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Lyles v. City of Charlotte and Motorola Inc.11/8/1996
operation of RAMCO, it was not participating in a statutory risk pool.
In Blackwelder, the parties, as did the members of this Court, assumed that a City had the authority to enter into such a government risk-management program. Therefore, we were not asked to consider whether such a program was ultra vires. However, in Leete v. County of Warren, 341 N.C. 116, 462 S.E.2d 476 (1995), this Court reaffirmed the principle that a municipality must have a legal obligation to make a payment in order to distribute governmental funds. Justice Orr, writing for the majority, quoted with approval Brown v. Board of Comm'rs of Richmond Co., 223 N.C. 744, 746, 28 S.E.2d 104, 105-06 (1943):
"The Legislature has no power to compel or even to authorize a municipal corporation to pay a gratuity to an individual to adjust a claim which the municipality is under no legal obligation to pay. Nor may it lawfully authorize a municipal corporation to pay gifts or gratuities out of public funds. . . . municipality cannot lawfully make an appropriation of public moneys except to meet a legal and enforceable claim . . . ."
Id. at 120, 462 S.E.2d at 479. A municipality has a legal obligation to pay a legitimate claim when it has waived sovereign immunity. On the other hand, to the extent a municipality retains its sovereign immunity, it has no authority to pay the claim against it.
"It is a well-established principle that municipalities, as creatures of the State, can exercise only that power which the legislature has conferred upon them." Bowers v. City of High Point, 339 N.C. 413, 417, 451 S.E.2d 284, 287 (1994). By what authority does the City of Charlotte negotiate, settle, and pay tort claims against it under the risk-management program? I find no statutory authority to pay such claims unless the City has waived its governmental immunity, either by the purchase of liability insurance or by participation in a local government risk pool. The City cannot have it both ways. Either it has waived governmental immunity by entering into this risk-management program, or its payment of government funds to settle tort claims to which governmental immunity applies would appear to be ultra vires. I presume that the City acted pursuant to article 20 of chapter 160A of the North Carolina General Statutes as recited in the agreement establishing the risk-management program, meaning its actions are not ultra vires. Therefore, I would deem the participation in the risk-management program to be participation in a local government risk pool, thereby waiving governmental immunity. Accordingly, I would affirm the decision of the Court of Appeals which affirmed the trial court as to this issue.
I now consider whether the City has waived governmental immunity for plaintiff's Woodson claim by the purchase of liability insurance. To the extent that the plaintiff's Woodson claim falls under the coverage provisions of the City's liability policy, the City has waived its governmental immunity. N.C.G.S. ยง 160A-485; see also Wall, 121 N.C. App. at 354, 465 S.E.2d at 553; Jones, 120 N.C. App. at 302, 462 S.E.2d at 246. Relying on this Court's decision in N.C. Farm Bureau Mut. Ins. Co. v. Stox, 330 N.C. 697, 412 S.E.2d 318 (1992), the majority holds that plaintiff's allegation that the City's action was substantially certain to cause injury removed the claim from coverage under the policy for purposes of this action. I do not believe that Stox requires this result.
First, Stox does not involve a Woodson claim. In fact, I have found no case from this Court discussing the applicability of liability coverage for a Woodson claim. To the extent applicable, however, I believe that Stox would suggest that
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