Hoke County Bd. of Educ. v. State

• Decision Date: 21 July 2009
• Docket Number: No. COA08-1036.,COA08-1036.
• Citation: 679 S.E.2d 512
• Parties: HOKE COUNTY BOARD OF EDUCATION, et al, Plaintiffs, and Asheville City Board of Education, et al, Plaintiff-Intervenors, v. STATE of North Carolina; State Board of Education, Defendants.
• Court: North Carolina Court of Appeals

679 S.E.2d 512

HOKE COUNTY BOARD OF EDUCATION, et al, Plaintiffs, and Asheville City Board of Education, et al, Plaintiff-Intervenors, v. STATE of North Carolina; State Board of Education, Defendants.

No. COA08-1036.

Court of Appeals of North Carolina.

July 21, 2009.

Appeal by plaintiffs from an order entered 5 May 2008 by Judge Howard E. Manning, Jr. in Wake County Superior Court. Heard in the Court of Appeals 26 March 2009.

Parker Poe Adams & Bernstein, LLP, by Robert W. Spearman, Melanie Black Dubis and Scott E. Bayzle, Raleigh; and Armstrong Law, PLLC, by H. Lawrence Armstrong, Jr., Enfield, for plaintiffs-appellants.

Attorney General Roy A. Cooper, III, by Special Deputy Attorney General Thomas J. Ziko, for defendants-appellees.

JACKSON, Judge.

Plaintiffs—students, parents, and school boards from Hoke, Halifax, Robeson, Cumberland, and Vance Counties—appeal the trial court's order denying them attorneys' fees. For the reasons stated below, we affirm.

This case originated in 1994 and became a hallmark of education law in this State.¹ The North Carolina Supreme Court, in its first Leandro opinion, concluded that the North Carolina Constitution "guarantee[s] every child of this state an opportunity to receive a sound basic education in our public schools." Leandro v. State of North Carolina, 346 N.C. 336, 347, 488 S.E.2d 249, 255 (1997)(Leandro I). The Court remanded the case to the trial court to determine whether the State had failed in its constitutional duty to provide such sound basic education. Id. at 357-58, 488 S.E.2d at 261.

In its second Leandro opinion, the Court affirmed the trial court's conclusion that the State had failed in its constitutional duty to provide students in Hoke County with the opportunity to obtain a sound basic education. Hoke Cty. Bd. of Educ. v. State, 358 N.C. 605, 647, 599 S.E.2d 365, 396 (2004) (Leandro II). It also affirmed the trial court's ruling that the State must act to correct these deficiencies. Id. Proceedings as to the other rural school districts were to continue "in a fashion that is consistent with the tenets outlined in [the] opinion." Id. at 648, 599 S.E.2d at 397.

In the years since Leandro II, the trial court has continued to monitor the progress of the State's efforts to comply with Leandro I and Leandro II. The State has established the Disadvantaged Student Supplemental Fund ("DSSF") to assist at-risk children, and has fully funded the Low Wealth Schools Fund ("LWF"). Additionally, the State has allocated funds to (1) expand the More-at-Four program which provides education to at-risk four-year-olds; (2) reduce class size; (3) increase resources to the Hoke County school system, including increased teacher salaries and creation of Learn to Earn High Schools; and (4) create new programs to adequately train school superintendents and administrators.

Through 30 April 2007, plaintiffs' counsel had devoted in excess of 17,000 hours in the fourteen years of this litigation. Hourly rates were below those charged to other clients. Most of the legal fees were paid from local tax revenues of the five plaintiff school districts, based upon their respective student populations. Over $175,000.00 was paid by the North Carolina Low Wealth Schools Consortium, a group comprised of counties eligible for LWF funding. Total attorneys' fees billed and paid, excluding costs, totaled nearly $2.5 million.

On 19 December 2005, plaintiffs filed a motion seeking attorneys' fees and costs. Plaintiffs submitted several theories upon which to award attorneys' fees: (1) North Carolina General Statutes, section 6-19.1, (2) the common fund doctrine, (3) the substantial benefit doctrine, and (4) the private attorney general doctrine. The State was not required to respond until 2007. Plaintiffs filed a supplemental memorandum and affidavit in support of their motion on 7 June 2007. The State filed its response on 11 September 2007. The trial court held a hearing on the matter on 28 February 2008.

In its Memorandum of Decision and Order dated 5 May 2008, the trial court commended plaintiffs' counsel for their excellent work in the matter, noting, "Plaintiffs' counsel have performed a significant public service in this case that has resulted in a great contribution to the citizens of North Carolina and to the jurisprudence of this State—of that there can be no dispute." However, the trial court found no legal basis upon which to award attorneys' fees. Therefore, it denied plaintiffs' motion as to attorneys' fees. It left open the issue as to whether costs should be awarded. Because it was an ancillary matter that would not affect the on-going proceedings, the trial court certified pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure that there was no just reason to delay any appeal of the matter. Plaintiffs appeal.

The 5 May 2008 order does not dispose of the entire case; as noted above, the on-going proceedings may continue, unaffected by this ruling. The order also leaves open the issue of costs—another portion of the original motion. Therefore, the order is interlocutory in nature. See Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) ("An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy." (citing Johnson v. Roberson, 171 N.C. 194, 88 S.E. 231 (1916))). Interlocutory orders ordinarily are not subject to this Court's immediate review. Goldston v. American Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). However, Rule 54(b) of the North Carolina Rules of Civil Procedure permits an immediate appeal when "(1) the order represents a final judgment as to one or more claims in a multi-claim lawsuit or one or more parties in a multi-party lawsuit," and (2) the trial court certifies that "there is no just reason to delay the appeal." Harris v. Matthews, 361 N.C. 265, 269 n. 1, 643 S.E.2d 566, 569 (2007) (citing N.C. Gen.Stat. § 1A-1, Rule 54(b)).

We generally accord great deference to a trial court's certification that there is no just reason to delay the appeal. See DKH Corp. v. Rankin-Patterson Oil Co., 348 N.C. 583, 585, 500 S.E.2d 666, 668 (1998). However, such certification "cannot bind the appellate courts because ruling on the interlocutory nature of appeals is properly a matter for the appellate division, not the trial court." First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C.App. 242, 247, 507 S.E.2d 56, 60 (1998) (citations and internal quotation marks omitted).

The burden to show that an appeal is proper is borne by the appellants. Johnson v. Lucas, 168 N.C.App. 515, 518, 608 S.E.2d 336, 338, aff'd, 360 N.C. 53, 619 S.E.2d 502 (2005) (per curiam). When an interlocutory order is the subject of the appeal, "the appellant[s] must include in [their] statement of grounds for appellate review `sufficient facts and argument to support appellate review on the ground that the challenged order affects a substantial right.'" Id. (quoting N.C. R.App. P. 28(b)(4)). The appellants must present more than a bare assertion that the order affects a substantial right; they must demonstrate why the order affects a substantial right. Id. "Where the appellant fails to carry the burden of making such a showing to the [C]ourt, the appeal will be dismissed." Id. (citing Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App. 377, 380, 444 S.E.2d 252, 254 (1994)).

Here, in their statement of grounds for appellate review, plaintiffs stated:

The Order is a final judgment regarding Plaintiffs' claim for attorneys' fees. The trial court ruled, pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure, that there was no just reason to delay any appeal from that Order as it is an ancillary matter and will not affect the on-going remedy proceedings continuing in the trial court to enforce the constitutional rights of North Carolina school children.

Although this statement addresses why there is no just reason to delay the appeal, it fails to address what substantial right will be lost absent immediate appeal.

The trial court's certification stated that "there is no just reason for delay should the parties wish to appeal this decision to the Appellate Division as this is an ancillary matter and will not affect the on-going proceedings in this case[.]" The fact that "this is an ancillary matter and will not affect the on-going proceedings in this case" appears to be the exact opposite of what is necessary to establish a substantial right. A substantial right is generally something that does—or at least could—affect the on-going proceedings; it is something that goes to the very heart of the matter. Examples of what has been determined to affect a substantial right include: (1) the State's capacity to be sued, RPR & Assocs. v. State, 139 N.C.App. 525, 527-28, 534 S.E.2d 247, 250 (2000) (denial of motion to dismiss based upon the defense of sovereign immunity), aff'd, 353 N.C. 362, 543 S.E.2d 480 (2001) (per curiam); (2) the possibility of inconsistent verdicts for different parties, Bernick v. Jurden, 306 N.C. 435, 439, 293 S.E.2d 405, 408 (1982) (grant of summary judgment for some but not all defendants); and (3) a class representative's discontinuance in a potentially meritorious suit, Perry v. Cullipher, 69 N.C.App. 761, 762, 318 S.E.2d 354, 356 (1984) (denial of class certification).

A substantial right is one which will clearly be lost or irremediably adversely affected if the order is not reviewable before final judgment. The right to immediate appeal is reserved for those cases in which the normal course of procedure is inadequate to protect the substantial right affected by the order sought to be appealed. Our courts have generally taken a restrictive view of the substantial right exception. The burden is on the appealing party to establish that a substantial right will be...