               IN THE COURT OF APPEALS OF NORTH CAROLINA

                                  No. COA17-1137

                                Filed: 21 August 2018

Halifax County, No. 16 CVS 30

TOWN OF LITTLETON, Plaintiff,

              v.

LAYNE HEAVY CIVIL, INC. f/d/b/a REYNOLDS, INC.; LAYNE INLINER, LLC,
f/d/b/a REYNOLDS INLINER, LLC; and MACK GAY ASSOCIATES, P.A.,
Defendants.


      Appeal by plaintiff from orders entered 20 June and 5 July 2017 by Judge

Beecher R. Gray in Halifax County Superior Court. Heard in the Court of Appeals 7

March 2018.


      Hedrick Gardner Kincheloe & Garofalo LLP, by Joshua D. Neighbors and
      Patricia P. Shields, and Tharrington Smith, LLP, by Rod Malone and
      Kristopher B. Gardner, for plaintiff-appellant.

      Ellis & Winters LLP, by Stephen D. Feldman, Leslie C. Packer, Steven A.
      Scoggan, and Alexander M. Pearce, for defendants-appellees Layne Heavy Civil,
      Inc. and Layne Inliner, LLC.

      Young Moore and Henderson, P.A., by Walter E. Brock, Jr. and Andrew P.
      Flynt, for defendant-appellee Mack Gay Associates, P.A.


      BERGER, Judge.


      The Town of Littleton (“Plaintiff”) appeals two orders granting summary

judgment in favor of Layne Heavy Civil, Inc. and Layne Inliner, LLC (“Defendant

Layne”) and Mack Gay Associates, P.A. (“Defendant Mack Gay”) in a dispute over a
                    TOWN OF LITTLETON V. LAYNE HEAVY CIV., INC.

                                   Opinion of the Court



sewer rehabilitation project. The trial court ruled in favor of all Defendants because

the applicable statutes of limitation barred each of Plaintiff’s claims. Plaintiff argues

that the trial court erred because the sewer project was a governmental function to

which statutes of limitation would not apply under the doctrine of nullum tempus.

However, a municipality’s operation and maintenance of a sewer system is a

proprietary function, not governmental, and thus, the doctrine of nullum tempus is

inapplicable. We therefore affirm the orders of the trial court.

                         Factual and Procedural Background

      In 2004, Plaintiff received grant money from the North Carolina Clean Water

Management Trust Fund (“the Fund”) to rehabilitate its sewer system. One purpose

of the Fund is to “help finance projects that enhance or restore degraded surface

waters; protect and conserve surface waters, including drinking supplies, and

contribute toward a network of riparian buffers and greenways for environmental,

educational, and recreational benefits.”      N.C. Gen. Stat. § 143B-135.230 (2017).

Plaintiff contracted with Defendant Mack Gay to provide assistance in applying for

grant funding, design the rehabilitation project, and perform construction

administration and observation services.

      The main scope of the project was to eliminate storm water infiltration into

Plaintiff’s sanitary sewer collection system, which would reduce costs and prevent

untreated wastewater spills. Defendant Mack Gay provided construction plans in



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                                 Opinion of the Court



July 2005. The scope of proposed work included: rehabilitation or replacement of

existing sewer lines, manholes, and an existing pump station; construction of new

pump stations; installation of a generator at a wastewater treatment plant; and other

miscellaneous repairs.

      Plaintiff contracted with Defendant Layne for the rehabilitation and repair

work that began in December 2005 and was completed by October 2008. Beginning

in April 2010, residents informed Plaintiff of serious deficiencies with the sewer

rehabilitation. Inspections in October 2010 and March 2011 confirmed significant

issues with the project. Recognizing the seriousness of the deficiencies, on November

7, 2011, Plaintiff’s town commissioners and town attorney discussed holding

Defendants accountable for these deficiencies. The town attorney was authorized to

take actions to ensure the issues were corrected. Plaintiff’s town commissioners

formally authorized the town attorney to file suit on January 3, 2013.

      However, three years passed before Plaintiff filed this lawsuit against

Defendants on January 8, 2016. Plaintiff’s unverified complaint alleged negligence,

fraud, negligent misrepresentation, breach of contract, breach of warranty,

professional malpractice, trespass to chattels, conversion, and unfair and deceptive

trade practices. Defendants moved to dismiss all claims pursuant to Rule 12 of the

North Carolina Rules of Civil Procedure, and the trial court dismissed the trespass

and conversion claims, as well as the claim of unfair and deceptive trade practices



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                                   Opinion of the Court



against Defendant Mack Gay.

      On May 8 and May 11, 2016, Defendants filed motions for summary judgment

on all remaining claims by Plaintiff, alleging that all were barred by the applicable

statutes of limitation. Plaintiff filed neither responsive pleadings nor additional

evidence. Since there were no disputes as to the material facts, the trial court granted

summary judgment in favor of Defendant Layne in an order entered June 20, 2017

and Defendant Mack Gay in an order entered July 5, 2017. Both of the trial court’s

orders granted summary judgment against Plaintiff because of the expiration of the

applicable statutes of limitation. Plaintiff timely appealed these orders.

                                 Standard of Review

      “Our standard of review of an appeal from summary judgment is de novo; such

judgment is appropriate only when the record shows that ‘there is no genuine issue

as to any material fact and that any party is entitled to a judgment as a matter of

law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting

Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)).

                                       Analysis

      Plaintiff argues that the trial court erred in granting summary judgment in

favor of Defendants due to the expiration of statutes of limitation. Plaintiff asserts

that its claims are not barred by the statutes of limitation because the project was a

governmental function and was therefore protected by the doctrine of nullum tempus.



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                                    Opinion of the Court



We disagree.

      Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that any party is entitled to a

judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2017). Further,

               [w]hen a motion for summary judgment is made and
               supported as provided in this rule, an adverse party may
               not rest upon the mere allegations or denials of his
               pleading, but his response . . . must set forth specific facts
               showing that there is a genuine issue for trial. If he does
               not so respond, summary judgment, if appropriate, shall be
               entered against him.

N.C. Gen. Stat. § 1A-1, Rule 56(e); accord Asheville Sports Props., LLC v. City of

Asheville, 199 N.C. App. 341, 344, 683 S.E.2d 217, 219 (2009).

      Causes of action based on negligence, fraud, negligent misrepresentation,

breach of contract, breach of warranty, and professional malpractice are each subject

to a three-year statute of limitation. N.C. Gen. Stat. §§ 1-15(c), -52 (2017). A cause

of action based on unfair and deceptive trade practices is subject to a four-year statute

of limitation. N.C. Gen. Stat. § 75-16.2 (2017). Plaintiff filed its suit more than four

years after all claims arose. Its suit would therefore be barred unless the doctrine of

nullum tempus applies.

      Our Supreme Court has described the doctrine of nullum tempus occurrit regi

by stating that:



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                                   Opinion of the Court



             nullum tempus survives in North Carolina and applies to
             exempt the State and its political subdivisions from the
             running of time limitations unless the pertinent statute
             expressly includes the State. . . . Nullum tempus does not,
             however, apply in every case in which the State is a party.
             If the function at issue is governmental, time limitations
             do not run against the State or its subdivisions unless the
             statute at issue expressly includes the State. If the
             function is proprietary, time limitations do run against the
             State and its subdivisions unless the statute at issue
             expressly excludes the State.

Rowan Cty. Bd. of Educ. v. U.S. Gypsum Co., 332 N.C. 1, 8-9, 418 S.E.2d 648, 653-54

(1992).

      As in sovereign immunity cases, whether the subject matter of the suit is

governmental or proprietary will determine whether the courts must apply nullum

tempus or the appropriate statutes of limitation.         See id.   Generally, “[i]f the

undertaking of the municipality is one in which only a governmental agency could

engage, it is governmental in nature.       It is proprietary and ‘private’ when any

corporation, individual, or group of individuals could do the same thing.” Britt v. City

of Wilmington, 236 N.C. 446, 451, 73 S.E.2d 289, 293 (1952). “The law is clear in

holding that the operation and maintenance of a sewer system is a proprietary

function where the municipality sets rates and charges fees for the maintenance of

sewer lines.” Harrison v. City of Sanford, 177 N.C. App. 116, 121, 627 S.E.2d 672,

676, disc. review denied, ___ N.C. ___, 639 S.E.2d 649 (2006); see also Union Cty. v.

Town of Marshville, ___ N.C. App. ___, ___, 804 S.E.2d 801, 805 (2017) (municipality



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                                  Opinion of the Court



not entitled to immunity because operation and maintenance of sewer system is

proprietary in nature), disc. review denied ___ N.C. ___, 814 S.E.2d 101 (2018); Bostic

Packaging, Inc. v. City of Monroe, 149 N.C. App. 825, 829, 562 S.E.2d 75, 79, disc.

review denied, 355 N.C. 747, 565 S.E.2d 192 (2002) (municipality not immune from

tort liability in the operation and maintenance of a sewer system).

      Plaintiff contends that the facts of this case compel us to follow McCombs v.

City of Asheboro, 6 N.C. App. 234, 170 S.E.2d 169 (1969).         Plaintiff interprets

McCombs as holding that the construction of a sewer system is a governmental

function, thus entitling the City of Asheboro to governmental immunity, and, by

analogy, entitles Plaintiff to the protection of nullum tempus. However, Plaintiff’s

reliance on McCombs is misguided for two reasons. First, McCombs refrained from

deciding whether the City of Asheboro’s construction of a new sewer line was a

governmental or proprietary function. See id. at 242, 170 S.E.2d at 175 (“Conceding,

arguendo, that [Plaintiff’s allegation that the Defendant was engaged in a proprietary

function in the construction of a sewer line] is sufficient to save the complaint from

demurrer on the ground of governmental immunity, we are of the opinion that the

complaint must fail [because there are no facts alleged constituting negligence of the

defendant].”). Second, McCombs is distinguishable from the case sub judice because

the defendant in McCombs was constructing new sewer lines, id. at 237, 170 S.E.2d

at 172, whereas here, Plaintiff was maintaining sewer system assets in need of repair.



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                                    Opinion of the Court



      The final report expressly acknowledged the purpose of the project was to

rehabilitate more than 35,000 linear feet of sewer collection lines and nearly 120

manhole    covers;   replace   or   build   multiple       pump    stations;   and   conduct

“[m]iscellaneous repairs to short line segments.” Defendant Mack Gay’s final report

on the project states that the main purpose of the project was to reduce inflow and

infiltration of storm water into the sewer system.                The evidence Defendants

submitted in support of its summary judgment motions established that one of the

purposes of the project was to reduce costs of running the sewer system.                This

evidence tended to show that the project would eliminate expenses incurred per

gallon of inflow and infiltration, which were estimated to cost $0.09 per gallon per

year. Additionally, the project would also eliminate Plaintiff’s potential liability for

sewage spills resulting from rainwater penetrating the system, which, under state

law, could have cost up to $25,000.00 per day.

      The record before us shows that there is no genuine issue as to any material

fact and Defendants were entitled to a judgment as a matter of law. The evidence

describes a maintenance project on a city-operated sewer system to reduce the

infiltration and inflow of storm water. This maintenance would reduce costs to

Plaintiff in its running of the sewer system and would reduce any waste water spills.

Because the operation and maintenance of a sewer system is a proprietary function,

Plaintiff’s maintenance project was a proprietary function. The doctrine of nullum



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                                   Opinion of the Court



tempus does not apply to Plaintiff’s claims. Therefore, the trial court did not err in

granting summary judgment in favor of Defendants.

                                      Conclusion

      Defendants properly pleaded the applicable statutes of limitation as a defense

against each of Plaintiff’s claims. The undisputed facts describe a sewer system

maintenance project, which is a proprietary function. Thus, nullum tempus does not

apply to Plaintiff’s claims, and the statutes of limitation control. The trial court did

not err in granting summary judgment to Defendants because of the expiration of the

applicable statutes of limitation. The orders of the trial court are affirmed.

      AFFIRMED.

      Judges ELMORE and INMAN concur.




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