KAWAI AMERICA CORPORATION and PIEDMONT MUSIC, INC. d/b/a NORTH
CAROLINA ARTISAN SELECT,
Plaintiffs,
v
.
UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL,
Defendant.
Appeal by defendant from order entered 18 June 2001 by Judge
Leon Stanback in Orange County Superior Court. Heard in the Court
of Appeals 4 June 2002.
Attorney General Roy Cooper, by Assistant Attorney General
Celia Grasty Lata, for defendant-appellant.
Horton, Sloan & Gerber, P.L.L.C., by Norman L. Sloan, for
plaintiff-appellees.
HUDSON, Judge.
The University of North Carolina at Chapel Hill (the
University) appeals an order denying its motion to dismiss
plaintiffs' claims for conversion and damage to property on grounds
of sovereign immunity, lack of personal and subject matter
jurisdiction, and failure to state a claim upon which relief can be
granted. For the reasons discussed below, we reverse in part,
affirm in part, and remand.
The facts relevant to this appeal are not in dispute.
Plaintiff Piedmont Music, Inc., (Piedmont) is a dealer of pianos
manufactured by plaintiff Kawai America Corporation (Kawai). On
or about 16 February 1995, plaintiffs entered into an agreement
with the University, under which Piedmont through Kawai was toprovide pianos to the University for use in its Department of
Music, in exchange for pianos owned by the University that were in
need of repair. According to the agreement, Kawai through Piedmont
could loan additional pianos to the University, and Piedmont could
offer for sale any pianos it had placed with the University to
other customers, provided that Piedmont replaced any pianos sold
with pianos of comparable model and quality. In the event of
termination of the agreement, pianos that Piedmont had provided in
exchange for pianos owned by the University would remain the
property of the University, but pianos that were loaned to the
University would be returned to Piedmont at Piedmont's expense.
At some point prior to the initiation of this action, the
parties decided to terminate the agreement. A dispute then arose
over the return of the pianos. The parties agreed that certain
pianos were to be returned to plaintiffs, and plaintiffs received
these pianos. Plaintiffs contend, however, that the pianos were
returned to them in damaged condition and that they are entitled to
compensation for the damage under the terms of the agreement.
Plaintiffs further contend that there are fourteen additional
pianos that they did not receive, to which they are entitled under
the agreement.
On 26 February 2001, plaintiffs filed a complaint against the
University in Orange County Superior Court. The complaint alleged
four causes of action: (1) breach of contract; (2) in the
alternative, conversion; (3) damage to property; and (4) claim and
delivery. Subsequently, plaintiffs voluntarily dismissed withoutprejudice the fourth cause of action pursuant to Rule 41 of the
North Carolina Rules of Civil Procedure. The University moved to
dismiss the claims for conversion and damage to property, asserting
sovereign immunity, lack of personal and subject matter
jurisdiction, and failure to state a claim upon which relief can be
granted. The court denied the motion to dismiss, and the
University appeals.
This Court has repeatedly held that appeals raising issues of
governmental or sovereign immunity affect a substantial right
sufficient to warrant immediate appellate review. Price v. Davis,
132 N.C. App. 556, 558-59, 512 S.E.2d 783, 785 (1999). Therefore,
although interlocutory orders such as a denial of a motion to
dismiss are not generally immediately appealable, this appeal is
properly before us. See Vest v. Easley, 145 N.C. App. 70, 72, 549
S.E.2d 568, 571 (2001).
Absent consent or waiver, an action cannot be maintained
against the State of North Carolina or an agency thereof. Guthrie
v. State Ports Authority, 307 N.C. 522, 534, 299 S.E.2d 618, 625
(1983) (emphasis omitted). Unless waived, the immunity provided
by the doctrine [of sovereign immunity] is absolute and
unqualified. Price, 132 N.C. App. at 559, 512 S.E.2d at 786
(internal quotation marks omitted). The University is a state
agency to which the doctrine of sovereign immunity applies. See
Truesdale v. University of North Carolina, 91 N.C. App. 186, 192,
371 S.E.2d 503, 506-07 (1988), appeal dismissed and disc. review
denied, 323 N.C. 706, 377 S.E.2d 229, cert. denied, 493 U.S. 808,107 L.Ed. 2d 19 (1989), overruled on other grounds by Corum v.
University of North Carolina, 330 N.C. 761, 413 S.E.2d 276, cert.
denied sub nom. Durham v. Corum, 506 U.S. 985, 121 L. Ed. 2d 431
(1992). Therefore, unless the University consented to suit or
waived its immunity regarding these claims, the claims are barred.
The State may statutorily waive sovereign immunity, but may
then be sued only in the manner and upon the terms and conditions
prescribed. Alliance Co. v. State Hospital, 241 N.C. 329, 332, 85
S.E.2d 386, 389 (1955) (internal quotation marks omitted).
Statutes which authorize suit against the State, being in
derogation of the sovereign right to immunity, must be strictly
construed. Guthrie, 307 N.C. at 538, 299 S.E.2d at 627. One such
statute, the State Tort Claims Act (the Act), provides in
relevant part that the Industrial Commission may award damages in
claims based on the negligence of any officer, employee,
involuntary servant or agent of the State while acting within the
scope of his office, employment, service, agency or authority,
under circumstances where the State of North Carolina, if a private
person, would be liable to the claimant in accordance with the laws
of North Carolina. N.C. Gen. Stat. 143-291(a) (2001). The Act
thus waives the sovereign immunity of the State with respect to
suits brought as a result of negligent acts committed by its
employees in the course of their employment. Teachy v. Coble
Dairies, Inc., 306 N.C. 324, 329, 293 S.E.2d 182, 185 (1982). The
Act also establishes that the forum for such suits is the
Industrial Commission, rather than the State courts. See id. This Court has stated that:
Suits against the State, its agencies and its officers
for alleged tortious acts can be maintained only to the
extent authorized by the Tort Claims Act, and that Act
authorizes recovery only for negligent torts.
Intentional torts committed by agents and officers of the
State are not compensable under the Tort Claims Act.
Wojsko v. State, 47 N.C. App. 605, 610, 267 S.E.2d 708, 711
(citation omitted), appeal dismissed and disc. review denied, 301
N.C. 239, 283 S.E.2d 136 (1980); see also Frazier v. Murray, 135
N.C. App. 43, 48, 519 S.E.2d 525, 528 (1999) (The Tort Claims Act
does not give the Industrial Commission jurisdiction to award
damages based on intentional acts.), appeal dismissed, 351 N.C.
354, 542 S.E.2d 209 (2000). Our courts have clearly held that any
modification or waiver of the doctrine of sovereign immunity must
come from the General Assembly. See Blackwelder v. City of
Winston-Salem, 332 N.C. 319, 324, 420 S.E.2d 432, 435 (1992) (We
feel that any change in this doctrine [of sovereign immunity]
should come from the General Assembly.); Guthrie, 307 N.C. at 534,
299 S.E.2d at 625 (It is for the General Assembly to determine
when and under what circumstances the State may be sued. (emphasis
and internal quotation marks omitted)).
We note that this appeal concerns only the claims for
conversion and damage to property. The University did not seek to
dismiss the claim against it for breach of contract, correctly
noting that the doctrine of sovereign immunity does not bar such a
suit. [W]henever the State of North Carolina, through its
authorized officers and agencies, enters into a valid contract, the
State implicitly consents to be sued for damages on the contract inthe event it breaches the contract. Smith v. State, 289 N.C. 303,
320, 222 S.E.2d 412, 423-24 (1976). Our Supreme Court emphasized,
however, that [t]his decision has no application to the doctrine
of sovereign immunity as it relates to the State's liability for
torts. Id. at 322, 222 S.E.2d at 424.
If plaintiffs' remaining claims were based on negligence, they
could be pursued in the Industrial Commission but not in superior
court. Conversion, however, is an intentional tort. See
Restatement (Second) of Torts § 222A(1) (1965) (Conversion is an
intentional exercise of dominion or control over a chattel
. . . .); see also Lewis v. Leasing Corp., 36 N.C. App. 556, 560,
244 S.E.2d 706, 709 (1978) (holding that an indemnity contract did
not relieve parties from liability for the intentional tort of
conversion). The State has not waived sovereign immunity for
intentional torts by action of the Tort Claims Act or other
statute. See Wojsko, 47 N.C. App. at 610, 267 S.E.2d at 711. The
plaintiffs' claim for conversion is therefore barred by the
doctrine of sovereign immunity.
We are not persuaded by plaintiffs' argument that the superior
court could obtain jurisdiction over the conversion claim through
the doctrine of pendent jurisdiction. Plaintiffs cite no legal
authority in support of their novel theory that pendent
jurisdiction can be used to waive sovereign immunity. Our Supreme
Court has stated that only the General Assembly has the authority
to modify the doctrine of sovereign immunity, and it has not done
so in this manner. See Blackwelder, 332 N.C. at 324, 420 S.E.2d at435; Guthrie, 307 N.C. at 534, 299 S.E.2d at 625. For the same
reason, we reject plaintiffs' argument that the superior court
should take jurisdiction over the conversion claim in the interest
of judicial economy.
Although a claim for damage to property ordinarily may be
characterized as either an intentional tort or negligence, see
Murray v. Insurance Co., 51 N.C. App. 10, 14, 275 S.E.2d 195, 198
(1981); Restatement (Second) of Torts §§ 497, 499 (1965);
Restatement (Second) of Torts § 871 (1979), here, the claim is
neither. The complaint alleges that the University is responsible
for paying for damage to pianos, by specific reference to the
contract. In paragraph 26, plaintiffs reallege paragraphs 1
through 17, which are contained in the breach of contract
allegations. In paragraph 27, the complaint alleges that [t]he
Agreement indicates that 'University shall bear the risk of loss
for the pianos while pianos are in University's possession.'
Because [u]pon information and belief, the pianos . . . were
damaged while in the possession and under control of the
University, the plaintiffs requested damages. There are no
allegations of negligent or intentional tortious behavior by the
University, but rather references to liability stemming from the
Agreement. Thus, as a claim based on allegations of contract,
this claim is not barred by the doctrine of sovereign immunity.
See Smith, 289 N.C. at 320, 222 S.E.2d at 423-24.
In conclusion, we hold that the trial court erred by denying
defendant's motion to dismiss the claim of conversion on grounds ofsovereign immunity, but not by denying the motion to dismiss the
claim for damage to property, which we believe arises from the
contract allegations. We therefore reverse the trial court's
denial of the University's motion to dismiss the conversion claim
and affirm the denial of the University's motion to dismiss the
damage to property claim. Thus, we remand for entry of an order
dismissing the conversion claim and for further proceedings in the
breach of contract claim, which was not part of this appeal, and in
the damage to property claim.
Reversed in part, affirmed in part, and remanded.
Judge BIGGS concurs.
Judge GREENE concurs in a separate opinion.
GREENE, Judge, concurring.
I fully concur in the majority opinion but write separately to
clarify the issue of plaintiffs' damage to property claim.
While plaintiffs' damage to property claim seeks recovery
for damage done to the pianos while in the University's possession
and is based on the contract provision wherein the University
assumed the risk of any loss to the pianos, their breach of
contract claim also seeks damages; but these damages are for
breach of the contract provision holding the University responsible
for the wrongful withholding of the pianos. As the two claims
represent separate issues arising under the contract, the
University's sovereign immunity defense does not apply to either.
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