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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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
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 ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
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/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
