Title: Whitfield v. Gilchrist

State: north-carolina

Issuer: North Carolina Supreme Court

Document:

IN THE SUPREME COURT OF NORTH CAROLINA
No. 287PA97
FILED: 3 APRIL 1998
PAUL L. WHITFIELD, P.A., a North Carolina Professional
Association
v.
PETER S. GILCHRIST, III, as District Attorney of the 26th
Judicial District of the State of North Carolina; and the STATE
OF NORTH CAROLINA, a sovereign governmental entity
On discretionary review pursuant to N.C.G.S. § 7A-31 of
a unanimous decision of the Court of Appeals, 126 N.C. App. 241,
485 S.E.2d 61 (1997), affirming in part, reversing in part, and
remanding an order entered by Winner, J., on 9 February 1996 in
Superior Court, Mecklenburg County.  Heard in the Supreme Court
18 November 1997.
Whitfield and Whitfield, P.A., by Paul L. Whitfield;
and Odom & Groves, P.C., by T. LaFontine Odom, for
plaintiff-appellee.
Michael F. Easley, Attorney General, by Charles J.
Murray, Special Deputy Attorney General, for defendant-
appellant State of North Carolina.
MITCHELL, Chief Justice.
The question presented for review is whether the
doctrine of sovereign immunity bars recovery in quantum meruit
upon an action based on a contract implied in law against the
State of North Carolina.  We conclude that a contract implied in
law is insufficient to constitute a waiver of sovereign immunity. 
We therefore reverse the decision of the Court of Appeals.
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Plaintiff made the following allegations in the
complaints filed for this action.  Plaintiff is a professional
association, and plaintiff’s attorney, Paul F. Whitfield, is the
principal attorney in the professional association.  Defendant
Peter S. Gilchrist is the District Attorney for the Twenty-Sixth
Judicial District of North Carolina, which includes the City of
Charlotte.  Since 1967, Mr. Whitfield has brought various public
nuisance actions within the City of Charlotte under chapter 19 of
the General Statutes of North Carolina.  Defendant Gilchrist
engaged plaintiff Whitfield to file two public nuisance actions,
one of which was against the Downtown Motel Corporation, a North
Carolina corporation, known as the Downtown Motor Inn and located
on North Tryon Street in the City of Charlotte (Downtown Motel
action).  The second action was against Ashak Patel, Mani, Inc.,
a North Carolina corporation, doing business as Alamo Plaza Hotel
Courts, Alamo Plaza Courts & Alamo Amusements, et al., in the
City of Charlotte (Alamo action).  In the investigation and
preparation for both of these actions, plaintiff worked
continuously with defendant Gilchrist as District Attorney and
with members of the Charlotte Police Department.  As a
consequence of plaintiff’s legal efforts, the public nuisances
were abated.  The Charlotte-Mecklenburg community, the public at
large, and the State have benefitted, and plaintiff expected to
be paid for its legal services.
On 28 July 1995, plaintiff filed a complaint alleging
that it was entitled to recover from defendants, on the basis of
quantum meruit, attorney’s fees and costs for legal services it
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provided in the Downtown Motel public nuisance action.  On
20 September 1995, defendants filed an answer and a motion to
dismiss.
On 23 October 1995, plaintiff filed a second complaint
with similar allegations seeking recovery in quantum meruit for
its services in the Alamo action.  Defendants filed a motion to
consolidate the two cases on 26 October 1995.  On 20 November
1995, defendants filed an answer and a motion to dismiss in the
Alamo action.
The motions were heard at the 18 January 1996 Civil
Session of Superior Court, Mecklenburg County.  On 9 February
1996, the trial court entered an order allowing the consolidation
of the two cases.  In that same order, the trial court dismissed
both actions, concluding that sovereign immunity is a complete
defense to plaintiff’s actions.  Plaintiff then appealed to the
Court of Appeals.
The Court of Appeals affirmed the trial court’s
dismissal of plaintiff’s claims against defendant Gilchrist. 
Paul L. Whitfield, P.A. v. Gilchrist, 126 N.C. App. 241, 251, 485
S.E.2d 61, 67 (1997).  The Court of Appeals reversed the trial
court’s dismissal of plaintiff’s claims against defendant State
of North Carolina and remanded the case for further proceedings
with regard to those claims against the State.  Id.
On 23 June 1997, defendant State petitioned this Court
for discretionary review seeking to have this Court resolve a
single issue:  “Did the Court of Appeals err in holding that
sovereign immunity is not available to the State as a defense to
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a pleading alleging a claim based on a quasi-contract implied in
law which totally fails to comply with the applicable statutory
requirements?”  On 23 July 1997, this Court entered an order
allowing discretionary review.  Our appellate review here is
limited solely to the single issue brought forward by defendant
State in its petition for discretionary review.
Defendant State contends that the Court of Appeals
erred in reversing the trial court’s dismissal of plaintiff’s
claims against the State of North Carolina because sovereign
immunity bars recovery on the basis of quantum meruit in an
action against the State upon a quasi contract or contract
implied in law.  We agree.
It has long been the established law of North Carolina
that the State cannot be sued except with its consent or upon its
waiver of immunity.  Guthrie v. N.C. State Ports Auth., 307 N.C.
522, 534, 299 S.E.2d 618, 625 (1983).  This Court has held,
however, 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.”  Smith v. State,
289 N.C. 303, 320, 222 S.E.2d 412, 423-24 (1976).  In the
decision below, the Court of Appeals improperly expanded Smith to
hold that sovereign immunity does not bar an action seeking
recovery in quantum meruit based on an implied-in-law contract
theory.  Whitfield, 126 N.C. App. at 248, 485 S.E.2d at 67.
Quantum meruit is a measure of recovery for the
reasonable value of services rendered in order to prevent unjust
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enrichment.  Potter v. Homestead Preservation Ass’n, 330 N.C.
569, 578, 412 S.E.2d 1, 7 (1992); see also Dan B. Dobbs, Dobbs
Law of Remedies § 4.2(3) (2d ed. 1993).  It operates as an
equitable remedy based upon a quasi contract or a contract
implied in law.  Potter, 330 N.C. at 578, 412 S.E.2d at 7.  “A
quasi contract or a contract implied in law is not a contract.” 
Booe v. Shadrick, 322 N.C. 567, 570, 369 S.E.2d 554, 556 (1988). 
An implied contract is not based on an actual agreement, and
quantum meruit is not an appropriate remedy when there is an
actual agreement between the parties.  Id.  Only in the absence
of an express agreement of the parties will courts impose a quasi
contract or a contract implied in law in order to prevent an
unjust enrichment.  Id.
We will not imply a contract in law in derogation of
sovereign immunity.  In Smith, we held that when the State,
acting through officers and agencies authorized by law, enters
into a valid contract, it implicitly waives its sovereign
immunity and consents to be sued for damages upon its breach of
the contract.  Smith, 289 N.C. at 320, 222 S.E.2d at 423-24.  We
emphasized, however, that “[t]he State is liable only upon
contracts authorized by law.  When it enters into a contract it
does so voluntarily and authorizes its liability.  Furthermore,
the State may, with a fair degree of accuracy, estimate the
extent of its liability for a breach of contract.”  Id. at 322,
222 S.E.2d at 425 (emphasis added).  Consistent with the
reasoning of Smith, we will not first imply a contract in law
where none exists in fact, then use that implication to support
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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 upon the State’s
breach.  Id.
The State has not authorized its district attorneys to
contract for payment of fees for attorneys’ services of any type. 
To the contrary, as we explain hereinafter, the legislature has
provided that such contracts may be entered only by, or with the
approval of, other agents of the State.  We certainly will not
imply a contract in law where there is a statute to the contrary.
It is important to recognize that there are situations
in which a district attorney may obtain the assistance of private
counsel.  For example, an elected district attorney has the
discretion to permit a private attorney to appear with him to
represent the State’s interest in an action, subject to the
court’s approval.  State v. Camacho, 329 N.C. 589, 593, 406
S.E.2d 868, 871 (1991).  Historically, however, private counsel
functioning in this prosecutorial capacity either have been paid
by private parties or have appeared pro bono publico.  See State
v. Best, 280 N.C. 413, 186 S.E.2d 1 (1972).  A district
attorney’s discretion to permit an attorney to act as a private
prosecutor on behalf of the State in the prosecution of a
particular case does not expressly or implicitly include the
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authority for the district attorney to bind the State to pay the
attorney for performing the historic role of a private
prosecutor.
More recently, the General Assembly has expressly
provided authority for the State’s district attorneys to employ
private attorneys to exercise a more expansive prosecutorial
power than that historically exercised under our common law by
private prosecutors who were empowered to act only in individual
cases.  N.C.G.S. § 7A-64(2) sets out the mandatory procedure for
a district attorney to follow to appoint private counsel to
provide temporary assistance when criminal dockets are
overcrowded.  N.C.G.S. § 7A-64(2) (1995).  Approval by the
Administrative Officer of the Courts is required before a
district attorney may make any such appointment.  Significantly,
N.C.G.S. § 7A-64 also mandates that “[t]he length of service and
compensation of such temporary appointee shall be fixed by the
Administrative Officer of the Courts in each case.”  Id., para.
2.  The district attorney has no power to provide for
compensation of an attorney appointed under this statute.  The
statute is public notice that compliance with its terms is
required before such an attorney will be compensated by the
State.
Another important statute, N.C.G.S. § 147-17 (1993),
sets out the procedure required for the State to enter a valid
contract to employ outside counsel for purposes other than those
contemplated by N.C.G.S. § 7A-64.  Only after the provisions of
N.C.G.S. § 147-17 have been followed will the State be deemed to
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have entered a valid contract for attorney’s fees and thereby to
have  implicitly waived its sovereign immunity and consented to
be sued in the event of its breach.
N.C.G.S. § 147-17 directs that no State official or
agency may employ outside counsel without the Governor’s
approval.  That statute also mandates that before such counsel
may be employed, the Attorney General must provide the Governor
with a determination that it is impractical for the Attorney
General to render the necessary legal services for the State. 
Finally, the Governor must determine the amount of compensation
that the attorney to be employed will receive and may determine
the source of State funds for the compensation.  All of these
specific requirements must be satisfied in order for the State to
have entered a valid contract with outside counsel to represent
the State’s interest.  Otherwise, no valid contract exists.  The
State’s sovereign immunity will be waived by implication only
once all of the requirements of N.C.G.S. § 147-17 are met and a
valid contract has been entered.  This statute serves as public
notice of its requirements.
Even though plaintiff could not expect to recover from
the State on a theory based upon the State’s implicit waiver of
sovereign immunity, parties bringing such actions are not left
without a means of compensation for maintaining civil nuisance
actions.  N.C.G.S. § 19-8 provides the procedure for the award of
attorney’s fees and costs in a public nuisance action.  The
enactment of N.C.G.S. § 19-8 indicates that the legislature
contemplated only one noncontractual method of payment for
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attorneys who undertake to maintain, on behalf of anyone, a civil
action to abate a nuisance as authorized by N.C.G.S. § 19-2.1. 
Under N.C.G.S. § 19-8, a prevailing party is awarded, in the
trial court’s discretion, attorney’s fees as part of the costs of
maintaining the action.  N.C.G.S. § 19-8 gave plaintiff statutory
notice of the sole method of compensation of private attorneys
maintaining public nuisance actions for other persons.  The fact
that a district attorney may permit an attorney to bring a public
nuisance action in his name does not mean that the district
attorney may, acting alone, also enter into a valid contract
binding the State to pay attorney’s fees.  In public nuisance
actions, an attorney for the party maintaining the action
receives compensation from the costs awarded that party should
the party prevail.  Surely, plaintiff knew this, as it alleges in
its complaint that it has brought more than one hundred such
actions in the past.
Neither of plaintiff’s two complaints allege compliance
with N.C.G.S. § 147-17, nor has the State in any other manner
entered into a valid contract with plaintiff for legal services. 
A contract implied in law--as opposed to an express valid
contract--simply will not form a sufficient basis for a court to
make a reasonable inference that the State has intended to waive
its sovereign immunity.  N.C.G.S. § 19-8 is the proper source of
compensation for an attorney representing a prevailing party in a
public nuisance action, at least when the State has not expressly
entered into a valid contract for such legal services.
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For the foregoing reasons, the trial court correctly
dismissed plaintiff’s claims against defendant State of North
Carolina, and the decision of the Court of Appeals to the
contrary was in error.  The decision of the Court of Appeals on
this issue is reversed, and this case is remanded to that court
for its further remand to the Superior Court, Mecklenburg County,
for reinstatement of the order dismissing all claims against the
State.
REVERSED AND REMANDED.