In a recent North Carolina appellate case, the plaintiff appealed after summary judgment was granted for the defendant, the City of Gastonia. The city owned a commercial building within a downtown revitalization district. The building wasn’t used to house a municipal or government office or department.
Starting in 2013, the city leased the building to an art guild, which wasn’t affiliated with the city or the county. The city leased the building in order to fill a vacancy and remove blight from the vacant downtown buildings. The purpose of the lease wasn’t profit, and the city kept its responsibility to inspect the building and maintain its exterior.
The art guild was limited to using the location as an art gallery, studio, and gift shop under the lease terms. The art guild had to provide compensation in the form of 90% of all of the rent money it got from subtenants, 30% of the gross sales receipts received for art sold in that location, and 15% of its gross sales receipts, and the subtenants had to provide at least 15 hours of volunteer time at the gallery as well as performing other tasks.
The subtenants got 19 private art studios in exchange. The plaintiff was a subtenant of the art guild who paid $95 each month to rent her studio, and 90% of that was paid to the city.
While leaving the premises through a rear exit and carrying multiple large pictures, the plaintiff lost her balance on the steps and suffered a broken hip. She incurred a lot of expenses, including hospital bills. Some of the cement on the steps had eroded, and since she’d been carrying pictures, she was prevented from seeing where she was stepping.
In 2015, she sued the defendant for negligently failing to keep up the exit or warn of its dangerous condition. The defendant filed for summary judgment, arguing it had governmental immunity. The motion was granted. The plaintiff appealed.
The appellate court explained that under the governmental immunity doctrine, a county or municipal corporation can’t be sued for its employees’ negligence while exercising governmental functions, unless there is a waiver of that immunity.
Governmental immunity isn’t applicable if a municipality engages in a proprietary function, as opposed to a governmental function. The latter is an activity that’s public, legislative, political, or discretionary and performed for the public good rather than for the benefit of the State. A proprietary function is an activity performed mostly for private advantage or commercial reasons. When it’s not clear whether an activity is proprietary or governmental, the doubt should be resolved against the city.
In this case, the plaintiff had sued the city on the basis of its ownership of a building leased to a nonprofit as part of revitalization efforts. The legislature had authorized cities to establish municipal service districts for the purpose of revitalization projects.
If a service at issue can be provided both privately and publicly, the court looks at multiple factors, including whether the service is traditionally provided by the government, the fee charged, and whether the fee does more than reimburse the operating costs.
In this case, the city received substantial revenue from many sources from the lease, and it provided so much pecuniary advantage that governmental immunity could not be applied. Specifically, the terms of the agreement, including the receipt of 15% commission on all private art sold, heavily weighed ownership and maintenance of the building as a proprietary function. Therefore, the court held the defendant wasn’t immune from suit.
Moreover, the appellate court found that the defendant was responsible for maintaining the steps, and the exit where the plaintiff fell was the only way to exit. The plaintiff was a subtenant, and the steps didn’t meet code standards. The defendant argued that the plaintiff was contributorily negligent because she was carrying big pictures that prevented her from seeing the steps. However, the appellate court found that a jury could find she acted reasonably, since there was no other way to leave the premises. Summary judgment was reversed.
If you suffered injuries due to the wrongful conduct or negligence of another party, the experienced North Carolina premises liability lawyers at Maurer Law may be able to help you recover compensation. Contact us at 888-258-1087 or via our online form.
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