Atl. Coast Conference v. Univ. of Maryland

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NO. COA13-532 NORTH CAROLINA COURT OF APPEALS Filed: 19 November 2013 ATLANTIC COAST CONFERENCE Plaintiff, v. Guilford County No. 12 CVS 10736 UNIVERSITY OF MARYLAND, COLLEGE PARK; BOARD OF REGENTS, UNIVERSITY SYSTEM OF MARYLAND, Defendants. Appeal by defendants from order entered 25 February 2013 by Judge John O. Craig, III in Guilford County Superior Court. Heard in the Court of Appeals 26 September 2013. Smith Moore Leatherwood LLP, by D. Clark Smith, Jr. and Alexander L. Maultsby, and Van Laningham Duncan LLP, by Alan W. Duncan, for plaintiff-appellee. Hagan Davis Mangum Barrett & Langley PLLC, by Charles T. Hagan, III, J. Alexander S. Barrett, and Jason B. Buckland, for defendants-appellants. HUNTER, JR., Robert N., Judge. The University of Maryland, College Park ( the University of Maryland ) and the Board of Regents for the University System of Maryland ( the Board of Regents ) (collectively Defendants ) appeal from an order denying their motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the North -2Carolina Rules of Civil Procedure. Despite the interlocutory nature of their appeal, Defendants contend that this Court has jurisdiction pursuant to N.C. Gen. Stat. § 1-277(a) and (b) (2011). that should Furthermore, be dismissed Defendants because contend they are entitled immunity under the principle of comity. this Court has jurisdiction to hear the complaint to sovereign While we agree that Defendants appeal, we disagree with Defendant s comity argument and affirm the trial court s order. I. Factual & Procedural History On 26 November 2012, the Atlantic Coast Conference ( the ACC ) filed seeking a a complaint declaratory in Guilford judgment that County a Superior withdrawal Court payment provision in the ACC Constitution is a valid liquidated damages clause enforceable against Defendants. The facts as alleged in the complaint are as follows. The ACC is a North Carolina unincorporated nonprofit association with its principal place of business in Greensboro, North Carolina. the ACC s When the complaint in this action was filed, membership consisted of twelve universities located along the eastern seaboard. colleges and In addition to the University of Maryland, the ACC s membership included Boston -3College, Clemson University, Duke University, Florida State University, the Georgia Institute of Technology, the University of Miami, the University of North Carolina, North Carolina State University, the University of Virginia, Virginia Polytechnic Institute and State University, and Wake Forest University.1 With its principal place of business in College Park, Maryland, the University of Maryland is a public institution organized and existing under the laws of the State of Maryland. The University of Maryland has been a member of the ACC since the ACC s founding in 1953. The Board of Regents is the governing body for the University System of Maryland and takes official actions on behalf of its constituent universities. Each member Maryland, has according to Constitution authority Council ), of the agreed the terms grants over the comprised member institution. to ACC, including conduct of the the ACC to of the the business ACC complete University with each Constitution. responsibility Council chief the of executive other The for Presidents officer of of ACC and ( the each Each member, including the University of Maryland, has agreed to be bound by the vote of the Council. 1 Since the filing of the complaint, the University of Notre Dame, the University of Pittsburgh, and Syracuse University have joined the ACC. -4On 13 September 2011, in response to a growing concern that a member financial institution s damage to withdrawal the from conference, the the ACC could Council cause unanimously voted to amend the ACC Constitution to establish a mandatory withdrawal payment at one operating budget of the ACC.2 and one-quarter times the total Defendants representative on the Council proposed the factor used in the calculation and voted for the amendment. The ACC alleges that after the September 2011 vote, the potential financial damage that would result from institution s withdrawal substantially increased. a member In response, the Council voted in September 2012 to change the formula used to calculate the withdrawal payment from one and one-quarter to three times the total operating budget of the ACC.3 Defendants representative on the Council voted against this measure. Not long after the Council voted to increase the withdrawal payment, Defendants informed the ACC on 19 November 2012 their decision to withdraw from the ACC. of On the same day, 2 The annual operating budget of the ACC for the 2012 2013 year was $17,422,114. Multiplying this figure by the agreed upon factor of one and one-quarter makes the total withdrawal penalty $21,777,642.50. 3 Multiplying the annual operating budget of the ACC for the 2012 2013 year by the new factor of three increases the total withdrawal penalty to $52,266,342. -5Defendants decision held to a press withdraw conference from the publicly ACC and to announcing join the their Big Ten Conference. The ACC alleges that the University of Maryland s withdrawal from the ACC subjects them to a mandatory withdrawal payment in the amount of $52,266,342. that Defendants public statements The ACC further alleges and conduct since their decision to leave the ACC make it clear that Defendants do not intend to make the withdrawal payment. filed this action seeking a declaration Accordingly, the ACC that the withdrawal payment is a valid and enforceable liquidated damages sum and that the University of Maryland is obligated to pay the sum under the terms of its membership in the ACC. On 18 January 2013, Defendants filed a pre-answer motion to dismiss the ACC s complaint for lack of personal jurisdiction under Rule Procedure. 12(b)(2) of the Specifically, North Defendants Carolina asserted Rules of Civil that the trial court lacked jurisdiction based upon the sovereign immunity of the State of Maryland. 4 4 Following briefing and a hearing on the On the same day, Defendants filed their own complaint in the Circuit Court for Prince George s County, Maryland seeking, among other things, a declaration that the withdrawal payment is invalid and unenforceable. The Maryland action has been stayed pending resolution of the present action in North Carolina, an -6matter, the trial court denied Defendants motion on 25 February 2013. In so doing, the trial court refused to extend comity to Defendants claim of sovereign immunity in North Carolina s courts. On 4 March 2013, Defendants filed a notice of appeal in the trial court from the order denying their motion to dismiss. Thereafter, the ACC Defendants implied responded with its own motion to deny request for a stay of the trial court s proceedings and asked the trial court to retain jurisdiction.5 Following briefing and a hearing on the matter, the trial court granted the ACC s motion to retain jurisdiction on 28 March 2013 and ordered Defendants to file a responsive pleading. On 4 April 2013, Defendants filed a petition for the issuance of a writ of supersedeas in this Court asking us to stay the trial court s proceeding pending resolution of order that was recently affirmed by Maryland s highest court. 5 N.C. Gen. Stat. § 1-294 (2011) provides that [w]hen an appeal is perfected as provided by this Article it stays all further proceedings in the court below upon the judgment appealed from. It is the ACC s position that Defendants have appealed a nonappealable interlocutory order. Thus, their motion asked the trial court to proceed as if the appeal had not been taken. See, e.g., Velez v. Dick Keffer Pontiac GMC Truck, Inc., 144 N.C. App. 589, 591, 551 S.E.2d 873, 875 (2001) (stating that a litigant cannot deprive the trial court of jurisdiction to determine a case on its merits by appealing from a nonappealable interlocutory order of the trial court ). -7Defendants appeal. By order of this Court on 18 April 2013, Defendants was court petition below were allowed stayed pending and all our proceedings review of in the Defendants appeal. II. Jurisdiction At the outset, we must determine whether this Court has jurisdiction to hear Defendants contend Defendants claim Defendants that of the interlocutory trial sovereign court s immunity appealable as affecting a substantial right. Generally, there is no right interlocutory orders and judgments. of order is appeal. denying immediately We agree. immediate appeal from Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). interlocutory order is one made during the pendency An of an action, which does not dispose of the case, but leaves it for further action by the trial court determine the entire controversy. in order to settle and Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). Thus, because the trial court s denial of Defendants motion to dismiss did not dispose of the case below, Defendants appeal is interlocutory in nature. -8However, an interlocutory right. immediate order or appeal judgment is which available affects a from an substantial Sharpe v. Worland, 351 N.C. 159, 162, 522 S.E.2d 577, 579 (1999) (quotation marks omitted); accord N.C. Gen. Stat. §§ 1-277(a), 7A-27(d) (2011). Our Supreme Court has defined a substantial right as a legal right affecting or involving a matter of substance as distinguished from matters of form: a right materially affecting those interests which a [person] is entitled to have preserved and protected by law: a material right. Sharpe, 351 N.C. at 162, 522 S.E.2d at 579 (quotation marks and citation omitted) (alteration in original). Admittedly the substantial right test for appealability of interlocutory orders is more easily stated than applied. It is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context in entered. which the order from which developed the deprivation injury . judgment. is sought was Waters v. Qualified Personnel, Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 343 (1978). has appeal of . . right that if itself substantial not Essentially a two-part test must be right corrected substantial must before and potentially appeal from Goldston, 326 N.C. at 726, 392 S.E.2d at 736. the work final The -9burden is on the appellant to establish that a substantial right will be affected unless he is allowed immediate appeal from an interlocutory order. Embler v. Embler, 143 N.C. App. 162, 166, 545 S.E.2d 259, 262 (2001). Here, Defendants contend that their claim of sovereign immunity implicates a substantial right sufficient to warrant our immediate review. See generally Petroleum Traders Corp. v. State, 542, 190 N.C. App. 545, 660 S.E.2d 662, 664 (2008) ( [A]lthough Defendants appeal is interlocutory, it is properly before us because orders denying dispositive motions grounded on the defense of governmental immunity are immediately reviewable as affecting a substantial right. (quotation marks and citation omitted)); Kawai Am. Corp. v. Univ. of North Carolina at Chapel Hill, 152 N.C. App. 163, 165, 567 S.E.2d 215, 217 (2002) ( This Court has repeatedly held that appeals raising issues of governmental or sovereign immunity affect a substantial right sufficient to warrant immediate appellate review. marks and citation omitted)). Defendants cite (quotation Smith v. Phillips, 117 N.C. App. 378, 380, 451 S.E.2d 309, 311 (1994) for the proposition that when [a] motion is made on the grounds of sovereign and qualified immunity, . . . a denial is immediately appealable, because to force a defendant to proceed with a trial -10from which he should be immune would vitiate the doctrine of sovereign immunity. The ACC takes no exception to these decisions, but contends they are inapplicable here because they deal with sovereign sovereign in its immunity own defenses courts. Here, raised as by the the ACC actual correctly asserts, sovereign immunity will only be extended to the State of Maryland, if at all, through the rule of comity. Accordingly, the ACC contends that Defendants are not entitled to comity as of right and that the State of Maryland therefore has no substantial right to appeal based on sovereign immunity in North Carolina s courts. Upon consideration of this distinction, we cannot agree with the ACC s argument. The ability of a sister state to appeal an interlocutory order refusing immunity Court. request to is extend a comity question of to that first state s impression sovereign in this However, as to the rule of comity generally, our Supreme Court has said that comity is not a right of any State or country, but is permitted and accepted by all civilized communities from mutual interest and convenience, and from a sense of the inconvenience which would otherwise result, and from moral necessity to do justice in order that justice may be done in return. -11Cannaday v. Atl. Coast Line R.R. Co., 143 N.C. 439, 443 44, 55 S.E. 836, 838 (1906). Thus, while sister states have no legal right to comity, practical considerations warrant the conclusion that they relating should to have claims comity of decisions, sovereign particularly immunity, reviewed those by an appellate court on an interlocutory basis pursuant to N.C. Gen. Stat. §§ 1-277(a) and 7A-27(d). The same considerations that permit the State of North Carolina to assert sovereign immunity in our courts lead us to this conclusion. Specifically, the defense of sovereign immunity is a material right of the State. See, e.g., Guthrie v. N.C. State Ports Auth., 307 N.C. 522, 534, 299 S.E.2d 618, 625 (1983) ( It has long been established that an action cannot be maintained against the State of North Carolina or an agency thereof unless it consents to be sued or upon its waiver of immunity, and that this immunity is absolute and unqualified. state s sovereign (emphasis immunity removed)). claim Second, works injury denial of because a it potentially forces a party who would otherwise be immune from suit to continue in the litigation. Smith, 117 N.C. App. at 380, 451 S.E.2d at 311. Accordingly, because Defendants underlying interest in asserting sovereign immunity is substantial, we will, with the -12aim of fostering beneficial relationships with our sister states and doing justice in order that justice may be done in return, accept jurisdiction of Defendants appeal pursuant to the authority conferred by N.C. Gen. Stat. §§ 1-277(a) and 7A-27(d). Notably, Defendants also contend that their appeal to this Court is permitted by N.C. Gen. Stat. § 1-277(b), which provides that [a]ny interested party shall have the right of immediate appeal from an adverse ruling as to the jurisdiction of the court over the person or property of the defendant. because 12(b)(2) the order motion, being appealed Defendants contend from denied that this jurisdiction over this appeal under § 1-277(b). Thus, Defendants Court has See Data Gen. Corp. v. Cnty. of Durham, 143 N.C. App. 97, 99 100, 545 S.E.2d 243, 245 46 (2001) (holding that a denial of a 12(b)(2) motion for lack of personal jurisdiction on the ground of sovereign immunity is immediately appealable). However, while [a] motion to dismiss based on sovereign immunity is a jurisdictional issue[,] whether sovereign immunity is grounded in a lack of subject matter jurisdiction or personal jurisdiction is unsettled in North Carolina. M Series Rebuild, LLC v. Town of Mount Pleasant, ___ N.C. App. ___, ___, 730 S.E.2d 254, 257 (2012). As our Supreme Court has noted: -13A viable argument may be propounded that the State, as a party, is claiming by the doctrine of sovereign immunity that the particular forum of the State courts has no jurisdiction over the State s person. On the other hand, the doctrine may be characterized as an objection that the State courts have no jurisdiction to hear the particular subject matter of [the] claims against the State. Although the federal courts have tended to minimize the importance of the designation of a sovereign immunity defense as either a Rule 12(b)(1) motion regarding subject matter jurisdiction or a Rule 12(b)(2) motion regarding jurisdiction over the person, the distinction becomes crucial in North Carolina because [N.C. Gen. Stat. §] 1277(b) allows the immediate appeal of a denial of a Rule 12(b)(2) motion but not the immediate appeal of a denial of a Rule 12(b)(1) motion. Teachy v. Coble Dairies, Inc., 306 N.C. 324, 327 28, 293 S.E.2d 182, 184 (1982) (internal citations omitted). case law remains Thus, because our ambiguous as to the type of jurisdictional challenge presented by a sovereign immunity defense, the ability of a litigant raising the defense to immediately appeal may vary, to some extent, based on the manner in which the motion is styled. For example, in Data Gen. Corp., Durham County moved to dismiss the plaintiff s complaint on the grounds of sovereign immunity under court denied. Rules 12(b)(1) and 12(b)(2), which the 143 N.C. App. at 99, 545 S.E.2d at 245. trial On appeal, this Court held that Durham County s 12(b)(1) motion was -14not immediately sovereign appealable, immunity 12(b)(2) motion. but question on then the decided basis of the underlying Durham County s Id. at 99 100, 545 S.E.2d at 245 46. Here, we decline to determine this Court s jurisdiction on such formulaic grounds. Indeed, because we have already accepted substantial right jurisdiction pursuant to N.C. Gen. Stat. §§ 1-277(a) and 7A-27(d), we leave the type of jurisdictional presented by a sovereign immunity claim challenge for resolution by a future court and refrain from addressing Defendants contention that we have jurisdiction to hear their appeal pursuant to N.C. Gen. Stat. § 1-277(b). III. Standard of Review Having determined that this Court has jurisdiction to review Defendants appeal, we now consider, also as a matter of first impression, the appropriate standard of review to apply to the trial court s comity decision. Defendants contend that the question of whether a North Carolina court should extend comity is a question of law reviewable de novo. For the following reasons, we agree. As an initial matter, we note that the decision of whether to extend comity to a sister state s sovereign immunity request is solely determined by our state s common law. See Nevada v. -15Hall, 440 U.S. 410, 416 (1979) (holding that the United States Constitution does not entitle one state to sovereign immunity in a second state s courts and stating, a claim of immunity in another sovereign s courts . . . necessarily implicates the power and authority of a second sovereign; its source must be found either in an agreement . . . or in the voluntary decision of the second to respect the dignity of the first as a matter of comity ). Thus, the United States Constitution, particularly the Eleventh Amendment, leaves the decision of whether to extend comity in such situations to each state s individual discretion. Consistent with this view, our cases have emphasized the discretion that North Carolina enjoys in deciding whether the extension of comity is appropriate. See Cox v. Roach, ___ N.C. App. ___, ___, 723 S.E.2d 340, 345 (2012) (stating that North Carolina courts are not required to respect Virginia s claim of sovereign immunity, [but] may do so as (quotation marks and citation omitted)); a matter of comity see also In re Chase, 195 N.C. 143, 148, 141 S.E. 471, 473 (1928) ( While comity is a rule of practice and not a rule of law, it has substantial value in securing uniformity of decision; it does not command, but it persuades; it does not declare how a case shall be decided, but how with propriety it may be decided . . . [a]nd this is a -16matter which each state must decide itself. ); Sainz v. Sainz, 36 N.C. App. 744, 749, 245 S.E.2d 372, 375 (1978) ( Comity rests in the discretion of the enforcement is sought. ). courts of the state in which Based on these propositions, the ACC would have us review the trial court s decision under an abuse of discretion standard. However, while the decision as to whether comity should be extended in any given case has been assigned to the discretion of our courts as a general matter, it does not follow that our courts should leave each comity decision to the sound discretion of the trial judge. On the contrary, our courts have chosen to apply a proposition of law when deciding whether the extension of comity is appropriate in a given case, namely, that rights acquired under the laws or judgments of a sister state will be given force and effect public policy. in North Carolina if they are not against Boudreau v. Baughman, 322 N.C. 331, 341 42, 368 S.E.2d 849, 857 58 (1988); Davis v. Davis, 269 N.C. 120, 125, 152 S.E.2d 306, 310 (1967); Howard v. Howard, 200 N.C. 574, 579, 158 S.E. 101, 103 (1931); In re Chase, 195 N.C. at 148, 141 S.E. at 473; Cox, ___ N.C. App. at ___, 723 S.E.2d at 346. Such propositions of law are reviewed by this Court de novo. State v. Biber, 365 N.C. 162, 168, 712 S.E.2d 874, 878 (2011) -17( Conclusions of law are reviewed de novo and are subject to full review. ). Accordingly, we review the decision to deny comity in this case de novo. review, the court considers the matter trial court s Under a de novo anew and freely substitutes its own judgment for that of the lower tribunal. Craig v. New Hanover Cnty. Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 354 (2009) (quotation marks and citation omitted). Such a review will increase uniformity of decision across the state a goal consistent with fostering mutual respect for and extending courtesy to our sister states. IV. Analysis Having determined that this Court has jurisdiction to hear Defendants appeal and the appropriate standard of review, we now address whether the trial court erred in denying Defendants motion to dismiss on the grounds of sovereign immunity. Defendants contend that the extension of comity in this case would not violate public policy and that they are entitled to sovereign immunity under the laws of Maryland. We disagree and affirm the trial court s order. As previously stated, under the rule of comity in North Carolina, rights acquired under the laws or judgments of a sister state will be given force and effect in North Carolina if -18not against public policy.6 ___, 723 S.E.2d at 346. See, e.g., Cox, ___ N.C. App. at Moreover, [t]o render foreign law unenforceable as contrary to public policy, it must violate some prevalent conception of good morals or fundamental principle of natural justice or involve injustice to the people of the forum state. This public policy exception has generally been applied in cases such as those involving prohibited marriages, wagers, lotteries, racing, gaming, and the sale of liquor. Id. (quoting Boudreau, 322 N.C. at 342, 368 S.E.2d at 857 58) (quotation marks omitted). In the context of the sovereign immunity doctrine, our Supreme Court has used public policy to effectively waive the State s sovereign contract. immunity in causes of action grounded in Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423 24 (1976). In making this decision, the Smith Court was moved by the following public policy considerations: 6 The rule and its rationale were reflected ably in the words of Chief Justice Taney in Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519, 590 (1839): The intimate union of these states, as members of the same great political family; the deep and vital interests which bind them so closely together; should lead us, in the absence of proof to the contrary, to presume a greater degree of comity, and friendship, and kindness towards one another, than we should be authorized to presume between foreign nations. And when (as without doubt must occasionally happen) the interest or policy of any state requires it to restrict the rule, it has but to declare its will, and the legal presumption is at once at an end. -19(1) To deny the party who has performed his obligation under a contract the right to sue the state when it defaults is to take his property without compensation and thus to deny him due process; (2) To hold that the state may arbitrarily avoid its obligation under a contract after having induced the other party to change his position or to expend time and money in the performance of his obligations, or in preparing to perform them, would be judicial sanction of the highest type of governmental tyranny; (3) To attribute to the General Assembly the intent to retain to the state the right, should expedience seem to make it desirable, to breach its obligation at the expense of its citizens imputes to that body bad faith and shoddiness foreign to a democratic government; (4) A citizen s petition to the legislature for relief from the state s breach of contract is an unsatisfactory and frequently a totally inadequate remedy for an injured party; and (5) The courts are a proper forum in which claims against the state may be presented and decided upon known principles. Id. at 320, 222 S.E.2d at 423. Accordingly, public policy is violated in North Carolina when the State is allowed to assert sovereign immunity as a defense to causes of action based on contract. It would seem plain, then, that because the ACC is seeking a declaration as to the parties rights and obligations under the terms of the ACC Constitution,7 it would violate public 7 The ACC Constitution was alleged in the ACC s complaint to be a contract by and among the member institutions, pursuant to which the members have agreed to conduct the business affairs of the ACC. -20policy to immunity. extend comity to Defendants claim of sovereign To this line of reasoning, Defendants raise three objections that we address in turn. First, Defendants contend that Boudreau limits the public policy exception to matters of marriages, family, and morals. See Boudreau, 322 N.C. at 342, 368 S.E.2d at 858 ( This public policy exception has generally been applied in cases such as those involving prohibited marriages, wagers, lotteries, racing, gaming, and the sale of liquor. ). However, as the language of Boudreau makes clear, the examples provided therein are nonexclusive and merely represent exception as a general matter. what has qualified under the Moreover, other language in Boudreau is consistent with the policy considerations at issue in Smith. Compare id. at 342, 368 S.E.2d at 857 58 ( To render foreign law unenforceable as contrary to public policy, it must violate some prevalent conception of good morals or fundamental principle of natural justice or involve injustice to the people of the forum state. (emphasis added)), with Smith, 289 N.C. at 320, 222 S.E.2d at 423 ( To hold that the state may arbitrarily avoid its obligation under a contract . . . would be judicial sanction of the highest type of governmental tyranny. ). Thus, the language of Boudreau explicitly provides that any injustice -21to the people of the forum state implicates the public policy exception, not merely matters of marriages, family, and morals. Here, Defendants are attempting to immunize themselves from a determination of contract the with their ACC a responsibilities North Carolina under an entity. alleged Under the rationale of Smith, such an action violates public policy. Second, Defendants proposition that immunity and Carolina to contend North are residents to in that Carolina dismiss North Cox courts an for the extend sovereign brought action Carolina stands by Courts North against the educational institutions of sister states which enjoy sovereign immunity in the courts of those states. extended comity to the University of In Cox, this Court Virginia s claim of sovereign immunity and affirmed the trial court s decision to grant the University s motion to dismiss. Cox, ___ N.C. App. at ___, 723 S.E.2d at 346 47. However, it does not follow that because we decided to extend comity to the University of Virginia in Cox we must, ipso facto, extend sovereign immunity to all the educational institutions of our sister states irrespective of the attendant circumstances. Cox is distinguishable from the present case because it dealt with tort claims being asserted against the -22University of Virginia, not a cause of action on a contract. See id. at ___, 723 S.E.2d at 342; see also Kawai, 152 N.C. App. at 166, 567 S.E.2d agencies and its at 217 officers ( Suits for against alleged the tortious State, acts its can be maintained only to the extent authorized by the Tort Claims Act, and that Act authorizes recovery only for negligent torts. Intentional torts committed by agents and officers of the State are not compensable under the Tort Claims Act. (quoting Wojsko v. State, 47 N.C. App. 605, 610, 267 S.E.2d 708, 711 (1980)). Thus, at least with respect to torts not covered by the Torts Claims Act, the state is claiming sovereign immunity. entitled to defend tort suits by Such a defense does not contravene public policy in North Carolina. Thus, this Court properly extended comity to the University of Virginia in Cox. Here, however, extending comity to Defendants in a cause of action based on an alleged contract would violate the clear public policy articulated principles that we in Smith. applied in For these Cox lead reasons, us to the the same opposite conclusion here comity will not be extended to allow Defendants to escape a determination as to their rights and obligations under an alleged contract. Third, Defendants contend that the holding in Smith that -23the State has no sovereign immunity defense in causes of action based on contract is limited to actions claiming a breach of contract. Accordingly, Defendants contend that because the ACC seeks declaratory relief, the waiver found in Smith does not apply and Defendants are entitled to sovereign immunity. As an underlying initial claim matter, in Smith we was note for that breach even the contract, of though our Supreme Court did not limit its holding to such actions: We hold, therefore, that whenever the State of North Carolina, through its authorized officers and agencies, enters into a valid contract, the State implicitly consents to be sued for damages on the contract in the event it breaches the contract. Thus, in this case and in causes of action on contract arising after the filing date of this opinion, . . . the doctrine of sovereign immunity will not be a defense to the State. The State will occupy the same position as any other litigant. Smith, 289 N.C. at 320, 222 S.E.2d at 423 24 (emphasis added). Nevertheless, Defendants cite Petroleum Traders Corp. for the proposition that sovereign immunity bars a declaratory judgment claim concerning a contract with the State. Traders Corp. did not involve a However, Petroleum declaratory judgment action seeking to ascertain the rights and obligations owed by the parties under the terms of an existing contract. Rather, the plaintiff in that case sought a declaration that a statutorily -24authorized bidding fee, which is charged against the vendor with the winning bid, violated the North Carolina Constitution. See Petroleum Traders Corp., 190 N.C. App. at 545, 660 S.E.2d at 663. We held that the Declaratory Judgment Act does not act as a general waiver of the State s sovereign immunity. 660 S.E.2d at 664. Id. at 547, Here, the ACC argues that Smith, not the Declaratory Judgment Act, acts as a waiver to Defendants claim of sovereign immunity. Furthermore, even though the underlying claim in Smith was for breach of contract, the public policy considerations underlying the Court s rationale are equally persuasive here. Specifically, we are moved by the consideration in Smith that [t]o hold that the state may arbitrarily avoid its obligation under a contract after having induced the other party to change his position or to expend time and money in the performance of his obligations, or in preparing to perform them, would be judicial sanction of the highest type of governmental tyranny. Smith, 289 N.C. at 320, 222 S.E.2d at 423. The Court s holding in Smith explicitly waived the State s sovereign immunity in causes of action on contract and we can discern no sound reason to limit that language to breach of contract claims when the Court s stated rationale is equally persuasive with respect to declaratory relief actions seeking to ascertain the rights -25and obligations owed under an alleged contract. See Ferrell v. Dep t of Transp., 334 N.C. 650, 654 55, 435 S.E.2d 309, 312 13 (1993) (relying on the public policy considerations articulated in Smith to find a waiver of the State s sovereign immunity in a declaratory judgment action). Such declaratory relief actions are a cause of action on contract sufficient to waive the State s sovereign immunity. Accordingly, because the public policy of this state does not allow the State of North Carolina to avoid its obligations in contract, we cannot extend comity to Defendants claim of sovereign immunity. Furthermore, because we find that the extension of comity in this case would violate public policy, we decline to consider as would be required if we had reached the opposite conclusion whether Defendants would be entitled to sovereign immunity as a matter of Maryland law.8 8 Indeed, pursuant to the rule of comity, rights acquired under the laws or judgments of a sister state will be given force and effect in North Carolina if not against public policy. Cox, ___ N.C. App. at ___, 723 S.E.2d at 346. Thus, had we determined that public policy permitted the extension of comity in this case, the burden would still be on Defendants to show that they would be entitled to sovereign immunity under Maryland law. In light of our holding, however, we decline to address this issue. -26V. Conclusion For the foregoing reasons, we affirm the order of the trial court denying Defendants motion to dismiss and terminate the stay entered by this Court on 18 April 2013. Affirmed. Judges ERVIN and DILLON concur.

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