GEER, Judge.
Plaintiffs Dennis E. Bullard, M.D. and Wendy W. Bullard ("the Bullards") appeal from the trial court's grant of summary judgment in favor of defendants Wake County, Troy Howard Parrott, John Dipetrio, Steven Aden Branch, and Edward Langston Savage ("the County")
In 1991, the Bullards bought 5.28 acres of land in North Raleigh on which to build a home. The Bullards contracted with Tall House Building Company to serve as the general contractor for the construction of a French Chateau-style single family residence. Structural drawings for the project were approved by the Wake County Inspections Department on 6 November 2002.
Construction of the house started in April 2003 and continued until the issuance of the certificate of occupancy on 15 December 2004. During construction, the County performed inspections of the foundation, footings, foundation slab, framing, plumbing systems, electrical systems, and insulation. At the final inspection, the County approved energy, life safety, and structural elements. The certificate of occupancy issued for the
At some point after the certificate of occupancy was issued, although the precise date is disputed, plaintiffs began to discover problems with the construction that they have described as "major construction deficiencies." Plaintiffs arbitrated their claims against Tall House, and an arbitration panel issued an award in plaintiffs' favor on 4 August 2006.
During the course of the repairs ordered by the arbitration panel, the Bullards learned that the house also had significant floor framing issues. The Bullards had not discovered those issues earlier because the defective work was covered by floor sheathing. Since then, the Bullards have continued to uncover structural deficiencies in the house that collectively are so severe that the house has been deemed not fit for human habitation.
The Bullards returned to arbitration with Tall House. The second arbitration panel issued an order on 9 April 2009 requiring Tall House to pay $2,626,452.45 for repair and damages associated with the faulty construction of the Bullards' house, as well as fees and costs. Following that award, Tall House declared bankruptcy.
On 7 April 2009, the Bullards filed suit against the County, asserting claims for negligent inspection and negligent misrepresentation in connection with the County's inspection of the Bullards' house. The County filed an answer including, among other affirmative defenses, the statute of limitations and sovereign immunity.
On 30 April 2010, the County filed a motion for summary judgment. On 24 August 2010, the trial court entered an order granting the motion on the grounds that "there are no genuine issues of material fact as to the issue of sovereign immunity [and] the Court concludes that the [sic] all of the plaintiff's claims raised herein are barred by sovereign immunity...." The court further concluded that summary judgment should also be granted based on the statute of limitations. The Bullards timely appealed to this Court.
Summary judgment is properly granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C.R. Civ. P. 56(c). This Court reviews the trial court's grant of summary judgment de novo. Nationwide Mut. Fire Ins. Co. v. Mnatsakanov, 191 N.C. App. 802, 805, 664 S.E.2d 13, 15 (2008).
Our Supreme Court has explained the burdens applicable to a motion for summary judgment:
DeWitt v. Eveready Battery Co., 355 N.C. 672, 681, 565 S.E.2d 140, 146 (2002) (internal citations and quotation marks omitted).
Once the moving party meets its burden, "then the nonmovant must produce a forecast of evidence demonstrating that the plaintiff will be able to make out at least a prima facie case at trial." Roumillat v. Simplistic Enters., Inc., 331 N.C. 57, 63, 414 S.E.2d 339, 342 (1992) (internal quotation marks omitted), overruled in part on other grounds by Nelson v. Freeland, 349 N.C. 615, 507 S.E.2d 882 (1998). In order to meet this burden, the nonmoving party "`may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in [Rule 56] must set forth specific facts showing that there is a genuine issue for trial.'" Id. (quoting N.C.R. Civ. P. 56(e)).
We consider first whether the trial court erred in granting summary judgment based upon sovereign immunity. Under
The General Assembly has provided that a county may waive immunity through the purchase of insurance:
N.C. Gen.Stat. § 153A-435(a) (emphasis added).
The Bullards, however, first argue that the County failed to properly plead the affirmative defense of sovereign immunity because the answer did not set out the specific policy language on which the County was relying. The County's Fourth Affirmative Defense alleged:
(Emphasis omitted.)
In Patrick v. Wake Cnty. Dep't of Human Servs., 188 N.C. App. 592, 593, 655 S.E.2d 920, 922 (2008), the defendant asserted as an affirmative defense that "`[a]ll claims of Plaintiff against all Defendants are barred by sovereign immunity as there has been no waiver of immunity by the purchase of insurance.'" This Court, in affirming the trial court's order granting summary judgment based on sovereign immunity held that "[d]efendants did not waive sovereign immunity through the purchase of this policy and properly asserted this affirmative defense in their answer." Id. at 597, 655 S.E.2d at 924 (emphasis added). Since there is no meaningful distinction between the articulation of the affirmative defense in Patrick and the affirmative defense in this case, we hold that the County sufficiently pled the affirmative defense of sovereign immunity.
Turning to the merits of that affirmative defense, it is well established that the mere purchase of insurance standing alone does not waive a county's sovereign immunity. "[I]f the action brought against [the county] is excluded from coverage under [its] insurance policy," then there is no waiver of immunity. Id. at 596, 655 S.E.2d at 923. See also Norton v. SMC Bldg., Inc., 156 N.C. App. 564, 569-70, 577 S.E.2d 310, 314-15 (2003) (holding that purchase of liability insurance did not waive sovereign immunity because policy excluded coverage for plaintiff's claim); Doe v. Jenkins, 144 N.C. App. 131, 135, 547 S.E.2d 124, 127 (2001) ("[B]ecause the insurance policy does not indemnify defendant against the negligent acts alleged in plaintiff's complaint, defendant has not waived its sovereign immunity....").
The County, in this instance, did have insurance coverage continuously from 13 January 2003 (when the building permit for the
This Court addressed the impact of this specific endorsement on sovereign immunity in Patrick. In that case, the plaintiff sued Wake County Department of Human Services for negligence and negligent infliction of emotional distress. 188 N.C.App. at 592-93, 655 S.E.2d at 921-22. This Court held that the above endorsement "exclude[d] coverage for plaintiff's action for negligence and negligent infliction of emotional distress. Defendants did not waive sovereign immunity through the purchase of this policy and properly asserted this affirmative defense in their answer. The defense of sovereign immunity clearly applies to bar plaintiff's claims." Id. at 597, 655 S.E.2d at 924. Accordingly, the Court held that "[t]he trial court properly granted defendants' motion for summary judgment." Id.
This Court applied Patrick to similar policy language in Estate of Earley v. Haywood Cnty. Dep't. of Soc. Servs., 204 N.C. App. 338, 694 S.E.2d 405 (2010), in which the plaintiff had asserted a negligence claim. In Earley, Haywood County's insurance policy included an exclusion for "`[a]ny claim, demand, or cause of action against any Covered Person as to which the Covered Person is entitled to sovereign immunity or governmental immunity under North Carolina Law.'" Id. at 342, 694 S.E.2d at 408. Relying on Patrick, the Court held that because of this exclusion, the County had not waived sovereign immunity as to the plaintiff's claim. Id. at 343, 694 S.E.2d at 409.
The Court observed, however:
Id., 694 S.E.2d at 409-10.
We are bound by both Patrick and Earley and, consequently, must hold that the County, in this case, did not waive its sovereign immunity as to the Bullards' claims during the periods of 1 June 2002 to 1 June 2003 and 1 June 2003 to 1 June 2004. Plaintiffs contend, however, that because the certificate of occupancy was issued on 15 December 2004, sovereign immunity should be determined based on the policy in effect from 1 June 2004 to 1 June 2005. During that period, the County's insurance policy did not include the endorsement quoted above. The County argues, however, that this policy still does not provide coverage for the Bullards' claim.
The 1 June 2004 to 1 June 2005 policy specified that the duty of the insurance company
(Emphasis added.) "Retained Limit" under the policy "refers to the amount stated in the Declarations. This amount may consist of a self-insured retention, underlying insurance, or a combination thereof." (Emphasis omitted.) Although the Bullards assert that the retained limit under this policy includes defense costs, they have overlooked an endorsement to the policy that provided, instead, that the retained limit, "with respect to a self-insured retention, shall not include defense costs...."
The County had a retained limit of $500,000.00 for "[a]ny one occurrence or wrongful act." The County chose to cover its retained limit through self-insurance as allowed by N.C. Gen.Stat. § 153A-435(a). That statute provides in relevant part that:
Id. (emphasis added).
On 6 October 2003, the Wake County Board of Commissioners adopted a Resolution pursuant to N.C. Gen.Stat. § 153A-435(a) regarding its self-insured retention and providing, in the Resolution's preamble, that the Board "desire[d] to waive the County's governmental immunity to the limited extent provided in this resolution." The text of the Resolution itself reiterated that "[t]his resolution is intended only to waive the County's immunity in the limited circumstances described herein." After various restrictions on waiver not pertinent here, the Resolution stated: "Waiver of immunity pursuant to this Resolution is limited to the voluntary settlement of claims. Settlements are not available under this Resolution after the institution by Claimant of any legal proceeding regarding the claim against the County, its officials, employees, or agents." (Emphasis added.)
The County thus limited its waiver of immunity with respect to the $500,000.00 retained limit to those instances involving the "voluntary settlement of claims" prior to the filing of any legal proceedings. The Bullards' claims were not voluntarily settled prior to the filing of this action and, therefore, the claims do not fall within the scope of the waiver of sovereign immunity set out in the Resolution with respect to the $500,000.00 retained limit. See Cunningham v. Riley, 169 N.C. App. 600, 603, 611 S.E.2d 423, 424-25 (2005) (holding that to the extent plaintiff's total loss fell within County's self-insured retention, plaintiff's claims were barred by sovereign immunity).
The question remains whether the County's purchase of insurance waived sovereign immunity for the portion of the Bullards' claim exceeding the $500,000.00 retained limit. That issue is resolved by this Court's decisions in Arrington v. Martinez, ___ N.C.App. ___, 716 S.E.2d 410 (2011), and Magana v. Charlotte-Mecklenburg Bd. of Educ., 183 N.C. App. 146, 645 S.E.2d 91 (2007).
In Magana, this Court considered whether a school board had waived its sovereign immunity by the purchase of insurance pursuant to N.C. Gen.Stat. § 115C-42 (2005), a statute equivalent to N.C. Gen.Stat. § 153A-435 but applicable to school boards. The school board's insurance policy provided "coverage for damages in excess of the Board's self-insured retention of $1,000,000." Magana, 183 N.C.App. at 147, 645 S.E.2d at
This Court first concluded that these clauses had the effect of making the "insurance policy's coverage. contingent upon the Board's liability for the first $1,000,000 of any damage award." Id. Because the school board had not purchased insurance for any amount below the $1,000,000.00 coverage limit, it had not waived its sovereign immunity for any damages under $1,000,000.00. The Court then concluded that even though the plaintiffs sought damages in excess of $1,000,000.00, since the board had immunity for claims seeking damages under $1,000,000.00, "it cannot be required to pay any part of the $1,000,000 self-insured amount and, therefore, the excess policy will provide no indemnification." Id. at 149, 645 S.E.2d at 93.
Although the Bullards attempt to distinguish Magana by arguing that the Magana policy language differs from the language in the Wake County policy, this Court, in Arrington, applied the same reasoning as in Magana to a City of Raleigh policy with language identical to that in the Wake County policy. The City of Raleigh policy provided, just like the policy in this case:
Arrington, ___ N.C.App. at ___, 716 S.E.2d at 418.
This Court interpreted this provision as requiring an "`expenditure' of the City's $2,000,000.00 retained limit `by means of payments for judgments, settlements, or defense costs before providing indemnification.'" Id. at ___, 716 S.E.2d at 418.
Here, as this Court held in Magana and Arrington, because the County is entitled to sovereign immunity as to the Bullards' negligence claims for the first $500,000.00 of their damages and because defense costs are excluded from the amount included within the retained limit, there will be no "complete limit through payments for expenditure" of the retained judgments. While the County's Resolution regarding the self-insured retention provides for waiver of the immunity in the event of voluntary settlements, it specifies that "[s]ettlements are not available under this Resolution after the institution by Claimant of any legal proceeding regarding the claim against the County, its officials, employees, or agents." Accordingly, there can be no qualifying settlements in this case. There will, therefore, be no expenditure of the retained limit. As a result, Magana and Arrington require that we conclude that the County has not, pursuant to
The Bullards argue vigorously that such a construction of the policy would fall within the reasoning of Fulford v. Jenkins, 195 N.C. App. 402, 409, 672 S.E.2d 759, 763 (2009) (internal citations and quotation marks omitted):
This precise argument in relation to self-insured retentions was, however, addressed in Magana: "The plaintiffs have argued that such a reading of the policy renders it meaningless, offering no coverage for any eventuality. We cannot agree. There are several instances where immunity is not available either because of federal or state statutes, or because of exceptions to the sovereign immunity doctrine. See, e.g., Smith [v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 424 (1976) ] (abolishing state sovereign immunity in the contractual context)." Magana, 183 N.C.App. at 149, 645 S.E.2d at 93. Because, like here, none of those instances applied, the Court affirmed the grant of summary judgment. Id.
The Bullards further contend that the County is bound by a response to a request for admissions and by the deposition testimony of the County's Rule 30(b)(6) designee. The admission stated:
The Rule 30(b)(6) designee testified as follows:
The Bullards argue that the County has, therefore, admitted a waiver of immunity for amounts greater than $500,000.00. In support of their position, they cite Cowell v. Gaston Cnty., 190 N.C. App. 743, 748, 660 S.E.2d 915, 919 (2008), in which the parties disputed whether the insurance policy provided coverage for building inspections given an endorsement excluding coverage for losses arising out of the rendering of professional services. In concluding that building inspections did not fall within the exclusion for professional services, the Court relied upon the testimony of Gaston County's Rule 30(b)(6) designee that he did not consider building inspection to be a professional service. Id. at 749-50, 660 S.E.2d at 920.
Cowell, however, hinged on the Court's conclusion that the policy was ambiguous — it was reasonably susceptible of different constructions. Id. at 749, 660 S.E.2d at 920. Here, however, the policies are unambiguous. It is settled, at least with respect to unambiguous policies, that "`[t]he interpretation of language used in an insurance policy is a question of law, governed by well-established rules of construction.'" Magnolia Mfg. of N.C., Inc. v. Erie Ins. Exch., 179 N.C. App. 267, 278, 633 S.E.2d 841, 847 (2006) (Tyson, J., dissenting) (quoting N.C. Farm Bureau Mut. Ins. Co. v. Mizell, 138 N.C. App. 530, 532, 530 S.E.2d 93, 95 (2000)), rev'd per curiam for reasons in dissenting opinion, 361 N.C. 213, 639 S.E.2d 443 (2007).
The question whether the terms of the County's policy waived the County's sovereign immunity as to the Bullards' claims is thus a question of law. Rule 36(a) of the Rules of Civil Procedure only allows requests for admission of the truth of any matters "that relate to statements or opinions of fact or of the application of law to fact." Similarly, parties are not bound by testimony as to questions of law given by their Rule 30(b)(6) witnesses. See AstenJohnson, Inc. v. Columbia Cas. Co., 562 F.3d 213, 229 n. 9 (3d Cir.2009) (holding with respect to Rule 30(b)(6) testimony regarding meaning of term in insurance policy that "[t]his type of legal conclusion is not binding on [the carrier]"); R & B Appliance Parts, Inc. v. Amana Co., 258 F.3d 783, 787 (8th Cir.2001) (holding that while party was bound by Rule 30(b)(6) testimony regarding facts, it was not bound by legal conclusion that agreement had been terminated).
In short, under the terms of the insurance policy in this case and this Court's prior holdings in Arrington and Magana, we are bound to conclude that the trial court properly granted the County summary judgment. Because we have concluded that the County did not waive its sovereign immunity as to the Bullards' claims, we need not address the parties' contentions regarding the statute of limitations.
Affirmed.
Judges STEELMAN and ROBERT N. HUNTER, JR. concur.
