North Carolina School Boards Ass'n v. Moore

• Decision Date: 01 July 2005
• Docket Number: No. 569A03.,569A03.
• Citation: 614 S.E.2d 504
• Court: North Carolina Supreme Court
• Parties: NORTH CAROLINA SCHOOL BOARDS ASSOCIATION; Wake County Board of Education; Durham Public Schools Board of Education; Johnston County Board of Education; Buncombe County Board of Education; Edgecombe County Board of Education; and Lenoir County Board of Education v. Richard H. MOORE, State Treasurer; Robert Powell, State Controller; David McCoy, State Budget Officer; Phillip J. Kirk, Jr., Chairman of the State Board of Education; Michael E. Ward, State Superintendent of Public Instruction; Roy Cooper, Attorney General of North Carolina; E. Norris Tolson, Secretary of the North Carolina Department of Revenue; Lyndo Tippett, Secretary of the North Carolina Department of Transportation; Carol Howard, North Carolina Commissioner of Motor Vehicles; Molly Corbett Broad, President of the University of North Carolina; James Moeser, Chancellor of the University of North Carolina at Chapel Hill; Marye Anne Fox, Chancellor of North Carolina State University at Raleigh; William G. Ross, Jr., Secretary of the North Carolina Department of Environment and Natural Resources; Jim Fain, Secretary of the North Carolina Department of Commerce; Carmen Hooker Buell, Secretary of the North Carolina Department of Health and Human Services; L. Thomas Lunsford, II, Executive Director of the North Carolina State Bar; Raymond W. Goodman, Jr., Chairman of the North Carolina Employment Security Commission; Sandra O'Brien, Executive Secretary of the North Carolina Board of Examiners of Plumbing, Heating and Fire Sprinkler Contractors; Robert L. Brooks, Executive Director of the North Carolina Board of Examiners of Electrical Contractors; Douglas H. Van Essen, Executive Secretary of the North Carolina Board of Cosmetic Art Examiners; each of whom is sued in his or her official capacity only.

614 S.E.2d 504

NORTH CAROLINA SCHOOL BOARDS ASSOCIATION; Wake County Board of Education; Durham Public Schools Board of Education; Johnston County Board of Education; Buncombe County Board of Education; Edgecombe County Board of Education; and Lenoir County Board of Education v. Richard H. MOORE, State Treasurer; Robert Powell, State Controller; David McCoy, State Budget Officer; Phillip J. Kirk, Jr., Chairman of the State Board of Education; Michael E. Ward, State Superintendent of Public Instruction; Roy Cooper, Attorney General of North Carolina; E. Norris Tolson, Secretary of the North Carolina Department of Revenue; Lyndo Tippett, Secretary of the North Carolina Department of Transportation; Carol Howard, North Carolina Commissioner of Motor Vehicles;

Molly Corbett Broad, President of the University of North Carolina; James Moeser, Chancellor of the University of North Carolina at Chapel Hill; Marye Anne Fox, Chancellor of North Carolina State University at Raleigh; William G. Ross, Jr., Secretary of the North Carolina Department of Environment and Natural Resources; Jim Fain, Secretary of the North Carolina Department of Commerce; Carmen Hooker Buell, Secretary of the North Carolina Department of Health and Human Services; L. Thomas Lunsford, II, Executive Director of the North Carolina State Bar; Raymond W. Goodman, Jr., Chairman of the North Carolina Employment Security Commission; Sandra O'Brien, Executive Secretary of the North Carolina Board of Examiners of Plumbing, Heating and Fire Sprinkler Contractors; Robert L. Brooks, Executive Director of the North Carolina Board of Examiners of Electrical Contractors; Douglas H. Van Essen, Executive Secretary of the North Carolina Board of Cosmetic Art Examiners; each of whom is sued in his or her official capacity only.

No. 569A03.

Supreme Court of North Carolina.

July 1, 2005.

COPYRIGHT MATERIAL OMITTED

Appeal by defendants Tippett and Howard pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of

Appeals, 160 N.C.App. 253, 585 S.E.2d 418 (2003), affirming in part and reversing in part an order of summary judgment entered 14 December 2001 by Judge Abraham Penn Jones in Superior Court, Wake County. On 5 February 2004, the Supreme Court allowed discretionary review of additional issues as to all plaintiffs and as to defendants Howard and Ross. Heard in the Supreme Court 11 May 2004.

Tharrington Smith, L.L.P., by Michael Crowell, and Roberts & Stevens, P.A., by Cynthia Grady, Raleigh, for plaintiff-appellants/appellees.

Roy Cooper, Attorney General, by W. Dale Talbert, Special Deputy Attorney General, for defendant-appellants/appellees Tippett, Howard, and Ross and defendant-appellees Moore, Powell, McCoy, Kirk, Ward, Cooper, Tolson, Broad, Moeser, Fox, Fain, Buell, Lunsford, Goodman, and Van Essen.

Young Moore and Henderson, P.A., by John N. Fountain and Reed N. Fountain, Raleigh, for defendant-appellees O'Brien and Brooks.

Allen and Pinnix, P.A., by Noel L. Allen, Raleigh, for North Carolina Board of Architecture and North Carolina Board of Funeral Service, amici curiae.

Bailey & Dixon, L.L.P., by Carson Carmichael, III, and Anna Baird Choi, Raleigh, for North Carolina Licensing Board for General Contractors and North Carolina Board of Pharmacy, amici curiae.

PARKER, Justice.

The Court in this appeal considers the proper implementation of the constitutional mandate in Article IX, Section 7 of the North Carolina Constitution, which provides:

All moneys, stocks, bonds, and other property belonging to a county school fund, and the clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State, shall belong to and remain in the several counties, and shall be faithfully appropriated and used exclusively for maintaining free public schools.

N.C. Const. art. IX, § 7.¹ The specific issues before the Court in this declaratory judgment proceeding are: (i) whether certain monetary payments to state agencies are being remitted to the State's General Fund or being retained by those agencies in violation of Article IX, Section 7; (ii) whether monies paid by environmental violators to fund, directly or indirectly, Supplemental Environmental Projects in lieu of civil penalties should be subject to Article IX, Section 7; (iii) whether the statutory scheme set out at N.C.G.S. §§ 115C-457.1 through -457.3 violates Article IX, Section 7 of the North Carolina Constitution by directing that the clear proceeds of civil penalties and forfeitures be remitted to the State Civil Penalty and Forfeiture Fund ("Civil Penalty Fund") rather than remain in the several counties where collected and by directing that the funds be used for school technology purposes rather than spent in the discretion of the local board of education of the county where collected; and (iv) whether civil penalties collected from the local school systems themselves are to be returned to the school systems pursuant to Article IX, Section 7.

Plaintiffs, the North Carolina School Boards Association and the school boards from Wake, Durham, Johnston, Buncombe, Edgecombe, and Lenoir Counties, instituted this action on 14 December 1998. On 18 December 2000, plaintiffs moved for summary judgment on all claims. All defendants except defendants O'Brien and Brooks also moved for summary judgment. After a hearing on the respective summary judgment motions, the trial court on 14 December 2001 entered summary judgment for plaintiffs on all issues. The trial court further stayed operation and enforcement of the order pending appeal.

Defendants filed timely notice of appeal from the trial court's order. On 16 September 2003, the Court of Appeals issued an opinion affirming in part and reversing in part the trial court's order. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C.App. 253, 585 S.E.2d 418 (2003). The Court of Appeals' opinion may be broken down into five discrete sections. The Court of Appeals first reversed the trial court's conclusion that the General Assembly's plan prescribed in N.C.G.S. §§ 115C-457.1 through — 457.3 for distributing the money collected pursuant to Article IX, Section 7 is unconstitutional. Id. at 266, 585 S.E.2d at 427. The Court of Appeals noted that Article IX, Section 7 is not self-executing and requires legislation to provide for its enforcement. Id. at 265, 585 S.E.2d at 426. Thus, the Court of Appeals held that the "General Assembly, by enacting Article 31A of Chapter 115C, has properly legislated the details necessary to effectuate the general proposition laid down by Article IX, Section 7 that the clear proceeds of civil penalties be set aside and used exclusively for the support of our State's public schools" and that the provisions of the statutes were in keeping with the framers' intent manifested by Article IX, Section 7. Id. at 266, 585 S.E.2d at 427.

The Court of Appeals next considered the trial court's ruling that all the payments to state agencies referenced in plaintiffs' complaint are to be distributed to the public schools pursuant to Article IX, Section 7. The Court of Appeals affirmed the trial court's ruling with respect to the following payments: (i) payments collected by the Department of Transportation from owners of overweight vehicles pursuant to N.C.G.S. § 20-118, and (ii) payments collected by the Department of Transportation for lapses in insurance coverage pursuant to N.C.G.S. § 20-309. Id. at 268-70, 585 S.E.2d at 428-30. The Court of Appeals reversed the trial court's holding that the following payments are subject to Article IX, Section 7:(i) payments collected by the Department of Revenue for failure to comply with regulatory or statutory tax provisions pursuant to N.C.G.S. §§ 105-113.89, -163.15, -163.41, -164.14, -231, and -236; (ii) payments collected by the Employment Security Commission from employers for overdue contributions to the unemployment insurance fund, late filing of wage reports, and tendering a worthless check pursuant to N.C.G.S. § 96-10(a), (g), and (h); (iii) payments collected by the boards of trustees of the Consolidated University of North Carolina campuses for violation of ordinances regulating traffic, parking, and vehicle registration pursuant to N.C.G.S. § 116-44.4(h); (iv) payments collected by the boards of trustees of the Consolidated University of North Carolina campuses for loss, damage, or late return of materials borrowed from university libraries pursuant to N.C.G.S. § 116-33; (v) payments collected by the Department of Revenue from persons dealing in unauthorized substances pursuant to N.C.G.S. §§ 105-113.105 through -113.113; and (vi) payments collected by state agencies and licensing boards for licensees' failure to comply in a timely manner with licensing requirements pursuant to N.C.G.S. §§ 87-22, 87-44, 88B-6 and -21, and 84-34. Id. at 270-78, 282-83, 585 S.E.2d at 430-34, 437. In making these determinations, the Court of Appeals followed this Court's precedent by employing an analysis which classifies each of these payments as either punitive, in which case the payment accrues to the public schools under Article IX, Section 7, or remedial, in which case it remains under the dominion of the collecting agency. Id. at 266-68, 585 S.E.2d at 427-28.

The Court of Appeals also considered whether monies paid by an environmental violator to perform or to fund a third party's performance of a Supplemental Environmental Project ("SEP") in lieu of paying a civil penalty to the Department of Environment and Natural Resources ("DENR") pursuant to N.C.G.S. §§ 143-215.6A, -215.114A, and -215.3(a)(9) were subject to Article IX, Section 7. Id. at 278-81, 585 S.E.2d at 434-36. The Court of Appeals analyzed this issue in light of this Court's precedent in Craven Cty. Bd. of Educ. v. Boyles, 343 N.C. 87, 468 S.E.2d 50 (1996), in which we held that an environmental violator's payments pursuant to a settlement agreement...