Data General Corp. v. County of Durham

• Citation: 143 NC App. 97,545 S.E.2d 243
• Decision Date: 17 April 2001
• Docket Number: No. COA00-202.,COA00-202.
• Parties: DATA GENERAL CORPORATION, Plaintiff-Appellee, v. COUNTY OF DURHAM, Defendant-Appellant.
• Court: Court of Appeal of North Carolina (US)

545 S.E.2d 243

143 NC App. 97

DATA GENERAL CORPORATION, Plaintiff-Appellee, v. COUNTY OF DURHAM, Defendant-Appellant.

No. COA00-202.

Court of Appeals of North Carolina.

April 17, 2001.

Durham County Attorney S.C. Kitchen and Assistant Durham County Attorney Curtis Massey, for the defendant-appellant.

Poyner & Spruill, L.L.P., by Donald R. Teeter, Raleigh, for the plaintiff-appellee.

WYNN, Judge.

This appeal arises from an arrangement for the lease of certain computer equipment by the County of Durham from Data General Corporation. According to the complaint, Data General and certain officials of Durham County negotiated in early 1993 for the lease of computer hardware and software. The final lease agreement was reduced to a writing, dated 3 June 1993, and was signed by representatives of both parties.

The lease agreement provided for annual lease payments during its four-year term. The lease agreement also provided that, at the expiration of the lease term, Durham County would have the option to purchase the leased equipment. According to the complaint, Durham County made the required annual payments during the term of the lease, but failed to exercise the purchase option. The complaint further alleged that Durham County kept and used the leased equipment for close to two years following the expiration of the lease term, without making any further payments to Data General.

Data General filed suit on 29 July 1999, asserting causes of action for breach of contract, quantum meruit, estoppel, and negligent misrepresentation. On 16 August 1999, Durham County filed a motion to dismiss pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(1) and (2), asserting a lack of subject matter and personal jurisdiction on grounds of sovereign immunity. Durham County also filed several sworn affidavits in support of its motion to dismiss. Following a hearing, Superior Court Judge Knox Jenkins entered an order dated 20 November 1999 denying the motion. From that order, Durham County appeals.

Durham County asserts two assignments of error on appeal. In its first assignment of error, Durham County contends that the trial court erred in denying the motion to dismiss pursuant to Rule 12(b)(2) for lack of personal jurisdiction, as the evidence in support of the motion demonstrated that Durham County did not waive its sovereign immunity and no grounds for jurisdiction existed. Durham County also assigns as error the trial court's denial of the motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction on grounds of sovereign immunity.

At the outset, we note that the denial of a motion to dismiss is interlocutory and ordinarily is not immediately appealable; nonetheless, this Court has held that an appeal of a motion to dismiss based on sovereign immunity presents a question of personal jurisdiction rather than subject matter jurisdiction, and is therefore immediately appealable. See N.C. Gen.Stat. § 1-277 (1996); Zimmer v. N.C. Dep't of Transp., 87 N.C.App. 132, 133-34, 360 S.E.2d 115, 116 (1987). On the other hand, the denial of a motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction is not immediately appealable. See N.C. Gen.Stat. § 1-277(a); Teachy v. Coble Dairies, Inc., 306 N.C. 324, 293 S.E.2d 182 (1982). We therefore consider Durham County's first assignment of error, but decline to consider the second assignment of error, as it is not properly before us.

It is a fundamental rule that sovereign immunity renders this state, including counties and municipal corporations herein, immune from suit absent express consent to be sued or waiver of the right of sovereign immunity. See Coastland Corp. v. N.C. Wildlife Resources Comm'n, 134 N.C.App. 343, 346, 517 S.E.2d 661, 663 (1999)

; Great American Ins. Co. v. Gold, 254 N.C. 168, 118 S.E.2d 792 (1961); EEE-ZZZ Lay Drain Co. v. N.C. Dep't of Hum. Res., 108 N.C.App. 24, 422 S.E.2d 338 (1992). Furthermore, counties and municipal corporations within this state enjoy governmental immunity from suit for activities that are governmental, and not proprietary, in nature. Robinson v. Nash County, 43 N.C.App. 33, 35, 257 S.E.2d 679, 680 (1979). Nonetheless, a governmental entity may waive its governmental immunity, for instance, where the entity purchases liability insurance. See EEE-ZZZ Lay Drain, 108 N.C.App. at 27,

422 S.E.2d at 340. Additionally, where the entity enters into a valid contract, the entity "implicitly consents to be sued for damages on the contract in the event it breaches the contract." Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 424 (1976).

We first consider the standards by which we must review the record before us. In ruling on a motion, the trial court is not required to make findings of fact absent a request by one of the parties. Where no such request is made by either party, and thus no such findings are made by the trial court, "it will be presumed that the judge, upon proper evidence, found facts sufficient to support his ruling." Cameron-Brown Co. v. Daves, 83 N.C.App. 281, 285, 350 S.E.2d 111, 114 (1986) (citing J.M. Thompson Co. v. Doral Mfg. Co., 72 N.C.App. 419, 424, 324 S.E.2d 909, 912-13 (1985)); see Bruggeman v. Meditrust Acquisition Co., 138 N.C.App. 612, 532 S.E.2d 215 (2000)

. Where such presumed findings are supported by competent evidence, they are deemed conclusive on appeal, despite the existence of evidence to the contrary. Cameron-Brown Co.,

83 N.C.App. at 285,

350 S.E.2d at 114.

In the instant case, neither party requested the trial court to make findings of fact, and the trial court made no such findings. We must therefore determine the sufficiency of the evidence to support the trial court's presumed findings. Id. In the absence of an express waiver of sovereign immunity by Durham County, we must determine whether there was sufficient evidence to support the presumed finding by the trial court that the county waived its sovereign immunity as to Data General's contract claims either by the purchase of liability insurance or by entering a valid contract.

Other than the unverified complaint, the record on appeal contains the following sources of evidence submitted by Durham County pertaining to the presence or lack of personal jurisdiction: (1) Sworn affidavit of Catherine C. Whisenhunt, the Risk Manager for Durham County; (2) Sworn affidavit of Sandra Phillips, the Purchasing Director for Durham County; (3) Sworn affidavit of Garry Umstead, the Clerk to the Board of Commissioners of Durham County; (4) Sworn affidavit of Perry Dixon, the Information Technology Director for Durham County; (5) Official Minutes of the Board of Commissioners for Durham County for 14 September 1992, pertaining to the prospective lease between Durham County and Data General; and (6) Data General's response to Durham County's request for a written statement of monetary relief sought.

"Where unverified allegations in the complaint meet plaintiff's `initial burden of proving the existence of jurisdiction ... and defendant[s] ... d[o] not contradict plaintiff's allegations [ ],' such allegations are accepted as true and deemed controlling." Inspirational Network, Inc. v. Combs, 131 N.C.App. 231, 235, 506 S.E.2d 754, 758 (1998) (quoting Bush v. BASF Wyandotte Corp., 64 N.C.App. 41, 45, 306 S.E.2d 562, 565 (1983)). However, to the extent the defendant offers evidence to counter the plaintiff's allegations, those allegations may no longer be accepted as controlling, and the plaintiff can no longer rest on such allegations in the complaint. See Bruggeman, 138 N.C.App. at 615-16,

532 S.E.2d at 217-218. The plaintiff may nonetheless satisfy the burden of establishing a prima facie basis for personal jurisdiction "if some form of evidence in the record supports the exercise of personal jurisdiction." Id. at 616, 532 S.E.2d at 218. That is, we must "look to the uncontroverted allegations in the complaint and the uncontroverted facts" asserted by Durham County for evidence supporting the trial court's presumed findings. Id.

We reject the initial contention by Data General that, as a general matter, the sworn affidavits submitted by Durham County should not have been considered by the trial court in ruling on Durham County's motion, and should not be considered by this Court in reviewing the trial court's denial of that motion. Rule 12(b) provides that a motion to dismiss for failure to state a claim under Rule 12(b)(6) "shall be treated as one for summary judgment and disposed of as provided in Rule 56" where the trial court considers matters outside the pleadings in ruling on the motion. N.C. Gen.Stat. § 1A-1, Rule 12(b). Rule 12(b) imposes no similar requirement or restriction upon the trial court in considering matters outside the pleadings in ruling on a motion to dismiss pursuant to Rule 12(b)(2) for lack of personal jurisdiction, and we decline to do so.

The complaint alleges that, by entering the lease agreement with Data General, Durham County waived any sovereign immunity it may have enjoyed and consented to being sued for damages in the event it breached the lease agreement. See Smith, 289 N.C. at 320,

222 S.E.2d at 424. Durham County contends on appeal that the materials submitted in support of its motion to dismiss establish that the lease agreement was not a valid contract enforceable against Durham County, and that Durham County did not, therefore, consent to be sued for breach of such contract.

In Smith, our Supreme Court held that "whenever the State of North Carolina, through its authorized officers and agencies, enters into a valid contract, the State implicitly consents to be sued for damages on the contract in the event it breaches the contract." Id. at 320, 222 S.E.2d at 423-24 (Emphasis added.) That is, in the absence of a valid contract, a state entity may not be subjected to contractual liability. See id. at 310, 222 S.E.2d at 417 (citing 72 Am.Jur.2d States, Etc. § 88 (1974)).

"N.C....