NO. COA02-1182

NORTH CAROLINA COURT OF APPEALS

Filed: 05 August 2003

    Appeal by defendant from judgment entered 14 June 2002 by Judge James Floyd Ammons, Jr. in Cumberland County Superior Court. Heard in the Court of Appeals 21 May 2003.

    Gerald F. Meek for plaintiff-appellee.

    Grainger R. Barrett for defendant-appellant.

    STEELMAN, Judge.

    Defendant, Cumberland County, appeals a trial court order denying its motion to dismiss. For the reasons discussed herein, we affirm.
    The Cumberland County Area Program (Area Program) is a state entity that plans, budgets, maintains, implements and monitors community-based mental health, developmental and substance abuse services within the Cumberland County area. In 1997, defendantentered into an agreement with the Area Program and the North Carolina Division of Mental Health, Developmental Disabilities and Substance Abuse Services to budget no less than $5,303,891.00 annually to the Area Program. Under the agreement, defendant agreed to maintain a reserve fund based on revenues from the Area Program.
    In 2002, however, defendant budgeted only $4,456,053.00 to the Area Program. The resulting $847,838 reduction forced the Area Program to transfer $322,166.00 from its reserve fund to cover its operations and ongoing programs. As of 1 January 2002, 795 Cumberland County residents were on waiting lists for mental health treatment.
    Plaintiff is a non-profit corporation whose members are either recipients of mental health services in Cumberland County or family members of such recipients.
    Plaintiff filed a complaint on 25 January 2002, alleging defendant breached the 1997 agreement, violated N.C. Gen. Stat. § 122C-115, and denied residents adequate mental health treatment under N.C. Const. Art. I, § 35. Plaintiff requested specific performance and a declaratory judgment.
    On 28 February 2002, defendant filed a motion to dismiss based on Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the North Carolina Rules of Civil Procedure. The motion contended that: (a)plaintiff's claims were barred by sovereign immunity; (b) plaintiff was not a third-party beneficiary to the agreement; (c) there was no private right of action; (d) a statutory remedy existed; and (e) plaintiff lacked standing. On 14 June 2002, defendant's motion to dismiss was denied. Defendant appeals.
    We note that this appeal would normally be considered interlocutory as it directs some further proceeding preliminary to a final decree and the case remains in the trial court. Blackwelder v. N. C. Dept. of Human Resources, 60 N.C. App. 331, 299 S.E.2d 777 (1983). However, an interlocutory order may be heard in appellate courts if it affects a substantial right. See N.C. Gen. Stat. § 1-277(a) (1999). 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) (citations omitted). Accordingly, defendant's appeal is properly before this Court.
    Defendant presents only two assignments of error to this Court: (1) the trial court erred in failing to grant its motion to dismiss plaintiff's contractual claim based on sovereign immunity; and (2) the trial court erred in denying its motion to dismiss plaintiff's statutory claim based on sovereign immunity.
    In its first assignment of error, defendant argues the trialcourt erred in failing to grant its motion to dismiss plaintiff's contractual claim based on sovereign immunity. We disagree.
    In considering a Rule 12(b)(6) motion to dismiss, the trial court must determine whether the factual allegations in the complaint state a claim for relief. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970). A plaintiff must state the substantive elements of a legally cognizable claim in order to survive a Rule 12(b)(6) motion to dismiss. Booher v. Frue, 86 N.C. App. 390, 392, 358 S.E.2d 127, 128 (1987), aff'd, 321 N.C. 590, 364 S.E.2d 141 (1988) (citations omitted).
    “[W]hen the State enters into a valid contract, it waives its sovereign immunity so that it may be sued for breach of the contract.” Able Outdoor v. Harrelson, 341 N.C. 167, 172, 459 S.E.2d 626, 629 (1995) (citing Smith v. State, 289 N.C. 303, 222 S.E.2d 412 (1976)). Thus, if the contract is valid, sovereign immunity is not a defense to a breach of contract claim. Paul L. Whitfield, P.A. v. Gilchrist, 348 N.C. 39, 497 S.E.2d 412 (1998).
    In this case, plaintiff alleged that there was “a valid and enforceable agreement.” A copy of the agreement, executed by the Cumberland County Manager, was attached to the complaint. These allegations are sufficient to withstand a motion to dismiss pursuant to Rule 12(b)(6). This assignment of error is without merit.    In its second assignment of error, defendant argues the trial court erred in denying its motion to dismiss plaintiff's statutory claim. We disagree.
    A county is required to provide mental health, developmental disabilities and substance abuse services pursuant to section 122C- 115(a) of the North Carolina General Statutes. A county must also appropriate funds for the support of these programs. N.C. Gen. Stat. § 122C-115(b) (2001).
Except as otherwise provided in this subsection, counties shall not reduce county appropriations and expenditures for current operations and ongoing programs and services of area authorities or county programs because of the availability of State-allocated funds, fees, capitation amounts, or fund balance to the area authority. Counties may reduce county appropriations by the amount previously appropriated by the county for one-time, nonrecurring special needs of the area authority or county program.

N.C. Gen. Stat. § 122C-115(d) (2001) (effective until 1 July 2002).
    The second count in plaintiff's complaint alleges that defendant violated the provisions of this statute and seeks an order directing that defendant comply with the statute. Defendant asserts that this claim is barred by sovereign immunity.
    In Charlotte-Mecklenburg Hosp. Auth. v. North Carolina Indus. Comm'n, 336 N.C. 200, 208, 443 S.E.2d 716, 721 (1994), our SupremeCourt held that “the doctrine of sovereign immunity does not authorize the dismissal of plaintiff hospitals' complaint alleging that defendant Commission and its members, in excess of their statutory authority, adopted an invalid regulation.”
    Here, plaintiff's second count has alleged a violation of section 122C-115(d). These allegations are sufficient to withstand a motion to dismiss pursuant to Rule 12(b)(6). This assignment of error is without merit.
    AFFIRMED.
    Judges WYNN and HUDSON concur.
    Report per Rule 30(e).

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