Our courts have held that the defense of sovereign immunity is
a Rule 12(b)(1) defense.
Teachy v. Coble Dairies,
Inc., 306 N.C.
324, 328, 293 S.E.2d 182, 184 (1982). Our courts have also held
that the defense of sovereign immunity is a matter of personal
jurisdiction that would fall under Rule 12(b)(2).
See Zimmer v.
North Carolina Dept. of Transp., 87 N.C. App. 132, 133-34, 360
S.E.2d 115, 116 (1987). Here, the Department moved to dismiss
plaintiff's complaint based upon sovereign immunity under Rules12(b)(1), 12(b)(2) and 12(b)(6).
It is an established principle of jurisprudence, resting on
grounds of sound public policy, that a state may not be sued in its
own courts or elsewhere unless it has consented by statute to be
sued or has otherwise waived its immunity from suit.
Smith v.
Hefner, 235 N.C. 1, 6, 68 S.E. 2d 783, 787 (1951). By application
of this principle, a subordinate division of the state or an agency
exercising statutory governmental functions may be sued only when
and as authorized by statute.
Id. Waiver of sovereign immunity
may not be lightly inferred and statutes waiving this immunity,
being in derogation of the sovereign right to immunity, must be
strictly construed.
Guthrie v. State Ports Authority, 307 N.C.
522, 537-38, 299 S.E. 2d 618, 627 (1983).
In
Smith v. State, 289 N.C. 303, 222 S.E.2d 412 (1976), our
Supreme Court held that whenever 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 in the event it breaches the contract.
Id. at 310,
222 S.E.2d at 418.
Moreover, the General Assembly enacted N.C. Gen. Stat. §
136-29 to provide a statutory ground that allows a contractor to
bring suit against the Department of Transportation.
See In re
Huyck Corp. v. Mangum, Inc., 309 N.C. 788, 790-91, 309 S.E. 2d 183,
185-86 (1983). That statute, which by its mandate is a part of
every contract for State highway construction between the
Department of Transportation and a contractor, provides as follows: (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 for the
amount the contractor claims is due. The
claim shall be submitted within 60 days after
the contractor receives his final statement
from the Department and shall state the
factual basis for the claim.
The State Highway Administrator shall
investigate a submitted claim within 90 days
of receiving the claim or within any longer
time period agreed to by the State Highway
Administrator and the contractor. The
contractor may appear before the State Highway
Administrator, either in person or through
counsel, to present facts and arguments in
support of his claim. The State Highway
Administrator may allow, deny, or compromise
the claim, in whole or in part. The State
Highway Administrator shall give the
contractor a written statement of the State
Highway Administrator's decision on the
contractor's claim.
(b) A contractor who is dissatisfied with the
State Highway Administrator's decision on the
contractor's claim 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
State Highway Administrator's written
statement of the decision.
(c) As to any portion of a claim that is
denied by the State Highway Administrator, the
contractor may, in lieu of the procedures set
forth in subsection (b) of this section,
within six months of receipt of the State
Highway Administrator'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.
(d) The provisions of this section shall be
part of every contract for State highway
construction between the Department of
Transportation and a contractor. A provision
in a contract that conflicts with this section
is invalid.
G.S. . 136-29 (2001). We believe this statute clearly waives the
Department's sovereign immunity. Thus, if Battle Ridge has fully
complied with the terms of G.S. . 136-29, and the claims arise
“under the contract,” then the court's dismissal was improper.
In
Teer Co. v. Highway Commission, 265 N.C. 1, 143 S.E.2d 247
(1965), a contractor who performed work under contract with the
State Highway Commission (now the Department of Transportation),
filed suit under G.S. . 136-29 seeking additional compensation from
the Commission after the completion of the subject work of the
contract. In deciding whether the contractor was entitled to seek
such additional compensation, our Supreme Court, referring to G.S.
. 136-29, noted that “recovery, if any, must be within the terms
and framework of the provisions of the contract . . . and not
otherwise.”
Id. at 16, 143 S.E.2d at 258. In a later appeal, this
Court dismissed the contractor's
quantum meruit claims because they
did not arise under the terms and framework of the contract.
Teer
Co. v. Highway Comm., 4 N.C. App. 126, 166 S.E.2d 705 (1969).
In
Davidson and Jones, Inc. v. N. C. Dept. of Administration,
315 N.C. 144, 337 S.E.2d 463 (1985), our Supreme Court,
interpreting a provision of Chapter 143 of our General Statutes
with nearly identical language to G.S. . 136-29, noted that:
We interpret the statute as requiring simply
that the contractor's claim arise out of a
breach of the contract or some provisionthereof so as to entitle the contractor to
some relief.
Id. at 149, 337 S.E.2d at 466. Thus, our Supreme Court held that
the contractor, who like the plaintiff here was seeking additional
compensation for duration-related costs incurred as the direct
result of an unexpected overrun exceeding 400 percent in the amount
of rock to be excavated under a construction contract with the
state department of administration, had a remedy for breach of
contract even in the absence of a specific contractual term
allowing such relief.
Id. While we recognize that Chapter 143
specifically excludes applicability to the Department of
Transportation in the construction of roads, we can see no reason
why the interpretation of the phrase “under the contract” should or
would be any different under the two statutes.
Turning to Battle Ridge's claims for breach of warranty, this
Court has previously held that where a contractor has complied with
plans and specifications prepared by the owner, the contractor will
not be liable for consequences in defects in those plans and
specifications.
See Gilbert Engineering Co. v. City of Asheville,
74 N.C. App. 350, 362-63, 328 S.E.2d 849, 857
, disc.
review denied,
314 N.C. 329, 333 S.E.2d 485 (1985). Indeed, we have held that the
plans and specifications constitute “positive representations upon
which [a contractor is] justified in relying.”
Lowder, Inc. v.
Highway Comm., 26 N.C. App. 622, 638, 217 S.E.2d 682, 692,
cert.
denied, 288 N.C. 393, 218 S.E.2d 467 (1975). In
Lowder, therefore,
we recognized that “a contracting agency which furnishes inaccurate
information as a basis for bids may be liable on a breach ofwarranty theory,” and that “[i]t is simply unfair to bar recovery
to contractors who are misled by inaccurate plans and submit bids
lower than they might otherwise have submitted.”
Id. at 638-39,
217 S.E.2d at 693. Thus, a claim for relief based upon a breach of
an implied warranty of plans and specifications arises under the
contract and, if sufficiently pled, will withstand a 12(b)(6)
motion to dismiss on grounds of immunity.
In ruling on a motion to dismiss brought under Rule 12(b)(6),
“[t]he question for the court is whether, as a matter of law, the
allegations of the complaint, treated as true, are sufficient to
state a claim upon which relief may be granted under some legal
theory, whether properly labeled or not.”
Harris v. NCNB, 85 N.C.
App. 669, 670, 355 S.E.2d 838, 840 (1987). Additionally, “a
complaint should not be dismissed for insufficiency
unless it
appears to a certainty that plaintiff is entitled to no relief
under any state of facts which could be proved in support of the
claim.”
Id. at 671, 355 S.E.2d at 840 (citations omitted).
Applying that standard here, we find that plaintiff's
complaint expressly brings forth five claims for relief. Count I
of each claim alleges that Battle Ridge is entitled to an
adjustment in compensation either under an “extra work” theory or
under a Department-caused work delay theory. Alternatively, Count
II of each claim alleges breach of an implied warranty of plans and
specifications for which Battle Ridge is entitled to compensation.
Based upon
Teer,
Lowder, and
Davidson, we hold these claims to be
cognizable causes of action under North Carolina law, which weresufficiently plead to withstand a 12(b)(6) motion to dismiss.
Thus, we reverse the superior court and remand for further
proceedings.
Reversed and remanded.
Judges WYNN and CALABRIA concur.
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