Williams v. N.C. Dep't of Justice ( 2020 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-1031
Filed: 18 August 2020
North Carolina Industrial Commission, I.C. No. TA-26709
KEITH WILLIAMS, CEO/DIRECTOR, SOUTHEASTERN PUBLIC SAFETY
GROUP, INC., Plaintiff,
v.
NORTH CAROLINA DEPARTMENT OF JUSTICE, CRIMINAL STANDARDS
DIVISION, Defendant.
Appeal by Plaintiff from an Order filed 18 June 2019 by the North Carolina
Industrial Commission. Heard in the Court of Appeals 14 April 2020.
Ian Morris for plaintiff-appellant.
Attorney General Joshua H. Stein, by Assistant Attorney General Kenzie M.
Rakes, for defendant-appellee.
MURPHY, Judge.
The State Tort Claims Act authorizes the Industrial Commission to hear
claims arising as a result of the negligence of any agent of the State within the scope
of their employment. Where the Industrial Commission does not dismiss a claim for
lack of subject matter jurisdiction, but instead for failure to state a claim upon which
relief may be granted, we affirm when the claim is not a recognized form of
negligence.
There is neither a statute nor caselaw in North Carolina which would support
Plaintiff’s claim for negligent interference with a contract. In 1914, our Supreme
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Court held a party to a contract who is injured by the negligence of a third party
cannot recover damages from that third party. North Carolina caselaw does not
support Plaintiff’s request that we recognize the tort of negligent interference with a
contract. Further, since we are an error-correcting court, it is not our role to expand
the law. The claim for negligent interference with a contract was properly dismissed
for failure to state a claim upon which relief may be granted. We affirm.
BACKGROUND
Southeastern Public Safety Group, Inc. (“Southeastern”) is a North Carolina
corporation and certified company police agency. On 31 March 2015, Southeastern
became certified to provide law enforcement services to the North Carolina
Department of Transportation. On 19 July 2016, Southeastern won a bid to provide
law enforcement services for traffic control to Sugar Creek Construction (“SCC”). The
contract required traffic control by a law enforcement agency in an active work zone.
On 7 April 2017, Southeastern’s Chief Executive, Keith Williams (“Williams”),
was contacted by Morgan Powell of the Federal Highway Administration. Powell was
in contact with Randy Munn (“Munn”), an official representative of the North
Carolina Department of Justice (“the NCDOJ”). Powell contacted Williams by
forwarding a message from Munn, where Munn requested information on Williams’s
“certification as a company police agency.” Williams complied. Munn later forwarded
Williams an email from the Assistant Attorney General, informing Williams that his
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work for SCC was in violation of N.C.G.S. § 74E (“the Company Police Act”) and
Southeastern must stop work on the contract immediately.
On 18 December 2017, Williams, in his official capacity and on behalf of
Southeastern, filed a North Carolina Industrial Commission (“NCIC”) Form T-11 (“T-
1 Affidavit”)for a claim of damages under the Tort Claims Act. Williams made claims
of work stoppage attributed to the NCDOJ in its failure to administrate the Company
Police Act. The T-1 Affidavit further alleged the administrative stoppage prevented
the business from providing police services as contracted and caused severe economic
loss.
The NCDOJ filed a Motion to Dismiss on 21 February 2018, pursuant to Rule
12(b)(6) for failure to state a claim and Rule 12(b)(1), (2), and (6) for lack of subject
matter jurisdiction over intentional tort and/or constitutional rights violations.
Williams moved to amend the complaint on 6 March 2018 to include additional causes
of action based on “negligent infliction of economic loss” due to breaches of duty to
investigate and duty to inform.
On 30 May 2018, the Deputy Commissioner entered an order (“the 30 May
2018 Order”) dismissing Williams’s claims with prejudice under Rule 12(b)(1) due to
lack of subject matter jurisdiction of the NCIC to handle claims of alleged intentional
tort or constitutional rights violations and breach of contract actions. A notice of
1 The T-1 Affidavit is a form the NCIC requires a claimant to file in order to enter the case
onto its hearing docket.
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appeal and application for review to the Full Commission was submitted by Williams
on 14 June 2018. Williams argued “[t]he claim was and still is that [the NCDOJ]
negligently inflicted economic harm to Southeastern by failing to thoroughly
administer, supervise, investigate, inform and protect Southeastern.” Further,
Williams argued “[w]hile some of the alleged actions of . . . Munn were intentional
actions, they could just as easily be attributed to misfeasance, inaction, poor
supervision, or outright incompetence.”
The Full Commission’s order (“the Order”) affirmed the 30 May 2018 Order.
The Full Commission held “[Williams’s] Affidavit and Motion to Amend Complaint
include allegations of constitutional violations, breach of contract claims, and
intentional torts, including tortious interference with a contract. Said claims are
outside of the [NCIC]’s jurisdiction and, as such, are subject to dismissal.” The Order
further concluded that “[t]o the extent [Williams] has remaining purported
negligence claims, including negligent tortious interference with a contract, they are
not recognized claims under which relief can be granted under North Carolina law
and are subject to dismissal under Rule 12(b)(6).” Williams timely appealed on 17
July 2019.
ANALYSIS
A. Standard of Review
The standard of review for an appeal from the Full
Commission’s decision under the Tort Claims Act ‘shall be
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for errors of law only under the same terms and conditions
as govern appeals in ordinary civil actions, and the findings
of fact of the Commission shall be conclusive if there is any
competent evidence to support them.’
Simmons ex rel Simmons v. Columbus Cnty. Bd. of Educ., 171 N.C. App. 725, 727-28,
615 S.E.2d 69, 72 (2005) (quoting N.C.G.S. § 143-293 (2003)). “Under the Tort Claims
Act, when considering an appeal from the [Full] Commission, our Court is limited to
two questions: (1) whether competent evidence exists to support the [Full]
Commission's findings of fact, and (2) whether the [Full] Commission's findings of
fact justify its conclusions of law and decision.” Fennell v. N.C. Dep't of Crime Control
& Pub. Safety, 145 N.C. App. 584, 589, 551 S.E.2d 486, 490 (2001).
“[T]he North Carolina Rules of Civil Procedure apply in tort claims before the
Commission, to the extent that such rules are not inconsistent with the Tort Claims
Act, in which case the Tort Claims Act controls.” Pate v. N.C. Dep’t of Transp., 176
N.C. App. 530, 533, 626 S.E.2d 661, 664 (2006); N.C.G.S. § 143-300 (2019).
1. Dismissal for Lack of Subject Matter Jurisdiction
The NCIC is “a court for the purpose of hearing and passing upon tort claims
against . . . institutions and agencies of the State.” N.C.G.S. § 143-291 (2019).
The [NCIC] shall determine whether or not each individual
claim arose as a result of the negligence of any officer,
employee, involuntary servant or agent of the State while
acting within the scope of his office, employment, service,
agency or authority, under circumstances where the State
of North Carolina, if a private person, would be liable to the
claimant in accordance with the laws of North Carolina.
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Id. “It is well-settled that the Tort Claims Act does not permit recovery for intentional
injuries. Only claims for negligence are covered.” Fennell, 145 N.C. App. at 592, 551
S.E.2d at 492 (internal citations omitted); N.C.G.S. § 143-291 (2019).
“Every defense, in law or fact, to a claim for relief in any pleading, . . . shall be
asserted in the responsive pleading thereto if one is required, except that the
following defenses may at the option of the pleader be made by motion: (1) Lack of
jurisdiction over the subject matter.” N.C.G.S. § 1A-1, Rule 12(b)(1) (2019). “Subject
matter jurisdiction is conferred upon the courts by either the North Carolina
Constitution or by statute.” Harris v. Pembaur, 84 N.C. App. 666, 667, 353 S.E.2d
673, 675 (1987). “The question of subject matter jurisdiction may be raised at any
time, even in the Supreme Court.” Lemmerman v. A.T. Williams Oil Co., 318 N.C.
577, 580, 350 S.E.2d 83, 85-86 (1986).
“It is a universal rule of law that parties cannot, by consent, give a court, as
such, jurisdiction over subject matter of which it would otherwise not have
jurisdiction. Jurisdiction in this sense cannot be obtained by consent of the parties,
waiver, or estoppel.” Pulley v. Pulley, 255 N.C. 423, 429, 121 S.E.2d 876, 880 (1961).
“Whether a trial court has subject-matter jurisdiction is a question of law, reviewed
de novo on appeal.” McKoy v. McKoy, 202 N.C. App. 509, 511, 689 S.E.2d 590, 592
(2010).
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“When the record shows a lack of jurisdiction in the lower court, the
appropriate action . . . is to arrest judgment or vacate any order entered without
authority.” State v. Felmet, 302 N.C. 173, 176, 273 S.E.2d 708, 711 (1981). “When
the record is silent and the appellate court is unable to determine whether the court
below had jurisdiction, the appeal should be dismissed.” Id.
2. Dismissal for Failure to State a Claim
“Every defense, in law or fact, to a claim for relief in any pleading, . . . shall be
asserted in the responsive pleading thereto if one is required, except that the
following defenses may at the option of the pleader be made by motion: (6) Failure to
state a claim upon which relief can be granted.” N.C.G.S. § 1A-1, Rule 12(b)(6) (2019).
The motion to dismiss under N.C. R. Civ. P. 12(b)(6) tests
the legal sufficiency of the complaint. In ruling on the
motion the allegations of the complaint must be viewed as
admitted, and on that basis the court must determine as a
matter of law whether the allegations state a claim for
which relief may be granted.
Henderson v. Charlotte-Mecklenburg Bd. of Educ., 253 N.C. App. 416, 419, 801 S.E.2d
145, 148 (2017).
Dismissal is proper when one of the following three conditions is satisfied: “(1)
the complaint on its face reveals that no law supports the plaintiff’s claim; (2) the
complaint on its face reveals the absence of facts sufficient to make a good claim; or
(3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”
Wood v. Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002). “This Court
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must conduct a de novo review of the pleadings to determine their legal sufficiency
and to determine whether the trial court’s ruling on the motion to dismiss was
correct.” Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4,
aff’d per curiam, 357 N.C. 567, 597 S.E.2d 673 (2003).
B. Subject Matter Jurisdiction
The Order dismissed Williams’s negligence claims, “including negligent
tortious interference with [a] contract,” under Rule 12(b)(6). The non-negligence
claims were dismissed under Rule 12(b)(1) for lack of subject matter jurisdiction.
Williams argues the Full Commission erred in finding that his complaint was
based on some intentional tort and not the negligent supervision, administration, and
investigation of Southeastern by Munn and the NCDOJ. Williams argues the Full
Commission has jurisdiction over claims that arise from the negligence of any agent
of the State while acting within the scope of his employment. Williams argues the
NCDOJ ordered it to cease work on its contract with SCC, and as a result it “suffered
personal, economic injury.” Further, Williams argues Munn was not intentionally
injuring Williams, but rather this injury was the result of Munn’s negligence.
Williams asks us to conclude the Full Commission does have subject matter
jurisdiction.
“The State Tort Claims Act authorizes the [NCIC] to entertain claims arising
as a result of a negligent act of any officer, employee, involuntary servant, or agent
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of the State while acting within the scope of his office, employment, service, agency,
or authority[.]” Guthrie v. N.C State Ports Auth., 307 N.C. 522, 536, 299 S.E.2d 618,
626 (1983); N.C.G.S. § 143-291 (2019). “Waiver of sovereign immunity may not be
lightly inferred and State statutes waiving this immunity . . . must be strictly
construed.” Guthrie, 307 N.C. at 537-38, 299 S.E.2d at 627.
Suits against the State, its agencies and its officers for
alleged tortious acts can be maintained only to the extent
authorized by the Tort Claims Act, . . . and that Act
authorizes recovery only for negligent torts. Intentional
torts . . . are not compensable under the Tort Claims Act.
Wojsko v. State, 47 N.C. App. 605, 610, 267 S.E.2d 708, 711 (1980); see also N.C.G.S.
§ 143-291 (2019).
The Order dismissed the claim of “negligent tortious interference with a
contract” under Rule 12(b)(6). The Full Commission acknowledged the motion to
dismiss under Rules 12(b)(1) and 12(b)(6), but chose to dismiss the negligence claim
under Rule 12(b)(6). The Full Commission did not dismiss the negligence claim for
lack of subject matter jurisdiction, but instead for failure to state a claim upon which
relief may be granted. Therefore, this claim was properly dismissed. While the Full
Commission dismissed the non-negligence claims under Rule 12(b)(1), it did not order
that it lacked jurisdiction to decide a negligence claim.
The Full Commission did not err in dismissing Williams’s claim of negligent
interference with a contract because the claim was dismissed for failure to state a
claim upon which relief may be granted, not for lack of subject matter jurisdiction.
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C. Failure to State a Claim
Williams next argues the Full Commission erred in finding no claim was
alleged because Williams established the NCDOJ had a duty to administer,
supervise, investigate, and inform company police agencies and failed to do so.
Williams argues the claim was and still is that the NCDOJ negligently stopped it
from working in contract with SCC, thus the NCDOJ breached their duty under the
Company Police Act. Further, Williams argues the NCDOJ was not seeking to
intentionally injure the contract, but the NCDOJ was the actual and proximate cause
of Williams’s injury and inability to complete the contract.
“A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the
complaint by presenting ‘the question whether, as a matter of law, the allegations of
the complaint, treated as true, are sufficient to state a claim upon which relief can be
granted under some [recognized] legal theory.’” Forsyth Mem'l Hosp., Inc. v.
Armstrong World Indus. Inc., 336 N.C. 438, 442, 444 S.E.2d 423, 425-26 (1994)
(quoting Lynn v. Overlook Dev., 328 N.C. 689, 692, 403 S.E.2d 469, 471 (1991)).
Dismissal is proper under Rule 12(b)(6) when “the complaint on its face reveals that
no law supports the plaintiff’s claim.” Wood, 355 N.C. at 166, 558 S.E.2d at 494.
This appeal is bound by the jurisdictional requirements of the Tort Claims Act,
and therefore any claim must be based in negligence. “Under the Tort Claims Act,
jurisdiction is vested in the [NCIC] to hear claims against the State of North Carolina
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for personal injuries sustained by any person as a result of the negligence of a State
employee while acting within the scope of his employment.” Guthrie, 307 N.C. at 536,
299 S.E.2d at 626.
There is neither a statute nor any caselaw supporting Williams’s claim for
negligent interference with a contract. North Carolina recognizes a claim for tortious
interference with a contract. See Beck v. City of Durham, 154 N.C. App. 221, 231-
232, 573 S.E.2d 183, 191 (2002). However, our Supreme Court has declined to
recognize negligent interference with a contract. See generally Thompson v. Seaboard
Air Line Ry., 165 N.C. 377, 81 S.E. 315 (1914).
In Thompson v. Seaboard Air Line Ry., a lumber company contracted with the
plaintiff to cut and saw timber. Thompson, 165 N.C. at 378, 81 S.E. at 316. The
plaintiff brought an action against a railway company after a fire ignited by sparks
from a train engine destroyed a portion of a timber lot where the plaintiff was
working. Id. Evidence showed that the fire destroyed groceries, provisions, and
shacks owned by the plaintiff. Id. The Supreme Court noted that “no recovery can
be had for an indirect, unintended injury to one arising from a tort to another.” Id.
at 379, 81 S.E. at 316.
Where, however, by the willful tort of a third person, one of
two contracting parties is disabled from performing his
contract, the wrong having been committed with intent to
injure the other, it has been held that the latter may
recover from the tort feasor in damages. But unless the
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wrong is done with a willful intent to injure the
complaining party, the latter cannot recover.
Id. (emphasis added) (internal alterations omitted). While Thompson is not an
express rejection of a negligent interference with a contract cause of action, it is an
implicit rejection. Presented with the opportunity to recognize such a cause of action,
our Supreme Court demurred and instead cited approvingly authority holding the
injury too attenuated from the wrongdoing to merit recognition of a claim based on
inability to perform a contract due to a third party’s negligence. Id. at 380, 81 S.E.
at 316 (citing Byrd v. English, 117 Ga. 191, 43 S.E. 419 (1903)).
In Thompson, our Supreme Court cited Byrd v. English to support the
application of the principle that “unless the wrong is done with a willful intent to
injure the complaining party, the latter cannot recover.” Thompson, 165 N.C. at 379-
380, 81 S.E. at 316. Byrd is a case from the Supreme Court of Georgia that is
analogous to the present situation where Williams is claiming negligent interference
with a contract, and given our Supreme Court’s reliance on the same, we consider it
here.
According to this petition, the damage done by them was to
the property of the Georgia Electric Light Company, who
were under contract to the plaintiff to furnish him with
electric power, and the resulting damage done to the
plaintiff was that it was rendered impossible for that
company to comply with its contract. If the plaintiff can
recover of these defendants upon this cause of action, then
a customer of his, who was injured by the delay occasioned
by the stopping of his work, could also recover from them,
and one who had been damaged through his delay could in
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turn hold them liable, and so on without limit to the
number of persons who might recover on account of the
injury done to the property of the company owning the
conduits. To state such a proposition is to demonstrate its
absurdity.
Byrd v. English, 117 Ga. 191, 193-94, 43 S.E. 419, 420 (1903). Byrd held a party to a
contract, who is injured by reason of the failure of the other party to comply with its
terms, cannot recover damages of a third person, a wrongdoer, whose negligence
rendered the performance of the contract impossible. See id.
Here, Williams’s claim is analogous to the situation in Byrd. Williams argues
the NDDOJ negligently stopped Southeastern from working in contract with SCC,
breaching its duty under the Company Police Act. Further, Williams argues the
NCDOJ was the actual and proximate cause of Southeastern’s injury and inability to
complete the contract with SCC. Therefore, Williams is arguing the NCDOJ, a third
party, was negligent and rendered the performance of the contract impossible.
However, the courts in Byrd and Thompson held a party to a contract who is injured
by the negligence of a third party cannot recover damages from that third party. As
a result, North Carolina caselaw does not support Williams’s request that we
recognize the tort of negligent interference with a contract.
Even if negligent interference with a contract was an issue of first impression
as Williams states, and it has not been barred from recognition by our Supreme
Court, it would not be our role to expand the law in a way to create such a cause of
action. “This Court is an error-correcting court, not a law-making court.” Shera v.
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N.C. State Univ. Veterinary Teaching Hosp., 219 N.C. App. 117, 127, 723 S.E.2d 352,
358 (2012). We are “not in the position to expand the law. Rather, such
considerations must be presented to our Supreme Court or our Legislature, who have
the power to rectify any inequities . . . .” Id. at 126, 723 S.E.2d at 358. It would be
the role of the General Assembly or our Supreme Court to expand the law to create a
cause of action for negligent interference with a contract.
“[T]he Tort Claims Act . . . waive[s] the sovereign immunity of the State in
those instances in which injury is caused by the negligence of a State employee and
the injured person is not guilty of contributory negligence, giving the injured party
the same right to sue as any other litigant.” Guthrie, 307 N.C. at 535, 299 S.E.2d at
625. Since the Tort Claims Act is in derogation of sovereign immunity it must be
strictly construed, and its terms must be strictly adhered to. Etheridge v. Graham,
14 N.C. App. 551, 554, 188 S.E.2d 551, 553 (1972); Watson v. N.C. Dep’t of Corr., 47
N.C. App. 718, 722, 268 S.E.2d 546, 549 (1980). As a result, even if it were in our
power to expand the law, we would not expand the Tort Claims Act to include an
unrecognized claim when sovereign immunity has not been waived with the
knowledge of the creation of a new tort.
Williams failed to state a claim for which relief can be granted because
negligent interference with a contract is not a tort recognized in North Carolina. The
Full Commission did not err in dismissing this claim under Rule 12(b)(6).
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D. Full Commission’s Consideration of Prior Filings
Williams argues the Full Commission relied too heavily on the T-1 Affidavit
and not the proposed Amended Complaint. Specifically, Williams argues the Full
Commission relied on the “emotional and colloquial language” of the T-1 Affidavit,
and not the allegations of negligent behavior from the proposed Amended Complaint.
“[A]s a general rule this Court will not hear an appeal when the subject matter
of the litigation has been settled between the parties or has ceased to exist.” Kendrick
v. Cain, 272 N.C. 719, 722, 159 S.E.2d 33, 35 (1968). “If the issues before the court
become moot at any time during the course of the proceedings, the usual response is
to dismiss the action.” 130 of Chatham, LLC v. Rutherford Elec. Membership Corp.,
241 N.C. App. 1, 8, 771 S.E.2d 920, 925 (2015). Having addressed the dismissal of
the negligent interference with a contract claim as proper, Williams’s argument that
the Full Commission erred in its judgment basing the dismissal on the T-1 Affidavit
rather than the proposed Amended Complaint is now moot. Dismissal of this third
issue is proper.
CONCLUSION
Williams’s claim of negligent interference with a contract was properly
dismissed for failure to state a claim upon which relief may be granted, not for lack
of subject matter jurisdiction. Further, negligent interference with a contract is not
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a tort recognized in North Carolina, and thus Williams failed to state a claim for
which relief can be granted. The Full Commission did not err dismissing this claim.
Williams’s claim that the Full Commission relied on the T-1 Affidavit rather
than the proposed Amended Complaint is deemed moot because the negligent
interference with a contract claim was properly dismissed.
AFFIRMED IN PART; DISMISSED IN PART.
Chief Judge MCGEE and Judge BROOK concur.
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