The Thompsons hired Michael Waters to build a home in North Carolina. After construction was complete and the Thompsons moved in, they began seeing stress fractures, cracks, settling of foundations and shifting of walls in the house. An inspection uncovered substantial structural defects and numerous building code violations. The Thompsons sued Waters for defective construction. They also sued Lee County for its building code inspector's negligent inspection and approval of the defective work.

As soon as the complaint was filed and before any facts had been gathered, Lee County filed a motion to dismiss, arguing that it was immune from liability under the "Public Duty Doctrine." The doctrine holds that a public entity cannot be held liable for negligent performance of obligations on behalf of the public. Lee County argued that because it was performing inspections as part of its public duty, it could not be held liable for negligently performing that duty. The trial court granted the motion to dismiss. The Thompsons appealed, and the Court of Appeals affirmed. The Thompsons appealed again to the North Carolina Supreme Court, which accepted their view and reversed. Thompson v. Waters, 351 N.C. 462; 526 S.E.2d 650 (2000)

The Supreme Court held that the Thompsons could state a claim against Lee County for negligent inspection. The court noted that the Public Duty Doctrine had been applied somewhat inconsistently in North Carolina and that it had been abandoned by other jurisdictions (e.g., Alaska, Iowa, and Wisconsin). The North Carolina Supreme Court had declined to apply the Public Duty Doctrine in a case in which a child was killed as a result of a school guard's negligence. North Carolina also recognizes exceptions to the Public Duty Doctrine when a special relationship has been created between the injured party and the government entity or when the government entity specifically promises certain protection to an individual and the individual relies on those promises. Other jurisdictions view the Public Duty Doctrine simply as another form of sovereign immunity that often is legislatively or judicially abrogated.

After reviewing past Public Duty Doctrine cases in North Carolina and out of state, the North Carolina Supreme Court declined to apply the doctrine as a bar to the Thompsons' claim. The court's opinion did not discuss the public policy benefits of the doctrine or analyze application of the doctrine to the facts of the case. Thus, the opinion stands for the proposition that in North Carolina the Public Duty Doctrine does not bar a homeowner's claim against a public entity for construction defects negligently overlooked by a government inspector.