Bates v. Charlotte-Mecklenburg Historic Landmarks Comm'n

897 S.E.2d 1

Tyson BATES and Regina Bates, Plaintiffs,

v.CHARLOTTE-MECKLENBURG HISTORIC LANDMARKS COMMISSION; Daniel Morrill, Individually and in His Official Capacity as Consulting Director of the Charlotte-Mecklenburg Historic Landmarks Commission; Harold Leonard Norman, Individually and in His Official Capacity as Chairman of the Projects Committee; and Jack Thomson, Individually and in His Official Capacity as Director of the Charlotte-Mecklenburg Historic Landmarks Commission, Defendants.

No. COA23-57

Court of Appeals of North Carolina.

Filed January 2, 2024

Appeal by defendants from order entered 14 October 2022 by Judge Reggie E. McKnight in Mecklenburg County Superior Court. Heard in the Court of Appeals 19 September 2023. Mecklenburg County, No. 22-CVS-4643

Ruff Bond Cobb Wade & Bethune, LLP, by Ronald L. Gibson, for defendant-appellants.

Q Byrd Law, Fayetteville, by Quintín D. Byrd, for plaintiff-appellees.

THOMPSON, Judge.

In this interlocutory appeal which concerns two failed real estate transactions, defendants contend that the trial court erred in denying their motion to dismiss some of plaintiffs’ claims based upon defendants’ assertions of governmental and sovereign immunity. As discussed below, in light of controlling precedent and certain deficiencies in plaintiffs’ complaint, we agree in part and therefore we reverse the trial court’s denial of defendants’ motion to dismiss (1) claims for negligence in the care of historic property and unjust enrichment as to all defendants and (2) the claim of conversion as to the entity defendant and the individually named defendants in their official capacities. However, we leave undisturbed the trial court’s denial of defendants’ motion to dismiss plaintiffs’ (3) claim of breach of the covenant of good faith and fair dealing against all defendants and their (4) conversion claim against the individual defendants in their individual capacities.

Defendants have also filed a petition for writ of certiorari in this Court, (5) seeking consideration of additional issues for which there is no right of immediate appeal, which we dismiss as moot in part and deny in part.

I. Factual Background and Procedural History

This case arises from plaintiffs’ attempt to purchase from defendants a property located in Huntersville and known as the Torrence-Lytle School. According to plaintiffs’ complaint, the property, which is no longer in use as a school and has fallen into disrepair, "is one of the oldest remaining African-American school buildings in Mecklenburg County" and is therefore of historic significance. In November. 2007, the property was transferred to defendant Charlotte-Mecklenburg Historic Landmarks Commission (HLC),¹ an entity created by the City of Charlotte and Mecklenburg County pursuant to N.C. Gen. Stat. § 160D-941 et seq., for the purpose of identifying and preserving historic properties. Plaintiffs attempted to purchase the property from HLC by entering into contracts for purchase ² in 2016 and again in 2019 but were never able to obtain ownership. As a result of this frustration of their purpose, plaintiffs filed a complaint in the Superior Court, Mecklenburg County on 22 March 2022 which alleged eight claims against defendants ³: discriminatory real estate practices, breach of the covenant of good faith and fair dealing, breach of contract, negligence in the care of historic property, unfair and deceptive trade practices, conversion, unjust enrichment, and punitive damages.

On 10 June 2022, defendants filed a motion for summary judgment on plaintiffs’ breach of contract claim and a motion to dismiss all of plaintiffs’ claims pursuant to Rule of Civil Procedure 12(b)(1), (2), and (6), raising governmental immunity on behalf of HLC and the individual defendants in their official capacities, and public official immunity on behalf of the individual defendants in their individual capacities, along with other defenses. After the motions were heard at the 11 July 2022 civil session of the Superior Court, Mecklenburg County, the trial court allowed defendants’ motion to dismiss plaintiffs’ claims for discriminatory real estate practices, unfair and deceptive trade practices, and punitive damages. The trial court, however, denied the motion to dismiss as to plaintiffs’ claims for breach of the covenant of good faith and fair dealing, breach of contract, negligence in the care of historic property, conversion of earnest money deposits, and unjust enrichment. No ruling by the trial court on defendants’ motion for summary judgment appears in the record on appeal. Defendants filed their notice of appeal on 2 November 2022.

II. Analysis

Defendants argue that the trial court erred in denying their motion to dismiss plaintiffs’ claims for breach of the covenant of good faith and fair dealing, negligence in the care of historie property, conversion, and unjust enrichment based upon defendants’ assertion of sovereign immunity defenses: governmental immunity on behalf of HLC and the individual defendants in their official capacities and public official immunity on behalf of the individual defendants in their individual capacities. As to HLC and the individual defendants in their official capacities, we agree as to plaintiffs’ claims for negligence in the care of historic property, conversion, and unjust enrichment, but we conclude that neither governmental nor public official immunity is a defense to a claim of breach of the covenant of good faith and fair dealing. As to the claim of conversion against the individual defendants in their individual capacities, we hold that the trial court properly denied defendants’ motion to dismiss, as plaintiffs’ complaint was sufficient to survive those defendants’ immunity defense at the pleading stage, and accordingly, we reverse the trial court’s order as to that portion of that claim. Plaintiffs’ petition for writ of certiorari seeking review of other issues is denied in part and dismissed as moot in part.

A. Appellate jurisdiction

[1] The order from which this appeal is taken is interlocutory. See, e.g., Bartley v. City of High Point, 381 N.C. 287, 293, 873 S.E.2d 525, 532 (2022) ("An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court to settle and determine the entire controversy." (citation, omitted)). "As a general proposition, interlocutory orders are not immediately appealable unless the order in question affects a substantial right." State ex rel. Stein v. Kinston Charter Academy, 379 N.C. 560, 571, 866 S.E.2d 647, 655 (2021) (citing N.C. Gen. Stat. § 7A-27(b)(3)(a) (2019)). See also N.C. Gen. Stat. § 1-277(a) (2021) (providing that "[a]n appeal may be taken from every judicial order or determination of a judge of a superior … court, upon or involving a matter of law or legal inference … that affects a substantial right").

[2–5] "Where a defendant asserts a form of sovereign immunity,⁴ "such immunity is more than a mere affirmative defense, as it shields a defendant entirely from having to answer for its conduct at all in a civil suit, for damages." Craig v. New Hanover Cty. Bd. of, Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 354 (2009) (citing Mitchell v. Forsyth, 472 U.S. 511, 525, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985)). For this reason, a trial court’s ruling "on grounds of sovereign immunity is immediately appealable, though interlocutory, because it represents a substantial right, as ‘[t]he entitlement is an immunity from suit rather than a mere defense to liability; and … it is effectively lost if a case is erroneously permitted to go to trial.’ " Craig, 363 N.C. at 338, 678 S.E.2d at 354 (quoting Mitchell, 472 U.S. at 526, 105 S.Ct. 2806).

[6–8] We are mindful, however, that "[o]rders denying Rule 12(b)(1) motions to dismiss based on sovereign immunity, and therefore public official immunity, ‘are not immediately appealable because they neither affect a substantial right nor constitute an adverse ruling as to personal jurisdiction.’ " Green v. Howell, 274 N.C. App. 158, 164, 851 S.E.2d 673, 678 (2020) (quoting Can Am South, LLC v. State, 234 N.C App. 119, 124, 759 S.E.2d 304, 308 (citation omitted), disc. review denied, 367 N.C. 791, 766 S.E.2d 624 (2014)). See also Teachy v. Coble Dairies, Inc., 306 N.C. 324, 327, 293 S.E.2d 182, 184 (1982) (holding, in the context of interlocutory appeals implicating sovereign immunity, that "while [N.C. Gen. Stat. §] 1-277(b)⁵ permits the immediate appeal of an order denying a motion made pursuant to Rule 12(b)(2) to dismiss for lack of jurisdiction over the person, that statute does not apply to orders denying motions made pursuant to Rule 12(b)(1) to dismiss for lack of subject matter jurisdiction"). However, the " ‘denial of a Rule 12(b)(2) motion premised on sovereign immunity constitutes an adverse ruling on personal jurisdiction and is therefore immediately appealable under section 1-277(b),’ " while "the denial of a 12(b)(6) motion based on the defense of sovereign immunity affects a substantial right and is immediately appealable under section 1-277(a)." Green, 274 N.C. App. at 164, 851 S.E.2d at 668 (quoting Can Am South, LLC, 234 N.C. App. at 124, 759 S.E.2d at 308) (other citations omitted).

As noted above, defendants’ motion to dismiss asserting governmental and public official immunity was made pursuant to Rule of Civil Procedure 12(b)(1), (2), and (6), but although the trial court’s order allowing in part and denying in part defendants’ motion cites all three subsections of Rule 12 as the basis for the motion, the order does not specifically state the ground or grounds upon which the court ruled. Accordingly, we dismiss defendants’ appeal from the trial court’s order to the extent it was premised upon Rule 12(b)(1) but allow the appeal to the extent that the trial court’s ruling was based upon Rule 12(b)(2) and (6).

B. Standard of review

[9, 10] When reviewing a...