Court Opinion

ID: 9539609
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:06:41.179719+00
Date Added: 2024-06-11T14:59:01.165516
License: Public Domain

CALABRIA, Judge,
concurring in part and dissenting in part.
I concur with the majority affirming the trial court’s dismissal of plaintiff’s constitutional claims. However, since plaintiff’s allegations were sufficient to support her claim that she was engaged in a protected activity as defined by the Whistleblower Act, N.C. Gen. Stat. *251§ 126-85 (2007), I respectfully dissent from the majority’s holding that plaintiff failed to state a claim under the Act.
The majority holds that as a matter of law the formation of an option contract, or the receipt of any value at all, precludes a finding that defendant Peacock violated state law, committed fraud, misappropriated state resources, committed gross mismanagement or a gross waste of public funds. The majority further holds that the reporting of this conduct by plaintiff is not protected conduct under the Whistleblower Act. Such a bright line rule is contrary, not only to the intent, but also to the plain language of the statute, and therefore I disagree.
Plaintiff alleges that she was asked to resign for two reasons: she refused to issue a check for $10,000 from the University Endowment Fund to purchase an option that she knew the University had insufficient funds to exercise, and she reported her objection to the transaction to David Larry, a University attorney.
Pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2007) the trial court must deny a motion to dismiss a claim if, “as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory.” Newberne v. Dep’t of Crime Control and Public Safety, 359 N.C. 782, 788, 618 S.E.2d 201, 206 (2005) (quoting Meyer v. Walls, 347 N.C. 97, 111, 489 S.E.2d 880, 888 (1997). “The complaint must be liberally construed, and the court should not dismiss the complaint unless it appears beyond a doubt that the plaintiff could not prove any set of facts to support his claim which would entitle him to relief.” Block v. County of Person, 141 N.C. App. 273, 277-78, 540 S.E.2d 415, 419 (2000). I would hold that plaintiff’s allegations, if accepted as true, are sufficient to show a violation of state law, a misappropriation of state resources, or a gross waste of public funds, and therefore the trial court erred by granting defendants’ motion.
Misappropriation of State Resources/Waste of Public Funds
I agree with the majority opinion that an option contract has value as a matter of law because it confers a legally enforceable right to the holder of the option. However, contrary to the holding of the majority, a contract with a corresponding value to the state does not, by law, make that contract an appropriate use of state resources and public funds. If we were presented facts showing that the administrator had asked plaintiff to purchase a hammer from Michael Cash *252for $10,000, instead of an option contract to purchase land, the majority’s reasoning would still mandate a dismissal of plaintiff’s Whistleblower Act claim. In exchange for the State’s $10,000, the State would receive the legally enforceable right to possess a hammer that has some value, even though spending $10,000 for a hammer would be a misappropriation of state resources and a gross waste of public funds.
If, as plaintiff alleges, the University was financially incapable of exercising the option contract before it expired, it would not hold any more value to the University than would the hammer in the above hypothetical. While the enforceable right to purchase does have theoretical value, its value under the facts as alleged by the plaintiff does not justify the expenditure of $10,000 from the public funds. Furthermore, the majority reasoning is at odds with the intent of the Whistleblower Act, and in effect prohibits its application to employees reporting the mismanagement of public funds.
The Endowment Fund
N.C. Gen. Stat. § 116-36 authorizes the board of trustees of each constituent institution of the University of North Carolina, such as defendants, to establish an endowment fund for that institution “to the end that the institution may improve and increase its functions, may enlarge its areas of service, and may become more useful to a greater number of people.” N.C. Gen. Stat. § 116-36(b) (2007). “The proceeds and funds described by this section are appropriated and may be used only as provided by this section.” N.C. Gen. Stat. § 116-36(1) (2007).
In the instant case, plaintiff alleged the option could not improve or increase the functions of the University, could not enlarge its areas of service, or become useful to a greater number of people. If plaintiff’s allegations are accepted as true, the option to purchase real property failed to fulfill the purposes for endowment fund appropriations and proceeds as outlined in N.C. Gen. Stat. § 116-36, and therefore violates state law.
Exclusive Emoluments Clause
N.C. Const. Art. I, § 32 (“Exclusive Emoluments Clause”) states that “[n]o person or set of persons is entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.” In interpreting this clause our Supreme Court has said “[t]his constitutes a specific constitutional prohibition against *253gifts of public money...Brown v. Board of Comm’rs, 223 N.C. 744, 746, 28 S.E.2d 104, 105 (1943).
Even if the University had the ability to exercise the option before the September 2006 expiration date, plaintiff alleged facts tending to show that this option contract was not in consideration of obtaining the option, but rather a gift to Michael Cash to enable him to pay his mortgage. If true, this too would be a misappropriation of state resources, and a violation of the Exclusive Emoluments Clause.
The present case is a factual dispute over whether the business transaction to obtain the option to purchase land was a violation of state law, a misappropriation of state resources or a gross waste of public funds. If plaintiff proves any one of these three, her refusal to take part in the transaction and her report of the transaction are protected activities. There is a genuine issue of material fact that should be resolved by the trier of fact. The trial court erred in granting defendants’ motion to dismiss plaintiff’s claims under the Whistleblower Act, and should be reversed.
Constitutional Claims
While I concur with the majority affirming the trial court’s dismissal of plaintiff’s constitutional claims, I disagree with the majority’s reasoning that plaintiff’s constitutional claims were properly dismissed because she failed to allege misconduct on the part of defendants and thus failed to allege that her constitutional rights were violated. I concur in the court’s dismissal of those claims because the Whistleblower Act creates an adequate remedy under state law and thus precludes any action at common law.
The common law creates a. direct cause of action against the State for violation of state constitutional rights when there is no other adequate remedy under state law. Corum v. Univ. of North Carolina, 330 N.C. 761, 782, 413 S.E.2d 276, 289 (1992). The plaintiff in Corum alleged that he was dismissed from his position as Dean of Learning Resources at Appalachian State University for criticizing the University’s decision to relocate an historic collection of books and artifacts in such a way that it would separate the artifacts from the rest of the collection. Id. at 767-69, 413 S.E.2d at 281-82. In reversing the trial court’s entry of summary judgment for the defendants, our Supreme Court held that the plaintiff had offered sufficient evidence to support a direct claim under N.C. Const. Art. I, § 14, the free *254speech clause of this State’s Declaration of Rights. Id. at 786, 413 S.E.2d at 292.
However, in Swain v. Elfland, 145 N.C. App. 383, 550 S.E.2d 530 (2001), this Court held that the plaintiff’s contested case hearing for wrongful termination under N.C. Gen. Stat. § 126-34.1 and NIC. Gen. Stat. § 126-86 in the Office of Administrative Hearings, was an adequate state remedy that precluded a direct cause of action for violation of the plaintiff’s right to free speech under the North Carolina Constitution. Swain, 145 N.C. App. at 391, 550 S.E.2d at 536. The plaintiff in Swain, like the plaintiff in the present case, cited Corum to support his cause of action. Id. Corum, however, predates the Whistleblower Act. The Court did not require the plaintiff’s success in the administrative hearing nor did the Court require that the state remedy provide the same or more relief than that available under a direct constitutional claim. Id.
The present case is similar in its facts to both Swain and Corum. Indeed, were it not for the advent of the Whistleblower Act, I would conclude that plaintiff has adequately stated a direct claim under both the free speech and Exclusive Emoluments clauses of this State’s Constitution. However, the Whistleblower Act, which the majority concludes does not apply to plaintiff, does constitute an adequate statutory remedy for the alleged violation of plaintiff’s constitutional rights.
Plaintiff’s claim under N.C. Gen. Stat. § 126-86 adequately addresses each of her constitutional claims. Because the report of state agency misconduct is a protected activity under N.C. Gen. Stat. § 126-85(a), there is an adequate statutory remedy for the violation of her free speech rights. Since reporting of misappropriations of state funds is expressly protected by N.C. Gen. Stat. § 126-84, the Whistleblower claim is an adequate state law remedy for her claim under the Exclusive Emoluments Clause. Finally, because the only form of discrimination alleged by the plaintiff is that based on her engagement in activities protected under N.C. Gen. Stat. § 126-85, her equal protection claim is also precluded by this remedy.
For this reason, the trial court’s dismissal of all Helm’s constitutional claims should be affirmed.
Conclusion
I concur with the majority in affirming the court’s dismissal of plaintiff’s constitutional claims, but only because the claims are *255precluded by the adequate state law remedy provided by the Whistleblower Act, not because they are without substantive merit. I respectfully dissent from the majority’s holding that plaintiff failed to state a claim under the Whistleblower Act. Therefore, I would reverse the trial court’s judgment and remand the case for further consideration of plaintiff’s claims under the Whistleblower Act.