Providence Volunteer Fire Department v. Town of Weddington
2017 WL 1381585
N.C. Ct. App.2017Background
- Providence Volunteer Fire Department conveyed its Hemby Road fire station to the Town of Weddington after the Town agreed to fund roughly $1 million in repairs, lease the station back to Providence, and retain Providence as primary fire/EMS provider for ten years under a Fire Suppression Agreement and a Lease Agreement.
- The Suppression Agreement included a $750,000 liquidated-damages provision if the Town terminated without cause.
- After budget disputes and a finding that Providence could not provide adequate assurances, the Town terminated the Suppression Agreement for cause and contracted with another department, offering that department an option to buy the Property for $750,000.
- Providence sued for breach of contract (seeking the $750,000), fraud in the inducement, and unfair/deceptive trade practices, filed a lis pendens on the Property, and sought injunctive relief to block transfer of the Property.
- The trial court allowed Providence to amend its complaint, denied the Town’s motion to dismiss Providence’s fraud claim on governmental-immunity grounds, and granted Providence a preliminary injunction; the Town appealed.
- The Court of Appeals affirmed the amendment ruling and denial of dismissal (on preserved proprietary-function theory) but reversed the preliminary injunction because the lis pendens provided an adequate remedy at law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion to amend complaint | Providence sought leave to file Second Verified Amended Complaint to add theories (including proprietary-function allegation and insurance waiver). | Town argued amendment included unfounded insurance allegation and counsel admitted lack of factual basis. | Court: Trial court did not abuse discretion; amendment allowed. |
| Governmental immunity — proprietary function | Providence alleged the Town acted in a proprietary (commercial) capacity in purchasing/ leasing back the station, so immunity does not bar tort claims. | Town argued its actions were governmental and thus immune. | Court: Complaint’s uncontroverted proprietary allegation (in verified amended complaint) was sufficient to defeat dismissal; denial of 12(b)(2)/(6) affirmed. |
| Governmental immunity — waiver by contract | Providence argued that entering a valid contract implicitly waived the Town’s immunity as to related tort claims (fraud/conversion). | Town argued contracting does not waive immunity for torts arising from the contract. | Court: Declined to extend Smith/Ports Authority to waive immunity for tort claims arising from contract; rejection of contractual-waiver theory. |
| Preliminary injunction | Providence claimed irreparable harm and likelihood of success warranting injunction to prevent sale/transfer. | Town argued lis pendens provided full, adequate remedy at law and Providence failed to show likelihood of success. | Court: Reversed preliminary injunction; lis pendens provides adequate legal remedy, so injunction improper. |
Key Cases Cited
- Can Am S., LLC v. State, 234 N.C. App. 119 (N.C. Ct. App.) (appealability of denial of sovereign immunity treated as personal jurisdiction issue)
- Data Gen. Corp. v. Cnty. of Durham, 143 N.C. App. 97 (N.C. Ct. App.) (verified complaint/affidavit procedure when immunity challenged)
- Estate of Williams v. Pasquotank Cnty. Parks & Recreation Dep’t, 366 N.C. 195 (N.C.) (framework for determining governmental vs. proprietary functions)
- Smith v. State, 289 N.C. 303 (N.C.) (state consents to be sued for breach of contract; does not extend to tort waiver)
- Ports Authority v. Fry Roofing Co., 294 N.C. 73 (N.C.) (circumstances when tort may arise from contractual performance; not a governmental-immunity waiver rule)
- Whitford v. N.C. Joint Stock Land Bank of Durham, 207 N.C. 229 (N.C.) (filing lis pendens supplies a full and adequate legal remedy preventing equitable injunction)
- A.E.P. Industries, Inc. v. McClure, 308 N.C. 393 (N.C.) (standard of appellate review for preliminary injunctions)