Wray v. City of Greensboro

IN THE SUPREME COURT OF NORTH CAROLINA

No. 255A16

Filed 18 August 2017

DAVID WRAY

v.
CITY OF GREENSBORO

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of

the Court of Appeals, ___ N.C. App. ___, 787 S.E.2d 433 (2016), reversing an order

entered on 13 May 2015 by Judge James C. Spencer, Jr. in Superior Court, Guilford

County, and remanding the case for further proceedings. Heard in the Supreme

Court on 9 May 2017 in session in the Old Chowan County Courthouse (1767) in the

Town of Edenton pursuant to N.C.G.S. § 7A-10(a).

Carruthers & Roth, P.A., by Kenneth R. Keller and Mark K. York, for plaintiff-
appellee.

Mullins Duncan Harrell & Russell PLLC, by Alan W. Duncan and Stephen M.
Russell, Jr.; and Smith Moore Leatherwood LLP, by Patrick M. Kane, for
defendant-appellant.

Wilson & Helms LLP, by Lorin J. Lapidus; and Kimberly S. Hibbard, General
Counsel, and Gregory F. Schwitzgebel, III, Associate General Counsel, for North
Carolina League of Municipalities, amicus curiae.

HUDSON, Justice.

This case involves attempts by plaintiff, David Wray, a former Chief of Police

for defendant, the City of Greensboro, to obtain reimbursement from the City for costs
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Opinion of the Court

incurred by plaintiff in defending lawsuits brought against him for events that

occurred during his tenure as Chief of Police. Because we conclude that plaintiff has

sufficiently pleaded waiver of governmental immunity by alleging the essence of a

contract claim, we affirm the decision of the Court of Appeals reversing the trial

court’s order of dismissal and remanding the matter for further proceedings.

On 2 January 2009, plaintiff filed a complaint in the Superior Court in Guilford

County, seeking, inter alia, a judgment declaring that he is entitled to

indemnification and reimbursement from the City for all legal expenses incurred by

him in connection with two lawsuits naming him as a defendant. In his complaint

plaintiff stated that he began employment with defendant as a police officer in March

1981 and rose through the ranks to be named Chief of Police in July 2003. According

to plaintiff, he was told that he “would need to take appropriate steps to restore the

integrity and high standards” of the police department that had deteriorated under

his predecessor. Plaintiff instituted measures that were unpopular with some

officers, and he was ultimately forced to resign from his position in January 2006.

In 2007 and 2008, respectively, two police officers sued plaintiff and other

individuals, as well as the City, seeking damages for various wrongs alleged to have

been inflicted on them during plaintiff’s tenure. In his complaint plaintiff states that

he requested that the City provide him with a defense in both suits, which

“contain[ed] allegations that David Wray was acting within the course and scope of

his employment with the City”; however, the City refused to do so.

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Opinion of the Court

Plaintiff asserted that in November 1980, long before either suit was filed, “the

City passed a Resolution which provided that if a City officer or an employee were

sued in either their individual or official capacities, the City would provide for the

defense of said employee or individual and pay any judgment resulting from said suit

against the employee or official.” Plaintiff stated that “[t]he Resolution provided for

defense and indemnification if the employee or official were acting in the scope and

course of their employment or duty, unless the employee or official: 1) acted with

fraud, corruption or actual malice, or 2) acted or failed to act in a wanton or oppressive

manner.” The 1980 Resolution reads that, as authorized by the General Assembly in

1977 in section 160A-167 of the North Carolina General Statutes,1 “it is . . . the policy

of the City of Greensboro to provide for the defense of its officers and employees

1 Section 160A-167 of the North Carolina General Statutes, titled “Defense of
employees and officers; payment of judgments,” reads in pertinent part:

Upon request made by . . . any . . . former employee or officer, . .
. any city . . . may provide for the defense of any civil or criminal
action or proceeding brought against him either in his official or
in his individual capacity, or both, on account of any act done or
omission made, or any act allegedly done or omission allegedly
made, in the scope and course of his employment or duty as an
employee or officer of the city . . . . The defense may be provided
by the city . . . by its own counsel, or by employing other counsel,
or by purchasing insurance which requires that the insurer
provide the defense. Providing for a defense pursuant to this
section is hereby declared to be for a public purpose, and the
expenditure of funds therefor is hereby declared to be a
necessary expense. Nothing in this section shall be deemed to
require any city . . . to provide for the defense of any action or
proceeding of any nature.

N.C.G.S. § 160A-167(a) (2015).

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against civil claims and judgments and to satisfy the same, either through insurance

or otherwise, when resulting from any act done . . . in the scope and course of their

employment,” with the exceptions stated above. The policy authorizes the City

Manager to determine whether a claim filed against an officer meets the standards

set forth in the policy and states that the City Council “shall determine . . . whether”

to provide for payment of any such claim made or judgment entered against an officer.

Plaintiff asked the court to “enter a declaratory judgment requiring the City to

defend and indemnify him in connection with [both lawsuits]” and to pay his costs for

defending those suits.

The case was removed to federal court to address a companion federal claim

asserted by plaintiff. That claim was dismissed, and in August 2013, the state-law

claim was remanded to the Superior Court in Guilford County.

On 20 October 2014, plaintiff filed an amended complaint reflecting dismissal

of the federal claim and adding details to his remaining claim seeking indemnification

and reimbursement from the City. Specifically, plaintiff stated that a third lawsuit

was filed against him, the City, and other individuals in January 2009, and that he

also had to pay his own defense costs for that action. Plaintiff reiterated that “[a]s

an employee of the City acting within the course and scope of his employment, and

pursuant to the provisions of the City Policy, [he] is entitled to indemnification and

reimbursement for the expenses he has incurred as a result of the allegations by and

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Opinion of the Court

position taken by the City, as well as costs he has incurred in connection with his

defense” in all three lawsuits “in the amount of $220,593.71.”

On 24 November 2014, the City filed a motion to dismiss under Civil Procedure

Rules 12(b)(1), 12(b)(2), and 12(b)(6). Defendant asserted that the complaint should

be dismissed for “lack of a justiciable controversy, lack of personal and subject matter

jurisdiction, and for failure to state a claim.” Defendant argued, inter alia, that the

claims asserted by plaintiff in his first amended complaint, including his “newly-

added claims for reimbursement of legal expenses,” “are barred by the doctrine of

governmental immunity, and accordingly Plaintiff has failed to state a claim on which

relief can be granted.”

On 13 May 2015, Judge James C. Spencer, Jr. entered an order dismissing

plaintiff’s first amended complaint with prejudice. The trial court ruled that

defendant is “shielded by the doctrine of governmental immunity, which immunity

has not been waived.” The court added, “Neither the institution of a plan adopted

pursuant to N.C.G.S. § 160A-167, under which a city may pay all or part of some

claims against employees of the city, nor action taken by the city under N.C.G.S. §

160A-167, waives governmental immunity.” Plaintiff appealed to the Court of

Appeals.

On 7 June 2016, a divided panel of the Court of Appeals reversed the trial

court’s order dismissing plaintiff’s claim and remanded the matter for further

proceedings. Wray v. City of Greensboro, ___ N.C. App. ___, 787 S.E.2d 433 (2016).

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The majority held that plaintiff “has, in fact, set forth allegations that the City has

waived governmental immunity . . . based on the City’s act of entering into an

employment agreement with Plaintiff.” Id. at ___, 787 S.E.2d at 435.

The majority explained, “Specifically, Plaintiff has made a breach of contract

claim, essentially alleging that he had a contract with the City to work for the City

and that pursuant to the City’s contractual obligations, the City is required to pay for

his litigation expenses.” Id. at ___, 787 S.E.2d at 435 (emphasis omitted). The

majority added, “Importantly, the City is authorized to enter into employment

contracts with its police officers, and the City is authorized by N.C.[G.S.] § 160A-167

to enact a policy by which it may contractually obligate itself to pay for certain legal

expenses incurred by these officers.” Id. at ___, 787 S.E.2d at 435-36.

The majority reiterated throughout its opinion that this appeal is not about

the merits of plaintiff’s contract claim. Id. at ___, 787 S.E.2d at 436-37. Rather, the

issue to be resolved is whether the trial court erred in dismissing the complaint

“based on the doctrine of governmental immunity, the only basis of its order.” Id. at

___, 787 S.E.2d at 436 (emphasis omitted). The majority reviewed plaintiff’s amended

complaint and determined that plaintiff sufficiently alleged waiver. Id. at ___, 787

S.E.2d at 437. Specifically, the majority determined that plaintiff alleged “that he

was employed by the City’s Police Department as the Chief of Police, that he was

acting within the ‘course and scope of his employment’ at all times material to his

claim, that pursuant to the provisions of the City Policy he is entitled to

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Opinion of the Court

reimbursement for his legal expenses and fees, and that the City failed to honor the

City Policy.” Id. at ___, 787 S.E.2d at 437. Therefore, the majority held that plaintiff

“establish[ed] waiver through a breach of Plaintiff’s contractual relationship as an

employee of the City.” Id. at ___, 787 S.E.2d at 437. The majority further held that

“the City is not shielded by the doctrine of governmental immunity to the extent that

Plaintiff’s action is based in contract.” Id. at ___, 787 S.E.2d at 438. Accordingly, the

majority reversed the trial court’s order and remanded the case for further

proceedings. Id. at ___, 787 S.E.2d at 438.

The dissent would conclude that the trial court properly granted defendant’s

motion to dismiss. Id. at ___, 787 S.E.2d at 438 (Bryant, J., dissenting). The dissent

would characterize the City’s policy, as declared in the 1980 Resolution, as

“prescrib[ing] an intent to provide for the defense of officers and employees,” which,

according to the dissent, does not equate to “provid[ing] substantive rights or

procedural steps.” Id. at ___, 787 S.E.2d at 439 (citations and emphasis omitted).

The dissent “would hold that the Resolution is not a contractual provision upon which

plaintiff can compel defendant’s performance.” Id. at ___, 787 S.E.2d at 439.

While acknowledging that “there is plenary support for the proposition that an

employer-employee relationship is essentially contractual and such a relationship

often waives immunity from suit on the contract,” the dissent would nonetheless

affirm the trial court. Id. at ___, 787 S.E.2d at 439 (citations omitted). The dissent

would conclude “that the record before the trial court was sufficient to determine that

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Opinion of the Court

plaintiff could not establish a valid contractual agreement with defendant City of

Greensboro on the issue central to this action, the provision of a legal defense as a

condition of employment.” Id. at ___, 787 S.E.2d at 439-40. Accordingly, the dissent

would “hold the trial court was correct in concluding that defendant . . . did not waive

its governmental immunity to plaintiff’s suit.” Id. at ___, 787 S.E.2d at 440.

Therefore, the dissent would affirm the trial court’s order dismissing plaintiff’s

complaint. Id. at ___, 787 S.E.2d at 440. Defendant filed its appeal based on the

dissenting opinion.

Because we agree that plaintiff has sufficiently pleaded waiver of

governmental immunity by alleging a contract claim, we affirm the decision of the

Court of Appeals reversing the trial court’s order of dismissal and remanding the

matter for further proceedings.

“Dismissal of an action under Rule 12(b)(6) is appropriate when the complaint

‘fail[s] to state a claim upon which relief can be granted.’ ” Arnesen v. Rivers Edge

Golf Club & Plantation, Inc., 368 N.C. 440, 448, 781 S.E.2d 1, 7 (2015) (alteration in

original) (quoting N.C. R. Civ. P. 12(b)(6)). “[T]he well-pleaded material allegations

of the complaint are taken as [admitted]; but conclusions of law or unwarranted

deductions of fact are not admitted.” Id. at 448, 781 S.E.2d at 7 (first alteration in

original) (quoting Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970)). “The

system of notice pleading affords a sufficiently liberal construction of complaints so

that few fail to survive a motion to dismiss.” Ladd v. Estate of Kellenberger, 314 N.C.

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477, 481, 334 S.E.2d 751, 755 (1985). “A complaint should not be dismissed under

Rule 12(b)(6) ‘. . . unless it affirmatively appears that plaintiff is entitled to no relief

under any state of facts which could be presented in support of the claim.’ ” Id. at

481, 334 S.E.2d at 755 (quoting Presnell v. Pell, 298 N.C. 715, 719, 260 S.E.2d 611,

613 (1979)). “We review appeals from dismissals under Rule 12(b)(6) de novo.”

Arnesen, 368 N.C. at 448, 781 S.E.2d at 8 (citing Bridges v. Parrish, 366 N.C. 539,

541, 742 S.E.2d 794, 796 (2013)). Additionally, “[q]uestions of law regarding the

applicability of sovereign or governmental immunity are reviewed de novo.” Irving

v. Charlotte-Mecklenburg Bd. of Educ., 368 N.C. 609, 611, 781 S.E.2d 282, 284 (2016)

(citations omitted).

As a general rule, “[u]nder the doctrine of sovereign immunity, the State is

immune from suit absent waiver of immunity.” Evans ex rel. Horton v. Hous. Auth.,

359 N.C. 50, 53, 602 S.E.2d 668, 670 (2004) (quoting Meyer v. Walls, 347 N.C. 97, 104,

489 S.E.2d 880, 884 (1997)); see also Smith v. State, 289 N.C. 303, 309, 222 S.E.2d

412, 417 (1976). Specifically, “[t]he doctrine has proscribed both contract and tort

actions against the [S]tate and its administrative agencies, as well as suits to prevent

a State officer or Commission from performing official duties or to control the exercise

of judgment on the part of State officers or agencies.” Smith, 289 N.C. at 309-10, 222

S.E.2d at 417 (citations omitted). Governmental immunity is that portion of the

State’s sovereign immunity which extends to local governments. See, e.g., Evans, 359

N.C. at 53, 602 S.E.2d at 670; Meyer, 347 N.C. at 104, 489 S.E.2d at 884.

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A State or local government, however, waives that immunity when it enters

into a valid contract, to the extent of that contract. Whitfield v. Gilchrist, 348 N.C.

39, 42-43, 497 S.E.2d 412, 414 (1998); Smith, 289 N.C. at 320, 222 S.E.2d at 423-24.

Specifically, this Court has held “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, 289 N.C. at 320, 222 S.E.2d at 423-24. Thus, “in causes of action on contract

. . . , the doctrine of sovereign immunity will not be a defense to the State. The State

will occupy the same position as any other litigant.” Id. at 320, 222 S.E.2d at 424

(citation omitted). “Likewise, a city or county waives immunity when it ‘enters into

a valid contract.’ ” Wray, ___ N.C. App. at ___, 787 S.E.2d at 436 (majority opinion)

(emphasis omitted) (quoting M Series Rebuild, LLC v. Town of Mount Pleasant, 222

N.C. App. 59, 65, 730 S.E.2d 254, 259, disc. rev. denied, 366 N.C. 413, 735 S.E.2d 190

(2012)).

“In order to overcome a defense of governmental immunity, the complaint must

specifically allege a waiver of governmental immunity. Absent such an allegation,

the complaint fails to state a cause of action.” Fabrikant v. Currituck County, 174

N.C. App. 30, 38, 621 S.E.2d 19, 25 (2005) (quoting Paquette v. County of Durham,

155 N.C. App. 415, 418, 573 S.E.2d 715, 717 (2002) (citations omitted), disc. rev.

denied, 357 N.C. 165, 580 S.E.2d 695 (2003)); accord Hinson v. City of Greensboro,

232 N.C. App. 204, 210, 753 S.E.2d 822, 827 (2014). “This requirement does not,

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however, mandate that a complaint use any particular language. Instead, consistent

with the concept of notice pleading, a complaint need only allege facts that, if taken

as true, are sufficient to establish a waiver . . . [of] immunity.” Fabrikant, 174 N.C.

App. at 38, 621 S.E.2d at 25 (emphasis added) (citation omitted). Because in contract

actions “the doctrine of sovereign immunity will not be a defense,” a waiver of

governmental immunity is implied, and effectively alleged, when the plaintiff pleads

a contract claim. See Smith, 289 N.C. at 320, 222 S.E.2d at 423-24 (“[W]henever the

State of North Carolina . . . enters into a valid contract, the State implicitly consents

to be sued for damages on the contract in the event it breaches the contract.”

(emphasis added)). Thus, an allegation of a valid contract is an allegation of waiver

of governmental immunity.

Here plaintiff adequately pleaded a contract action: that he had an

employment relationship with the City that included the obligation on the part of the

City to pay for his defense and that the City failed to do so. Specifically, in his first

amended complaint plaintiff alleged, in pertinent part, as follows:

2. The plaintiff . . . was formerly Chief of Police
of the Greensboro Police Department.

....

4. David Wray began employment with the
Police Department of the City of Greensboro as a police
officer in March of 1981.

5[.] Through the years, David Wray was promoted
to Sergeant, Lieutenant, Assistant Chief, and ultimately

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Opinion of the Court

was promoted . . . to the position of Chief of Police in July
of 2003.

....

25. Mitchell Johnson’s actions in locking David
Wray from his office effectively ended David Wray’s ability
to serve as Chief and as a practical matter terminated
David Wray’s employment with the City.

26. David Wray submitted his resignation as
Chief on January 9, 2006.

....

35[.] At all times material hereto . . . David Wray
acted in the scope and course of his employment with the
City, and not because of actual fraud, corruption, actual
malice, or in a wanton or oppressive manner.

....

38[.] By letter dated June 5, 2007, counsel for
David Wray wrote to counsel representing the City,
pointing out that the Fulmore complaint pertained to
“official capacity” conduct on the part of David Wray and
requested that the City indemnify David Wray and provide
him with a defense in the action. . . .

39. By letter dated July 3, 2007, counsel for the
City responded to the request that the City provide David
Wray with representation by providing a copy of the City
Policy dated 13 November 1980 and 18 November 1980
(“City Policy”) and denied the request for representation,
based “on current information.” . . .

40. Upon information and belief, the City paid for
representation of Randy Gerringer, Brian Bissett and
Craig McMinn in the Fulmore Suit.

....

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46. David Wray also requested that the City
provide him with a defense in connection with the Hinson
Suits.

47. The City did not defend David Wray or
provide David Wray with a defense in the Hinson Suits.

....

51. David Wray requested that the City provide
him with a defense and indemnification in the Alexander
Suit.

52. The City did not defend David Wray or
provide David Wray with a defense in the Alexander Suit.

....

62. At all times material hereto, David Wray was
acting within the course and scope of his employment with
the City of Greensboro, in the good faith discharge of his
duties.

....

64. At all times material to the allegations
contained in the Fulmore Suit, the Hinson Suits, and the
Alexander Suit, David Wray acted within the course and
scope of his employment as the Chief of the Greensboro
Police Department and is entitled to reimbursement for
costs he incurred to defend himself in connection with the
statements made by the City, as well as costs incurred in
connection with his defense in the Fulmore Suit, the
Hinson Suits, and the Alexander Suit.

65[.] The City has refused and continues to refuse
to reimburse David Wray for his legal expenses.

66. As an employee of the City acting within the
course and scope of his employment, and pursuant to the

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provisions of the City Policy, David Wray is entitled to
indemnification and reimbursement for the expenses he
has incurred as a result of the allegations by and position
taken by the City, as well as costs he has incurred in
connection with his defense in the Fulmore Suit, the
Hinson Suits, and the Alexander Suit in the amount of
$220,593.71.

In sum, plaintiff alleged that he was an “employee of” defendant, that he “acted

within the course and scope of his employment as the Chief of the Greensboro Police

Department,” that “pursuant to the provisions of the City Policy, [he] is entitled to

indemnification and reimbursement for the . . . costs he has incurred in connection

with his defense” in various lawsuits, and that defendant “has refused and continues

to refuse to reimburse” him.

In light of the low bar for notice pleading under Rule 12(b)(6), as well as the

waiver of governmental immunity that is inferred from the pleading of a contract

claim, we conclude that the averments in plaintiff’s first amended complaint are

sufficient to allege a waiver of governmental immunity due to the City’s failure to

honor contractual obligations to plaintiff as an employee. Although we hold that

dismissal of the complaint was not warranted, like the Court of Appeals, we express

no opinion on the merits of plaintiff’s contract action. We simply conclude, as we did

in Smith, that “plaintiff is not to be denied his day in court because his contract was

with” the City. Smith, 289 N.C. at 322, 222 S.E.2d at 424.

Moreover, the trial court erroneously concluded that the City was “shielded by

the doctrine of governmental immunity” based on this Court’s decision in Blackwelder

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Opinion of the Court

v. City of Winston-Salem, 332 N.C. 319, 420 S.E.2d 432 (1992). Citing Blackwelder,

the trial court stated: “Neither the institution of a plan adopted pursuant to N.C.G.S.

§ 160A-167, under which a city may pay all or part of some claims against employees

of the city, nor action taken by the city under N.C.G.S. § 160A-167, waives

governmental immunity.” Blackwelder, however, does not control here. In

Blackwelder this Court stated that “[a]ction by the City under N.C.G.S. § 160A-167

does not waive immunity” in the context of a tort action, noting that “N.C.G.S. § 160A-

485 provides that the only way a city may waive its governmental immunity is by the

purchase of liability insurance.” 332 N.C. at 324, 420 S.E.2d at 436 (emphasis added).

Section 160A-485 of the North Carolina General Statutes specifically addresses

waiver of immunity from civil liability in tort. N.C.G.S. § 160A-485(a) (2015) (“Any

city is authorized to waive its immunity from civil liability in tort by the act of

purchasing liability insurance.”). Here, in the context of a contract action, rather

than a tort action, section 160A-485 has no application and does not limit how

governmental immunity may be waived. Because there is no analogous statute

limiting mechanisms for waiver of governmental immunity in the context of contract

actions, the reasoning in Blackwelder does not control here.

We conclude that plaintiff’s first amended complaint sufficiently presents

allegations of a claim sounding in contract. As such, we further conclude that the

complaint sufficiently alleges that the City has consented to be sued to the extent of

any such contract. These allegations are adequate to raise a waiver of governmental

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Opinion of the Court

immunity, and thus, to survive the City’s motion to dismiss. For these reasons, we

affirm the decision of the Court of Appeals reversing the trial court’s order of

dismissal and remanding the matter for further proceedings.

AFFIRMED.

Justice ERVIN dissenting.

As a result of its reliance upon what I believe to be an excessively “low bar for

notice pleading under [N.C.G.S. § 1A-1,] Rule 12(b)(6),” the Court has determined

that plaintiff “adequately pleaded a contract action: that he had an employment

relationship with the City that included the obligation on the part of the City to pay

for his defense and that the City failed to do so.” In view of my belief that plaintiff

did not sufficiently allege the existence of a contractual relationship between himself

and the City that encompassed a right to obtain reimbursement for the costs of

defending the civil actions brought against him in the Alexander, Fulmore, and

Hinson suits, I am unable to agree with the Court’s conclusion that plaintiff’s

amended complaint adequately alleged the necessary waiver of governmental

immunity. As a result, I respectfully dissent from the Court’s decision to affirm the

Court of Appeals’ opinion in this case.

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Ervin, J., dissenting

The trial court dismissed plaintiff’s first amended complaint on the grounds

that the City had not waived its right to assert governmental immunity in this case,

with “[n]either the institution of a plan adopted pursuant to N.C.G.S. § 160A-167,

under which a city may pay all or part of some claims against employees of the city,

nor action taken by the city under N.C.G.S. § 160A-167” sufficing to work such a

waiver. In reversing the trial court’s order, the Court of Appeals determined that

plaintiff “has essentially pleaded that he had an employment relationship with the

City and that the City has contractually obligated itself to pay for his defense as a

benefit of his contract,” with the issue of “[w]hether the City is, in fact, obligated to

pay contractually by virtue of its passage of the City Policy [going] to the merits”

rather than being “the subject of this appeal.” Wray v. City of Greensboro, ___ N.C.

App. ___, ____, 787 S.E.2d 433, 437 (2016). In upholding this determination, this

Court has held that “plaintiff’s first amended complaint sufficiently presents

allegations of a claim sounding in contract” and “sufficiently alleges that the City

consents to be sued to the extent of any such contract.” As a result, the ultimate issue

before the Court in this case is the extent, if any, to which plaintiff’s first amended

complaint adequately alleges that the City breached a contract with plaintiff under

which plaintiff was entitled to obtain reimbursement for the cost of defending civil

actions brought against him in connection with actions that he had taken in the

course and scope of his employment by the City.

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Ervin, J., dissenting

According to Rule 12(b)(6) of our Rules of Civil Procedure, a complaint is

subject to dismissal in the event that it fails “to state a claim upon which relief can

be granted.” N.C.G.S. § 1A-1, Rule 12(b)(6) (2015). “When the complaint on its face

reveals that no law supports the claim, reveals an absence of facts sufficient to make

a valid claim, or discloses facts that necessarily defeat the claim, dismissal is proper.”

Arnesen v. Rivers Edge Golf Club & Plantation, Inc., 368 N.C. 440, 448, 781 S.E.2d 1,

8 (2015) (citing Wood v. Guilford County, 355 N.C. 161, 166, 558 S.E.2d 490, 494

(2002)). In determining whether a motion to dismiss for failure to state a claim for

relief should be allowed or denied, “the well-pleaded material allegations of the

complaint are taken as admitted; but conclusions of law or unwarranted deductions

of fact are not.” Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970) (quoting

2A James Wm. Moore et al., Moore’s Federal Practice ¶ 12.08 (2d ed. 1968)).

Rule 8(a)(1) of our Rules of Civil Procedure requires civil complaints to include

“[a] short and plain statement of the claim sufficiently particular to give the court

and the parties notice of the transactions, occurrences, or series of transactions or

occurrences, intended to be proved showing that the pleader is entitled to relief.”

N.C.G.S. § 1A-1, Rule 8(a)(1) (2015). Thus, pursuant to Rule 8(a)(1), a complaint is

sufficient to state a claim upon which relief can be granted in the event that

“it gives sufficient notice of the events or transactions
which produced the claim to enable the adverse party to
understand the nature of it and the basis for it, to file a
responsive pleading, and by using the rules provided for
obtaining pretrial discovery to get any additional

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Ervin, J., dissenting

information he may need to prepare for trial.”
Nevertheless, the plaintiff’s complaint must allege enough
“to give the substantive elements of his claim.”

RGK, Inc. v. U.S. Fid. & Guar. Co., 292 N.C. 668, 674, 235 S.E.2d 234, 238 (1977)

(quoting Sutton, 277 N.C. at 104-05, 176 S.E.2d at 167); see also United Leasing Corp.

v. Miller, 45 N.C. App. 400, 405, 263 S.E.2d 313, 317 (stating that “[a] claim for relief

must still satisfy the requirements of the substantive law which gave rise to the

pleadings, and no amount of liberalization should seduce the pleader into failing to

state enough to give the substantive elements of his claim”), disc. rev. denied, 300

N.C. 374, 267 S.E.2d 685 (1980). As this Court stated shortly after the enactment of

the North Carolina Rules of Civil Procedure, “the additional requirements in our Rule

8(a)(1) manifest the legislative intent to require a more specific statement, or notice

in more detail, than Federal Rule 8(a)(2) requires.” Sutton, 277 N.C. at 100, 176

S.E.2d at 164.

Governmental immunity1 “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) (citation omitted). “Under the

doctrine of sovereign immunity, the State is immune from suit absent waiver of

1 Although “[t]he State’s sovereign immunity applies to both its governmental and
proprietary functions, while the more limited governmental immunity covers only the acts of
a municipality or a municipal corporation committed pursuant to its governmental
functions,” Evans ex rel. Horton v. Hous. Auth., 359 N.C. 50, 53, 602 S.E.2d 668, 670 (2004)
(citations omitted), “[i]n application here, the distinction is immaterial,” Craig, 363 N.C. at
335 n.3, 678 S.E.2d at 353 n.3, given the obviously governmental nature of the law
enforcement function.

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Ervin, J., dissenting

immunity.” Evans ex rel. Horton v. Hous. Auth., 359 N.C. 50, 53, 602 S.E.2d 668, 670

(2004) (quoting Meyer v. Walls, 347 N.C. 97, 104, 489 S.E.2d 880, 884 (1997)). A

“complaint [against a local governmental entity] does not state a cause of action”

unless it alleges a waiver of governmental immunity. Fields v. Durham City Bd. of

Educ., 251 N.C. 699, 701, 111 S.E.2d 910, 912 (1960).

As the Court acknowledges, a municipality can waive governmental immunity

by entering into a valid express contract. See Whitfield v. Gilchrist, 348 N.C. 39, 42-

43, 497 S.E.2d 412, 414 (1998) (citing Smith v. State, 289 N.C. 303, 320, 222 S.E.2d

412, 423-24 (1976) (holding 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”)). For that reason, the Court correctly notes that “a waiver of governmental

immunity is implied, and effectively alleged, when the plaintiff pleads a contract

claim,” so that, in other words, “an allegation of a valid contract is an allegation of

waiver of governmental immunity.” On the other hand, in the absence of allegations

that the parties entered into “both an express contract and a valid contract, the State

has not waived its sovereign immunity.” Eastway Wrecker Serv., Inc. v. City of

Charlotte, 165 N.C. App. 639, 644, 599 S.E.2d 410, 413 (2004), aff’d per curium, 360

N.C. 167, 622 S.E.2d 495 (2005); see also Whitfield, 348 N.C. at 42-43, 497 S.E.2d at

415 (stating that, “[c]onsistent 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 the

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Ervin, J., dissenting

further implication that the [governmental entity] has intentionally waived its

[governmental immunity] and consented to be sued for damages for breach of the

contract it never entered in fact”).

In order to state a valid express contract claim, the plaintiff “must allege the

existence of a contract between plaintiff and defendant, the specific provisions

breached, the facts constituting the breach, and the amount of damages resulting to

plaintiff from such breach.” RGK, 292 N.C. at 675, 235 S.E.2d at 238 (emphasis

omitted) (quoting Cantrell v. Woodhill Enters., Inc. 273 N.C. 490, 497, 160 S.E.2d 476,

481 (1968)). Admittedly, “[t]here is no rule which requires a plaintiff to set forth in

his complaint the full contents of the contract which is the subject matter of his action

or to incorporate the same in the complaint by reference to a copy thereof attached as

an exhibit” as long as the complaint “allege[s] in a plain and concise manner the

material, ultimate facts which constitute his cause of action.” Id. at 675, 235 S.E.2d

at 238 (quoting City of Wilmington v. Schutt, 228 N.C. 285, 286, 45 S.E.2d 364, 366

(1947)). At a minimum, however, a complaint must “allege such a state of facts as

would put defendants . . . on legal notice of the existence of the contract.” Eller v.

Arnold, 230 N.C. 418, 422, 53 S.E.2d 266, 269 (1949).

In his amended complaint, plaintiff alleged that he “began employment with

the Police Department of the City of Greensboro as a police officer in March of 1981”

and was, “[t]hrough the years, . . . promoted to Sergeant, Lieutenant, Assistant Chief,

and[,] ultimately[,] . . . to the position of Chief of Police in July of 2003.” According to

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Ervin, J., dissenting

a City Policy adopted on 13 and 17 November 1980,2 a copy of which is attached to

plaintiff’s amended complaint and incorporated in plaintiff’s complaint by reference:

1. [I]t is hereby declared to be the policy of the City of
Greensboro to provide for the defense of its officers and
employees against civil claims and judgments and to
satisfy the same, either through insurance or
otherwise,, when resulting from any act done or
omission made, or any act allegedly done or omission
allegedly made, in the scope and course of their
employment or duty as employees or officers of the City,
except and unless it is determined that an officer or
employee (1) acted or failed to act because of actual
fraud, corruption or actual malice or (2) acted or failed
to act in a wanton or oppressive manner.

2. The City Manager or his designee shall determine
whether or not a claim or suit filed against an officer or
employee, either in his official or his individual
capacity, or both, meets the standards set forth herein
and the standards set forth in the aforementioned
statute as specified herein for providing a defense for
such officer or employee.

....

4. The terms “officer” and “employee” as used herein shall
mean present or past officers or employees who might

2 The City’s Policy, upon which plaintiff’s claim rests, was founded, in turn, upon
N.C.G.S. § 160A-167(a), which currently provides, in pertinent part, that, “[u]pon request
made by . . . any . . . employee or officer, or former employee or officer, . . . any city . . . may
provide for the defense of any civil or criminal action or proceeding brought against him either
in his official or in his individual capacity, or both, on account of any act done or omission
made, or any act allegedly done or omission allegedly made, in the scope and course of his
employment or duty as an employee or officer of the city,” with “[n]othing in this section [to]
be deemed to require any city . . . to provide for the defense of any action or proceeding of any
nature.” N.C.G.S. § 160A-167(a) (2015). The payment of any judgments entered against such
municipal employees or officers, which is a subject beyond the scope of the present action
given that plaintiff was not held to be liable in the Alexander, Fulmore, or Hinson suits, is
governed by the provisions of N.C.G.S. § 160A-167(b) and (c).

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Ervin, J., dissenting

hereafter have claims or judgments entered against
them.

5. This resolution shall not be interpreted in any way to
relieve any insurance company of its obligation under
any insurance policy to protect the interest of any
insured under said policy, or to reduce or eliminate the
rights of any officer or any employee of the City against
any other party. Further, except as expressly stated
herein, this resolution is not to be interpreted as an [sic]
waiver of any rights the City has against any party.

6. The terms of this resolution shall include all pending
claims and litigation, as well as any future claims and
litigation which may arise from the date of adoption of
this resolution. Further, this resolution shall constitute
the uniform standards under which claims made or civil
judgments entered against officers or employees or
former officers or employees of the City shall be paid,
and a copy of this resolution shall be maintained in the
office of the City Clerk for public inspection.

According to plaintiff, the actions of City Manager Mitchell Johnson in changing the

locks on plaintiff’s office on 6 January 2006 “effectively ended [plaintiff’s] ability to

serve as Chief and[,] as a practical matter[,] terminated [plaintiff’s] employment with

the City.” Although plaintiff requested the City to pay for his defense in the

Alexander, Fulmore, and Hinson suits, the City declined to do so. As a result, plaintiff

claimed to be entitled to recover “indemnity and reimbursement of fees incurred by

[him] as a result of failure by the [City] to honor the provisions of the” City’s legal fee

and judgment payment reimbursement policy given that, “[a]t all times material to

the allegations contained in the Fulmore Suit, the Hinson Suits, and the Alexander

Suit, [plaintiff] acted within the course and scope of his employment as the Chief of

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Ervin, J., dissenting

the Greensboro Police Department”; “[t]he City has refused and continues to refuse

to reimburse [plaintiff] for his legal expenses”; and “[a]s an employee of the City

acting within the course and scope of his employment, and pursuant to the provisions

of the City Policy, [plaintiff] is entitled to indemnification and reimbursement for the

expenses he has incurred as a result of the allegations by and position taken by the

City, as well as costs he has incurred in connection with his defense in the Fulmore

Suit, the Hinson Suits, and the Alexander Suit in the amount of $220,593.71.”

A careful review of the allegations contained in the amended complaint

discloses that plaintiff never alleged that the City had a contractual obligation to

provide, or reimburse him for the cost of, his defense in the Alexander, Fulmore, and

Hinson suits. Aside from the fact that the word “contract” is nowhere to be found in

the amended complaint, plaintiff simply never alleged that the protections available

under the City’s defense cost reimbursement and judgment payment policy

constituted any part of the consideration that plaintiff received in return for his

service as a City employee. Although there is no “mandate that a complaint use any

particular language” and although a complaint “need only allege facts that, if taken

as true, are sufficient to establish a waiver . . . of . . . immunity,” Fabrikant v.

Currituck County, 174 N.C. App. 30, 38, 621 S.E.2d 19, 25 (2005), plaintiff has

completely failed to allege any basis for a finding that the provisions of the City’s

defense cost reimbursement and judgment payment policy have been incorporated

into plaintiff’s employment contract with the City, such as, for instance, by alleging

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Ervin, J., dissenting

that the Policy was a component of his contract of employment with the City or that

he had a vested contractual right to be reimbursed for the cost of defending the

Alexander, Fulmore, and Hinson suits in accordance with the Policy. On the

contrary, plaintiff has simply alleged that he was a City employee and that the Policy

exists, without making an effort to establish any nexus between these two facts. I

simply do not believe that these allegations suffice to work a waiver of governmental

immunity on the basis of a valid, express contract.

The ordinary sense of the language utilized in plaintiff’s amended complaint

indicates that, instead of attempting to allege an action for breach of his contract of

employment with the City, plaintiff is attempting to bring a direct action to enforce a

freestanding City policy separate and apart from his contract of employment. Such

a reading of plaintiff’s complaint is bolstered by plaintiff’s repeated references to

having “requested” the City to provide him with a defense or to reimburse him for the

cost of his defense in the Alexander, Fulmore, and Hinson suits without making any

reference to his employment contract with the City. Assuming that I have correctly

interpreted plaintiff’s complaint as asserting a direct claim against the City under

the Policy rather than as asserting a claim for breach of plaintiff’s contract of

employment with the City, it is clear that plaintiff has failed to adequately allege any

basis for a waiver of the City’s governmental immunity defense.

Finally, even if plaintiff has alleged that the Policy was a portion of his contract

of employment with the City, or even if plaintiff is entitled to bring a direct claim

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Ervin, J., dissenting

against the City on the basis of the Policy, he still cannot properly plead the requisite

waiver of governmental immunity. As the Policy clearly states, “this resolution is not

to be interpreted as [a] waiver of any rights the City has against any party.” 3 When

read in accordance with its plain meaning, the Policy itself clearly states that it

should not be understood as creating any sort of enforceable contractual right or

operating to work a waiver of any claim of governmental immunity that the City

might otherwise be entitled to make. As a result, for all of these reasons, I

respectfully dissent from my colleagues’ decision and would reverse, rather than

affirm, the Court of Appeals’ decision to overturn the trial court’s order dismissing

plaintiff’s complaint.4

Justice BEASLEY joins in this dissenting opinion.

3 The Policy provision quoted in the text is fully consistent with, and possibly
mandated by, the provision in N.C.G.S. § 160A-167(a) that states that “[n]othing in this
section shall be deemed to require any city . . . to provide for the defense of any action or
proceeding of any nature.” In light of this provision, one could argue that a municipality
lacks the necessary statutory authority to contractually obligate itself to reimburse an
officer’s or employee’s defense costs. However, we need not decide that issue given the fact
that plaintiff has, for the reasons discussed in the text, failed to adequately allege the waiver
of governmental immunity necessary to support the claim that he has attempted to assert
against the City in the amended complaint.

4 Although I am not certain that the proper interpretation of our prior decision in
Blackwelder v. City of Winston-Salem, 332 N.C. 319, 420 S.E.2d 432 (1992), is directly
relevant given the manner in which the Court has resolved this case, I disagree with the
manner in which my colleagues have read our statement in Blackwelder to the effect that
“[a]ction by the City under N.C.G.S. § 160A-167 does not waive immunity.” Id., at 324, 420
S.E.2d at 436. Although Blackwelder was, in fact, decided in the context of a tort action, I
see no reason to believe that the statement quoted earlier in this footnote has no bearing on
claims other than those sounding in tort, such as contract actions, and do not wish to be
understood as having agreed with the Court’s contrary view.

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