Fight Over Historic Black School in Charlotte-Mecklenburg

In 2007, the Torrence-Lytle School in Huntersville, North Carolina was transferred to the Charlotte-Mecklenburg Historic Landmarks Commission (HLC).  The school (facade image below, and back view farther down), originally known as the Huntersville Colored High School, was built in 1937 and expanded in the 1950s to add classrooms for younger students.  The building has not been used as a public school since 1966.

In 2016, and again in 2019, Tyson Bates and Regina Bates entered into contracts with HLC for the purchase of the property.  According to Nick de la Canal, reporting for WFAE Radio in North Carolina, the couple wanted to restore the facilities and open them to underserved children in the area.  They were never able to secure the property, and in 2022,  they sued HLC and its members, alleging eight causes of action, including breach of contract and breach of the duty of good faith and fair dealing. 

A trial court dismissed many of the plaintiffs' claims, but the breach of contract and breach of the duty of good faith claims survived, as did claims for negligent maintenance of a historic property, conversion and unjust enrichment.  On HLC's appeal, the Court of Appeals of North Carolina in Bates v. Charlotte-Mecklenburg Historic Landmarks Commission upheld the trial court's dismissals of some claims but it also dismissed, on governmental immunity grounds  all remaining claims against HLC and the individual defendants, except for the breach of good faith and fair dealing.  

The court granted most of defendants' motion to dismiss HLC and the individual defendants in their official capacities based on governmental immunity. The plaintiffs failed to allege a waiver of such immunity.  However, the court concluded, in a matter of first impression in the North Carolina courts, that governmental immunity doctrine does not cover claims for the breach of the duty of good faith and fair dealing.  The government is presumed to waive immunity to breach of contract claims whenever it enters into a contract.  Because the duty of good faith and fair dealing is an implied term in any contract, immunity is presumptively waived whenever a government entity enters into a contract.

The court extended immunity protections to the individual defendants in their individual capacities, because plaintiffs failed to allege that any of the individual defendants acted outside the scope of their duties or acted with malice or corruption.  Such allegations are required, under North Carolina law, to overcome the presumption of immunity for official acts.  For the same reasons, defendants could not be liable in their individual capacities for negligence or unjust enrichment.  However, conversion is an intentional tort.  As to the individual plaintiffs, only the conversion claim and the claim of breach of the implied duty of good faith and fair dealing survived the motion to dismiss.

Defendants sought leave through a writ of certiorari to challenge the trial court's denial of their motion to dismiss plaintiffs' breach of contract and breach of the duty of good faith and fair dealing claims, presumably on grounds other than immunity.  The court rejected these challenges as impermissible interlocutory appeals.  In sum, plaintiffs’ case will proceed on their breach of contract and breach of the covenant of good faith and fair dealing claims against all defendants and on their claim of conversion against the individual defendants in their individual capacities.