De Luca v. Stein

CourtCourt of Appeals of North Carolina
DecidedDecember 15, 2020
Docket17-1374-2
StatusPublished

This text of De Luca v. Stein (De Luca v. Stein) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
De Luca v. Stein, (N.C. Ct. App. 2020).

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA17-1374-2

Filed: 15 December 2020

Wake County, No. 16 CVS 12965

THE NEW HANOVER COUNTY BOARD OF EDUCATION, Plaintiffs,

v.

JOSH STEIN, in his capacity as Attorney General of the State of North Carolina, Defendant,

and

NORTH CAROLINA COASTAL FEDERATION and SOUND RIVERS, INC., Intervenors.

Appeal by plaintiff from order entered 12 October 2017 by Judge Paul C.

Ridgeway in Wake County Superior Court. Originally heard in the Court of Appeals

20 June 2018. De Luca v. Stein, 261 N.C. App. 118, 820 S.E.2d 89 (2018). Upon

remand from the Supreme Court of North Carolina by opinion issued 3 April 2020.

New Hanover Cty. Bd. of Educ. v. Stein, 374 N.C. 102, 840 S.E.2d 194 (2020).

Stam Law Firm, PLLC, by Paul Stam and R. Daniel Gibson, for plaintiff- appellants.

Attorney General Joshua H. Stein, by Deputy Solicitor General James W. Doggett and Special Deputy Attorney General Marc Bernstein, for defendant- appellee.

No supplemental briefing by intervenors.

TYSON, Judge. NEW HANOVER CTY. BD. OF EDUC. V. STEIN

Opinion of the Court

I. Background

Smithfield Foods, Inc. and its subsidiaries: Brown’s of Carolina, Inc., Carroll’s

Foods, Inc., Murphy Farms, Inc., Carroll’s Foods of Virginia, Inc., and Quarter M

Farms, Inc. (collectively, the “Companies”), own and operate swine farms throughout

eastern North Carolina. In the mid-to-late 1990s, millions of gallons of swine waste

overflowed the containment lagoons after storms and spilled into North Carolina

waterways. The waste contaminated the waterways and impacted groundwater

supplies.

The North Carolina Department of Justice Environmental Division (the

“DOJ”) filed a number of lawsuits against swine farms from which the waste had

overflowed. See, e.g., Murphy Family Farms v. N.C. Dep’t of Env’t & Natural Res.,

359 N.C. 180, 605 S.E.2d 636 (2004).

After months of negotiations, then Attorney General, Michael F. Easley, and

the Companies entered into an agreement (the “Agreement”) under which the

Companies “agreed to lead the development and implementation of environmentally

superior swine waste management technologies in North Carolina” and to pay for

those costs.

The Companies additionally agreed to “pay each year for 25 years an amount

equal to one dollar for each hog in which the Companies . . . have had any financial

-2- NEW HANOVER CTY. BD. OF EDUC. V. STEIN

interest in North Carolina during the previous year, provided, however, that such

amount shall not exceed $2 million in any year.”

The Attorney General retained sole authority under the Agreement to award

and distribute funds held in a private bank account to organizations of his choosing,

if the funds are “used to enhance the environment of the State.” The Attorney

General developed the Environmental Enhancement Grant Program (the “EEG

Program”) to receive requests and facilitate the administration of these funds.

The Attorney General, after receiving EEG Program recommendations, retains

sole discretion to select recipients of the funds and to allocate the amount awarded to

each recipient, up to $500,000 per award. Once the grant recipients are selected, the

recipient requests reimbursement, and the Attorney General orders the bank to

disburse the funds. Since the Agreement was signed, the Attorney General has

selected and distributed more than $24 million dollars in payments. The recipients

and programs are not limited to the geographical areas of swine production, water

quality improvement, or elimination of pollution, but include conservation projects

and storm sediment.

Former Plaintiff, Francis X. De Luca (“De Luca”), filed his complaint on 18

October 2016. De Luca sought to preliminary and permanently enjoin the Attorney

General from distributing payments made pursuant to the Agreement to anyone

other than the Civil Penalty and Forfeiture Fund. See N.C. CONST. art. IX, § 7(a)

-3- NEW HANOVER CTY. BD. OF EDUC. V. STEIN

(“the clear proceeds of all penalties and forfeitures and of all fines collected . . . shall

be faithfully appropriated and used exclusively for maintaining free public schools”).

The Attorney General filed a motion to dismiss De Luca’s complaint on 19

December 2016. Plaintiff amended his complaint to add the New Hanover County

Board of Education (“the Board”) as a Plaintiff and to substitute Josh Stein, the

current Attorney General of North Carolina, as Defendant on 25 January 2017.

The superior court entered an order granting the Attorney General’s motion

for summary judgment on 12 October 2017. That same day, the superior court denied

Plaintiffs’ motion for summary judgment, dismissed Plaintiffs’ complaint with

prejudice, and dissolved the preliminary injunction. Plaintiffs filed their notice of

appeal to this Court and a motion for temporary stay at the trial court on 25 October

2017.

This Court reversed the superior court. See De Luca v. Stein, 261 N.C. App.

118, 136, 820 S.E.2d 89, 100 (2018). Further, we held De Luca lacked standing to

assert the civil penalty claim, but we determined the Board had standing as an

“intended beneficiary of a portion of those monies.” Id. at 126-28, 820 S.E.2d at 94-

95. The Attorney General appealed to the Supreme Court based upon a dissent in

this Court. De Luca did not seek review of his dismissal for lack of standing and

subsequently filed a motion to be removed from the case. New Hanover Cty. Bd. of

Educ., 374 N.C. at 113, n.3, 840 S.E.2d at 202 n.3.

-4- NEW HANOVER CTY. BD. OF EDUC. V. STEIN

The day before oral arguments were heard at the Supreme Court, the Governor

of North Carolina signed 2019 N.C. Sess. Laws 250 into law. The Board argued § 5.7

of 2019 N.C. Sess. Laws 250 (“§ 5.7”) controlled the disposition of “the bulk of the

money in controversy.”

Our Supreme Court, over a dissent, reversed and remanded, holding these

funds are not “the clear proceeds of all penalties and forfeitures and of all fines

collected . . . shall be faithfully appropriated and used exclusively for maintaining

free public schools.” N.C. CONST. art. IX, § 7(a). The Supreme Court “remand[ed]

this case to the Court of Appeals for any additional proceedings not inconsistent with

this opinion.” New Hanover Cty. Bd. of Educ., 374 N.C. at 123-24, 840 S.E.2d at 209.

In a subsequent Order, the Supreme Court deleted a portion of footnote 8 in its

opinion and substituted in part:

[T]he parties agreed that the provisions of newly-enacted N.C.G.S. § 147-76.1 would not have the effect of mooting this appeal . . . we will refrain from attempting to construe N.C.G.S. § 147-76.1 or to apply its provisions to the facts of this case. We express no opinion as to what effect, if any, N.C.G.S. § 147-76.1 has on the agreement or on any past or future payments made thereunder.

New Hanover Cty. Bd. of Educ., 374 N.C. 260, n.8, 840 S.E.2d at 209 n.8 (emphasis

supplied).

II. Jurisdiction

-5- NEW HANOVER CTY. BD. OF EDUC. V. STEIN

This case returns to this Court upon remand from the Supreme Court of North

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Bluebook (online)
De Luca v. Stein, Counsel Stack Legal Research, https://law.counselstack.com/opinion/de-luca-v-stein-ncctapp-2020.