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NO. COA01-1560
NORTH CAROLINA COURT OF APPEALS
Filed:  31 December  2002
STEVEN M. FISHER, Guardian Ad Litem for RHONDA CHILDS, a Minor,
Plaintiff,
v.
THE HOUSING AUTHORITY OF THE CITY OF KINSTON, NORTH CAROLINA,
Defendant.
Appeal  by  plaintiff  from  judgment  entered                                27  June   2001  by
Judge Benjamin G. Alford in Lenoir County Superior Court.   Heard in
the Court of Appeals  12 September  2002.
Donaldson & Black, P.A., by Phyllis Lile-King, for plaintiff-
appellant.
White  &  Allen,  P.A.,  by  Matthew  S.  Sullivan  and  Thomas  J.
White, III, for defendant-appellee.
HUDSON, Judge.
Plaintiff Rhonda Childs  (“Plaintiff”), a minor, brought suit
through her guardian ad litem against the Housing Authority of the
City of Kinston  (“Housing Authority”) in  2000.    Plaintiff alleged
that she has sustained injuries from exposure to lead paint, due to
the Housing Authority’s failure to properly maintain an apartment
building  that  it  owned.  The  Housing  Authority  moved  for  summary
judgment  on  the  basis  of  sovereign  immunity.     The  trial  court
granted  the  motion.    For  the  reasons  set  forth  below,  we  reverse
the judgment of the trial court.
Plaintiff is eleven years old.   From either 1996 or 1997--the
year is disputed--until 2000, Plaintiff lived with her mother in an
apartment  at  3  Mitchell  Wooten  Court  in  Kinston,  North  Carolina,




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property  that  is  owned  and  maintained  by  the  Housing  Authority.
Plaintiff  alleges  that  during  that  period,  she  was  exposed  to
peeling  and  chipping  lead  paint  because  the  Housing  Authority
failed  to  properly  maintain  and  repair  the  apartment.    Plaintiff
alleges that she now suffers from permanent brain damage due to the
lead exposure.
Plaintiff filed this suit in November 2000, alleging that the
Housing  Authority  violated  the  North  Carolina  Residential  Rental
Agreements Act, N.C. Gen. Stat.  §  42-38 et seq.; that it breached
the implied warranty of habitability; that it breached an express
warranty; that it was negligent; and that it engaged in unfair and
deceptive practices in contravention of N.C. Gen. Stat.  §  75-1.1.
Plaintiff sought actual, treble, and punitive damages.   The Housing
Authority  moved  for  summary  judgment  in  April  2001,  arguing  that
sovereign  immunity  precluded  Plaintiff  from  maintaining  this
action.    The  trial  court  granted  the  motion  on  June                27,                2001.
Plaintiff now appeals.
Plaintiff  argues  that  the  trial  court  erroneously  granted
summary judgment in favor of the Housing Authority.    She contends
that   operating   low-income   housing   is   a   proprietary,   not
governmental, function and, therefore, that the Housing Authority
cannot assert sovereign immunity as a defense in this action.    We
agree.
Summary  judgment  is  properly  granted  when                              “the  pleadings,
depositions,  answers  to  interrogatories,  and  admissions  on  file,
together with the affidavits, if any, show that there is no genuine




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issue as to any material fact and that any party is entitled to a
judgment as a matter of law.”    N.C. R. Civ. P.  56(c)  (2001).    The
burden to demonstrate the absence of a triable issue lies with the
moving party, who must show either (1) that an essential element of
the opposing party’s claim is nonexistent or (2) that the opposing
party  cannot  produce  evidence  sufficient  to  support  an  essential
element  of  the  claim  or  to  overcome  an  affirmative  defense  that
would  bar  its  claim.     Pierson  v.  Cumberland  County  Civic  Ctr.
Comm’n,  141  N.C.  App.  628,  630,  540  S.E.2d  810,  812  (2000).    The
trial court must consider the evidence in the light most favorable
to  the  nonmoving  party  and  draw  all  inferences  from  the  evidence
against  the  moving  party  and  in  favor  of  the  nonmovant.    Id.  at
631,  540 S.E.2d at  812.
In  general,  the  doctrine  of  sovereign  immunity  shields
municipalities from liability for torts committed by its agencies
and  organizations  unless  immunity  has  been  waived  by  the  General
Assembly  or  otherwise.    Wood  v.  North  Carolina  State  Univ.,  147
N.C. App. 336, 338, 556 S.E.2d 38, 40 (2001), disc. review denied,
355  N.C.  292,  561  S.E.2d  887  (2002);  Herring  ex  rel.  Marshall  v.
Winston-Salem/Forsyth County Bd. of Educ., 137 N.C. App. 680, 685,
529 S.E.2d 458, 462, disc. review denied, 352 N.C. 673, 545 S.E.2d
423                                                                            (2000).   Application  of  the  doctrine  depends  in  part  upon
whether  the  activity  out  of  which  the  tort  arises  is  properly
characterized as governmental or proprietary in nature.    Pierson,
141 N.C. App. at 631, 540 S.E.2d at 813.   The doctrine applies when
the  entity  is  being  sued  for  the  performance  of  a  governmental




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function,  but  it  does  not  apply  when  the  entity  is  performing  a
proprietary function.   Herring, 137 N.C. App. at 683, 529 S.E.2d at
461; Messick v. Catawba County, 110 N.C. App. 707, 714, 431 S.E.2d
489, 493, disc. review denied, 334 N.C. 621, 435 S.E.2d 336 (1993).
As our Supreme Court has explained, governmental functions are
those that are “discretionary, political, legislative, or public in
nature and performed for the public good [on] behalf of the State.”
Britt v. City of Wilmington, 236 N.C. 446, 450,  73 S.E.2d 289,  293
(1952).    In  contrast,  proprietary  activities  are  those  that  are
“commercial  or  chiefly  for  the  private  advantage  of  the  compact
community.”    Id.      The test for distinguishing between the two is
as  follows:                                                                    “If  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. . .                .”
Id.  at  451,  73  S.E.2d  at  293;  see  also  Herring,  137  N.C.  App.  at
683,  529 S.E.2d at  461.
In  applying  this  test,  our  courts  have  analyzed  whether  the
act  or  function  involves  special  corporate  benefit  or  pecuniary
profit that inures to the municipality.   Hickman v. Fuqua, 108 N.C.
App.  80,  83-84,  422  S.E.2d  449,  451  (1992),  disc.  review  denied,
333  N.C.  462,  427  S.E.2d  621  (1993);  see  also  Sides  v.  Cabarrus
Mem’l  Hosp.,  Inc.,                                                            287  N.C.                                                   14,   22,   213  S.E.2d   297,   302   (1975)
(noting that an “analysis of the various activities that this Court
has held to be proprietary in nature reveals that they involved a




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monetary charge of some type”).   It is not necessary, however, that
the public body actually make a profit.   Sides, 287 N.C. at 23, 213
S.E.2d  at  303;  Pierson,  141  N.C.  App.  at  632,  540  S.E.2d  at  813.
The main issue remains, under the test set forth in Britt, whether
an                                                                             “undertaking  is  one  traditionally  provided  by  the  local
governmental units.”    Hickman,  108 N.C. App. at  84,  422 S.E.2d at
452  (citation and quotation marks omitted).
Using   these   tests,   we   conclude   here   that   the   Housing
Authority’s  activities  in  owning,  operating,  and  maintaining  the
low-income housing occupied by Plaintiff is a proprietary function.
Managing  low-income  housing  is  not  an  enterprise  in  which  only
governmental  entities  can  engage.    Any  individual  or  corporation
can--and, in fact, often does--own and operate low-income housing.
Providing  rental  housing  does  not  traditionally  fall  within  the
government’s purview.
In  addition,  the  Housing  Authority  in  most  cases  collects
rents  from  its  tenants.    Although  the  Housing  Authority  may  not
make  a  profit,  our  cases  require  only  that  a  “monetary  charge  of
some type” be involved.   Sides,  287 N.C. at  22,  213 S.E.2d at  302.
Two  prior  decisions  further  compel  our  conclusion  that
operating low-income housing is a proprietary function.   In Carter
v.  City  of  Greensboro,  249  N.C.  328,  106  S.E.2d  564  (1959),  the
City  of  Greensboro  entered  into  a  contract  with  the  federal
government  that  required  the  city  to  manage  and  maintain  public
housing units.   The plaintiff, who lived in one of the units, sued
the city after a trash fire was left unattended and caused severe




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injuries to the plaintiff.    Id. at  329,  106 S.E.2d at  565-66.
The  Supreme  Court  in  Carter  noted  that  the  defendant  made
three  arguments  on  appeal,  the  second  of  which  was:                  “(2)  the
defendant is immune from liability for negligence in this case in
that the injury occurred incident to the performance of a necessary
governmental  function.”                                                     249  N.C.  at  330,  106  S.E.2d  at  566.    To
resolve  the  issue,  the  Court  directly  addressed                        “whether  the
defendant   acted   in   its   governmental   or   in   its   proprietary
capacity.”    Id. at  332-33,  106 S.E.2d at  568.
In  the  Court’s  view,  the                                                 “duties  the  city  assumed  and  the
purposes it sought to accomplish, the special and limited class of
tenants  who  could  qualify  for  occupancy,  and  the  substantial
financial returns the city received under the contract placed the
city’s  management  of  the  project  in  the  category  of  proprietary
activity.”   Id. at  333, 106 S.E.2d at  568-69.   The same holds true
here.
The Housing Authority contends that Carter is not controlling.
It argues that Carter is not a “housing authority” case because the
public  entity  at  issue  was  a  city  and  not  a  housing  authority
acting  pursuant  to  statute.      The  Housing  Authority  also  submits
that  Carter  is  distinguishable  because  the  city  in  Carter  was
acting  pursuant  to  a  contract  with  the  federal  government,  while
the  Housing  Authority  in  this  case  had  no  such  contractual
obligation.
We  do  not  agree  that  these  factual  distinctions  affect  the
analysis.     That  the  Housing  Authority  was  acting  pursuant  to




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statute does not automatically render its actions governmental and
is  not  relevant  to  our  analysis.     Much  activity  by  a  housing
authority  is  regulated  by  statute,  as  is  much  activity  by  a
municipality.    Similarly,  the  fact  that  the  city  in  Carter  was
acting pursuant to a contract with the federal government did not
affect  the  Supreme  Court’s  decision  on  this  issue  and  does  not
affect ours.
More recently, this Court addressed a very similar issue, in
Jackson  v.  Housing  Authority  of  the  City  of  High  Point,  73  N.C.
App.  363,  326  S.E.2d  295,  disc.  review  denied,  313  N.C.  603,  330
S.E.2d                                                                        610                                                      (1985).   There,  the  plaintiff’s  estate  sued  the
defendant  Housing  Authority  after  the  plaintiff,  a  resident  of  a
housing project that the Housing Authority owned and operated, died
from  carbon  monoxide  poisoning.     The  estate  alleged  that  the
Housing Authority was negligent in failing to maintain the heater
and flue in the plaintiff’s unit, which had become clogged and had
caused the plaintiff’s death.   Id. at 364-66, 326 S.E.2d at 296-97.
The  Housing  Authority  argues  that  Jackson  is  inapposite
because the parties did not raise immunity as an issue.    However,
this  Court  did.    It  noted  the  following:                               “[T]he  court  did  not
specify what the perceived weakness in plaintiff’s case was and we
will briefly address the possibilities that the record suggests.”
Jackson,  73 N.C. App. at  367,  326 S.E.2d at  297-98.    As the Court
explained,                                                                    “[c]ertainly  the  claim  is  not  barred  because  of
defendant’s status as an arm of the City of High Point in operating




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a  low  income  housing  project;  such  activities  are  proprietary,
rather   than   governmental,   and   municipalities   are   legally
accountable therefor on the same basis as other defendants.”    Id.
at  367,  326  S.E.2d  at  298  (citing,  inter  alia,  Carter).    We  find
this analysis logical, and we hold accordingly.                                The parties also
dispute whether the Housing Authority had purchased insurance for
the  unit  in  which  Plaintiff  resided  and,  if  so,  what  that  policy
covered and excluded.    Because we hold that the Housing Authority
was engaging in a proprietary function, and that sovereign immunity
did not apply, we need not reach these remaining questions.
We  conclude  that  the  Housing  Authority,  by  owning  and
operating  low-income  housing,  engaged  in  a  proprietary  function.
Accordingly,  it  is  not  protected  by  the  doctrine  of  sovereign
immunity.    We  reverse  the  decision  of  the  trial  court  and  remand
for further proceedings.
Reversed.
Judges TIMMONS-GOODSON and CAMPBELL concur.

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