Send Lawyers, Guns and Money Understanding Your Community College’s Liability North Carolina Association of Community College Attorneys September 6, 2018

Hypothetical Early one foggy morning while walking on a campus sidewalk to class, a student tripped and fell because of an uneven crack on the sidewalk. Due to the fog and the fact that the area had poor lighting, the student was unable to see the condition of the sidewalk. The student was not injured but reported the poor condition of the sidewalk as well as the poor lighting to the Vice President for Administration, VP Black. VP Black puts the matter on his “to do” list. Three days later at dusk, Martha, an uninsured continuing education student, fell in the same area on the sidewalk. Martha was seriously injured breaking her hip and arm. Due to an unrelated pre-existing medial condition, Martha’s recovery is painful, difficult and long. Her out-of-pocket medical bills are significant as well as her lost wages since she was unable to work during her recovery for period of twelve weeks. Martha files a lawsuit against The Trustees of Tar Heel Community College and VP Black in his individual capacity alleging negligence.

When the Lawsuit is Filed… FIRST - When a demand is sent or when a lawsuit is filed and served, the College needs to immediately put its insurance company on notice. Failure to timely notify the insurance company of a “claim” could result in the insurance denying coverage. Also, know what type of liability insurance your College has: occurrence based or claims-made based. SECOND – Immediately contain the College’s attorney anytime you get a demand letter or you are on “notice” of a claim. If the matters turns into a lawsuit, the insurance company should assign legal counsel to defend the lawsuit (which may or may not be your local College attorney); however, there may be several preliminary things that the College’s attorney can do before the insurance lawyer is assigned. Also, your College’s attorney might be more knowledgeable about specific issues related to suing a governmental client and could provide some much needed insight to the attorney provided by the insurance company. THIRD – The College needs to immediately implement a “litigation hold” for all documents and records that the College maintains. The College must secure all documents, emails, records, photos, videos, etc. related to anything about the subject of the litigation.

Claims Against the Board of Trustees Question #1 – Did Martha sue the right legal entity? NCGS 115C-14 – the correct legal entity is “The Trustees of Tar Heel Community College”. Tar Heel Community College is not a legal entity. Failure to name the correct legal entity in the complaint could result in the complaint being dismissed. The Board of Trustees is the legal entity – that does not mean, however, that the individual members of the Board have been sued individually. Highly unlikely for individual Trustees to have personal liability regarding College affairs (but not impossible in very narrow situations).

Claims Against the Board of Trustees Question #2 – Did Martha file the complaint in the correct legal venue? NCGS 143-291(a) – Community colleges are deemed “state agencies” and are subject to the NC Tort Claims Act making the Industrial Commission the proper venue for tort claims against a community college board of trustees. BUT… NCGS 115D-58.12(b) states that boards of trustees are authorized to purchase insurance and a plaintiff may sue a board of trustees in negligence only in the county of the administrative area of the college which the suit is brought. So….? It makes a big difference. For example, if the Industrial Commission is the proper venue, then Martha’s complaint against the Tar Heel Board of Trustees would be dismissed in Tar Heel County and Martha would have to file her claim against the Board in the Industrial Commission. Presumably, if the College has insurance, it can be sued in superior court in the county where the College is located.

Board Liability – Assuming Tort Claims Applies For the first one million dollars in damages, the claim would be subject to the North Carolina State Tort Claims Act ("Act"):   Under the Act, the Board is liable for the first $150,000 and the State is liable for the remainder up to one million dollars provided, however, that if the Governor determines that the Board has the resources to pay the full claim past $150,000, the Governor may, in his/her discretion, require the Board to pay the claim up to one million dollars. One reason to have a commercial general liability insurance policy, even under this scenario, is to protect the Board from liability exposure.

Board Liability – Beyond a Million…. For damages above one million dollars, the Act does not apply.   The Board may have governmental immunity if: a) the incident involved a governmental function as opposed to a proprietary function; and b) the Board has not waived governmental immunity through the purchase of insurance (or damages exceed the insurance policy limits). Governmental immunity does not apply to breach of contract claims or actions brought for violations of the state/federal constitution and/or federal regulations. N.C.G.S. § 115D-24 – "[g]overnmental immunity shall be deemed to have been waived by the act of obtaining liability insurance, but only to the extent that the board [of trustees] is indemnified for the negligence or torts of its agents and employees and only as to claims arising after the procurement of liability insurance and while such insurance is in force."

Board Liability – Respondeat Superior Respondeat Superior. Under state law, governmental entities can be liable for the negligent acts of their employees. Based on this legal application, the Board will almost always be named in a lawsuit.   In federal claims (deprivation of a protected, constitutional right), respondeat superior is not available and the Board is only liable if the Board itself is a motivating force behind the deprivation (i.e., the Board’s policy or custom (willful ignorance or recklessness) played a part in a violation of federal law).

Should a Trustee be Sued Individually… For state law claims, Trustees sued individually enjoy public official immunity. Public officials sued in their individual capacities for the performance of their job-related duties may not be held liable for exercising those duties. The test for public official capacity requires:   The position is created by the NC Constitution or statute; The public official exercises a portion of sovereign power; and The public official exercises discretion in his/her position as opposed to just engaging in ministerial duties. Public official immunity is not available if the employee’s actions were malicious, corrupt or outside the scope of his/her official duties.

Trustee Liability For federal constitutional claims, Trustees sued individually enjoy qualified immunity. Qualified immunity protects government officials who perform discretionary functions from civil liability insofar as their conduct does not violate clearly established statutory law or constitutional rights of which a reasonable person would have known. Public Official Immunity and Qualified Immunity are not waived by the purchase of insurance.

College Employee Liability Backed to our hypo, in addition to suing The Trustees of Tar Heel Community College (perhaps in the wrong legal venue), Martha sued VP Black in his individual capacity. Question #1 – Who will represent VP Black? Can the attorney who represents the College also represent VP Black in his individual capacity? Who pays for the attorney? Can VP Black have a different attorney than the one provided by the insurance company? What if the insurance company denies the claim and there is no insurance through the College for VP Black? What happens then?

College Employee Liability Question #2 – What is the correct legal venue? Does the NC Tort Act apply with an employee sued individually? If not the Industrial Commission, then where?

College Employee Liability Question #3 – Who Pays a Judgment if VP Black is found Liable? Will the College’s insurance pay judgement for individual employee’s personal liability? Defense of State Employee’s Act – G.S. 143-300.2 College employees are considered “state employees” under the Act. Provides for attorney [although community colleges must pay the cost of said attorney] and pays a portion of judgment if the employee was engaged in the “scope and course” of employment. The College must pay for the first $150,000 and the State may be on the hook for excess.

Questions/Thoughts? Chad R. Donnahoo Campbell Shatley, PLLC 674 Merrimon Ave., Suite 210 Asheville, NC 28804 (828) 378-0064 chad@csedlaw.com