Selective Insurance v. NCNB National Bank

380 S.E.2d 521, 324 N.C. 560, 1989 N.C. LEXIS 333
CourtSupreme Court of North Carolina
DecidedJune 27, 1989
DocketNo. 544A88
StatusPublished
Cited by5 cases

This text of 380 S.E.2d 521 (Selective Insurance v. NCNB National Bank) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Selective Insurance v. NCNB National Bank, 380 S.E.2d 521, 324 N.C. 560, 1989 N.C. LEXIS 333 (N.C. 1989).

Opinions

FRYE, Justice.

The issue before this Court, one of first impression, is whether a crossclaim for contribution and indemnification may be asserted against the State in our trial courts. We answer in the affirmative.

This appeal had its genesis in a cause of action instituted by Selective Insurance Company of the Southeast (hereinafter Selective) against both NCNB National Bank of North Carolina (hereinafter NCNB) and the State of North Carolina (hereinafter State) arising out of the loss or theft of bearer bonds with a par value of $500,000. The bonds were deposited by Selective with the North Carolina Department of Insurance (hereinafter Department) as a condition for conducting insurance business in North Carolina. NCNB was the custodian of the bonds for Selective which instructed NCNB to deposit the bonds with the Department. NCNB hired third-party defendant Airborne Freight Corporation to deliver the bonds to the Department, which it did on or about 15 January 1985. In February 1985, the Department advised NCNB that it had received the Airborne package but that the package had been lost. The package has yet to be found.

In its complaint Selective asks for declaratory relief and damages for breach of trust against the State, that a surety bond it executed as a condition for reissuance of those bonds be declared void, and that Selective be relieved of any liabilities or obligations under that surety bond. As against NCNB, Selective seeks a declaratory judgment that, because of NCNB’s alleged negligence and breach of a custodianship agreement under which it had held the bonds, NCNB is liable to Selective for any and all liabilities incurred by or asserted against Selective with respect to the bearer bonds. Selective also seeks monetary damages caused by NCNB’s alleged negligence.

[562]*562NCNB filed an answer and asserted a crossclaim against the State for contribution and indemnity. The State moved to dismiss Selective’s complaint and NCNB’s crossclaim. The motions were granted and both Selective and NCNB appealed to the Court of Appeals. The Court of Appeals reversed the trial court’s dismissal of Selective’s claim against the State on the grounds that an actual controversy existed and the complaint presented a basis for declaratory relief. The Court of Appeals, however, affirmed the trial court’s dismissal of NCNB’s crossclaim against the State on the ground that the trial court had no subject matter jurisdiction over NCNB’s crossclaim. The Court of Appeals held that NCNB’s crossclaim is a tort claim against the State and must be heard by the Industrial Commission pursuant to the State Tort Claims Act. Judge Wells dissented from that part of the majority opinion which held that the trial court properly dismissed NCNB’s crossclaim against the State. NCNB brought this appeal contesting the dismissal of its crossclaim against the State.

In its crossclaim, NCNB asserts two claims against the State. The first is for contribution. NCNB contends that if it was negligent, then “the State of North Carolina, through the Department, was [also] negligent in losing the package containing the Bearer Bonds and that such negligence on the part of the State of North Carolina joined and concurred with the negligence of NCNB, if any, and NCNB is entitled to recover contribution from the State of North Carolina . . . .”

NCNB’s second claim against the State is for indemnification. NCNB contends that if it was negligent in any way, “the State of North Carolina, through the Department, was negligent in losing the package containing the Bearer Bonds and that such negligence of the State of North Carolina was the primary, active and proximate cause of Southeastern’s damages . . . and therefore, NCNB is entitled to be indemnified by the State of North Carolina . . . .”

NCNB properly asserted these claims as crossclaims pursuant to N.C.G.S. § 1A-1, Rule 13(g), because the State was a co-defendant in the original action brought by Selective against both NCNB and the State. Rule 13(g) provides:

(g) Crossclaim against coparty. — A pleading may state as a crossclaim any claim by one party against a coparty arising [563]*563out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such crossclaim may include a claim that the party against whom it is asserted is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the crossclaimant.

N.C.G.S. § 1A-1, Rule 13(g) (1983).

In the instant case, the Court of Appeals affirmed the trial court’s finding that it lacked jurisdiction over NCNB’s crossclaim on the grounds that there is no express provision in Rule 13(g), comparable to Rule 14(c), which allows a crossclaim to be asserted against the State. The Court of Appeals noted that “[t]he Legislature has simply not similarly excepted crossclaims against the State from the Tort Claims Act as it has for third-party claims.” Selective Ins. Co. v. NCNB, 91 N.C. App. 597, 602, 372 S.E. 2d 876, 880 (1988). Accordingly, the Court of Appeals held that NCNB’s crossclaim against the State is a tort-based action which pursuant to the State Tort Claims Act must be heard by the Industrial Commission rather than in state court.

The State Tort Claims Act provides in pertinent part as follows:

The North Carolina Industrial Commission is hereby constituted a court for the purpose of hearing and passing upon tort claims against the State Board of Education, the Board of Transportation, and all other departments, institutions and agencies of the State.

N.C.G.S. § 143-291 (1987 & Cum. Supp. 1988).

Both the Court of Appeals and the State rely upon Guthrie v. State Ports Authority, 307 N.C. 522, 299 S.E. 2d 618 (1983), in asserting that by enacting the State Tort Claims Act, and N.C.G.S. § 1A-1, Rule 14(c), the legislature expressly waived the State’s sovereign immunity under specifically limited circumstances and that such statutes waiving sovereign immunity must be strictly construed. While each of those propositions is true, Guthrie is not applicable to the instant case.1 Sovereign immunity [564]*564for claims against the State for contribution has been waived by N.C.G.S. § 1B-1(h) which allows the State to be sued for contribution as a joint tort-feasor.2 “The right to indemnification arises out of a tort claim, the State’s immunity to which was abrogated by the Tort Claims Act.” Teachy v. Coble Dairies, Inc., 306 N.C. 324, 332, 293 S.E. 2d 182, 186-87.

N.C.G.S. § 1B-1(h) and the State Tort Claims Act operate to waive sovereign immunity for claims against the State for contribution and indemnification. The State correctly points out that statutes waiving sovereign immunity must be strictly construed. Guthrie v. State Ports Authority, 307 N.C. 522, 538, 299 S.E. 2d 618, 627. However, Rule 13(g) does not address the immunity of the State from crossclaims against the State for contribution and indemnification, but rather presents the question of whether state courts are the proper forum — as opposed to the Industrial Commission — for such claims.

In the instant case, the State has already been made a party to the action in state court.

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Cite This Page — Counsel Stack

Bluebook (online)
380 S.E.2d 521, 324 N.C. 560, 1989 N.C. LEXIS 333, Counsel Stack Legal Research, https://law.counselstack.com/opinion/selective-insurance-v-ncnb-national-bank-nc-1989.