The University of Maryland (“Maryland”) filed a motion to dismiss for lack of jurisdiction in the trial court to dismiss the Atlantic Coast Conference’s (“ACC”) claims against it based on a sovereign immunity defense. The trial court denied Maryland’s request and Maryland appealed the matter to the North Carolina Court of Appeals. The North Carolina Court of Appeals upheld the trial court’s decision and, thus, the ACC’s claims requiring Maryland to pay a $52 million exit fee will continue.
In the context of the sovereign immunity doctrine, the North Carolina Supreme Court “has used public policy to effectively waive the State’s sovereign immunity in causes of action grounded in contract. But see Leach v. Texas Tech (Texas treats sovereign immunity differently). “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, it would violate public policy to extend comity to [Maryland’s] claim for sovereign immunity.” Accordingly, because the public policy of the state does not allow for the State of North Carolina to evoke sovereign immunity in the context of a contract, the North Carolina Court of Appeals declined to extend protection under the sovereign immunity doctrine to Maryland under a sister state’s sovereign immunity doctrine.