De Luca v. Stein
| Decision Date | 04 September 2018 |
| Docket Number | No. COA17-1374,COA17-1374 |
| Citation | 820 S.E.2d 89,261 N.C.App. 118 |
| Parties | Francis X. DE LUCA and The New Hanover County Board of Education, Plaintiffs, v. Josh STEIN, in his capacity as Attorney General of the State of North Carolina, Defendant, and North Carolina Coastal Federation and Sound Rivers, Inc., Intervenors. |
| Court | North Carolina Court of Appeals |
Stam Law Firm, PLLC, by Paul Stam, Apex and Amy C. O'Neal, for plaintiff-appellants.
Attorney General Joshua H. Stein, by Special Deputy Attorneys General Marc Bernstein and Jennie Wilhelm Hauser, Raleigh, for defendant-appellee Joshua H. Stein in his capacity as Attorney General of the State of North Carolina.
Southern Environmental Law Center, by Mary Maclean Asbill, Brooks Rainey Pearson and Blakely E. Hildebrand, for intervenor-appellees North Carolina Coastal Federation and Sound Rivers, Inc.
Tharrington Smith, L.L.P., by Deborah R. Stagner, Raleigh and Lindsay Vance Smith, for amicus curiae North Carolina School Boards Association.
Plaintiffs’ appeal asserts the trial court erred in concluding, as a matter of law, that payments specified in an agreement between the Attorney General of North Carolina and Smithfield Foods, Inc., and its subsidiaries are not civil penalties required to be used to fund public education pursuant to Article IX, § 7 of the North Carolina Constitution. The trial court's order granting the defendant's motion for summary judgment and denying the plaintiffs’ cross-motion for summary judgment is reversed in part and remanded for trial.
On 25 July 2000, Michael F. Easley, in his capacity as Attorney General of North Carolina, entered into an agreement (the "Agreement") with Smithfield Foods, Inc. ("Smithfield") and several of its subsidiaries, Brown's of Carolina, Inc., Carroll's Foods, Inc., Murphy Farms, Inc., Carroll's Foods of Virginia, Inc., and Quarter M Farms, Inc. (collectively, the "Companies").
Daniel Oakley, the former Division Director of the North Carolina Department of Justice's Environmental Division at the time the Agreement was negotiated and entered into, stated in an affidavit:
The background for the [Agreement] was a five-year period of time, from 1995 to 2000, when ruptured or flooded swine waste lagoons, not all of them Smithfield's, had spilled millions of gallons of waste into North Carolina waterways, contaminating surface waters and killing aquatic life, while seepage from waste lagoons impacted groundwater supplies.
In the Agreement, the Department of Environmental Quality is referred to under its previous name of the Department of Environment and Natural Resources, or DENR. As of 1 July 2015, the agency was formally renamed the North Carolina Department of Environmental Quality. 2015 S.L. 241, § 14.30.(c), eff. July 1, 2015. We refer to the agency throughout this opinion under its current name of the Department of Environmental Quality ("DEQ").
Under the terms of the Agreement, the Companies entered into it for the purpose of undertaking "a series of environmental initiatives intended to preserve and enhance water quality in eastern North Carolina." To support "environmental initiatives," the Companies agreed to commit funds to "environmental enhancement activities." The Agreement specified these funds would be
In the Agreement, the Companies committed, among other things, to "pay each year for 25 years an amount equal to one dollar for each hog in which the Companies ... have had any financial interest in North Carolina during the previous year, provided, ... that such amount shall not exceed $2 million in any year." To facilitate these payments, the Companies maintain an escrow account into which funds are deposited. The Attorney General maintains the sole authority to direct the escrow agent to disburse funds to grant recipients, who are chosen by the Attorney General.
Under the Agreement, the Attorney General may consult with the Companies, DEQ, and "any other groups or individuals he deems appropriate and may appoint any advisory committees he deems appropriate[,]" in administering the grant program.
To facilitate the administration of the funds in escrow, the Attorney General established the Environmental Enhancement Grant Program ("EEG Program"). Every year since the Agreement was established, the Attorney General has received proposals from governmental agencies and nonprofit organizations to receive Environmental Enhancement Grants ("EEGs"). A panel consisting of representatives from the Department of Justice, DEQ, the North Carolina Department of Natural and Cultural Resources, academic institutions, and environmental nonprofit organizations reviews the EEG proposals and makes recommendations to the Attorney General. Representatives from Smithfield could also submit recommendations separate from the panel.
The Attorney General exercises sole discretion over the selection of grant recipients and approval of the amounts awarded, up to a maximum of $500,000 per award. After the Attorney General selects the grant recipients, the funds are distributed as reimbursements for expenses already incurred by the grant recipients. The Attorney General has awarded grants totaling more than $24 million since the Agreement was signed.
On 18 October 2016, Francis X. De Luca ("De Luca"), a citizen and resident of Wake County, North Carolina, filed a complaint against the Attorney General of North Carolina, Roy Cooper, in his official capacity. In his complaint, De Luca sought a preliminary and permanent injunction to prevent the Attorney General from distributing monies paid under the Agreement to any entities other than to the State's Civil Penalty and Forfeiture Fund.
The Attorney General filed a motion to dismiss on 19 December 2016. On 25 January 2017, while the motion to dismiss was pending, De Luca filed an amended complaint, which added the New Hanover County Board of Education ("NHCBE") as a party-plaintiff. Joshua H. Stein ("the Attorney General"), in his official capacity as the current Attorney General of North Carolina, was substituted as the defendant. The Attorney General subsequently filed an amended motion to dismiss.
On 14 June 2017 and 16 June 2017, respectively, De Luca and the NHCBE (collectively, "Plaintiffs") filed a motion for preliminary injunction and a motion for summary judgment. The trial court heard Plaintiffs’ motion for preliminary injunction and the Attorney General's amended motion to dismiss on 27 June 2017.
The trial court denied the Attorney General's motion to dismiss and granted Plaintiffs’ request for a preliminary injunction, based upon the court's finding that Plaintiffs were "likely to prevail" and "the public interest favors the granting of a preliminary injunction." The Attorney General filed an answer to the amended complaint on 17 July 2017. On 21 July 2017, upon consent of the parties, an amended injunction was entered to clarify the preliminary injunction would only apply to grants awarded after 30 September 2016.
On 21 August 2017, two environmental organizations, who had previously received grants under the Agreement, the North Carolina Coastal Federation, Inc. and Sound Rivers, Inc. (collectively, "Intervenors"), filed a motion to intervene. On 22 September 2017, Plaintiffs served their opposition to the motion to intervene and renewed their motion for summary judgment. The same day, the Attorney General filed a motion for summary judgment. On 28 September 2017, the Intervenors filed a motion for leave to file a memorandum of law in support of the Attorney General's motion for summary judgment, and the North Carolina School Boards Association ("NCSBA") filed a motion for leave to file an amicus curiae brief in support of Plaintiffs’ motion for summary judgment.
The parties’ cross-motions for summary judgment, Intervenors’ motion to intervene, and NCSBA's motion for leave to file an amicus brief were heard by the trial court on 5 October 2017. On 12 October 2017, the trial court entered its order, which granted the Attorney General's motion for summary judgment, denied Plaintiffs’ motion for summary judgment, dismissed Plaintiffs’ complaint with prejudice, and dissolved the preliminary injunction previously entered by the trial court. The trial court also entered orders granting Intervenors’ motion to intervene and NCSBA's motion for leave to file an amicus brief. On appeal, Plaintiffs do not challenge the trial court's order, to the extent it granted Intervenors’ motion to intervene.
From the trial court's order granting the Attorney General's motion for summary judgment and denying their motion for summary judgment, Plaintiffs filed timely notice of appeal on 25 October 2017.
Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2017) as an appeal from a final judgment of the superior court.
"Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that [a] party is entitled to judgment as a matter of law." Summey v. Barker , 357 N.C. 492, 496, 586 S.E.2d 247, 249 (2003) (citation and internal quotation marks omitted); see N.C. Gen. Stat. § 1A-1, Rule 56(c).
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New Hanover Cnty. Bd. of Educ. v. Stein
...the Attorney General proved successful, it was entitled to receive a portion of the funds at issue in this case. De Luca v. Stein , 261 N.C. App. 118, 128, 820 S.E.2d 89 (2018). In addition, the Court of Appeals held that the record disclosed the existence of "genuine issues of material fac......
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New Hanover Cnty. Bd. of Educ. v. Stein
...whether Mr. De Luca had standing to assert a claim against the Attorney General pursuant to article IX, section 7. De Luca v. Stein , 261 N.C.App. 118, 820 S.E.2d 89 (2018). According to the Court of Appeals, Mr. De Luca had failed to allege that "(1) the payments at issue constitute an ill......
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New Hanover Cnty. Bd. of Educ. v. Stein
...a motion for temporary stay at the trial court on 25 October 2017.This Court reversed the superior court. See De Luca v. Stein , 261 N.C. App. 118, 136, 820 S.E.2d 89, 100 (2018). Further, we held De Luca lacked standing to assert the civil penalty claim, but we determined the Board had sta......