Lynn v. Overlook Development
| Decision Date | 02 May 1991 |
| Docket Number | No. 204PA90,204PA90 |
| Citation | 328 N.C. 689,403 S.E.2d 469 |
| Parties | David M. LYNN and wife, Lorna L. Lynn v. OVERLOOK DEVELOPMENT, a joint venture; Roger L. Jones and wife, Myra E. Jones; Marshall N. Kanner; City of Asheville, a municipal corporation; J.R. Smith; Mark Rumfelt; Wind-In-The-Oaks Homeowners Association, Inc., a North Carolina corporation; Joe C. Swicegood, Sr. and wife Dorothy C. Swicegood; Garland L. Norton; Joe P. Eblen and wife Roberta S. Eblen; Ben Kanner and wife, Sylvia Kanner; Gary Phillips and wife, Debby Phillips; Dean J. Schranz and wife Margie Schranz; Rebecca M. Pressley; Michael D. Brandson and Stevie A. Salido; Joseph Carr Swicegood, Jr.; J. Dean Deweese, Jr.; B. Paul Goodman; Keith J. Dunn; Debra M. Leatherwood; Benjamin Biber and wife, English W. Biber; Roberta Horvath; Robert C. Newton, Jr.; Robert M. Smith and wife, Sandy Smith; Paul E. Gilsdorf and wife, Laura L. Gilsdorf; Paul A. Robichaud; Terrence W. Burt; Southeastern Savings and Loan Company, a North Carolina corporation; David E. Matney, III, Trustee; Kenneth M. Michalove, Wilhelmina B. Bratton, Mary Lloyd Frank, Russell M. Martin, Norma T. Price and Robert York, members of the Asheville City Council in their official capacities; and W. Louis Bissette, Jr., Mayor of the City of Asheville in his official capacity. |
| Court | North Carolina Supreme Court |
On discretionary review pursuant to N.C.G.S. § 7A-31 of a decision of the Court of Appeals, 98 N.C.App. 75, 389 S.E.2d 609 (1990), affirming in part and reversing in part an order entered by Lamm, J., on 10 May 1989, after hearing at the 1 May 1989 Civil Session of Superior Court, Buncombe County. Heard in the Supreme Court 11 December 1990.
Charles R. Brewer, Asheville, for plaintiffs-appellants.
Womble Carlyle Sandridge & Rice by Tyrus V. Dahl, Jr., Ellen M. Gregg and Lawrence Egerton, Winston-Salem, for defendants-appellees the City of Asheville and J.R. Smith.
North Carolina Academy of Trial Lawyers by Michael K. Curtis, Winston-Salem, amicus curiae.
North Carolina Ass'n of County Com'rs by James Blackburn, Gen. Counsel, and North Carolina League of Municipalities by Ellis Hankins, Raleigh, amici curiae.
After this Court's review of the record, our appraisal of the facts found in the complaint and exhibits differs somewhat from the facts stated in the opinion of the Court of Appeals. This action arises out of a contract for the purchase and sale of a new townhouse unit which plaintiffs entered into with Overlook Development (not a party to this appeal) on 22 February 1985. Plaintiffs allege that the relevant building permits were issued by J.R. Smith, a City of Asheville building inspector, to Overlook Development in December 1984 but that plaintiffs did not obtain title to the unit until 23 August 1985. Plaintiffs further allege that on 23 August 1985, an employee of the Building Inspections Department of the City of Asheville telephoned a representative of Carolina Power & Light Company, informed the company that a final inspection of plaintiffs' unit had been done, and authorized the power company to hook up the electricity to the building.
Plaintiffs immediately assumed occupancy upon completion of the unit's construction in August 1985. No certificate of compliance, as required by N.C.G.S. § 160A-423 and section 105.10 of the North Carolina State Building Code ("Building Code") as a precondition for legal occupancy, was ever issued as to plaintiffs' unit. However, an inspection was conducted by J.R. Smith during August 1985 after the plaintiffs moved in, but Smith did not issue a certificate of compliance, inform plaintiffs of any problems with the construction, or inform them that they were occupying the unit in violation of N.C.G.S. § 160A-423.
After plaintiffs moved into their new home in August, they discovered numerous defects in the construction and workmanship of their unit in violation of the Building Code, as well as problems with grading, drainage, and driveway pavement failure. These defects were the subject of a later condemnation proceeding brought by the City of Asheville ("City") against plaintiffs on 5 December 1988 and 18 January 1989, resulting in a determination that plaintiffs' unit was unfit for human habitation and an order to demolish the unit at the plaintiffs' expense.
On 6 March 1989, plaintiffs filed their verified complaint, alleging eleven causes of action, seeking relief against numerous defendants (forty-six) on a variety of theories of recovery. Relevant to this appeal, plaintiffs allege that the City, through its agents, had a duty to inspect the unit and that defendants' failure to inspect and/or order correction of the alleged Building Code violations was a proximate cause of plaintiffs' damages. Plaintiffs sought compensatory and punitive damages against defendants City of Asheville and City Building Inspector J.R. Smith, in both his official and individual capacities, for his alleged acts and omissions pertaining to the inspection of the townhouse unit.
Prior to answering, these defendants filed a motion to dismiss plaintiffs' claim pursuant to N.C.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Following a hearing on these motions, the trial court entered its order on 10 May 1990, allowing defendants' motions as to all claims against these defendants, except those against J.R. Smith in his individual capacity for compensatory and punitive damages arising out of his alleged willful, wanton, unlawful, culpable, and/or reckless conduct outside the scope of his duties as a city employee.
The Court of Appeals reversed the trial court's dismissal of plaintiffs' claim for compensatory damages against the City "predicated on allegations of inspector Smith's willful and wanton conduct" and affirmed the order in all other respects. Lynn v. Overlook Development, 98 N.C.App. 75, 80, 389 S.E.2d 609, 613 (1990). On 26 July 1990, this Court granted plaintiffs' petition for discretionary review, 327 N.C. 140, 394 S.E.2d 176.
A motion to dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure presents the question whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief can be granted under some legal theory. Jackson v. Bumgardner, 318 N.C. 172, 347 S.E.2d 743 (1986). The complaint must be construed liberally, and the court should not dismiss the complaint unless it appears that the plaintiffs could not prove any set of facts in support of their claim which would entitle them to relief. Peoples Security Life Ins. Co. v. Hooks, 322 N.C. 216, 367 S.E.2d 647, reh'g denied, 322 N.C. 486, 370 S.E.2d 227 (1988).
In this connection, we have examined the applicable statutes, the Building Code, and the trial court record. Plaintiffs allege that City Building Inspector Smith was negligent under the standards set forth at N.C.G.S. §§ 160A-411 to -425 and Building Code sec. 105 in that he improperly issued a building permit to Overlook Development (which did not hold a valid general contractor's license); failed to observe code violations in the construction of the unit; or alternatively, having observed such violations, failed to take appropriate remedial measures, including notifying plaintiffs and revoking the building permit. Plaintiffs contend that these allegations are sufficient to withstand the defendants' motion to dismiss pursuant to Rule 12(b)(6). Since plaintiffs have premised their right to recover upon the violation of N.C.G.S. §§ 160A-417, -420, and -423 and Building Code secs. 105.4(f), 105.6, and 105.10, we must first determine whether the statute complained of is a safety statute and whether plaintiffs belong to the class of persons for whose protection and benefit the statute and the Building Code were enacted.
N.C.G.S. § 160A-411 requires that cities in North Carolina, by one of several authorized methods, perform the duties and responsibilities listed in N.C.G.S. § 160A-412, including enforcing state and local laws relating to the construction of buildings, installation of facilities, and maintenance of buildings. N.C.G.S. § 160A-411 (1982). These duties and responsibilities include issuing or denying permits, making any necessary inspections, and issuing or denying certificates of compliance. N.C.G.S. § 160A-412 (1982). No permits are to be issued unless the work is to be performed by a duly licensed contractor when any provision of a statute or ordinance so requires. N.C.G.S. § 160A-417 (1982). As the work pursuant to a permit progresses, city building inspectors make as many inspections of the work as may be necessary to satisfy them that it is being done according to all applicable laws and all terms of the permit. N.C.G.S. § 160A-420 (1982). The permit holder is required to give the inspector timely notice when the work is ready for the required inspections. North Carolina State Building Code sec. 105.6(b) (1978). The final step in this statutory scheme is N.C.G.S. § 160A-423, which provides, inter alia, that no completed building shall be occupied until a certificate of compliance is issued pursuant to a final inspection stating that the structure complies with all applicable state and local laws. When the building inspector finds any defects or finds that the building has not been constructed in accordance with applicable state and local laws, he is to notify the owner or occupant. N.C.G.S. § 160A-425 (1982).
The pertinent sections of the Building Code provide as follows:
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(f) Where the General Statutes require a licensed contractor for certain types of construction, no permit shall be issued for such construction except in compliance with these statutes.
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(a) As the work covered by permit progresses, local inspectors shall make as many inspections thereof as necessary to satisfy them that the work is being...
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