Meinck v. City of Gastonia

• Decision Date: 21 March 2017
• Docket Number: No. COA16-892,COA16-892
• Parties: Joan A. MEINCK, Plaintiff, v. CITY OF GASTONIA, a North Carolina Municipal Corporation, Defendant.
• Court: North Carolina Court of Appeals

252 N.C.App. 312

798 S.E.2d 417

Joan A. MEINCK, Plaintiff,

v.CITY OF GASTONIA, a North Carolina Municipal Corporation, Defendant.

No. COA16-892

Court of Appeals of North Carolina.

Filed: March 21, 2017

Law Office of Thomas D. Bumgardner, PLLC, Charlotte, by Thomas D. Bumgardner, for plaintiff-appellant.

Stott, Hollowell, Palmer & Windham, L.L.P., by Martha Raymond Thompson, Asheville, and Ryan L. Bostic for defendant-appellee.

TYSON, Judge.

Joan Meinck ("Plaintiff") appeals from an order granting summary judgment in favor of the City of Gastonia ("Defendant"). We reverse and remand.

I. Background

Defendant owns a commercial building located at 212 West Main Avenue in Gastonia, North Carolina. The building is located within a downtown revitalization district established by Defendant in a 1999 city resolution. Defendant did not use the building to house any municipal or government departments or offices.

Beginning in 2013, Defendant leased the building to the Gaston County Art Guild ("Art Guild"), a private non-profit entity unaffiliated with either Defendant or Gaston County. Defendant leased the building as an effort to fill a vacancy and help remove a blight from vacant buildings on the downtown area. Defendant's evidence tends to show Defendant did not seek to make a profit from the lease. Defendant retained the responsibility for maintaining the exterior of the premises and the right to inspect the building at any time.

The lease agreement between Defendant and the Art Guild limited the Art Guild's uses of 212 West Main Avenue to an "art gallery and artists’ studios and a gift shop." The lease agreement provided for four separate means of compensation to Defendant. The first method required the Art Guild to pay Defendant 90% of all rent money it received from subtenants. The second method guaranteed Defendant 30% of the gross sales receipts received for art the Art Guild sold on the premises. The third method required subtenants of the Art Guild to disgorge 15% of their gross sales receipts to Defendant. The fourth method required subtenants to provide a minimum of fifteen hours of volunteer time each month working on tending to the gallery and the gift shop. In addition to the minimum required volunteer time, subtenants were also tasked to arrange sales shows, serve on committees, or help manage other subtenants.

The subleased space in 212 West Main Avenue contained enough room for nineteen private art studios for subtenants. Plaintiff was one of the subtenants of the Art Guild. Plaintiff paid $95.00 per month to rent space inside 212 West Main Avenue, 90% of which was paid to Defendant.

For the 2013 fiscal year, Defendant expended $33,062.01 on 212 West Main Avenue and received revenues of $21,572.98 from the Art Guild's lease, a loss of $11,489.03. For the 2014 fiscal year, Defendant expended $40,008.13 and received revenues of $21,935.57, a loss of $18,072.56.

On 11 December 2013, Plaintiff left through the rear exit of 212 West Main Avenue, and she carried several large pictures, lost her balance on a set of steps, and fell. As a result of her fall, Plaintiff suffered a broken hip, required hospitalization, and incurred medical expenses. Portions of the cement on the steps had apparently eroded. As a result of carrying large pictures, Plaintiff was prevented from seeing where she was stepping.

On 4 February 2015, Plaintiff filed a complaint and alleged Defendant had negligently failed to maintain the exit of the building or to warn of the dangerous condition of the exit. On 12 January 2016, Defendant filed a motion for summary judgment asserting governmental immunity as an affirmative defense. The trial court granted Defendant's motion on that basis. Plaintiff appeals.

II. Statement of Jurisdiction

Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b)(1), which provides for an appeal of right from any final judgment of a superior court. N.C. Gen. Stat. § 7A-27(b)(1) (2015).

III. Standard of Review

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2016).

In reviewing a motion for summary judgment, the trial court must "view the pleadings and all other evidence in the record in the light most favorable to the nonmovant and draw all reasonable inferences in that party's favor." N.C. Farm Bureau Mut. Ins. Co. v. Sadler , 365 N.C. 178, 182, 711 S.E.2d 114, 117 (2011) (citation omitted).

An issue is "genuine" if it can be proven by substantial evidence and a fact is "material" if it would constitute or irrevocably establish any material element of a claim or a defense.

A party moving for summary judgment may prevail if it meets the burden (1) of proving an essential element of the opposing party's claim is nonexistent, or (2) of showing through discovery that the opposing party cannot produce evidence to support an essential element of his or her claim. Generally this means that on undisputed aspects of the opposing evidential forecast, where there is no genuine issue of fact, the moving party is entitled to judgment as a matter of law. If the moving party meets this burden, the non-moving party must in turn either show that a genuine issue of material fact exists for trial or must provide an excuse for not doing so.

Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citations and internal quotation marks omitted).

This Court reviews a trial court's summary judgment order de novo . Sturgill v. Ashe Mem'l Hosp., Inc., 186 N.C.App. 624, 626, 652 S.E.2d 302, 304 (2007), disc. review denied, 362 N.C. 180, 658 S.E.2d 662 (2008).

IV. Analysis

A. Governmental Immunity

Plaintiff asserts the trial court's grant of summary judgment for governmental immunity was error.

"Under the doctrine of governmental immunity, a county or municipal corporation ‘is immune from suit for the negligence of its employees in the exercise of governmental functions absent waiver of immunity.’ " Estate of Williams v. Pasquotank County, 366 N.C. 195, 198, 732 S.E.2d 137, 140 (2012) (quoting Evans ex rel. Horton v. Hous. Auth., 359 N.C. 50, 53, 602 S.E.2d 668, 670 (2004) (internal quotation omitted)). "Nevertheless, governmental immunity is not without limit. ‘[G]overnmental immunity covers only the acts of a municipality or a municipal corporation committed pursuant to its governmental functions.’ Governmental immunity does not, however, apply when the municipality engages in a proprietary function." Williams, 366 N.C. at 199, 732 S.E.2d at 141 (quoting Evans, 359 N.C. at 53, 602 S.E.2d at 670 (citations omitted), and citing Town of Grimesland v. City of Washington, 234 N.C. 117, 123, 66 S.E.2d 794, 798 (1951) ).

A governmental function is an activity which is "discretionary, political, legislative, or public in nature and performed for the public good in behalf of the State rather than for itself [.]" Britt v. City of Wilmington, 236 N.C. 446, 450, 73 S.E.2d 289, 293 (1952). A proprietary function is an activity which is "commercial or chiefly for the private advantage of the compact community[.]" Id. "[I]n cases of doubtful liability[,] application of [governmental immunity] should be resolved against the municipality." Koontz v. City of Winston-Salem , 280 N.C. 513, 530, 186 S.E.2d 897, 908 (1972) (citations omitted).

Whether a particular government activity is a governmental or proprietary function depends upon a multi-factor inquiry. "[T]he threshold inquiry in determining whether a function is proprietary or governmental is whether, and to what degree, the legislature has addressed the issue." Williams , 366 N.C. at 200, 732 S.E.2d at 141-42.

Here, Plaintiff asserts a claim against Defendant on the basis of its ownership and maintenance of the building leased to the private, non-profit tenant, as allegedly part of Defendant's downtown revitalization efforts. The legislature has authorized cities to lease property to private parties pursuant to N.C. Gen. Stat. § 160A-272 (2015). The legislature did not specify in N.C. Gen. Stat. § 160A-272 nor elsewhere, whether a city's leasing of property to a private party is a governmental or proprietary function.

The legislature also authorizes cities to establish municipal service districts for the purpose of, inter alia , downtown revitalization projects. N.C. Gen. Stat. § 160A-535 (2016). The statute defines "downtown revitalization" to mean "improvements, services, functions, promotions, and developmental activities intended to further the public health, safety, welfare, convenience, and economic well-being of the central city or downtown area." N.C. Gen. Stat. § 160A-536(b). Nowhere has the legislature deemed all downtown revitalization projects undertaken by a city within a service district to be activities, which are exempt from suit through governmental immunity.

"[W]hen an activity has not been designated as governmental or proprietary by the legislature, that activity is necessarily governmental in nature when it can only be provided by a governmental agency or instrumentality." Williams , 366 N.C. at 202, 732 S.E.2d at 142. The ownership and maintenance of property leased to a private entity is not an activity, which is provided only by a governmental agency or instrumentality.

When the service in question can be provided both privately and publicly, we are required to consider several additional factors, including: "whether the service is traditionally a service provided by a governmental entity, whether a substantial fee is charged for the service provided, and whether that fee does more than simply cover the operating costs of the service provider." Id. at 202-03, 732 S.E.2d at 143 (footnotes omitted). Here, a city's ownership and maintenance of a building that is occupied and used solely by a private...