DocketNumber: No. COA15–23.
Judges: Stephens
Filed Date: 11/17/2015
Status: Precedential
Modified Date: 10/19/2024
*37I. Factual Background and Procedural History
Plaintiff Henry Frazier, III, was employed at North Carolina Central University ("NCCU") as head football coach pursuant to a contract for a five-year period, beginning 1 January 2011 and continuing through 31 December 2015. The terms of Frazier's contract provided that his position was "designated as employment at will and therefore governed by the common law of the State of North Carolina and not by any statutory SPA [State Personnel Act] or EPA [Exempt Personnel Act] policies or procedures." The contract further provided that NCCU could terminate Frazier's employment for just cause, which was defined in pertinent part to include
[a]ny conduct by [Frazier] which constitutes moral turpitude, which would constitute a criminal offense under *38North Carolina law, or which would tend to bring public disrespect, contempt or ridicule upon [NCCU]. Any discipline under this subsection shall not violate the due process rights of [Frazier] to defend himself against false and/or malicious prosecution or accusations[.]
In the event of any disciplinary action against Frazier, section 3.2 of the contract required NCCU's Director of Athletics to give him notice of and an opportunity to respond to any allegations against him, as well as written notice of any subsequent disciplinary decisions and the right to request a review of such decisions by NCCU's Chancellor.
On 14 May 2012, Frazier was arrested and charged with misdemeanor assault on a female following a domestic incident involving his spouse, and a protective order was entered *517against him. Frazier was initially placed on administrative leave from NCCU. After entering into a deferred prosecution agreement with the Wake County District Attorney, Frazier was allowed to return to his position at NCCU provided he fully comply with the conditions of his prayer for judgment. At that time, NCCU's Chancellor issued Frazier a formal letter of reprimand and notified him that any additional incidents of this kind would be cause for more severe disciplinary actions, up to and including dismissal.
On 19 August 2013, Frazier was arrested for violating the aforementioned protective order. That same day, NCCU's Director of Athletics, Dr. Ingrid Wicker-McCree notified Frazier by letter that he was suspended with full pay while NCCU collected additional information regarding his arrest. On 22 August 2013, after meeting with Frazier and providing him an opportunity to respond to the allegations against him, Wicker-McCree notified Frazier by letter of her decision to terminate his employment. In her letter, Wicker-McCree explained:
It is my intent to discharge you for behavior that has brought public disrespect, contempt and ridicule upon [NCCU], the Department of Intercollegiate Athletics and the football program....
....
During our meeting, you provided me with your position regarding your performance as Head Coach and outlined your achievements to date. You also indicated that while you understood [NCCU's] concerns regarding these matters, you did not believe that these issues have had a negative impact on your job performance or your ability to lead *39the program. During our discussion, it became clear to me that you did not have an appreciation of the impact these types of behaviors, your arrest and the resulting negative publicity can and have had on our student athletes, the program and [NCCU]. This was especially disturbing, in light of the fact that you were severely reprimanded for similar behaviors in July 2012. Your recent arrest for violation of a domestic protective order, stemming from your May 2012 arrest, ... has once again generated local, regional and national media stories and opinions that have harmed the reputation of [NCCU] and our athletics program.
Frazier's contract expressly provided that he had the right to appeal any decision by the Director of Athletics to take disciplinary action against him to NCCU's Chancellor. On 29 August 2013, Frazier's New York-licensed attorney, Linda Kenney Baden, sent a letter to NCCU Chancellor Debra Saunders-White appealing Wicker-McCree's decision. In a letter dated 25 September 2013, Saunders-White informed Frazier that she had considered his request for reinstatement but ultimately concluded-in light of his previous arrest in May 2012, the resulting deferred prosecution and letter of reprimand from NCCU's former Chancellor, and Frazier's "current arrest, and blatant disregard for [NCCU] directives [, which] are inconsistent with the position as Head Coach, a position charged with modeling behaviors for students"-that "there is sufficient basis to support your for cause termination" and therefore upheld Wicker-McCree's decision.
On 30 September 2013, Frazier was acquitted of the charges that led to his most recent arrest. On 1 October 2013, Frazier's attorney, Kenney Baden, sent a letter to NCCU's general counsel, Melissa Jackson Holloway, requesting that NCCU reconsider its decision to terminate her client's employment, and inquiring whether Frazier was required to complete any further internal or more formal appeals process "before legal action ensues." In a letter dated 11 October 2013, Jackson Holloway confirmed that "[i]t is [NCCU's] position that Coach Frazier has exhausted his campus based appeals rights" and also stated that the terms of Frazier's contract precluded him "from pursuing avenues of appeal/review provided for in the State Personnel Act (governing SPA employees) and/or the NCCU EPA non faculty employment policies (governing EPA non faculty employees) including, but not limited to, a review of the termination decision by the NCCU Board of Trustees...." However, Jackson Holloway also cautioned Frazier's attorney that
*518*40given my role as counsel to [NCCU], I am not in the position to identify all of the claims that you believe your client may have against [NCCU] and/or its representatives or to identify every potential statutory or other requirement to pursue such claims. I would respectfully suggest that you obtain NC local counsel to ensure your understanding of state contract law, the North Carolina Tort Claims Act and other relevant statutes, case law and other authority applicable to any claims your client may have.
On 8 April 2014, after hiring a North Carolina-licensed attorney, Frazier filed a complaint in Durham County Superior Court against NCCU and the Board of Governors of the University of North Carolina seeking compensatory and punitive damages for breach of contract, wrongful discharge in violation of public policy, and breach of the covenant of good faith and fair dealing. With NCCU's consent, Frazier subsequently amended his complaint three times in order to attach an accurate copy of his contract and correct certain typographical errors.
On 5 June 2014, NCCU filed a motion to dismiss all of Frazier's claims pursuant to Rule 12(b)(1), (2), and (6) of the North Carolina Rules of Civil Procedure based on sovereign immunity, lack of subject matter jurisdiction, lack of personal jurisdiction, and failure to state a claim upon which relief can be granted, given the fact that Frazier failed to exhaust his administrative remedies under our State's Administrative Procedure Act ("APA") and also failed to allege in any of his complaints that the available administrative procedures and remedies were inadequate. The trial court held a hearing on this motion on 12 August 2014, and on 25 August 2014, it entered an order granting NCCU's motion and dismissing Frazier's claims with prejudice. On 22 September 2014, Frazier gave notice of appeal to this Court.
II. Analysis
Frazier argues that by terminating his employment before he had the opportunity to defend himself in court, NCCU violated his contractual right to due process. However, the scope of our review in the present case focuses not on the merits of Frazier's claim but instead on the threshold issue of whether the trial court erred in granting NCCU's motion to dismiss. On that point, Frazier argues that the trial court erred in dismissing his complaint because: (1) his contract did not require him to exhaust administrative remedies available under the APA; (2) NCCU waived its sovereign immunity by entering into the contract with him; and (3) by pleading all the elements of a claim for breach of contract, his *41complaint adequately alleged that any available administrative remedies were inadequate. We disagree.
A. Background Law
This Court's standard of review for a motion to dismiss pursuant to N.C.R. Civ. P. 12(b)(1) is de novo. See Country Club of Johnston Cnty., Inc. v. U.S. Fid. & Guar. Co.,
A motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction may be raised at any time. Subject matter jurisdiction is a prerequisite for the exercise of judicial authority over any case or controversy. An action is properly dismissed for lack of subject matter jurisdiction when the plaintiff has failed to exhaust his administrative remedies. Where the legislature has provided by statute an effective administrative remedy, that remedy is exclusive and its relief must be exhausted before recourse may be had to the courts.
Hentz v. Asheville City Bd. of Educ.,
It is well established that the actions of the University of North Carolina ("the University") and its constituent institutions-which include NCCU, see N.C. Gen.Stat. § 116-4 (2013)-are "specifically made subject to the judicial review procedures" provided by N.C. Gen.Stat. § 150B-43. Huang v. N.C. State *519Univ.,
*42may affirm the decision or remand the case for further proceedings. It may also reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional provisions;
(2) In excess of the statutory authority or jurisdiction of the agency or administrative law judge;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Unsupported by substantial evidence ... in view of the entire record as submitted; or
(6) Arbitrary, capricious, or an abuse of discretion.
N.C. Gen.Stat. § 150B-51(b) (2013). This Court's prior holdings amply demonstrate that a trial court lacks subject matter jurisdiction to hear an action challenging a final decision by the University unless the plaintiff has exhausted all available administrative remedies, including seeking judicial review pursuant to section 150B-43, or his complaint alleges the administrative remedies available to him are inadequate. Huang,
In Huang, for example, the plaintiff had been terminated from his position as a tenured professor at N.C. State University ("NCSU") after he was arrested for attempted rape. Id. at 711-12,
On appeal, we first explained that "[b]ecause no statutory administrative remedies are made available to employees of the University, those who have grievances with the University have available only those administrative remedies provided by the rules and regulations of the University and must exhaust those remedies before having access to the courts." Id. at 713-14,
The trial court did not have before it the complete administrative record, as required by [section] 150B-47. Indeed[,] the trial court conducted a de novo hearing, not a review of the record of the agency proceedings. This is so even though the trial court was made aware of the Board's decision prior to entering summary judgment. Furthermore, Huang filed a complaint in superior court seeking compensatory and punitive damages. The correct procedure for seeking review of an administrative decision is to file a petition in the court explicitly stating what exceptions are taken to the administrative decision. This judicial review is to be conducted without a jury. Huang specifically requested a jury trial.
*44Id. at 714-15,
We also rejected Huang's alternative argument that he was not required to exhaust his administrative remedies before filing an action in superior court because the only administrative remedies available to him were inadequate. Id. at 716,
In cases since Huang, this Court has consistently and repeatedly held that a trial court lacks jurisdiction to hear breach of contract claims brought by University employees who failed to first exhaust their administrative remedies, including petitioning for judicial review pursuant to section 150B-43. See, e.g., Tucker v. Fayetteville State Univ., --- N.C.App. ----, ----,
B. Frazier's Appeal
In the present case, rather than filing a petition for judicial review of NCCU's decision to terminate his employment within 30 days of receiving the 11 October 2013 letter informing him that he had exhausted all on-campus appeal procedures, Frazier waited roughly six months and then filed the present lawsuit. During the hearing on NCCU's motion to dismiss and again in his brief to this Court, Frazier has raised several related arguments as to why his claims should be exempt from *46the requirements of the APA and section 150B-43. We find none of them persuasive.
(1) Applicability of the APA to Frazier's employment contract
We turn first to Frazier's argument that the APA does not apply to his claims at all because his contract with NCCU prohibited the use of any statutory administrative procedures for resolving disputes between the parties. In support of this argument, Frazier notes that the dispute-resolution process outlined by section 3.2 of his contract makes no reference to the APA, and he also emphasizes the contract's express provision that his position was "designated as employment at will and therefore governed by the common law of the State of North Carolina and not by any statutory SPA or EPA policies or procedures." In Frazier's view, the fact that the 11 October 2013 letter confirmed that he had exhausted the internal appeal process required by his contract, and that his contract prevented him "from pursuing avenues of appeal/review provided for in the State Personnel Act," proves that there were no administrative procedures for him to utilize before filing a lawsuit.
This argument is unavailing. There is no dispute that NCCU is a member of the University system and therefore, as noted supra, the APA makes NCCU's actions subject to judicial review under section 150B-43. Nothing in Frazier's contract expressly purports to exempt him from the APA's procedures, and we do not believe the mere fact that the contract states that the EPA and SPA do not apply has any bearing on this *522issue. In this Court's recent decision in Tucker, we construed a similar contractual provision that exempted the plaintiff University basketball coach from the SPA to mean that his position was subject to the University's internal grievance and dispute-resolution procedures, and not the statutory scheme outlined in chapter 126 of our General Statutes, where the SPA is codified. See Tucker, --- N.C.App. at ----,
(2) Frazier's failure to exhaust available administrative remedies
Frazier argues next that because NCCU waived its sovereign immunity by entering into a contract with him, he was not required to exhaust administrative remedies, and therefore the trial court erred in dismissing his claims. In support of this argument, Frazier relies on our Supreme Court's holding in Smith v. State,
[t]he Smith Court abolished sovereign immunity in only those cases where an administrative or judicial determination was not available. It did so by finding that the State had implicitly consented to be sued by entering into a valid contract. Unaffected by the decision were those contractual situations in which the State had waived its immunity by statute, thereby expressly consenting to suit.
Id. at 574-75,
However, Frazier contends that Huang is obsolete and that this Court has long since abandoned its exhaustion requirement in circumstances like his, where a party seeks monetary damages for breach of *48contract. Specifically, Frazier insists that the fact the APA does not provide for breach of contract damages means that judicial review under section 150B-43 is not an adequate remedy, which in Frazier's view means that he has not failed to exhaust his administrative remedies. In support of his argument, Frazier relies heavily on this Court's decision in Ware v. Fort,
There are several reasons why this argument fails. On the one hand, we note that our holding in Huang has never been overruled by our Supreme Court, and it is well established that "[w]here a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court." In re Appeal from Civil Penalty,
where adequate state remedies exist, no Corum claim will lie. The pleadings indicate that [the] plaintiff had a number of alternative state law remedies whereby he could have pursued the damages he seeks. [The p]laintiff could have sought judicial review of the final BOG decision under Chapter 150B of the [APA]. [The p]laintiff also could have sued the University for breach of contract, since the State implicitly consents to be sued for damages on the contract in the event it breaches the contract.
(3) Frazier's failure to allege inadequacy of available administrative remedies
Frazier argues further that the trial court erred in dismissing his claim because his available administrative remedies were inadequate in light of the compensatory and punitive damages he sought in his complaint for breach of contract. Frazier also contends that by merely alleging an action for breach of contract, he sufficiently alleged that his available administrative remedies were inadequate. In support of this argument, Frazier cites this Court's prior decisions in S. Furniture Co. of Conover, Inc. v. Dep't of Transp.,
In S. Furniture, the plaintiff property owner contended that when it granted the Department of Transportation ("DOT") a right-of-way over its land for highway access in 1953, DOT agreed to maintain a secondary road and a median crossover on the highway.
*50
In Sanders, the plaintiffs were a group of State employees who alleged they were wrongfully denied employment benefits after working for more than 12 months as temporary employees and who brought suit for breach of contract as well as claims under the North Carolina Constitution and the North Carolina Administrative Code.
In the present case, Frazier contends that S. Furniture and Sanders demonstrate that the APA is categorically inapplicable to claims seeking monetary damages for breach of contract, and therefore urges us to hold that the trial court erred in dismissing his complaint-which he contends, by seeking compensatory and punitive damages, sufficiently alleged that his available administrative *525remedies were inadequate. We find this argument unpersuasive. Notably, Frazier's argument ignores the fact that neither S. Furniture (in which the State argued the plaintiff failed to exhaust his administrative remedies available under section 136-111 of our General Statutes) nor Sanders (in which the State failed to cite any specific statutory procedure the plaintiffs had failed to exhaust) purported to address the adequacy of the administrative remedies provided by section 150B-43. Further, Frazier's argument overlooks fundamental differences between the facts from which his claim for breach of contract damages arose and those at issue in S. Furniture and Sanders. Moreover, we are unpersuaded by the superficial distinctions he attempts to draw between the present facts and those at issue in our decisions in Tucker and Hedgepeth, which involved strikingly similar fact patterns as are present here and in which we concluded, in keeping with Huang, that the trial court lacked subject matter jurisdiction to hear claims for breach of contract damages filed by University employees who failed to exhaust their available administrative remedies and failed to allege the inadequacy of those remedies in their complaints. See Tucker, --- N.C.App. at ----,
In our view, here again, Huang is directly on point with the facts and procedural posture of the present case, and consequently controls the outcome. Like the plaintiff in Huang, Frazier argues that his claim for compensatory and punitive damages renders the administrative remedies available pursuant to section 150B-43 inadequate.
Frazier may well be correct in contending that judicial review pursuant to section 150B-43 does not provide for the compensatory or punitive damages he seeks in conjunction with his breach of contract claim, but we are not convinced that this necessarily renders it an inadequate remedy or otherwise obviates the APA's general exhaustion requirement. Indeed, we believe that Frazier's argument misapprehends the purpose of judicial review under the APA in this context, which, as Huang implies, is to promote judicial economy by providing a forum for efficiently resolving personnel disputes between the University and its employees based on a review of "the completed administrative record" in a less formalized setting before allowing the plaintiff to seek further judicial intervention.
Because Frazier failed to exhaust his available administrative remedies pursuant to section 150B-43, and also failed to adequately allege that those remedies were inadequate, we hold that the trial court did not err in dismissing his complaint. Accordingly, the trial court's decision is
AFFIRMED.
Judges BRYANT and DIETZ concur.
Although Rule 30(e)(3) of North Carolina's Rules of Appellate Procedure holds that this Court's unpublished decisions do not constitute controlling legal authority, the facts and procedural posture of Hedgepeth are strikingly similar to those of the present case. In Hedgepeth, we held-based on Huang, Johnson , and Hentz -that the trial court did not err in dismissing an action for breach of contract by a University employee who, by failing to petition for judicial review pursuant to section 150B-43, had not exhausted her available administrative remedies and also failed to allege in her complaint that such remedies were inadequate. Indeed, during arguments below in the present case, counsel for NCCU specifically cited Hedgepeth as support for NCCU's motion to dismiss and, just before granting the motion, the trial court stated, "If the Hedgepeth case was published it would be right on point; it's not, so it has no precedential value." Thus, although the trial court was correct that because Hedgepeth was unpublished it does not control the result here, we nevertheless find its reasoning persuasive for the reason that, inter alia, it followed the well-established precedent on which it relied.