Lannan v. Bd. of Governors of the Univ. of N.C. ( 2022 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-653
No. COA21-554
Filed 4 October 2022
Wake County, No. 20-CVS-9988
JOSEPH LANNAN, AND LANDRY KUEHN, on behalf of themselves and others
similarly situated, Plaintiffs,
v.
BOARD OF GOVERNORS OF THE UNIVERSITY OF NORTH CAROLINA, known
and distinguished by the name of “THE UNIVERSITY OF NORTH CAROLINA,” a
body politic and corporate, Defendant.
Appeal by defendant and cross appeal by plaintiffs from order entered 30 June
2021 by Judge Edwin G. Wilson, Jr. in Superior Court, Wake County. Heard in the
Court of Appeals 8 February 2022.
White & Stradley, PLLC, by J. David Stradley and Robert P. Holmes, IV, and
Law Office of Brian D. Westrom, by Brian D. Westrom, for plaintiffs-
appellees/cross-appellants.
Attorney General Joshua H. Stein, by Special Deputy Attorneys General Laura
McHenry and Kari R. Johnson, and Brooks, Pierce, McLendon, Humphrey &
Leonard, LLP, by Jim W. Phillips, Jr. and Jennifer K. Van Zant, for defendant-
appellant/cross-appellee.
STROUD, Chief Judge.
¶1 Defendant Board of Governors of the University of North Carolina appeals
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from an order denying its Motion to Dismiss Plaintiffs Joseph Lannan and Landry
Kuehn’s breach of contract claims. Plaintiffs cross appeal from the same order’s grant
of Defendant’s Motion to Dismiss their state constitutional claim under Corum v.
University of North Carolina Through Bd. of Governors, 330 N.C. 761, 413 S.E.2d 276(1992). We first confirm our appellate jurisdiction and grant Defendant’s Petition for
Writ of Certiorari as to the issue of whether the trial court erred in denying its Motion
to Dismiss the contract claims for failure to state a claim under North Carolina Rule
of Civil Procedure 12(b)(6). N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2021). As to
Defendant’s appeal, because Plaintiffs’ Amended Complaint pled a valid implied-in-
fact contract and such a contract can waive the State and its agencies’ sovereign
immunity, the trial court properly denied Defendant’s Motion to Dismiss the contract
claims on sovereign immunity grounds. Because Plaintiffs adequately pled breach of
contract claims, the trial court also acted correctly in denying Defendant’s Motion on
Rule 12(b)(6) grounds. Turning to Plaintiffs’ cross appeal, because their contract
claims are adequate state remedies, the trial court properly granted the Motion to
Dismiss their Corum claim. Therefore, we affirm.
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I. Background
¶2 Since this case is at the pleading stage, we rely upon the facts as alleged in
Plaintiffs’ Amended Complaint.1 Defendant is the Board of Governors for the
University of North Carolina at Chapel Hill (“UNC-CH”) and North Carolina State
University at Raleigh (“NCSU”), two constituent institutions of the University of
North Carolina (“Universities”). Before the Fall 2020 Term, Defendant required
students planning to attend the Universities to pay certain student fees. These
students included Plaintiff Kuehn, an undergraduate student at UNC-CH, and
Plaintiff Lannan, a graduate student at NCSU. The Universities required students
to pay these fees to register as a student, “remain . . . in good standing,” receive
“scholastic credit,” and “obtain a transcript” for the Fall 2020 term.
¶3 The student fees were also “earmarked for specific categories of services and
benefits” that Fall 2020 students at the Universities “[were] entitled to receive” from
the Universities. The Universities “represented in writing on their respective
websites and in written communications to each student” through emails to students,
1Plaintiffs filed their original Complaint on 10 September 2020. Because the order on appeal
ruled on Defendant’s Motion to Dismiss the Amended Complaint, we do not discuss the
original Complaint, with one exception noted below, for the remainder of this opinion. For
completeness of the procedural history, we also note Defendant filed a motion to dismiss the
original Complaint on 29 October 2020, and the Chief Justice of the Supreme Court of North
Carolina, pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District
Courts, designated the case as “exceptional” and specifically assigned Judge Wilson to the
case on or about 18 November 2020.
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account statements, and an itemized bill, “each component Student Fee would be
used for the purposes described . . . for that component fee.” For example, both
Universities had fees related to student health services. UNC-CH described its
student health services fee as: “Student Health Fee - $400.16: ‘Funds medical
services for students, including the salaries, maintenance and operation of student
health centers.’” Similarly, NCSU described its student health services fee as:
“Student Health Services Fee – This fee of $407.00 is used by the University
Health Center to offer medical and counseling services to students.” The other
student fees for the Fall 2020 term included: academic registration, education
technology, library services, scholarships, teaching awards, student IDs, different
schools within the universities, campus security, campus programming, student
organizations, student publications, student government, student legal services, the
student centers, sustainability, recreational sports, intercollegiate athletics, transit,
night parking, and debt servicing for and expansion of certain on-campus buildings.
Plaintiffs and the other students at the Universities paid these fees with the
understanding they would be used for the listed services and benefits.
¶4 In addition to the student fees, Plaintiffs and some other students purchased
from the Universities “optional motor vehicle parking permits which permitted the
purchasers to park their motor vehicle on NCSU’s and UNC-CH’s convenient on-
campus parking lots for the Fall 2020 Terms.” For Plaintiff Lannan, this fee covered
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only the Fall 2020 Term, but for Plaintiff Kuehn, the parking permit included both
the Fall 2020 and Spring 2021 Terms.
¶5 In August 2020, both NCSU and UNC-CH took measures to switch from in-
person to online learning and shut down their campuses for the Fall 2020 Term. The
original Complaint indicated this shut down was due to the COVID-19 pandemic, but
the Amended Complaint includes no explanation for the shutdown. As a result of the
shutdown, the constituent Universities: “evicted all students from on-campus
housing”; cancelled “all in-person, on-campus instruction”; restricted “campus
transportation service to the point that service was of extremely limited value”;
barred students from accessing “on-campus student athletic[,] recreation facilities,”
and student activity venues; “shut down on-campus libraries . . . workshops,
laboratories[,] studios, . . . museums[,] arboretums,” the student unions, and dining
halls; “stopped live art performances on campus”; prohibited students from attending
intercollegiate sports; “discontinued student organization activity and other in-
person student activity”; and “curtailed student health services and advised Fall 2020
Term students that they should obtain health services” elsewhere.
¶6 Based on these alleged facts, Plaintiffs eventually filed an Amended Complaint
on 3 February 2021. The Amended Complaint includes claims for breach of contract,
“or, in the alternative, if it is determined that Plaintiffs cannot assert a claim for
breach of contract, a ‘Corum claim’” against Defendant for its constituent Universities
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UNC-CH and NCSU’s decisions to “improper[ly]” assess and retain student fees and
on-campus parking permit fees “after on-campus classes, activities, and student
services at the” Universities “were stopped or curtailed in and after August 2020.”
The Amended Complaint states the suit is a class action “on behalf of students who
registered and paid student fees for the Fall 2020 academic semester” at the
constituent Universities of the University of North Carolina, with a separate class for
those who paid for on-campus parking. As a result, the Amended Complaint includes
“Class Action Allegations,” (capitalization altered) but the class action component of
the lawsuit is not at issue in this appeal.
¶7 Focusing on the relevant portions of the lawsuit, the breach of contract claims
cover both student fees and parking permit fees. As to the student fees contract claim,
the Amended Complaint alleges the Universities “offered to Plaintiffs and other
prospective Fall 2020 Term . . . students that if the prospective students registered
for the Fall 2020 Terms and promised to pay” student fees they “would, in turn,
receive the services, benefits, and opportunities” described in the student fees.
Plaintiffs and the other students then “accepted the offers” when they paid their
student fees and thus “expected to receive, and were entitled to receive . . . all of the
services, benefits, and opportunities” described. According to the Amended
Complaint, this constituted “a meeting of the minds,” thereby creating a contract.
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¶8 While Plaintiffs and the other students in the class “fully performed their
duties” by paying the student fees, the Universities breached the contract when they
shut down their campuses, as detailed above, because they either stopped providing
the services or “rendered” them “of no value whatsoever.” The Amended Complaint
alleges “[b]ut for the unnecessary decisions” to shut down the campuses, Plaintiffs
and the other students in the proposed class “would have regularly gone on their
respective campuses” and thus taken advantage of the services and benefits provided
for by the student fees, as they and others had done in the past. Finally, the Amended
Complaint alleges Plaintiffs and the other students suffered damages because they
did not receive “the services, benefits, and opportunities” they paid for with the
student fees and the fees “were not adjusted, pro-rated, or rebated in any way”
following the campus shutdowns.
¶9 As to the parking fees contract claim, the Universities “offered to sell optional
parking permits” to Plaintiffs and other students “which would permit the purchaser
to park a motor vehicle in an on-campus parking lot during the Fall 2020” Term.
Plaintiffs and some other students “accepted the offers” by buying the parking passes,
thereby forming a contract. The Amended Complaint alleges all relevant students
performed by paying their parking fees fully and expected and were entitled to receive
“the full benefit of their parking permits for the duration of the Fall 2020 Term.” But
the Universities breached the contract by shutting down their campuses, which
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meant the on-campus parking passes were “rendered worthless.” While Plaintiffs
and other students received partial refunds, the refunds did not cover the full cost of
the parking passes and thus the full damages suffered.2
¶ 10 For both contract claims, the Amended Complaint also alleges Defendant
waived sovereign immunity. It first alleges Defendant is a State agency. Then, it
alleges when the State or its agencies, such as Defendant, enter into a contract, it
“implicitly consents to be sued for the breach of that contract and the doctrine of
sovereign immunity is not a defense.” (Citing Smith v. State, 289 N.C. 303, 320, 222
S.E.2d. 412, 423–24 (1976).) The Amended Complaint finally alleges Defendant
waived “any defense based on sovereign immunity when it entered into the contracts”
for student fees and parking permits as already described.
¶ 11 Finally, the Amended Complaint includes a Corum claim “in the alternative”
to its breach of contract claims if those are barred by sovereign immunity. The
Amended Complaint alleges a Corum claim allows a direct claim under our
Constitution for a violation of a right protected by our Constitution when a plaintiff
lacks access to other statutory or common law remedies. Specifically, Plaintiffs allege
the contracts with the Universities—wherein they paid money for certain services
2 As to Lannan and other NCSU students, the Amended Complaint first alleges, “NCSU
rebated no parking permit fees to Lannan, or, upon information and belief, to any other”
impacted students before later saying Lannan received a rebate.
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and benefits—created a “vested property interest” in those service and benefits such
that they would either receive those things or “receive a timely and proportionate
refund” for what the Universities “promised, but failed, to provide.” The Amended
Complaint explains under our Constitution’s Article I, § 19 “[L]aw of the [L]and”
Clause, such private property could not be “taken for public use” unless “just
compensation” was paid. (Citing Eller v. Bd. of Educ. of Buncombe Cty., 242 N.C.
584, 586, 89 S.E.2d 144, 146 (1955).) According to the Amended Complaint’s
allegations, when the Universities shut down and denied Plaintiffs and other
students those benefits, they took the vested property interest, and they did not
provide appropriate refunds as just compensation.
¶ 12 The Amended Complaint also states “If the claims for breach of contract . . .
fail, then Plaintiffs” and other students in the proposed classes “lack any sort of state
remedy.” As part of this paragraph, the Amended Complaint states, “But for the
doctrine of sovereign immunity, Plaintiffs and the other students would have claims
against [Defendant]” or its constituent institutions “for the intentional tort of
conversion or for unjust enrichment.” Finally, as to the Corum claim, Plaintiffs allege
they are “entitled to” money damages.
¶ 13 On 2 March 2021, Defendant filed a “Motion to Dismiss [the] Amended
Complaint” based on North Carolina Rules of Civil Procedure 12(b)(1), 12(b)(2), and
12(b)(6). (Capitalization altered.) First, Defendant argued “Plaintiffs’ claims are
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barred by sovereign immunity.” Next, Defendant contended the Amended Complaint
failed to state claims for relief for breach of contract and for a state constitutional
violation. Finally, Defendant’s Motion to Dismiss claimed Plaintiffs “lack standing
to assert the claims in the Amended Complaint on behalf of other students” and fail
to show “Defendant’s alleged conduct proximately caused Plaintiffs’ alleged
damages.”
¶ 14 Following a hearing on 10 May 2021, the trial court entered an order on
Defendant’s Motion to Dismiss on 18 June 2021. The order granted the Motion to
Dismiss Plaintiffs’ Corum claim, but it denied the Motion to Dismiss Plaintiffs’
contract claims. On or about 23 June 2021, Defendant filed a notice of appeal from
that order.
¶ 15 On 29 June 2021, Plaintiffs filed a “Motion to Amend [the] Order.”
(Capitalization altered.) Plaintiffs’ Motion to Amend requested the trial court amend
its order on Defendant’s Motion to Dismiss to make clear the Corum claim was
“properly pled” in general and only failed because Plaintiffs “had an adequate state-
law remedy” via the contract claims such that “the court of appeals would have
jurisdiction to review the dismissal of the Corum claim as an alternative basis for
denying the Motion to Dismiss.” Plaintiffs also requested, “[i]n the alternative,” the
order be amended “to certify the dismissal of the Corum claim as a final judgment
and that there is no just reason for delaying the appeal of that dismissal.”
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¶ 16 The trial court entered an “Amended Order” on 30 June 2021. (Capitalization
altered.) The trial court still granted Defendant’s Motion to Dismiss as to the Corum
claim and denied it as to the contract claims. It then added language “conclud[ing]
that there is no just reason to delay the appeal of the dismissal of the Corum claim
and that Order is hereby certified for immediate appeal,” as Plaintiffs had requested.
On 1 July 2021, Plaintiffs filed written notice of appeal from the Amended Order’s
dismissal of their Corum claim. Defendant filed a notice of appeal from the Amended
Order’s denial of its Motion to Dismiss the contract claims on 6 July 2021.
II. Analysis
¶ 17 This case presents three issues for our review arising from Defendant’s appeal
and Plaintiffs’ cross-appeal of the Amended Order. First, Defendant argues “the
doctrine of sovereign immunity bars Plaintiffs’ claims,” so the trial court should have
dismissed Plaintiffs’ contract claims. (Capitalization altered.) Second, Defendant
argues the trial court should have dismissed the contract claims “pursuant to Rule
[of Civil Procedure] 12(b)(6) for failure to plead a claim for breach of contract upon
which relief may be granted.” Third, in their cross-appeal, Plaintiffs argue to the
extent they “have no remedy for breach of contract . . ., then, in the alternative, their
Corum claims state claims for relief” such that the trial court erred by dismissing
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that claim.3 (Capitalization altered.) We first discuss our jurisdiction to review each
of these issues and then discuss the merits.
A. Appellate Jurisdiction
¶ 18 An appellate court cannot hear an appeal if it does not have jurisdiction, so we
must first confirm we have jurisdiction. See Dogwood Development and Management
Co., LLC v. White Oak Transport Co., Inc., 362 N.C. 191, 197, 657 S.E.2d 361, 364
(2008) (“It is axiomatic that courts of law must have their power properly invoked by
an interested party.”); Bailey v. Gooding, 301 N.C. 205, 208, 270 S.E.2d 431, 433
(1980) (explaining appellate courts must always ensure they have jurisdiction to hear
an appeal); see also RPR & Associates, Inc. v. State, 139 N.C. App. 525, 527, 534
S.E.2d 247, 249–50 (2000) (explaining this Court had to “determine whether th[e]
appeal [was] properly before” it in a case involving a denial of a motion to dismiss
based on sovereign immunity). Generally, appellate courts only have jurisdiction to
hear appeals from a final judgment, not from an interlocutory order. See N.C. Gen.
Stat. § 7A-27 (2021) (permitting appeals as a matter of right to this Court from final
judgments and from a limited set of interlocutory orders); Can Am South, LLC v.
State, 234 N.C. App. 119, 122, 759 S.E.2d 304, 307 (2014) (“Generally, there is no
3 Plaintiffs refer to multiple Corum claims in their appellate briefing, but the Amended
Complaint only includes one Corum claim. Thus we refer to a singular Corum claim during
this appeal.
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right of immediate appeal from interlocutory orders and judgments.” (quoting
Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990))); see
also Veazey v. City of Durham, 231 N.C. 357, 361–62, 57 S.E.2d 377, 381 (1950)
(defining final judgment and interlocutory order).
¶ 19 This general rule barring appeals from interlocutory orders has two exceptions:
First, the trial court may certify that there is no just reason
to delay the appeal after it enters a final judgment as to
fewer than all of the claims or parties in an action. N.C.G.S.
§ 1A–1, Rule 54(b) (1990). Second, a party may appeal an
interlocutory order that “affects some substantial right
claimed by the appellant and will work an injury to him if
not corrected before an appeal from the final judgment.”
Veazey, 231 N.C. at 362, 57 S.E.2d at 381; see also N.C.G.S.
§ 1–277 (1996); N.C.G.S. § 7A–27 (1995); Tridyn Indus.,
Inc. v. American Mut. Ins. Co., 296 N.C. 486, 251 S.E.2d
443 (1979).
Department of Transp. v. Rowe, 351 N.C. 172, 174–75, 521 S.E.2d 707, 709 (1999); see
also Doe v. Charlotte-Mecklenburg Bd. of Educ., 222 N.C. App. 359, 360, 363, 731
S.E.2d 245, 246–48 (2012) (describing same two exceptions in case related to
immunity and state constitutional claims).
¶ 20 Here, as both parties recognize, the Amended Order on Defendant’s Motion to
Dismiss is an interlocutory order. Since the Order dismissed Plaintiffs’ Corum claim
but not its contract claims, it did not “dispose of the case, but [left] it for further action
by the trial court in order to settle and determine the entire controversy.” See Veazey,
231 N.C. at 362, 57 S.E.2d at 381 (so defining an interlocutory order). This Court has
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also repeatedly explained, in general, “the denial of a motion to dismiss is not
immediately appealable because it is an interlocutory order.” E.g., RPR, 139 N.C.
App. at 527, 534 S.E.2d at 249; Can Am South, 234 N.C. App. at 122, 759 S.E.2d at
307. Therefore, we must determine whether either of the exceptions applies to allow
us to review each of the parties’ issues on appeal. See Richmond County Bd. of Educ.
v. Cowell, 225 N.C. App. 583, 586, 739 S.E.2d 566, 568–69 (2013) (allowing immediate
appeal of sovereign immunity issue but not allowing review of denial of Rule 12(b)(6)
motion on separate issue).
1. Sovereign Immunity
¶ 21 As to Defendant’s sovereign immunity argument, we agree with both parties
that “an order denying a dismissal motion predicated upon the doctrine of sovereign
immunity . . . is immediately appealable ‘because it represents a substantial right.’”
State ex rel. Stein v. Kinston Charter Academy, 379 N.C. 560, 2021-NCSC-163, ¶ 23
(quoting Craig v. New Hanover Cnty. Bd. of Educ., 363 N.C. 334, 338, 678 S.E.2d 351(2009)).
¶ 22 “Sovereign immunity protects the State and its agencies from suit absent
waiver or consent.” Carl v. State, 192 N.C. App. 544, 550, 665 S.E.2d 787, 793 (2008)
(quoting Wood v. N.C. State Univ., 147 N.C. App. 336, 338, 556 S.E.2d 38, 40 (2001)).
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Defendant Board of Governors is an agency of the State.4 See N.C. Gen. Stat. § 116-
3 (2021) (establishing the Board “as a body politic and corporate”). As a result, it can
claim the protection of sovereign immunity.
¶ 23 The protection of sovereign immunity extends beyond just a mere “defense in
a lawsuit”; a “valid claim . . . is in essence immunity from suit.” RPR, 139 N.C. App.
at 527, 534 S.E.2d at 250. This characteristic of sovereign immunity explains why
our caselaw allows immediate appeal of orders denying motions to dismiss on
sovereign immunity grounds. If the case is “erroneously permitted to proceed to trial,
immunity would be effectively lost.” Doe, 222 N.C. App. at 364, 731 S.E.2d at 248
(quotations and citations omitted); see also RPR, 139 N.C. App. at 527–28, 534 S.E.2d
at 250 (explaining ability to lose benefits of immunity means denial of motion to
dismiss based on sovereign immunity affects a substantial right). Because
Defendant’s loss of the protection provided by sovereign immunity affects a
substantial right, we have jurisdiction to hear Defendant’s appeal on this issue.
2. Corum Claim
¶ 24 As Plaintiffs argue, their Corum claim falls under the other exception to the
4 This Court has also previously found the two constituent Universities covered in the
Amended Complaint, UNC-CH and NCSU, see N.C. Gen. Stat. § 116-4 (2021) (listing
constituent universities of the University of North Carolina), are state agencies for the
purpose of sovereign immunity. Kawai America Corp. v. University of North Carolina at
Chapel Hill, 152 N.C. App. 163, 165, 567 S.E.2d 215, 217 (2002) (stating UNC-CH “is a state
agency to which the doctrine of sovereign immunity applies”); Wood, 147 N.C. App. at 338,
556 S.E.2d at 40 (stating “NCSU is a State agency” in a paragraph on sovereign immunity).
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bar on interlocutory appeals, Rule of Civil Procedure 54(b) certification. In relevant
part, Rule 54(b) allows a trial court to certify for immediate appeal a final judgment
on one claim in a multi-claim action:
When more than one claim for relief is presented in an
action, whether as a claim, counterclaim, crossclaim, or
third-party claim, or when multiple parties are involved,
the court may enter a final judgment as to one or more but
fewer than all of the claims or parties only if there is no
just reason for delay and it is so determined in the
judgment. Such judgment shall then be subject to review
by appeal or as otherwise provided by these rules or other
statutes.
N.C. Gen. Stat. § 1A-1, Rule 54(b) (2021).
¶ 25 Here, in the Amended Order ruling on Defendant’s Motion to Dismiss, the trial
court included the following language about the Corum claim: “The Court concludes
that there is no just reason to delay the appeal of the dismissal of the Corum claim
and that Order is hereby certified for immediate appeal.” The trial court properly
certified the dismissal of the Corum claim, so we have jurisdiction to review Plaintiffs’
cross-appeal as to the trial court’s dismissal of the Corum claim.
3. Motion to Dismiss Contract Claims under Rule 12(b)(6)
¶ 26 Finally, we must consider appellate jurisdiction to review the trial court’s
denial of Defendant’s Motion to Dismiss the contract claims under Rule 12(b)(6).
Defendant argues we can also review this issue because it is “inextricably
intertwined” with immediately appealable issues. Defendant argues the 12(b)(6)
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issue is inextricably intertwined with the sovereign immunity issue because
Plaintiffs’ argue sovereign immunity has been waived because a contract exists and
to assess that argument we “must analyze and determine whether the Amended
Complaint sufficiently identifies a valid contract.” Defendant also contends the
12(b)(6) issue is inextricably intertwined with the Corum issue because: (1) a Corum
claim is only available when there is no adequate state remedy and the existence of
a contract claim is such an adequate remedy; or (2) the constitutional claim
underlying Plaintiffs’ Corum claim is an unconstitutional taking under the Law of
the Land Clause and that also requires a valid contract.5 In the alternative,
5 Defendant technically includes these arguments about the Corum issue being inextricably
intertwined with the 12(b)(6) issue as a reason we should issue a Petition for Writ of
Certiorari (“PWC”) to hear the issue of whether Plaintiffs’ pleaded a breach of contract claim.
This contrasts with Defendant’s treatment of the inextricably intertwined nature of the
sovereign immunity issue and 12(b)(6) issue where Defendant argued “issues inextricably
intertwined with immediately appealable issues may also be immediately appealed.”
Our caselaw also has not consistently treated the inextricably intertwined nature of issues
on appeal as a reason to grant a PWC as opposed to an additional way to have a right to
appeal. Compare Carl, 192 N.C. App. at 550, 665 S.E.2d at 793 (“Although the denial of their
Rule 12(b)(6) defense is interlocutory, we agree with the State that the issue is inextricably
intertwined with the issues before this Court as of right. Accordingly, we grant the Writ of
Certiorari and address the State’s argument in this appeal.”) with State v. Carver, 277 N.C.
App. 89, 2021-NCCOA-141, ¶ 23 (“[A] right to appeal those other issues exists only if this
Court finds those issues ‘inextricably intertwined with the issues before this Court as of
right.’” (quoting Carl, 192 N.C. App. at 550, 665 S.E.2d at 793)).
For the purpose of this discussion, we assume without deciding an issue inextricably
intertwined with another issue where there is an appeal of right can also be appealed as a
matter of right. If two issues are intertwined such that addressing one addresses the other,
see Carver, ¶ 24 (summarizing this Court’s application of “the ‘inextricably intertwined’ rule”
in State v. Howard, 247 N.C. App. 193, 783 S.E.2d 786 (2016) by explaining all three issues
were just based on the first issue), it makes little sense to require a party to file a PWC rather
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Defendant asks we grant its Petition for Writ of Certiorari (“PWC”) to review “all
grounds involved in” its Motion to Dismiss.
¶ 27 As Defendant argues, a valid contract is a pre-requisite for each of the three
issues in dispute. A valid contract is necessary to waive sovereign immunity. See
Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423–24 (1976) (“[W]henever the
State of North Carolina, through its authorized officers and agencies, enters into a
valid contract, the State implicitly consents to be sued for damages on the contract”
such that “the doctrine of sovereign immunity will not be a defense to the State.”). A
valid contract is necessary to survive a motion to dismiss under Rule 12(b)(6) for a
contract claim. E.g. Montessori Children’s House of Durham v. Blizzard, 244 N.C.
App. 633, 636, 781 S.E.2d 511, 514 (2016) (“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.” (quoting Poor v. Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000))).
And, as relevant to Plaintiffs’ claim under Corum, a valid contract is required to bring
a suit under our state Constitution’s Law of the Land Clause because that provides
the vested property right the State cannot take without just compensation. See
Adams v. State, 248 N.C. App. 463, 470, 790 S.E.2d 339, 344 (2016) (although
recognizing “vested contractual rights are property and are protected by the Law of
than just having a right to appeal. Still, we need not decide the issue because we grant the
PWC on separate grounds.
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the Land Clause of our Constitution,” rejecting argument because plaintiffs failed to
show vested contractual right (citing Bailey v. State, 348 N.C. 130, 154, 500 S.E.2d
54, 68 (1998))). Thus, if we agree with Defendant on the merits and find there is not
a valid contract, all the issues are linked by this common thread.
¶ 28 But, if we do not agree with Defendant on the validity of the contract, all the
issues suddenly become untethered; once there is a valid contract, we could still rule
for either side on a separate ground. On the waiver of sovereign immunity, we could
still rule for Defendant if a valid implied-in-fact, as opposed to an “express,” contract
is not sufficient, as Defendant and Plaintiffs contest on the merits and we discuss
more below. On the Rule 12(b)(6) ground to dismiss the contract claims, we could still
rule for Defendant if Plaintiffs failed to adequately plead breach. See Montessori
Children’s House, 244 N.C. App. at 636, 781 S.E.2d at 514 (requiring “a valid contract
and . . . breach”). On the Corum claim, we could still rule for Defendant if Plaintiffs
have an alternate adequate remedy. See Taylor v. Wake County, 258 N.C. App. 178,
183, 811 S.E.2d 648, 652 (2018) (“A Corum claim is available to a plaintiff who is able
to establish that (1) her state constitutional rights have been violated, and (2) she
lacks any sort of ‘adequate state remedy.’” (quoting Corum, 330 N.C. at 782, 413
S.E.2d at 289)). We should not have to determine part of the merits of a case in this
way to determine if we have jurisdiction to reach the merits issues. Thus, the issues
are not so inextricably intertwined that jurisdiction over either the sovereign
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immunity issue or the Corum issue grants us jurisdiction over the Rule 12(b)(6) issue.
¶ 29 At the same time, these links between the issues convince us to grant
Defendant’s PWC to review the 12(b)(6) issue. As Defendant indicates, our appellate
courts can grant a PWC when doing so “will serve the expeditious administration of
justice . . . .” North Carolina Department of Transportation v. Laxmi Hotels of Spring
Lake, Inc., 259 N.C. App. 610, 618, 817 S.E.2d 62, 69 (2018). Here, once we determine
the validity of the contract for sovereign immunity, we have already conducted a
major part of the Rule 12(b)(6) analysis, and it would save judicial resources to finish
that analysis rather than leave it for review after final judgment in this case when
the court may also have to deal with an additional myriad of issues. Therefore, in
our discretion, we grant Defendant’s PWC to review the trial court’s denial of
Defendant’s Motion to Dismiss the contract claims for failure to state a claim under
Rule 12(b)(6).
B. Sovereign Immunity
¶ 30 Defendant argues “the doctrine of sovereign immunity bars Plaintiffs’ claims.”
(Capitalization altered.) Specifically, Defendant contends “Plaintiffs have not
adequately pled waiver of sovereign immunity” because they have not pled a “valid
and express contract” as required. Within this argument, Defendant has two points.
First, Defendant argues Plaintiffs fail to plead an express contract. On this point,
Plaintiffs respond an express contract is not required because “an implied-in-fact
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contract overcomes sovereign immunity” too. Second, Defendant asserts Plaintiffs
failed “to allege a [valid] contract.” Plaintiffs respond they “pleaded a valid contract
implied-in-fact.” (Capitalization altered.)
¶ 31 Thus, Defendant’s sovereign immunity argument presents us with two issues.
As both parties agree, a valid contract can waive sovereign immunity. Smith, 289
N.C. at 320, 222 S.E.2d at 423–24. First, we must decide if a valid implied-in-fact
contract, as opposed to an express contract, can waive sovereign immunity. Then, if
an implied-in-fact contract can waive sovereign immunity, we consider whether
Plaintiffs pled a valid implied-in-fact contract sufficient to effect such a waiver. After
addressing the standard of review, we discuss each issue in turn.
1. Standard of Review
¶ 32 Our Supreme Court recently explained an appellate court “reviews a trial
court’s decision to grant or deny a motion to dismiss based upon the doctrine of
sovereign immunity using a de novo standard of review.” State ex rel. Stein, ¶ 23
(citing White v. Trew, 366 N.C. 360, 362–63, 736 S.E.2d 166 (2013)); see also Wray v.
City of Greensboro, 370 N.C. 41, 47, 802 S.E.2d 894, 898 (2017) (“[Q]uestions of law
regarding the applicability of sovereign or governmental immunity are reviewed de
novo.” (quoting Irving v. Charlotte-Mecklenburg Bd. of Educ., 368 N.C. 609, 611, 781
S.E.2d 282, 284 (2016))).
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¶ 33 To the extent the question of whether Plaintiffs’ pled a valid contract should
be reviewed under the standard for orders on motions to dismiss under Rule 12(b)(6),
the standard is the same, i.e. de novo. See State ex rel. Stein, ¶ 25 n.2 (explaining
standard is the same because “the only factual materials presented for the trial
court’s consideration were those contained in the complaint”); see also Wray, 370 N.C.
at 46–47, 802 S.E.2d at 898 (stating appellate courts “review appeals from dismissals
under Rule 12(b)(6) de novo” immediately before stating same standard for sovereign
immunity (quotations and citations omitted)). In conducting such a review of the
complaint, appellate courts treat as true the complaint’s allegations. Deminski on
behalf of C.E.D. v. State Board of Education, 377 N.C. 406, 2021-NCSC-58, ¶ 12
(“When reviewing a motion to dismiss, an appellate court considers ‘whether the
allegations of the complaint, if treated as true, are sufficient to state a claim upon
which relief can be granted under some legal theory.” (quoting Coley v. State, 360
N.C. 493, 494–95, 631 S.E.2d 121, 123 (2006))); see also State ex rel. Stein, ¶ 25. An
appellate court “is not, however, required to accept mere conclusory allegations,
unwarranted deductions of fact, or unreasonable inferences as true.” Estate of
Vaughn v. Pike Elec., LLC, 230 N.C. App. 485, 493, 751 S.E.2d 227, 233 (2013).
2. Whether an Implied-In-Fact Contract Can Waive Sovereign Immunity
¶ 34 The first issue for our de novo review is whether an implied-in-fact contract
can waive sovereign immunity. “As a general rule, under the doctrine of sovereign
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immunity, the State is immune from suit absent waiver of immunity.” Wray, 370
N.C. at 47, 802 S.E.2d at 898 (quotations, citations, and alterations omitted). But, as
we explained above, the State—which includes Defendant Board of Governors, see
N.C. Gen. Stat. § 116-3 (establishing the Board “as a body politic and corporate”)—
“waives that immunity when it enters into a valid contract, to the extent of that
contract.” Wray, 370 N.C. at 47, 802 S.E.2d at 899 (citing Smith, 289 N.C. at 320,
222 S.E.2d at 423–24 and Whitfield v. Gilchrist, 348 N.C. 39, 42–43, 497 S.E.2d 412,
414 (1998)). As such, for contract claims, “[t]he State will occupy the same position
as any other litigant.” Smith, 289 N.C. at 320, 222 S.E.2d at 424.
¶ 35 Our Supreme Court held the State waives its sovereign immunity by entering
into a contract based on five “considerations”:
(1) To deny the party who has performed his obligation
under a contract the right to sue the state when it defaults
is to take his property without compensation and thus to
deny him due process;
(2) To hold that the state may arbitrarily avoid its
obligation under a contract after having induced the other
party to change his position or to expend time and money
in the performance of his obligations, or in preparing to
perform them, would be judicial sanction of the highest
type of governmental tyranny;
(3) To attribute to the General Assembly the intent to
retain to the state the right, should expedience seem to
make it desirable, to breach its obligation at the expense of
its citizens imputes to that body ‘bad faith and shoddiness’
foreign to a democratic government;
(4) A citizen’s petition to the legislature for relief from the
state’s breach of contract is an unsatisfactory and
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frequently a totally inadequate remedy for an injured
party; and
(5) The courts are a proper forum in which claims against
the state may be presented and decided upon known
principles.
Id., 289 N.C. at 320, 222 S.E.2d at 423 (spacing altered to start each consideration on
a new line).
¶ 36 Smith spoke of the waiver of sovereign immunity in broad terms, only
requiring a valid contract, in a case where the employment contract was based on
statute. See id., 389 N.C. at 309, 320, 222 S.E.2d at 417, 423–24 (“We hold, therefore,
that whenever the State of North Carolina, through its authorized officers and
agencies, enters into a valid contract, the State implicitly consents to be sued for
damages on the contract in the event it breaches the contract.” (emphasis added)); see
also Data General Corp. v. County of Durham, 143 N.C. App. 97, 102, 545 S.E.2d 243,
247 (2001) (emphasizing the requirement for a valid contract from Smith). In the
decades since Smith, our appellate courts have continued to refine the contours of
Smith’s sovereign immunity waiver, explaining how it applies, or does not apply, to
the “three variations of contract theory.” See Waters Edge Builders, LLC v. Longa,
214 N.C. App. 350, 353, 715 S.E.2d 193, 196 (2011) (quotations and citation omitted)
(“There are at least three variations of contract theory: express contract, contract
implied in fact, and contract implied in law.” (quotations, citation, and alterations
omitted)). The courts have first applied the waiver in cases where there are express,
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written contracts. See, e.g., Kawai America Corp., 152 N.C. App. at 167–68, 567
S.E.2d at 218–19 (recounting complaint allegations about the written terms of the
agreement before saying the claim is “based on allegations of contract” so it is not
barred by sovereign immunity).
¶ 37 Our caselaw has also clarified contracts implied in law, which are also called
quasi contracts and which permit recovery based on quantum meruit, do not waive
sovereign immunity. See Whitfield, 348 N.C. at 41–42, 497 S.E.2d at 414 (court
agreeing with statement “sovereign immunity bars recovery on the basis of quantum
meruit in an action against the State upon a quasi contract or contract implied in
law”); see also Eastway Wrecker Service, Inc. v. City of Charlotte, 165 N.C. App. 639,
643, 599 S.E.2d 410, 412 (2004) (affirming dismissal of quantum meruit claim
“because such a claim when brought against an arm of the State is barred by
sovereign immunity”). In Whitfield, our Supreme Court explained Smith found the
State waived sovereign immunity when entering into contracts “authorized by law”
because in those instances the State is “voluntarily” entering the contract and thereby
“authoriz[ing] its liability.” Whitfield, 348 N.C. at 42, 497 S.E.2d at 415 (emphasis in
original) (quoting Smith, 289 N.C. at 322, 222 S.E.2d at 425). “Furthermore, the
State may, with a fair degree of accuracy, estimate the extent of its liability for a
breach of contract.” Id. (quoting Smith, 289 N.C. at 322, 222 S.E.2d at 425). Based
on that reasoning, the Whitfield Court was unwilling to “imply a contract in law
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where none exists in fact”—since “[a] quasi contract or a contract implied in law is
not a contract,” see id. (quoting Booe v. Shadrick, 322 N.C. 567, 570, 369 S.E.2d 554,
556 (1988)) (explaining it would not imply a contract in law after previously
discussing a contract in law is not an actual contract)—and “then use that implication
to support the further implication that the State has intentionally waived its
sovereign immunity and consented to be sued for damages for breach of the contract
it never entered in fact.” Id., 348 N.C. at 42–43, 497 S.E.2d at 415. As a result, the
Whitfield Court “conclude[d] that a contract implied in law is insufficient to constitute
a waiver of sovereign immunity.” Id., 348 N.C. at 40, 497 S.E.2d at 413.
¶ 38 As Defendant highlights, Whitfield and other cases from this line around
contracts implied in law sometimes include broad language that when read literally,
and taken out of context, could also exclude contracts implied in fact from the waiver
of sovereign immunity. For example, Whitfield says, “Only when the State has
implicitly waived sovereign immunity by expressly entering into a valid contract
through an agent of the State expressly authorized by law to enter into such contract
may a plaintiff proceed with a claim against the State upon the State’s breach.” 348
N.C. at 43, 497 S.E.2d at 415 (emphasis in original). Later, Whitfield explains, “A
contract implied in law—as opposed to an express valid contract—simply will not
form a sufficient basis for a court to make a reasonable inference that the State has
intended to waive its sovereign immunity.” 348 N.C. at 45, 497 S.E.2d at 416. And
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in Eastway Wrecker Service, this Court stated, “Without both an express contract and
a valid contract, the State has not waived its sovereign immunity.” 165 N.C. App. at
644, 599 S.E.2d at 413.
¶ 39 But these overly broad statements do not change the fact that Whitfield and
Eastway Wrecker Service concern contracts implied in law only. In addition to our
above discussion of Whitfield’s focus on contracts implied in law, we note the two
broad statements still emphasize the need to enter into a valid contract and state a
contract implied in law is not enough without mention of a contract implied in fact,
348 N.C. at 43, 45, 497 S.E.2d at 415–16, which is a valid contract. See Snyder v.
Freeman, 300 N.C. 204, 217, 266 S.E.2d 593, 602 (1980) (stating, in a paragraph about
contracts implied in fact, “An implied contract is valid and enforceable as if it were
express or written”); Sanders v. State Personnel Com’n, 183 N.C. App. 15, 21, 644
S.E.2d 10, 14 (2007) (explaining Archer v. Rockingham County, 144 N.C. App. 550,
548 S.E.2d 788 (2001) established “contracts implied from the facts . . . involve actual
contracts”).
¶ 40 Eastway Wrecker Service likewise was limited to contracts implied in law.
First, directly after the statement we pointed out above, this Court explained, “This
dual requirement necessarily precludes any recovery in quantum meruit against the
State . . . .” Eastway Wrecker Service, 165 N.C. App. at 644, 599 S.E.2d at 413. And
these statements came after the court explained “dismissal of the quantum meruit
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claim was still appropriate because such a claim when brought against an arm of the
State is barred by sovereign immunity.” Id., 165 N.C. App. at 643, 599 S.E.2d at 412(emphasis on “such a claim” added). Eastway Wrecker Service also distinguished
another case, Archer, because Archer involved a “valid employment contract.” 165
N.C. App. at 643, 599 S.E.2d at 413. Notably, Archer was a case involving a contract
implied in fact. See Archer, 144 N.C. App. at 557, 548 S.E.2d at 793 (explaining
Smith’s “reasoning is equally sound when applied to implied oral contracts”);
Sanders, 183 N.C. App. at 21, 644 S.E.2d at 14 (explaining Archer was referring to
contracts implied in fact when it discussed implied contracts by stating “Archer
establishe[d]” contracts “implied from the facts . . . involve actual contracts”).
¶ 41 We conclude Whitfield and Eastway Wrecker Service only allow the State to
defend itself based on sovereign immunity against contracts implied in law, not
contracts implied in fact. This conclusion is bolstered by another line of cases holding
the State waives its sovereign immunity when it enters into a contract implied in
fact. See Sanders, 183 N.C. App. at 21, 644 S.E.2d at 14 (stating “even if the existence
of a contract must be implied from the circumstances and relationship between the
parties, the analysis of Smith still applies” before going on to clarify that was a
description of “contracts implied from the facts”). This line of cases starts with
Archer. In that case, this Court explained Smith is not limited to express or written
contracts because “its reasoning is equally sound when applied to implied oral
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contracts.” See 144 N.C. App. at 557, 548 S.E.2d at 793 (explaining in terms of written
contracts shortly after saying contracts in the employment context at issue in the case
“may be express or implied”). Archer then defined an “implied contract” as “an actual
contract inferred from the circumstances, conduct, acts or relations of the parties,
showing a tacit understanding.” Id.¶ 42 In Sanders, this Court further explained Archer. First, the Sanders Court
clarified Archer was referring to contracts implied in fact when it discussed implied
contracts. See 183 N.C. App. at 21, 644 S.E.2d at 14 (explaining Archer established
“contracts implied from the facts . . . involve actual contracts”). In that case, the
defendants “confused contracts implied from the facts—which, as Archer establishes,
involve actual contracts—with contracts implied in law, which do not involve a
contract.” Id. After that explanation of the difference, Sanders clarified cases
including Whitfield and Eastway Wrecker Service only applied to contracts implied in
law and thus had no bearing on the question of whether a contract implied in fact
waived sovereign immunity. See id., 183 N.C. App. at 21–22, 644 S.E.2d at 14 (stating
Whitfield “is inapposite” because it involved a contract implied in law whereas the
instant case involved “an actual employment contract” before also citing Eastway
Wrecker Service).
¶ 43 And since Sanders, this Court has continued to apply Smith’s sovereign
immunity waiver to contracts implied in fact. For example, in Lake v. State Health
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Plan for Teachers and State Employees, this Court rejected the defendants’ argument
their Rule 12(b)(2) motion based on sovereign immunity “should have been granted
because [the p]laintiffs failed to allege an express agreement” on the grounds that, as
in Sanders, the plaintiffs alleged “something ‘in the nature of a contractual obligation’
which would still amount to a valid contract under Archer.” 234 N.C. App. 368, 371,
374, 760 S.E.2d 268, 271, 273 (2014) (quoting Sanders, 183 N.C. App. at 21, 644
S.E.2d at 13)).
¶ 44 Defendant argues these cases do not apply here because they all arise from the
“employment context” where “there is no doubt that the governmental entity
intentionally employed the complainant and that a contract of some sort exists.”
(Emphasis in original.) By contrast, according to Defendant, “[i]n the educational
context . . . the relationship between school and student is not inherently contractual.”
(Emphasis in original.) While in its briefing Defendant never identified what
relationship exists between school and student if not a contractual one, at oral
argument Defendant said the relationship is statutory in nature. Defendant pointed
us to provisions in North Carolina General Statute § 116-143 requiring Defendant to
“fix the tuition and fees, not inconsistent with the actions of the General Assembly .
. . in such amount or amounts as it may deem best . . .,” with each constituent
institution collecting them from students, and prohibiting “the giving of tuition and
fee waivers, or especially reduced rates,” at least to the extent this “represent[s] in
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effect a variety of scholarship awards, . . . except when expressly authorized by
statute.” N.C. Gen. Stat. § 116-143 (a), (c) (2019). Defendant’s argument does not
persuade us.6
¶ 45 Defendant is correct the cases extending Smith to implied in fact contracts are
all from the employment context. See Archer, 144 N.C. App. at 552, 548 S.E.2d at
790 (“[T]he County has waived any immunity it had by entering into an implied
employment contract with the EMTs.”); Sanders, 183 N.C. App. at 19, 644 S.E.2d at
13 (“In the amended complaint, plaintiffs allege that the State entered into
employment contracts with the plaintiffs, incorporating state personnel regulations .
. . .”); Lake, 234 N.C. App. at 371, 760 S.E.2d at 271 (“Plaintiffs pled that they each
had a contract of employment with the State . . . .”). But the reasoning of those cases
extends beyond the employment context. Those cases turned on the similarities of
express and implied in fact contracts and how, as a result, the reasoning of Smith
applied equally to implied in fact contracts. See Archer, 144 N.C. App. at 557, 548
S.E.2d at 793 (discussing difference between express and implied contracts and then
stating, “We do not limit Smith to written contracts; its reasoning is equally sound
6 Defendant also cites a decision from the U.S. District Court in Maryland that, according to
it, “rejected arguments identical to Plaintiffs’ arguments in this case and dismissed the
students’ contract claims.” (Citing Student “A” v. Hogan, 513 F. Supp. 3d 638, 645 (D. Md.
2021).) But Defendant indicates the court’s decision turned on Maryland’s requirement of a
written contract for a waiver of sovereign immunity, and our caselaw, as discussed above,
does not contain any such limitation.
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when applied to implied oral contracts”); Sanders, 183 N.C. App. at 21–22, 644 S.E.2d
at 14 (explaining, “In short, even if the existence of a contract must be implied from
the circumstances and relationship between the parties, the analysis of Smith still
applies” before rejecting the defendants’ arguments because “contracts implied from
the facts . . . involve actual contracts”); Lake, 234 N.C. App. at 372, 374, 760 S.E.2d
at 272–73 (emphasizing Archer’s language about Smith applying equally to implied
contracts and then relying on Archer and Sanders to find the plaintiffs survived a
motion to dismiss based on sovereign immunity because they “alleged something ‘in
the nature of a contractual obligation’” (quoting Sanders, 183 N.C. App. at 21, 644
S.E.2d at 13).
¶ 46 Contrary to Defendant’s argument, the employment context and the
educational context are not so different that we can disregard the cases addressing
contracts implied in fact in the employment context. See Archer, 144 N.C. App. at
552, 548 S.E.2d at 790; Sanders, 183 N.C. App. at 19, 644 S.E.2d at 13; Lake, 234
N.C. App. at 371, 760 S.E.2d at 271. In the employment cases, an employee agrees
to work for the employer, and the employer agrees to pay the employee; based upon
these facts, the terms of the implied contract are clear, even without an express
written contract. In the educational context, as alleged by Plaintiffs’ Amended
Complaint, the educational institutions agreed to accept and enroll the students, and
the students have agreed to pay certain fees for particular services to be provided as
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part of the educational program. The parameters of the alleged implied contract are
quite clear, and as noted by the Whitfield Court, “the State may, with a fair degree
of accuracy, estimate the extent of its liability for a breach of contract.” 348 N.C. at
42, 497 S.E.2d at 415 (quoting Smith, 289 N.C. at 322, 222 S.E.2d at 425).
¶ 47 Extending Archer and its progeny beyond the employment context is consistent
with our treatment of implied in fact contracts in general. Our Supreme Court has
long held “[a]n implied [in fact] contract is valid and enforceable as if it were express
or written.” See Snyder, 300 N.C. at 217, 266 S.E.2d at 602 (stating in a paragraph
about contracts implied in fact). “Except for the method of proving the fact of mutual
assent, there is no difference in the legal effect of express contracts and contracts
implied in fact.” Creech v. Melnik, 347 N.C. 520, 526–27, 495 S.E.2d 907, 911 (1998)
(citing Snyder, 300 N.C. at 217, 266 S.E.2d at 602). And that difference in the method
of proving mutual assent has no effect at this pleading stage of proceedings.
“Whether mutual assent is established and whether a contract was intended between
parties are questions for the trier of fact.” Snyder, 300 N.C. at 217, 266 S.E.2d at 602
(citing Storey v. Stokes, 178 N.C. 409, 100 S.E. 689 (1919) and Devries v. Haywood,
64 N.C. 83 (1870)). At the pleading stage, “consistent with the concept of notice
pleading, a complaint need only allege facts that, if taken as true, are sufficient to
establish a waiver by the State of sovereign immunity.” Can Am South, 234 N.C.
App. at 126, 759 S.E.2d at 310 (quoting Fabrikant v. Currituck Cnty., 174 N.C. App.
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30, 38, 621 S.E.2d 19, 25 (2005)); see also Smith, 289 N.C. at 322, 222 S.E.2d at 424(noting the court had “no knowledge, opinion, or notion as to what the true facts” were
and those would be established later).
¶ 48 In a similar vein, this Court has defined an “implied in fact contract” as “an
agreement between parties, but the terms of the agreement have not been fully
expressed in words and, instead, are established by the parties’ conduct.” Thompson-
Arthur Paving Co., a Div. of APAC-Carolina, Inc. v. Lincoln Battleground Associates,
95 N.C. App. 270, 280, 382 S.E.2d 817, 823 (1989). The terms of a contract implied
in fact are also “questions for the trier of fact” because mutual assent covers “the
terms of the agreement so as to establish a meeting of the minds” based on “the
actions of the parties showing an implied offer and acceptance.” See Snyder, 300 N.C.
at 217–18, 266 S.E.2d at 602 (so explaining after saying mutual assent is a question
for the trier of fact). Again, the trier of fact plays no role at the pleading stage. See
Smith, 289 N.C. at 322, 222 S.E.2d at 424 (leaving question of “true facts” for later
trial).
¶ 49 As noted above, at oral argument Defendant also proposed an alternative
classification of the relationship between the student and university as it relates to
fees as a statutory relationship but not a form of contract. To the extent we can even
review this contention raised for the first time at oral argument, see N.C. R. App. P.
28(a) (“The scope of review on appeal is limited to issues so presented in the several
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briefs. Issues not presented and discussed in a party’s brief are deemed abandoned.”),
we reject Defendant’s alternative classification of the relationship between the
student and university as it relates to fees as statutory. First, Defendant did not
submit any caselaw or other authority defining the concept of a statutory
relationship.7 Further, the statutory requirements for Defendant to set fees to be
collected from students and not waive them except when authorized by statute, see
N.C. Gen. Stat. § 116-143(a), (c), do not create any particular relationship between
students and the University of North Carolina system. Under the statute, Defendant
must require students to pay certain fees to be able to enroll. Id., § 116-143(a). And
one of the most basic forms of contract is an agreement for one party to pay money to
another party in return for some form of goods or services.
¶ 50 Finally, the General Assembly envisioned Defendant could be sued for this
type of claim because it passed a statute granting “institution[s] of higher education
. . . immunity” from claims related to “tuition or fees paid” for the Spring 2020
semester when the claim is based on “an act or omission” related to COVID-19. N.C.
Gen. Stat. § 116-311 (eff. 1 July 2020). There would be no need for this separate
immunity statute if the General Assembly believed sovereign immunity already
7Defendant also did not submit any additional authorities, which “may be brought to the
attention of the court by filing a memorandum thereof” even after a party has filed its
briefing. N.C. R. App. P. 28(g).
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prevented such a claim.
¶ 51 Thus, we conclude a contract implied in fact can waive sovereign immunity
under the contractual waiver holding in Smith. As a result, we must determine
whether Plaintiffs here, who rely on such a contract, sufficiently pled such waiver.
3. Whether Plaintiffs Pled a Valid Implied-In-Fact Contract
¶ 52 Beyond arguing an implied-in-fact contract cannot waive sovereign immunity,
Defendant asserts Plaintiffs failed “to allege a [valid] contract.” Defendant initially
makes a general argument “[e]ducational law in North Carolina is inconsistent with
implied-in-fact contracts.” Defendant then has three specific reasons in support of
this argument. First, Defendant argues Plaintiffs pled “there was no meeting of the
minds” because they allege they “were told prior to the start of the semester that the
fees would not be refunded in the event the mode of instruction changed.” Second,
Defendant contends a meeting of the minds did not occur because Plaintiffs alleged
“the fees were paid in exchange for the right to enroll and remain in good standing,
rather than the right to obtain services.” Third, Defendant asserts Plaintiffs failed
to plead Defendant promised any services and “[e]very contract requires a promise.”
¶ 53 An allegation of a valid contract matters because “when the plaintiff pleads a
contract claim” a waiver of sovereign immunity is “effectively alleged.” See Wray, 370
N.C. at 47–48, 802 S.E.2d at 898–99 (stating in terms of governmental immunity
after defining governmental immunity as “that portion of the State’s sovereign
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immunity which extends to local governments”); see also Fabrikant, 174 N.C. App. at
38, 621 S.E.2d at 25 (“[A]s long as the complaint contains sufficient allegations to
provide a reasonable forecast of waiver, precise language alleging that the State has
waived the defense of sovereign immunity is not necessary.”); Can Am South, 234
N.C. App. at 126, 759 S.E.2d at 310 (holding the plaintiff “sufficiently pleaded waiver
of [the] defendants’ sovereign immunity” because they pleaded “their entry into three
facially valid contracts”). Our system of notice pleading means the bar to plead a
valid contract is “low.” Wray, 370 N.C. at 50, 802 S.E.2d at 900 (explaining there is
a “low bar for notice pleading under Rule 12(b)(6), as well as the waiver of
governmental immunity that is inferred from the pleading of a contract claim”).
¶ 54 While our caselaw does not explicitly set out the requirements to plead a valid
implied in fact contract,8 we can use the pleading requirements for an express
contract as a starting point because an implied in fact contract “is valid and
enforceable as if it were express or written.” See Snyder, 300 N.C. at 217, 266 S.E.2d
at 602 (so stating in terms of “implied contract” and then clarifying in the next
8 None of Archer, Lake, or Sanders involved an argument on the nuances of whether the
plaintiff pled a valid contract implied in fact. See Lake, 234 N.C. App. at 374, 760 S.E.2d at
273 (determining the plaintiffs had sufficiently “alleged something in the nature of a
contractual obligation” without going into further detail (quotations and citation omitted));
Sanders, 183 N.C. App. at 20, 644 S.E.2d at 13 (rejecting the defendants arguments that the
“alleged contract” was not valid because they went “to the merits of plaintiffs’ breach of
contract claim”).
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sentence court meant implied-in-fact contract). For an express contract, “[t]he
‘elements of a valid contract are offer, acceptance, consideration, and mutuality of
assent to the contract’s essential terms.’” Society for Historical Preservation of
Twentysixth North Carolina Troops, Inc. v. City of Asheville, 2022-NCCOA-218, ¶ 30
(quoting Se. Caissons, LLC v. Choate Const. Co., 247 N.C. App. 104, 110, 784 S.E.2d
650, 654 (2016) (in turn citing Snyder, 300 N.C. at 218, 266 S.E.2d at 602)). Snyder
explains “mutual assent . . . is normally accomplished through the mechanism of offer
and acceptance,” thereby rolling the last element into the first two, and for “a contract
implied in fact, one looks not to some express agreement, but to the actions of the
parties showing an implied offer and acceptance.” 100 N.C. at 218, 266 S.E.2d at 602.
Thus, to plead a valid implied-in-fact contract, Plaintiffs needed to plead offer,
acceptance, and consideration.
¶ 55 Looking at the Amended Complaint, Plaintiffs properly pled each of those three
elements. On offer, the Amended Complaint alleges the constituent institutions
“offered Plaintiffs and members of the” pertinent classes the “services, benefits, and
opportunities” listed and billed to them as student fees and “offered to sell optional
parking permits . . . which would permit the purchaser to park a motor vehicle in an
on-campus parking lot during the Fall 2020” Term. As to acceptance, the Amended
Complaint alleges “Plaintiffs and class members accepted Defendant’s offer and
agreed to pay, and did, in fact, pay, the Student Fees” for the listed services and
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Plaintiffs and “certain other Fall 2020 Term students accepted” the offer to purchase
parking permits. These allegations are based on earlier pleaded facts laying out the
specific student fees and their amount, services, benefits, and purposes as the
constituent institutions “represented in writing on their respective websites and in
written communications to each student” as well as that Plaintiffs and the proposed
class members had accepted the offer for such services and paid the fees for the Fall
2020 semester. The Amended Complaint includes a similar prior explanation of the
parking fees allegation.
¶ 56 Finally, Plaintiffs properly pled consideration because those allegations detail
an exchange of money (i.e. the fees) for “services, benefits, and opportunities” or a
parking permit. See, e.g., Elliott v. Enka-Candler Fire and Rescue Dept., Inc., 213
N.C. App. 160, 163, 713 S.E.2d 132, 135 (2011) (“Consideration sufficient to support
a contract consists of ‘any benefit, right, or interest bestowed upon the promisor, or
any forbearance, detriment, or loss undertaken by the promisee.’” (quoting, inter alia,
Brenner v. School House, Ltd., 302 N.C. 207, 215, 274 S.E.2d 206, 212 (1981))). Thus,
Plaintiffs adequately pled a valid contract implied in fact.
¶ 57 None of Defendant’s arguments persuade us Plaintiffs failed to plead a valid,
implied-in-fact contract. As to Defendant’s general argument contracts implied in
fact cannot exist in the educational context, Defendant only cites two binding cases
and neither one states or even implies support for its argument. (Citing Ryan v.
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University of North Carolina Hospitals, 128 N.C. App. 300, 302, 494 S.E.2d 789, 791
(1998) and Montessori Children’s House, 244 N.C. App. 633, 781 S.E.2d 511). Ryan
was a case about contract claims challenging the “general quality of [an] educational
program” and held only one aspect of the written contract in that case could survive
dismissal because it “would not involve an inquiry into the nuances of educational
processes and theories.” 128 N.C. App. at 301–03, 494 S.E.2d at 790–91. To the
extent Ryan stated the plaintiff had to “point to an identifiable contractual promise
that the University failed to honor,” it did so in the context of explaining how courts
generally disfavor claims about the “general quality of the educational program.” Id.,128 N.C. App. at 302, 494 S.E.2d at 791. Here, Plaintiffs’ claims are not about the
quality of the educational program.
¶ 58 Montessori Children’s House also involved a written contract, and this Court
upheld the trial court’s ruling because statements on the school’s webpage were not
“expressly incorporated by reference” into the written contract with the school. 244
N.C. App. at 634, 641–42, 781 S.E.2d at 513, 517. Here, there was no written
contract, so the statements on the school websites to which Plaintiffs point could not
have been incorporated into one. Thus, we are not persuaded by Defendant’s general
argument.
¶ 59 Turning to Defendant’s specific arguments, we are similarly unconvinced.
Defendant’s first two specific arguments—that there was no meeting of the minds
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because the students “were told prior to the start of the semester that the fees would
not be refunded in the event the mode of instruction changed” and because Plaintiffs
alleged the fees were paid in exchange for enrollment, not services—suffer from a
common flaw. Both arguments challenge whether there was a meeting of the minds,
but that question is left for the trier of fact, as we explained above. See Snyder, 300
N.C. at 217–18, 266 S.E.2d at 602 (explaining, “[w]hether mutual assent is
established and whether a contract was intended between parties are questions for
the trier of fact” before going on to equate mutual assent to a meeting of the minds).
As a result, it will be for the trier of fact to determine on what terms there was a
meeting of the minds and thus what terms are included in the alleged contract on
which Plaintiffs will ultimately need to demonstrate breach to prevail. We do not
express any opinion on that merits question at this stage; we only decide Plaintiffs
have validly pled a contract sufficient to waive sovereign immunity. See Can Am
South, 234 N.C. App. at 127, 759 S.E.2d at 310 (“This Court has consistently held
that we are not to consider the merits of a claim when addressing the applicability of
sovereign immunity as a potential defense to liability.” (citing Archer, 144 N.C. App.
at 558, 548 S.E.2d at 793 and Smith, 289 N.C. at 322, 222 S.E.2d at 424)); see also
Wray, 370 N.C. at 50, 802 S.E.2d at 900 (“Although we hold that dismissal of the
complaint was not warranted, like the Court of Appeals, we express no opinion on the
merits of [the] plaintiff’s contract action.”).
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¶ 60 We further note Plaintiffs specifically pled a meeting of the minds, at least as
to student fees:
There was a meeting of the minds between Plaintiffs and
the Class Members on the one hand, and UNC on the other
hand, on this point: Plaintiffs and the Class Members paid
their Fall Term 2020 Student Fees in full, and, in return,
UNC promised to provide to Plaintiffs and the Class
Members the benefits, services, and opportunities of the
Earmarked Components in full for the duration of the Fall
2020 Terms.
Although the allegation of the meeting of the minds is sufficient at this stage,
ultimately whether there was a meeting of the minds is a question for the trier of
fact. Snyder, 300 N.C. at 217–18, 266 S.E.2d at 602.
¶ 61 Defendant finally argues Plaintiff failed to plead Defendant promised any
services and “[e]very contract requires a promise.” We cannot reconcile Defendant’s
argument with the allegations in the Amended Complaint because Plaintiffs
repeatedly included pleadings about promises for services. For example, as to each
Plaintiff, the Amended Complaint lists “specific categories of services and benefits”
they were “entitled” to receive from the university by providing the student fees,
which were broken down in various listed categories. Further, the Amended
Complaint specifically states:
Further, before the beginning of their respective Fall 2020
Terms, NCSU and UNC-CH provided each student
enrolled for their Fall 2020 Terms, including Plaintiffs, an
itemized bill which labeled, in writing, the services,
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benefits, and opportunities which NCSU and UNC-CH
promised to provide in exchange for each student’s,
including each Plaintiff’s, payment of Fall 2020 Term
Student Fees; those bills also specified the amount that
each Plaintiff and each other NCSU and UNC-CH student
was required to pay for those services, benefits, and
opportunities.
(Emphasis added.) As to the parking fees, the Amended Complaint alleges Plaintiffs
and other students in the proposed class purchased “optional motor vehicle parking
permits, which permitted the purchasers to park their motor vehicle[s]” in the
constituent Universities’ “convenient on-campus parking lots.”
¶ 62 Defendant argues these were not enough because the Amended Complaint
included “no specific statements in any university documents or communications that
ever promised” these fees would be used for these purposes and the referenced
“websites and billing information” do not support a contract on their own and were
not incorporated into any such contract relying on Montessori Children’s House. We
have already explained how that case is not applicable here because it involved a
situation where there was a separate written contract. Here, the specific billing
statements, lists of fees, etc. do not need to be specifically incorporated into a contract
because Plaintiffs allege they are the contract. While the fees do not specifically say
Defendant or the constituent Universities promise to do anything, Plaintiffs’
contention is, in essence, the circumstances and relationship they had with the
institutions meant a contract could be implied. That is a contract implied in fact, e.g.
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Sanders, 183 N.C. App. at 21, 644 S.E.2d at 14, and Plaintiffs did not need to plead
anything further.
¶ 63 We therefore conclude Plaintiffs adequately pled a valid contract implied in
fact. Because a valid contract implied in fact waives sovereign immunity, we hold,
after our de novo review, Plaintiffs properly pled such a waiver and the trial court did
not err in denying Defendant’s motion to dismiss on the grounds of sovereign
immunity.
C. Motion to Dismiss under Rule 12(b)(6) as to Contract Claims
¶ 64 In its final argument in its appeal from the Amended Order, Defendant
contends the trial court erred by not dismissing the contract claims “pursuant to Rule
[of Civil Procedure] 12(b)(6) for failure to plead a claim for breach of contract upon
which relief may be granted.” Specifically, Defendant argues “Plaintiffs do not allege
that any of the services for which the fees were purportedly charged stopped when
the institutions changed the mode of instruction” and they “fail[ed] to identify any
instance where they requested a service and were denied” such that their claims “are
speculative at best.” (Emphasis in original.)
1. Standard of Review
¶ 65 An appellate court “reviews de novo a trial court’s order on a motion to
dismiss.” Deminski, ¶ 12. “When reviewing a motion to dismiss, an appellate court
considers ‘whether the allegations of the complaint, if treated as true, are sufficient
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to state a claim upon which relief can be granted under some legal theory.” Id.(quoting Coley, 360 N.C. at 494–95, 631 S.E.2d at 123); see also State ex rel. Stein, ¶
25. When conducting that analysis:
“the allegations of the complaint must be viewed as
admitted, and on that basis the court must determine as a
matter of law whether the allegations state a claim for
which relief may be granted.” Davis v. Hulsing Enterprises,
LLC, 370 N.C. 455, 457, 810 S.E.2d 203 (2018) (quoting
Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611(1979)). N.C.G.S. § 1A-1, “Rule 12(b)(6), generally
precludes dismissal except in those instances where the
face of the complaint discloses some insurmountable bar to
recovery.” Newberne v. Dep’t of Crime Control & Pub.
Safety, 359 N.C. 782, 784, 618 S.E.2d 201 (2005) (quoting
Energy Investors Fund, L.P. v. Metric Constructors, Inc.,
351 N.C. 331, 337, 525 S.E.2d 441 (2000)) (cleaned up).
State ex rel. Stein, ¶ 25. Applying this standard of review, we must determine if
Plaintiffs adequately pled their contract claims to survive a Rule 12(b)(6) motion.
2. Pleading of Breach
¶ 66 Since we have already determined above Plaintiffs pled a valid contract, we
only need to address whether Plaintiffs adequately pled breach to address the trial
court’s Rule 12(b)(6) ruling. See Montessori Children’s House, 244 N.C. App. at 636,
781 S.E.2d at 514 (listing elements of breach of contract claim as “(1) existence of a
valid contract and (2) breach of the terms of that contract”). We determine Plaintiffs
properly pled breach of the contract.
¶ 67 As to the student fees claim, Plaintiffs pled the Universities “voluntarily and
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permanently stopped, or severely curtailed providing many of the services, benefits,
and opportunities” that they allege were promised in return for many of the student
fees and those conditions “persisted for the duration of the Fall 2020 Term.” One
example is illustrative. Plaintiffs allege both Universities charged them a student
health fee, and then allege the Universities “curtailed student health services and
advised Fall 2020 Term students that they should obtain health services from private
health providers and not from the student health services which were paid for in the
Fall 2020 Term Student Fees.” In more general terms, Plaintiffs allege they paid for
a service and then the other party to the alleged contract did not allow them to access
that service. Taking the alleged facts as true, as we must at this stage, State ex rel.
Stein, ¶ 25, Plaintiffs have properly alleged breach.
¶ 68 Turning to the parking fees claim, Plaintiffs allege they paid for parking
permits that allowed them to park in the Universities’ “convenient on-campus
parking lots” and they were not “properly rebated those permit fees” after they were
“evicted . . . from on-campus housing” and the Universities cancelled in-person, on-
campus instruction. Specifically, they allege their removal from on-campus housing
and lack of on-campus instruction “rendered worthless those on-campus parking
passes.” The Amended Complaint also includes additional allegations on the precise
amount of damages Plaintiffs and the proposed classes they represent would be
seeking based on rebates provided by the Universities. Again, Plaintiffs have pled
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they paid for a service and the constituent institutions took actions that prevented
them from using those services, at least the same way they would have had campus
been open as normal.
¶ 69 Defendant’s only argument is Plaintiffs failed to identify “any instance where
they requested a service and were denied,” so their claims “are speculative at best.”
(Emphasis in original.) This argument does not conform with how a reasonable
person would act. Taking the same student health fee example from above,
Defendant is correct the Plaintiffs do not allege they tried to access student health
services after being advised “they should obtain health services from private health
providers and not from the student health services,” but requiring Plaintiffs to go to
student health just to get denied services per the previous communication would
make little sense. Further, Plaintiffs allege in past terms they and other students
“had regularly used the services and had enjoyed the services, benefits, and
opportunities” each of the student fees allegedly provided, and, as a result, they
“would have continued to use and enjoy the services, benefits, and opportunities.”
Likewise, on-campus parking would be of no use to students who are not allowed
either to attend class on campus or to live on campus.
¶ 70 The only two cases Defendant cites in support of this proposition, Estate of
Vaughn, 230 N.C. App. at 493, 751 S.E.2d at 233 and McCrann v. Pinehurst, LLC,
225 N.C. App. 368, 377, 737 S.E.2d 771, 777 (2013), are of no help to its argument.
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Defendant appears to cite Estate of Vaughn for the proposition an appellate court “is
not . . . required to accept mere conclusory allegations, unwarranted deductions of
fact, or unreasonable inferences as true.” 230 N.C. App. at 493, 751 S.E.2d at 233.
Similarly, McCrann’s main point in the relevant section is an appellate court “may
ignore plaintiffs’ legal conclusions” when reviewing a motion to dismiss on Rule
12(b)(6) grounds. 225 N.C. App. at 377, 737 S.E.2d at 777. While we agree with both
of these statements of law, they do not change our conclusion here. Focusing only on
the non-conclusory factual allegations, Plaintiffs adequately allege a breach even
though they do not specifically say they explicitly asked for and then were denied
services; according to the allegations, they paid for services and then Defendant
barred them from accessing such services. Defendant cites no case law supporting
their argument a pleading fails to state a claim for breach of contract if the breaching
party tells the non-breaching party it cannot engage in the contracted service and the
non-breaching party takes the breaching party at its word.
¶ 71 After our de novo review, the trial court did not err in denying Defendant’s
motion to dismiss Plaintiffs’ contract claims for failure to state a claim under Rule
12(b)(6).
D. Corum Claim
¶ 72 Turning to Plaintiffs’ cross-appeal, they argue “to the extent” they “have no
remedy for breach of contract to recover student fees or parking fees, then, in the
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alternative, their Corum claims state claims for relief.” (Capitalization altered.)
Specifically, Plaintiffs argue they properly pled a constitutional claim under the Law
of the Land Clause in Article I, § 19 of our Constitution because they allege a vested
property interest arising from the contract with Defendant and that the constituent
institutions took that interest when they accepted Plaintiffs’ money but did not
provide services or a refund.9 Plaintiffs acknowledge their Corum claim and contract
claims “are mutually exclusive—the Corum claim[] exist[s] only if the contract claims
are not viable.”
1. Standard of Review
¶ 73 As both parties agree, Defendant moved to dismiss Plaintiffs’ Corum claim
based on Rule 12(b)(6) for failure to state a claim. As a result, we apply the same de
novo standard of review we applied above to Defendant’s argument Plaintiffs’ failed
9 Plaintiffs also argue “but for sovereign immunity” they “would have valuable choses-in-
action against Defendant for the tort of conversion or unjust enrichment; a chose-in-action is
a constitutionally protected property.” (Capitalization altered.) The Amended Complaint
only includes a conclusory allegation Plaintiffs would have those claims absent sovereign
immunity; it does not detail the facts necessary to show Defendant committed either tort nor
does it explain those claims would give rise to a constitutionally protected property right. We
are not required to accept such a conclusory allegation as true, Estate of Vaughn, 230 N.C.
App. at 493, 751 S.E.2d at 233, and even if we were, the Amended Complaint still does not
say these claims could be transformed into a valid constitutional claim. This failure to plead
a valid constitutional claim based on these grounds is fatal to Plaintiffs’ Corum claim based
on these grounds because a valid Corum claim requires establishing “state constitutional
rights have been violated.” Taylor, 258 N.C. App. at 183, 811 S.E.2d at 652. Even if that
were not the case, we would also affirm the trial court’s dismissal of this part of Plaintiffs’
Corum claim because Plaintiffs have an adequate state remedy via the contract claims, as
we discuss in more detail below.
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to state contract claims. Deminski, ¶ 12 (explaining an appellate court “reviews de
novo a trial court’s order on a motion to dismiss” and “considers ‘whether the
allegations of the complaint, if treated as true, are sufficient to state a claim upon
which relief can be granted under some legal theory’” (quoting Coley, 360 N.C. at 494–
95, 631 S.E.2d at 123)); Carl, 192 N.C. App. at 555, 665 S.E.2d at 796 (when reviewing
the dismissal of a Corum claim stating, “In reviewing a trial court’s Rule 12(b)(6)
dismissal, the appellate court must inquire whether, as a matter of law, the
allegations of the complaint, treated as true, are sufficient to state a claim upon which
relief may be granted under some legal theory.” (quoting Newberne, 359 N.C. at 784,
618 S.E.2d at 203)).
2. Viability of Corum Claim
¶ 74 As this Court recently explained:
A Corum claim allows a plaintiff to recover compensation
for a violation of a state constitutional right for which there
is either no common law or statutory remedy, or when the
common law or statutory remedy that would be available
is inaccessible to the plaintiff. By allowing an otherwise
common law or statutory claim to proceed as a direct
constitutional claim, the North Carolina Supreme Court
fashioned an avenue to bypass certain defenses such as
sovereign or governmental immunity. A Corum claim is
available to a plaintiff who is able to establish that (1) her
state constitutional rights have been violated, and (2) she
lacks any sort of “adequate state remedy.” Corum, 330 N.C.
at 782, 413 S.E.2d at 289.
Taylor, 258 N.C. App. at 183, 811 S.E.2d at 652. Our Supreme Court has explained
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“to be considered adequate in redressing a constitutional wrong, a plaintiff must have
at least the opportunity to enter the courthouse doors and present his claim.” Id.,
258 N.C. App. at 184, 811 S.E.2d at 653 (quoting Craig, 363 N.C. at 339–40, 678
S.E.2d at 355). A remedy must also address “the alleged constitutional injury” to be
considered adequate. Id., 258 N.C. App. at 185, 811 S.E.2d at 654 (citing Copper ex
rel. Copper v. Denlinger, 363 N.C. 784, 789, 688 S.E.2d 426, 429 (2010)). This second
requirement means “a plaintiff must be allowed to pursue claims for the same alleged
wrong under both the constitution and state law where one could produce only
equitable relief and the other could produce only monetary damages, thus
‘complet[ing] [the plaintiff’s] remedies[.]’” Carl, 192 N.C. App. at 555–56, 665 S.E.2d
at 796 (alterations in original) (quoting Corum, 330 N.C. at 789, 413 S.E.2d at 294).
¶ 75 Here, as Plaintiffs recognize when they argue “the Corum claims exist only if
the contract claims are not viable,” Plaintiffs fail to state a Corum claim because they
do not lack an adequate state remedy; they have the contract claims we addressed
above. Since above we found sovereign immunity did not bar the Plaintiffs’ contract
claims, they can “enter the courthouse doors and present [their] claim.” Taylor, 258
N.C. App. at 184, 811 S.E.2d at 653. Further, the remedy for those contract claims,
namely money damages, is identical to the Plaintiffs’ requested remedy for the
alleged constitutional violation as part of the Corum claim, so the contract claims
redress “the alleged constitutional injury. Id., 258 N.C. App. at 185, 811 S.E.2d at
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654; see Carl, 192 N.C. App. at 555–56, 665 S.E.2d at 796 (explaining a Corum claim
and another state law claim can co-exist if one provides equitable relief and the other
provides only monetary damages).
¶ 76 This case resembles Carl. There, the plaintiffs, on behalf of a proposed class,
sued the State Health Plan for an alleged breach of a contractual obligation to not
raise insurance premiums unless certain specific requirements were met, and they
added a claim based on Article I, § 19 of our Constitution because taking away the
same contractual right amounted to an unconstitutional taking without just
compensation. 192 N.C. App. at 545–46, 665 S.E.2d at 790–91. This Court held
sovereign immunity did not bar the contract claims. See id., 192 N.C. App. at 555,
665 S.E.2d at 796 (stating in the section on the Corum claim “we have concluded that
sovereign immunity does not bar [the p]laintiffs’ breach of contract claim”). Then,
because the breach of contract claim would “vindicate the same rights as their
constitutional argument, . . . namely, monetary damages,” this Court held the
plaintiffs had “an adequate alternative remedy under state law” such that their
“takings claim under N.C. Constitution Article I, Section 19 should have been
dismissed.” Id., 192 N.C. App. at 556, 665 S.E.2d at 797 (quotations, citations, and
alterations omitted). Faced with identical types of claims here and also determining
sovereign immunity does not bar Plaintiffs’ contract claims, we similarly hold
Plaintiffs have an “adequate alternative remedy under state law” so their Corum
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claim based on Article I, § 19 of our Constitution should be dismissed. Id. Therefore,
after our de novo review, the trial court did not err by dismissing Plaintiffs’ Corum
claim.
III. Conclusion
¶ 77 Having reviewed both the appeal and cross-appeal, we affirm. We first
determine we have appellate jurisdiction over the sovereign immunity issue related
to the contract claims because it affects a substantial right, over the Corum issue
because of the trial court’s Rule of Civil Procedure 54(b) certification, and over the
Rule 12(b)(6) issue related to the contract claims because we grant Defendant’s PWC
as to that issue. Turning to the merits, the trial court properly denied Defendant’s
Motion to Dismiss the contract claims on sovereign immunity grounds because
Plaintiffs adequately pled a valid implied-in-fact contract and such a contract can
waive sovereign immunity. The trial court also properly denied the Motion as to the
contract claims on 12(b)(6) grounds because Plaintiffs’ Amended Complaint properly
pleads breach of contract claims. Finally, the trial court correctly granted the Motion
to Dismiss Plaintiffs’ Corum claim because Plaintiffs’ contract claims are an adequate
alternative remedy.
AFFIRMED.
Judges DILLON and JACKSON concur.