Williams v. Devere Constr. Co. Inc., COA10–900.

• Decision Date: 16 August 2011
• Docket Number: No. COA10–900.,COA10–900.
• Citation: 716 S.E.2d 21
• Court: North Carolina Court of Appeals
• Parties: Jonathan WILLIAMS and wife Jamie Kaufman Williams, Plaintiffs,v.DEVERE CONSTRUCTION COMPANY, INC., Davis, Martin, Powell & Associates, Inc., Terry's Plumbing & Utilities, Inc., and City of Thomasville, Defendants.

716 S.E.2d 21

Jonathan WILLIAMS and wife Jamie Kaufman Williams, Plaintiffs,

v.DEVERE CONSTRUCTION COMPANY, INC., Davis, Martin, Powell & Associates, Inc., Terry's Plumbing & Utilities, Inc., and City of Thomasville, Defendants.

No. COA10–900.

Court of Appeals of North Carolina.

Aug. 16, 2011.

Appeal by plaintiffs from judgment entered 3 March 2010 by Judge V. Bradford Long in Randolph County Superior Court. Heard in the Court of Appeals 25 January 2011.

Stone, Bowers, Gray & McDonald, P.A., Lexington, by Carl W. Gray, for plaintiff-appellants.

Little & Little, P.L.L.C., Raleigh, by Cathryn M. Little, Esq., for defendant-appellant City of Thomasville.

BRYANT, Judge.

Because there exists an issue as to whether or not defendant City of Thomasville was engaged in a proprietary function that would make it subject to tort liability, we reverse the trial court's conclusion that defendant City of Thomasville was engaged in a governmental function and thereby entitled to governmental immunity. Nevertheless, assuming arguendo defendant City of Thomasville is not entitled to a defense of governmental immunity, we hold plaintiffs' negligence claim must fail because plaintiffs fail to allege what duty or control defendant City of Thomasville, located in Davidson County, was to exercise in the construction and establishment of the new Randolph County school sewer system. Therefore, we affirm the judgment of the trial court dismissing the negligence claim against City of Thomasville pursuant to Rule 12(b)(6).

Plaintiffs Jonathan Williams and Jamie Kaufman Williams are residents of Randolph County. On 10 August 2009, a sewer line backed up and sewage flowed back through the sewer line connected to a house owned by plaintiffs; sewage spilled from the toilets, bathtubs, and showers onto the flooring of the first floor, down through the walls, basement ceiling, and into the heating and cooling ducts causing substantial damage to the house. On 30 December 2009, plaintiffs filed a negligence complaint against defendants DeVere Construction Company, Inc.; Davis, Martin, Powell & Associates, Inc.; Terry's Plumbing & Utilities, Inc.; and City of Thomasville.

Devere Construction Co. served as general contractor for the construction of a new Randolph County school in the City of Trinity. Plaintiffs alleged that City of Thomasville, located in adjacent Davidson County, “was involved in the process of construction of the sewer system for [the] new school ... in preparation for taking over operation and control of said sewer system.” On 25 January and 18 February 2010, defendant City of Thomasville filed a motion and amended motion, respectively, to dismiss plaintiffs' claim as to them pursuant to Rule 12(b)(1) and 12(b)(6). City of Thomasville contended that it was immune from suit for torts committed by its officers or employees while performing governmental functions based on the doctrine of governmental immunity. A hearing on the motion was set for 1 March 2010.

On 1 March 2010, plaintiffs filed subpoenas for Kelly Craver, City of Thomasville City Manager, and Morgan Huffman, City of Thomasville Director of Public Services. City of Thomasville filed objections and a motion to quash plaintiffs' subpoenas. On 15 March 2010, the trial court entered an order granting City of Thomasville's motion to quash plaintiffs' witness subpoenas, under Rule 45(c)(5), and ordered that plaintiffs' claim against City of Thomasville be dismissed pursuant to Rule 12(b)(1) and Rule 12(b)(6). Plaintiffs appeal.

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On appeal, plaintiffs question whether the trial court erred by (I) quashing plaintiffs' subpoenas; dismissing plaintiffs' complaint pursuant to (II) 12(b)(1); and (III) 12(b)(6).

Before we reach plaintiffs' arguments, we consider whether plaintiffs' interlocutory appeal is properly before this Court.

Under North Carolina Rules of Civil Procedure, Rule 54,

[A]ny order ... which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties and shall not then be subject to review either by appeal or otherwise except as expressly provided by these rules or other statutes.

N.C. R. Civil P. 54(b) (2009). “An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.” Stanford v. Paris, 364 N.C. 306, 311, 698 S.E.2d 37, 40 (2010) (quoting Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950)).

As a general rule, interlocutory orders are not immediately appealable. Davis v. Davis, 360 N.C. 518, 524, 631 S.E.2d 114, 119 (2006). However, “immediate appeal of interlocutory orders and judgments is available in at least two instances”: when the trial court certifies, pursuant to N.C.G.S. § 1A–1, Rule 54(b), that there is no just reason for delay of the appeal; and when the interlocutory order affects a substantial right under N.C.G.S. §§ 1–277(a) and 7A–27(d)(1). Sharpe v. Worland, 351 N.C. 159, 161–62, 522 S.E.2d 577, 579 (1999).

Turner v. Hammocks Beach Corp., 363 N.C. 555, 558, 681 S.E.2d 770, 773 (2009). Where the trial court does not certify the order pursuant to Rule 54(b), the first avenue is not available to the appellant. Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App. 377, 379, 444 S.E.2d 252, 253 (1994). Pursuant to the second avenue, “the appellant has the burden of showing this Court that the order deprives the appellant of a substantial right which would be jeopardized absent a review prior to a final determination on the merits.” Id. at 380, 444 S.E.2d at 254. This Court has held that appeals from interlocutory orders raising issues of governmental or sovereign immunity affect a substantial right sufficient to warrant immediate appellate review. Price v. Davis, 132 N.C.App. 556, 558–59, 512 S.E.2d 783, 785 (1999); see, e.g., Hines v. Yates, 171 N.C.App. 150, 614 S.E.2d 385 (2005); Derwort v. Polk County, 129 N.C.App. 789, 501 S.E.2d 379 (1998); Hedrick v. Rains, 121 N.C.App. 466, 466 S.E.2d 281, aff'd, 344 N.C. 729, 477 S.E.2d 171 (1996).

Here, plaintiffs appeal from an order quashing their witness subpoenas and dismissing their negligence claim against City of Thomasville pursuant to Rule 12(b)(1) and 12(b)(6). The trial court's stated basis for the dismissal was that “the doctrine of governmental immunity applies to plaintiffs' allegations against defendant City ... [,] defendant City has not waived its governmental immunity ... [, and] defendant City's Motions to dismiss shall be and hereby are granted....” These grounds are sufficient to warrant immediate appellate review. See Price, 132 N.C.App. at 558–59, 512 S.E.2d at 785; see also Murray v. County of Person, 191 N.C.App. 575, 577, 664 S.E.2d 58, 60 (2008) (“appeals which present defenses of governmental or sovereign immunity ... have been held by this Court to be immediately appealable as affecting a substantial right.” (citations omitted)). Therefore, we review plaintiffs' appeal.

Because the issues presented by plaintiffs in arguments II and III are determinative, our opinion addresses only the arguments corresponding to those issues.

II

Plaintiff argues that the trial court erred in granting defendant City's motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1). Plaintiff argues that defendant City is not entitled to governmental immunity because (A) it waived its governmental immunity with the purchase of liability insurance and (B), in the alternative, because defendant City's involvement in the process of construction of the sewer system was a proprietary function. Though the record is undeveloped as to whether City of Thomasville was engaged in a proprietary function, plaintiffs' allegations are sufficient to warrant further review in the determination of whether governmental immunity is applicable.

“We review Rule 12(b)(1) motions to dismiss for lack of subject matter jurisdiction de novo and may consider matters outside the pleadings.” Harris v. Matthews, 361 N.C. 265, 271, 643 S.E.2d 566, 570 (2007) (citations omitted).

“Under the doctrine of governmental immunity ... a municipality is not liable for the torts of its officers and employees if the torts are committed while they are performing a governmental function.” Gregory v. City of Kings Mountain, 117 N.C.App. 99, 101, 450 S.E.2d 349, 352 (1994) (citation omitted). “Application of the doctrine depends upon whether the activity out of which the tort arises is properly characterized as ‘governmental’ or ‘proprietary’ in nature.” Bostic Packaging, Inc. v. City of Monroe, 149 N.C.App. 825, 826–27, 562 S.E.2d 75, 77 (2002) (citation omitted).

A municipal corporation is dual in character and exercises two classes of powers—governmental and proprietary. It has a twofold existence—one as a governmental agency, the other as a private corporation.

Any activity of the municipality which is discretionary, political, legislative, or public in nature and performed for the public good in behalf of the State rather than for itself comes within the class of governmental functions. When, however, the activity is commercial or chiefly for the private advantage of the compact community, it is private or proprietary.

...

In either event it must be for a public purpose or public use.

So then, generally speaking, the distinction is this: If the undertaking of the municipality is one in which only a governmental agency could engage, it is governmental in nature. It is proprietary and “private” when any corporation, individual, or group of individuals could do the same thing. Since, in either event, the undertaking must be for a public purpose, any proprietary enterprise must, of necessity, at least incidentally promote or protect the general health, safety, security or general welfare of the residents of...