Purchase of Insurance as waiver

Size: px

Start display at page:

Download "Purchase of Insurance as waiver"

Melvin Nicholson
5 years ago
Views:

1 Can immunity be waived by contracting with a vendor and being named as an additional insured? Purchase of Insurance as waiver Cities and Municipalities Local Boards of Education Counties Any local board of education, by securing liability insurance as hereinafter provided, is hereby authorized and empowered to waive its governmental immunity from liability for damage by reason of death or injury to person or property caused by the negligence or tort of any agent or employee of such board of education when acting within the scope of his authority or within the course of his employment. Such immunity shall be deemed to have been waived by the act of obtaining such insurance, but such immunity is waived only to the extent that said board of education is indemnified by insurance for such negligence or tort. Any contract of insurance purchased pursuant to this section shall be issued by a company or corporation duly licensed and authorized to execute insurance contracts in this State or by a qualified insurer as determined by the Department of Insurance and shall by its terms adequately insure the local board of education against liability for damages by reason of death or injury to person or property proximately caused by the negligent act or torts of the agents and employees of said board of education or the agents and employees of a particular school in a local administrative unit when acting within the scope of their authority. The local board of education shall determine what liabilities and what officers, agents and employees shall be covered by any insurance purchased pursuant to this section. Any company or corporation which enters into a contract of insurance as above described with a local board of education, by such act waives any defense based upon the governmental immunity of such local board of education. Every local board of education in this State is authorized and empowered to pay as a necessary expense the lawful premiums for such insurance. N.C. Gen. Stat. Ann. 115C-42 1

2 (a) Any city is authorized to waive its immunity from civil liability in tort by the act of purchasing liability insurance....immunity shall be waived only to the extent that the city is indemnified by the insurance contract from tort liability. No formal action other than the purchase of liability insurance shall be required to waive tort immunity, and no city shall be deemed to have waived its tort immunity by any action other than the purchase of liability insurance. If a city uses a funded reserve instead of purchasing insurance against liability for wrongful death, negligence, or intentional damage to personal property, or absolute liability for damage to person or property caused by an act or omission of the city or any of its officers, agents, or employees acting within the scope of their authority and the course of their employment, the city council may adopt a resolution that deems the creation of a funded reserve to be the same as the purchase of insurance under this section. Adoption of such a resolution waives the city's governmental immunity only to the extent specified in the council's resolution, but in no event greater than funds available in the funded reserve for the payment of claims. (b) An insurance contract purchased pursuant to this section may cover such torts and such officials, employees, and agents of the city as the governing board may determine. The city may purchase one or more insurance contracts, each covering different torts or different officials, employees, or agents of the city. An insurer who issues a contract of insurance to a city pursuant to this section thereby waives any defense based upon the governmental immunity of the city, and any defense based upon lack of authority for the city to enter into the contract. Each city is authorized to pay the lawful premiums for insurance purchased pursuant to this section. N.C. Gen. Stat. Ann. 160A-485 (a) A county may contract to insure itself and any of its officers, agents, or employees against liability for wrongful death or negligent or intentional damage to person or property or against absolute liability for damage to person or property caused by an act or omission of the county or of any of its officers, agents, or employees when acting within the scope of their authority and the course of their employment. The board of commissioners shall determine what liabilities and what officers, agents, and employees shall be covered by any insurance purchased pursuant to this subsection. Purchase of insurance pursuant to this subsection waives the county's governmental immunity, to the extent of insurance coverage, for any act or omission occurring in the exercise of a governmental function. Participation in a local government risk pool pursuant to Article 23 of General Statute Chapter 58 shall be deemed to be the purchase of insurance for the purposes of this section. By entering into an insurance contract with the county, an insurer waives any defense based upon the governmental immunity of the county. If a county uses a funded reserve instead of purchasing insurance against liability for wrongful death, negligence, or intentional damage to personal property, or absolute liability for damage to person or property caused by an act or omission of the county or any of its officers, agents, or employees acting within the scope of their authority and the course of their employment, the county board of commissioners may adopt a resolution that deems the creation of a funded reserve to be the same as the purchase of insurance under this section. N.C. Gen. Stat. Ann. 153A-435 Fuller vs. Wake County, N.C.App., 802 S.E.2d 106 (2017) Fuller next contends that Wake County waived its immunity by entering into the asset transfer agreement with Six Forks and by requiring Six Forks as part of the franchise agreement to purchase liability insurance and to designate Wake County as an insured on the policy. We disagree. Fuller v. Wake Cty., 802 S.E.2d 106, 113 (N.C. Ct. App. 2017) 2

3 As to his second argument, Fuller has failed to cite any relevant legal authority to support his contention that the franchise agreement between Wake County and Six Forks, which required Six Forks to purchase general liability insurance and to name Wake County as an insured, constituted waiver. Nonetheless, Fuller appears to be asserting a purchase of liability insurance waiver theory. Relevant here, N.C. Gen. Stat. 153A-435(a) authorizes a county to waive its immunity and provides in pertinent part: Purchase of insurance pursuant to this subsection waives the county's governmental immunity, to the extent of insurance coverage, for any act or omission occurring in the exercise of a governmental function. (Emphasis added.) Although Six Forks's liability insurance policy neither was presented to the trial court nor included in the appellate record, the franchise agreement requiring the policy makes clear that such a policy was purchased, if at all, by Six Forks, and not by Wake County. Additionally, we note the franchise agreement explicitly provided: Nothing in this [indemnification] provision is intended to affect or abrogate [Wake] County's governmental immunity... Strictly construing the plain language of N.C. Gen. Stat. 153A-435's immunity waiver to apply to insurance policies actually purchased by the county, we hold that Fuller failed to establish a genuine issue of material fact that Wake County waived its immunity in this respect. Contract Theory Waiver Local government implicitly consents to be sued for damages on the contract in the event it breaches the contract. Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 424 (1976)(assuming contract meets all the requirements required by law) Party seeking waiver must be party to the contract (Can this include 3 rd party beneficiary?) Plaintiff seeking waiver must allege a breach of the contract Here, Plaintiff never properly pled a breach of contract claim against Wake County, and neither presented evidence that Wake County breached that contract, nor, importantly, that Fuller was a party thereto. Fuller v. Wake Cty., 802 S.E.2d 106, 113 (N.C. Ct. App. 2017) Direct Claims under the NC Constitution as alternative to claims arising in tort The genesis of this alternative pleading is Corum s holding that In the absence of an adequate state remedy, one whose state constitutional rights have been abridged has a direct claim against the State under our Constitution. Corum v. University of North Carolina, 330 N.C. 761, 413 S.E.2d 276, cert. denied, 506 U.S. 985, 113 S.Ct. 493, 121 L.Ed.2d 431 (1992) An adequate remedy must provide the possibility of relief under the circumstances. Here, the language of the excess liability insurance policy and corresponding applicability of sovereign immunity, make relief impossible on plaintiff's common law negligence claim, regardless of his ability to prove his case. Further, the facts presented here are distinguishable from a case in which a plaintiff has lost his ability to pursue a common law claim due to expiration of the statute of limitations, for example. Sovereign immunity entirely precludes this plaintiff from moving forward with his common law claim; without being permitted to pursue his direct colorable constitutional claims, he will be left with no remedy for his alleged constitutional injuries. Craig ex rel. Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 340, 678 S.E.2d 351, (2009) 3

4 Sovereign immunity is not available as a defense to a claim brought directly under the state constitution. Bunch v. Britton, 802 S.E.2d 462, 469 (N.C. Ct. App. 2017) Initially, we note that the imposition of an additional element to be proved by Wilcox does not impact her chance or opportunity to obtain relief. Wilcox v. City of Asheville, 222 N.C. App. 285, 302, 730 S.E.2d 226, 238 (2012) An adequate remedy must give the plaintiff at least the opportunity to enter the courthouse doors and present his claim and must provide the possibility of relief under the circumstances. Id. at , 678 S.E.2d at 355 (emphasis added). Thus, adequacy is found not in success, but in *300 chance. Further, when discussing the inadequacy of the remedy in that case, the Supreme Court used the language of impossibility, noting that governmental immunity stood as an absolute bar to the plaintiff's claim, entirely and automatically precluded recovery, and made relief impossible. Id. at , 678 S.E.2d at , citing Craig. What is Adequate? Statutory right (such as right to appeal) Copper ex rel. Copper v. Denlinger, 363 N.C. 784, 688 S.E.2d 426 (2010) A common law claim that may, at trial, ultimately fail based on a defense of public official immunity is an adequate remedy. DeBaun v. Kuszaj, 238 N.C. App. 36, 39, 767 S.E.2d 353, 356 (2014) State law torts claims not barred by immunity (false imprisonment, malicious prosecutution) Another lawsuit? Same plaintiff, same claims, different defendant? 4

5 What is a constitutional claim? Every negligence claim by government actor? (Craig says the constitutional claim can be predicated upon same facts as common law negligence claims) See discussion in dissent - colorable constitutional claims require something more than just an ordinary negligence claim which has been given an alternate title as a constitutional claim with some sections of the North Carolina State Constitution cited in support, but no factual allegations which would actually make the claim something more than an ordinary negligence claim. Allowing such a claim to proceed could, as a practical matter, essentially eliminate sovereign or governmental immunity in most, if not all, ordinary negligence cases. Doe v. Charlotte-Mecklenburg Bd. of Educ., 222 N.C. App. 359, 374, 731 S.E.2d 245, 255 (2012) 5

SUPREME COURT OF MISSOURI en banc

SUPREME COURT OF MISSOURI en banc STATE ex rel. CITY OF GRANDVIEW, MISSOURI Relator, v. No. SC95283 THE HONORABLE JACK R. GRATE, Respondent. ORIGINAL PROCEEDING IN PROHIBITION Opinion issued April 5, 2016