NEW HANOVER COUNTY — Last fall prior to the election, a candidate running for N.C. Senate district 7 released an ad, which prompted her opponent to sue. Exactly a year later, the two have reached a settlement.
READ MORE: NHC judge rules against Sen. Michael Lee’s request to remove opponent’s political ad
ALSO: Lee sues N.C. Senate race opponent over alleged defamatory ad | Port City Daily
Sen. Michael Lee (R-New Hanover) — who beat Democrat Marcia Morgan by 2.4% of the votes last November — filed a legal complaint and restraining order against Morgan for a political ad she released on TV. Lee said the aired advertisement was false and defamatory.
Titled “Serving Others,” the ad, released at the end of September 2022 by Morgan’s campaign, stated:
“As a former teacher and Army colonel, I’ve always been focused on serving others. That’s how it should be for leaders in Raleigh. But Michael Lee doesn’t see it that way. Lee used his political position to serve real estate clients. Lee got rezoning and special use permits for big developers against the advice of city planners, sticking us with overdevelopment, higher living costs and more traffic. That’s not leadership. That’s self-interest. When I get to Raleigh, I’ll never pander to greedy special interests.”
Port City Daily reached out to Morgan and Lee for additional details of the settlement, including the amount paid out. A response was not received by press.
“My primary objectives were to protect my reputation, defend my law firm, and set the record straight,” Lee said in a press release Thursday. “I am pleased that the settlement accomplished those goals and included a reimbursement for the costs of this lawsuit.”
Morgan has since posted an apology on social media, admitting to falsifying information.
“I regret that my accusations were not based on actual facts,” Morgan wrote on the Elect Marcia Morgan Facebook page Sept. 20. “I am grateful to put this matter behind me and move forward.”
The post also states she was following the guidance of the N.C. Senate Democratic Caucus’ staff and consultants when her campaign ran the ad. The caucus did not return Port City Daily’s request for comment.
The ad accused Lee, also a partner at law firm Lee & Kaess, of using his position as a senator to obtain special favors for his real-estate development clients. Lee helped found Lee & Kaess in 2012 and handles cases specifically tied to land use, zoning and commercial development.
The lawsuit filed by Lee and his firm, along with legal representation from Brooks, Pierce, McLendon, Humphrey and Leonard, details the advertisement in particular insinuates bribery or improper conduct from the senator. Documents say it alleges Lee uses his position for personal gain, in turn violating numerous N.C. State Bar rules of professional conduct.
It also implies Lee committed felonies.
“Regrettably, the consultants and the Senate Democratic Caucus misled and encouraged Marcia Morgan to disseminate this untruthful ad due to personal vendettas to impugn my character and my law firm’s reputation,” Lee wrote in a release. “Actions have consequences, and I hope this will serve as a lesson to the Senate Democratic Caucus on how they run their future campaigns.”
In the suit, Lee referenced a 2018 ethics complaint filed when he ran for senator against Harper Peterson. It was submitted to the state ethics commission by former NHC Republican Chair William Shell and Wilmington resident Terry Rielly. The complaint was “almost identical” to the allegations made in Morgan’s ad but was later dismissed.
The 2018 ethics complaint details examples, such as Lee representing developers of the $200 million mixed-use complex, The Avenue, the transfer of property from Wrightsville Beach to Wilmington for the Galleria development and a handful of rezonings. Shell and Rielly said it showed a “constant pattern” and ethics violation.
“Senator Lee has used his public office for private gain to an extreme level,” the 2018 complaint stated. “Senator Lee has clearly used his positions as state senator to further his own financial interests.”
Lee noted he lost a potential client because of the claim, despite its dismissal.
Morgan’s ad said Lee “used his profession for personal gain,” namely when representing The Avenue and The Landing at Lewis Creek Estates.
The motion Lee submitted Oct. 3, 2022 called for Morgan to stop publishing the ad, pay at least $25,000 in damages and order a jury trial on the matter. He also noted a potential client was not comfortable with the politics of Lee & Kaess and no longer requested its services.
The suit accused Morgan’s statements of being so egregiously defamatory, she could be in violation of North Carolina G.S. 163-274, making it a crime to publish or circulate reports with reference to a political candidate knowing they are false.
“Given the public record, news articles, unsuccessful 2018 ethics complaint and common sense, Marcia Morgan knew or should have known that there was no basis for her defamatory accusations,” according to the lawsuit.
The original motion was supplemented by an affidavit from Adam Sosne, manager of McAdams Homes, defending Lee’s ethics and professionalism.
While Judge Phyllis Gorham decided not to force Morgan to remove the ad, the Democratic candidate voluntarily did so.
On Oct. 31, 2022, Morgan filed a motion to dismiss the case, stating the ad was political free speech and protected under the U.S. Constitution. It also stated the plaintiff did not suffer monetary damages and the ad never mentioned Lee & Kaess.
The dismissal was set to be heard Jan. 3, 2023 but was continued to April 17. One month later, Morgan withdrew her motion to dismiss, as attorneys on either side were gearing up to enter discovery and set a trial date for fall.
Instead the case was settled and then filed for voluntary dismissal Sept. 27, 2023.
“I have developed a thick skin when it comes to campaign attack ads, but when individuals knowingly and falsely accuse me of criminal actions, implicating not only me but the governments of the City of Wilmington and New Hanover County, we have reached a new low,” Lee said in the release.
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