NEW HANOVER COUNTY — Claiming several defenses, including statutes of limitation, government and public official immunity, and case law barring punitive damages against government bodies, the New Hanover County Board of Education and Superintendent Dr. Tim Markley have both an answer to and a motion to dismiss the civil suit filed by victims and alleged victims of former teacher and convicted sex offender Micheal Earl Kelly.
The response is separate from that of former Deputy Superintendent Dr. Rick Holliday, who retired amid an investigation into the administration. Holliday is represented by a separate attorney not covered by the district or its insurer and filed his response last month. According to the latest filings, Kelly does not have legal counsel and is representing himself.
In general, the response — filed on behalf of the board and Markley by Raleigh-based law firm Tharrington Smith — denies all allegations of wrongdoing. In some cases, the response claims the defendants lack sufficient knowledge to answer allegations.
The response denies any attempt by the Board, the district, or Markley to conceal Kelly’s actions or failure to report them. It also specifically denies several allegations that members of current and past administration and boards were notified of Kelly’s actions, including a 1993 incident where then Laney High School Assistant Principal Rick Holliday was allegedly notified of Kelly’s inappropriate conversations.
The response also specifically denies the plaintiffs’ claim that Kelly committed sexual crimes while in the scope and or course of his employment, which could make Kelly’s supervisors, including Markley, liable for failure to supervise him adequately. It’s worth noting that many of the allegations against Kelly — which he pleaded guilty to in June — involved incidents that took place on school property and in classrooms during school hours.
The response does not confirm or deny allegations made about former Laney band teacher Richard Priode, citing state personnel law.
The response, followed by a motion to dismiss, also notes a number of defenses. It also reserves the right to challenge the anonymity of the plaintiffs in future filings.
Statutes of limitations
There are a number of state statutes that control how long a victim of alleged sexual assault has to file a civil suit. A new law, which was approved in the general assembly on Thursday and now awaits the governor’s signature, would expand those time limits, making it possible for more victims to file suit.
Under current law, victims have until they turn 21 to file civil suits based on assaults that happened while they were minors. Under the new law, that age would be 28.
In the motion to dismiss from Board and Markley, the defendants claim that three of the six current plaintiffs are outside of the statute of limitations. Based on details provided about the anonymous plaintiffs — John Does 2, 3, and 5 in the complaint — the alleged victims would have turned 21 between 2013 and 2017 or 2018.
The new law would make this particular defense moot since all of the plaintiffs are still under 28. It would also, according to attorneys for the plaintiffs, allow other alleged victims of Kelly to join the class action suit.
Sovereign, government, and public official immunity
Sovereign immunity derives from the maxim of English common law that the “king can do no wrong” and usually refers to the state or federal government. Government immunity is considered to be a version of sovereign immunity extended to local government.
Historically, these types of immunity were absolute, but they’ve been tempered by recent court decisions that have added limits. School boards, for example, waive their right to immunity in any situation for which they carry liability insurance.
This is somewhat of a catch-22: if a school board doesn’t carry insurance for something, for example negligent hiring practices, they can’t be sued for that issue. There is also the North Carolina Schools Boards Trust (NCSBT), created in 1982. The non-profit NCBST is a “risk management partner,” which claims that its “services rival those of any insurance company” without forcing school boards to waive their immunity – since, under state statute, it is not considered an insurance company.
Governmental immunity for North Carolina schools was fundamentally altered by a case filed in 2006; a New Hanover County family sued the Board of Education and the Roland Grise Middle School principal for failing to protect their son from sexual assault. The Board’s defense was governmental immunity, since they did not carry negligent hiring or supervision insurance. The case eventually went to the state Supreme Court, which ruled that the student’s constitutional right to an education defeated any claim of immunity.
Public official immunity applies to government employees that occupy offices created by statute, take an oath of office, and exercise discretion in performance of their duties. While there are some grey areas, in general, it applies to superintendents and principals, but not teachers or coaches.
There are limits to this immunity, as well. Under state case law, actions that are “malicious, corrupt, or outside the scope of employment” are not protected.
For example, a public official can be sued for deliberate official action that intentionally leads to personal injury or harm. Also, a public official can be sued for something not related to their employment. For example, an elected official is not protected by immunity if they are involved in a vehicular accident.
Barring punitive damage
Both the response and motion to dismiss cite North Carolina case law that prohibits punitive damage against government bodies and public officials (acting in their professional capacity). That means while the government can be sued for compensatory damages, including specific damages — lost wages, property damages, etc. — and general damages — including ‘loss of enjoyment,’ and ‘pain and suffering,’ which do not have a clear monetary value.
Under the North Carolina Tort Claims Act, these damages are capped at $1 million in cases against government departments and agencies.
Punitive damages, on the other hand, are not linked to the injury directly but are aimed at punishing the defendant in a civil case. There are several cases where judges found that unless specifically allowed by state statute punitive damages could not be awarded against a government body. These include North Carolina Supreme Court rulings in the Jackson v. Housing Authority of High Point case in 1986 and Long v. City of Charlotte case in 1982.
In the Kelly case, defendants cite Ripellino v. North Carolina School Boards Association, which was decided in the North Carolina Court of Appeals in 2006. The lawsuit, interestingly, is against the Johnston County Board of Education but also the non-profit which manages the NCSBT that allows schools to essentially be insured without waiving government immunity.
The court found that, as per the New Hanover County case, constitutional claims always trump government immunity. However, the court also ruled conclusively that government entities are immune from punitive damages.
The role of insurance
While the Board and Markley claim governmental immunity and public official immunity, the response acknowledges that the district does carry liability insurance that “may provide ceratin coverage” for some of the allegations made by the plaintiffs.
The defendants deny the allegation (e.g. “in paragraph 34”) that purchasing this insurance waives all immunities. Again, due to the catch-22 nature of the laws around sovereign immunity, anything the school is not insured for, it can’t be sued for.
According to a copy of the NHCS insurance policy, the district has recently altered its coverage in ways that will likely be at issue here. On July 1, 2017, the policy was updated to remove an exclusion for abuse and molestation, and insurance for sexual misconduct was added.
The amended policy reads:
The following is added to paragraph under: 1. Insuring Agreement SECTION I – COVERAGE 1. We will pay on behalf of the “insured” those sums in excess of the “retained limit” that the “insured” becomes legally obligated to pay because of “loss” arising out of: a. A “wrongful act” but only to the extent of the “insured’s” “vicarious liability”; b. The “insured’s” negligent: (1) Employment, (2) Investigation, (3) Supervision, (4) Retention, (5) Training, (6) Reporting to proper authorities, or failure to report to proper authorities,
The added coverage is for $3 million and was backdated to cover events dating from August 23, 1994, to the present.
While the Board of Education and Markley have requested the case be thrown out, they’re also taking steps to prepare further defenses. On Monday, representatives of the district are expected in Superior Court to request criminal records related to the Kelly investigation.
Also on the horizon, a Superior Court Judge will have to rule on whether to grant the motion to dismiss or move ahead. A judgment is also expected on whether to allow the case to proceed as a class action or not — and it remains to be seen if, with the passage of the new state law expanding statutes of limitation, if more plaintiffs will seek to join the case.
It also remains to be seen if, and how, Kelly will respond.
Note: It is the district’s stated policy not to comment on ongoing litigation. Port City Daily reached to both Board Chairperson Lisa Estep and Superintendent Markley for comment and, if they provide one, this and future articles will be updated with that information.
Send comments and tips to Benjamin Schachtman at firstname.lastname@example.org, @pcdben on Twitter, and (910) 538-2001