N.C. Monroe Construction Co. v. State

574 S.E.2d 482, 155 N.C. App. 320, 2002 N.C. App. LEXIS 1612
CourtCourt of Appeals of North Carolina
DecidedDecember 31, 2002
DocketNo. COA01-1478
StatusPublished
Cited by1 cases

This text of 574 S.E.2d 482 (N.C. Monroe Construction Co. v. State) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
N.C. Monroe Construction Co. v. State, 574 S.E.2d 482, 155 N.C. App. 320, 2002 N.C. App. LEXIS 1612 (N.C. Ct. App. 2002).

Opinion

McGEE, Judge.

In response to a federal court mandate to promptly relieve prison facility overcrowding in North Carolina, the General Assembly enacted legislation in 1987 that transferred the responsibility and authority to design and construct prisons from the Office of State Construction (OSC) to the Office of State Budget and Management (OSBM) and exempted prison construction from various statutory requirements to help expedite prison construction. OSBM began discussions in 1987 with N.C. Monroe Construction Company (plaintiff) about building prisons for the State.

The General Assembly enacted the State Prison and Youth Facilities Bond Act, ch. 935, 1989 N.C. Sess. Laws 294 (Bond Act) on 16 July 1990. The Bond Act authorized the issuance of $200 million in state bonds, pending voter approval in November 1990. The Bond Act did not explicitly authorize State agencies to enter into contracts for the expenditure of bond proceeds, but reserved to the General Assembly the power to provide such authorization at a later date.

Plaintiff and the State entered into a management agreement on 1 August 1990 (August 1990 Agreement). C.C. Cameron, head of OSBM and Executive Assistant to the Governor for Budget and Management, negotiated and executed the August 1990 Agreement for the State. The August 1990 Agreement established plaintiff as program manager “for services in connection with the construction of those facilities described in Section 6 of . . . the State Prison and Youth Services Facilities Bond Act . . . .” Section 6 of the Bond Act provided that

[t]he proceeds of bonds and notes shall be allocated and expended for the purposes of paying the cost of prison and youth services facilities as provided in this act, the particular projects [323]*323within such purposes and the projected allocations therefor to be determined by legislative action of the General Assembly at the 1991 session or any subsequent session.

§ 6, ch. 935, 1989 N.C. Sess. Laws 294, 298. North Carolina voters approved the Bond Act on 6 November 1990. C.C. Cameron left state government service the following month and was replaced by Marvin Dorman (Dorman), formerly second in command at OSBM as the Deputy State Budget Officer.

The General Assembly ratified the Appropriations and Budget Revenue Act of 1991, ch. 689, 1991 N.C. Sess. Laws 1894 (Revenue Act), on 13 July 1991. The Revenue Act provided for the appropriation of $112.5 million in bonds for

financing the cost of. . . State prison facilities and youth services facilities, including, without limitation, the cost of constructing capital facilities, renovating or reconstructing existing facilities, acquiring equipment related thereto, purchasing land, paying costs of issuance bonds and notes and paying contractual services necessary for the partial implementation of the purposes of the bond act.

§ 239(a), ch. 689, 1991 N.C. Sess. Laws 1894, 2125. Section 239 of the Revenue Act allocated $103.4 million of the $112.5 million towards the construction of prison projects in the State and the remainder to construction projects in the Division of Youth Services. Id. at 2125-26. Section 239 left the remaining $87.5 million of the overall $200 million to be used as determined by subsequent legislative action during that same session or any later session of the General Assembly. Id. Section 239(f) granted OSBM the ability to contract for prison facilities, stating that

[w]ith respect to facilities authorized for the Department of Correction, the Office of State Budget and Management may contract for and supervise all aspects of administration, technical assistance, design, construction or demolition of prison facilities in order to implement the providing of prison facilities under the provisions of this act.

Id. at 2127.

At the request of Dorman, plaintiff and the State executed a second contract on 18 September 1991 (September 1991 Agreement), covering the same general services as the August 1990 Agreement, [324]*324with two significant differences. First, both the August 1990 Agreement and the September 1991 Agreement name the State and plaintiff as the parties to the contract and state that the contract is

for services in connection with the construction of those facilities described in Section 6 of . . . [the] Bond Act (200 Million Bond Issue), as enacted during the 1989 Session (May 1990 Session) of the North Carolina General Assembly . . ., a copy which is attached hereto.

However, the September 1991 Agreement includes a provision immediately after the above cited language that specifies the contract includes the entire $200 million under the Bond Act and gives the rationale for including the entire amount. The provision includes facilities

for which appropriations have been made for the Department of Corrections pursuant to Section 239(c) in House Bill 83 as enacted in the 1991 Session of the North Carolina General Assembly, as well as the facilities for which appropriations shall be made for the balance of the $87,500,000 authorized as part of the 200 Million Bond Issue.
The facilities for which appropriations have not been made are being contracted for because a) a portion of the appropriations which are to be subsequently made will be necessary to complete the facilities authorized by the current appropriation, b) planning for the entire 200 Million Bond Issue will substantially decrease delays which would otherwise occur in construction of facilities for which appropriations are to be made subsequently, and c) savings will be realized by the State of North Carolina as a result of the economy of scale for the total 200 Million Bond Issue.

(emphasis added).

A second key addition in the September 1991 Agreement was to section 6.1, which originally established the reimbursement rate for the initial $103.4 million portion of the construction project. A provision was added governing the reimbursement rate for the remaining portions of the $200 million when appropriated by the General Assembly.

At the request of the General Assembly, Dorman presented a list of prison projects to be constructed from the remaining $87.5 million [325]*325to the Senate Finance Committee on 4 June 1992. However, the General Assembly did not appropriate funds for those projects at that time. The General Assembly enacted the Act of July 24,1992, ch. 1036, 1991 Sess. Laws 1106 (1992 Appropriations Act), which gave the General Assembly the discretion to select the particular projects on which the remaining $87.5 million would be spent, provided that expenditures should not be made, nor contracts entered into concerning the remaining $87.5 million until the General Assembly enacted a schedule for those funds; the Act directed OSC to consider alternative delivery systems that could expedite the construction of prison facilities. The following day, 25 July 1992, the General Assembly rewrote the Revenue Act, changing the list of facilities approved under section 239(c) of the original bill and, under section 239(f), requiring OSBM to include OSC, the Department of Correction, and the Department of Insurance in the construction process under the Bond Act. Capital Improvements Appropriations Act of 1992, ch. 1044, § 41, 1991 N.C. Sess. Laws 1158, 1202-05.

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Bluebook (online)
574 S.E.2d 482, 155 N.C. App. 320, 2002 N.C. App. LEXIS 1612, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nc-monroe-construction-co-v-state-ncctapp-2002.