RPR & ASSOCIATES v. O'Brien/Atkins Associates

• Decision Date: 28 December 1995
• Docket Number: No. 1:94CV00706.,1:94CV00706.
• Citation: 921 F. Supp. 1457
• Court: U.S. District Court — Middle District of North Carolina
• Parties: RPR & ASSOCIATES, Plaintiff, v. O'BRIEN/ATKINS ASSOCIATES, P.A. and Tai and Associates, Defendants.

921 F. Supp. 1457

RPR & ASSOCIATES, Plaintiff, v. O'BRIEN/ATKINS ASSOCIATES, P.A. and Tai and Associates, Defendants.

No. 1:94CV00706.

United States District Court, M.D. North Carolina, Durham Division.

December 28, 1995.

COPYRIGHT MATERIAL OMITTED

Allen Holt Gwyn, Jr., Patton Boggs, L.L.P., Greensboro, NC, Steven Douglas Hedges, Patton Boggs, L.L.P., Greensboro, NC, for RPR & Associates, Inc.

John Lewis Shaw, Poyner & Spruill, L.L.P., Raleigh, NC, James Moore Tatum, Jr., Moore & Van Allen, Durham, NC, for O'Brien/Atkins Associates, P.A.

James Moore Tatum, Jr., Moore & Van Allen, Durham, NC, Dailey J. Derr, Dailey J. Derr, P.A., Durham, NC, for Tai and Associates.

MEMORANDUM OPINION

OSTEEN, District Judge.

This matter comes before the court on Defendants' motions to dismiss complaint. Defendants cite several grounds for dismissal: (1) Fed.R.Civ.P. 12(b)(1) and 12(b)(2) for lack of subject matter jurisdiction and personal jurisdiction over Defendants on grounds of sovereign immunity; (2) Rule 12(b)(7) for failure to join a necessary and indispensable party; and (3) abstention. In addition, Defendant O'Brien/Atkins Associates filed a motion to dismiss under Rule 12(b)(1) and 12(b)(2) for lack of subject matter jurisdiction and personal jurisdiction on grounds of arbitral immunity.

For the reasons stated herein, both motions will be denied.

I. FACTS

On June 7, 1988, Defendant O'Brien/Atkins Associates ("O'Brien") was hired as the architect for the George Watts Hill Alumni Center located on the campus of the University of North Carolina at Chapel Hill ("University") for its owner, the State of North Carolina by and through the University of North Carolina at Chapel Hill. The University hired Defendant Tai and Associates ("Tai") on July 28, 1988, to provide services as consulting engineer. Specifically, Tai was retained to perform site condition tests at the location. Plaintiff RPR and Associates ("RPR") was awarded the contract for the general construction work on the project and was one of the State's prime contractors on this multi-prime project.

Plaintiff alleges that both Defendant O'Brien and Defendant Tai committed numerous negligent acts and omissions that proximately caused Plaintiff substantial damage, losses, and delay on the project. Plaintiff now seeks to recover against them individually for their negligence.

In December 1990, while construction of the Alumni Center was ongoing, Plaintiff initiated an administrative proceeding before the North Carolina Office of State Construction, pursuant to N.C.Gen.Stat. § 143-135.3, for more than $4,000,000. The claims now pending in the administrative proceeding principally involve claims against fellow prime contractors and claims for interest on retainage held by the State. Those claims allege the liability of the State for numerous delays and items of extra cost arising from alleged defaults and shortcomings in the administration of the project by the State and O'Brien. The proceeding is ongoing and the conclusion date is unascertainable.

Defendants O'Brien and Tai each filed a motion to dismiss the complaint pursuant to Rule 12(b)(1) and 12(b)(2), claiming that the court lacks both subject matter jurisdiction and personal jurisdiction over Defendants. Both Defendants claim that they are clothed with the State's sovereign immunity because they are acting in their capacity as agents for the State of North Carolina.

In addition, Defendants assert that the complaint should be dismissed under Rule 12(b)(7) because Plaintiff has failed to include an indispensable party, the State of North Carolina. Defendant O'Brien moves for dismissal under Rule 12(b)(1) and 12(b)(2) alleging that it is entitled to arbitral immunity. Furthermore, both Defendants move for dismissal on grounds of abstention because: (1) the case involves complicated issues of state law; and (2) the exact matters at issue in this suit are currently pending in state administrative proceedings before the Office of State Construction.

II. DISCUSSION

A. Rule 12(b)(1) — Sovereign Immunity

As an initial matter, the court recognizes that there is confusion as to whether a motion raising the defense of sovereign immunity should be brought as a challenge to subject matter jurisdiction under Rule 12(b)(1) or a challenge to the court's personal jurisdiction under Rule 12(b)(2). Some circuits have found that a motion under Rule 12(b)(2) for lack of personal jurisdiction is not the proper mechanism for raising an immunity defense. "The question of immunity does not bear on the question of amenability, or personal jurisdiction." Petrol Shipping Corp. v. Kingdom of Greece, 360 F.2d 103, 107 (2d Cir.), cert. denied, 385 U.S. 931, 87 S.Ct. 291, 17 L.Ed.2d 213 (1966). The North Carolina Supreme Court has declined to decide whether state sovereign immunity should be raised as lack of subject matter jurisdiction or lack of personal jurisdiction. Teachy v. Coble Dairies, Inc., 306 N.C. 324, 293 S.E.2d 182 (1982). As several federal courts have done in other cases, this court will treat Defendants' motions to dismiss on grounds of immunity in this case only as motions to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1).

Under Fourth Circuit precedent, a Rule 12(b)(1) motion should be granted only in very limited circumstances. A "complaint should not be ... dismissed in this manner merely because the court doubts that the plaintiff will ultimately prevail; so long as a plaintiff colorably states facts which, if proven, would entitle him to relief, the motion to dismiss should not be granted." Adams v. Bain, 697 F.2d 1213, 1216 (4th Cir.1982) (citing Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In a Rule 12(b)(1) case, the court must give the plaintiff the same procedural protections provided under Rule 12(b)(6); thus, all the facts alleged in the complaint are assumed true and all factual inferences are drawn in the plaintiff's favor. Id. at 1219. The "moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768 (4th Cir. 1991), cert. denied, 503 U.S. 984, 112 S.Ct. 1667, 118 L.Ed.2d 388 (1992).

Defendants O'Brien and Tai argue that the action should be dismissed because they are both clothed with the State's sovereign immunity. Defendants' argument fails to convince the court. The State could not be sued by Plaintiff unless it consents to be sued. State v. Taylor, 322 N.C. 433, 368 S.E.2d 601 (1988). However, state statutes specifically provide for actions based on breach of contract claims under state construction projects. See N.C.Gen.Stat. § 143-135.3. The North Carolina Supreme Court has ruled that the exclusive remedy for aggrieved contractors for breach of a state construction contract is specifically set forth in the statute. Middlesex Constr. Corp. v. State ex rel. State Art Museum Bldg. Comm'n, 307 N.C. 569, 299 S.E.2d 640 (1983), reh'g denied, 310 N.C. 150, 312 S.E.2d 648 (1984). In this case, Plaintiff does not seek to sue or recover from the State. Instead, Plaintiff seeks to recover against Defendants O'Brien and Tai in their individual capacities.

In addition, Defendants claim the status of public officers contending that they may only be held liable if they act outside the scope of their duties. This argument is unpersuasive. The facts do not support the assertion that either Defendant is a public official or should be treated as such. It is true that full-time employees of the State are not liable in negligence in connection with their professional activities on behalf of the State in the absence of wanton negligence, corruption, or malice. Wilkins v. Burton, 220 N.C. 13, 16 S.E.2d 406 (1941). Neither Defendant O'Brien nor Defendant Tai is an employee of the State. Both Defendants are independent contractors hired by the State to assist with the construction of the Alumni Center. Thus, they are neither full-time employees of the State nor public officials and will not be treated as such.

According to North Carolina law, architects and engineers are liable in tort for negligence in the performance of their professional duties. Quail Hollow East Condominium Ass'n v. Donald J. Scholz Co., 47 N.C.App. 518, 268 S.E.2d 12, cert. denied, 301 N.C. 527, 273 S.E.2d 454 (1980). For purposes of imposing liability, it is irrelevant whether the contractor or architect is acting on his own behalf or under contract with another. Shoffner Indus., Inc. v. W.B. Lloyd Constr. Co., 42 N.C.App. 259, 265, 257 S.E.2d 50, 55 (1979) (citing Council v. Dickerson's, Inc., 233 N.C. 472, 64 S.E.2d 551 (1951)). Because of the amount of control that architects and engineers exercise over construction projects, there are compelling reasons to hold them accountable to the contractors who rely on their work. In Shoffner, the North Carolina Court of Appeals decided that

altogether too much control over the contractor necessarily rests in the hands of the supervising architect for him not to be placed under a duty imposed by law to perform without negligence his functions as they affect the contractor. The power of the architect to stop the work alone is tantamount to a power of economic life or death over the contractor. It is only just that such authority, exercised in such a relationship, carry commensurate legal responsibility.

Id. at 266, 257 S.E.2d at 55 (quoting United States v. Rogers & Rogers, 161 F.Supp. 132, 136 (S.D.Cal.1958)). Defendants should, therefore, be directly liable to Plaintiff for their alleged negligent acts, if actual proof supports the allegations.

North Carolina courts repeatedly have denied a claim to sovereign immunity by private parties. The North Carolina Supreme Court set out the state of the law in Shingleton v. State, 260 N.C. 451, 133 S.E.2d 183 (1963):

When public

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