When State Does not Buy Insurance it Does not Waive Sovereign Immunity
Post 4854
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Plaintiffs appealed from the trial court’s order granting summary judgment in favor of Defendant, the City of Winston-Salem (“the City”).
In Livingstone Flomeh-Mawutor, Georgina Michael Shenjere and Konsikrated Moringa Farms d/b/a More Than Manna v. City Of Winston-Salem, No. COA23-809, Court of Appeals of North Carolina (August 6, 2024) the Court of Appeals unsuccessfully sought evidence of waiver of sovereign Immunity.
BACKGROUND
In the summer of 2019, Plaintiffs applied for a $100,000 loan via the City’s small business loan program.
In August 2019, Flomeh-Mawutor allegedly received verbal confirmation from Steven Harrison, a small business development specialist for the City, that Plaintiffs’ loan request had been approved and that a written letter of approval would be sent the following week. Plaintiffs allege that “Harrison was . . . in routine communication” with Plaintiffs over the ensuing months and repeatedly promised that the loan would close soon.
The loan eventually closed on 2 July 2020, when Plaintiffs signed, inter alia, a loan agreement with the City. On 14 August 2020, the City disbursed the loan proceeds to Plaintiffs. However, Plaintiffs claim to have lost significant business opportunities and goodwill as a result of the delay in their receipt of the funds.
Plaintiffs sued the City. The City moved for summary judgment which was granted.
DISCUSSION
Summary judgment is appropriate if there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.
Tort Claims
Under the doctrine of governmental immunity, a county or municipal corporation is immune from suit for the negligence of its employees in the exercise of governmental functions absent waiver of immunity. The North Carolina Supreme Court has repeatedly explained that a governmental function is an activity that is discretionary, political, legislative, or public in nature and performed for the public good on behalf of the State rather than for itself, while a proprietary function is one that is commercial or chiefly for the private advantage of the compact community.
The first step in determining whether a function is proprietary or governmental is whether, and to what degree, the legislature has addressed the issue. Nevertheless, if an action has been designated as governmental or proprietary in nature by the legislature, that is the end of the inquiry.
The City asserted that at the time that the City’s small business loan program loaned the $100,000 to Plaintiffs, the North Carolina General Assembly had specifically indicated that this expenditure of funds for community development was a governmental activity.
Regarding this second step, the City asserts that the money to operate the City’s small business loan program comes from HUD block grants relating to Neighborhood Revitalization Strategy Areas. Since the program or activity in this case can only be provided by a governmental agency, the City concluded that it is necessarily governmental.
WAS IMMUNITY WAIVED?
It is well established that a city can waive its immunity by purchasing liability insurance. However, the City’s risk manager averred that the City had neither purchased nor had in effect any liability insurance to cover such claims as are alleged in Plaintiffs’ complaint. As Plaintiffs’ complaint failed to allege that the City waived its governmental immunity, the tort claims cannot survive the City’s assertion of the immunity affirmative defense.
Therefore, the trial court properly granted summary judgment in the City’s favor as to Plaintiffs’ tort claims.
Breach of Contract
Plaintiffs’ breach of contract claim, rather than claims sounding in tort, a “local government . . . waives its governmental immunity when it enters into a valid contract, to the extent of that contract. However, Plaintiffs failed to prove that the Letter promising funding was a valid contract. Therefore, the City had not waived its governmental immunity from suit, and Plaintiffs cannot overcome the City’s affirmative defense. Affirmed.
ZALMA OPINION
Suing a governmental entity is often difficult when the governmental immunity defense is raised. Tort claims are only waived when the public entity obtains insurance or there is some other affirmative statement of waiver of the immunity. None existed in this case and the summary judgment was affirmed.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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ZIFL – Volume 29, Issue 21
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post 5220
Read the full article at https://lnkd.in/gRMJpi4s, see the video at https://lnkd.in/gwGSd6ZA & at https://lnkd.in/gbDiuFJy, and at https://zalma.com/blog plus more than 5200 posts.
See the video at & at https://rumble.com/v711hr0-zalmas-insurance-fraud-letter-november-1-2025.html
See the full 18 page issue of ZIFL at ZIFL-11-01-2025
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Conviction for Health Insurance Fraud Upheld
Physician Conspired with Bonavilla to Effect Health Insurance Fraud
Dennis Davin Bonavilla was involved in an insurance fraud scheme as an executive of Free Choice Healthcare. The scheme targeted indigent patients, often on ...
The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
