Fuller v. Wake Cnty.

• Decision Date: 20 June 2017
• Docket Number: No. COA16-869,COA16-869
• Citation: 254 N.C.App. 32,802 S.E.2d 106
• Court: North Carolina Court of Appeals
• Parties: Dr. Edward E. FULLER, Sr., Plaintiff, v. WAKE COUNTY, a Body Politic and Corporate, Defendant.

254 N.C.App. 32

802 S.E.2d 106

Dr. Edward E. FULLER, Sr., Plaintiff,

v.WAKE COUNTY, a Body Politic and Corporate, Defendant.

No. COA16-869

Court of Appeals of North Carolina.

Filed: June 20, 2017

Hicks McDonald Noecker LLP, by David W. McDonald, Greensboro and William E. Mitchell, Elizabeth City, for plaintiff-appellant.

Office of the Wake County Attorney, by Senior Deputy Wake County Attorney Roger A. Askew, Senior Assistant County Attorney Jennifer Jones, and Senior Assistant County Attorney Allison Pope Cooper, for defendant-appellee.

ELMORE, Judge.

This governmental immunity case concerns whether a county can face liability for making discretionary decisions relating to the manner by which it meets its statutorily delegated responsibilities to ensure its citizens are provided emergency medical services (EMS) and to regulate EMS within its jurisdiction.

Plaintiff Edward Fuller, Sr. served as volunteer treasurer of Six Forks Rescue Squad, Inc. (Six Forks), a non-profit EMS provider franchised by Defendant Wake County to provide EMS within a certain district as part of its county-wide EMS system. Six Forks was required by its franchise agreement to undergo annual audits and to submit those reports to Wake County. In 2011, Wake County discovered that Six Forks had submitted a fraudulent audit report for fiscal year 2009 (FY2009). This discovery prompted the board of directors of Six Forks (Six Forks Board) to resolve to immediately cease Six Forks's EMS operations and temporarily transfer its emergency vehicles and medical supplies to Wake County; Wake County EMS and other contract providers assumed operational control of EMS delivery within Six Forks's district to ensure seamless provision of EMS to Wake County citizens. Subsequently, the Six Forks Board voted to voluntarily dissolve Six Forks and transfer eight ambulances and two trucks to Wake County, which accepted the vehicles into its county-wide EMS system. Wake County has assumed operational control of Six Forks's service district ever since.

The discovery of Six Forks's fraudulent FY2009 audit report also triggered a criminal investigation by the Raleigh Police Department (RPD), requested in part by the Internal Audit Director of Wake County. The investigation revealed questionable charges to Six Forks's business banking accounts, which were solely managed by its treasurer, Fuller, and its bookkeeper, Jill Cafolla. As a result, Fuller was charged with and arrested for allegedly embezzling $10,000.00 from Six Forks.

After Fuller's embezzlement charge was dismissed, he sued Wake County and ten fictitious defendants, alleging they falsely and maliciously accused him of embezzlement in order to trigger a publicized criminal investigation into Six Forks as a pretext to force an involuntary takeover. Fuller alleged that engineering such a hostile takeover served Wake County's alleged long-term stated goal to consolidate independent EMS providers into its county-wide EMS system. In response, Wake County raised the complete defense of governmental immunity and moved to dismiss Fuller's claims. After a hearing, the trial court entered an order dismissing Fuller's claims as to the fictitious defendants on grounds that they were barred by the statute of limitations. Wake County later moved for summary judgment on grounds of governmental immunity. After a hearing, the trial court entered an order awarding Wake County summary judgment, thereby dismissing Fuller's claims with prejudice.

On appeal, Fuller argues that (1) Wake County's actions were proprietary and, therefore, unshielded by governmental immunity; and (2) Wake County waived any immunity it might enjoy. Fuller also argues that (3) Wake County is liable to him as a transferee of Six Forks's assets under statutory and common law successor-liability theories. After careful review, we affirm the trial court's order.

I. Background

Since 1976, Wake County has issued Six Forks annual franchises to provide EMS to its citizens within a certain district as part of its county-wide EMS system. The franchise agreement required Six Forks to engage in annual audits and to submit those reports to the Wake County's Director of Budget and Management Services, Finance Officer, and EMS Director, no later than 1 October of each succeeding fiscal year.

In 2009, Fuller was elected by the Six Forks Board to serve as Six Forks's treasurer. In 2010, Wake County officials discovered that it did not have a budget from Six Forks or a copy of Six Forks's FY2009 audit report. At Wake County EMS Medical Director Brent Myers's request, around 16 June 2010, Cafolla sent a FY2009 audit report to Chief of Six Forks Daniel Cline, who then forwarded it to Wake County officials. In February 2011, Wake County was alerted that Six Forks failed to submit its FY2010 audit report and, after several unanswered requests, discovered that Fuller had failed to secure an auditor for FY2010.

In March 2011, Wake County Internal Audit Director John Stephenson met with Myers, Cline, and Fuller, to review Six Forks's cash projection in order to ensure its payroll and bill obligations would be met. During the meeting, Stephenson closely reviewed the FY2009 audit and opined that it reported a $65,000.00 profit but should have shown a $2,000.00 loss and contained a potentially fraudulent signature. Six Forks's FY2009 audit was then forwarded to and investigated by the North Carolina State Board of Certified Public Accountant Examiners, which confirmed the signature had been forged. In late April 2011, Stephenson alerted Fuller and Six Forks the FY2009 audit was a fake. On 1 May 2011, at President of Six Forks Ed Bottum's request, Fuller resigned as its treasurer.

On 2 May 2011, the Six Forks Board called an emergency meeting and resolved immediately to cease its EMS operations and to transfer its eight ambulances, two trucks, and medical supplies to Wake County for the next 30 days in order "to maintain seamless emergency medical care to the citizens of Wake County." Wake County EMS and a few other contract providers assumed operational coverage of Six Forks's service district and, around 21 June 2011, Six Forks and Wake County executed an asset transfer agreement to effectuate the transfer of Six Forks's emergency vehicles to Wake County. According to the agreement, Wake County accepted the vehicles, valued at $348,450.00, for $1 of consideration.

On 3 May 2011, according to police reports, Cline called the RPD and reported that Cafolla had submitted the fraudulent FY2009 audit, causing Six Forks to disband. Soon after, Stephenson also reported the fraudulent FY2009 audit to the RPD and provided further information about the events leading up to its discovery. Noting Stephenson's request that Wake County would like the case investigated, the RPD commenced an investigation into the allegations of fraud at Six Forks revealing multiple non-business related expenses charged to Six Forks's business banking account at Coastal Federal Credit Union (CFCU), an account solely controlled and managed by Fuller and Cafolla. The expenses included two $5,000.00 checks written in early 2011 for undocumented purposes and charges totaling $9,825.36 to a debit card linked to Six Forks's business banking account at CFCU in 2009.

On 6 May 2011, as part of its investigation, RPD detectives met with Stephenson, who provided additional information about the incidents leading up to the discovery of the FY2009 audit, a binder of recorded expenses and box of financial information recovered from the Six Forks station, as well as copies of Six Forks's meeting minutes. According to police reports, the minutes from 12 October 2009 indicated that Fuller explained to the Six Forks Board that the $9,825.36 of charges to Six Forks's CFCU business account arose because the debit card was mistakenly linked to his son's personal CFCU banking account. Fuller explained that his son, Edward Fuller, Jr., believed the debit card was his and mistakenly incurred the charges to Six Forks's CFCU account. Stephenson told RPD he requested Six Forks's banking statements from CFCU and Wachovia but was only given limited information. RPD resolved to obtain search warrants to collect this information.

On 13 June 2011, an RPD investigating officer contacted a representative at CFCU to gather Six Forks's banking information and inquired as to whether Fuller's explanation of the debit card mix-up was possible. The CFCU representative opined that it was not and that the $9,825.36 had not been repaid into the account. RPD later discovered that, immediately before the debit card transactions started in May 2009, Fuller transferred $10,000.00 from the Six Forks CFCU business commercial checking account into a business basic checking account. Fuller deposited $9,242.14 from his personal CFCU banking account into the business basic checking account on 10 November 2009. RPD also discovered several miscellaneous withdrawals from and deposits to the Six Forks Wachovia and CFCU banking accounts by Cafolla. Between Fuller and Cafolla nearly $90,000.00 of unapproved transactions were identified. Subsequently, after conferring with an on-call assistant district attorney of the Wake County District Attorney's Office, RPD determined that Fuller and Cafolla should be charged with embezzlement.

On 24 July 2011, the Six Forks Board adopted a plan of Six Forks's dissolution and a distribution of its assets. On 22 September 2011, RPD arrested Fuller for allegedly embezzling $10,000.00 from Six Forks. On 10 October 2011, Six Forks delivered a victim impact statement to Wake County, stating that Fuller and Cafolla's actions caused its dissolution. According to Fuller, his charge and arrest were publicized by local news media, thereby causing him to be terminated from his long-time employment as Director of the Master of Business Administration program at Pfeiffer University. On some date unclear from the record, Fuller's embezzlement charge...