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NC Supreme Court Finds Leasing of Property To Be Governmental Function

NC Supreme Court Holds That Leasing Property As Part of Revitalization Efforts is a Governmental Function in Meinck v. City of Gastonia

This week the North Carolina Supreme Court held that the City of Gastonia was entitled to the protections afforded by governmental immunity in a lawsuit brought by an artist who fell on stairs that were allegedly in disrepair when leaving a building that the City of Gastonia had purchased and leased to a non-profit art guild as part of its efforts to revitalize the downtown area.

In reaching its decision, the Court stayed away from extremes.  Specifically, the Court would not say that the government leasing property is always a proprietary function nor would the Court opine that all revitalization efforts by municipalities are necessarily governmental functions.  Instead, the Court emphasized the fact specific nature of the inquiry to determine whether a particular function is governmental or proprietary.

The fact that the activity at issue was a valid redevelopment activity under the Urban Redevelopment Law, that the City did not seek to make a profit from it and that the fees charged were not substantial were all factors that influenced the Court’s determination that leasing the property to the Art Guild was a governmental function entitling the City to assert immunity as a defense to the lawsuit.

The Court ultimately remanded the case for a determination of whether the City waived its immunity by purchasing insurance.

For North Carolina municipalities, this decision serves as a guideline for how best to structure revitalization efforts if they wish to rely upon immunity in the future.

To read the full opinion in Meinck v. City of Gastonia, 130PA17, 2018 WL 5310160 (N.C. Oct. 26, 2018), click here:    https://cases.justia.com/north-carolina/supreme-court/2018-130pa17.pdf?ts=1540567987

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