M Series Rebuild, LLC v. Town of Mount Pleasant

• Decision Date: 07 August 2012
• Docket Number: No. COA12–194.,COA12–194.
• Citation: 730 S.E.2d 254
• Parties: M SERIES REBUILD, LLC, Plaintiff, v. TOWN OF MOUNT PLEASANT, NC, Defendant.
• Court: North Carolina Court of Appeals

730 S.E.2d 254

M SERIES REBUILD, LLC, Plaintiff,

v.TOWN OF MOUNT PLEASANT, NC, Defendant.

No. COA12–194.

Court of Appeals of North Carolina.

Aug. 7, 2012.

Appeal by plaintiff from order entered 24 January 2012 by Judge William G. Hamby, Jr. in District Court, Cabarrus County. Heard in the Court of Appeals 7 June 2012.

Ferguson, Scarbrough, Hayes, Hawkins & DeMay, P.A., Concord, by James R. DeMay, for plaintiff-appellant.

Hartsell & Williams, P.A., Concord, by Christy E. Wilhelm, for defendant-appellee.

STROUD, Judge.

M Series Rebuild, LLC, (“plaintiff”) appeals from a trial court's order granting the Town of Mount Pleasant's (“defendant”) motion and dismissing plaintiff's claims. For the foregoing reasons, we affirm the trial court's order.

I. Background

Plaintiff filed a complaint on 17 August 2011 alleging the following: In early 2011, plaintiff contacted Chief Chris Honeycutt with the Mount Pleasant Volunteer Fire Department, a subsidiary of the Town of Mount Pleasant, a municipal corporation located in North Carolina. Plaintiff offered to install a “prototype hydraulic steering system” in defendant's M35A2C fire truck “at no charge” to defendant, and Chief Honeycutt accepted.

Prior to delivery of the truck to plaintiff, plaintiff received a call from “a representative of the Mt. Pleasant Volunteer Fire Department” requesting plaintiff to also do some minor repairs to the truck: to fix the left front axle seal, a broken u-bolt, and a door latch. In the course of installing the steering system, plaintiff found a number of other repairs that needed to be done. Plaintiff got approval from Chief Honeycutt to make repairs to the radiator. Plaintiff also discovered other additional repairs, including “rotted and cracked, damaged hoses, oil and fuel leaking around the filter canisters, and fuel leaking from several sections of the injector return line assembly” and notified “Sean,” a “representative” of the fire department. “Sean” approved the additional repairs and requested that plaintiff perform a routine service on the fire truck. These repairs were completed and the truck returned. Plaintiff sent an invoice to defendant for the work done, not including work installing the power steering system, totaling $7,911.16. Plaintiff requested immediate payment, but defendant refused to pay. Based on these allegations, plaintiff raised claims for breach of contract and unjust enrichment. Plaintiff also included a copy of the invoice with its complaint.

Defendant filed its answer on 24 October 2011. Defendant admitted that plaintiff contacted Chief Honeycutt with an offer to install a hydraulic steering system on the fire truck and that Chief Honeycutt accepted. Defendant also admitted that plaintiff was asked to repair the left front axle seal, the broken u-bolt, and the door latch. Defendant further admitted that Chief Honeycutt gave plaintiff permission to fix the radiator. Defendant admitted to receipt of an invoice from plaintiff which it refused to pay in full but claims it offered to pay for the repairs it agreed to have done. However, defendant denied agreeing to any other additional repairs. Defendant asserted several defenses, inter alia, that plaintiff's complaint failed “to state a claim upon which relief can be granted.” It also stated that “[t]he alleged contract upon which this action is based is illegal in that it does not comply with the pre [-]audit certificate requirements contained in N.C. Gen.Stat. § 159–28, as required by law. The alleged contract is thus invalid and unenforceable and this action is barred.”

Following a hearing on defendant's motion, the trial court on 24 January 2012 entered an order dismissing plaintiff's claims. Plaintiff filed timely written notice of appeal on 25 January 2012. Plaintiff makes three arguments on appeal challenging the trial court's ruling regarding its claim for unjust enrichment: (1) the trial court erred in applying a summary judgment standard to defendant's motion to dismiss, (2) the trial court erred in dismissing plaintiff's unjust enrichment claim, and (3) the trial court erred in applying sovereign immunity.

II. Standard of Review

Plaintiff argues that the trial court “apparently considered Defendant's Motion to Dismiss under Rule 12(b)(6)” but in error it also utilized a summary judgment standard in making its conclusions. Plaintiff concludes that “this Court should remand for the trial court to apply the appropriate motion to dismiss standard.” Defendant counters that the trial court “did not err in considering this matter under a summary judgment standard as opposed to a motion to dismiss standard” because plaintiff's claims would fail under either standard.

In its answer, defendant raised as its “second defense” that “Plaintiff's Complaint fails to state a claim upon which relief can be granted, and it should therefore be dismissed.” This is similar to the language of N.C. Gen.Stat. § 1A–1, Rule 12(b)(6) (2011) (permitting a motion to dismiss for “[f]ailure to state a claim upon which relief can be granted.”). Although the parties in their briefs before this Court treat the motion to dismiss as arising under Rule 12(b)(6), actually neither the defendant's motion nor the trial court's order as noted above cite any particular rule other than N.C. Gen.Stat. § 159–28.

Plaintiff points us to this statement by the trial court to support its argument that the trial court erred by applying a summary judgment standard:

This Motion to Dismiss shall be determined in the same manner as a Motion for Summary Judgment where, as here, the pleadings and admissions of the parties show that there is no issue as to any material fact, and the factual allegations are considered in the light most favorable to the non-moving party.

(Emphasis added). Although the language of this statement is similar to the standard for summary judgment, see Belcher v. Fleetwood Enters., Inc., 162 N.C.App. 80, 84–85, 590 S.E.2d 15, 18 (2004) (stating the review for a ruling on a motion for summary judgment), an examination of the trial court's order shows that its ultimate ruling was based on defendant's “fourth defense” in its answer. Defendant's answer raised as its “fourth defense” that “[t]he alleged contract upon which this action is based is illegal in that it does not comply with the pre[-]audit certificate requirements contained in N.C. Gen.Stat. § 159–28, as required by law. The alleged contract is thus invalid and unenforceable and this action is barred.” The trial court dismissed plaintiff's claims because there was no allegation of a valid contract between the parties, based on plaintiff's failure to comply with the requirements of N.C. Gen.Stat. § 159–28; without an allegation of a valid contract, plaintiff did not demonstrate that defendant had waived its sovereign immunity; and therefore, the trial court lacked jurisdiction over defendant. See Arrington v. Martinez, ––– N.C.App. ––––, ––––, 716 S.E.2d 410, 417 (2011) (stating that “[w]aiver of immunity must be established at the outset of a lawsuit.”). Also, the parties' briefs address the issue of sovereign immunity. A motion to dismiss based on sovereign immunity is a jurisdictional issue; whether sovereign immunity is grounded in a lack of subject matter jurisdiction or personal jurisdiction is unsettled in North Carolina. ¹N.C. Gen.Stat. § 1A–1, Rule 12(b)(1) permits a party to move for dismissal based on “[l]ack of jurisdiction over the subject matter[,]” and Rule 12(b)(2) permits dismissal based on “[l]ack of jurisdiction over the person[.]”

“Our review of a motion to dismiss under Rule 12(b)(1) of the North Carolina Rules of Civil Procedure is de novo.... Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the [trial court].” Peninsula Prop. Owners Ass'n v. Crescent Res., LLC, 171 N.C.App. 89, 92, 614 S.E.2d 351, 353 (2005) (citations and quotation marks omitted). The standard of review of the trial court's decision to grant a motion to dismiss under Rule 12(b)(2) is whether the record contains evidence that would support the court's determination that the exercise of jurisdiction over defendants would be inappropriate. See Stann v. Levine, 180 N.C.App. 1, 22, 636 S.E.2d 214, 227 (2006).

Stacy v. Merrill, 191 N.C.App. 131, 134, 664 S.E.2d 565, 567 (2008). In cases where waiver is at issue, “it is irrelevant whether immunity implicates personal or subject matter jurisdiction. Because it is a jurisdictional matter, a plaintiff's complaint must affirmatively demonstrate the basis for the waiver of immunity when suing a governmental entity which has immunity.” Arrington, ––– N.C.App. at ––––, 716 S.E.2d at 417 (citation omitted). Therefore, we will apply the these standards to the parties' substantive arguments to determine if plaintiff's complaint “affirmatively demonstrate[d] the basis for the waiver of immunity[.]” See id.

We also note that the trial court in its order made findings of fact and conclusions of law. Plaintiff argues that the trial court incorrectly made “findings of fact” and “conclusions of law” upon which it based its order and that we should remand this case for the trial court to correct this error. However, findings of fact are generally not binding on appeal from a trial court's ruling on motion to dismiss under Rule 12. The purpose of a motion to dismiss is to test law of a claim, not to resolve evidentiary conflicts. White v. White, 296 N.C. 661, 667, 252 S.E.2d 698, 702 (1979). As “[r]esolution of evidentiary conflicts is ... not within the scope” of Rule 12, “[w]e are not bound by the trial court's findings [.]' ” Id. Also, as noted above, we will use a de novo standard of review to address these issues. We next turn to address the parties' substantive arguments.

III. Trial Court's Dismissal

Plaintiff argues that the trial court erred in dismissing the complaint because North Carolina law provides for recovery against...