A woman carrying large paintings down the steps from an art gallery tripped and fell on an eroded concrete staircase. The building was owned by the local city government, which had leased the property to the art gallery, which sublet to numerous tenants – the plaintiff among them.
The defendant North Carolina city in this premises liability lawsuit sought summary judgment – which was granted – on an assertion of sovereign immunity. Attorneys for the city argued the claim did not fall under circumstances for which the city had granted a waiver of governmental immunity.
The plaintiff appealed, and the North Carolina Court of Appeals reversed. Basically, the fact that the city was making a profit off these tenants meant that it was serving a proprietary function, the plaintiff argued, which meant the city couldn’t assert governmental immunity.
This case takes place in Gastonia, where the downtown region had been overcome by blight as of the mid-1990s. By 1999, the city enacted a resolution to revitalize the district, which included this commercial property building owned by the city. There were no government offices or departments housed in the building. Instead, the structure was leased to a non-profit art guild unaffiliated with either the city or the county. The purpose of the lease was to fill the vacancy and help address downtown blight, and the evidence does tend to show the defendant didn’t seek to make a profit from the lease. The terms of the lease required the defendant city to maintain the exterior of the premises, and the defendant retained the right to inspect the property at any time.
The lease agreement limited the use of the property to use by the art gallery and artists’ studios and a gift shop. The guild had to pay 90 percent of all rent received by subtenants to the city, and the city was to receive 30 percent of all gross sales for art sold on site. Subtenants were also required to provide a minimum 15 hours monthly tending to the gallery and gift shop. Subtenants also had to participate in sales shows, serve on committees, and help manage other subtenants. There was space for 19 private studios for subtenants, and the plaintiff was one of those, paying $95 a month, of which the defendant city received 90 percent.
The defendant typically operated the site at a loss, spending more than it received in revenue.
On one day in December 2013, the plaintiff exited the building through a rear door, carrying several large pictures. She lost her balance on the stairs and suffered a slip-and-fall accident, breaking her hip and requiring her to be hospitalized. It was later noted that portions of the cement steps had become eroded. The plaintiff could not see this dangerous condition because she was carrying the paintings.
The plaintiff filed a complaint for damages against the defendant, arguing the city was negligent in its failure to maintain the exit of the building or to warn of the dangerous condition. The defendant claimed governmental immunity, and the trial court granted summary judgment.
In its reversal, the North Carolina Court of Appeals noted that while the doctrine of governmental immunity protects a government agency from liability for the negligence of employees exercising governmental functions (absent a waiver of immunity), that immunity is not limitless. For example, it does not apply when a government engages in a proprietary function. A proprietary function is one that is mostly commercial or for the private advantage of the compact community.
Determining whether a function is proprietary or governmental – and to which degree – requires an extensive checklist. Here, the justices in the appeals court ruled the city had not met its burden of proving the function in question was governmental rather than proprietary. Even though the city was operating the facility as a loss, justices noted the substantial amount of revenue the city pulled in from the lease, gift shop sales, and subtenants’ rents pointed strongly toward the ownership and maintenance of this building being a proprietary function. Immunity will not protect the city, and the case will move forward.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Meinck v. City of Gastonia, March 21, 2017, North Carolina Court of Appeals
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