Welch Contracting v. N.C. Dept. of Transp., COA05-100.

• Decision Date: 20 December 2005
• Docket Number: No. COA05-100.,COA05-100.
• Citation: 622 S.E.2d 691
• Court: North Carolina Supreme Court
• Parties: WELCH CONTRACTING, INC., Plaintiff-Appellant, v. NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, as an agency of the State of North Carolina, and the Eastern Band of Cherokee Indians, Defendants-Appellees.

Page 691

622 S.E.2d 691

WELCH CONTRACTING, INC., Plaintiff-Appellant, v. NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, as an agency of the State of North Carolina, and the Eastern Band of Cherokee Indians, Defendants-Appellees.

No. COA05-100.

Court of Appeals of North Carolina.

December 20, 2005.

Appeal by plaintiff from order dated 9 September 2004 by Judge James U. Downs in Superior Court, Swain County. Heard in the Court of Appeals 21 September 2005.

McLean Law Firm, P.A., by Russell L. McLean, III, Waynesville, for plaintiff-appellant.

Attorney General Roy Cooper, by Special Deputy Attorney General Joseph E. Herrin, for defendant-appellee North Carolina Department of Transportation.

Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Elizabeth A. Martineau, Charlotte, and Taurus E. Becton; and David L. Nash, Cherokee, for defendant-appellee Eastern Band of Cherokee Indians.

McGEE, Judge.

The North Carolina Department of Transportation (NCDOT) and the Eastern Band of Cherokee Indians (the EBCI) (collectively, defendants) entered into a construction agreement on 11 June 1999 to make improvements to U.S. Highway 19 from Cherokee, North Carolina, to Maggie Valley, North Carolina (Highway 19 project). The Highway 19 project was designated as a "high priority project" by the United States Congress, under 23 U.S.C. § 117, commonly known as the "High Priority Projects Program." Designated as High Priority Project number 1303 under the federal statute, the Highway 19 project was to "upgrade and improve U.S. 19 from Maggie Valley to Cherokee." 23 U.S.C. § 117. Congress allocated fifteen million dollars for the project, which constituted eighty percent of the total cost of construction. Under the terms of defendants' construction agreement, the EBCI was responsible for the remaining twenty percent, or three million dollars, of the cost. The EBCI was also responsible for administering the construction of the Highway 19 project and was authorized to hire contractors for the construction.

Welch Contracting, Inc. (plaintiff) filed a complaint against defendants on 16 February 2004, alleging plaintiff had been hired by EBCI as a sub-contractor pursuant to defendants' construction agreement. Plaintiff alleged wrongdoing by defendants under two contracts: (1) defendants' construction agreement and (2) an alleged contract between plaintiff and the EBCI. Plaintiff, a minority-owned North Carolina corporation, claimed it entered into a thirty-month contract with the EBCI, through an authorized agent, to perform work on the Highway 19 project. Plaintiff did not include a copy of said contract in either its complaint or the record on appeal. Plaintiff alleged in its complaint, inter alia, that NCDOT failed to supervise the EBCI as required by defendants' construction agreement, and that NCDOT failed to adhere to federal and state minority business policies. Plaintiff alleged that the EBCI breached its contract with plaintiff by forcing plaintiff to change the scope and nature of its work, and later by terminating plaintiff without just cause, right or provocation. Plaintiff sought recovery from NCDOT for incidental and consequential damages incurred as a result of NCDOT's actions under defendants' construction agreement. Plaintiff sought recovery from the EBCI for breach of the alleged contract between plaintiff and the EBCI.

Defendants filed a motion to dismiss pursuant to North Carolina Rules of Civil Procedure 12(b)(1), (b)(2), (b)(6), and (h)(3). N.C. Gen.Stat. § 1A-1, Rule 12 (2003). Thereafter, plaintiff filed an amended complaint, which contained the additional allegation that NCDOT failed to follow state bidding requirements. NCDOT amended its motion to dismiss to include plaintiff's amended complaint, as well as the original complaint.

Defendants' motion to dismiss was heard by the trial court on 20 May 2004. The hearing was heard out-of-county and out-of-session by the consent of the parties. The trial court allowed defendants' motion to dismiss under N.C.R. Civ. P. 12(b)(1) and (b)(6). The trial court held that it lacked subject matter jurisdiction over the case, and, as a result, the complaint failed to state a claim upon which relief could be granted. Plaintiff appeals.

Plaintiff's only assignment of error is that the trial court erred as a matter of law "in granting summary judgment" for defendants. However, the order entered by the trial court did not, in fact, grant summary judgment. Rather, the order granted a motion to dismiss under Rules 12(b)(1) and (b)(6) of the North Carolina Rules of Civil Procedure, on the grounds that the trial court lacked subject matter jurisdiction and that consequently the complaint failed to state a claim upon which relief could be granted. Plaintiff's assignment of error refers to an incorrect ground for dismissal, summary judgment. However, plaintiff's brief contains arguments on the correct ground, lack of subject matter jurisdiction.

Under Rule 10 of the North Carolina Rules of Appellate Procedure:

(a) . . . [T]he scope of review on appeal is confined to a consideration of those assignments of error set out in the record on appeal in accordance with this Rule 10.

(c) (1) . . . A listing of the assignments of error upon which an appeal is predicated shall be stated at the conclusion of the record on appeal[.] . . . Each assignment of error shall, so far as practicable, be confined to a single issue of law; and shall state plainly, concisely and without argumentation the legal basis upon which error is assigned.

N.C.R.App. P. 10(a) and (c)(1).

Under Rule 28 of the North Carolina Rules of Appellate Procedure,

(b) (6) . . . Immediately following each question [presented] shall be a reference to the assignments of error pertinent to the question, identified by their numbers and by the pages at which they appear in the printed record on appeal. Assignments of error not set out in the appellant's brief, or in support of which no reason or argument is stated or authority cited, will be taken as abandoned.

N.C.R.App. P. 28(b)(6).

Plaintiff's brief is in violation of Rules 10 and 28 in that the assignment of error in the record on appeal does not correspond to the question presented in plaintiff's brief. Our Supreme Court has held that "[t]he North Carolina Rules of Appellate Procedure are mandatory and `failure to follow these rules will subject an appeal to dismissal.'" Viar v. North Carolina Dept. of Transp., 359 N.C. 400, 401, 610 S.E.2d 360, 360 (2005) (quoting Steingress v. Steingress, 350 N.C. 64, 65, 511 S.E.2d 298, 299 (1999)). The rationale underlying the Viar decision, however, was that "otherwise, the Rules become meaningless, and an appellee is left without notice of the basis upon which an appellate court might rule." Id. at 402, 610 S.E.2d at 361. Here, clearly, defendants had sufficient notice of the basis upon which our Court might rule. Plaintiff made only one assignment of error, and that assignment of error referenced the order of the trial court. The trial court's order stated only one ground from which plaintiff could appeal, that being the lack of subject matter jurisdiction under Rule 12. The order read in pertinent part:

This Matter having come on to be heard before the undersigned Senior Resident Superior Court Judge . . . the Court finds and concludes that the Superior Court of Swain County, North Carolina lacks subject matter jurisdiction of this case and consequently holds that the complaint fails to state a claim upon which relief can be granted[.]

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the motions of both defendants to dismiss the plaintiff's action on the grounds that the Superior Court of Swain County lacks subject matter jurisdiction of this case, and as a result thereof the complaint fails to state a claim upon which relief can be granted . . . and the same are hereby allowed.

As defendants concede, there was no mention of summary judgment in the order. The trial court ruled solely on the motion made under N.C.R. Civ. P. 12. Under these circumstances, defendants reasonably should have known that plaintiff's assignment of error contained a clerical error, incorrectly citing summary judgment as the ground for dismissal. As defendants were not prejudiced by plaintiff's error, we review the merits of plaintiff's argument. In so doing, we do not address an issue "not raised or argued by plaintiff," nor do we "create an appeal for an appellant." Viar, 359 N.C. at 402, 610 S.E.2d at 361. Upon review, we affirm the order of the trial court.

Rule 12(b)(1) of the Rules of Civil Procedure allows for dismissal based upon a trial court's lack of jurisdiction over the subject matter of the claim. N.C. Gen.Stat. § 1A-1, Rule 12. Our Court has held that the defense of sovereign immunity is a Rule 12(b)(1) jurisdiction defense. Battle Ridge Cos. v. N.C. Dep't of Transp., 161 N.C.App. 156, 587 S.E.2d 426 (2003). "[T]he standard of review on a motion to dismiss under Rule 12(b)(1) for lack of jurisdiction is de novo." Hatcher v. Harrah's N.C. Casino Co., LLC, 169 N.C.App. 151, 155, 610 S.E.2d 210, 212 (2005) (internal citations omitted). The standard of review on a motion to dismiss under Rule 12(b)(6) is "whether, if all the plaintiff's allegations are taken as true, the plaintiff is entitled to recover under some legal theory." Toomer v. Garrett, 155 N.C.App. 462, 468, 574 S.E.2d 76, 83 (2002).

Plaintiff argues that dismissal was erroneous as to both NCDOT and the EBCI because both defendants waived their sovereign immunity.

I.

Plaintiff first argues that dismissal as to NCDOT was improper because NCDOT waived its sovereign immunity when it entered into a construction agreement with the EBCI.

The law of state sovereign immunity is quite clear in this State:

It is an established principle of jurisprudence, resting on grounds of sound public policy, that a state may not be sued in its own courts or elsewhere unless it has consented...