STEVEN M. FISHER, Guardian Ad Litem for RHONDA CHILDS, a Minor,
Plaintiff,
v
.
THE HOUSING AUTHORITY OF THE CITY OF KINSTON, NORTH CAROLINA,
Defendant.
Donaldson & Black, P.A., by Phyllis Lile-King, for plaintiff-
appellant.
White & Allen, P.A., by Matthew S. Sullivan and Thomas J.
White, III, for defendant-appellee.
HUDSON, Judge.
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Plaintiff Rhonda Childs (Plaintiff), a minor, brought suit
through her guardian ad litem against the Housing Authority of the
City of Kinston (Housing Authority) in 2000. Plaintiff alleged
that she has sustained injuries from exposure to lead paint, due to
the Housing Authority's failure to properly maintain an apartment
building that it owned. The Housing Authority moved for summary
judgment on the basis of sovereign immunity. The trial court
granted the motion. For the reasons set forth below, we reverse
the judgment of the trial court.
Plaintiff is eleven years old. From either 1996 or 1997--the
year is disputed--until 2000, Plaintiff lived with her mother in an
apartment at 3 Mitchell Wooten Court in Kinston, North Carolina,property that is owned and maintained by the Housing Authority.
Plaintiff alleges that during that period, she was exposed to
peeling and chipping lead paint because the Housing Authority
failed to properly maintain and repair the apartment. Plaintiff
alleges that she now suffers from permanent brain damage due to the
lead exposure.
Plaintiff filed this suit in November 2000, alleging that the
Housing Authority violated the North Carolina Residential Rental
Agreements Act, N.C. Gen. Stat. § 42-38 et seq.; that it breached
the implied warranty of habitability; that it breached an express
warranty; that it was negligent; and that it engaged in unfair and
deceptive practices in contravention of N.C. Gen. Stat. § 75-1.1.
Plaintiff sought actual, treble, and punitive damages. The Housing
Authority moved for summary judgment in April 2001, arguing that
sovereign immunity precluded Plaintiff from maintaining this
action. The trial court granted the motion on June 27, 2001.
Plaintiff now appeals.
Plaintiff argues that the trial court erroneously granted
summary judgment in favor of the Housing Authority. She contends
that operating low-income housing is a proprietary, not
governmental, function and, therefore, that the Housing Authority
cannot assert sovereign immunity as a defense in this action. We
agree.
Summary judgment is properly granted when the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuineissue as to any material fact and that any party is entitled to a
judgment as a matter of law. N.C. R. Civ. P. 56(c) (2001). The
burden to demonstrate the absence of a triable issue lies with the
moving party, who must show either (1) that an essential element of
the opposing party's claim is nonexistent or (2) that the opposing
party cannot produce evidence sufficient to support an essential
element of the claim or to overcome an affirmative defense that
would bar its claim. Pierson v. Cumberland County Civic Ctr.
Comm'n, 141 N.C. App. 628, 630, 540 S.E.2d 810, 812 (2000). The
trial court must consider the evidence in the light most favorable
to the nonmoving party and draw all inferences from the evidence
against the moving party and in favor of the nonmovant. Id. at
631, 540 S.E.2d at 812.
In general, the doctrine of sovereign immunity shields
municipalities from liability for torts committed by its agencies
and organizations unless immunity has been waived by the General
Assembly or otherwise. Wood v. North Carolina State Univ., 147
N.C. App. 336, 338, 556 S.E.2d 38, 40 (2001), disc. review denied,
355 N.C. 292, 561 S.E.2d 887 (2002); Herring ex rel. Marshall v.
Winston-Salem/Forsyth County Bd. of Educ., 137 N.C. App. 680, 685,
529 S.E.2d 458, 462, disc. review denied, 352 N.C. 673, 545 S.E.2d
423 (2000). Application of the doctrine depends in part upon
whether the activity out of which the tort arises is properly
characterized as governmental or proprietary in nature. Pierson,
141 N.C. App. at 631, 540 S.E.2d at 813. The doctrine applies when
the entity is being sued for the performance of a governmentalfunction, but it does not apply when the entity is performing a
proprietary function. Herring, 137 N.C. App. at 683, 529 S.E.2d at
461; Messick v. Catawba County, 110 N.C. App. 707, 714, 431 S.E.2d
489, 493, disc. review denied, 334 N.C. 621, 435 S.E.2d 336 (1993).
As our Supreme Court has explained, governmental functions are
those that are discretionary, political, legislative, or public in
nature and performed for the public good [on] behalf of the State.
Britt v. City of Wilmington, 236 N.C. 446, 450, 73 S.E.2d 289, 293
(1952). In contrast, proprietary activities are those that are
commercial or chiefly for the private advantage of the compact
community. Id. The test for distinguishing between the two is
as follows: If the undertaking of the municipality is one in
which only a governmental agency could engage, it is governmental
in nature. It is proprietary and 'private' when any corporation,
individual, or group of individuals could do the same thing. . . .
Id. at 451, 73 S.E.2d at 293; see also Herring, 137 N.C. App. at
683, 529 S.E.2d at 461.
In applying this test, our courts have analyzed whether the
act or function involves special corporate benefit or pecuniary
profit that inures to the municipality. Hickman v. Fuqua, 108 N.C.
App. 80, 83-84, 422 S.E.2d 449, 451 (1992), disc. review denied,
333 N.C. 462, 427 S.E.2d 621 (1993); see also Sides v. Cabarrus
Mem'l Hosp., Inc., 287 N.C. 14, 22, 213 S.E.2d 297, 302 (1975)
(noting that an analysis of the various activities that this Court
has held to be proprietary in nature reveals that they involved amonetary charge of some type). It is not necessary, however, that
the public body actually make a profit. Sides, 287 N.C. at 23, 213
S.E.2d at 303; Pierson, 141 N.C. App. at 632, 540 S.E.2d at 813.
The main issue remains, under the test set forth in Britt, whether
an undertaking is one traditionally provided by the local
governmental units. Hickman, 108 N.C. App. at 84, 422 S.E.2d at
452 (citation and quotation marks omitted).
Using these tests, we conclude here that the Housing
Authority's activities in owning, operating, and maintaining the
low-income housing occupied by Plaintiff is a proprietary function.
Managing low-income housing is not an enterprise in which only
governmental entities can engage. Any individual or corporation
can--and, in fact, often does--own and operate low-income housing.
Providing rental housing does not traditionally fall within the
government's purview.
In addition, the Housing Authority in most cases collects
rents from its tenants. Although the Housing Authority may not
make a profit, our cases require only that a monetary charge of
some type be involved. Sides, 287 N.C. at 22, 213 S.E.2d at 302.
Two prior decisions further compel our conclusion that
operating low-income housing is a proprietary function. In Carter
v. City of Greensboro, 249 N.C. 328, 106 S.E.2d 564
(1959), the
City of Greensboro entered into a contract with the federal
government that required the city to manage and maintain public
housing units. The plaintiff, who lived in one of the units, sued
the city after a trash fire was left unattended and caused severeinjuries to the plaintiff. Id. at 329, 106 S.E.2d at 565-66.
The Supreme Court in Carter noted that the defendant made
three arguments on appeal, the second of which was: (2) the
defendant is immune from liability for negligence in this case in
that the injury occurred incident to the performance of a necessary
governmental function. 249 N.C. at 330, 106 S.E.2d at 566. To
resolve the issue, the Court directly addressed whether the
defendant acted in its governmental or in its proprietary
capacity. Id. at 332-33, 106 S.E.2d at 568.
In the Court's view, the duties the city assumed and the
purposes it sought to accomplish, the special and limited class of
tenants who could qualify for occupancy, and the substantial
financial returns the city received under the contract placed the
city's management of the project in the category of proprietary
activity. Id. at 333, 106 S.E.2d at 568-69. The same holds true
here.
The Housing Authority contends that Carter is not controlling.
It argues that Carter is not a housing authority case because the
public entity at issue was a city and not a housing authority
acting pursuant to statute. The Housing Authority also submits
that Carter is distinguishable because the city in Carter was
acting pursuant to a contract with the federal government, while
the Housing Authority in this case had no such contractual
obligation.
We do not agree that these factual distinctions affect the
analysis. That the Housing Authority was acting pursuant tostatute does not automatically render its actions governmental and
is not relevant to our analysis. Much activity by a housing
authority is regulated by statute, as is much activity by a
municipality. Similarly, the fact that the city in Carter was
acting pursuant to a contract with the federal government did not
affect the Supreme Court's decision on this issue and does not
affect ours.
More recently, this Court addressed a very similar issue, in
Jackson v. Housing Authority of the City of High Point, 73 N.C.
App. 363, 326 S.E.2d 295, disc. review denied, 313 N.C. 603, 330
S.E.2d 610 (1985). There, the plaintiff's estate sued the
defendant Housing Authority after the plaintiff, a resident of a
housing project that the Housing Authority owned and operated, died
from carbon monoxide poisoning. The estate alleged that the
Housing Authority was negligent in failing to maintain the heater
and flue in the plaintiff's unit, which had become clogged and had
caused the plaintiff's death. Id. at 364-66, 326 S.E.2d at 296-97.
The Housing Authority argues that Jackson is inapposite
because the parties did not raise immunity as an issue. However,
this Court did. It noted the following: [T]he court did not
specify what the perceived weakness in plaintiff's case was and we
will briefly address the possibilities that the record suggests.
Jackson, 73 N.C. App. at 367, 326 S.E.2d at 297-98. As the Court
explained, [c]ertainly the claim is not barred because of
defendant's status as an arm of the City of High Point in operatinga low income housing project; such activities are proprietary,
rather than governmental, and municipalities are legally
accountable therefor on the same basis as other defendants. Id.
at 367, 326 S.E.2d at 298 (citing, inter alia, Carter). We find
this analysis logical, and we hold accordingly. The parties also
dispute whether the Housing Authority had purchased insurance for
the unit in which Plaintiff resided and, if so, what that policy
covered and excluded. Because we hold that the Housing Authority
was engaging in a proprietary function, and that sovereign immunity
did not apply, we need not reach these remaining questions.
We conclude that the Housing Authority, by owning and
operating low-income housing, engaged in a proprietary function.
Accordingly, it is not protected by the doctrine of sovereign
immunity. We reverse the decision of the trial court and remand
for further proceedings.
Reversed.
Judges TIMMONS-GOODSON and CAMPBELL concur.