The Game of Risk Understanding Your Legal Liability as a Trustee NC Association of Community College Trustees April 9, 2015

So Who is Being Sued? The Trustees of Community College ("Board") Trustees in their Individual Capacity ("Trustee")

Board Liability N.C.G.S. § 115D-14  "The board of trustees of each institution shall be a body corporate with the powers to enable it to acquire, hold, and transfer real and personal property, to enter into contracts, to institute and defend legal actions and suits, and to exercise such other rights and privileges as may be necessary of the management and administration of the institution…" The legal entity is "The Trustees of _________Community College". So when people say "I’m going to sue ________Community College", legally, they are suing the Board. Any Community College Educational Foundation is a wholly separate 501(c)(3), nonprofit, legal entity. Typically, actions taken by the Board or the Foundation do not legally implicate the other.

Board Liability Fact Pattern – Around 8:45 p.m., John, a student at Tarheel Community College, is walking down a sidewalk to his car. He trips over what appears to be some major cracks and uneven pavement as a result of a recent, heavy rainstorm (no one at the College knew about the condition of the side walk). As a result, of his fall, John is severely injured. John sues the Board for negligence (e.g., failure to maintain safe conditions and failure to warn of unsafe conditions).

Board Liability 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 provided, however, that if the Governor determined 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.  The Board has commercial general liability insurance to protect its liability exposure.

Board Liability 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.  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. Under state law, governmental entities can be liable for the actions of their employees. For example, suppose in the earlier hypo, the College’s Facilities Director knew about the dangerous pavement, knew students had gotten injured there in the recent past but didn’t do anything about it. The Board could be liable through the actions or inactions of the College’ Facilities Director. 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 played a part in a violation of federal law). The Board will almost always be named in a lawsuit.

Trustee Liability Fact Pattern – an employee is caught stealing College property. The President terminates the employee’s contract and the employee appeals to the Board. A panel of the Board upholds the termination. The employee files a breach of contract claim against the Board, the panel-member Trustees in their individual capacities and the President in her individual capacity.

Trustee Liability 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. The College’s insurance policies also provides liability coverage for Trustees. Public Official Immunity and Qualified Immunity are not waived by the purchase of insurance.

Trustee Liability Trustees play a limited role in the day-to-day operations and normally are not individually named in lawsuits. The risk is somewhat limited. If sued individually, some immunities may apply as well as insurance. As a Trustee, know and understand your role and responsibilities.

Questions/Thoughts? Campbell Shatley, PLLC 674 Merrimon Ave., Suite 210 Asheville, NC (828)