Frampton v. The Univ. of NC at Chapel Hill

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-1236
Filed: 15 August 2017
Orange County, No. 13 CVS 699
PAUL FRAMPTON, Petitioner-Plaintiff,
v.
THE UNIVERSITY OF NORTH CAROLINA and THE UNIVERSITY OF NORTH
CAROLINA AT CHAPEL HILL, Respondent-Defendants.
Appeal by plaintiff from orders entered 28 June and 3 August 2016 by Judge
James E. Hardin, Jr., in Orange County Superior Court. Heard in the Court of
Appeals 2 May 2017.
Law Office of Barry Nakell, by Barry Nakell, for plaintiff-appellant.
Attorney General Joshua H. Stein, by Special Deputy Attorney General
Kimberly D. Potter, for defendant-appellee.
BRYANT, Judge.
Where the plain language of a statute permits the trial court to exercise its
discretion in the award of attorney’s fees and where plaintiff does not establish an
abuse of discretion in the court’s denial of plaintiff’s motion for attorney’s fees, we
affirm.
The background of this case is set out in Frampton v. Univ. of N.C. (Frampton
I), 241 N.C. App. 401, 773 S.E.2d 526 (2015). In brief, the case addressed the
termination of Paul Frampton (“plaintiff”), a tenured professor at the University of
FRAMPTON V. THE UNIV. OF N.C. AT CHAPEL HILL
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North Carolina at Chapel Hill (“UNC”), who was arrested in an airport in Buenos
Aires, Argentina and ultimately convicted of smuggling cocaine found in his suitcase.
Id. Following plaintiff’s arrest, UNC’s chancellor placed plaintiff on unpaid leave and
terminated his salary and benefits without pursuing the disciplinary procedures
outlined in the university’s tenure policies. After appealing to the UNC Board of
Trustees, which upheld the decision to place plaintiff on leave without pay, plaintiff
filed a petition for judicial review of a State agency decision in Orange County
Superior Court. The superior court affirmed UNC’s actions, and plaintiff appealed to
this Court. On appeal, this Court held that by placing plaintiff on personal, unpaid
leave instead of pursuing formal disciplinary proceedings pursuant to the tenure
policy, UNC violated its own policies. On this basis, this Court reversed the trial
court’s ruling and remanded the matter for the trial court to determine the
appropriate amount of the salary and benefits withheld that should have been paid
to plaintiff. Id. at 414, 773 S.E.2d at 535.
Upon remand, plaintiff filed a motion requesting compensation for unpaid
salary and benefits as well as attorney’s fees. The trial court awarded plaintiff
$231,475.92 in back salary and $31,824.53 for loss of benefits, but denied the motion
for attorney’s fees. The trial court found “UNC-Chapel Hill did not act without
substantial justification as it attempted to manage an unusual set of circumstances
that were not of its own making, and that it would be unjust to require the State to
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pay attorney fees under such special circumstances.” Plaintiff now appeals the trial
court’s denial of his request for attorney’s fees to this Court.1
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On appeal, plaintiff argues the trial court abused its discretion by denying his
motion for an award of attorney’s fees, made pursuant to our General Statutes,
section 6-19.1, contending the trial court improperly concluded UNC (I) acted with
substantial justification (2) under special circumstances that would make the award
unjust. We disagree.
The standard of review for a trial court’s decision whether to award attorney’s
fees is abuse of discretion. High Rock Lake Partners, LLC v. N.C. Dep’t of Transp.,
234 N.C. App. 336, 760 S.E.2d 750 (2014). “A ruling committed to a trial court’s
discretion is to be accorded great deference and will be upset only upon a showing
that it was so arbitrary that it could not have been the result of a reasoned decision.”
Smith v. Beaufort Cty. Hosp. Ass’n, Inc., 141 N.C. App. 203, 210, 540 S.E.2d 775, 780
(2000) (citation omitted). On appeal, the appellant has the burden to show the trial
court’s ruling was unsupported by reason or could not be the product of a reasoned
decision. High Rock Lake Partners, LLC, 234 N.C. App. at 340, 760 S.E.2d at 753.
1 On 30 March 2016, pursuant to the decision of this Court in Frampton I, plaintiff filed a
motion seeking attorney’s fees. Following the trial court’s denial of the motion on 28 June 2016,
plaintiff filed a motion for reconsideration of the ruling pursuant to Rules 59 and 60. In an order
entered 3 August 2016, the trial court denied the motion for reconsideration. Plaintiff appeals both
orders.
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As the appellant, here, plaintiff contends the trial court abused its discretion
by finding “UNC-Chapel Hill did not act without substantial justification” under
special circumstances and that it would be unjust to require UNC to pay plaintiff’s
attorney’s fees.
General Statutes, section 6-19.1, specifically addresses the awarding of
attorney’s fees to parties defending against agency decisions.
In any civil action . . . brought by a party who is contesting
State action . . . the court may, in its discretion, allow the
prevailing party to recover reasonable attorney’s fees,
including attorney’s fees applicable to the administrative
review portion of the case . . . if:
(1) The court finds that the agency acted without
substantial justification in pressing its claim against
the party; and
(2) The court finds that there are no special circumstances
that would make the award of attorney’s fees unjust.
The party shall petition for the attorney’s fees within
30 days following final disposition of the case. The
petition shall be supported by an affidavit setting forth
the basis for the request.
N.C. Gen. Stat. § 6-19.1(a) (2015). In accordance with this statute, our Supreme
Court determined that in order for a trial court to act within its discretion and award
attorney’s fees to the prevailing party, the trial court must first find that the State
agency acted “without substantial justification” and, second, that there were no
special circumstances which would make awarding attorney’s fees unjust. Crowell
Constructors, Inc. v. State ex rel. Cobey, 342 N.C. 838, 843, 467 S.E.2d 675, 678 (1996).
Thus, a trial court’s power to award attorney’s fees manifests only when the court
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determines that the agency acted without substantial justification and no special
circumstances exist. High Rock Lake Partners, LLC, 234 N.C. App. at 339, 760 S.E.2d
at 753. However, even when both criteria are met, the trial court is not required to
award attorney’s fees. See id. at 339, 760 S.E.2d at 753.
I. Substantial Justification
Plaintiff first argues that the trial court erred in concluding UNC did not act
without substantial justification. We disagree.
A state agency has the initial burden before the trial court to show substantial
justification existed. Early v. Cty. of Durham, Dep’t. of Soc. Servs., 193 N.C. App.
334, 347, 667 S.E.2d 512, 522 (2008). The “substantial justification” standard
requires that a State agency bear the burden “to demonstrate that its position, at and
from the time of its initial action, was rational and legitimate to such degree that a
reasonable person could find it satisfactory or justifiable in light of the circumstances
then known to the agency.” Crowell Constructors, 342 N.C. at 844, 467 S.E.2d at 679.
On appeal, a trial court’s determination that a state agency’s actions were
substantially justified is a reviewable conclusion of law, but findings of fact are
binding if substantiated by evidence in the record. See Whiteco Indus., Inc. v.
Harrelson, 111 N.C. App. 815, 819, 434 S.E.2d 229, 232–33 (1993); see also Early, 193
N.C. App. at 346–47, 667 S.E.2d at 522. “Conclusions of law are reviewed de novo
and are subject to full review.” State v. Biber, 365 N.C. 162, 168, 712 S.E.2d 874, 878
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(2011); see also Carolina Power & Light Co. v. City of Asheville, 358 N.C. 512, 517,
597 S.E.2d 717, 721 (2004) (“Conclusions of law drawn by the trial court from its
findings of fact are reviewable de novo on appeal.” (citation omitted)).
This Court has made it clear that an agency need not be “legally correct in
order to avoid liability for attorney’s fees.” Estate of Joyner v. N.C. Dep’t of Health &
Human Servs., 214 N.C. App. 278, 292, 715 S.E.2d 498, 508 (2011).
The test for substantial justification is not whether this
Court ultimately upheld respondent’s reasons . . . but,
rather, whether respondent’s . . . [actions were] justified to
a degree that could satisfy a reasonable person under the
existing law and facts known to, or reasonably believed by,
respondent at the time respondent . . . [acted].
S.E.T.A. UNC-CH, Inc. v. Huffines, 107 N.C. App. 440, 443–44, 420 S.E.2d 674, 676
(1992) (citation omitted).
Here on appeal, UNC argues that the trial court’s finding, “UNC-Chapel Hill
did not act without substantial justification” by deciding to place plaintiff on unpaid,
personal leave instead of pursuing disciplinary action as outlined by UNC’s tenure
policies, was supported by the evidence before the trial court.
In Frampton I, this Court emphasized that the disciplinary procedures
incorporated by UNC’s own policies provided a method of recourse in the event a
tenured professor was unable to perform the professional duties required, such as in
plaintiff’s case. 241 N.C. App. at 413, 773 S.E.2d at 534.
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While we can envision scenarios in which it would be more
beneficial to place a tenured faculty member on unpaid
personal leave without his or her consent in order to protect
the faculty member’s reputation from the stigma
associated with disciplinary actions—even if those
proceedings result in a favorable outcome—we believe that
the more reasoned interpretation of the unpaid leave policy
could only support its application if the faculty member
either requested it or consented to it. Moreover, the fact
that there is no “mandated” appeal procedure for this type
of leave suggests that . . . the unpaid personal leave policy
is not intended to be unilaterally imposed upon a tenured
professor given the procedural protections afforded to
faculty members in all other situations.
Id. (emphasis added). However, while our Court in Frampton I determined that
UNC’s actions were not proper in light of its own tenure policies, the determination
of whether the actions were based on substantial justification is reviewed for the first
time in this appeal (Frampton II).
In Daily Express, Inc. v. Beatty, after a trial court determined an agency’s
position was not legally correct, it awarded attorney fees to the plaintiff. 202 N.C.
App. 441, 688 S.E.2d 791 (2010). On appeal, this Court reversed the attorney fee
award to the plaintiff after making a distinction between whether the agency’s
actions were legally correct and whether the agency’s actions were substantially
justified. Id. at 455–56, 688 S.E.2d at 802. “[E]ven though we ultimately did not
accept [the agency’s] construction of the applicable statutory provisions, we
recognized that [the agency’s] construction of the relevant statutory language had
some level of support in both logic and the language enacted by the General
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Assembly.” Id. at 455, 688 S.E.2d at 802. Therefore, this Court in Daily Express held
that the agency was not liable to plaintiff for attorney’s fees under N.C. Gen. Stat. §
6-19.1, because although the agency’s actions were later determined to be erroneous,
“at the time that action was taken, [the agency was] not without substantial
justification[.]” Id. at 456, 688 S.E.2d at 802.
Thus, as our Court reasoned in Daily Express (notwithstanding an erroneous
decision, a court must consider the existence of substantial justification), the Orange
County Superior Court reasoned that “UNC-Chapel Hill did not act without
substantial justification.” We uphold the trial court’s determination, and therefore,
the court’s order has met the substantial justification prong of section 6-19.1.
II. Special Circumstances
Plaintiff next argues the trial court erred in finding that there were special
circumstances that would make an award of attorney’s fees unjust. We disagree.
North Carolina case law is limited with regard to interpreting what qualifies
as special circumstances that would make an award of attorney’s fees unjust.
However, our courts have looked to federal decisions applying similar laws for
guidance on interpreting statutory language. See generally Newberne v. Dep’t of
Crime Control & Pub. Safety, 359 N.C. 782, 618 S.E.2d 201 (2005). Specifically, our
Supreme Court, when interpreting N.C. Gen. Stat. § 6-19.1, has incorporated the
United States Supreme Court’s interpretation of the federal Equal Access to Justice
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Act (“EAJA”) which “contains an attorney’s fees provision almost identical to [N.C.
Gen. Stat. § 6-19.1].” See Crowell, 342 N.C. at 843, 467 S.E.2d at 679 (showing the
identical language of the substantial justification and special circumstances prongs
and citing United States Supreme Court decisions to interpret the language of the
federal statute that is identical to that of the North Carolina statute).
Interpreting “special circumstances” in the EAJA as a “safety valve”
preventing unjust awards, the United States Supreme Court stated the special
circumstances provisions allow “the [trial] court[s] discretion to deny awards where
equitable considerations dictate an award should not be made.” Scarborough v.
Principi, 541 U.S. 401, 423, 158 L. Ed. 2d 674, 692 (2004) (citation omitted).
Though not giving deference to UNC’s basis for withholding benefits in
Frampton I, this Court did acknowledge the uniqueness of the situation UNC faced.
241 N.C. App. at 412, 773 S.E.2d at 534. “This case requires this Court, as it required
the trial court and the University, to resolve an unusual and controversial dispute
that tests the University’s responsibilities as an employer of tenured faculty and as
a steward of public funds.” Id. at 401–02, 773 S.E.2d at 527. In reviewing the issues
that are currently before this Court, we hold that based on UNC’s responsibility to
manage public funds and plaintiff’s own choices that precipitated this dispute, the
trial court acted within its discretion in determining special circumstances would
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make an award of attorney’s fees unjust in this case, thus satisfying the second prong
of section 6-19.1.
Regardless, even if UNC acted without substantial justification and no special
circumstances existed, the controlling statute specifically states that a trial court
“may” use its discretion to decide whether to grant or deny an award of attorney’s
fees. N.C. Gen. Stat. § 6-19.1(a). It is not required to award attorney’s fees. See High
Rock Lake Partners, LLC, 234 N.C. App. at 339, 760 S.E.2d at 753 (setting out the
standard of review for a trial court’s decision on whether or not to award attorney’s
fees as abuse of discretion). Plaintiff relies on what he contends was the trial court’s
error in finding substantial justification for UNC’s action to support the conclusion
that the trial court was “operating under a mistake of law” and “abused its discretion
in denying the motion for an award of attorney’s fees.” However, on appeal, plaintiff
asserts “the trial court erred on both points, ‘rational basis’ and ‘special circumstance,’
so there can be no ‘reason’ supporting its decision to deny the motion.” By this
assertion, plaintiff improperly implies that a failure to prove both provisions—
substantial justification and special circumstances—mandates that the trial court
award attorney’s fees. Yet, the plain language of the statute merely permits the trial
court to decide whether to grant the award of attorney’s fees; the use of “may” does
not necessitate an action by the trial court when both prongs are satisfied.
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In the order denying plaintiff attorney’s fees, the trial court based its
conclusion that “it would be unjust to require the State to pay attorney’s fees” to
plaintiff on “the record in this case, the decision of the North Carolina Court of
Appeals [in Frampton I], the submissions of the parties, the arguments of counsel,
and the relevant-statutory and case law.” Given the trial court’s reasoned response
and plaintiff’s failure to establish that the trial court abused its discretion in reaching
its decision to deny the requested award, we overrule plaintiff’s argument.
Therefore, the orders entered 28 June 2016 and 3 August 2016 denying
appellant’s request for attorney’s fees, are
AFFIRMED.
Judges STROUD and DAVIS concur.
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