The state Supreme Court on Monday reinforced its view that the state is almost always immune from financial damages when it wiped out a $18.3 million judgment to a computer company that claimed a state agency wrongly drove it out of business during a contract dispute.
Computer Plus Center, Inc. had argued that the state waived sovereign immunity because it sued the private seller of computing equipment. The business argued that the state should be liable for financial judgments based on the counter claims it made in response to the state's lawsuit.
A lower court agreed with the Computer Plus, awarding it $18.3 million, the value of the business. A judge later reduced the award to $1.83 million
In the decision released Monday, the state's high court reversed lower court rulings and eliminated any financial award, concluding that sovereign immunity protects the state in most circumstances from financial claims, regardless of who sues first.
In cases of suits for financial damages, the Supreme Court adopted the position of the state Attorney General's office that aggrieved parties must obtain approval from the state Office of the Claims Commissioner prior to initiating a legal action. Parties can appeal adverse decisions by the claims commissioner to the General Assembly.
"I am pleased that the Supreme Court has agreed with our position that the verdict against the state in this case should not stand," state Attorney General George Jepsen said Monday."The court is correct in its conclusion that the state does not waive its sovereign immunity simply by initiating litigation against a private party; rather, a person who believes the state has caused damages must follow the Claims Commission process established by the legislature, which was not done in this case. This is a significant victory for the state's taxpayers, who will not be left on the hook for costs based on a verdict that we maintained was outside the law."
Hartford lawyer James Wade, who represents Computer Plus, could not be reached.
The state Department of Information Technology sued Computer Plus in 2003 in a dispute over the purchase by the state of computer servers and personal computers from the former East Hartford business.
"We agree with the department, and conclude that the state does not waive its sovereign immunity for counterclaims seeking monetary damages simply by initiating litigation against a private party," Justice Flemming L. Norcott Jr. wrote for a unanimous court. "Accordingly, we conclude that the trial court improperly denied the department's motions to dismiss the defendant's procedural due process counterclaim on the basis of sovereign immunity."
The dispute between the state and Computer Plus grew out of two contracts under which the computer equipment supplier agreed to sell the sate servers and personal computers. When the computer memory in the servers malfunctioned, state technology officers began to suspect that Computer Plus deliberately supplied equipment that fell below contract specifications, despite what the high court called the supplier's "prompt remediation of the memory malfunctions."
The state later determined that Computer Plus was not a "responsible" bidder under state contracting rules. The company claimed that subsequent actions by the state, including the high profile lawsuit, caused it to go out of business.