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A Tale of Two Filing Requirements: Business Court Issues Second Opinion Dismissing Appeal For Failure To Comply With Appellate Rule 3’s Filing Requirements

Approximately two months ago, I blogged on the Business Court’s dismissal of an appeal not filed with the Business Court by the 5:00 p.m. notice of appeal deadline.  On Tuesday, the Business Court dismissed another appeal—this time for failure to file the notice of appeal with the clerk of the Superior Court by the notice of appeal deadline.

In Ehrenhaus v. Baker, 2014 NCBC 30, Plaintiff, the prospective appellant, used the Business Court’s electronic filing system to electronically submit his notice of appeal before the appeal deadline.  The Business Court’s website issued Plaintiff a “Notice of Electronic Filing” that listed the “Clerk of Court” at raleigh.clerk@aoc.nccourts.org as having been notified of the appeal.  The Plaintiff, however, did not file a copy of the notice of appeal with the Mecklenburg County Superior Court—the court in which the case originated—until after his appeal deadline had passed.

Thereafter, the Defendants moved to dismiss the appeal for failure to comply with Appellate Rule 3.  Appellate Rule 3 provides that “Any party entitled by law to appeal from a judgment or order of a superior or district court rendered in a civil action or special proceeding may take appeal by filing notice of appeal with the clerk of superior court . . . .”  Id. (emphasis added).

Because Plaintiff failed to “file his notice of appeal with the Mecklenburg County Clerk of Superior Court within the time prescribed by Appellate Rule 3(c),” the Business Court concluded his appeal was untimely and dismissed his appeal.

You may ask: Plaintiff received a “Notice of Electronic Filing” from the Business Court’s website stating that the notice of appeal was served on the “Clerk of Court.”  Why wasn’t that sufficient to satisfy the filing requirements of Appellate Rule 3?

The first problem is that the Business Court does not have its own “Clerk of Court.”  Instead, the email address on the Notice of Electronic filing was assigned to Judge Jolly’s resident law clerk in Raleigh—not the Mecklenburg County Clerk of Court.  [Apparently the Business Court was unaware that the law clerk’s email address and the phrase “Clerk of Court” were listed by default on Notices of Electronic Filings generated by the Business Court’s website.  Those references have since been removed.]

Second, the Business Court focused on the phrase “with the clerk of superior court” found in Appellate Rule 3, rather than on the word “filing.”  Because the case was originally filed in Mecklenburg County before being assigned to the Business Court, the Business Court concluded that Mecklenburg County’s “Clerk of Court” was the only “clerk of superior court” referenced by Appellate Rule 3.  Therefore, the notice of appeal had to be timely filed with the Mecklenburg Clerk of Court for the appeal to proceed under Appellate Rule 3.

Finally, the Business Court noted that some non-jurisdictional requirements of Appellate Rule 3 could be excused under the “substantial compliance” doctrine.  The Business Court concluded that filing the notice of appeal with the clerk of the superior court is a “jurisdictional,” rather than procedural, requirement.  Therefore, “[w]ithout any clear guiding appellate precedent to the contrary,” the Business Court felt compelled to strictly construe this requirement of Appellate Rule 3 and dismiss the appeal.

Business Court litigants have fallen into several appellate dismissal traps recently.  One reason may be that when the North Carolina Rules of Appellate Procedure were adopted, the special e-filing procedures used by the Business Court did not exist.  However, unless the appellate courts provide different direction on these special Business Court filing scenarios, Business Court litigants need to remember to jump through an extra hoop not required in “regular” superior court appeals to have a timely appeal:  First, file the notice of appeal with the clerk of Superior Court on or before the appeal deadline (just like “regular” appeals). Second, electronically submit the notice of appeal to the business court’s e-filing system before 5:00 on or before the appeal deadline (or before 4:00 if you read our blog).  See Carter v. Clements Walker PLLC, 2014 NCBC 12 (2014).

Second, it appears to me that “filing” as used on the Business Court’s “Notice of Electronic Filing” email has a different meaning than “filing” as used in Appellate Rule 3.  It is also unclear to me how this opinion interplays with Business Court Rule 8.1, which provides that “all documents and materials submitted to the Business Court shall also be filed within five (5) business days with the Clerk of Superior Court in the judicial district in which the matter is pending.”

Third, is there a danger in relying on the Business Court’s website to serve a notice of appeal by email, rather than serving the notice of appeal by hand-delivery or mail?  As we have noted before, the Court of Appeals has held that service of a notice of appeal by email is not proper under Appellate Rule 3. Although the Matthews Court characterized this service requirement as non-jurisdictional, it also warned that “practitioners need be cautioned that non-compliance with the Rules in future cases may result in dismissal.” MNC Holdings, LLC v. The Town of Matthews.

Finally, this case serves as a reminder that while the Business Court may sometimes resemble the federal e-filing system, the rules governing federal notices of appeal are much, much more forgiving.  For example, federal courts have historically allowed notices of appeal filed in the wrong court to slide, reasoning that where the notice of appeal is filed is a procedural, rather than jurisdictional, requirement that does not require dismissal of the appeal.  Indeed, filing the notice of appeal in the wrong court is so common that the federal rules were amended to clarify that if a notice of appeal “is mistakenly filed in the court of appeals, the clerk of that court must note on the notice the date when it was received and send it to the district clerk.  The notice is then considered filed in the district court on the date so noted.”  Fed. R. App. P. 4(d).  Federal Rule of Appellate Procedure 3(a)(2) provides further “grace” for notice of appeal mishaps by noting that an “appellant’s failure to take any step other than the timely filing of a notice of appeal does not affect the validity of the appeal.”  As of now, that “federal grace” has not been extended to state court notices of appeal.

Bottom line:

Whenever you are in the Business Court, remember to file your notice of appeal in two different places before the appeal deadline.  And for good measure, serve the notice of appeal by mail as well.

I am interested in your thoughts on this opinion.  Let me know in the comments below.

–Beth Scherer

H/T to Matt Sawchak for bringing this case to our radar so promptly.

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