Appeal by plaintiffs from order entered 20 December 2001 by
Judge Howard R. Greeson, Jr., in Montgomery County Superior Court.
Heard in the Court of Appeals 22 January 2003.
Moser, Schmidly, Mason & Roose, by Stephen S. Schmidly and
Jason G. Goins, for plaintiff-appellants.
Womble Carlyle Sandridge & Rice, PLLC, by Burley B. Mitchell,
Jr., and Mark A. Davis, for defendant-appellee Montgomery
County.
MARTIN, Judge.
Plaintiffs brought this action alleging claims for breach of
contract, breach of warranty, and fraud against defendant SMC
Building, Inc. (“SMC”), and for negligence against defendants Lake
Badin Associates, Charles Shuffler, and County of Montgomery
(“County”). In their amended complaint, plaintiffs alleged they
purchased property in the Old North State Club at Uwharrie Point in
Montgomery County from defendant Lake Badin Associates for the
purpose of building a retirement home, and upon the recommendation
of Lake Badin Associates, plaintiffs entered into a contract with
defendant SMC to construct a home on the property. According to
the complaint, plaintiffs were not advised that SMC was notlicensed as a general contractor or that SMC had a history of poor
construction practices.
Plaintiffs alleged that on 9 December 1997, defendant County
issued a building permit and subsequently performed inspections of
the footings and foundation of plaintiffs' home. Although the
footings and foundation failed inspection, plaintiffs alleged the
County's building inspector, Phil Henley, did not document reasons
for the failure or give plaintiffs notice thereof. Plaintiffs also
alleged that in April or May 1998 the County negligently allowed
framing work to begin without determining that the detected flaws
had been repaired so as to meet the requirements of the State
Building Code (“the Code”).
In June 1998, defendant Charles Shuffler, an engineer, also
made inspections and provided the County with a letter stating that
the construction met the Code. Plaintiffs, who did not receive a
copy, alleged that the letter was not appropriately sealed with
Shuffler's professional seal and that the County violated its duty
to plaintiffs by allowing construction to continue without either
obtaining a properly sealed letter from Shuffler or conducting a
re-inspection itself. In a later letter, Shuffler amended his
report to indicate that some defects remained and required repair
to meet the Code. Plaintiffs alleged the County failed to take
steps to ensure that the necessary repair took place.
In October 1998, when the construction was 75 percent
complete, plaintiffs noticed that no permits or inspection reports
were posted on site. Despite assurances from SMC that allinspections and repairs had been performed, plaintiffs inquired
with Henley about the inspection status on 6 November 1998.
According to the complaint, Henley stated that he had accepted the
reports from Shuffler as proof of compliance even though he had no
evidence at that time that the repairs recommended by Shuffler had
been completed. Plaintiffs then met with Shuffler on site on 11
November 1998 to determine whether the repairs had been made, but
Shuffler allegedly made only an exterior visual inspection.
Plaintiffs alleged the County negligently accepted a letter from
Shuffler stating the repairs had been completed even though it knew
a visual inspection was not sufficient to determine compliance and
that further inspections had not been made. Plaintiffs terminated
SMC and hired a new builder to complete construction.
Plaintiffs alleged the County had “specific knowledge” that
SMC had numerous problems and Code violations on other projects in
the past but did not take reasonable action to determine that SMC
constructed plaintiffs' home in compliance with the Code.
Nevertheless, the County issued a certificate of occupancy on 18
March 1999. Upon occupying the residence, plaintiffs discovered
other defects in construction. Although the County claimed to have
performed a final inspection in connection with the certificate of
occupancy, plaintiffs alleged that it conducted either no
inspection or a negligent one. Plaintiffs also alleged defendant
County had purchased liability insurance providing coverage for
plaintiffs' claims.
Defendant County filed an answer in which it denied thematerial allegations of the complaint and asserted affirmative
defenses, including sovereign immunity. Defendant County
thereafter moved for summary judgment, based on sovereign immunity.
Plaintiffs appeal from the order granting the motion for summary
judgment and dismissing their claim against defendant County.
_______________________________
Plaintiffs assign error to the trial court's order granting
summary judgment in favor of defendant Montgomery County.
Plaintiffs assert (1) G.S. § 143-138 and Section 109.1 of Volume 7
of the State Building Code operate as a waiver of sovereign
immunity in this case and (2) the County waived sovereign immunity
through its purchase of liability insurance for the damages
sustained by plaintiffs.
Summary judgment is properly granted “if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that any party is entitled to a
judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c)
(2002).
In deciding a motion for summary judgment, the trial court
must view the evidence presented by the parties in the light most
favorable to the non-movant.
DeWitt v. Eveready Battery Co., 355
N.C. 672, 565 S.E.2d 140 (2002).
The common law doctrine of sovereign immunity generally
protects states and their political subdivisions, such as county
governments, from suit for damages for tort liability based on
performance of governmental functions.
Lovelace v. City of Shelby,351 N.C. 458, 526 S.E.2d 652,
reh'g denied, 352 N.C. 157, 544
S.E.2d 225 (2000). However, under G.S. § 153-435(a), a county may
waive the defense of sovereign immunity through the purchase of
liability insurance. N.C. Gen. Stat. § 153A-435(a) (2002). In
such cases, a county's liability is limited to those damages
covered by the insurance purchased. N.C. Gen. Stat. § 153A-435(b)
(2002). “Waiver of sovereign immunity may not be lightly inferred
and State statutes waiving this immunity, being in derogation of
the sovereign right to immunity, must be strictly construed.”
Guthrie v. N.C. State Ports Authority, 307 N.C. 522, 537-38, 299
S.E.2d 618, 627 (1983).
Plaintiffs first argue that, by adoption of the State Building
Code and specifically § 109.1 of Volume 7, the General Assembly has
waived the sovereign immunity of county governments with respect
to suit for negligent building inspections. In support of this
argument, plaintiffs point to G.S. § 153A-352, which describes as
one of the duties of county inspection departments the task of
enforcing state and local law relating to “the construction of
buildings.” N.C. Gen. Stat. § 153A-352(1) (2002). Further,
plaintiffs note that G.S. § 143-138(e) applies the Code throughout
the State of North Carolina. N.C. Gen. Stat. § 143-138(e) (2002).
Plaintiffs assert specifically that § 109.1 of Volume 7 of the
Code, as applied by these statutes, constitutes an implied waiver
of sovereign immunity. Section 109.1 states in pertinent part:
Relief from personal responsibility. The
building official or the building official's
authorized representative, acting in good
faith and without malice in the discharge ofhis duties shall not render himself personally
liable for any damage that may accrue to
persons or property as a result of any act or
by reason of any act or omission in the
discharge of his duties. Any suit brought
against the building official or employees
because of such an act or omission performed
in the enforcement of this code shall be
defended by the jurisdiction until final
determination and any judgment thereof shall
be assumed by the jurisdiction.
N.C. Bldg. Code, Vol. VII, Residential § 109.1 (1997).
We note initially that Section 109.1 addresses the personal
liability of building officials or their employees or
representatives in suits
brought against the official or employees.
Plaintiffs have not asserted a claim against building inspector
Henley or any other County employee or official. Thus, § 109.1
appears to have no application to the present case. The provision
does not expressly waive sovereign immunity and, in the absence of
a clear indication of a contrary intent by the General Assembly, we
decline to imply such a waiver.
Guthrie,
supra. Other than G.S.
§ 153A-435, plaintiffs have not directed us to, nor have we found,
any statutory authority for waiver of a governmental unit's
sovereign immunity against tort liability or of any intent by the
General Assembly to delegate to the North Carolina Building Code
Council the authority to waive it. Thus, we reject plaintiffs'
argument that § 109.1 operates as a waiver of defendant County's
sovereign immunity.
Plaintiffs also argue the trial court erred in granting
summary judgment to the County because the County waived sovereign
immunity through its purchase of liability insurance providingcoverage for the claims asserted by plaintiffs. The parties agree
that, at all times relevant to this case, the County was a
participant in the North Carolina Counties Liability and Property
Insurance Pool Fund. Subsection A of Section V of the County's
Coverage Contract with the Fund contained the following provision:
2.
Public Officials Coverage.
The Fund will pay on behalf of the Participant
or a Covered Person, or both, all sums which
the Participant or Covered Person shall become
legally obligated to pay as money damages
because of any civil claim or claims brought
against the Participant or a Covered Person
arising out of any Wrongful Act of any
Covered Person acting in his capacity as a
Covered Person(s) of the Participant and
caused by the Covered Person while acting in
his regular course of duty.
Subsection G of the contract lists the following exclusion to the
public officials coverage:
This coverage does not apply to any claim as
follows:
. . .
5. for loss, damage to or destruction of any
tangible property, or the loss of use thereof
by reason of the foregoing; . . . .
The County asserts that this exclusion excludes coverage for
plaintiffs' claim, therefore, the contract does not constitute a
waiver of sovereign immunity.
Doe v. Jenkins, 144 N.C. App. 131,
547 S.E.2d 124 (2001). Citing cases holding that claims for costs
of repair to real property due to negligent construction are not
covered under an insured contractor's property damage coverage,
plaintiffs argue that because their claims are for cost of repair
and construction defects
, they are not claims for “property damage”
and do not fall under the exclusion.
See Hobson Construction Co.,Inc. v. Great American Ins. Co., 71 N.C. App. 586, 322 S.E.2d 632
(1984),
disc. review denied, 313 N.C. 329, 327 S.E.2d 890 (1985);
Reliance Ins. Co. v. Mogavero, 640 F. Supp. 84 (D. Md. 1986).
The cases cited by plaintiffs are inapposite to the present
case and we reject their arguments that claims for damages due to
defective conditions in structures which occur due to negligence on
the part of building inspectors are not claims for “loss, damage
to, or destruction of . . . tangible property, or the loss of use
thereof by reason of the foregoing.”
The meaning of language used in an
insurance contract is a question of law for
the Court, as is the “construction and
application of the policy provisions to the
undisputed facts.” If the language in an
exclusionary clause contained in a policy is
ambiguous, the clause is “to be strictly
construed in favor of coverage.” If such an
exclusion is plainly expressed, it is to be
construed and enforced as expressed.
Daniel v. City of Morganton, 125 N.C. App. 47, 53, 479 S.E.2d 263,
267 (1997) (citations omitted). “Ambiguity in the terms of the
policy is not established simply because the parties contend for
differing meanings to be given to the language. Non-technical
words are to be given their meaning in ordinary speech unless it is
clear that the parties intended the words to have a specific
technical meaning.”
Allstate Ins. Co. v. Chatterton, 135 N.C. App.
92, 95, 518 S.E.2d 814, 816-17 (1999) (citations omitted),
disc.
review denied, 351 N.C. 350, 542 S.E.2d 205 (2000).
The words used in the exclusionary provision at issue here are
non-technical and there is no evidence or assertion that they were
intended to have a special meaning. According to Webster's NewCollegiate Dictionary, “damage” is “loss or harm resulting from
injury to person, property, or reputation.”
Webster's New
Collegiate Dictionary, 5
th Ed. (1977). Likewise, the American
Heritage Dictionary defines “damage” as “[h]arm or injury to
property . . ., resulting in loss of value or the impairment of
usefulness.”
American Heritage Dictionary of the English Language,
4
th Ed. (2000). The disputed exclusionary provision is not
ambiguous and, when construed and enforced according to its plain
meaning, it clearly encompasses the construction defects plaintiffs
allege resulted from the County's negligent building inspection.
We also reject plaintiffs' attempt to avoid the exclusion by
characterizing their alleged injury as something other than
property damage on the basis of the nature of the damages which
they seek to recover. Cost of repair is but one measure of
potential damages for injury to real property, not a basis for
defining the injury itself.
Plow v. Bug Man Exterminators, Inc.,
57 N.C. App. 159, 290 S.E.2d 787,
disc. review denied, 306 N.C.
558, 294 S.E.2d 224 (1982). Moreover, if plaintiffs' claim was not
one for property damage of some kind, as they argue to avoid the
exclusionary provision, it would not have been a claim for which
the County could have waived immunity through the purchase of
insurance. In pertinent part, G.S. § 153A-435 authorizes a county
to waive sovereign immunity by insuring itself against “liability
for . . . negligent . . .
damage to person or
property.” N.C. Gen.
Stat. § 153A-435(a) (2002) (emphasis added). The trial court
correctly determined that defendant County was entitled to judgmentas a matter of law.
Affirmed.
Judges HUDSON and STEELMAN concur.
*** Converted from WordPerfect ***