The civil suit against NHCS is on hold until a three-judge panel makes a ruling
A high-profile civil case against New Hanover County Schools is on hold after a slew of rulings by Superior Court Judge Phyllis Gorham on June 29, 2022.
The case, filed by the survivors and alleged survivors of former teacher and convicted child sexual abuser Michael Earl Kelly, accuses the school board and top administrators, including former superintendent Tim Markley and deputy superintendent Rick Holliday, of negligence and violations of their obligations to the public.
Attorneys for both the plaintiffs and the defense have been waiting for Gorham to make her decision after contentious three-day court hearings in March 2022.
Gorham referred the facial, or constitutional, challenges to a Wake County three-judge panel, which will be created by Chief Justice Paul Newby. Until that panel makes a ruling, the civil case against the school district is essentially on hold.
Even the John Does independent medical exams, which were requested by the defense, will now be taken off the calendar until the ruling of the panel.
There's no clear timeline for the decision, but the planned September trial date will likely be pushed back.
The facial challenge against the school board concerns whether the two-year revival window of the Sexual Assault Fast Reporting and Enforcement Act or SAFE Child Act, a 2019 law, which reopened the window from January 1, 2020, until December 31, 2021, for survivors to file suit is constitutional.
The panel will also rule on whether it’s constitutional for the state to waive the statute of limitations for state entities and subdivisions, like school boards. This could impact whether Holliday will continue on as a named defendant in the suit. What complicates matters more is that Holliday served as both a principal and a district administrator over the twenty-year period Kelly was abusing students.
In the most recent filing, Gorham denied over a half-dozen of the district’s motions to dismiss the case. But she did grant the defense’s request that Markley not be named in the suit — arguing that his former official capacity is duplicative of the claims against the school board. Although Markley is not officially named the judge allowed most of the allegations against him and the board to proceed.
Gorham denied a motion by Holliday’s attorney to remove him from the lawsuit — because the claims against him are not “wholly duplicative of those against the New Hanover County Board of Education (NHCBOE).”
Gorham also found, in contrast to what Tharrington Smith attorney Deborah Stagner had argued, that Superior Court does in fact have jurisdiction over the lawsuit. The defense had previously argued that the plaintiffs failed to “exhaust their administrative remedies.”
Gorham also said the following claims could proceed against the board: the breach of fiduciary duty (i.e. the board has a duty/responsibility for its students), which has a ten-year statute of limitations, assault and battery, the invasion of privacy, negligence, and a violation of the plaintiff's constitutional rights to a sound, basic education — for which is there is no sovereign immunity.
For the assault and battery claim, Stagner tried to argue that the board wasn’t liable for the actions of Kelly based on a theory of ‘respondeat superior’ — which essentially means that the board is responsible for its employees. Stagner said that Kelly's actions belong to only him, not to the board and those who oversaw him as a high school chemistry teacher at Laney High School and Isaac Bear Early College.
Stagner also claimed that the board did not violate a state public safety statute, as the plaintiffs’ attorneys had argued.
When Stagner asked Gorham to dismiss these claims the judge said the plaintiffs’ allegations on these fronts are ‘sufficient’ — and the attorneys for the John Does have a ‘set of facts’ that the board had oversight over Kelly — and that his actions and the actions on behalf of the district could have violated public safety.
Aside from the three-judge panel ruling on the constitutional challenges, Gorham paved the way for the John Does to stay in the lawsuit because the statute of limitations period — outside of the stipulations of the SAFE Child Act — was “equitably tolled.”
This means that the 14 survivors can likely stay in the lawsuit because the three-year clock to file suit started in 2019 when Assistant District Attorney Connie Jordan, the prosecutor in the criminal case against Kelly, said in court that the district had already investigated him for child sex abuse allegations. Moreover, Jordan also said no one in the district referred these to law enforcement.
In other words, Gorham’s ruling more or less sided with the fact that it wasn’t until 2019 that the survivors discovered there were other instances where students and their families expressed concerns or made complaints to school administrators about Kelly’s abuse — and the district had potentially been aware of Kelly's actions and failed to act.
The defense’s response
Board Chair Stephanie Kraybill said of Gorham’s decision, “Yesterday’s ruling recognizes that there are important constitutional questions that remain to be decided before this case can move forward to trial. The Board of Education respects the privacy of the plaintiffs and will not publicly discuss details of the ongoing litigation. That said, NHCS has made, and continues to make, significant progress to address awareness and prevention of sexual harassment and abuse, and the NHC Board of Education remains fully committed to student safety."
Daniel Mullins of the Hertzog Law Group, who represents Holliday, said he had no comment on the matter.
The implications – and what’s next?
The next step in this suit is the three-judge panel ruling on the constitutional challenges in this case. If the panel decides this is unconstitutional, the plaintiff's lawyers can appeal directly to the North Carolina Supreme Court. And if the panel upholds the constitutionality of the window, the defense could send the case to the Court of Appeals.
Other questions are, how many plaintiffs will stay in the case after the panel’s decision — and how many insurance policies will ultimately be in place.
Gorham has also named the judge in the school board’s dispute with its insurance companies, Netherlands Insurance, Peerless Insurance, Liberty Insurance, and Liberty Mutual, on which of their policies — and how much money — can be used if the district is in fact held liable in a civil suit or in the case of a settlement.
Currently, the companies are saying $4 million is available, but the board is asking for $31 million more to pay out possible claims.