IN THE COURT OF APPEALS OF NORTH CAROLINA. No. COA Filed: 5 July 2016

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1 An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. IN THE COURT OF APPEALS OF NORTH CAROLINA No. COA Filed: 5 July 2016 Haywood County, No. 14 CVS 557 KYLE EDWARDS, Individually and d/b/a/ KYLE EDWARDS CONSTRUCTION COMPANY, Plaintiff, v. BOARD OF TRUSTEES OF HAYWOOD COMMUNITY COLLEGE, a COLLEGE, by and through its BOARD OF TRUSTEES, Defendant/Third Party Plaintiff, v. CINCINNATI INSURANCE COMPANY and NORTH CAROLINA STATE BOARD OF EDUCATION, Third Party Defendants. Appeal by plaintiff from judgment dated 25 May 2015 and orders dated 1 June 2015 and 4 June 2015 by Judge Bradley B. Letts in Haywood County Superior Court. Heard in the Court of Appeals 14 April McLean Law Firm, P.A., by Russell L. McLean, III, for plaintiff-appellant. Frank G. Queen, PLLC, by Frank G. Queen, and Smathers & Smathers, by Patrick U. Smathers, for defendant/third party plaintiff-appellee Board of Trustees of Haywood Community College.

2 Hedrick Gardner Kincheloe and Garofalo, LLP, by Mark A. Michael, for defendant-appellee Cincinnati Insurance Company. Attorney General Roy Cooper, by Special Deputy Attorney General Scott Stroud, for defendant-appellee North Carolina State Board of Education. ZACHARY, Judge. Kyle Edwards, individually and d/b/a Kyle Edwards Construction Company (plaintiff) appeals from orders granting summary judgment in favor of the Board of Trustees of Haywood Community College, Cincinnati Insurance Company, and the North Carolina State Board of Education (defendants). On appeal, plaintiff argues that the trial court erred by granting summary judgment for defendants, on the grounds that the claims asserted in his complaint are within the scope of the coverage of an insurance policy issued by Cincinnati Insurance Company to Haywood Community College and of a policy issued by the North Carolina School Insurance Fund. We conclude that plaintiff s claims are not covered by either policy and that the trial court did not err by granting summary judgment for defendants. I. Background Haywood Community College (hereafter Haywood ) is a public educational institution located in Clyde, North Carolina. Haywood previously offered classes in sawmill training operations in a building known as the old sawmill. Haywood has purchased insurance policies from defendant Cincinnati Insurance Company ( Cincinnati ). In 2010, Haywood planned to offer continuing education classes - 2 -

3 related to sawmill operations beginning in the fall of However, in June 2010, Cincinnati indicated that it was unwilling to provide insurance coverage for damages arising from sawmill operations, leading Haywood to suspend its plans for the proposed classes. In July 2010, Cincinnati issued an insurance policy that renewed Haywood s insurance coverage, but excluded coverage for activities related to saw mill operations. Because Cincinnati would not provide insurance against damages arising out of sawmill operations, Haywood purchased a separate policy from Northfield Insurance Company that did not contain an exclusion for bodily injury or property damages arising from sawmill operations. On 12 May 2012, Haywood s Board of Trustees decided to sell the contents of the old sawmill building and tear down the building. Accordingly, Haywood hired an auctioneer, who conducted an auction of the contents of the old sawmill on 22 September Plaintiff attended the auction and was present when the auctioneer explained certain features of the auction. Specifically, plaintiff heard the auctioneer tell the assembled bidders that upon placing a winning bid at the auction, the bidder would become the legal owner of the item, after which Haywood would assume no responsibility or liability if, prior to the new owner removing the item from the old sawmill, the item was lost, stolen, broken, or damaged[.] Plaintiff also heard the auctioneer ask the bidders to remove any items that they purchased within thirty days

4 Plaintiff placed winning bids on various items with a total cost of approximately $85,490. In addition to the lots that plaintiff won directly from the auction, plaintiff purchased items from other successful bidders at the auction. During the seven weeks following the auction, plaintiff removed some of the items he had purchased at the auction, but made no attempt to secure insurance coverage for his purchases. On 11 November 2012, the old sawmill burned down in a fire that damaged or destroyed those items that plaintiff had purchased at the auction but had not yet removed from the sawmill. On 2 June 2014, plaintiff filed a complaint against Board of Trustees of Haywood Community College, a College, by and through its Board of Trustees seeking more than $300,000 in damages. Plaintiff s complaint asserted claims for breach of contract, breach of an implied bailment, conversion, and a statutory claim for interference with property rights under N.C. Gen. Stat. 99A-1 (2014). The factual basis for all of plaintiff s claims was that plaintiff was required to remove his property from the sawmill building between 8:00 a.m. and 4:00 p.m., Monday through Friday, which were Haywood s regular business hours. On 4 August 2014, Haywood filed an answer denying the material allegations of plaintiff s complaint and moving to dismiss plaintiff s complaint on the grounds that (1) plaintiff had failed to identify Haywood by its correct legal name; (2) the Industrial Commission had exclusive subject matter jurisdiction over plaintiff s claims under the North Carolina Tort Claims Act; and (3) plaintiff had failed to sue - 4 -

5 two necessary parties, Cincinnati Insurance Company and the North Carolina School Insurance Fund. Haywood also raised affirmative defenses, including plaintiff s contributory negligence and sovereign immunity. In its answer, Haywood also brought a third party complaint against Cincinnati and the North Carolina State Board of Education seeking a judgment declaring that neither the insurance policy issued by Cincinnati to Haywood nor the policy issued to Haywood by North Carolina School Insurance Fund would provide coverage for any of plaintiff s claims in the event that plaintiff could establish that Haywood was legally liable for the damage to plaintiff s property. On 16 September 2014, Cincinnati filed an answer, counterclaim and crossclaim asserting that the insurance policy Cincinnati had issued to Haywood excluded coverage for any claims for property damage arising out of operations, ongoing or completed, of Activities Related to saw mill operations [.] Cincinnati sought a judgment declaring that the insurance policy it issued to Haywood does not provide coverage for any claim asserted by [plaintiff.] On 15 October 2014, Haywood filed a motion asking the trial court to sever the issues of insurance coverage by Third Party Defendants for trial, and that the coverage issue be determined prior to any determination on the liability of Plaintiff's claims against Defendant/Third Party Plaintiff. On 29 December 2014, the trial court granted the motion to sever. After the issue of the scope of coverage of the insurance policies issued to Haywood was severed from the question of Haywood s liability to plaintiff, Cincinnati, - 5 -

6 Haywood, and the North Carolina State Board of Education each moved for summary judgment. The trial court conducted a hearing on defendants motions for summary judgment on 8 May The trial court entered orders granting summary judgment for Cincinnati, the North Carolina State Board of Education, and Haywood on 3 June Plaintiff has appealed the summary judgment orders to this Court. II. Standard of Review Under N.C. Gen. Stat. 1A-1, Rule 56(a) (2015), summary judgment is properly entered 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. The party moving for summary judgment has the burden of establishing the lack of any triable issue. Collingwood v. G. E. Real Estate Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989) (citation omitted). A party moving for summary judgment may prevail if it meets the burden (1) of proving an essential element of the opposing party s claim is nonexistent, or (2) of showing through discovery that the opposing party cannot produce evidence to support an essential element of his or her claim. Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citations omitted). [O]nce the party seeking summary judgment makes the required showing, the burden shifts to the nonmoving party to produce a forecast of evidence demonstrating specific facts, as opposed to allegations, showing that he can at least establish a prima facie case at trial. Pacheco v. Rogers & Breece, Inc., 157 N.C. App. 445, 448,

7 S.E.2d 505, 507 (2003) (quoting Gaunt v. Pittaway, 139 N.C. App. 778, , 534 S.E.2d 660, 664 (2000), cert. denied, 353 N.C. 371, 547 S.E.2d 810 (2001)). We review a trial court s order granting or denying summary judgment de novo. Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the lower tribunal. Patmore v. Town of Chapel Hill, 233 N.C. App. 133, 136, 757 S.E.2d 302, 304 (quoting Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 354 (2009)), disc. review denied, 367 N.C. 519, 758 S.E.2d 874 (2014). If the granting of summary judgment can be sustained on any grounds, it should be affirmed on appeal... even though the trial court may not have assigned the correct reason for the judgment entered. Shore v. Brown, 324 N.C. 427, 428, 378 S.E.2d 778, 779 (1989) (citation omitted). III. Waiver of Sovereign Immunity It is well settled in North Carolina that the State is immune from suit unless it has expressly consented to be sued. This immunity extends not only to suits where the State is a named defendant but also to suits against departments, institutions, and agencies of the State. RPR & Assocs. v. State, 139 N.C. App. 525, 528, 534 S.E.2d 247, 250 (2000) (citing Smith v. State, 289 N.C. 303, 309, 222 S.E.2d 412, 417 (1976), and Jones v. Pitt County Mem. Hospital, 104 N.C. App. 613, 616, 410 S.E.2d 513, 514 (1991)), aff'd, 353 N.C. 362, 543 S.E.2d 480 (2001). [Haywood], as a community college and an institution of the State, is authorized to waive its governmental immunity from liability through the purchase of liability insurance for negligent or - 7 -

8 tortious conduct that results in bodily injury or property damage. N.C. Ins. Guar. Ass n v. Bd. of Trs. of Guilford Technical Cmty. College, 185 N.C. App. 518, 522, 648 S.E.2d 859, 861 (2007) (citing N.C. Gen. Stat. 115D-24) (other citation omitted), rev d on other grounds, 364 N.C. 102, 691 S.E.2d 694 (2010). N.C. Gen. Stat. 115D-24 (2014) provides that The board of trustees of any [community college], by obtaining liability insurance as provided in G.S. 115D-53, is authorized to waive its governmental immunity from liability for... property damage caused by the negligence or tort of any agent or employee of the board of trustees[.]... Governmental immunity shall be deemed to have been waived by the act of obtaining liability insurance, but only to the extent that the board is indemnified for the negligence or torts of its agents and employees[.] [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 County Dep t of Human Servs., 188 N.C. App. 592, 596, 655 S.E.2d 920, 923 (2008) (citing Norton v. SMC Bldg. Inc., 156 N.C. App. 564, 577 S.E.2d 310 (2003)). Therefore, we must determine if plaintiff s claims are within the coverage of one or both of Haywood s insurance policies. IV. Plaintiff s Claims A. Breach of Contract The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of that contract. Poor v. Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000). In this case, plaintiff alleges that he entered into a - 8 -

9 contract for the purchase and sale of goods with Haywood, and that Haywood breached its performance of the contract by failing to deliver the property and breached its obligations to transfer and deliver said property by retaining control and interference of the Plaintiff s use thereof[.] The sole basis for plaintiff s breach of contract claim is that plaintiff was required to remove his property from the campus during Haywood s regular business hours, between 8:00 a.m. and 4:00 p.m., Monday to Friday. B. Implied Bailment Plaintiff s complaint asserted that Haywood s requirement that plaintiff remove his property from the campus on weekdays between 8:00 a.m. and 4:00 p.m. constitutes an implied bailment of the Plaintiff s property. This Court has previously held that a bailment is created upon the delivery of possession of goods and the acceptance of their delivery by the bailee. Becker v. N.C. Dep t of Motor Vehicles, 177 N.C. App. 436, 439, 628 S.E.2d 446, 449, (quoting Atlantic Contr g & Material Co. v. Adcock, 161 N.C. App. 273, 277, 588 S.E.2d 36, 39 (2003)), disc. review denied, 361 N.C. 166, 639 S.E.2d 648 (2006). The bailor has the burden of establishing the existence of a bailor-bailee relationship. Fabrics, Inc. v. Delivery Service, 39 N.C. App. 443, 447, 250 S.E.2d 723, (1979) (citation omitted). C. Conversion Plaintiff s complaint also asserted a claim for damages caused by Haywood s alleged conversion of plaintiff s purchases. This claim is based upon the fact that - 9 -

10 plaintiff was required to remove his purchases between 8:00 a.m. and 4:00 p.m., Monday to Friday. [C]onversion is defined as an unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of an owner s rights. [T]wo essential elements are necessary in a claim for conversion: (1) ownership in the plaintiff, and (2) a wrongful conversion by the defendant. Steele v. Bowden, N.C. App.,, 768 S.E.2d 47, 55 (2014) (quoting Myers v. Catoe Construction Co., 80 N.C. App. 692, 695, 343 S.E.2d 281, 283 (1986), and Bartlett Milling Co. v. Walnut Grove Auction & Realty Co., 192 N.C. App. 74, 86, 665 S.E.2d 478, 489, disc. review denied, 362 N.C. 679, 669 S.E.2d 741 (2008)). D. Interference with Property Rights Finally, plaintiff brought a claim for damages under N.C. Gen. Stat. 99A-1 (2014), which provides in relevant part that: Notwithstanding any other provisions of the General Statutes of North Carolina, when personal property is wrongfully taken and carried away from the owner or person in lawful possession of such property without his consent and with the intent to permanently deprive him of the use, possession and enjoyment of said property, a right of action arises for recovery of actual and punitive damages from any person who has or has had, possession of said property knowing the property to be stolen.... N.C. Gen. Stat. 99A-1... created a right of action in the owner... for recovery of damages from one who is criminally guilty of receiving stolen property. Noell v. Winston, 51 N.C. App. 455, 457, 276 S.E.2d 766, 768 (1981) (citation omitted)

11 In this case, plaintiff does not allege that Haywood was in possession of stolen property, but bases his claim on the fact that plaintiff did not have access to Haywood at night or on weekends. E. Summary Each of plaintiff s claims is based solely upon the fact that after plaintiff purchased items at the auction, he was required to remove his purchases from Haywood s campus during the school s normal working hours of 8:00 a.m. to 4:00 p.m., Monday through Friday. For the purpose of our review of the trial court s summary judgment orders, the significant fact is that plaintiff s claims are all predicated upon allegations of intentional, deliberate tortious acts by Haywood. V. Insurance Policy Issued by Cincinnati A review of the provisions of the insurance policy issued by Cincinnati to Haywood makes it clear that the policy does not apply to plaintiff s claims. The policy provides in the section for Common Policy Conditions that [a]ll coverage parts included in this policy are subject to the following conditions. The policy section titled Commercial General Liability Coverage Form states that words and phrases that appear in quotation marks have special meaning. Refer to Section V - Definitions. The Commercial General Liability Coverage Form s Section I - Coverages provides in relevant part that: 1. Insuring Agreement

12 a. We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies b. This insurance applies to bodily injury and property damage only if: (1) The bodily injury or property damage is caused by an occurrence[.]... The term occurrence is defined in Section V - Definitions as follows: 16. Occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. In Gaston County Dyeing Machine Co. v. Northfield Ins. Co., 351 N.C. 293, 302, 524 S.E.2d 558, 564 (2000), our Supreme Court interpreted an insurance policy with the same definition of occurrence as in the present case: [The policy] defines an occurrence as an accident, including continuous or repeated exposure to substantially the same harmful conditions... Because the term occurrence is defined in the policy, we use the specific definition. However, nontechnical words are to be given their ordinary meaning. An accident is generally considered to be an unplanned and unforeseen happening or event, usually with unfortunate consequences. In his appellate brief, plaintiff acknowledges that the policy covers only damages caused by an occurrence, but argues that the occurrence was in fact the fire. Plaintiff s complaint, however, does not allege that Haywood s legal liability to plaintiff is based on the fire. For example, plaintiff does not assert in his complaint

13 that Haywood started the fire, negligently failed to prevent the fire, or failed to properly minimize damage from the fire. In his deposition, plaintiff testified that he was not claiming that Haywood was legally liable based on the fire. Instead, as plaintiff admitted in his deposition, plaintiff s claims are all premised on his assertion that Haywood is legally liable to plaintiff for damages to his property caused by Haywood s intentional tortious act of restricting the hours when he could retrieve his purchases from the campus. We conclude that, because plaintiff s claims assert that Haywood is legally liable to plaintiff based on Haywood s intentional decision to require him to remove his purchases during the school s business hours, plaintiff s complaint does not allege that he suffered property damage from an accident or occurrence as defined in the policy. Therefore, plaintiff s claims do not fall within the ambit of the insurance policy issued to Haywood by Cincinnati, and the policy does not constitute a waiver of Haywood s sovereign immunity. The trial court did not err by granting summary judgment for defendants with respect to the insurance policy issued by Cincinnati. VI. Insurance Policy Issued by the North Carolina School Insurance Fund Plaintiff argues next that the trial court erred by granting summary judgment for defendants on the grounds that Haywood s sovereign immunity was waived by its purchase of insurance from the North Carolina School Insurance Fund. We disagree. Section A., Property Coverage, of the insurance policy issued by the North Carolina School Insurance Fund provides that unless otherwise excluded or limited

14 by the provisions of this Contract or the Scope of Coverage Conditions, we will pay for direct physical loss or damage to Covered Property arising from Covered Causes of Loss. Section I., Covered Causes of Loss, states that Covered Causes of Loss, as used in this Scope of Coverage, means risks of DIRECT PHYSICAL LOSS[.] (emphasis in original). Consistent with the policy s requirement that a covered cause of loss must be a risk of direct physical loss, Section L., Definitions, defines Specified Cause of Loss as Fire; Lightning; Explosion; Windstorm or Hail; Smoke; Aircraft or Vehicle Collision; Riot or Civil Commotion; Vandalism and Malicious Mischief; Sinkhole Collapse; Volcanic Action or Falling Objects. All of these are circumstances that would create a risk of direct physical loss. Plaintiff s complaint, however, asserts that Haywood is legally liable for damage to his property based on the college s requirement that buyers at the auction remove their purchases between 8:00 a.m. and 4:00 p.m., Monday through Friday. Plaintiff does not argue that the school s business hours created a risk of direct physical loss and we discern no possibility that this might occur. Plaintiff s complaint thus asserts liability based on the indirect relationship between the limitations on the time that the campus was open and the fact that when the sawmill burned down, fifty-one days after the auction, plaintiff had not removed all of his purchases. Because plaintiff s complaint does not assert any claims based on facts alleging a risk of direct physical loss, his claims were not covered by the North

15 Carolina School Insurance Fund insurance policy and the trial court did not err by granting summary judgment for defendants as regards this insurance policy. For the reasons discussed above, we conclude that the trial court did not err by granting summary judgment for defendants on plaintiff s claims and that its orders should be AFFIRMED. Chief Judge McGEE and Judge DILLON concur. Report per Rule 30(e)

DEBORAH FREEMAN, Plaintiff, v. FOOD LION, LLC, BUDGET SERVICES, INC., and FRANK S FLOOR CARE, Defendants NO. COA Filed: 6 September 2005

DEBORAH FREEMAN, Plaintiff, v. FOOD LION, LLC, BUDGET SERVICES, INC., and FRANK S FLOOR CARE, Defendants NO. COA04-1570 Filed: 6 September 2005 1. Appeal and Error--preservation of issues--failure to raise