If you please the court, I name it Sam Gorham and I have for me John Crone. We represent the city of Hickory and the Smiley. The issue is whether the district court aired and denying a motion to dismiss a lack of subject matter jurisdiction based on the wave of governmental community. Mr. Gorham and while we're on the subject of subject matter jurisdiction and this may be a question that are posed to Mr. Davis but I recall that you did not concede that diversity jurisdiction has been established in this case in your answer and I'm wondering whether that was because the plaintiff in this case is a limited liability company and under the rules as I understand it's not the state of organization that matters. This is a Delaware limited liability company but the citizenship and residence of its members and I'm wondering whether any of those members may be North Carolina citizens in which case there is no diversity jurisdiction. You know the answer to that? I don't think the word won't draw. I don't think it works but I'm not positive. I'll just have to stay up all night. Is there any reason why you didn't concede? No, I don't think so. That has not been an impediment and I'm proceeding in this case. Okay
. Well, the Davis I want to think about that and if you have an answer you can let us know when you get up here. I don't think that was the issue then. When on alleged contract is an issue the governmental immunity borrowers, quasar contractual class against the municipality arising from the alleged contract even if the contract concerns a proprietary function and it will standard a review in this case is the NOVO. There were no factual findings and they caught a load on another district court. The North Carolina courts clearly say that the starting place and resolving the governmental immunity issues is to look to see what the legislature has said about questions. The legislature in North Carolina sets the public policy following the separation of powers clause in the North Carolina legislature that is legislated executive and judicial branches on Article 1, Section 6. The tort case of the state of Williams and the tort case of Stephen versus Newburn which are not disposited to our issues but they do give some background for now that judicial or rather governmental immunity has been part of North Carolina law since 1889. Now since then the court adopted it and the legislature have passed the statute based on the sovereign immunity. Now sovereign immunity has the public policy in North Carolina subject to exceptions. The Williams still in cases again those the tort cases recognize that further modification or repeal of the common law doctrine must come from the legislature again the legislature courts should not abrogate doctrine that has been expressed by the legislature. Why does governmental immunity matter? For the incentives passed as we all know it protected the king who could do no wrong. If they get protected the sanctity of the municipalities and counties budget which under North Carolina law must be balanced under North Carolina statute and municipalities they purchase liability but may purchase liability insurance to ensure again to what I think we all have for the standards
. On the contract side in North Carolina a contract for capital projects or grant projects has to be valid as passed a pre audit requirement. Start out in detail and the local government budget and fiscal control act which was enacted by the National Legislation for the protection tax payers and the statute requires a budget ordinance that includes an appropriation authorizing the obligation. It also requires funds to pay the obligation and a written contract within the tax pre audit certificate under data general to comply with the above void the contract or agreement. So, out of general hand you some of that, municipalities have no way to protect themselves from quasi contract claim. Whereas as to a contract the pre audit requirement and the statute that I just mentioned, pre audit grant requirements offer protection from court claim in capital projects and grant projects anyone can read the local government budget and fiscal control act. Let me ask you this. If the claim against the government is unjust in Richmond what protection do they need against that kind of claim? Well, Judge Borey's was saying I think that we've got a tribal issue under unjust enrichment. But that's not my question. My question is generally speaking as a matter of policy and philosophy. If the charge against the municipality or the government is unjust in Richmond you got something and a benefit of something to the detriment of a private party. What is what policy or what is it that the government is being protected from through the use of our governmental immunity? Well of course the government is not going to be a party to the contract in that situation. That's right, that's a gift
. Let's say that's a gift. And so it gets back to the legislature I think. It's the legislature want to carve out an exception. They ask those if they're willing to sue a municipality for unjust enrichment. At these cases that we're talking about, there's a contract and no, there's not a contract and that a general and an empty series rebuild case say no contract then you don't get through the issue of unjust enrichment. And one of the problems is that if you got a court you can go by insurance and if you've got a written contract on agreement you look at the statute that I just talked about and that's available to anybody that's a look at I found it on my cell phone the last night and my motel room. But what is there to protect a municipality from unjust enrichment? Go engage in a proprietary function? I guess. We'll accept that out of general and out of general and empty series rebuilds so it's distinguished. And the granted the cases, the often cases that won't slip in and say if the government wants to engage in a proprietary function then you've conceded the governmental immunity. But that's not what that of general and empty series rebuild say that they don't go that far. They look at contract, no contract and then you don't get through the unjust enrichment. I'm just trying to figure out data general what the basis for that opinion was and I don't know anything in what the government is being protected from
. Data general says that leasing a computer. Uh-huh for me. Yes sir. But it's said that without a valid contract the trial for lack personal jurisdiction with the claim for for if you don't have a valid contract then you don't get to quantum merit and those are the applicable claims. And so what other what judge worries I think was saying was golden. He found no contract at all. I think all is worth nothing. And but then he said we need to look to see whether it's for proprietary or governmental and function. Well the trouble you don't dispute that it's proprietary but we admit that. Right. I mean we've got roofe selling fuel while at the airport. So what is there that your client needs protection from when it behaves like an ordinary business corporation making money or trying to and the claim is for unjust enrichment as the chief judge just described it
. What do you what do you what do you want to need protection from? They cut for unjust about and stand you correctly. We need protection from these multitudes. How do you protect your staff from unjust enrichment? I mean they are taken. You need in government or function. That's how you protect it. But but but if the North Carolina law seems to say and it used to be the government and the government function definition was very broad and it does seem to be going the other way. And in the cases that say the law or we looked at it and said we're selling fuel at the airport is probably proprietary. It's not governmental. Now running operating the runways which always in the city responsibility or running the ILS or something like that. Like the government. But selling soda pop and and jet fuel are not. But still though we we think that the legislature needs to step in
. Not the courts and if there's going to be a wide open area that's the amount of public policy that the courts don't need to get involved in and data general and institute rebuild recognize that public policy and then get into that. Now a couple other points. Chief Judge Mitchell in a case called Quickfield versus Pilgrims said consider that the courts consider a quasi contract. The courts consider a quasi contract. Only the absence of an expressive agreement between the party. So you don't get to the obligation is there's an agreement but not the agreement is between tick-free and profile which was the operator therefore it was not between the plaintiff and his case or the plaintiff's predecessor and interest. And they they and we feel for the said and and this is the most frustrating for a contract will not be implied in law quote where none exists in fact then use that implications of the court before the implications that the state has intentionally waived its sovereign immunity and considered to be sued for damages for the contract it never entered. In fact with that we asked the court to consider that data general and institute rebuild control this case and that the court should dismiss plaintiff's immunity plaintiff's claims on grounds that governmental immunity bars employees of our contractual claims. And Mr. Krungle made come back thank you. Thank you. Thank you Your Honor
. Please the court ward Davis on behalf of AGI Associates the Apalee with me is Demetra Sourlis also from Bill Davis and that Judge Diaz I'll address your question first without going back and checking I'm not 100% sure but I'm quite confident that this was not an issue of one of the members of the LLC being a resident of North Carolina I've run into that issue before it's become my practice to check on that before filing a diversity action with an LLC all done so I'm confident not 100% but confident that that's not an issue in this case. You might have been a practice also to let that point understood. Under turns out to be different policy. Absolutely. Thank you Your Honor. As Justice Martin pointed out in a concurrent in the recent Bionum opinion of the North Carolina Supreme Court these are case by case analyses but cause governmental immunity tends to be so circumstance specific the court avoids applying categorical rules and this is a perfect example of a case where that's appropriate. It's a unique case with unique facts. The City of Hickory ultimately stood in the shoes of the FBO that was operating the City of Hickory Airport. They have conceded that that was clearly a proprietary function. The City began collecting rents the City began selling fuel. It has now been for a period of time in a clearly proprietary function. I think we understand the facts
. I think that's great what you say but data general. I would you have that's exactly where I was going Your Honor. We have data general in series and guilt risk that are sort of a line of cases that cite one another and the way I would distinguish those three cases is one the way Judge Voorhees did in the district court is that each of those cases was a contract analysis granted data general has a proprietary function issue and I'll address that in a moment. But guilt risk it was an issue of attorney's fees for a public nuisance suit. There is no analysis in guilt risk about proprietary function. The same is true within series. With data general does go into a very short quick at the end of the opinion it just makes a statement that by undertaking these activities without really defining what that means data general or excuse me the municipality within a proprietary function. What is so distinguished about data general from this case is data general still only involved one lease and what the court seemed to be saying was that by entering one lease that's a proprietary function but the courts the facts of that case and the analysis are still limited to one lease. It was not a case as we have here where it is clearly a long ongoing proprietary function. It's not limited to just one contract. It might be the best you can do but we still have this decision where they in effect allowed governmental immunity to be asserted against equitable remedies in a proprietary situation. Granted it is a court of appeals and not the North John Spring Court
. It's hard to get around. Understood, Your Honor. We've known that reality since we read data general. I would encourage the court and it had a significant effect on the district court's opinion but if we look at the more recent 2012 case of Williams the estate of Williams case. Judge Voorhees quoted the case. The Williams court quotes the Grimesland case and your Honor have seen the quotes but these are the quotes in the 2012 case. One of the most recent Supreme Court decisions on governmental immunity is that government immunity covers only the acts of imminence penalty and the Williams court even added emphasis on the word only. They took the quote, put it in a pally and bolded it. Governmental immunity covers only the acts of imminence penalty or municipal corporation committed pursuant to its government functions and then goes on to cite the Grimesland case which is an older case but it's now here cited in a 2012 case in saying that when a municipal corporation undertakes functions beyond its government and police powers and engages in business in order to render a public service for the benefit of the community for a profit and here's the key. It becomes subject to liability for contract and tort in case of private corporate as in case of private corporations. And your Honor asked the question, why does imminence penalty need protection against unjust enrichment? In this case is a great example of why they shouldn't get protection against unjust enrichment when they are engaging in an ongoing proprietary function because here they're collecting rents just as profile was doing before. Clearly profile is a private FBO
. It's running the airport. It's collecting rents. Bankruptcy's file, City of Hickory decides to step in and run the airport instead of bringing in a different FBO. They start collecting rents and don't distribute them. What is the remedy? But in data general didn't want to be leasing. They were leasing computer equipment. If leasing it after the contract expired or something like that. They were leasing computer equipment. And the court let them get an equitable remedy. We let them bring an equitable remedy. Correct, Your Honor. One of the other distinguishing characteristics of data general and M-series and the Gilchrist case and each of those courts spent a good bit of time talking about this is the plaintiff had failed to satisfy those statutory requirements for entering a contract with a municipality and seemed to find some fault with the plaintiff for doing that. In the Gilchrist case, it talked about the fact that this lawyer had a big deal about filing over 100 public nuisance claims. And the court essentially said, you know how you're going to recover your attorney's properties, you should have done it the correct way. In this case, we don't have that. There's no allegation and there's just no facts. It's not the case that someone failed to follow a statutory procedure to enter a contract. You never had the opportunity to do that. Never had the opportunity. I don't think that statute applies, Your Honor. I mean, it- Why don't you have a claim for conversion? We've talked about and thought about that and that's a good question. I just, as we were evaluating what claims to file, I'm just not sure a conversion fit because the city is collecting rents pursuant to a bankruptcy order. So to claim that they're collecting those rents unlawfully. Unlawfully, exactly
. In the Gilchrist case, it talked about the fact that this lawyer had a big deal about filing over 100 public nuisance claims. And the court essentially said, you know how you're going to recover your attorney's properties, you should have done it the correct way. In this case, we don't have that. There's no allegation and there's just no facts. It's not the case that someone failed to follow a statutory procedure to enter a contract. You never had the opportunity to do that. Never had the opportunity. I don't think that statute applies, Your Honor. I mean, it- Why don't you have a claim for conversion? We've talked about and thought about that and that's a good question. I just, as we were evaluating what claims to file, I'm just not sure a conversion fit because the city is collecting rents pursuant to a bankruptcy order. So to claim that they're collecting those rents unlawfully. Unlawfully, exactly. I mean, we could have tried to bootstrap it into the fact that you've collected them, but then you're supposed to pay them over, but the bankruptcy order, and this is one reason Judge Vwery has dismissed our accounting claim. The bankruptcy order just said you've got to account for them. What about the Viking Utilities court case in March of this year in the quarter of a deal? You look at that. I haven't- not look at that, Your Honor. I don't believe. I think it's entirely consistent with your approach to Williams as you just described it. I'm glad to hear that. That's right. That's right. So thank you for pointing that out, Your Honor. But just in conclusion, again, and I don't want to keep repeating myself, but here we have a municipality who is collecting funds and is keeping those funds. There are other lawsuits out there with similar claims when Judge Whitley ultimately dismissed the bankruptcy
. I mean, we could have tried to bootstrap it into the fact that you've collected them, but then you're supposed to pay them over, but the bankruptcy order, and this is one reason Judge Vwery has dismissed our accounting claim. The bankruptcy order just said you've got to account for them. What about the Viking Utilities court case in March of this year in the quarter of a deal? You look at that. I haven't- not look at that, Your Honor. I don't believe. I think it's entirely consistent with your approach to Williams as you just described it. I'm glad to hear that. That's right. That's right. So thank you for pointing that out, Your Honor. But just in conclusion, again, and I don't want to keep repeating myself, but here we have a municipality who is collecting funds and is keeping those funds. There are other lawsuits out there with similar claims when Judge Whitley ultimately dismissed the bankruptcy. He kind of acknowledged them. I know I'm creating a problem that I don't have any other options. And so you have the city, you have multiple parties who were creditors in the bankruptcy coming and so- wait a minute. Now that you're collecting these funds and profile is not, we're entitled to them. And we're running into a government immunity defense where it is fundamentally clear that this city has stepped into a proprietary function. And we would argue that data general and Gilchrist and M-Series are distinguishable because of the statutory requirement issue. And because what I believe, what the Gilchrist court and what M-Series and data general courts are concerned about most is when you're in a contract theory. And so you can take any of those plaintiffs. They've alleged the contract that they failed to satisfy statutory requirements. That contract claim fails and they're able to just in-run around the statutory requirements and file an unjust enrichment claim. And with that not being the case here, we would ask the court to find that under these facts, in this unique case, that data general doesn't apply and that it's the reasoning of the Williams case and the Grimes-Lung case that says that when a municipality undertakes one of these proprietary functions, they ought to expect to be sued. It's just part of the reality
. He kind of acknowledged them. I know I'm creating a problem that I don't have any other options. And so you have the city, you have multiple parties who were creditors in the bankruptcy coming and so- wait a minute. Now that you're collecting these funds and profile is not, we're entitled to them. And we're running into a government immunity defense where it is fundamentally clear that this city has stepped into a proprietary function. And we would argue that data general and Gilchrist and M-Series are distinguishable because of the statutory requirement issue. And because what I believe, what the Gilchrist court and what M-Series and data general courts are concerned about most is when you're in a contract theory. And so you can take any of those plaintiffs. They've alleged the contract that they failed to satisfy statutory requirements. That contract claim fails and they're able to just in-run around the statutory requirements and file an unjust enrichment claim. And with that not being the case here, we would ask the court to find that under these facts, in this unique case, that data general doesn't apply and that it's the reasoning of the Williams case and the Grimes-Lung case that says that when a municipality undertakes one of these proprietary functions, they ought to expect to be sued. It's just part of the reality. And in a situation like this, where this case comes up under another state, we could certify the question to the highest court is what the law is in North Carolina. But North Carolina is the only state in our circuit that doesn't permit us to certify a question to them when we have a question of state law. It's unfortunate and I wish it were different. It is unfortunate because it's such a nice, tight, narrow issue that would be interesting to see how they would rule. I don't want to let us. You might have to take our guess. That's right. Thank you, Your Honor. Thank you. Mr. Crone. Good morning, Your Honor
. And in a situation like this, where this case comes up under another state, we could certify the question to the highest court is what the law is in North Carolina. But North Carolina is the only state in our circuit that doesn't permit us to certify a question to them when we have a question of state law. It's unfortunate and I wish it were different. It is unfortunate because it's such a nice, tight, narrow issue that would be interesting to see how they would rule. I don't want to let us. You might have to take our guess. That's right. Thank you, Your Honor. Thank you. Mr. Crone. Good morning, Your Honor. I'm John Crone and that's my privilege to be here representing the City of Hickory and my capacity of City Attorney in my honor to be an arcing for you today. Judge Davis mentioned the Viking case and I don't have time in my five minutes to delve into it as extensively as I'd like to but I would like to point out that interestingly the Viking case did not cite or mention data general or the MCRI's rebuild case. And we feel like the data general case controls in this particular case before the court also Viking from is it from the Supreme Court or the court of the Vikings is a court of appeals case, Your Honor. Publish. And it recently that we stumbled across on our way to Anthony or almost. That's why you're honesty. Viking is a breach of contract case. It has some quays up contract claims for him but the facts and the allegations are dissimilar from the case at bar and I would contend among other things that the data general case is the controlling case that we should be looking at and analyzing the pleadings in this case. And in particular and my partner has gone over this but you've got in contract cases if you go through the pre-album process as the legislature says you waive your governmental immunity and there's a good reason to do that. And the reason for that and for allowing insurance to be purchased in the court cases is we're looking at tax payers here who don't want surprises. Tax payers don't want contracts to be entered into by municipality without being approved by some mechanism to where the public knows their money is safe. But in this case, AGI never had the opportunity to negotiate a contract
. I'm John Crone and that's my privilege to be here representing the City of Hickory and my capacity of City Attorney in my honor to be an arcing for you today. Judge Davis mentioned the Viking case and I don't have time in my five minutes to delve into it as extensively as I'd like to but I would like to point out that interestingly the Viking case did not cite or mention data general or the MCRI's rebuild case. And we feel like the data general case controls in this particular case before the court also Viking from is it from the Supreme Court or the court of the Vikings is a court of appeals case, Your Honor. Publish. And it recently that we stumbled across on our way to Anthony or almost. That's why you're honesty. Viking is a breach of contract case. It has some quays up contract claims for him but the facts and the allegations are dissimilar from the case at bar and I would contend among other things that the data general case is the controlling case that we should be looking at and analyzing the pleadings in this case. And in particular and my partner has gone over this but you've got in contract cases if you go through the pre-album process as the legislature says you waive your governmental immunity and there's a good reason to do that. And the reason for that and for allowing insurance to be purchased in the court cases is we're looking at tax payers here who don't want surprises. Tax payers don't want contracts to be entered into by municipality without being approved by some mechanism to where the public knows their money is safe. But in this case, AGI never had the opportunity to negotiate a contract. The situation was hoisted on them by the perverse. So I just don't know that data general is a good fit. That's a very good point. I'd like to talk your answer to that, Your Honor, and that. Profile was the original party to the contract. AGI came along later and AGI's function in this is to assume or take over an indebtedness that Profile had with the lender. So AGI has never dealt with the city. The data general case test specifically and I think this is important. To discuss is that is that parties dealing with governmental organizations are presumed to know the limitations of authority of the governmental agency and the public policy mandates the governmental immunity bar. Quays are contract claims such as unjust enrichment. That would be our argument. So AGI, but that's not really responsive to judge the I's as question
. The situation was hoisted on them by the perverse. So I just don't know that data general is a good fit. That's a very good point. I'd like to talk your answer to that, Your Honor, and that. Profile was the original party to the contract. AGI came along later and AGI's function in this is to assume or take over an indebtedness that Profile had with the lender. So AGI has never dealt with the city. The data general case test specifically and I think this is important. To discuss is that is that parties dealing with governmental organizations are presumed to know the limitations of authority of the governmental agency and the public policy mandates the governmental immunity bar. Quays are contract claims such as unjust enrichment. That would be our argument. So AGI, but that's not really responsive to judge the I's as question. Well I think it goes to AGI's position as far as it never dealt with the city of Hickory. Profile is the entity that dealt with city. That doesn't help you, I don't think. Because in data general, there are expectations of front. These parties, the city, the entity there was negotiating with a governmental entity. They should have known what the requirements were and they were penalized for not knowing that, but you don't have that in your case. Well I do think the facts are dissimilar. I think in our case at bar, our dealings were rough on us a consistent agreement. Of course we never dealt with the lending issue. The city I was a stranger to that negotiation. They were a stranger to that negotiation. Why should they be forced to burden as if they were face to face negotiators with the city? I'm having difficulty
. Well I think it goes to AGI's position as far as it never dealt with the city of Hickory. Profile is the entity that dealt with city. That doesn't help you, I don't think. Because in data general, there are expectations of front. These parties, the city, the entity there was negotiating with a governmental entity. They should have known what the requirements were and they were penalized for not knowing that, but you don't have that in your case. Well I do think the facts are dissimilar. I think in our case at bar, our dealings were rough on us a consistent agreement. Of course we never dealt with the lending issue. The city I was a stranger to that negotiation. They were a stranger to that negotiation. Why should they be forced to burden as if they were face to face negotiators with the city? I'm having difficulty. Well we would still consent that profile when they initially contracted with city of Hickory. That contract went through the the bedding process. The point is that all third parties dealing with profile, lenders, secured parties, unsecured parties, all those potential parties are essentially burdened with profiles, failures or deficiencies or. Yeah, but I don't think under the data general case, I don't think we get that far. I mean the issue here, that it didn't deal with that situation. That's exactly right. But that, a general, has to do with a contract between two parties upfront, the party that it was dealing with that brought the client, which is not this case. That's correct. We'd also like to point the court's attention to the, again, to the Whitfield case that says a contract will not be implied in law where none exists in fact. And then use the implication to support the further implication that the state has intentionally waved to sovereign immunity and consented to be sued for damages. Again, the issue here is whether sovereign immunity should apply to quasi-contracts unjust enrichment type claims. You've got it clearly rules by the legislature for express contracts, written contracts
. Well we would still consent that profile when they initially contracted with city of Hickory. That contract went through the the bedding process. The point is that all third parties dealing with profile, lenders, secured parties, unsecured parties, all those potential parties are essentially burdened with profiles, failures or deficiencies or. Yeah, but I don't think under the data general case, I don't think we get that far. I mean the issue here, that it didn't deal with that situation. That's exactly right. But that, a general, has to do with a contract between two parties upfront, the party that it was dealing with that brought the client, which is not this case. That's correct. We'd also like to point the court's attention to the, again, to the Whitfield case that says a contract will not be implied in law where none exists in fact. And then use the implication to support the further implication that the state has intentionally waved to sovereign immunity and consented to be sued for damages. Again, the issue here is whether sovereign immunity should apply to quasi-contracts unjust enrichment type claims. You've got it clearly rules by the legislature for express contracts, written contracts. You have the city's ability to purchase insurance for torts. And this comes somewhere in the middle. And the public policy rationale and reasoning behind data general was to, again, among other things, protect taxpayers from the uncertainty of what could happen in a quasi-contractor contract that goes wrong, which is exactly what happened in this contract. Okay, because you're out of time. Thank you. I was enjoying the argument, but we got all those. We got all the half a minute, 36 left. Really? Sorry. Okay. Thank you, Aaron.
If you please the court, I name it Sam Gorham and I have for me John Crone. We represent the city of Hickory and the Smiley. The issue is whether the district court aired and denying a motion to dismiss a lack of subject matter jurisdiction based on the wave of governmental community. Mr. Gorham and while we're on the subject of subject matter jurisdiction and this may be a question that are posed to Mr. Davis but I recall that you did not concede that diversity jurisdiction has been established in this case in your answer and I'm wondering whether that was because the plaintiff in this case is a limited liability company and under the rules as I understand it's not the state of organization that matters. This is a Delaware limited liability company but the citizenship and residence of its members and I'm wondering whether any of those members may be North Carolina citizens in which case there is no diversity jurisdiction. You know the answer to that? I don't think the word won't draw. I don't think it works but I'm not positive. I'll just have to stay up all night. Is there any reason why you didn't concede? No, I don't think so. That has not been an impediment and I'm proceeding in this case. Okay. Well, the Davis I want to think about that and if you have an answer you can let us know when you get up here. I don't think that was the issue then. When on alleged contract is an issue the governmental immunity borrowers, quasar contractual class against the municipality arising from the alleged contract even if the contract concerns a proprietary function and it will standard a review in this case is the NOVO. There were no factual findings and they caught a load on another district court. The North Carolina courts clearly say that the starting place and resolving the governmental immunity issues is to look to see what the legislature has said about questions. The legislature in North Carolina sets the public policy following the separation of powers clause in the North Carolina legislature that is legislated executive and judicial branches on Article 1, Section 6. The tort case of the state of Williams and the tort case of Stephen versus Newburn which are not disposited to our issues but they do give some background for now that judicial or rather governmental immunity has been part of North Carolina law since 1889. Now since then the court adopted it and the legislature have passed the statute based on the sovereign immunity. Now sovereign immunity has the public policy in North Carolina subject to exceptions. The Williams still in cases again those the tort cases recognize that further modification or repeal of the common law doctrine must come from the legislature again the legislature courts should not abrogate doctrine that has been expressed by the legislature. Why does governmental immunity matter? For the incentives passed as we all know it protected the king who could do no wrong. If they get protected the sanctity of the municipalities and counties budget which under North Carolina law must be balanced under North Carolina statute and municipalities they purchase liability but may purchase liability insurance to ensure again to what I think we all have for the standards. On the contract side in North Carolina a contract for capital projects or grant projects has to be valid as passed a pre audit requirement. Start out in detail and the local government budget and fiscal control act which was enacted by the National Legislation for the protection tax payers and the statute requires a budget ordinance that includes an appropriation authorizing the obligation. It also requires funds to pay the obligation and a written contract within the tax pre audit certificate under data general to comply with the above void the contract or agreement. So, out of general hand you some of that, municipalities have no way to protect themselves from quasi contract claim. Whereas as to a contract the pre audit requirement and the statute that I just mentioned, pre audit grant requirements offer protection from court claim in capital projects and grant projects anyone can read the local government budget and fiscal control act. Let me ask you this. If the claim against the government is unjust in Richmond what protection do they need against that kind of claim? Well, Judge Borey's was saying I think that we've got a tribal issue under unjust enrichment. But that's not my question. My question is generally speaking as a matter of policy and philosophy. If the charge against the municipality or the government is unjust in Richmond you got something and a benefit of something to the detriment of a private party. What is what policy or what is it that the government is being protected from through the use of our governmental immunity? Well of course the government is not going to be a party to the contract in that situation. That's right, that's a gift. Let's say that's a gift. And so it gets back to the legislature I think. It's the legislature want to carve out an exception. They ask those if they're willing to sue a municipality for unjust enrichment. At these cases that we're talking about, there's a contract and no, there's not a contract and that a general and an empty series rebuild case say no contract then you don't get through the issue of unjust enrichment. And one of the problems is that if you got a court you can go by insurance and if you've got a written contract on agreement you look at the statute that I just talked about and that's available to anybody that's a look at I found it on my cell phone the last night and my motel room. But what is there to protect a municipality from unjust enrichment? Go engage in a proprietary function? I guess. We'll accept that out of general and out of general and empty series rebuilds so it's distinguished. And the granted the cases, the often cases that won't slip in and say if the government wants to engage in a proprietary function then you've conceded the governmental immunity. But that's not what that of general and empty series rebuild say that they don't go that far. They look at contract, no contract and then you don't get through the unjust enrichment. I'm just trying to figure out data general what the basis for that opinion was and I don't know anything in what the government is being protected from. Data general says that leasing a computer. Uh-huh for me. Yes sir. But it's said that without a valid contract the trial for lack personal jurisdiction with the claim for for if you don't have a valid contract then you don't get to quantum merit and those are the applicable claims. And so what other what judge worries I think was saying was golden. He found no contract at all. I think all is worth nothing. And but then he said we need to look to see whether it's for proprietary or governmental and function. Well the trouble you don't dispute that it's proprietary but we admit that. Right. I mean we've got roofe selling fuel while at the airport. So what is there that your client needs protection from when it behaves like an ordinary business corporation making money or trying to and the claim is for unjust enrichment as the chief judge just described it. What do you what do you what do you want to need protection from? They cut for unjust about and stand you correctly. We need protection from these multitudes. How do you protect your staff from unjust enrichment? I mean they are taken. You need in government or function. That's how you protect it. But but but if the North Carolina law seems to say and it used to be the government and the government function definition was very broad and it does seem to be going the other way. And in the cases that say the law or we looked at it and said we're selling fuel at the airport is probably proprietary. It's not governmental. Now running operating the runways which always in the city responsibility or running the ILS or something like that. Like the government. But selling soda pop and and jet fuel are not. But still though we we think that the legislature needs to step in. Not the courts and if there's going to be a wide open area that's the amount of public policy that the courts don't need to get involved in and data general and institute rebuild recognize that public policy and then get into that. Now a couple other points. Chief Judge Mitchell in a case called Quickfield versus Pilgrims said consider that the courts consider a quasi contract. The courts consider a quasi contract. Only the absence of an expressive agreement between the party. So you don't get to the obligation is there's an agreement but not the agreement is between tick-free and profile which was the operator therefore it was not between the plaintiff and his case or the plaintiff's predecessor and interest. And they they and we feel for the said and and this is the most frustrating for a contract will not be implied in law quote where none exists in fact then use that implications of the court before the implications that the state has intentionally waived its sovereign immunity and considered to be sued for damages for the contract it never entered. In fact with that we asked the court to consider that data general and institute rebuild control this case and that the court should dismiss plaintiff's immunity plaintiff's claims on grounds that governmental immunity bars employees of our contractual claims. And Mr. Krungle made come back thank you. Thank you. Thank you Your Honor. Please the court ward Davis on behalf of AGI Associates the Apalee with me is Demetra Sourlis also from Bill Davis and that Judge Diaz I'll address your question first without going back and checking I'm not 100% sure but I'm quite confident that this was not an issue of one of the members of the LLC being a resident of North Carolina I've run into that issue before it's become my practice to check on that before filing a diversity action with an LLC all done so I'm confident not 100% but confident that that's not an issue in this case. You might have been a practice also to let that point understood. Under turns out to be different policy. Absolutely. Thank you Your Honor. As Justice Martin pointed out in a concurrent in the recent Bionum opinion of the North Carolina Supreme Court these are case by case analyses but cause governmental immunity tends to be so circumstance specific the court avoids applying categorical rules and this is a perfect example of a case where that's appropriate. It's a unique case with unique facts. The City of Hickory ultimately stood in the shoes of the FBO that was operating the City of Hickory Airport. They have conceded that that was clearly a proprietary function. The City began collecting rents the City began selling fuel. It has now been for a period of time in a clearly proprietary function. I think we understand the facts. I think that's great what you say but data general. I would you have that's exactly where I was going Your Honor. We have data general in series and guilt risk that are sort of a line of cases that cite one another and the way I would distinguish those three cases is one the way Judge Voorhees did in the district court is that each of those cases was a contract analysis granted data general has a proprietary function issue and I'll address that in a moment. But guilt risk it was an issue of attorney's fees for a public nuisance suit. There is no analysis in guilt risk about proprietary function. The same is true within series. With data general does go into a very short quick at the end of the opinion it just makes a statement that by undertaking these activities without really defining what that means data general or excuse me the municipality within a proprietary function. What is so distinguished about data general from this case is data general still only involved one lease and what the court seemed to be saying was that by entering one lease that's a proprietary function but the courts the facts of that case and the analysis are still limited to one lease. It was not a case as we have here where it is clearly a long ongoing proprietary function. It's not limited to just one contract. It might be the best you can do but we still have this decision where they in effect allowed governmental immunity to be asserted against equitable remedies in a proprietary situation. Granted it is a court of appeals and not the North John Spring Court. It's hard to get around. Understood, Your Honor. We've known that reality since we read data general. I would encourage the court and it had a significant effect on the district court's opinion but if we look at the more recent 2012 case of Williams the estate of Williams case. Judge Voorhees quoted the case. The Williams court quotes the Grimesland case and your Honor have seen the quotes but these are the quotes in the 2012 case. One of the most recent Supreme Court decisions on governmental immunity is that government immunity covers only the acts of imminence penalty and the Williams court even added emphasis on the word only. They took the quote, put it in a pally and bolded it. Governmental immunity covers only the acts of imminence penalty or municipal corporation committed pursuant to its government functions and then goes on to cite the Grimesland case which is an older case but it's now here cited in a 2012 case in saying that when a municipal corporation undertakes functions beyond its government and police powers and engages in business in order to render a public service for the benefit of the community for a profit and here's the key. It becomes subject to liability for contract and tort in case of private corporate as in case of private corporations. And your Honor asked the question, why does imminence penalty need protection against unjust enrichment? In this case is a great example of why they shouldn't get protection against unjust enrichment when they are engaging in an ongoing proprietary function because here they're collecting rents just as profile was doing before. Clearly profile is a private FBO. It's running the airport. It's collecting rents. Bankruptcy's file, City of Hickory decides to step in and run the airport instead of bringing in a different FBO. They start collecting rents and don't distribute them. What is the remedy? But in data general didn't want to be leasing. They were leasing computer equipment. If leasing it after the contract expired or something like that. They were leasing computer equipment. And the court let them get an equitable remedy. We let them bring an equitable remedy. Correct, Your Honor. One of the other distinguishing characteristics of data general and M-series and the Gilchrist case and each of those courts spent a good bit of time talking about this is the plaintiff had failed to satisfy those statutory requirements for entering a contract with a municipality and seemed to find some fault with the plaintiff for doing that. In the Gilchrist case, it talked about the fact that this lawyer had a big deal about filing over 100 public nuisance claims. And the court essentially said, you know how you're going to recover your attorney's properties, you should have done it the correct way. In this case, we don't have that. There's no allegation and there's just no facts. It's not the case that someone failed to follow a statutory procedure to enter a contract. You never had the opportunity to do that. Never had the opportunity. I don't think that statute applies, Your Honor. I mean, it- Why don't you have a claim for conversion? We've talked about and thought about that and that's a good question. I just, as we were evaluating what claims to file, I'm just not sure a conversion fit because the city is collecting rents pursuant to a bankruptcy order. So to claim that they're collecting those rents unlawfully. Unlawfully, exactly. I mean, we could have tried to bootstrap it into the fact that you've collected them, but then you're supposed to pay them over, but the bankruptcy order, and this is one reason Judge Vwery has dismissed our accounting claim. The bankruptcy order just said you've got to account for them. What about the Viking Utilities court case in March of this year in the quarter of a deal? You look at that. I haven't- not look at that, Your Honor. I don't believe. I think it's entirely consistent with your approach to Williams as you just described it. I'm glad to hear that. That's right. That's right. So thank you for pointing that out, Your Honor. But just in conclusion, again, and I don't want to keep repeating myself, but here we have a municipality who is collecting funds and is keeping those funds. There are other lawsuits out there with similar claims when Judge Whitley ultimately dismissed the bankruptcy. He kind of acknowledged them. I know I'm creating a problem that I don't have any other options. And so you have the city, you have multiple parties who were creditors in the bankruptcy coming and so- wait a minute. Now that you're collecting these funds and profile is not, we're entitled to them. And we're running into a government immunity defense where it is fundamentally clear that this city has stepped into a proprietary function. And we would argue that data general and Gilchrist and M-Series are distinguishable because of the statutory requirement issue. And because what I believe, what the Gilchrist court and what M-Series and data general courts are concerned about most is when you're in a contract theory. And so you can take any of those plaintiffs. They've alleged the contract that they failed to satisfy statutory requirements. That contract claim fails and they're able to just in-run around the statutory requirements and file an unjust enrichment claim. And with that not being the case here, we would ask the court to find that under these facts, in this unique case, that data general doesn't apply and that it's the reasoning of the Williams case and the Grimes-Lung case that says that when a municipality undertakes one of these proprietary functions, they ought to expect to be sued. It's just part of the reality. And in a situation like this, where this case comes up under another state, we could certify the question to the highest court is what the law is in North Carolina. But North Carolina is the only state in our circuit that doesn't permit us to certify a question to them when we have a question of state law. It's unfortunate and I wish it were different. It is unfortunate because it's such a nice, tight, narrow issue that would be interesting to see how they would rule. I don't want to let us. You might have to take our guess. That's right. Thank you, Your Honor. Thank you. Mr. Crone. Good morning, Your Honor. I'm John Crone and that's my privilege to be here representing the City of Hickory and my capacity of City Attorney in my honor to be an arcing for you today. Judge Davis mentioned the Viking case and I don't have time in my five minutes to delve into it as extensively as I'd like to but I would like to point out that interestingly the Viking case did not cite or mention data general or the MCRI's rebuild case. And we feel like the data general case controls in this particular case before the court also Viking from is it from the Supreme Court or the court of the Vikings is a court of appeals case, Your Honor. Publish. And it recently that we stumbled across on our way to Anthony or almost. That's why you're honesty. Viking is a breach of contract case. It has some quays up contract claims for him but the facts and the allegations are dissimilar from the case at bar and I would contend among other things that the data general case is the controlling case that we should be looking at and analyzing the pleadings in this case. And in particular and my partner has gone over this but you've got in contract cases if you go through the pre-album process as the legislature says you waive your governmental immunity and there's a good reason to do that. And the reason for that and for allowing insurance to be purchased in the court cases is we're looking at tax payers here who don't want surprises. Tax payers don't want contracts to be entered into by municipality without being approved by some mechanism to where the public knows their money is safe. But in this case, AGI never had the opportunity to negotiate a contract. The situation was hoisted on them by the perverse. So I just don't know that data general is a good fit. That's a very good point. I'd like to talk your answer to that, Your Honor, and that. Profile was the original party to the contract. AGI came along later and AGI's function in this is to assume or take over an indebtedness that Profile had with the lender. So AGI has never dealt with the city. The data general case test specifically and I think this is important. To discuss is that is that parties dealing with governmental organizations are presumed to know the limitations of authority of the governmental agency and the public policy mandates the governmental immunity bar. Quays are contract claims such as unjust enrichment. That would be our argument. So AGI, but that's not really responsive to judge the I's as question. Well I think it goes to AGI's position as far as it never dealt with the city of Hickory. Profile is the entity that dealt with city. That doesn't help you, I don't think. Because in data general, there are expectations of front. These parties, the city, the entity there was negotiating with a governmental entity. They should have known what the requirements were and they were penalized for not knowing that, but you don't have that in your case. Well I do think the facts are dissimilar. I think in our case at bar, our dealings were rough on us a consistent agreement. Of course we never dealt with the lending issue. The city I was a stranger to that negotiation. They were a stranger to that negotiation. Why should they be forced to burden as if they were face to face negotiators with the city? I'm having difficulty. Well we would still consent that profile when they initially contracted with city of Hickory. That contract went through the the bedding process. The point is that all third parties dealing with profile, lenders, secured parties, unsecured parties, all those potential parties are essentially burdened with profiles, failures or deficiencies or. Yeah, but I don't think under the data general case, I don't think we get that far. I mean the issue here, that it didn't deal with that situation. That's exactly right. But that, a general, has to do with a contract between two parties upfront, the party that it was dealing with that brought the client, which is not this case. That's correct. We'd also like to point the court's attention to the, again, to the Whitfield case that says a contract will not be implied in law where none exists in fact. And then use the implication to support the further implication that the state has intentionally waved to sovereign immunity and consented to be sued for damages. Again, the issue here is whether sovereign immunity should apply to quasi-contracts unjust enrichment type claims. You've got it clearly rules by the legislature for express contracts, written contracts. You have the city's ability to purchase insurance for torts. And this comes somewhere in the middle. And the public policy rationale and reasoning behind data general was to, again, among other things, protect taxpayers from the uncertainty of what could happen in a quasi-contractor contract that goes wrong, which is exactly what happened in this contract. Okay, because you're out of time. Thank you. I was enjoying the argument, but we got all those. We got all the half a minute, 36 left. Really? Sorry. Okay. Thank you, Aaron