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North Carolina Indian Cultural Center, Inc. v. Sanders

Court of Appeals of North Carolina

June 18, 2019


          Heard in the Court of Appeals 14 February 2019.

          Appeal by Plaintiff from Order entered 23 April 2018 by Judge D. Thomas Lambeth, Jr. in Wake County No. 17 CVS 2597 Superior Court.

          Linck Harris Law Group, PLLC, by David H. Harris, Jr., for plaintiff-appellant.

          Attorney General Joshua H. Stein, by Special Deputy Attorney General G. Mark Teague, for the State.

          Lewis Brisbois Bisgaard & Smith LLP, by Christopher Derrenbacher, for defendant-appellee Paul Brooks.

          HAMPSON, JUDGE.

         Factual and Procedural Background

         North Carolina Indian Cultural Center, Inc. (Plaintiff) appeals from an Order (1) granting summary judgment in favor of the State of North Carolina (State), the North Carolina Department of Administration (DOA), the North Carolina Commission of Indian Affairs (Commission), Machelle Sanders (Sanders), Secretary of the DOA, in her official capacity, and Furnie Lambert (Lambert), Chairman of the Commission, in his official capacity (collectively, the State Defendants); (2) denying Plaintiff's Motion for Partial Summary Judgment; and (3) dismissing Plaintiff's Complaint against Paul Brooks (Brooks). The Record before us tends to show the following:

         Beginning in or around 1983, the State began acquiring land in Maxton Township in Robeson County (Property) for the purpose of ultimately developing the North Carolina Indian Cultural Center (Cultural Center) with a focus on the heritage and culture of North Carolina's Native Americans. Plaintiff incorporated as a nonprofit corporation in 1985 to "develop, establish, manage, furnish, equip, maintain, preserve, exhibit and interpret to the public the North Carolina Indian Cultural Center . . . ." Plaintiff has its own Board of Directors appointed under its Articles of Incorporation.

         In 1989, the General Assembly enacted legislation directing the State to enter into a 99-year lease of the Property with Plaintiff for the sum of $1.00 per year for the establishment of the Cultural Center. The legislation also called for the lease to include certain terms and conditions, such as requiring Plaintiff to obtain funding of $4.16 million for the Cultural Center within five years of a lease agreement. 1989 N.C. Sess. Law 1074, § 18. In 1992 and 1993, the General Assembly amended this legislation by excluding from the prospective lease a portion of the Property used for a golf course, extending the timeframe for the State and Plaintiff to enter into a lease, and easing Plaintiff's funding requirements. See 1991 N.C. Sess. Law 900, § 22; 1993 N.C. Sess. Law 88, § 1; 1993 N.C. Sess. Law 561, § 33.

         On 12 May 1994, Plaintiff and the State entered into a lease agreement for the Property, excluding the golf course (Lease). The Lease, among other provisions, included requirements that Plaintiff: maintain and improve the premises at no cost to the State; furnish utilities, including water service, to the Cultural Center; maintain certain insurance policies; provide ingress and egress via the main road through the Property, including to permit access to the golf course; and not sublease or assign the Lease without prior written approval from the DOA. The Lease was amended, pursuant to legislation, in 1997 to add an additional parcel of land to the Property and Lease and to reduce Plaintiff's funding obligation to $3 million. 1997 N.C. Sess. Law 41, § 1. The Lease was further amended, pursuant to additional legislation, in 2001 to eliminate the funding obligation altogether. 2001 N.C. Sess. Law 89, § 1.

         The 1997 legislation also required Plaintiff to reorganize with a Board of Directors appointed by the Commission. 1997 N.C. Sess. Law 41, § 2. This legislation was amended in 2003, changing the makeup of Plaintiff's Board of Directors but leaving the Commission with the authority to appoint directors. 2003 N.C. Sess. Law 260, § 1 (hereinafter, 2003 Legislation). In 2009, an Administrative Law Judge issued a decision blocking the Commission from appointing directors, which was subsequently adopted as a Final Agency Decision by the Commission. Subsequently, in 2011, a Superior Court Judge declared the 2003 Legislation unconstitutional.

         In March 2010, a team from the State Construction Office, an office within the DOA, inspected the Property and on 26 March 2010 issued a Facility Condition Assessment Report (FCAR) on the Property. The FCAR identified a number of deteriorated or dilapidated buildings on the Property (including on the golf course) that needed significant repair or demolition. The FCAR observed there was vandalism throughout the site, theft of electrical wiring, and exposed wiring posing safety problems. With respect to the Cultural Center, the FCAR recommended a theater complex used for an outdoor drama be rebuilt, as it was in such an advanced state of deterioration it was unsafe for public access. In addition, the FCAR indicated the Cultural Center museum required substantial repairs, including complete renovation of the interior along with complete replacement of the electrical system. Among other things, the FCAR noted the museum had various Building Code violations and safety hazards, including exposed electrical wiring and its restrooms were unsuitable for public use. The FCAR further recommended demolition of a warehouse attached to the museum because it was in such poor condition. In his affidavit, John F. Webb, III, the Manager of the Leasing and Space Planning Section of the DOA, calculated the amount needed to make the immediate repairs necessary for the portion of the Property leased to Plaintiff was $2.083 million.

         On 18 January 2011, the State issued Plaintiff a letter (Default Letter) detailing a number of claimed defaults under the lease, including failure to maintain and improve the leased premises as set out in the FCAR; failure to pay for water service to the Cultural Center; failure to obtain required insurance coverage; subleasing without prior written approval; and hindering access to patrons of the golf course. In addition, the Default Letter expressly invoked a requirement under the terms of the Lease that Plaintiff begin efforts to cure the defaults within 60 days and remedy the defaults within 120 days.

         Plaintiff's then attorney formally responded by email on or about 17 March 2011, disputing any default under the Lease. Plaintiff, through its counsel, indicated Plaintiff had begun to address each of the concerns raised by the State, including obtaining new insurance policies. Plaintiff also asserted the Commission and DOA had interfered with Plaintiff's efforts to maintain the Property and interfered in contractual arrangements, including having "conspired and collaborated" with a private corporation to operate the golf course on the Property. Plaintiff further claimed the Commission and DOA "sabotaged the work" of the Cultural Center and resultantly were themselves responsible for the conditions on the Property. On 28 April 2011, in reply, the State sent Plaintiff correspondence disputing Plaintiff's assertions and noting the State was provided no evidence of efforts to cure the defaults.

         On 3 October 2011, the Office of State Fire Marshall issued a report (Fire Marshall Report) to the DOA, identifying a number of Building and Fire Code violations existing on the Property, including at the theater, museum store, and warehouse. This Report also noted the theater stage, built in 2007, had not received necessary approvals prior to construction and appeared to be in violation of the Building Code as well.

         In June 2012, the Joint Legislative Program Division Oversight Committee of the General Assembly directed its Program Evaluation Division to evaluate the current and long-term disposition of the Property. The Program Evaluation Division delivered its report on 12 December 2012 (PED Report). The PED Report noted many of the same problems as the 2010 FCAR and 2011 Fire Marshall Report, including dilapidated buildings, exposed wiring, vandalism, and theft of copper wiring. The PED Report identified over $2.1 million in necessary repairs to the Property, including demolition of the museum, warehouse, and amphitheater complex.

         This PED Report further acknowledged that while the State had declared Plaintiff in default under the Lease, the DOA felt constrained from proceeding further by the legislative directive contained in the 1989 Session Law, as later amended, requiring the State to specifically enter into the Lease with Plaintiff. Among other recommendations, the PED Report recommended the General Assembly enact legislation terminating the Lease.

         On 26 June 2013, Session Law 2013-186 was enacted, directing the DOA to terminate the Lease to Plaintiff within 15 days. See 2013 N.C. Sess. Law 186, § 2. On 10 July 2013, the DOA issued notice to Plaintiff that the Lease would terminate in 60 days. In 2014, a substantial portion of the Property previously leased to Plaintiff was sold to the Lumbee Tribe of North Carolina. The remainder was reallocated to the North Carolina Department of Environment and Natural Resources for incorporation into the Lumber River State Park.

         On 3 October 2013, Plaintiff filed an amended complaint[1] against the DOA, the Commission, the State, as well as Brooks, a former Chairman of the Commission and then Chair of the Tribal Council of the Lumbee Tribe, Inc. (2013 Complaint). In the 2013 Complaint, Plaintiff alleged breach of contract and various constitutional violations, seeking both damages and a declaratory judgment that Session Law 2013-186 was unconstitutional.

         The Record reflects no proof the 2013 Complaint was served on Brooks. On 10 February 2014, Brooks filed Motions to Dismiss and an Answer to the 2013 Complaint, alleging, inter alia, failure by Plaintiff to provide proof of service of the 2013 Complaint on Brooks. On 11 March 2016, prior to Brooks's Motions being heard, Plaintiff filed a Notice of Voluntary Dismissal Without Prejudice.

         On 6 March 2017, Plaintiff filed the present action against the State Defendants and Brooks (collectively, Defendants). In this Complaint, Plaintiff alleged Defendants' actions "were taken with the clear intent to breach the Ground Lease" and that the Lease was a valid contract, constituting waiver of sovereign immunity. Plaintiff further alleged breach of contract against the State Defendants and sought a declaratory judgment that Session Law 2013-186 was invalid. Against Brooks specifically, Plaintiff alleged tortious interference with contract and a claim for ...

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