Meinck v. City of Gastonia
NC Supreme Court (October 2018)
Governmental immunity provides local government immunity from tort-based claims. This means that officials or entities are allowed immunity, when acting in connection with their governmental duties. However, this immunity is not provided to the government actor or agency if the official’s is action is in connection with a proprietary act. A number of tort cases involving governmental immunity revolve around the issue of whether or not a municipality is engaging in a governmental function, as opposed to a proprietary function. On October 26, 2018, the Supreme Court of North Carolina issued an opinion, which addressed the specific issue of government immunity and its application to a local municipality sued by a nonprofit art group for an injury that occurred in a building owned and maintained by the local municipality. The issue before the court, whether a building owned and maintained by a municipality and leased to private parties for downtown revitalization efforts is a proprietary or government function for purposes of government immunity.
As background, the Defendant purchased a historic property in Gastonia in order to redevelop and revitalize the downtown area. Defendant’s intent in purchasing the building was not only to help restore the building and ensure the property did not deteriorate, but also to bring art into the downtown, making it more appealing for both people and business. Defendant began leasing to nonprofit arts groups, and as part of the lease, was responsible for maintaining the exterior of the premises. On December 11, 2013, the Plaintiff, who was a subtenant, was leaving the building with a stack of pictures when she lost her balance on the steps and fell. As a result of the fall, the Plaintiff suffered a broken hip in addition to other injuries, which led to surgery, hospitalization and rehabilitation.
The evidence showed that part of the concrete step had eroded, and as a result, the Plaintiff filed a complaint against the Defendant for negligence in maintaining the building’s exit and for failure to warn of the dangerous and hazardous condition. The complaint also stated that the Defendant had waived any governmental immunity by purchasing liability insurance, as well as by engaging in tortious conduct while acting in a proprietary function.
In this personal injury case, the North Carolina Supreme Court reversed a decision from the Court of Appeals and remanded the case to the Court of Appeals to determine if the Defendant waived governmental immunity by purchasing liability insurance. An issue, the Court of Appeals did not initially address since, the Court of Appeals determined the Defendant was not entitled to governmental liability. The original trial court’s ruling, which was based on the doctrine of government immunity, held that the Defendant, the City of Gastonia, was entitled to government immunity based on the facts of the case.
The trial court ruled the Defendant was entitled to governmental immunity and granted summary judgement in favor of the Defendant. The decision was based on the fact that the Defendant’s liability insurance contained an express non-waiver provision, in addition to the fact that court concluded the city leased the property as part of its governmental mission to revitalize the area and preserve the historical structure. The Plaintiff appealed this decision, arguing that the Defendant’s ownership and maintenance of the building was proprietary and not governmental. The Court of Appeals concluded that governmental immunity did not apply and reversed the trial court’s order that granted summary judgment in favor of the Defendant.
Generally, 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 Cty. Parks & Recreation Dep’t, 366 N.C. 198, 732 S.E.2d 140 (2012). On the other hand, if a county or municipality is engaged in a proprietary function, governmental immunity does not apply. In its ruling, the Court cited the Williams court to determine whether or not the activity by the local municipality is governmental or proprietary in nature.
First, the Court found “the threshold inquiry . . . whether, and to what degree the legislature has addressed the issue.” Williams, id. at 200, 732 S.E.2d at 141-42; see id. at 200-01, 732 S.E.2d at 142 (“This is especially so given . . . that any change in the common law doctrine of governmental immunity is a matter for the legislature.” (citation omitted)). The Court looked to N.C.G.S. § 160A-272 for clarification. That statue authorizes a city to lease or rent any property it owns “but not for longer than 10 years . . . only if the council determines that the property will not be needed by the city for the term of the lease.” N.C.G.S. §160A-272(a) (2017). The Court concluded that nothing the statute indicated an intent by the legislature to designate the leasing of property authorized therein as a governmental or proprietary function.
Instead, the Court relied on the Urban Redevelopment Law, where the legislature specifically addressed the problem of “blighted areas” and authorized municipalities to engage in “redevelopment projects” in the interest of public health, safety, convenience, and welfare. N.C.G.S. §§ 160A-500 to -526 (2017). The Urban Redevelopment Law authorized the governing bodies of municipalities to create a separate body to act as a “redevelopment commission,” N.C.G.S. § 160A-504(a), or to simply “undertake to exercise such powers, duties, and responsibilities [of a redevelopment commission] itself,” id. § 160A-505(a). In the instant case, the defendant’s purchase of the building and its lease to the non-profit arts group to promote the arts for purposes of revitalizing the downtown area is a valid redevelopment activity under the Urban Redevelopment Law.
Further, the Court concluded that in addition to the Urban Redevelopment Law, Article 23, the Municipal Service District Act allows cities to establish “service districts in order to finance, provide, or maintain for the districts one or more of the following services, facilities, or functions in addition to or to a greater extent than those financed, provided or maintained for the entire city,” N.C.G.S. § 160A-536(a). These services include “[d]owntown revitalization projects,” id. § 160A-536(a)(2). The Court noted; however, the legislature has not deemed all urban redevelopment and downtown revitalization projects government functions that are immune from suit. Therefore, the Court considered additional factors for its governmental or proprietary function determination. For the specific activity undertaken in the present case, the Court determined it could be performed either publicly or privately. In sum, in consideration of various factors, the Court held: (1) the lease of a historic building to the non-profit arts group in the downtown area to promote the arts downtown was a valid urban redevelopment and downtown revitalization activity; the defendant did not seek to make a profit; and that the fees charged by defendant were not substantial and did not cover its operating costs.
While the Court held as such in this case, it was conscious to note that this ruling should not be construed to hold that every urban revitalization project should be viewed as a governmental function, as the scope of urban development is not straightforward and can encompass a wide array of activities, including those commercial in nature. Rather the determination of whether an action is governmental or proprietary is an intensive, fact based inquiry. As the facts differ from case to case, so may the designation of governmental or proprietary.
As a result of the ruling, the court remanded the case to determine whether the Defendant waived governmental immunity by purchasing liability insurance, an item which the Court of Appeals failed to rule on following its determination that the Defendant was not entitled to governmental immunity.
From this ruling, it is evident that a seemingly straightforward personal injury case can become much more entangled when involving a government agency or actor, based on the protections allotted to such individuals faced with tort-based claims. In addition, it is clear that the facts play a significant role in determining a case such as this, and should be carefully considered when pursuing legal action.
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