RPR & ASSOCIATES, INC., a South Carolina Corporation, Plaintiff v. THE STATE OF NORTH CAROLINA, THE UNIVERSITY OF NORTH CAROLINA-CHAPEL HILL and THE NORTH CAROLINA DEPARTMENT OF ADMINISTRATION, Defendants
No. COA98-1581
IN THE COURT OF APPEALS
Filed 15 August 2000
139 N.C. App. 525 (2000)
- Appeal and Error— appealability—interlocutory order—denial of motion to dismiss —sovereign immunity defense—substantial right
Although the denial of a motion to dismiss is generally not immediately appealable based on the fact that it is an interlocutory order, the Court of Appeals allowed an immediate appeal because the denial of defendants’ motions to dismiss based upon the defense of sovereign immunity affects a substantial right.
- Immunity— sovereign—contract claim
The trial court did not err in concluding that plaintiff-contractor followed the statutory procedures provided under
N.C.G.S. § 143-135.3 in order to have defendants’ sovereign immunity waived in an action involving contract claims against the State and its agencies, because: (1) the statute provides that the contractor must first submit its claim to the director of the Office of State Construction and await the director‘s decision, which plaintiff did; (2) if a contractor is displeased with the director‘s decision, it may then appeal that decision by either instituting a contested case hearing before an ALJ, or in lieu of that option, by filing a complaint in superior court; and (3) in the instant case, plaintiff initially chose the contested case option but never availed itself of any of those proceedings before it then opted to proceed in superior court instead, as allowed by the statute. - Process and Service— state agency—registered agent receiving service
Although the long-standing rule in this State is that a summons should direct service upon defendant itself and not upon its process agent, the trial court did not err in denying defendant UNC-CH‘s motions to dismiss for insufficient service of process based on the summons directing service only upon the state agency‘s registered agent, because: (1)
N.C.G.S. § 1A-1, Rule 4(b) is leniently applied in the context of corporations and state agencies when the caption listed on the summons, together with the complaint attached to that summons, clearly demonstrates that it is the corporate defendant, not its agent, that is being sued; and (2) the fact that the summons does not state that the person listed is the process agent is immaterial.
Judge McGEE dissenting.
Appeal by defendants University of North Carolina-Chapel Hill and North Carolina Department of Administration from order entered 16 July 1998 by Judge Henry V. Barnette, Jr. in Wake County Superior Court. Heard in the Court of Appeals 6 October 1999.
Attorney General Michael F. Easley, by Associate Attorney General Thomas J. Pitman, for defendant-appellant University of North Carolina-Chapel Hill.
Attorney General Michael F. Easley, by Assistant Attorney General D. David Steinbock, for defendant-appellant North Carolina Department of Administration.
LEWIS, Judge.
RPR & Associates, Inc. (“RPR“) entered into a written construction contract with the State of North Carolina (“State“), through the University of North Carolina at Chapel Hill (“UNC-CH“), to construct the George Watts Hill Alumni Center (“Alumni Center“) on the UNC-CH campus. Following the completion of the Alumni Center, on 22 November 1994, plaintiff filed a verified claim against UNC-CH with the Office of State Construction (“OSC“) pursuant to
On 12 September 1997, pursuant to
All three defendants thereafter filed motions to dismiss plaintiff‘s complaint in superior court pursuant to North Carolina Rules of Civil Procedure 12(b)(1), (2), (4), (5) and (6). After a hearing on the motions, the trial court entered an order granting the State‘s motion to dismiss pursuant to Rule 12(b)(5) for insufficient service of process because a summons was never served upon the Attorney General or a deputy or assistant attorney general as required by Rule 4(j)(3). The trial court, however, denied UNC-CH‘s and the DOA‘s motions to dismiss. From this order denying their motions to dismiss, UNC-CH and the DOA now appeal.
[1] At the outset, we must determine whether this appeal is properly before us. Generally, the denial of a motion to dismiss is not immediately appealable because it is an interlocutory order. Fraser v. Di Santi, 75 N.C. App. 654, 655, 331 S.E.2d 217, 218,
Here, defendants’ motions to dismiss were based, in part, on the doctrine of sovereign immunity. Although our Supreme Court has never specifically addressed the issue, this Court has held that the denial of a motion to dismiss based upon the defense of sovereign immunity affects a substantial right and is thus immediately appealable. Anderson v. Town of Andrews, 127 N.C. App. 599, 601, 492 S.E.2d 385, 386 (1997); Faulkenbury v. Teachers’ & State Employees’ Retirement System, 108 N.C. App. 357, 365, 424 S.E.2d 420, 423, aff‘d per curiam, 335 N.C. 158, 436 S.E.2d 821 (1993). The rationale for such an exception derives from the nature of the immunity defense. Slade v. Vernon, 110 N.C. App. 422, 425, 429 S.E.2d 744, 746 (1993). “A valid claim of immunity is more than a defense in a lawsuit; it is in essence immunity from suit.” Id. In other words, immunity would be effectively lost if the case were erroneously allowed to proceed to trial. Id. Because the trial court‘s denial of the motions to dismiss affected a substantial right of defendants, we hold that their appeal is properly before this Court. We therefore turn to the merits of their appeal.
It is well settled in North Carolina that the State is immune from suit unless it has expressly consented to be sued. Smith v. State, 289 N.C. 303, 309, 222 S.E.2d 412, 417 (1976). This immunity extends not only to suits where the State is a named defendant but also to suits against departments, institutions, and agencies of the State. Jones v. Pitt County Mem. Hospital, 104 N.C. App. 613, 616, 410 S.E.2d 513, 514 (1991).
Our legislature has adopted a limited waiver of the sovereign immunity doctrine for actions involving contract claims against the State and its agencies.
[2] Defendants argue that plaintiff has failed to comply with all the statutory requirements of
(c) A contractor who has completed a contract with a board for construction or repair work and who has not received the amount he claims is due under the contract may submit a verified written claim to the Director of the [OSC] of the Department of Administration for the amount the contractor claims is due. . . .
. . . The Director may allow, deny, or compromise the claim, in whole or in part. The Director shall give the contractor a written statement of the Director‘s decision on the contractor‘s claim.
. . . .
(c1) A contractor who is dissatisfied with the Director‘s decision on a claim submitted under subsection (c) of this section may commence a contested case on the claim under Chapter 150B of the General Statutes. The contested case shall be commenced within 60 days of receiving the Director‘s written statement of the decision.
(d) As to any portion of a claim that is denied by the Director, the contractor may, in lieu of the procedures set forth in the preceding subsection of this section, within six months of receipt of the Director‘s final decision, institute a civil action for the sum he claims to be entitled to under the contract by filing a verified complaint and the issuance of a summons in the Superior Court of Wake County or in the superior court of any county where the work under the contract was performed. The procedure shall be the same as in all civil actions except that all issues shall be tried by the judge, without a jury.
(Emphasis added).
The preceding provisions thus outline a two-tiered process for recovering on contract claims against state agencies. The contractor must first submit its claim to the director of the OSC and await the director‘s decision.
Prior versions of section 143-135.3 only provided one avenue for a dissatisfied contractor to appeal from the decision of the Director of the OSC. That avenue was by filing a claim in superior court.
Rather, through subsections (c1) and (d), our legislature was simply trying to create alternate methods of appeal. By using the phrase “in lieu of,” our legislature is merely prohibiting a contractor from appealing via a contested case hearing, waiting to see whether it likes the decision handed down by the OAH, and then initiating an appeal in superior court as well if it does not like the decision. In other words, a contractor cannot use one avenue of appeal as a “trial run” before proceeding with the other.
Here, plaintiff initially started the contested case hearing process, but plaintiff never availed itself of any of those proceedings. Rather, before any hearing or other action had occurred before the OAH, plaintiff decided to proceed in superior court instead. Plaintiff then immediately withdrew its claim before the OAH. Under these facts, we hold that plaintiff complied with the statutory procedures outlined, and defendants’ sovereign immunity has thereby been statutorily waived.
[3] Next, defendant UNC-CH argues the trial court erred in denying its motions to dismiss for insufficient service of process.
Plaintiff attempted to serve defendant UNC-CH on 15 January 1998. On its civil summons, plaintiff listed the name and address of the party to be served as follows:
Susan Ehringhaus, Esq.
103 S. Bldg., UNC Chapel Hill
Chapel Hill, NC 27599
Ms. Ehringhaus is the duly-appointed process agent for UNC-CH. Defendant UNC-CH contends that, because plaintiff‘s summons is directed to Ms. Ehringhaus (rather than to UNC-CH itself) and nowhere states that Ms. Ehringhaus is being served as an agent of UNC-CH, defendant UNC-CH was never properly served. We fully acknowledge that it would have been better practice for plaintiff to have directed service as follows:
University of North Carolina-Chapel Hill
c/o Susan Ehringhaus, Esq. (Registered Agent)
103 S. Bldg., UNC Chapel Hill
Chapel Hill, NC 27599
Nonetheless, we conclude plaintiff has adequately complied with the service of process requirements outlined in Rule 4(b) and (j).
The long-standing rule in this State is that a summons should direct service upon the defendant itself, not upon its process agent. Wiles v. Construction Co., 295 N.C. 81, 83, 243 S.E.2d 756, 757 (1978). In the context of corporations, however, our Supreme Court has expressed leniency in the application of this rule. Specifically, when the caption listed on the summons, together with the complaint attached to that summons, clearly demonstrate that it is the corporate defendant, not its agent, that is being sued, service is adequate. Id. at 85, 243 S.E.2d at 758. The Wiles Court reasoned:
Since, under Rule 4, a copy of the complaint must be served along with the summons, and the corporate representative who may be served is customarily one of sufficient discretion to know what should be done with legal papers served on him, the possibility of any substantial misunderstanding concerning the identity of the party being sued in this situation is simply unrealistic. Under the circumstances, the spirit certainly, if not the letter, of
N.C.R. Civ. P. 4(b) has been met.
Id. (citation omitted). Although Wiles only dealt with Rule 4 in the context of service upon corporations, we believe Wiles is equally applicable in situations involving service upon state agencies. After all, Rule 4(b) deals with the requirements for summonses in general, not just for corporate defendants. Thus, so long as the caption on the summons, together with the complaint attached to the summons, clearly show that the state agency, as opposed to its registered agent, is the party being sued, the fact that the summons directs service only upon the agent will not invalidate service upon the state agency. Here, both the complaint and the caption on the summons clearly list UNC-CH as a party-defendant. Neither Ms. Ehringhaus nor UNC-CH could have reasonably been misled. We therefore conclude service upon UNC-CH was valid.
Defendant UNC-CH points out that in Wiles, “Registered Agent” was listed next to the name of the person upon whom service was to be directed. From this, defendant argues that plaintiff may not avail itself of the Wiles rule because it nowhere stated on the summons that Ms. Ehringhaus is a process agent. This is simply a distinction without a difference. Wiles focuses upon how the defendant is listed in the caption on the
Affirmed.
Judge JOHN concurs.
Judge McGEE dissents.
Judge McGEE dissenting.
I respectfully dissent. I disagree with the majority opinion‘s broad construction of
I do not disagree with the majority opinion that the General Assembly provided a contractor an alternative appeal option under
The majority opinion emphasizes that plaintiff decided to proceed in superior court “before any hearing or other action had occurred before the OAH.” Nonetheless, this overlooks the fact that the contractor both “commence[d]” its case by filing a petition with the OAH and also “institute[d]” a complaint in superior court, resulting in two actions pending at the same time in two different forums.
Strictly construing