RIFENBURG CONSTRUCTION, INC., PLAINTIFF V. BRIER CREEK ASSOCIATES LIMITED PARTNERSHIP, NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, RTP ASSEMBLAGE ASSOCIATES, LLC; ATHENA AIRPORT ASSEMBLAGE, LP; AND ATHENA AIRPORT ASSEMBLAGE CORP, DEFENDANTS
No. COA02-1391
IN THE COURT OF APPEALS
Filed 21 October 2003
[160 N.C. App. 626 (2003)]
1. Immunity— sovereign—road building agreement with property owner—no waiver for contractor
There was no contract, and no waiver of sovereign immunity, between the North Carolina Department of Transportation and a contractor who had been hired to build a road by defendant Brier Creek. Because public monies partially funded the project, NCDOT concurred in the award of the contract under
2. Immunity— sovereign—joint venture—road building
There was no joint venture, and no waiver of sovereign immunity as to a contractor, where NCDOT entered into a contract with a property owner to share costs for the construction of a roadway which resulted in NCDOT acquiring a right-of-way at no additional costs. The authorizing statute,
3. Immunity— sovereign—partnership—road building
NCDOT was not a partner with a property owner, and did not waive sovereign immunity as to a contractor, where NCDOT contracted with the property owner to share the costs of building the road and to receive a right-of-way at no additional cost. The authorizing statute,
4. Highway and Streets— road building—agreement with state—remedies
The remedies available under
Judge WYNN dissenting.
Appeal by defendant North Carolina Department of Transportation from order entered 17 May 2002 by Judge Leon Stanback in Wake County Superior Court. Heard in the Court of Appeals 16 September 2003.
Safran Law Offices, by Victor A. Anderson, Jr. and Bonnor E. Hudson, III, for plaintiff-appellee.
Attorney General Roy Cooper, by Assistant Attorney General Joseph E. Herrin, for defendant-appellant North Carolina Department of Transportation.
TYSON, Judge.
The North Carolina Department of Transportation (“NCDOT“) appeals from an order denying its motion to dismiss, upon sovereign immunity grounds, Rifenburg Construction, Inc.‘s (“plaintiff“) third cause of action.
I. Facts
Plaintiff is a New York corporation that is authorized to do business in North Carolina. Defendant Brier Creek Associates Limited Partnership (“Brier Creek“) is a Delaware limited liability corporation authorized to do business in North Carolina. Defendants RTP Assemblage Associates, LLC, Athena Airport Assemblage, LP, and Athena Airport Assemblage Corp are either general or limited partners of Brier Creek. NCDOT is an agency of the State of North Carolina.
On 12 April 1999, Brier Creek conveyed by deed the right-of-way for the road to NCDOT. On 17 June 1999, Brier Creek and plaintiff entered into a contract to construct the roadway. NCDOT concurred in the awarding of this contract. Plaintiff began work on the roadway, completed phase I, and was paid for its work. By 6 May 2001, plaintiff had completed phase II and the roadway was accepted by NCDOT as part of the State‘s highway system. On 5 April 2001, the roadway was open for traffic. On 4 May 2001, NCDOT accepted maintenance of the roadway.
Plaintiff is still owed in excess of $1,056,915.76 for construction of the roadway. Brier Creek and its partners refused to pay plaintiff the money owed. Plaintiff filed a lien against the property upon which the road is located on 30 August 2001. On 2 November 2001, plaintiff filed a complaint alleging that NCDOT was liable to plaintiff for the amount owed. Plaintiff filed its verified claim on 23 January 2002, in accordance with the 1995 NCDOT Standard Specifications Section 107-25 and
II. Issue
The sole issue is whether the trial court erred in denying NCDOT‘s motion to dismiss pursuant to Rules 12(b)(1), (b)(2), (b)(6),
III. Sovereign Immunity
The defense of sovereign immunity is a matter of personal jurisdiction that falls under Rule 12(b)(2) of the North Carolina Rules of Civil Procedure. Zimmer v. N.C. Dep‘t of Transp., 87 N.C. App. 132, 134, 360 S.E.2d 115, 116 (1987). In other cases, our courts have held sovereign immunity to also be a defense under Rule 12(b)(1) of the North Carolina Rules of Civil Procedure. Teachy v. Coble Dairies, Inc., 306 N.C. 324, 328, 293 S.E.2d 182, 184 (1982).
As a sovereign, the State is immune from suit absent its waiver of immunity. Guthrie v. State Ports Auth., 307 N.C. 522, 534, 299 S.E.2d 618, 625 (1983). “Sovereign immunity is a legal principle which states in its broadest terms that the sovereign will not be subject to any form of judicial action without its express consent.” Id. at 535, 299 S.E.2d at 625. The State is not subject to suit “unless by statute it has consented to be sued or has otherwise waived its immunity from suit.” Ferrell v. North Carolina State Highway Comm‘n, 252 N.C. 830, 833, 115 S.E.2d 34, 37 (1960). Our Supreme Court has held:
It is axiomatic that the sovereign cannot be sued in its own courts or in any other without its consent and permission. Except in a limited class of cases the State is immune against any suit unless and until it has expressly consented to such action. . . . An action against a Commission or Board created by Statute as an agency of the State where the interest or rights of the State are directly affected is in fact an action against the State. The State is immune from suit unless and until it has expressly consented to be sued. It is for the General Assembly to determine when and under what circumstances the State may be sued.
Great American Ins. Co. v. Comm‘r of Ins., 254 N.C. 168, 172-73, 118 S.E.2d 792, 795 (1961) (quoting Prudential Ins. Co. of America v. Powell, 217 N.C. 495, 8 S.E.2d 619, 621 (1940)) (internal citations omitted). Sovereign immunity can be waived when the State enters into a valid contract. Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423-24 (1976). The State “implicitly consents to be sued for damages on the contract in the event it breaches the contract.” Id.
[1]
Here, the contract between Brier Creek and plaintiff was not let pursuant to
Our Supreme Court has held:
We will not imply a contract in law in derogation of sovereign immunity. . . . We emphasized, however, that “[t]he State is liable only upon contracts authorized by law. When it enters into a contract it does so voluntarily and authorizes its liability. Consistent with the reasoning of Smith, we will not first imply a contract in law where none exists in fact, then use that implication to support the further implication that the State has intentionally waived its sovereign immunity and consented to be sued for damages for breach of the contract it never entered in fact. Only when the State has implicitly waived sovereign immunity by expressly
entering into a valid contract . . . may a plaintiff proceed with a claim against the State upon the State‘s breach.
Whitfield v. Gilchrist, 348 N.C. 39, 42-43, 497 S.E.2d 412, 415 (1998) (quoting Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423-24 (1976)) (internal citations omitted). No contract was entered into between NCDOT and plaintiff. NCDOT did not waive its sovereign immunity as to plaintiff.
B. Joint Venture between NCDOT and Brier Creek
[2]
NCDOT entered into an agreement with Brier Creek to share costs for a roadway constructed on Brier Creek‘s property. In return for partial funding pursuant to the statute, Brier Creek granted NCDOT a right-of-way to the roadway without cost. Brier Creek advertised and solicited bids from contractors to construct this roadway. Brier Creek selected plaintiff from the bidders. NCDOT merely concurred in the selection because public monies were being used to partially fund the project. Although NCDOT personnel may have interacted with plaintiff‘s employees, NCDOT dealt solely with Brier Creek pursuant to the agreement. NCDOT had no direct connection with, ties to, nor entered into any contract with plaintiff.
NCDOT did not waive its sovereign immunity with respect to plaintiff. NCDOT entered into an agreement with Brier Creek pursuant to
Were the statute interpreted to hold that a joint venture was created to waive sovereign immunity for plaintiff, we would hold that plaintiff failed to establish the elements of a joint venture. A joint venture exists when there is: “(1) an agreement, express or implied, to carry out a single business venture with joint sharing of profits, and (2) an equal right of control of the means employed to carry out the venture.” Rhoney v. Fele, 134 N.C. App. 614, 620, 518 S.E.2d 536, 541 (1999) (quoting Edwards v. Bank, 39 N.C. App. 261, 275, 250 S.E.2d 651, 661 (1979)). In Cheape v. Town of Chapel Hill, our Supreme Court discussed joint ventures and stated:
A joint venture is an association of persons with intent, by way of contract, express or implied to engage in and carry out a single business adventure for joint profit, for which purpose they combine their efforts, property, money, skill, and knowledge, but without creating a partnership in the legal or technical sense of the term. . . . Facts showing the joining of funds, property, or labor, in a common purpose to attain a result for the benefit of the parties in which each has a right in some measure to direct the conduct of the other through a necessary fiduciary relation, will justify a finding that a joint adventure exists.
320 N.C. 549, 561, 359 S.E.2d 792, 799 (1987) (quoting Pike v. Wachovia Bank & Trust Co., 274 N.C. 1, 8-9, 161 S.E.2d 453, 460 (1968)). Our Supreme Court has further held that a joint venture does not exist where each party to an agreement cannot direct the conduct of the other. Pike, 274 N.C. at 10, 161 S.E.2d at 461.
Brier Creek had control of the day-to-day management and progress of the project. All work was required to be completed in accordance with NCDOT‘s Standard Specifications for Roads and Structures and was subject to NCDOT‘s approval. Those standards insure the safety of the traveling public—the ultimate beneficiaries of the road. As NCDOT maintained approval over the conformity of the work with its standards, Brier Creek had no right to control NCDOT. NCDOT‘s involvement and approval insured that the roadway was constructed in accordance with the terms of the agreement and to the State‘s standards. This involvement amounted to unilateral approval of the quality of work performed by Brier Creek. No joint venture existed. NCDOT did not waive sovereign immunity as to plaintiff.
[3] Plaintiff contends that it is entitled to recover against NCDOT because Brier Creek and NCDOT were “partners” in the construction of the roadway. We disagree.
As stated above regarding a joint venture, no language in the statute refers to a partnership being created when NCDOT entered into this type of agreement with Brier Creek. Were this the case, anytime an agency of the State provided money for a project the State would be deemed to be a partner and sovereign immunity would be waived to all parties with any connection to the agreement. Nothing shows this interpretation to be the General Assembly‘s intent in creating this statute. We will not write this interpretation into the statute.
Were the statute interpreted to hold that a partnership is created, we would hold that the elements of a partnership are not met in this case.
(a) A partnership is an association of two or more persons to carry on as co-owners a business for profit. (b) But any association formed under any other statute of this State, or any statute adopted by authority, other than the authority of this State, is not a partnership under this Article . . . .”
Nothing in the agreement entered into between NCDOT and Brier Creek or other evidence indicates that the parties entered into any agreement as co-owners of any business for profit or that they were established under this statute. This agreement was established pursuant to
D. Application of N.C. Gen. Stat. § 136-29
[4] Plaintiff contends that
(a) A contractor who has completed a contract with the Department of Transportation to construct a State highway and who has not received the amount he claims is due under the contract may submit a verified written claim to the State Highway Administrator....
(emphasis supplied). The remedies available under this statute are applicable to a contractor who has “completed a contract” with NCDOT under the provisions of
IV. Conclusion
The North Carolina General Assembly determines the manner in which the State is to be sued. We hold that sovereign immunity bars plaintiff‘s suit against NCDOT. The order of the trial court is reversed and remanded to the trial court to enter an order dismissing with prejudice on sovereign immunity grounds plaintiff‘s claims against NCDOT.
Reversed and Remanded.
Judge LEVINSON concurs.
Judge WYNN dissents.
WYNN, Judge dissenting.
In this appeal, Rifenburg Construction alleges that the North Carolina Department of Transportation (NCDOT) entered into a contract with Brier Creek which formed a joint venture or partnership with Brier Creek. As such, Rifenburg Construction argues that “once the partnership or joint venture was formed, then NCDOT became liable for the wrongful acts of its partner or joint venturer, Brier Creek, committed in the ordinary course of business.” I agree with Rifenburg Construction and the trial judge in this case; accordingly, I dissent from the majority opinion.
Chapter 136 of our General Statutes authorizes NCDOT to enter into construction contracts by either (1) contracting directly with road construction contractors under
It is well established that a joint venture exists when (1) parties combine their property, money, efforts, skill or knowledge in a common undertaking (2) for the benefit of the parties in which (3) each has a right in some measure to direct the conduct of the other. Pike v. Wachovia Bank & Trust Co., 274 N.C. 1, 161 S.E.2d 453 (1968). Here, under their contract authorized by
The last element under Pike—“each has a right in some measure to direct the conduct of the other“—presents the focal issue in the case. I disagree with the majority‘s conclusion that NCDOT did not have some measure of direct control because NCDOT‘s “involvement amounted to unilateral approval of the quality of work performed by Brier Creek” and NCDOT “merely concurred in the selection because public monies were being used to partially fund the project.” Instead, the record shows that under the
A joint venture is a type of partnership and it is governed by substantially the same rules as a partnership. Pike, 274 N.C. 1, 161 S.E.2d 453 (1968). Each partner in a partnership is jointly and severally liable to third parties for the acts and obligations of the partners.
In conclusion, the majority opinion allows NCDOT to make a contract with a developer under