SOVEREIGN OR GOVERNMENTAL IMMUNITY IN NORTH CAROLINA

North Carolina recognizes the common law doctrine of sovereign immunity. Generally speaking, this prevents hey person from suit a city or town or county for negligence. It does not apply to claims for breach of contract. Claims against the state of North Carolina are now governed by the Tort Claims Act, and sovereign immunity has been waived against the state of North Carolina.

In Meinck v. City of Gastonia (January 2, 2019), the Court of Appeals addressed a case in which the plaintiff was injured when she fell at a building homes and maintained by a city of Gastonia.

In the first round of appeals, the issue was whether the city was engaged in a governmental or proprietary function in connection with the building. The general rule in North Carolina is that the city has sovereign immunity only with respect to a governmental function. In this case, the building at issue was a historic building, which had been leased to a non-profit art-related entity. The North Carolina Supreme Court ruled that this constituted a governmental function, such that sovereign immunity generally applied. This would mean that the plaintiff could not recover against the City even if her accident was solely due to the negligence of the city in the manner in which the steps were maintained.

In North Carolina, a municipality may waive its sovereign immunity through the purchase of insurance. In this particular case, the City had a policy of insurance. This policy contained a provision which is common to many policies issued to municipalities. Many cases have held that such a provision essentially negates this waiver, by disclaiming any coverage for a claim that would not otherwise be precluded by the doctrine of sovereign immunity. Such a provision may state, as a simple example, that the insurance does not provide coverage for any claim which would be barred by the doctrine of sovereign immunity in the absence of insurance. One may question the effect of such a policy. At a minimum, such a policy still provides protection for claims against the municipality for the performance of a proprietary function. The coverage is therefore not illusory.

In this case, the provision at issue stated “for any amount for which the insured would not be liable under applicable governmental or sovereign immunity but for the existence of this policy; the issuance of this insurance shall not be deemed a waiver any statutory immunities by or on behalf of any insured, nor any statutory limits on the monetary amount of liability applicable to any insured where this policy not in effect; and with respect to any claim, we expressly reserved any and all rights to deny liability by reason of such immunity, and to assert the limitations as to the amount of liability as might be provided by law.”

The Court of Appeals ruled that this provision was ambiguous. There seem to be two problems with this clause. The first is that the portion of the provision before the semicolon was not a complete sentence, which seemed to greatly troubled the court. The other concern is that the provision refers to a “statutory” immunity, which could be could be distinct from the common law doctrine of sovereign immunity. The court has ruled that the policy covered the claim and that the City did not waive sovereign immunity. The court distinguished similar clauses in other cases, which did in fact operate to preserve sovereign immunity.

This case raises several peculiar issues regarding sovereign immunity and insurance clauses. One issue is whether this clause is truly ambiguous. Certainly the provision could be written much better. One interpretation could be that the second and third clauses each follow the first clause, which would mean that City basically retains all sovereign immunity by common law as well as statutory immunity.

The Court of Appeals employed a principle of interpreting insurance policies which generally states that policies will be construed against the insurance company and construed in favor of coverage. Interestingly, however, there is a competing line of cases in the context of a waiver of sovereign immunity, which holds that immunity is not to be lightly inferred and that as a result, such policies should actually be construed where this would result construed against coverage where this would result in a waiver.

I have handled many claims involving coverage under insurance policies such as the one at  issues in this case.  I have also represented municipalities and have asserted claims against municipalities for violating individuals rights, and I have extensive experience with the doctrine of sovereign immunity, as well as several related documents such as the public duty doctrine and official immunity. If you have a case involving these issues, you may contact me for a consultation.