1. Appeal and Error--appealability--denial of summary judgment-
-governmental immunity
An order refusing to grant summary judgment or dismiss a
case which declines to recognize a claim of governmental immunity
affects a substantial right and is subject to immediate appeal.
2. Immunity--governmental--prior federal action--issues of fact
The trial court properly refused to dismiss or to grant
summary judgment for defendants on plaintiffs' state law claims
on the basis of issue preclusion and governmental immunity where
defendants filed a controlled substance tax assessment against
plaintiffs after marijuana was found on their property even
though plaintiffs were not arrested; the certificates of tax
liability were eventually canceled; plaintiffs filed an action
for a number of claims, including violation of 42 U.S.C. § 1983,
malicious prosecution, and intentional infliction of emotional
distress in state court; that action was removed to federal
court; the federal magistrate determined that the § 1983 claim
was barred by defendants' qualified immunity but declined to
exercise jurisdiction over the state claims, dismissing them
without prejudice; the action was re-opened in state court; and
that court found that defendants were not shielded by qualified
or sovereign immunity and that the state claims were not barred
by res judicata. The issue of claim preclusion is not involved
because the federal magistrate did not decide the state claims,
and the determination that defendants had qualified immunity
against the § 1983 claims does not mandate a finding that
defendants have immunity to the state law claims because the §
1983 claim involved the objective reasonableness of the
official's conduct based upon law clearly established at the
time, while immunity to state claims involves a subjective
determination of the state of mind of the governmental actor
(corrupt or malicious conduct). Defendants have not answered
plaintiffs' allegations of corrupt and malicious conduct and
issues of fact remain as to whether defendants may be entitled to
immunity.
Attorney General Michael F. Easley, by Special Deputy Attorney
General George W. Boylan, for defendant-appellants.
Law Office of Harold J. Bender, by R. Deke Falls, for
plaintiff-appellees.
HUDSON, Judge.
Defendants appeal an order of Judge L. Todd Burke declining to
dismiss or to award summary judgment against plaintiffs' claims of
malicious prosecution, intentional infliction of emotional
distress, conspiracy to maliciously prosecute, and conspiracy to
inflict emotional distress. Defendants argue plaintiffs' causes of
action are barred by the doctrines of governmental immunity and
claim preclusion. We affirm the trial court and remand for
continuation of the proceedings below.
Facts pertinent to this case are as follows: on 14 July 1992,
State Bureau of Investigation Special Agent Jeffrey Sellers was
informed that a tractor trailer containing marijuana controlled by
the Drug Enforcement Administration (DEA) was to be brought into
western North Carolina by a group of undercover DEA agents and a
cooperating informant. Law enforcement officers planned to arrest
the individuals who had ordered the marijuana. On 16 July, the DEA
agents and informant who were driving the truck met suspects John
Anthony Norris, Donnie McLamb, and Steven Shew at a motel in Surry
County. The three suspects then led the tractor trailer to a barn
on a farm owned by Jones and Robert Andrews in Alleghany County,
arriving around 9:15 p.m.
Sellers and approximately nineteen other federal, state, andcounty law enforcement officers set up surveillance of
the barn at
that time. At 10:41 p.m., the tractor trailer left the farm.
Sometime thereafter, a 1986 Honda drove into the area where the
officers were watching the barn and then drove away. The driver of
the car was identified as a white male wearing glasses, and the
car's tags indicated it was registered to Bonnie Andrews, known by
local officers to be the recently separated wife of Robert Andrews.
Just after midnight, officers approached the barn. Steven
Shew exited the barn and had a short conversation with the
Alleghany County sheriff. Shew told the sheriff he was "just doing
a little work" and that he had leased the barn from Robert Andrews.
Inside the barn, officers found approximately 2,000 pounds of
marijuana.
At approximately 1:28 a.m., officers went to the house of
Jones Andrews. All the lights in the house were out, and it took
him several minutes to get to the door. When Jones answered the
door, it appeared he had just gotten out of bed. He told the
officers he had not leased his barns to anyone and gave them
permission to search his other barn. He thereafter accompanied the
officers to the home of his son, Robert.
They approached Robert's house at around 2:00 a.m., and
officers saw the 1986 Honda they had identified several hours
earlier parked there. Robert came to the door quickly, fully
dressed and wearing boots. The officers asked why he was fully
dressed at that hour, and Robert told them he had fallen asleep on
the couch. He said he had arrived at his residence at 5:00 p.m.
the evening before and had not left since. When officersquestioned him about seeing the Honda near the barn, Robert said
his 15-year old son had been driving it earlier that night. His
son had told him he had seen some vehicles on the farm, but his son
had assumed they were there for fox hunting. Officers did not
question Robert's son.
Robert stated he had not leased the barn to anyone and did not
know whose barrels of marijuana were in it. When informed that
Steve Shew had been arrested in connection with the marijuana,
Robert said he had heard rumors Shew was involved in drugs, but
that he did not know him that well. Shew owed the Andrews money
for some Christmas trees sold to him in the past, but Robert had
never had any other dealings with him. Law enforcement officers
did not believe they had probable cause to arrest Jones or Robert
Andrews in connection with the marijuana, and no criminal charges
were brought against them.
Hours after the marijuana was found, the Alleghany County
sheriff contacted defendant R.A. Hughes, Deputy Secretary of the
Controlled Substance Tax Section of the North Carolina Department
of Revenue. Hughes immediately drove to Alleghany County to
investigate the propriety of levying a controlled substance tax
against those involved in the drug drop-off.
The controlled substance tax was enacted by the North Carolina
General Assembly in 1989 and requires drug dealers to purchase
stamps to affix to controlled substances in their possession. 1989
N.C. Sess. Laws ch. 772, § 1. The law imposes a tax against
dealers who possess controlled substances without having purchased
the proper stamps for them. The pertinent statute in effect duringthe events of the case sub judice stated:
Notwithstanding any other provision of law, an assessment
against a dealer who possesses a controlled substance to
which a stamp has not been affixed as required by this
Article shall be made as provided in this section. The
Secretary [of Revenue] shall assess a tax, applicable
penalties, and interest based on personal knowledge or
information available to the Secretary.
N.C.G.S. § 105-113.111 (amended in 1997 to substitute "an
unauthorized substance" for "a controlled substance" in first
sentence).
Subsequent to his visit to Alleghany County, Hughes decided
sufficient evidence existed to levy the controlled substance tax
against Robert Andrews. He based his decision on the following
information given to him by Special Agent Sellers and the Alleghany
County sheriff: that Steve Shew had said he had rented the barn
from Robert, that the vehicle which had been driven in the area of
the barn after the drop-off was registered to Robert's wife, and
that when officers went to Robert's house to talk with him he was
fully dressed and appeared "very nervous." Hughes conferred with
his supervisor, defendant Robert Crump, and received Crump's
approval to make a tax assessment based on the above information.
On 21 July 1992, Hughes issued a "Notice of Controlled
Substance Tax Assessment" against Robert Andrews, pursuant to N.C.
G.S. § 105-113.111. The assessment consisted of a $3,175,200.00
tax, a $3,175,200.00 penalty, and $21,273.84 in interest, for a
total of $6,371,673.84, based upon the seizure of 2,000 pounds of
marijuana from the Andrews' barn.
On 22 July 1992, Hughes filed a "Certificate of Tax Liability"
with the Alleghany County Clerk of Superior Court, which constituted a lien on real property owned by Robert Jones from the
date it was docketed, pursuant to N.C.G.S. § 105-242(c).
Approximately two weeks later, Hughes filed another "Certificate of
Tax Liability" with Surry County, as he had learned Robert owned
land in Surry County as well. At the time he filed these
certificates, Hughes knew Jones and Robert Andrews were in the
Christmas tree business.
On or about 3 August 1992, Robert Andrews filed an objection
to the assessment and a request for a hearing. On 11 September
1992, he and his attorney met with Crump for a pre-hearing
conference and requested a statement of the evidence upon which the
tax assessment and lien were based. Thereafter, Crump wrote to
Special Agent Sellers requesting him to set forth the evidence
against Robert. Sellers' supervisor, J.S. Momier, Jr., wrote back
on 12 October 1992 detailing the events of 16 and 17 July 1992 and
ending with the following conclusion:
Due to the facts that Shew had used the Andrews farm as
a drop site for such a large amount of marijuana, that
Andrews' vehicle was seen in the area around the barn by
the surveillance teams while the marijuana was being
worked in the barn, that at 2:00 a.m. in the morning when
officers spoke with Andrews that he was fully dressed and
appeared to be very nervous, and that by Steve Shew's
statement that he leased the barn from Robert Andrews, it
is believed that Robert Andrews was a silent partner for
this shipment of marijuana and supplied the drop site for
Shew.
Robert Andrews' attorney wrote Crump on 12 November 1992,
urging him to make a prompt decision on the propriety of the
assessment so that Robert "could sell his Christmas trees." He
also wrote that "[a]s a direct result of the tax assessment still
pending, my client has had to seek the protection of the BankruptcyCourt." Plaintiffs have alleged that the liens prohibited them
from selling the Christmas trees on their property, and that
without the income from the trees, they could not pay the mortgages
on the property.
At some point in the fall of 1992, Hughes heard that Shew had
recanted his statement that Robert Andrews had leased the barn to
him. He also learned that it was Robert Andrews' son, not Robert
himself, who had driven the Honda in the area of the barn on the
night in question. Based on these facts, he came to the conclusion
that the assessment should be lifted and shared this opinion with
Crump. Crump then asked Hughes to find out if there was any other
information tying Robert to the marijuana. Hughes reported back
that he could not find any.
On 26 February 1993, United States Bankruptcy Judge Marvin R.
Wooten entered an "Order Determining Tax Liability" on behalf of
Robert Andrews, finding that "[t]he tax, penalty and interest
assessed against the Debtor were assessed without good and valid
basis in law or fact." Judge Wooten further found that the North
Carolina Department of Revenue (DOR) had expressly consented to the
tax cancellation sought by Robert Andrews. Judge Wooten ordered
DOR to withdraw the tax assessment and release the liens filed in
Alleghany and Surry counties within fifteen days. On approximately
21 March, Crump ordered Hughes to cancel the Certificates of Tax
Liability. Hughes canceled the liens in Alleghany County on 23
March 1993 and in Surry County on 25 March 1993.
On 10 July 1995, Robert and Jones Andrews filed in Alleghany
County Superior Court the suit which is the subject of thisopinion. They alleged the defendants had seized their property in
violation of the Fourth, Eighth, and Fourteenth Amendments to the
United States Constitution and 42 U.S.C. § 1983; maliciously
prosecuted them in violation of the Fourth and Fourteenth
Amendments and 42 U.S.C. § 1983; maliciously prosecuted them in
violation of state law; intentionally inflicted emotional distress
upon them in violation of state law; and conspired together to
commit all of the above violations. Jones Andrews was included as
a plaintiff in that he co-owned property subject to the liens with
his son. On 26 September 1995, defendants responded with a motion
to dismiss the plaintiffs' claims pursuant to N.C.R. Civ. P.
12(b)(1), 12(b)(2), and 12(b)(6).
On 6 September 1994, plaintiffs filed in the Western District
of the United States District Court essentially the same complaint
filed in Allegheny County Superior Court. Plaintiffs and
defendants made a joint motion to remove the case from the
Alleghany Superior Court trial docket pending resolution of the
federal case, which motion was approved.
A Memorandum of Decision was filed 16 October 1996 by United
States Magistrate Judge H. Brent McKnight in response to
defendants' motion for summary judgment. He determined, in short,
that plaintiffs' federal claims pursuant to 42 U.S.C. § 1983
(section 1983) were barred by the defendants' qualified immunity.
He declined to exercise pendent jurisdiction over plaintiffs' state
law claims and dismissed them without prejudice.
Plaintiffs thereafter moved the Alleghany County Superior
Court to re-open the case, and defendants followed with a motionfor summary judgment which incorporated their earlier motion to
dismiss. Defendants' motion asserted that the doctrine of res
judicata barred plaintiffs' state claims based on the federal
court's finding that defendants had qualified immunity to
plaintiffs' section 1983 claims.
The order of Judge L. Todd Burke was filed on 7 October 1999,
denying defendants' motions to dismiss and for summary judgment.
The trial court concluded it had jurisdiction over the parties and
the subject matter, and that plaintiffs had adequately stated
claims for malicious prosecution, intentional infliction of
emotional distress, and conspiracy to commit the preceding torts.
It further found that defendants were not shielded as a matter of
law under the doctrines of qualified or sovereign immunity, and
that plaintiffs' state law claims were not barred by the doctrine
of res judicata. Defendants filed notice of appeal to this Court
on 4 November 1999.
[1]Normally, no appeal lies from an order refusing to dismiss
a case or to grant summary judgment; however, when such an order
declines to recognize a claim of governmental immunity on the part
of defendants, it is subject to immediate appeal on that issue, as
a substantial right is affected. Denegar v. City of Charlotte, 115
N.C. App. 166, 166-67, 443 S.E.2d 778, 779 (1994). We proceed
therefore to address the immunity issues raised by defendants.
[2]The doctrines of res judicata (claim preclusion) and
collateral estoppel (issue preclusion), cited by defendants in
their arguments for immunity, have been developed in order toprotect parties from the burden of relitigating previously decided
matters. Bockweg v. Anderson, 333 N.C. 486, 491, 428 S.E.2d 157,
161 (1993). Under claim preclusion, where a "second action between
two parties is upon the same claim, the prior judgment serves as a
bar to the relitigation of all matters that were or should have
been adjudicated in the prior action." Id. at 492, 428 S.E.2d at
161. When a second action between the same parties involves
different claims, however, the doctrine of issue preclusion bars
retrial only of "issues actually litigated and determined in the
original action." Id.
In the present case, the trial court allowed plaintiffs' state
law claims of malicious prosecution, intentional infliction of
emotional distress, and conspiracy to commit these torts to move
forward. These claims were not decided by the federal court;
rather, Magistrate Judge McKnight declined to decide plaintiffs'
state law claims and dismissed them without prejudice. Therefore,
the doctrine of claim preclusion is not involved here.
Defendants argue that the federal court's finding that
defendants had "qualified immunity" to plaintiffs' section 1983
claims operates under the doctrine of issue preclusion to mandate
a finding by the state court that defendants have governmental
immunity to plaintiffs' state law claims. We must therefore
determine what issues were actually decided by the federal court
with regard to defendants' immunity. To do so, it is necessary to
examine the concept of "qualified immunity" as it is set forth in
the federal law of section 1983 claims. Section 1983 is a vehicle by which private citizens can sue
government officials acting under color of state law for violation
of their constitutional rights. Governmental officials sued in
their individual capacities, as were the defendants in this case,
may be held liable for money damages under section 1983. See Corum
v. University of North Carolina, 330 N.C. 761, 772, 413 S.E.2d 276,
283, cert. denied, 506 U.S. 985, 121 L. Ed. 2d 431 (1992). They
may, however, raise the defense of qualified immunity to section
1983 claims. Id.
Under the doctrine of qualified immunity, "government
officials performing discretionary functions generally are shielded
from liability for civil damages insofar as their conduct does not
violate clearly established statutory or constitutional rights of
which a reasonable person would have known." Harlow v. Fitzgerald,
457 U.S. 800, 818, 73 L. Ed. 2d 396, 410 (1982).
On summary judgment, the judge appropriately may
determine, not only the currently applicable law, but
whether that law was clearly established at the time an
action occurred. If the law at that time was not clearly
established, an official could not reasonably be expected
to anticipate the subsequent legal developments, nor
could he fairly be said to "know" that the law forbade
conduct not previously identified as unlawful.
Id. at 818, 73 L. Ed. 2d at 410-11; see footnote 30 (explicitly
applying the Court's decision to section 1983 claims).
North Carolina law regarding the immunity of government actors
to suit under state law claims differs from the law of immunity in
federal section 1983 actions. See, e.g., Roberts v. Swain, 126
N.C. App. 712, 487 S.E.2d 760, cert. denied, 347 N.C. 270, 493S.E.2d 746 (1997)(analyzing immunity to state law claims and
section 1983 claims under different standards). It may be
summarized as follows:
It is settled law in this jurisdiction that a public
official, engaged in the performance of governmental
duties involving the exercise of judgment and discretion,
may not be held personally liable for mere negligence in
respect thereto. The rule in such cases is that an
official may not be held liable unless it be alleged and
proved that his act, or failure to act, was corrupt or
malicious, or that he acted outside of and beyond the
scope of his duties.
Meyer v. Walls, 347 N.C. 97, 112, 489 S.E.2d 880, 888
(1997)(quoting Smith v. Hefner, 235 N.C. 1, 7, 68 S.E.2d 783, 787
(1952). Public employees, as opposed to public officials, do not
enjoy the same protection, and may be held liable for mere
negligence in the performance of their duties. Id.
Immunity of public officials to state law claims therefore
involves a determination of the subjective state of mind of the
governmental actor, i.e., whether his actions were corrupt or
malicious. By contrast, the U.S. Supreme Court stated in Harlow v.
Fitzgerald that in determining qualified immunity to section 1983
cases, the trial court need not delve into the subjective
motivation of the government actor. 457 U.S. at 815-18, 73 L. Ed.
2d at 409-410. Rather, the court should examine the objective
reasonableness of the official's conduct based upon law clearly
established at the time. 457 U.S. at 818, 73 L. Ed. 2d at 410; but
cf. Corum, 330 N.C. at 777, 413 S.E.2d at 286 (where the "clearly
established law" contains a subjective element such as motive or
intent, that element is properly a part of summary judgementanalysis).
True to the dictate of Harlow, in the present case, Magistrate
Judge McKnight did not consider the subjective intentions of the
defendants in placing the tax liens on plaintiffs' property.
Instead, he conducted a complex analysis of federal case law in
effect at the time the liens were placed and determined, based on
that case law, that although defendants did not have probable cause
to believe Robert Andrews possessed marijuana, it was reasonable
for the defendants to have been unaware that placing the liens
constituted a seizure implicating the Fourth Amendment. Andrews v.
Crump, 984 F. Supp. 393, 411-12 (W.D.N.C. 1996). He did not
determine the defendants' actual knowledge or intentions regarding
the violation of plaintiffs' rights. Thus, the federal judge's
determination that defendants had qualified immunity against
plaintiffs' section 1983 claims does not operate under the doctrine
of issue preclusion to mandate a finding that defendants have
immunity to plaintiffs' state law claims, which do involve issues
of intent and state of mind.
Given that the federal court declined to rule on plaintiffs'
state law claims and that defendants' qualified immunity to
plaintiffs' section 1983 claims does not translate into
governmental immunity to the state law claims, the trial court
properly denied defendants' motion for summary judgment, which was
based on the theories of issue and claim preclusion.
Assuming arguendo that defendants may be considered public
officials as opposed to employees, their governmental immunity tothe state law claims rests on whether their actions were "corrupt
or malicious." Plaintiffs' complaint repeatedly alleges that the
actions of defendants in placing the tax liens were corrupt and
malicious. Plaintiffs allege, specifically, that defendants knew
Robert Andrews had no involvement in criminal activity, yet
proceeded to file the liens against him anyway.
Defendants have not filed an answer to plaintiffs' complaint,
did not attach any evidence in contravention of plaintiffs'
allegations to their motion for summary judgment, and did not make
any arguments to the trial judge other than that the federal
opinion precluded a finding of malice on the part of defendants.
Although defendants did refer to certain depositions of law
enforcement officers and Hughes at the hearing on the motion for
summary judgement, the transcript of the hearing indicates they
were not considered by the judge. See N.C.R. Civ. P. 56(c)(motion
for summary judgment shall be served at least 10 days before the
hearing). As defendants have not countered plaintiffs' allegations
of corrupt and malicious conduct, issues of fact remain as to
whether defendants may be entitled to governmental immunity.
Defendants additionally contend that plaintiffs' complaint
cannot state a claim against them in their individual capacities
because plaintiffs allege defendants were at all pertinent times
acting within the scope of their employment. This assertion is
without merit. Whether a plaintiff's allegations relate to actions
outside the scope of a defendant's official duties is relevant in
determining if the defendant is entitled to immunity, but it is
"not relevant in determining whether the defendant is being sued inhis or her official or individual capacity." Meyer, 34
7 N.C. at
111, 489 S.E.2d at 888.
Defendants' remaining arguments were not assigned as error,
and do not involve issues of immunity, and thus we do not address
them. See N.C.R. App. P. 10(a)(Court's review limited to
consideration of assignments of error set out in the record on
appeal).
In conclusion, the trial court's refusal to dismiss or to
grant summary judgment against plaintiffs' state law claims on the
basis of issue preclusion and governmental immunity was proper.
Affirmed.
Judges GREENE and MCCULLOUGH concur.
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