Rowan County Bd. of Educ. v. U.S. Gypsum Co.

• Decision Date: 17 July 1992
• Docket Number: No. 339A91,339A91
• Court: North Carolina Supreme Court
• Parties: , 75 Ed. Law Rep. 1233 ROWAN COUNTY BOARD OF EDUCATION v. UNITED STATES GYPSUM CO.

Page 648

418 S.E.2d 648

332 N.C. 1, 75 Ed. Law Rep. 1233

ROWAN COUNTY BOARD OF EDUCATION v. UNITED STATES GYPSUM CO.

No. 339A91.

Supreme Court of North Carolina.

July 17, 1992.

Woodson, Linn, Sayers, Lawther, Short & Wagoner by Donald D. Sayers, Salisbury, Ness, Motley, Loadholt, Richardson & Poole by Edward J. Westbrook, Charleston, and J. Wilson Parker, Winston-Salem, for plaintiff appellee.

Kennedy, Covington, Lobdell & Hickman by William C. Livingston, Charlotte, and Morgan, Lewis & Bockius by James D. Pagliaro and Rebecca J. Slaughter, Philadelphia, Pa., for defendant appellant.

Haywood, Denny, Miller, Johnson, Sessoms & Patrick by Michael W. Patrick, Chapel Hill, for Forsyth Memorial Hosp., Inc. and Carolina Medicorp, Inc., amici curiae.

WHICHARD, Justice.

On 30 July 1985, the Rowan County Board of Education ("Rowan") brought suit against United States Gypsum Company ("USG") to recover costs associated with the removal of asbestos-containing ceiling plasters from certain of its schools. After a three-week jury trial in 1990, a jury awarded Rowan $812,984.21 in compensatory damages and $1,000,000.00 in punitive damages. The trial court entered judgment in those amounts and denied USG's motions for judgment notwithstanding the verdict and for a new trial.

On appeal to this Court, USG raises three issues:

1) Whether the Court of Appeals erred in refusing to reverse its prior ruling that USG was not entitled to summary judgment based on the defenses of the statutes of limitation and repose?

2) Whether the Court of Appeals erred in affirming the trial court's order denying USG's motions for directed verdict and judgment notwithstanding the verdict as to Rowan's fraud and misrepresentation claims?

3) Whether the Court of Appeals erred in affirming the trial court's decision not to instruct the jury on the issue of the "state of the art"?

As to the first issue, we hold that the common law doctrine of nullum tempus occurrit regi protected Rowan from the running of any potentially applicable statutes of limitation or repose. As to the second issue, which contains three sub-issues, we hold that the trial court did not err in denying the motions for directed verdict and judgment notwithstanding the verdict. Finally, we conclude that discretionary review was improvidently allowed as to the issue regarding the "state of the art" jury instruction.

This controversy has its roots in 1980 communications and publications from the federal Environmental Protection Agency and the North Carolina Department of Public Instruction that alerted Rowan to possible dangers posed by the presence of in-place construction materials containing asbestos. Rowan alleged that between 1950 and 1961 it bought and installed two brands of asbestos-containing ceiling plasters from USG, marketed under the names of Audicote and Sabinite. According to Rowan, Audicote was placed in the ceilings of South and East Rowan High Schools, while Sabinite was installed in Cleveland and Granite Quarry Elementary Schools and Corriher-Lipe High School. After consulting experts in government and the private sector, Rowan decided to remove the asbestos-containing materials. Prior to beginning the removal process in 1983, Rowan offered USG the opportunity to perform air samples; USG declined.

On 30 July 1985, Rowan filed a suit against USG sounding in negligence, fraud and misrepresentation, and breach of implied warranty. On 18 June 1986, USG moved for summary judgment on grounds that Rowan's claims were barred by the applicable statutes of limitation and repose. On 10 October 1986, the trial court granted the motion. The Court of Appeals reversed, holding that statutes of limitation and repose do not run against a political subdivision of the State when it is pursuing a governmental purpose. The Court of Appeals further held that Rowan's "action to recover lost tax dollars expended in the preservation and maintenance of school property and necessitated by a potential health hazard to our school personnel and children" was a governmental function in pursuit of a sovereign purpose. Rowan County Bd. of Education v. U.S. Gypsum Co., 87 N.C.App. 106, 115, 359 S.E.2d 814, 819 (1987) ("Rowan I "). On 7 December 1987, this Court denied USG's petition for discretionary review of the Court of Appeals decision. Rowan County Bd. of Education v. U.S. Gypsum Co, 321 N.C. 298, 362 S.E.2d 782 (1987).

On remand, the case was tried before Washington, J., from 3 January to 26 January 1990. The trial court directed verdicts for USG on all claims as to Cleveland Elementary School and Corriher-Lipe High School. The trial court also directed verdicts for USG on the claim of breach of implied warranty as to all schools. On the remaining claims, the trial court denied USG's motions for directed verdict. The jury returned a verdict for Rowan on the claims of fraud and negligence as to the Granite Quarry Elementary School and East and South Rowan High Schools projects, and it awarded compensatory and punitive damages. The trial court entered judgment on the verdict and denied USG's motions for judgment notwithstanding the verdict and a new trial.

USG appealed to the Court of Appeals, where a divided panel affirmed, with Greene, J., concurring in part and dissenting in part. Rowan County Bd. of Education v. U.S. Gypsum Co., 103 N.C.App. 288, 407 S.E.2d 860 (1991) ("Rowan II "). USG appealed as of right on the issue raised by Judge Greene's dissent, and this Court granted USG's petition for discretionary review as to additional issues. Rowan County Bd. of Education v. U.S. Gypsum Co., 330 N.C. 121, 409 S.E.2d 601 (1991).

The first issue, which is before us on discretionary review, is whether USG was entitled to summary judgment because Rowan's suit was time-barred pursuant to the following statutes of limitation and repose: N.C.G.S. §§ 1-15(b), -50(5), -50(6), -52(5). Until its repeal in 1979, N.C.G.S. § 1-15(b), a professional malpractice statute of repose, provided for a ten-year repose period. N.C.G.S. § 1-15(b) (Supp.1971) (repealed by 1979 Session Laws, c. 654, s. 3). N.C.G.S. § 1-50(5), a real property improvement statute of repose, and N.C.G.S. § 1-50(6), a products liability statute of repose, both establish a six-year repose period. N.C.G.S. §§ 1-50(5), -50(6) (Supp.1991). N.C.G.S. § 1-52(5) prescribes a three-year limitation period. N.C.G.S. § 1-52(5) (Supp.1991).

Rowan alleged that USG's asbestos-containing products were installed in Rowan County schools from 1950 to 1961. Clearly, if USG is correct that the statutes of limitation and repose apply to Rowan, Rowan's suit, which was brought twenty-four years after the last installation, was time-barred. Rowan contends, and the Court of Appeals held in Rowan I, that as a political subdivision of the State which was performing a governmental function, Rowan escaped the running of the statutes of limitation and repose under the common law doctrine of nullum tempus occurrit regi. The doctrine, which is translated as "time does not run against the king," developed at common law under the reasoning that the king, who was preoccupied with weighty affairs, "should [not] suffer by negligence of his officers" in failing to pursue legal claims. Armstrong v. Dalton, 15 N.C. (4 Dev.) 568, 569 (1834). While nullum tempus "appears to be a vestigial survival of the prerogative of the Crown," the source of its continuing vitality " 'is to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers.' " Guaranty Trust Co. v. United States, 304 U.S. 126, 132, 58 S.Ct. 785, 788, 82 L.Ed. 1224, 1227-28 (1938) (quoting Story, J., in United States v. Hoar, Fed.Cas. No. 15,393, p. 330); accord Mt. Lebanon Sch. Dist. v. W.R. Grace and Co., --- Pa.Super. ----, 607 A.2d 756, 758-9 (1992).

USG presents a multi-tiered argument against application of the doctrine of nullum tempus in this case. First, it contends that our legislature abrogated nullum tempus in 1868 when it passed the statute now codified as N.C.G.S. § 1-30. That statute, which retains its original language unchanged, provides that "[t]he limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties." N.C.G.S. § 1-30 (1983). As evidence that N.C.G.S. § 1-30 abrogated the common law doctrine of nullum tempus, USG cites several cases spanning a forty-year period from 1885 to 1924: Manning v. R.R., 188 N.C. 648, 655, 125 S.E. 555, 565 (1924); Tillery v. Lumber Co., 172 N.C. 296, 297-98, 90 S.E. 196, 197 (1916); Threadgill v. Wadesboro, 170 N.C. 641, 643, 87 S.E. 521, 522 (1916); Hospital v. Fountain, 129 N.C. 90, 92-93, 39 S.E. 734, 735 (1901); Furman v. Timberlake, 93 N.C. 66, 67 (1885). According to USG, the legislature's abrogation of nullum tempus means that the State and its political subdivisions are subject to the running of time limitations, unless the pertinent statute expressly excludes the State. Manning, 188 N.C. at 665, 125 S.E. at 565; Threadgill, 170 N.C. at 643, 87 S.E. at 522.

In response, Rowan contends that N.C.G.S. § 1-30 did not work a complete abrogation of nullum tempus, that the doctrine survives in North Carolina, and that under the doctrine no time limitation applies against the State or its political subdivisions unless the pertinent statute expressly includes the State. See the following: State v. West, 293 N.C. 18, 25, 235 S.E.2d 150, 154 (1977); Pipeline Co. v. Clayton, Comr. of Revenue, 275 N.C. 215, 229, 166 S.E.2d 671, 680-81 (1969); Miller v. McConnell, 226 N.C. 28, 34, 36 S.E.2d 722, 726 (1946); Raleigh v. Bank, 223 N.C. 286, 293, 26 S.E.2d 573, 577 (1943); Charlotte v. Kavanaugh, 221 N.C. 259, 266, 20 S.E.2d 97, 101 (1942); Asheboro v. Morris and Morris v. Asheboro, 212 N.C. 331, 333, 193 S.E. 424, 425-26 (1937); Wilkes County v....