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Sovereign Immunity: or why I cannot sue most municipalities

One of the most bizarre and antiquated laws still existing in North Carolina is the law of sovereign immunity.  Like contributory negligence, where North Carolina is one of only a small hand-full of states with this doctrine, our sovereign immunity regulations continue despite our advances as a society.  The original reason for Sovereign immunity was to allow police and sheriff to make arrests and take other governmental actions without fear of suit for ordinary negligence.  This original logical reason has been expanded to any governmental function of a municipality.
Our Court of Appeals in one of its most recent opinions essentially sets out that the individual municipality is unfettered in taking whatever action it chooses with regard to waiver of immunity.
"As a general rule, the doctrine of governmental, or sovereign immunity bars action against, inter alia, the state, its counties, and its public officials sued in their official capacity." Herring v. Winston-Salem/Forsyth County Bd. of Educ., 137 N.C.App. 680, 683, 529 S.E.2d 458, 461 (2000) (citation omitted). The doctrine applies when the entity is being sued for the performance of a governmental function. Id. " '[S]uits against public officials are barred by the doctrine of governmental immunity where the official is performing a governmental function, such as providing police services.' " Parker v. Hyatt, 196 N.C.App. 489, 493, 675 S.E.2d 109, 111 (2009) (citation omitted). A town or municipality may waive sovereign immunity through the purchase of liability insurance. Satorre v. New Hanover Cty. Bd. of Comm'rs, 165 N.C.App. 173, 176, 598 S.E.2d 142, 144 (2004). However, " '[i]mmunity is waived only to the extent that the [municipality] is indemnified by the insurance contract from liability for acts alleged.' " Id. (quoting Combs v. Town of Belhaven, 106 N.C.App. 71, 73, 415 S.E.2d 91, 92 (1992)). "A governmental entity does not waive sovereign immunity if the action brought against them is excluded from coverage under their insurance policy." Patrick v. Wake Cty. Dep't of Human Servs., 188 N.C.App. 592, 596, 655 S.E.2d 920, 923 (2008).
Lunsford v. Lori Renn, --- N.C.App. ----, ----, 700 S.E.2d 94, 100 (2010), disc. review denied, --- N.C. ----, 707 S.E.2d 244 (2011).  Arrington v. Martinez, COA10-1204, 2011 WL 4389653 (N.C. Ct. App. Sept. 6, 2011).
In the Arrington case, the Court of Appeals set out that the City of Raleigh may set out specific rules for when it will waive immunity that includes that it will waive immunity when a case settles and may specifically agree that it never owes any pain and suffering.
'By statute, a City may, but is not required to, waive governmental immunity."  Arrington v. Martinez, COA10-1204, 2011 WL 4389653 (N.C. Ct. App. Sept. 6, 2011).
The court determined that the City of Raleigh's determination not to pay pain and suffering and to waive their immunity only upon a settlement and a release was neither "arbitrary or capricious" which would be the only waive to prove the city's waiver was invalid.
Instead the Court of Appeals found "North Carolina General Statutes § 160A-485(a) provides that a municipality may purchase insurance coverage and may waive its immunity to whatever extent it determines appropriate. It may also elect not to waive its immunity at all, in which case plaintiff would have no possibility of any recovery from the City."   Arrington v. Martinez, COA10-1204, 2011 WL 4389653 (N.C. Ct. App. Sept. 6, 2011).
Although the Court found that the waiver should be construed against the one waiving the immunity, their decision did not have much in the way of logical support for their position.  Instead the Court found that the city could just deny the claim therefore any payment they allowed was sufficient.

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