Batson v. Coastal Resources Commission

• Decision Date: 01 March 2022
• Docket Number: COA21-110
• Citation: 871 S.E.2d 120
• Parties: Hollis L. BATSON and Carol D. Batson, Lawrence F. Baldwin and Elizabeth C. Baldwin, Baldwin-Batson Owners’ Association, Inc., Petitioners. v. COASTAL RESOURCES COMMISSION and North Carolina Department of Transportation, Respondents.
• Court: North Carolina Court of Appeals

871 S.E.2d 120

Hollis L. BATSON and Carol D. Batson, Lawrence F. Baldwin and Elizabeth C. Baldwin, Baldwin-Batson Owners’ Association, Inc., Petitioners.

v.COASTAL RESOURCES COMMISSION and North Carolina Department of Transportation, Respondents.

No. COA21-110

Court of Appeals of North Carolina.

Filed March 1, 2022

Davis Hartman Wright PLLC, by I. Clark Wright, Jr., for petitioners-appellees.

Attorney General Joshua H. Stein, by Special Deputy Attorney General Mary L. Lucasse, for respondent-appellant Coastal Resources Commission.

DIETZ, Judge.

¶ 1 This appeal concerns the Coastal Resources Commission's conduct in a permit challenge to the Harkers Island Bridge replacement. By statute, the Commission must screen requests from third parties seeking to challenge this sort of permitting decision and deny requests that the Commission determines to be frivolous.

¶ 2 The Commission denied Petitioners’ request for a regulatory challenge as frivolous, and Petitioners sought judicial review in the trial court. The court rejected the Commission's reasoning and remanded for an administrative proceeding. The court later awarded attorneys’ fees against the Commission, and the Commission appealed that award.

¶ 3 As explained below, we hold that the trial court had the authority to award attorneys’ fees for this type of agency decision. But we remand the case for additional findings with respect to whether the Commission acted without substantial justification. On remand, the trial court may make additional findings on the existing record or conduct any further proceedings the court deems necessary in the interests of justice.

Facts and Procedural History

¶ 4 In 2019, the North Carolina Division of Coastal Management issued a permit to the North Carolina Department of Transportation for construction of a new bridge to replace the aging bridges connecting Harkers Island to the mainland of our State.

¶ 5 Petitioners are nearby landowners who believed there were issues with DOT's permit. By law, third parties impacted by this type of permitting decision may challenge the regulatory decision through a contested case proceeding. But the General Statutes also impose a gatekeeping role on the Coastal Resources Commission. Under N.C. Gen. Stat. § 113A-121.1, a third party "who is dissatisfied with a decision to deny or grant a minor or major development permit may file a petition for a contested case hearing only if the Commission determines that a hearing is appropriate." N.C. Gen. Stat. § 113A-121.1(b). The Commission's determination "shall be based on whether the person seeking to commence a contested case: (1) Has alleged that the decision is contrary to a statute or rule; (2) Is directly affected by the decision; and (3) Has alleged facts or made legal arguments that demonstrate that the request for the hearing is not frivolous." Id.

¶ 6 Petitioners submitted a one-page request for authorization to pursue a contested case challenging the permit, and the Commission denied the request. The Commission concluded that Petitioners failed to demonstrate "that the Request for a hearing is not frivolous."

¶ 7 Section 113A-121.1 permits judicial review of the Commission's decision and Petitioners promptly sought judicial review in the trial court. After a hearing, the trial court rejected the Commission's determination and remanded the matter to the Office of Administrative Hearings for a contested case proceeding. Relevant to this appeal, the trial court found that the Commission's repeated determinations that Petitioners’ claims were frivolous "are not supported by the record, or the plain meaning of the words ‘not frivolous’ as used in N.C.G.S. § 113A-121.1(b)(3)." The Commission did not appeal the trial court's order.

¶ 8 Petitioners later requested an award of attorneys’ fees and costs against the Commission under N.C. Gen. Stat. § 6-19.1. The trial court granted the request in a written order with findings of fact and conclusions of law and awarded $89,444.36 in attorneys’ fees to Petitioners. The Commission timely appealed.

Analysis

I. Trial court authority to award fees under N.C. Gen. Stat. § 6-19.1

¶ 9 The Commission first challenges the authority of the trial court to award attorneys’ fees under N.C. Gen. Stat. § 6-19.1. The Commission contends that the statute does not apply to its actions in its statutory gatekeeping role under N.C. Gen. Stat. § 113A-121.1.

¶ 10 A trial court may award attorneys’ fees only as authorized by statute. City of Charlotte v. McNeely , 281 N.C. 684, 691, 190 S.E.2d 179, 185 (1972). This Court reviews whether particular statutory language authorizes an award of attorneys’ fees de novo. Applewood Props., LLC v. New S. Props., LLC , 366 N.C. 518, 522, 742 S.E.2d 776, 779 (2013).

¶ 11 This case is governed by Section 6-19.1(a) of our General Statutes, which permits an award of attorneys’ fees against a State agency by a prevailing party who is contesting state action and demonstrates that the agency acted without substantial justification in pressing its claim:

§ 6-19.1. Attorney's fees to parties appealing or defending against agency decision.

(a) In any civil action, other than an adjudication for the purpose of establishing or fixing a rate, or a disciplinary action by a licensing board, brought by the State or brought by a party who is contesting State action pursuant to G.S. 150B-43 or any other appropriate provisions of law, unless the prevailing party is the State, the court may, in its discretion, allow the prevailing party to recover reasonable attorney's fees, including attorney's fees applicable to the administrative review portion of the case, in contested cases arising under Article 3 of Chapter 150B, to be taxed as court costs against the appropriate agency if:

(1) The court finds that the agency acted without substantial justification in pressing its claim against the party; and

(2) The court finds that there are no special circumstances that would make the award of attorney's fees unjust.

N.C. Gen. Stat. § 6-19.1(a).

¶ 12 Our Supreme Court has held that the purpose of this statute mirrors the federal Equal Access to Justice Act, with which it shares "similar language." Crowell Constructors v. State ex rel. Cobey , 342 N.C. 838, 843, 467 S.E.2d 675, 679 (1996). That purpose is to ensure private parties effectively can participate in the court process when facing the government—whose resources substantially outweigh ordinary citizens—by permitting recovery of litigation expenses when the government acts unreasonably. See , e.g. , Roanoke River Basin Ass'n v. Hudson , 991 F.2d 132, 138 (4th Cir. 1993).

¶ 13 The Commission presents several reasons why it believes its action in this case cannot meet the statutory criteria of Section 6-19.1(a). First, the Commission argues that its "gate-keeper decision is not a civil action nor is an appeal of the Commission's gate-keeper decision." But it is now well-settled that a petition for judicial review is "a civil action." Winkler v. N.C. State Bd. of Plumbing , 374 N.C. 726, 733, 843 S.E.2d 207, 212 (2020). So, for example, when a State agency denied an administrative request for rulemaking and the applicant later petitioned for judicial review and secured an order commanding the agency to commence the rulemaking, we held that the judicial review proceeding was a civil action. Table Rock Chapter of Trout Unlimited v. Envtl. Mgmt. Comm'n , 191 N.C. App. 362, 363–64, 663 S.E.2d 333, 335 (2008). Similarly here, Petitioners sought permission to begin an administrative proceeding, but the Commission declined to grant that permission. The applicable statute expressly provides that the Commission's "determination that a person may not commence a contested case is a final agency decision and is subject to judicial review under Article 4 of Chapter 150B of the General Statutes." N.C. Gen. Stat. § 113A-121.1(b). That judicial review proceeding, under settled law, is a civil action. Winkler , 374 N.C. at 733, 843 S.E.2d at 212 ; Table Rock , 191 N.C. App. at 363–64, 663 S.E.2d at 335.

¶ 14 Moreover, as our Supreme Court observed in Winkler , the General Assembly excluded certain agency decisions subject to judicial review from the scope of Section 6-19.1. 374 N.C. at 733, 843 S.E.2d at 212. Had our legislature intended to insulate the Commission's gatekeeper decisions from the statute as well, "the legislature could have explicitly excepted" the Commission's decisions as it did those other agency decisions. Id. Accordingly, we hold that a judicial review proceeding challenging the Commission's gatekeeper decision under N.C. Gen. Stat. § 113A-121.1 is a civil action contesting State action that falls within the language of N.C. Gen. Stat. § 6-19.1.

¶ 15 Our dissenting colleague raises his own issues with the trial court's order, none of which are advanced by the Commission, and for good reason. First, the dissent argues that the trial court lacked subject matter jurisdiction over this fee petition because "Petitioners did not submit a request for attorney's fees initially to the Commission, in their petition for judicial review, or to the OAH at any time."

¶ 16 This argument ignores both the language of the statute and settled case law. Petitioners were not required to assert their fee request before the Commission or in their initial petition for judicial review to confer subject matter jurisdiction on the trial court. Section 6-19.1 provides that the "party shall petition for the attorney's fees within 30 days following final disposition of the case." N.C. Gen. Stat. § 6-19.1. Filing the petition within 30 days of final disposition is the "jurisdictional prerequisite to the award of attorney's fees." Daily Express, Inc. v. Beatty , 202 N.C. App. 441, 446, 688 S.E.2d 791, 796 (2010).

¶ 17 This "final disposition" occurs "after the decision has become final and it is too late to appeal." Whiteco Indus., Inc. v. Harrelson , 111 N.C. App. 815, 818, 434 S.E.2d 229, 232 (1993) (...