Court Opinion

ID: 4556316
Source: CourtListenerOpinion
Date Created: 2020-08-18 12:06:59.825603+00
Date Added: 2024-06-11T09:26:57.336759
License: Public Domain

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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                                  Opinion of the Court

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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                                   Opinion of the Court

      “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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                                   Opinion of the Court

                            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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                                  Opinion of the Court

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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