Topping v. Kurt Meyers & Mcguirewoods, LLP

• Citation: 842 S.E.2d 95
• Decision Date: 17 March 2020
• Docket Number: No. COA19-618,COA19-618
• Parties: Richard TOPPING, Plaintiff, v. Kurt MEYERS and McGuireWoods, LLP, Defendants.
• Court: North Carolina Court of Appeals

842 S.E.2d 95

Richard TOPPING, Plaintiff,

v.Kurt MEYERS and McGuireWoods, LLP, Defendants.

No. COA19-618

Court of Appeals of North Carolina.

Filed: March 17, 2020

Rudolf Widenhouse, by David S. Rudolf, Charlotte, Joseph P. Lattimore, and Sonya Pfeiffer, Charlotte, for plaintiff-appellee.

Mullins Duncan Harrell & Russell PLLC, by Allison O. Mullins, Greensboro, and Alan W. Duncan, for defendant-appellants.

TYSON, Judge.

Kurt Meyers and McGuireWoods, LLP ("Defendants") appeal from an order entered 18 March 2019 denying their motion to dismiss Richard Topping's ("Plaintiff") claims against them. We dismiss Defendant's interlocutory appeal and remand.

I. Background

Defendants’ client, Cardinal Innovations Healthcare Solutions ("Cardinal") is a Local Management Entity/Managed Care Organization under the Mental Health, Developmental Disabilities, and Substance Abuse Act of 1985. N.C. Gen. Stat. § 122C-1 (2019). Cardinal is an "area authority," which is "a local political subdivision of the State." N.C. Gen. Stat. §§ 122C-3(1), 122C-116(a) (2019).

Plaintiff became the Chief Executive Officer ("CEO") of Cardinal 1 July 2015. Following receipt and review of a North Carolina State Auditor's performance audit in May 2017, the Secretary of the North Carolina Department of Health and Human Services ("DHHS") initiated an investigation into Cardinal's activities.

The subsequent investigatory report "sharply criticized" the severance provisions of Plaintiff's employment contract and several other Cardinal executives, and also Plaintiff's compensation and potential bonus opportunities under his contract. Plaintiff and three other executives resigned from Cardinal in November 2017, after the audit and DHHS report. Plaintiff was paid two years’ severance, allegedly worth $1.7 million. DHHS officials took over Cardinal's operations and fired its board members. The new board ("the Board") hired Defendants in January 2018 to conduct an independent internal investigation of Plaintiff's conduct relating to the drafting and approval of the severance agreements, and the November 2017 severance payments made to himself and three other former Cardinal executives, who had also resigned.

Defendant Meyers presented the findings of the investigation to the Board on 23 March 2018. The Board voted to file a lawsuit against Plaintiff, seeking the return of the November 2017 two year's severance payment based upon his alleged misconduct. The Board also authorized a press conference to be held after filing the suit, wherein Defendant Meyers would present the findings and allegations in the complaint to the media.

Cardinal filed suit against Plaintiff at 9:00 a.m. on 26 March 2018. A press conference began at 10:30 a.m., during which Defendant Meyers gave his presentation to the assembled representatives of the media.

Plaintiff filed suit against Defendants on 30 May 2018, alleging libel per se , slander per se , negligent infliction of emotional distress, negligence, and punitive damages. Defendants moved to dismiss Plaintiff's complaint for failure to state a claim upon which relief could be granted, pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2019). Defendants asserted, inter alia , Plaintiff's claims are barred by absolute privilege and Plaintiff had improperly recast and re-asserted his defamation claims as negligence claims.

The trial court struck four paragraphs of Plaintiff's complaint for impermissible reliance upon the North Carolina Rules of Professional Conduct to allege a legal duty and standard of care for the negligence claims. The trial court otherwise denied Defendants’ motion. Defendants timely filed notice of appeal.

II. Interlocutory Jurisdiction

Defendants argue this Court possesses jurisdiction over this interlocutory appeal pursuant to N.C. Gen. Stat. §§ 1-277(a) and 7A-27(b)(3) (2019).

Ordinarily, an appeal from an interlocutory order will be dismissed as fragmentary and premature unless the order affects some substantial right and will work injury to appellant if not corrected before appeal from final judgment. ... Essentially a two-part test has developed[:] the right itself must be substantial and the deprivation of that substantial right must potentially work injury to plaintiff if not corrected before appeal from final judgment.

Goldston v. American Motors Corp. , 326 N.C. 723, 726, 392 S.E.2d 735, 736 (1990) (citations and internal quotation marks omitted).

Admittedly the "substantial right" test for appealability of interlocutory orders is more easily stated than applied. It is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context in which the order from which appeal is sought was entered.

Waters v. Personnel, Inc. , 294 N.C. 200, 208, 240 S.E.2d 338, 343 (1978).

On a purported appeal from an interlocutory order without the trial court's Rule 54(b) certification, "the appellant has the burden of showing this Court that the order deprives the appellant of a substantial right which would be jeopardized absent a review prior to a final determination on the merits." Jeffreys v. Raleigh Oaks Joint Venture , 115 N.C. App. 377, 380, 444 S.E.2d 252, 254 (1994) (citations omitted).

Defendants assert the trial court's order deprived them of substantial rights in two ways: (1) the trial court's failure to dismiss Plaintiff's defamation claims for absolute privilege; and, (2) the trial court's failure to dismiss Plaintiff's negligence claims attacking speech as duplicative of his defamation claims. We address each in turn. Alternatively, Defendants have concurrently filed a petition for a writ of certiorari with this Court.

A. Absolute Privilege

Defendants analogize their claim of absolute privilege to sovereign immunity or public official immunity to assert the trial court's denials of their motion to dismiss are immediately appealable. See, e.g. , Green v. Kearney , 203 N.C. App. 260, 266, 690 S.E.2d 755, 761 (2010) (citations omitted) (the "denial of a Rule 12(b)(6) motion to dismiss on the basis of sovereign immunity affects a substantial right and is immediately appealable"); Summey v. Barker , 142 N.C. App. 688, 689, 544 S.E.2d 262, 264 (2001) (citation omitted) ("Orders denying dispositive motions based on public official's immunity affect a substantial right and are immediately appealable.").

The rationale for the exception to the general rule [denying interlocutory appeals] stems from the nature of the immunity defense. A valid claim of immunity is more than a defense in a lawsuit; it is in essence immunity from suit. Were the case to be erroneously permitted to proceed to trial, immunity would be effectively lost.

Clark v. Red Bird Cab Co. , 114 N.C. App. 400, 403, 442 S.E.2d 75, 77 (1994) (citations and internal quotation marks omitted).

If an absolute bar to suit extends and applies to Defendants’ actions, the trial court's failure to dismiss Plaintiff's claims deprives Defendants of immunity from suit. If applicable, this denial of immunity from suit, as asserted in Defendants’ motion, is a substantial right for Defendants, which would be lost, absent interlocutory review. See Jeffreys , 115 N.C. App. at 380, 444 S.E.2d at 254. In "considering the particular facts ... and the procedural context" of this case, we conduct a full analysis of the issue of absolute immunity from suit below, to determine whether Defendants have asserted a "substantial right" in this interlocutory appeal. See Waters , 294 N.C. at 208, 240 S.E.2d at 343.

B. Negligence Claims

Defendants also assert a substantial right exists for this Court to exercise interlocutory jurisdiction over their appeal of the trial court's denial of their motion to dismiss Plaintiff's negligence-based claims regarding Defendants’ speech. Defendants argue the trial court's failure to dismiss Plaintiff's negligence-based claims misapplies defamation standards including the actual malice standard, denies them applicable defenses including the truth, and also presents the danger of inconsistent verdicts.

"An order implicating a party's First Amendment rights affects a substantial right." Sherrill v. Amerada Hess Corp. , 130 N.C. App. 711, 719, 504 S.E.2d 802, 807 (1998). Our Courts have recognized, when considering a motion for summary judgment, a misapplication of the actual malice standard could have a chilling effect on a defendant's right to free speech and implicates a substantial right. Boyce & Isley, PLLC v. Cooper (Boyce II ), 169 N.C. App. 572, 575-76, 611 S.E.2d 175, 177 (2005) (citing Priest v. Sobeck , 357 N.C. 159, 579 S.E.2d 250 (2003) ). In Boyce II , however, this Court held the denial of a Rule 12 motion to dismiss does not implicate a substantial right as could arise by the denial of a motion for summary judgment under Rule 56:

misapplication of the actual malice standard on summary judgment could lead to some loss or infringement on a substantial right, whereas denial of the 12(c) motion here will not. On a motion for summary judgment the forecast of evidence is set. A court can more adequately determine whether the forecast evidence (affidavits, depositions, exhibits, and the like) presents a factual issue under the correctly applied legal standard for actual malice. In reviewing the allegations of the pleadings as in ruling on a 12(c) motion, the court need only decide if the elements of the claim, perhaps including actual malice, have been alleged, not how to apply that standard. An incorrect application of the actual malice standard to deny summary judgment results in trial, whereas denial of a 12(c) motion results in further discovery and possibly summary judgment or other proceedings. Although we recognize that the First Amendment protects substantial rights, there is nothing here to suggest an immediate loss of these rights. ... Any defenses or arguments that plaintiffs cannot actually prove their allegations in the complaint due to lack of evidence regarding malice will

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