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Schools & School Boards – Tort/Negligence –Sovereign Immunity –Risk- Management Trust –No Waiver –Constitutional – Jurisdiction

Frye v. Brunswick County Board of Education. (Lawyers Weekly No. 09-02-0221, 19 pp.) (James C. Dever III, J.) E.D.N.C.
Holding: The court declines to recognize a claim for violation of a student’s right to education under the N.C. Constitution. Since this and other claims fail on their merits, the court need not decide whether a state remedy is “adequate” if it is barred by sovereign immunity.
The school board’s motion to dismiss is granted. Plaintiffs may continue to seek relief from the defendant-teacher.
According to plaintiffs, the defendant-teacher engaged in an inappropriate sexual relationship with plaintiff Kylee Frye while she was a 17-year-old high school student. The high school’s administration reported one incident to the sheriff’s office, but the defendant-school board’s employees told law enforcement that they “did not need to respond.” Board employees attempted “to disengage the policy from a real investigation.”
The school’s principal initially refused to provide witness statements to the sheriff’s department and only complied after being threatened with arrest. The superintendent directed the principal not to provide the statements.
The school board is enrolled in a risk-management program (the agreement) provided by the N.C. School Board’s Trust (NCSBT). Plaintiffs did not name NCSBT as a defendant in this action.
Sovereign Immunity
N.C. courts have not resolved whether the sovereign-immunity defense challenges personal or subject-matter jurisdiction. The court evaluates the board’s motion to dismiss under both governing standards.
Under N.C. law, the purchase of liability insurance is the exclusive means for a local school board to waive immunity. A board waives its immunity only to the extent of its liability insurance, and the insurance contract must be purchased from an N.C.-licensed or otherwise qualified insurance company.
A school board’s risk-management agreement with NCSBT does not waive governmental immunity because NCBST does not qualify as liability insurance under G.S. Sect. 115C-42. Willett v. Chatham County Board of Education, 176 N.C. App. 268, 625 S.E.2d 900 (2006).
The agreement between the school board and NCSBT states that it “is not a contract of insurance by a company or corporation duly licensed and authorized to execute insurance contracts in [North Carolina] or by a qualified insurer as determined by the Department of Insurance.” The agreement also states that it “expressly is not considered a waiver of governmental immunity as provided in [G.S. Sect. ] 115C-42.”
Plaintiffs note that the agreement does include excess insurance for claims between $150,000 and $850,000. Further, NCSBT apparently contracts for reinsurance with Selective Insurance Co. of the Southeast, which was apparently a licensed insurer in North Carolina.
Nevertheless, the agreement specifically excludes from its excess insurance “any claim arising out of or in connection with … willful violation of any law [or] sexual acts, sexual molestation, sexual harassment, sexual assault, or sexual misconduct of any kind.”
The school board’s governmental immunity bars plaintiffs’ state tort claims against the board.
Constitutional Claims
Governmental immunity does not apply to plaintiffs’ N.C. constitutional claims. Nevertheless, a direct claim under the N.C. Constitution is available only in the absence of an adequate state remedy. According to Craig v. New Hanover County Board of Education, 185 N.C. App. 651, 648 S.E.2d 923 (2007), cert. granted, 362 N.C. 234, 659 S.E.2d 439 (2008), an adequate state remedy need not be “potentially successful,” only “available.”
In Craig, Judge Bryant disagreed with the majority’s analysis of the adequate state remedy doctrine under Corum v. University of North Carolina, 330 N.C. 761, 413 S.E.2d 290 (1992), and its progeny. Plaintiffs in Craig relied on Judge Bryant’s dissent and appealed to the N.C. Supreme Court. The Supreme Court has heard oral argument in Craig but has not yet ruled.
The court need not resolve this issue of N.C. law or await the N.C. Supreme Court’s decision in Craig. Because plaintiffs’ state constitutional claims fail to state a claim upon which relief may be granted, the N.C. Supreme Court’s potential analysis of the adequate state remedy doctrine in Craig will not affect the outcome of the school board’s motion to dismiss.
Plaintiffs’ substantive due process claim fails for numerous reasons. First, to the extent plaintiffs seek payment under the NCSBT agreement and claim that the board violated substantive due process in not paying their claim, plaintiffs fail to state a claim upon which relief may be granted. According to the agreement, NCSBT, not the board, is responsible for determining the merits of and paying any claim.
Plaintiffs also fail to make any allegation of any egregious or outrageous action on the part of the board for failing to pay plaintiffs. Thus, plaintiffs’ substantive due process claim fails as a matter of law under rational review basis.
Further, plaintiffs have failed to allege the existence of a right that the board violated in failing to pay plaintiffs. Absent a valid waiver of governmental immunity, plaintiffs have no right to recover damages from the board. Plaintiffs’ substantive due process claim against the board under the U.S. and N.C. Constitutions fails to state a claim upon which relief may be granted.
A party can bring an equal protection claim by alleging it has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment. Plaintiffs also must plead sufficient facts to demonstrate this unequal treatment was the result of intentional or purposeful discrimination.
Plaintiffs allege that the board “could have raised the doctrine of immunity on many tort claims,” and its refusal to do so in some instances violates equal protection. Given that plaintiffs do not assert that the board violated a fundamental right or used a suspect classification, the board’s actions in failing to pay plaintiffs need only be rationally related to a legitimate governmental interest.
The board’s allegedly selective use of the immunity defense, without more, does not meet the requirements necessary to survive a motion to dismiss.
Alternatively, the board’s discretion to pay certain claims and not others is rationally related to a government interest.
Finally, plaintiffs fail to allege that the board’s treatment of plaintiffs’ claim was the result of intentional or purposeful discrimination. Thus, plaintiffs’ equal protection allegations under the U.S. and N.C. Constitutions fail to state a claim upon which relief may be granted.
Plaintiffs also allege that the board violated their right to the privilege of education under the N.C. Constitution.
No N.C. appellate court has yet recognized a private right of action for damages under the N.C. Constitution against a local school board for the denial of the privilege of education. Given that no N.C. appellate court has recognized the right and the remedy that plaintiffs advance, this federal court will not create such a right of action.
Finally, assuming without deciding that plaintiffs are intended third-party beneficiaries of the NCSBT agreement, plaintiffs do not allege sufficient facts to show that the board breached the contract. According to the complaint, the board “has breached the contract between itself and the [NCSBT] by refusing to pay claims after it has entered into an agreement to budget for the payment of those type of claims.”
Therefore, even if NCSBT should have paid plaintiffs’ claims, NCSBT (a non-party in this action) was the one that breached the agreement, not the board. Accordingly, plaintiffs have failed to state a breach of contract claim against the board.
Motion granted.

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