Appeal by plaintiff from order dated 9 September 2004 by Judge
James U. Downs in Superior Court, Swain County. Heard in the Court
of Appeals 21 September 2005.
McLean Law Firm, P.A., by Russell L. McLean, III for
plaintiff-appellant.
Attorney General Roy Cooper, by Special Deputy Attorney
General Joseph E. Herrin, for defendant-appellee North
Carolina Department of Transportation.
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Elizabeth
A. Martineau and Taurus E. Becton; and David L. Nash, for
defendant-appellee Eastern Band of Cherokee Indians.
McGEE, Judge.
The North Carolina Department of Transportation (NCDOT) and
the Eastern Band of Cherokee Indians (the EBCI) (collectively,
defendants) entered into a construction agreement on 11 June 1999
to make improvements to U.S. Highway 19 from Cherokee, North
Carolina, to Maggie Valley, North Carolina (Highway 19 project).
The Highway 19 project was designated as a "high priority project"
by the United States Congress, under 23 U.S.C. § 117, commonly
known as the "High Priority Projects Program." Designated as High
Priority Project number 1303 under the federal statute, the Highway
19 project was to "upgrade and improve U.S. 19 from Maggie Valley
to Cherokee." 23 U.S.C. § 117. Congress allocated fifteen million
dollars for the project, which constituted eighty percent of thetotal cost of construction. Under the terms of defendants'
construction agreement, the EBCI was responsible for the remaining
twenty percent, or three million dollars, of the cost. The EBCI
was also responsible for administering the construction of the
Highway 19 project and was authorized to hire contractors for the
construction.
Welch Contracting, Inc. (plaintiff) filed a complaint against
defendants on 16 February 2004, alleging plaintiff had been hired
by EBCI as a sub-contractor pursuant to defendants' construction
agreement. Plaintiff alleged wrongdoing by defendants under two
contracts: (1) defendants' construction agreement and (2) an
alleged contract between plaintiff and the EBCI. Plaintiff, a
minority-owned North Carolina corporation, claimed it entered into
a thirty-month contract with the EBCI, through an authorized agent,
to perform work on the Highway 19 project. Plaintiff did not
include a copy of said contract in either its complaint or the
record on appeal. Plaintiff alleged in its complaint, inter alia,
that NCDOT failed to supervise the EBCI as required by defendants'
construction agreement, and that NCDOT failed to adhere to federal
and state minority business policies. Plaintiff alleged that the
EBCI breached its contract with plaintiff by forcing plaintiff to
change the scope and nature of its work, and later by terminating
plaintiff without just cause, right or provocation. Plaintiff
sought recovery from NCDOT for incidental and consequential damages
incurred as a result of NCDOT's actions under defendants'
construction agreement. Plaintiff sought recovery from the EBCIfor breach of the alleged contract between plaintiff and the EBCI.
Defendants filed a motion to dismiss pursuant to North
Carolina Rules of Civil Procedure 12(b)(1), (b)(2), (b)(6), and
(h)(3). N.C. Gen. Stat. § 1A-1, Rule 12 (2003). Thereafter,
plaintiff filed an amended complaint, which contained the
additional allegation that NCDOT failed to follow state bidding
requirements. NCDOT amended its motion to dismiss to include
plaintiff's amended complaint, as well as the original complaint.
Defendants' motion to dismiss was heard by the trial court on
20 May 2004. The hearing was heard out-of-county and out-of-
session by the consent of the parties. The trial court allowed
defendants' motion to dismiss under N.C.R. Civ. P. 12(b)(1) and
(b)(6). The trial court held that it lacked subject matter
jurisdiction over the case, and, as a result, the complaint failed
to state a claim upon which relief could be granted. Plaintiff
appeals.
____________________
[1] Plaintiff's only assignment of error is that the trial
court erred as a matter of law "in granting summary judgment" for
defendants. However, the order entered by the trial court did not,
in fact, grant summary judgment. Rather, the order granted a
motion to dismiss under Rules 12(b)(1) and (b)(6) of the North
Carolina Rules of Civil Procedure, on the grounds that the trial
court lacked subject matter jurisdiction and that consequently the
complaint failed to state a claim upon which relief could be
granted. Plaintiff's assignment of error refers to an incorrectground for dismissal, summary judgment. However, plaintiff's brief
contains arguments on the correct ground, lack of subject matter
jurisdiction.
Under Rule 10 of the North Carolina Rules of Appellate
Procedure:
(a) . . .[T]he scope of review on appeal is
confined to a consideration of those
assignments of error set out in the record on
appeal in accordance with this Rule 10.
(c) (1) . . . A listing of the assignments of
error upon which an appeal is predicated shall
be stated at the conclusion of the record on
appeal[.] . . . Each assignment of error
shall, so far as practicable, be confined to a
single issue of law; and shall state plainly,
concisely and without argumentation the legal
basis upon which error is assigned.
N.C.R. App. P. 10(a) and (c)(1).
Under Rule 28 of the North Carolina Rules of Appellate
Procedure,
(b) (6) . . . Immediately following each
question [presented] shall be a reference to
the assignments of error pertinent to the
question, identified by their numbers and by
the pages at which they appear in the printed
record on appeal. Assignments of error not
set out in the appellant's brief, or in
support of which no reason or argument is
stated or authority cited, will be taken as
abandoned.
N.C.R. App. P. 28(b)(6).
Plaintiff's brief is in violation of Rules 10 and 28 in that
the assignment of error in the record on appeal does not correspond
to the question presented in plaintiff's brief. Our Supreme Court
has held that "[t]he North Carolina Rules of Appellate Procedure
are mandatory and 'failure to follow these rules will subject anappeal to dismissal.'"
Viar v. North Carolina Dept. of Transp.,
359 N.C. 400, 401, 610 S.E.2d 360, 360 (2005) (quoting
Steingress
v. Steingress, 350 N.C. 64, 65, 511 S.E.2d 298, 299 (1999)).
The
rationale underlying the
Viar decision, however, was that
"otherwise, the Rules become meaningless, and an appellee is left
without notice of the basis upon which an appellate court might
rule."
Id. at 402, 610 S.E.2d at 361. Here, clearly, defendants
had sufficient notice of the basis upon which our Court might rule.
Plaintiff made only one assignment of error, and that assignment of
error referenced the order of the trial court. The trial court's
order stated only one ground from which plaintiff could appeal,
that being the lack of subject matter jurisdiction under Rule 12.
The order read in pertinent part:
This Matter having come on to be heard before
the undersigned Senior Resident Superior Court
Judge . . . the Court finds and concludes that
the Superior Court of Swain County, North
Carolina lacks subject matter jurisdiction of
this case and consequently holds that the
complaint fails to state a claim upon which
relief can be granted[.]
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED
that the motions of both defendants to dismiss
the plaintiff's action on the grounds that the
Superior Court of Swain County lacks subject
matter jurisdiction of this case, and as a
result thereof the complaint fails to state a
claim upon which relief can be granted . . .
and the same are hereby allowed.
As defendants concede, there was no mention of summary judgment in
the order. The trial court ruled solely on the motion made under
N.C.R. Civ. P. 12. Under these circumstances, defendants
reasonably should have known that plaintiff's assignment of errorcontained a clerical error, incorrectly citing summary judgment as
the ground for dismissal. As defendants were not prejudiced by
plaintiff's error, we review the merits of plaintiff's argument.
In so doing, we do not address an issue "not raised or argued by
plaintiff," nor do we "create an appeal for an appellant."
Viar,
359 N.C. at 402, 610 S.E.2d at 361. Upon review, we affirm the
order of the trial court.
Rule 12(b)(1) of the Rules of Civil Procedure allows for
dismissal based upon a trial court's lack of jurisdiction over the
subject matter of the claim. N.C. Gen. Stat. § 1A-1, Rule 12. Our
Court has held that the defense of sovereign immunity is a Rule
12(b)(1) jurisdiction defense.
Battle Ridge Cos. v. N.C. Dep't of
Transp., 161 N.C. App. 156, 587 S.E.2d 426 (2003). "[T]he standard
of review on a motion to dismiss under Rule 12(b)(1) for lack of
jurisdiction is
de novo."
Hatcher v. Harrah's N.C. Casino Co.,
LLC, 169 N.C. App. 151, 155, 610 S.E.2d 210, 212 (2005) (internal
citations omitted). The standard of review on a motion to dismiss
under Rule 12(b)(6) is "whether, if all the plaintiff's allegations
are taken as true, the plaintiff is entitled to recover under some
legal theory."
Toomer v. Garrett, 155 N.C. App. 462, 468, 574
S.E.2d 76, 83 (2002).
Plaintiff argues that dismissal was erroneous as to both NCDOT
and the EBCI because both defendants waived their sovereign
immunity.
I.
[2]
Plaintiff first argues that dismissal as to NCDOT wasimproper because NCDOT waived its sovereign immunity when it
entered into a construction agreement with the EBCI.
The law of state sovereign immunity is quite clear in this
State:
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
(1952). 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.
Battle Ridge, 161 N.C. App. at 157, 587 S.E.2d at 427. Sovereign
immunity is waived whenever the State, "through its authorized
officers and agencies, enters into a valid contract[] [because] the
State implicitly consents to be sued for damages on the contract in
the event it breaches the contract."
Smith v. State, 289 N.C. 303,
320, 222 S.E.2d 412, 423-24 (1976). Even then, however, "recovery,
if any, must be within the terms and framework of the provisions of
the contract . . . and not otherwise."
Teer Co. v. Highway
Commission, 265 N.C. 1, 16, 143 S.E.2d 247, 258 (1965).
Our Court decided this issue in a case with facts similar to
our present case,
Rifenburg Constr., Inc. v. Brier Creek Assocs.
Ltd. P'ship, 160 N.C. App. 626, 586 S.E.2d 812 (2003),
aff'd per
curiam, 358 N.C. 218, 593 S.E.2d 585 (2004), in which a contractor
sought relief under a contract between NCDOT and a third party. In
Rifenburg, NCDOT and a private developer entered into a
construction agreement under a private/public developmentarrangement as allowed by N.C. Gen. Stat. § 136-28.6.
Id. at 628,
586 S.E.2d at 814. The developer was responsible for the day-to-
day management and progress of the project, just as the EBCI was
responsible for the Highway 19 project in the present case.
Id. at
632, 586 S.E.2d at 817. The developer in
Rifenburg entered into a
separate agreement with a contractor, who later filed suit against
NCDOT. Upon review, our Court held that "[w]hen a state agency,
such as NCDOT, enters into an agreement with a developer, who then
alone enters into a contract with a contractor, the state agency
waives its sovereign immunity only to the original party to their
agreement
not to others."
Id. at 631, 586 S.E.2d at 816 (emphasis
added). In the present case, there was no contract between
plaintiff and NCDOT. Accordingly, NCDOT did not waive its immunity
as to plaintiff when it entered into a contract with the EBCI. We
therefore find plaintiff's argument to be without merit.
Plaintiff also argues that NCDOT waived its sovereign immunity
by failing to comply with statutory bidding procedures when it
entered into a contract with the EBCI. N.C. Gen. Stat. § 136-28.1
(2003) sets forth NCDOT's contract-letting procedures:
(a) All contracts over one million two hundred
thousand dollars ($1,200,000) that the
Department of Transportation may let for
construction or repair necessary to carry out
the provisions of this Chapter shall be let to
a responsible bidder after public advertising
under rules and regulations to be made and
published by the Department of Transportation.
However, the contract at issue here between NCDOT and the EBCI
was a construction agreement under N.C. Gen. Stat. § 136-18(12),
not § 136-28.1. N.C. Gen. Stat. § 136-18(12)(2003) authorizesNCDOT to do all "things necessary to carry out fully the
cooperation contemplated and provided for" by federal programs
relating to transportation. Even assuming,
arguendo, that NCDOT
failed to follow bid-letting procedures, this failure would not
necessarily result in a waiver of sovereign immunity. Sovereign
immunity can be expressly waived by statute.
See,
e.g.,
Allan
Miles Cos. v. N.C. Dept. of Transportation, 68 N.C. App. 136, 141-
42, 314 S.E.2d 576, 579-80 (1984) (holding that N.C. Gen. Stat. §
136-29, then entitled "Adjustment of Claims," expressly waived
sovereign immunity with respect to disputes between contractors and
NCDOT). However, plaintiff presents no statute or case law to
support the contention that the contract bidding statute is an
express waiver by the North Carolina General Assembly of NCDOT's
sovereign immunity. Accordingly, we find this argument lacks
merit.
Plaintiff also contends that NCDOT failed to provide
supervision and control over the EBCI, which led to a breach of
contract between the EBCI and plaintiff. We find no language in
defendants' construction agreement that holds NCDOT responsible for
the supervision and control of the EBCI in its dealings with third-
party contractors. In fact, paragraph seven of the agreement
specifically provides: "(B) The construction, engineering and
supervision will be furnished by the EBCI." Plaintiff also
contends that NCDOT "specifically set out in [defendants'
construction agreement] that [plaintiff] could become a contractor
so long as it followed the terms of the agreement," thereby"authoriz[ing] and induc[ing]" plaintiff to expend funds to its
detriment. Citing
Smith, plaintiff
argues that it would be unfair
"to hold that a state may arbitrarily avoid its obligations under
a contract after having induced the other side to change its
position or expend time or money[.]"
Smith, 289 N.C. at 320, 222
S.E.2d at 423. In reviewing defendants' construction agreement, we
find no language that specifically states that plaintiff could
become a contractor. Paragraph seven of the agreement reads in
pertinent part: "(A) If the EBCI elects to enter into a contract
for the construction of any portion of said projects, the
contractor shall comply with all specifications and policies of the
[NCDOT] and the terms of this agreement." Moreover, plaintiff
misapplies
Smith. Unlike the facts of
Smith, plaintiff in the
present case is not a party to the contract that plaintiff claims
induced plaintiff to expend funds to its detriment.
Plaintiff seems to imply the existence of a quasi-contractual
relationship between plaintiff and NCDOT, based upon the express
contract between NCDOT and the EBCI. However, our Supreme Court
has stated:
We will not imply a contract in law in
derogation of sovereign immunity. . . . [W]e
will not first imply a contract in law where
none exists in fact, then use that implication
to support the further implication that the
State has intentionally waived its sovereign
immunity and consented to be sued for damages
for breach of the contract it never entered in
fact. Only when the State has implicitly
waived sovereign immunity by
expressly
entering into a
valid contract through an
agent of the State expressly authorized by law
to enter into such contract may a plaintiff
proceed with
a claim against the State[.]
Whitfield v. Gilchrist, 348 N.C. 39, 42-43, 497 S.E.2d 412, 415
(1998) (citing
Smith). As no contract was entered into between
NCDOT and plaintiff, NCDOT did not waive its sovereign immunity as
to plaintiff. Accordingly, the assignment of error as to NCDOT is
overruled.
II.
[3] Plaintiff next argues that dismissal as to the EBCI was
improper because the EBCI waived its tribal sovereign immunity.
Plaintiff concedes that the EBCI is a federally recognized Indian
tribe, and that the doctrine of tribal sovereign immunity for
federally recognized tribes normally prevents state courts from
obtaining jurisdiction over them. Plaintiff asks this Court to
decide "the very narrow issue . . . [of] whether the [] EBCI has
waived its sovereign immunity to allow this suit."
Tribal sovereign immunity is a matter of federal law.
Kiowa
Tribe v. Manufacturing Tech., 523 U.S. 751, 755-60, 140 L. Ed. 2d
981, 986-88 (1998). The Fourth Circuit has explicitly held that
the right to sue the EBCI is dependant upon the explicit permission
of Congress and that the principles of federal preemption apply.
See Eastern Band of Cherokee Indians v. Lynch, 632 F.2d 373 (4
th
Cir. 1980) (discussing
Haile v. Saunooke, 246 F.2d 293 (4
th Cir.
1957))
. An Indian tribe such as the EBCI is subject to suit only
where Congress has authorized the suit or the tribe has expressly
and unequivocally waived its tribal sovereign immunity.
Santa
Clara Pueblo v. Martinez, 436 U.S. 49, 56 L. Ed. 2d 106 (1978);
see
also Oklahoma Tax Com. v. Potawatomi Tribe, 498 U.S. 505, 112 L.Ed. 2d 1112 (1991)
.
Plaintiff argues that the EBCI expressly and unequivocally
waived its tribal sovereign immunity when it incorporated under the
laws of North Carolina in 1889. Plaintiff contends that pursuant
to the corporate charter, the tribe consented to sue and be sued in
North Carolina courts. However, federal courts have held that the
EBCI's charter does not waive the EBCI's tribal sovereign immunity.
The U.S. District Court for the Western District of North Carolina
held that
Chapter 211 of the Private Laws of North
Carolina of 1889 entitled "An act
incorporating the Eastern Band of Cherokee
Indians, and for other purposes," as
subsequently amended by other Acts of the
General Assembly of North Carolina, is
operative . . . only in so far as it does not
interfere with the supervisory control which
the Federal Government exercises over this
Indian Tribe. Since the Federal Government
has plenary power and control over this Indian
Tribe, the State of North Carolina is without
power by Act of its Legislature to authorize
suit to be brought against [the EBCI], or in
any other manner to interfere with Federal
control over its affairs.
Haile v. Saunooke, 148 F. Supp. 604, 607 (W.D.N.C. 1947),
aff'd,
246 F.2d 293 (4
th Cir. 1957),
cert. denied,
Haile v. Eastern Band
of Cherokee Indians, 355 U.S. 893, 2 L. Ed. 2d. 191 (1957).
In
Haile, the plaintiff sought to recover from the EBCI and
from individual members of EBCI for personal injuries suffered in
the collapse of a swinging bridge located on tribal land.
Id. at
605. The district court dismissed the action as to the EBCI based
upon sovereign immunity of the tribe.
Id. at 608. The Fourth
Circuit, in affirming, concluded: It is said that the right to sue the [EBCI] is
given by the act of the Legislature of North
Carolina incorporating the band; but it is
perfectly clear that an act of a state
legislature cannot be allowed to interfere
with the guardianship over these people which
the United States has assumed, since Congress
alone must determine the extent to which the
immunities and protection afforded by tribal
status are to be withdrawn.
Haile, 246 F.2d at 297-98. In light of this federal precedent, we
hold that the charter granted to the EBCI by the State of North
Carolina does not operate to waive the EBCI's tribal sovereign
immunity.
Plaintiff relies on
Sasser v. Beck, 40 N.C. App. 668, 253
S.E.2d 577 (1979) for the proposition that the EBCI is subject to
the jurisdiction of North Carolina courts. However,
Sasser is
distinguishable on its facts. In
Sasser, a non-Indian minor,
through his guardian ad litem, brought a tort action against an
individual member of the EBCI, not the EBCI as an entity. The
plaintiff sought to recover for personal injuries he sustained in
a motel swimming pool owned by the defendant. Our Court held that
the superior court had civil jurisdiction over the tort action
against the individual member of the EBCI.
Sasser at 674, 253
S.E.2d at 581.
Plaintiff also argues that because the EBCI entered into the
construction agreement with NCDOT off reservation territory, with
authority to employ plaintiff off the reservation, North Carolina
law places the EBCI in the position of a general contractor from
whom plaintiff should be entitled to seek relief in state court for
a breach of contract. First, we note that the record does not contain a copy of any
contract between plaintiff and the EBCI. Accordingly, the language
of any such contract is beyond the scope of our review.
See N.C.R.
App. P. 9. Moreover, plaintiff presents no argument that the
contract included any language whereby the EBCI unequivocally
expressed a waiver of tribal sovereign immunity. A waiver of
tribal sovereign immunity cannot be implied from entering into a
contract; rather, it must be unequivocally expressed.
See,
e.g.,
Oklahoma Tax Comm'n;
Santa Clara Pueblo. A waiver of tribal
sovereign immunity is distinguishable from a waiver of state
sovereign immunity, which may be implied from entering into a
contract.
See Kiowa, 523 U.S. at 755-56, 140 L. Ed. 2d at 986.
In
Kiowa, the U.S. Supreme Court affirmed the rigid criteria
that apply to a waiver of tribal sovereign immunity. The facts of
Kiowa are that the
tribe defaulted on an agreement to purchase
stock from a private manufacturer.
Id. at 754, 140 L. Ed. 2d at
984. The manufacturer obtained a summary judgment against the
tribe in state court. On appeal, the Oklahoma Court of Civil
Appeals held the tribe was subject to suit in state court, based
upon the law of state sovereign immunity.
Id. at 753, 140 L. Ed.
2d at 984. The U.S. Supreme Court reversed and rejected the state
court's reliance on cases involving state sovereign immunity,
holding that "[w]e have often noted . . . that the immunity
possessed by Indian tribes is not coextensive with that of the
States. . . . [T]ribal immunity is a matter of federal law and is
not subject to diminution by the States."
Id. at 755-56, 140 L.Ed. 2d at 986 (internal citations omitted). The Court concluded:
"[W]e choose to defer to Congress. Tribes enjoy immunity from
suits on contracts, whether those contracts involve governmental or
commercial activities and whether they were made on or off a
reservation. [Where] Congress has not abrogated this immunity, nor
has petitioner waived it, [] the immunity governs[.]"
Id. at 760,
140 L. Ed. 2d at 988.
In this case, Congress has not abrogated the immunity of the
EBCI, nor has the EBCI waived its immunity. Accordingly, the EBCI
enjoys tribal sovereign immunity from jurisdiction of the courts of
North Carolina. Without jurisdiction over the EBCI, the trial
court properly dismissed plaintiff's claim under Rules 12(b)(1) and
(b)(6).
Affirmed.
Judges McCULLOUGH and JACKSON concur.
*** Converted from WordPerfect ***
