courts must first decide whether the agency functions as "an arm of the State" under the Eleventh Amendment.

Francis, a former leasing consultant and tenant of Lakeside Vista Apartments, sued on July 12, 2024. The opinion recounts her allegations that in October 2022 an individual rented the apartment next to hers and "smoked marijuana incessantly, in violation of the lease provisions," and that management ignored her complaints and her requests for mold remediation and reasonable accommodations. She sued Fairfield Lakeside LLC and Fairfield Residential LLC, which she said owned and operated the complex, along with CalSTRS. Her claims included negligence per se, constructive eviction, trespass, discrimination, intentional infliction of emotional distress and breach of contract.

Francis's only allegation against CalSTRS was that it owned Fairfield Residential. "Francis did not allege any specific acts or omissions by CalSTRS," Judge Gobeil wrote. "Significantly, nor did Francis allege any manner in which CalSTRS had waived its sovereign immunity."

CalSTRS moved to dismiss. It argued that Francis had never properly served it and that it was a public entity immune under the California Government Claims Act. It also relied on Franchise Tax Board of California v. Hyatt, the 2019 U.S. Supreme Court decision holding that states keep their sovereign immunity from private suits in other states' courts. Francis responded that CalSTRS was the majority owner of Fairfield Residential and an active participant in the business, and had therefore given up its immunity. She attached the pension system's Investment Policy Statement. According to the opinion, that document did not mention Fairfield Residential.

The trial court granted the motion. It found that mailing the complaint, which was delivered to a guard at CalSTRS's headquarters, was not proper service, and that CalSTRS is a California public agency entitled to immunity. On appeal, Francis argued that owning and controlling an apartment complex was a commercial activity, not a sovereign function. She also argued that the trial court should have run the arm-of-the-state analysis. "These arguments do not withstand scrutiny," Judge Gobeil wrote.

On the contract claim, the panel noted that Georgia waives immunity for breach of a written contract entered into by the state or its agencies. But "it is undisputed that CalSTRS was not a signatory to the lease with Francis, and she has failed to show that any person acting on behalf of CalSTRS was involved with the agreement," the court held. Nor was there evidence that CalSTRS took part in the emails Francis exchanged with management.

On the tort claims, the panel relied on a 1993 Georgia Court of Appeals decision, University of Iowa Press v. Urrea. That decision granted comity immunity to an Iowa state entity because Iowa's tort claims statute and Georgia's both waive immunity only for suits in the state's own courts. The panel found California's statute equivalent. Because the two states' provisions are "conceptually identical, application of [California's] Tort Claims Act would not violate Georgia's public policy," the court wrote, quoting the earlier case with California substituted for Iowa.

The panel added that the Supreme Court's view of sovereign immunity "lends further support to the trial court's ruling here." It quoted the Hyatt decision: "[t]he Constitution does not merely allow States to afford each other immunity as a matter of comity; it embeds interstate sovereign immunity within the constitutional design." Summing up, Judge Gobeil wrote that "Francis failed to plead any basis for a waiver of immunity in her complaint, or the extent of any such waiver."

The panel held that the arm-of-the-state test belongs to the Eleventh Amendment and does not control here. Quoting the Supreme Court's 1999 decision in Alden v. Maine, the court wrote that the "sovereign immunity of the States neither derives from, nor is limited by, the terms of the Eleventh Amendment."

The panel also rejected Francis's argument that the trial court should have let her take discovery into CalSTRS's ownership and control of the complex before ruling. CalSTRS moved to dismiss on February 4, 2025, the trial court heard the motion on June 30, and it ruled on July 25. But "at no point during these four months does it appear that Francis raised the issue of discovery," the panel wrote, and it held the issue waived.

Francis did win on one point. Because a sovereign-immunity defense goes to the court's subject matter jurisdiction rather than the merits, the panel held, a dismissal on that ground "is without prejudice." The trial court had already said that its dismissal for improper service was without prejudice.

The court sent the case back to the trial court with instructions to clarify that the dismissal of the claims against CalSTRS was for lack of subject matter jurisdiction and is without prejudice. Under the notice printed on the opinion, motions for reconsideration must be received by 4:30 p.m. on the 10th day after the decision.