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Immunity_sovereign--board of education--purchase of excess liability insurance
Defendant board of education did not waive its governmental immunity when it
purchased a general liability insurance policy providing coverage for damages in excess of the
board's self-insured retention of $1,000,000 where the policy stated that the board did not intend
to waive its governmental immunity, and the policy's coverage is contingent upon the board's
liability for the first $1,000,000 of any damage award.
Osborne Law Offices, P.C., by Curtis C. Osborne, for
plaintiff-appellants.
Helms, Mullis & Wicker, PLLC, by James G. Middlebrooks and Amy
Reeder Worley, for defendant-appellees.
MARTIN, Chief Judge.
Plaintiffs brought this action alleging various claims for
negligence and negligent infliction of emotional distress against
defendant Charlotte-Mecklenburg Board of Education and David
Roberts, a Behavior Management Technician employed by the Board.
Plaintiffs sought compensatory and punitive damages for physical
injuries inflicted upon the minor plaintiff, who suffers from
Asperger's Disorder (a mild form of autism), when Roberts attempted
to restrain him by grabbing and twisting his left arm. Defendants
answered, denying any improper conduct on Roberts' part, and
asserting affirmative defenses including, inter alia, governmental
immunity. In response to a defense motion, plaintiffs provided aStatement of Monetary Relief Sought indicating that they were
seeking damages totaling $1,250,000.
Defendants then moved for summary judgment, supporting their
motion with an affidavit from Scott H. Denham, the Risk Manager for
the City of Charlotte, who administers insurance and self-insured
retention programs for defendant Board of Education. In his
affidavit, Mr. Denham provided a copy of the Board's Comprehensive
General Liability Insurance Policy covering the applicable period,
which contained a self-insured retention limit of $1,000,000. The
policy further provided that “it is not intended by the insured to
waive its governmental immunity as allowed by North Carolina
Statutes Sec. 115C-42.” Mr. Denham stated that the policy provided
no coverage to the Board or Mr. Roberts for any amount up to
$1,000,000 and that the Board carried no other insurance which
might be applicable to provide coverage for the events alleged in
the complaint for any amount below $1,000,000.
The trial court granted defendants' motion for summary
judgment, concluding there was no genuine issue of material fact as
to the Board's immunity or Roberts' official capacity immunity, and
dismissed plaintiffs' claims against the Board and against Roberts
to the extent he was sued in his official capacity. The court
reserved its ruling on any claims asserted against Roberts in his
individual capacity, which plaintiffs subsequently dismissed
without prejudice. Plaintiffs appeal.
The sole issue presented by this appeal is whether the trial
court erred in its conclusion that defendants did not waiveimmunity through the Board's purchase of a liability insurance
policy providing coverage for damages in excess of the Board's
self-insured retention of $1,000,000. We hold that the trial court
did not err and affirm the order granting summary judgment.
The State and its agencies have traditionally enjoyed complete
immunity from being sued in court. Smith v. State, 289 N.C. 303,
309-10, 222 S.E.2d 412, 417 (1976). With respect to immunity, a
county board of education is a governmental agency, and is
therefore not liable in a tort or negligence action except to the
extent that it has waived its governmental immunity pursuant to
statutory authority. Beatty v. Charlotte-Mecklenburg Bd. of Educ.,
99 N.C. App. 753, 755, 394 S.E.2d 242, 244 (1990). However, a
board of education may waive this immunity by purchasing liability
insurance. See N.C. Gen. Stat § 115C-42 (2005). That statute
reads, in pertinent part:
Any local board of education, by securing
liability insurance as hereinafter provided,
is hereby authorized and empowered to waive
its governmental immunity from liability for
damage by reason of death or injury to person
or property caused by the negligence or tort
of any agent or employee of such board of
education when acting within the scope of his
authority or within the course of his
employment. Such immunity shall be deemed to
have been waived by the act of obtaining such
insurance, but such immunity is waived only to
the extent that said board of education is
indemnified by insurance for such negligence
or tort.
N.C. Gen. Stat § 115C-42(2005). We have previously held that this
statute provides the only means by which a board of education may
waive its sovereign immunity. Lucas v. Swain Cty. Bd. of Educ.,154 N.C. App. 357, 361, 573 S.E.2d 538, 541 (2002). Therefore, the
pivotal question is whether the defendant had indemnified itself by
insurance for the alleged tort.
Defendant School Board's General Liability Policy for the
period at issue specifically stated that it was “not intended by
the insured to waive its governmental immunity as allowed by North
Carolina Statutes Sec. 115C-42.” It contained a Self-Insured
Retention Limit of $1,000,000. The Policy also carried an
endorsement stating that when “the insured's legal obligation to
pay damages has been determined, and the amount of such damages is
less than or equal to $1,000,000 ... then we shall have no
obligation to pay or indemnify the insured for any amount under
this Policy.” The Policy went on to state that when “the insured's
legal obligation to pay damages to which this insurance applies has
been determined, and: (1) the amount of such damages is greater
than ... [$1,000,000], and (2) the insured has paid... [$1,000,000]
to the claimant, then and only then will the insured be entitled to
make claim for indemnity under this Policy.” Therefore, the
insurance policy's coverage is contingent upon the Board's
liability for the first $1,000,000 of any damage award.
Our courts have strictly construed N.C.G.S. § 115C-42 against
waiver. Hallman v. Charlotte-Mecklenburg Bd. of Educ., 124 N.C.
App. 435, 438-39 477 S.E.2d 179, 181 (1996). The terms of the
statute itself make it clear that immunity is waived only to the
extent of the coverage obtained under an insurance policy. See
N.C. Gen. Stat. § 115C-42 (2005)(“Such immunity shall be deemed tohave been waived by the act of obtaining such insurance, but such
immunity is waived only to the extent that said board of education
is indemnified by insurance for such negligence or tort”)(emphasis
added). In this case, as noted above, the policy provides coverage
for only those claims for which defendant Board is liable for
damages in excess of $1,000,000.
Even though plaintiffs seek damages in excess of $1,000,000,
the policy provides that it will not indemnify the Board unless the
Board has first paid $1,000,000 to the claimant. Since the Board
has statutory immunity from liability for tort claims, it cannot be
required to pay any part of the $1,000,000 self-insured amount and,
therefore, the excess policy will provide no indemnification. The
plaintiffs have argued that such a reading of the policy renders it
meaningless, offering no coverage for any eventuality. We cannot
agree. There are several instances where immunity is not available
either because of federal or state statutes, or because of
exceptions to the sovereign immunity doctrine. See, e.g., Smith,
289 N.C. at 320, 222 S.E.2d at 424 (abolishing state sovereign
immunity in the contractual context). Those instances are not
applicable here. Therefore, the trial court correctly concluded
the Board has not waived its immunity as to the claims asserted by
plaintiffs. Summary judgment is appropriate whenever the movant
establishes a complete defense to plaintiffs' claim. Overcash v.
Statesville City Bd. of Educ., 83 N.C. App. 21, 26, 348 S.E.2d 524,
528 (1986).
Affirmed. Judges WYNN and GEER concur.
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