Devore v. Samuel
Date Filed2022-12-20
Docket22-305
Cited0 times
StatusPublished
Syllabus
Contribution and indemnity claims against school board in bus negligence case limited waiver of governmental immunity Tort Claims Act Rule 14 of the Rules of Civil Procedure N.C. Gen. Stat. 1B-1(h) statutes strictly construed against waiver of governmental immunity
Full Opinion (html_with_citations)
IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-834
No. COA22-305
Filed 20 December 2022
Mecklenburg County, No. 21 CVS 7323
FRED W. DEVORE, III as Guardian ad Litem for AZARIA HORTON, a Minor,
Plaintiff,
v.
CHARLES LAMONTE SAMUEL, JR., STACY V. SAMUEL, KINDERCARE
EDUCATION, LLC and KINDERCARE LEARNING CENTERS, LLC, Defendants.
KINDERCARE EDUCATION, LLC and KINDERCARE LEARNING CENTERS,
LLC, Defendants/Third-Party Plaintiffs,
v.
CHARLOTTE-MECKLENBURG BOARD OF EDUCATION, and KEYERA
GORDON, Third-Party Defendants.
Appeal by third-party defendant from order entered 7 January 2022 by Judge
Jesse Caldwell, IV, in Mecklenburg County Superior Court. Heard in the Court of
Appeals 18 October 2022.
Shumaker, Loop & Kendrick, LLP, by Steven A. Meckler and Daniel R. Hansen,
for third-party plaintiffs-appellees.
J. Melissa Woods and Hope A. Root for third-party defendant-appellant
Charlotte-Mecklenburg Board of Education.
DIETZ, Judge.
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
¶1 This case presents an issue of first impression concerning the waiver of
governmental immunity for local school boards in school bus negligence cases. As
explained below, we hold that the limited waiver of governmental immunity in these
bus negligence cases does not permit a defendant to join a local school board as a
third-party defendant in a court proceeding on claims of indemnity or contribution.
¶2 Although our Stateâs case law permits parties to join the State and state
agencies in these third-party proceedings, the applicable statutes and rules do not
unambiguously permit joinder of local governmental entities. Accordingly, applying
the principle that we must strictly construe these immunity provisions against
waiver, we hold that these indemnification and contribution claims are permissible
only in the Industrial Commission.
Facts and Procedural History
¶3 In June 2018, a Charlotte-Mecklenburg Schools bus dropped off an elementary
school student at an afterschool childcare center operated by Defendants KinderCare
Education, LLC, and KinderCare Learning Centers, LLC (collectively, âKinderCareâ).
As the child crossed the street to the KinderCare center, Defendant Charles Samuel
struck the child with his SUV.
¶4 Plaintiff brought this negligence action on behalf of the injured child against a
number of defendants, including KinderCare. Plaintiff did not assert claims against
the school bus driver or the Charlotte-Mecklenburg Board of Education, who
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
employed the bus driver. KinderCare later filed a third-party complaint against the
Charlotte-Mecklenburg Board of Education and the bus driver, alleging claims for
contribution and indemnity.
¶5 The school board moved to dismiss on the ground that the third-party claims
were barred by governmental immunity. After a hearing, the trial court denied the
motion. The school board timely appealed. Although the trial courtâs order is
interlocutory, we possess appellate jurisdiction because the challenged order concerns
an issue of governmental immunity. Ballard v. Shelley, 257 N.C. App. 561, 564,811 S.E.2d 603, 605
(2018).
Analysis
¶6 âCounties and other municipalities, as governmental agencies, enjoy the
protections of governmental immunity.â Ballard v. Shelley, 257 N.C. App. 561, 564,
811 S.E.2d 603, 606 (2018). This governmental immunity applies to a local school
board because it âis a governmental agency, and is therefore not liable in a tort or
negligence action except to the extent that it has waived its governmental immunity
pursuant to statutory authority.â Magana v. Charlotte-Mecklenburg Bd. of Educ., 183
N.C. App. 146, 148,645 S.E.2d 91, 92
(2007).
¶7 We review claims of governmental immunity de novo. Wray v. City of
Greensboro, 370 N.C. 41, 47,802 S.E.2d 894, 898
(2017). Waivers of governmental
immunity âmay not be lightly inferredâ and statutes purportedly waiving this
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
immunity âmust be strictly construed.â Guthrie v. N. Carolina State Ports Auth., 307
N.C. 522, 537â38,299 S.E.2d 618, 627
(1983); Magana,183 N.C. App. at 149
,645 S.E.2d at 92
.
I. Waiver of immunity for indemnity/contribution claims
¶8 We begin by examining KinderCareâs argument that the school board may be
joined as a third party in this court proceeding because a series of statutes waive the
school boardâs governmental immunity for this type of third-party claim in the court
system.
¶9 Importantly, the parties do not dispute that KinderCareâs third-party claims
could be asserted against the school board in the Industrial Commission under the
Tort Claims Act. In other words, this dispute is not about whether governmental
immunity totally bars these claims. Instead, the issue is whether the school boardâs
statutory waiver of immunity is limited to claims in the Industrial Commission, or
whether it is broader and applies to third-party claims asserted in court.
¶ 10 To understand KinderCareâs argument, we must first examine the series of
statutes and rules on which it is based. We begin with Rule 14 of the North Carolina
Rules of Civil Procedure. Rule 14 âpermits a defendant in the State courts to sue a
person not a party to the action who is or may be liable to the defendant for all or part
of the plaintiff's claim against the defendant.â Teachy v. Coble Dairies, Inc., 306 N.C.
324, 329,293 S.E.2d 182, 185
(1982). Subsection (c) of the rule provides that,
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
notwithstanding the Tort Claims Act, the State of North Carolina and state agencies
may be joined as third parties in tort actions:
Rule applicable to State of North Carolina. â
Notwithstanding the provisions of the Tort Claims Act, the
State of North Carolina may be made a third party under
subsection (a) or a third-party defendant under subsection
(b) in any tort action. In such cases, the same rules
governing liability and the limits of liability of the State
and its agencies shall apply as is provided for in the Tort
Claims Act.
N.C. Gen. Stat. § 1A-1, Rule 14(c).
¶ 11 Similarly, the Uniform Contribution Among Tort-Feasors Act states that the
right to contribution âshall apply to tort claims against the State. However, in such
cases, the same rules governing liability and the limits of liability shall apply to the
State and its agencies as in cases heard before the Industrial Commission.â N.C. Gen.
Stat. § 1B-1(h).
¶ 12 Our Supreme Court has interpreted Rule 14 and N.C. Gen. Stat. § 1B-1(h) as
a waiver of sovereign immunity that permits the State to âbe joined as a third-party
defendant, whether in an action for contribution or in an action for indemnification,
in the State courts,â subject to the limitations set out in those provisions. Teachy, 306
N.C. at 332,293 S.E.2d at 187
. In other words, Teachy interpreted these rules as
expanding the limited waiver in the Tort Claims Actâone which requires the claims
to be brought in the Industrial Commissionâto permit third party claims in court
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
proceedings.
¶ 13 Thus, as the parties acknowledge, the State and state agencies can be joined as
third-party defendants in court proceedings for claims of contribution or
indemnification under Teachy. The critical question in this appeal is whether a local
school board likewise may be joined in these court proceedings.
¶ 14 It is well settled that a local school board is not âthe State of North Carolinaâ
for ordinary legal purposes. There is a difference between the State and state
agenciesâwhich possess sovereign immunityâand local government entities such as
local school boardsâwhich possess only governmental immunity, not sovereign
immunity. See, e.g., State ex rel. Stein v. Kinston Charter Acad., 379 N.C. 560, 2021-
NCSC-163, ¶¶ 22, 26 (distinguishing between state agencies and local governmental
school entities).
¶ 15 But KinderCare points to a provision of the Tort Claims Act governing claims
âagainst county and city boards of education for accidents involving school buses or
school transportation service vehicles.â N.C. Gen. Stat. § 143-300.1. In Section 143-
300.1, the General Assembly provided that the liability of a local school board in
school bus negligence cases âshall be the same in all respectsâ as a similar claim
against the State Board of Education:
Claims against county and city boards of education for
accidents involving school buses or school transportation
service vehicles.
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
(a) The North Carolina Industrial Commission shall have
jurisdiction to hear and determine tort claims against
any county board of education or any city board of
education [for school bus negligence] when:
(1) The driver is an employee of the county or city
administrative unit of which that board is the
governing body, and the driver is paid or authorized
to be paid by that administrative unit . . .
. . . The liability of such county or city board of education,
the defenses which may be asserted against such claim by
such board, the amount of damages which may be awarded
to the claimant, and the procedure for filing, hearing and
determining such claim, the right of appeal from such
determination, the effect of such appeal, and the procedure
for taking, hearing and determining such appeal shall be
the same in all respects as is provided in this Article with
respect to tort claims against the State Board of Education
except as hereinafter provided.
N.C. Gen. Stat. § 143-300.1 (emphasis added).
¶ 16 KinderCare relies on this statutory language to assert that âthe process for
determining a local school boardâs liability for negligent school-bus operationâ must
be âundertaken just as it would be if the local board were the State Board of
Education.â It follows, according to KinderCare, that for purposes of school bus
negligence claims, a local school board is the State Board of Education. And, because
the State Board of Education is a state agency, KinderCare further argues that the
local school board in this case can be joined as a third-party defendant under Rule 14
and N.C. Gen. Stat. § 1B-1(h) even though those provisions only apply to the State
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
and state agencies.
¶ 17 The flaw in this argument is that the statute does not actually say that, in
school bus negligence cases, a local school board is considered the State Board of
Education. Instead, the statute explains that a local school boardâs liability, together
with other aspects of the case such as the âamount of damages,â the âprocedure for
filing, hearing and determining such claim,â and âthe right of appeal from such
determination,â shall be the same as provided âwith respect to tort claims against the
State Board of Education.â N.C. Gen. Stat. § 143-300.1.
¶ 18 This language suggests that the General Assembly understood these local
school boards are not the State Board of Education. But because these local entities
now employ most bus drivers, the State chose to waive these local entitiesâ
governmental immunity, as it did with the State Board of Educationâs sovereign
immunity, and to apply the same framework for suits against these local entities that
apply if the school bus driver were employed by the State Board of Education. This
waiver, though, is a limited one. Section 143-300.1 requires the claim to be brought
in the Industrial Commission and does not (at least, on its own) permit a school bus
negligence claim to be brought in the court system.
¶ 19 As noted above, in interpreting this provision, and the corresponding
provisions of Rule 14 and N.C. Gen. Stat. § 1B-1(h), we are governed by the well-
settled rule that waiver of governmental immunity âmay not be lightly inferredâ and
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
that statutes purporting to waive this immunity âmust be strictly construed.â
Guthrie, 307 N.C. at 537â38, 299 S.E.2d at 627; Magana,183 N.C. App. at 149
,645 S.E.2d at 92
. Applying this principle here, we hold that the language ofN.C. Gen. Stat. § 143-300.1
does not unambiguously provide that local school boards are
considered a state agency (that is, considered the State Board of Education) for
purposes of third-party actions under Rule 14 and N.C. Gen. Stat. § 1B-1(h). Strictly
construing Section 143-300.1, it is a limited waiver that permits these claims only in
the Industrial Commission.
¶ 20 This result stems not only from the plain language of N.C. Gen. Stat. § 143-
300.1, but also the fact that it was enacted by the General Assembly before Rule 14
and N.C. Gen. Stat. § 1B-1(h)âmeaning the legislature could not have crafted this
language with the intent to permit local school boards to be joined in third party
actions under these later-enacted statutes. Moreover, when the legislature enacted
Rule 14 and N.C. Gen. Stat. § 1B-1(h), it chose not to include school boards or other
local governmental entities in the language of these provisions, instead limiting them
to the State and state agencies.
¶ 21 This result is reinforced by the Supreme Courtâs holding in Teachy. There, the
Supreme Court acknowledged that âthere exists in North Carolina a common law
right to indemnification of a passively negligent tort-feasor from an actively negligent
tort-feasor.â Teachy, 306 N.C. at 332, 293 S.E.2d at 186â87. The Court further
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
observed that the âright to indemnification arises out of a tort claim, the Stateâs
immunity to which was abrogated by the Tort Claims Act.â Id. at 332,293 S.E.2d at 187
.
¶ 22 Thus, the Court held, because the State waived immunity for tort claims, it
had also waived immunity for corresponding third-party indemnification and
contribution claims. But, importantly, the Court went on to observe that the âonly
controversy is whether the State courts are the proper forum for such actions.â Id.
(emphasis added). The Court made this observation because, ordinarily, tort claims
against the State can be brought only in the Industrial Commission.
¶ 23 Simply put, the ultimate holding in Teachyâthat the third-party claims
against the State could be asserted in the court systemâis governed by two factors:
(1) that the Tort Claims Act waives immunity for the State and state agencies for tort
claims, and (2) that because of this waiver of immunity, the express reference to the
State in the language of Rule 14 and N.C. Gen. Stat. § 1B-1(h) authorizes litigants to
join the State and its agencies as third parties in claims of contribution or indemnity
sounding in tort.
¶ 24 With school bus negligence claims against local school boards, by contrast, we
have only the first of these two factorsâthe waiver of immunity under the Tort
Claims Act. The second factorâan express statutory authorization to pursue the
claim outside the Industrial Commissionâdoes not exist. Without that statutory
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
authorization, Teachy and its progeny do not permit these claims to be brought in any
forum other than the Industrial Commission.
¶ 25 We acknowledge that our strict construction of these provisions means
KinderCare must assert its contribution and indemnity claims against the school
board in the Industrial Commission. That will create a second, parallel proceeding
and consume judicial resources that could be spared if the school board were joined
as a third party in this action. But this Court has no authority to expand the limited
waiver of immunity enacted by the General Assembly, which confines these claims to
the Industrial Commission. Strictly construing these provisions, as we must, local
school boards are not âthe Stateâ for purposes of Rule 14 and N.C. Gen. Stat. § 1B-
1(h). If this result is not intended, then the General Assembly can amend N.C. Gen.
Stat. § 143-300.1, or amend Rule 14 and N.C. Gen. Stat. § 1B-1(h), to clarify that
these third-party claims against local school boards may be brought in a court
proceeding as well.
¶ 26 In sum, we hold that the limited waiver of governmental immunity for school
bus negligence claims against local school boards applies only to claims brought in
the Industrial Commission. To the extent the trial court relied on this theory of
waiver to deny the school boardâs motion to dismiss, the ruling was error.
II. Waiver of immunity through purchase of insurance
¶ 27 KinderCare also argues that the school board waived its governmental
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
immunity through the purchase of insurance.
¶ 28 Under N.C. Gen. Stat. § 115C-42, âlocal boards can elect to waive their
governmental immunity from tort actions in North Carolinaâs superior courts by
purchasing liability insurance.â Martinez v. Wake Cty. Bd. Of Educ., 258 N.C. App.
466, 471,813 S.E.2d 658, 662
(2018). The waiver of immunity through liability
insurance applies only to the extent that the school board âis indemnified by the
insurance contract from liability for the acts alleged.â Hinson v. City of Greensboro,
232 N.C. App. 204, 210,753 S.E.2d 822, 827
(2014). âIf the liability policy, by its plain
terms, does not provide coverage for the alleged acts, then the policy does not waive
governmental immunity.â Ballard, 257 N.C. App. at 565,811 S.E.2d at 606
. As with
other claims of waiver, when this Court âexamines policy provisions allegedly waiving
governmental immunity, we must strictly construe the provision against waiver.â Id.;
Magana, 183 N.C. App. at 149,645 S.E.2d at 92
.
¶ 29 Here, the school board purchased an excess liability policy that applies above
the school boardâs $1,000,000 self-insured retention. The policy expressly states that
it provides no coverage unless the school board first becomes liable for, and pays, the
full amount of the self-insured retention. The policy further states that âthis policy is
not intended by the Insured to waive its governmental immunityâ and that âthis
policy provides coverage only for occurrences or wrongful acts for which the defense
of governmental immunity is clearly not applicable or for which, after the defenses
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
are asserted, a court of competent jurisdiction determines the defense of
governmental immunity not to be applicable.â
¶ 30 As KinderCare acknowledges, this Court repeatedly has held that this type of
excess liability coverage does not waive governmental immunity. See, e.g., Magana,
183 N.C. App. at 148â49, 645 S.E.2d at 92â93; Doe v. Charlotte-Mecklenburg Bd. of
Educ., 222 N.C. App. 359,731 S.E.2d 245
(2012). KinderCare asserted in its appelleeâs
brief that our Supreme Court has never addressed this question and that this Courtâs
precedent âare ripe for overturning as illogical, against public policy, and unfair to
every family with public-school-aged children.â At oral argument, KinderCare further
explained that it sought to preserve this argument for further review in the Supreme
Court.
¶ 31 We must follow Magana and its progeny as these cases are indistinguishable
and controlling. In re Civil Penalty, 324 N.C. 373, 384,379 S.E.2d 30, 36
(1989). Thus,
to the extent that the trial court relied on this theory of waiver to deny the school
boardâs motion to dismiss, the ruling was error. We acknowledge that KinderCare has
preserved its challenge to this line of cases should it seek further appellate review on
this issue.
¶ 32 Having concluded that there was no basis in the record before us to find a
waiver of the school boardâs governmental immunity for these third-party claims in
the court system, we reverse the trial courtâs order and remand for entry of an order
DEVORE V. SAMUEL
2022-NCCOA-834
Opinion of the Court
granting the school boardâs motion to dismiss.
Conclusion
¶ 33 We reverse the trial courtâs order and remand for entry of an order granting
the Charlotte-Mecklenburg Board of Educationâs motion to dismiss.
REVERSED AND REMANDED.
Judges CARPENTER and GRIFFIN concur.