Howard v. Cnty. of Durham

• Decision Date: 07 May 2013
• Docket Number: No. COA12–1484.,COA12–1484.
• Citation: 748 S.E.2d 1
• Parties: Sadie HOWARD, Plaintiff. v. COUNTY OF DURHAM, Defendant.
• Court: North Carolina Court of Appeals

748 S.E.2d 1

Sadie HOWARD, Plaintiff.

v.COUNTY OF DURHAM, Defendant.

No. COA12–1484.

Court of Appeals of North Carolina.

May 7, 2013.

Appeal by plaintiff from Order entered 17 October 2012 by Judge Orlando F. Hudson, Jr. in Superior Court, Durham County. Heard in the Court of Appeals 28 March 2013.

Hairston Lane Brannon, PA, Raleigh, by Jeremy R. Leonard and James E. Hairston, Jr., for plaintiff-appellant.

Durham County Attorney's Office by Assistant County Attorney Kathy R. Everett–Perry, for defendant-appellee.

STROUD, Judge.

Sadie Howard (“plaintiff”) appeals from the order entered 17 October 2012 dismissing both of her claims against Durham County (“defendant”). She argues on appeal that the trial court erred in granting defendant's motion to dismiss because it had jurisdiction over defendant and she properly pled each claim. For the following reasons, we affirm.

I. Background

On 26 July 2012, plaintiff filed a complaint against defendant in Superior Court, Durham County, for breach of contract and negligent misrepresentation. Plaintiff's complaint alleged that in April 2010, she had filed a complaint in Superior Court, Wake County, for violation of her civil rights under 42 U.S.C. § 1983 and wrongful termination. Defendant removed the action to the United States District Court for the Eastern District of North Carolina. The parties participated in a mediated settlement conference on 2 May 2011. Defendant was represented at the settlement conference by Kim Simpson, the Durham County Tax Administrator, and Kathy Everett–Perry, an Assistant Durham County Attorney.¹

The parties exchanged settlement offers and, according to plaintiff's complaint, they reached an oral agreement to settle for $50,000. The mediator prepared a “Memorandum of Settlement” reflecting the terms of the settlement. Plaintiff signed the memorandum, but Ms. Simpson refused to sign for defendant as she said she did not have authority to settle for that amount. On 4 May 2011, Ms. Simpson informed the mediator that she had decided not to recommend the settlement offer to the Durham County Board of Commissioners.

Instead of filing an answer, defendant moved to dismiss plaintiff's complaint on 11 September 2012 under N.C. Gen.Stat. § 1A–1, Rule 12(b)(1), (2), and (6), alleging that the trial court lacked subject matter and personal jurisdiction due to sovereign immunity and that plaintiff's complaint failed to state a claim. Along with its motion to dismiss, defendant filed an affidavit from Catherine Whisenhunt, the Risk Manager for Durham County, stating that the county has not purchased any insurance policies that would cover plaintiff's claims. The Superior Court granted defendant's motion by order entered 17 October 2012 both on jurisdictional grounds and on the grounds that plaintiff failed to state a cause of action. Plaintiff filed written notice of appeal to this Court on 25 October 2012.

II. Motion to Dismiss

Defendant moved to dismiss plaintiff's action both on the grounds of sovereign immunity under N.C. Gen.Stat. § 1A–1, Rules 12(b)(1) and (2) and failure to state a claim under Rule 12(b)(6). The Superior Court granted defendant's motion to dismiss on both grounds. For the following reasons, we affirm the trial court's order.

A. Standard of Review

With respect to a motion to dismiss based on sovereign immunity, the question is whether the complaint specifically alleges a waiver of governmental immunity. Absent such an allegation, the complaint fails to state a cause of action.... [Further,] precise language alleging that the State has waived the defense of sovereign immunity is not necessary, but, rather, the complaint need only contain sufficient allegations to provide a reasonable forecast of waiver.

Sanders v. State Personnel Com'n, 183 N.C.App. 15, 19, 644 S.E.2d 10, 13 (citations, quotation marks, and brackets omitted), disc. rev. denied,361 N.C. 696, 652 S.E.2d 653, and app. dismissed,361 N.C. 696, 652 S.E.2d 654 (2007).

On a motion to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, the standard of review is whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory. The complaint must be liberally construed, and the court should not dismiss the complaint unless it appears beyond a doubt that the plaintiff could not prove any set of facts to support his claim which would entitle him to relief.

Block v. County of Person, 141 N.C.App. 273, 277–78, 540 S.E.2d 415, 419 (2000) (citations and quotation marks omitted).

B. Breach of Contract

We first address plaintiff's breach of contract claim. Plaintiff argues that the trial court erred in dismissing her claim for lack of jurisdiction and failure to state a claim because she alleged a valid contract between her and defendant. Defendant counters that it is protected by sovereign immunity because there was evidence before the trial court that it had not waived immunity through the purchase of “insurance which would provide coverage for the Causes of Action stated in plaintiff's complaint.” Defendant further asserts that “there was never a meeting of the minds between the parties and, thus, no agreement” and that plaintiff failed to properly plead a valid contract based upon the lack of a pre-audit statement required by N.C. Gen.Stat. § 159–28(a).

First, we note that defendant is not protected by sovereign immunity as to a claim for breach of contract, if there was a valid contract between it and plaintiff.

[W]henever 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. Thus, in this case, and in causes of action on contract ... the doctrine of sovereign immunity will not be a defense to the State. The State will occupy the same position as any other litigant.

Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423–24 (1976) (citation omitted). This rule applies to contracts entered into by the counties of this state. Archer v. Rockingham County, 144 N.C.App. 550, 558, 548 S.E.2d 788, 793 (2001), disc. rev. denied,355 N.C. 210, 559 S.E.2d 796 (2002). Although plaintiff's underlying claims in federal court were for “willful violation of civil rights pursuant to 42 U.S.C. § 1983” and wrongful termination, the claim which is the subject of this action arises only from the failure to settle that claim in federal court and does not involve the merits of plaintiff's federal claim.

Thus, if plaintiff properly pled a valid contract between her and defendant, defendant would not be protected by sovereign immunity as to a claim for breach of the contract. See Archer, 144 N.C.App. at 558, 548 S.E.2d at 793. If, however, plaintiff did not properly plead a valid contract, her action would be subject to dismissal for failure to state a claim for breach of contract. Id.; see McLamb v. T.P. Inc., 173 N.C.App. 586, 588, 619 S.E.2d 577, 579–80 (2005), disc. rev. denied,360 N.C. 290, 627 S.E.2d 621 (2006). So we must first consider whether plaintiff has pled a valid contract.

Lest this case create bad law which we believe would be quite detrimental to mediation and apparently contrary to our state law and public policy regarding mediation, we note that this case presents a unique situation. This case falls into an unusual gap between the statutes and rules governing mediation in the state court and the federal court. Had the mediated settlement conference taken place in our state's superior court, there would clearly be no enforceable agreement because mediated settlement agreements must be in writing under N.C. Gen.Stat. § 7A–38.1( l )(2011). The mediation rules governing mediation in the Eastern District of North Carolina also provide that mediated settlement agreements “shall” be in writing, E.D.N.C. Local Rule 101.1d(d)(3), but we can find no Fourth Circuit cases which hold that this rule precludes enforcement of an oral agreement reached at mediation, and we will not presume to interpret the federal rules, particularly as defendant has not raised this argument. SeeN.C.R.App. P. Rule 28(a); Ashley Furniture Industries, Inc. v. SanGiacomo N.A. Ltd., 187 F.3d 363, 378 (4th Cir.1999) (noting that the local rules in the Middle District of North Carolina require mediated settlement agreements to be reduced to writing, but declining to address whether that requirement makes an oral settlement agreement unenforceable, reasoning that “[t]he district court is certainly in a better position than we to interpret its rules.”).

Taking the allegations of the complaint as true, as we must, plaintiff has alleged an oral contract and defendant has raised no defense that this particular agreement must be in writing to be enforceable. Thus, this case is governed by neither the state nor federal statutes regarding mediation. By its plain language, N.C. Gen.Stat. § 7A–38.1 only applies to superior court civil actions and does not purport to govern mediated settlement conferences in the federal courts within North Carolina. Therefore, we must apply the general common law of contract formation.

Defendant also fails to raise any argument regarding Ms. Simpson's authority, or lack thereof, to settle plaintiff's claim on defendant's behalf without approval by the county commissioners. Under N.C. Gen.Stat. § 153A–12, a county may act only upon approval by the county commissioners. “[P]owers [vested in a county] can only be exercised by the board of commissioners, or in pursuance of a resolution adopted by the board.” Jefferson Standard Life Ins. Co. v. Guilford County, 225 N.C. 293, 301, 34 S.E.2d 430, 435 (1945). Plaintiff has not alleged any particular action by defendant's county commissioners assenting to the proposed settlement or even authorizing defendant's counsel to settle the case for any particular...