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.
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ZIFL Volume 30, Number 2
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5260
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th 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/ This issue contains the following articles about insurance fraud:
Read the full 19 page issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/01/ZIFL-01-15-2026.pdf.
The Contents of the January 15, 2026 Issue of ZIFL Includes:
Use of the Examination Under Oath to Defeat Fraud
The insurance Examination Under Oath (“EUO”) is a condition precedent to indemnity under a first party property insurance policy that allows an insurer ...
ERISA Life Policy Requires Active Employment to Order Increase in Benefits
Post 5259
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In Katherine Crow Albert Guidry, Individually And On Behalf Of The Estate Of Jason Paul Guidry v. Metropolitan Life Insurance Company, et al, Civil Action No. 25-18-SDD-RLB, United States District Court, M.D. Louisiana (January 7, 2026) Guidry brought suit to recover life insurance proceeds she alleges were wrongfully withheld following her husband’s death on January 9, 2024.
FACTUAL BACKGROUND
Jason Guidry was employed by Waste Management, which provided life insurance coverage through Metropolitan Life Insurance Company (“MetLife”). Plaintiff contends that after Jason’s death, the defendants (MetLife, Waste Management, and Life Insurance Company of North America (“LINA”)) engaged in conduct intended to confuse and ultimately deny her entitlement to...
Failure to Respond to Motion to Dismiss is Agreement to the Motion
Post 5259
Read the full article at https://lnkd.in/gP52fU5s, see the video at https://lnkd.in/gR8HMUpp and at https://lnkd.in/gh7dNA99, and at https://zalma.com/blog plus more than 5250 posts.
In Mercury Casualty Company v. Haiyan Xu, et al., No. 2:23-CV-2082 JCM (EJY), United States District Court, D. Nevada (January 6, 2026) Plaintiff Mercury Casualty Company (“plaintiff”) moved to dismiss. Defendant Haiyan Xu and Victoria Harbor Investments, LLC (collectively, “defendants”) did not respond.
This case revolves around an insurance coverage dispute when the parties could not be privately resolved, litigation was initiated in the Eighth Judicial District Court of Nevada. Plaintiff subsequently filed for a declaratory judgment in this court.
On or about April 15, 2025, the state court action was dismissed with prejudice pursuant to a stipulation following mediation. Plaintiff states that the state court dismissal renders its ...
Court Must Follow Judicial Precedent
Post 5252
Read the full article at https://www.linkedin.com/pulse/sudden-opposite-gradual-barry-zalma-esq-cfe-h7qmc, see the video at and at and at https://zalma.com/blog plus more than 5250 posts.
Insurance Policy Interpretation Requires Application of the Judicial Construction Doctrine
In Montrose Chemical Corporation Of California v. The Superior Court Of Los Angeles County, Canadian Universal Insurance Company, Inc., et al., B335073, Court of Appeal, 337 Cal.Rptr.3d 222 (9/30/2025) the Court of Appeal refused to allow extrinsic evidence to interpret the word “sudden” in qualified pollution exclusions (QPEs) as including gradual but unexpected pollution. The court held that, under controlling California appellate precedent, the term “sudden” in these standard-form exclusions unambiguously includes a temporal element (abruptness) and cannot reasonably be construed to mean ...
Lack of Jurisdiction Defeats Suit for Defamation
Post 5250
Posted on December 29, 2025 by Barry Zalma
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
Subscribe to the e-mail Version of ZIFL, it’s Free! https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D
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/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
