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Westward Bound: Supreme Court to Hold Two Sessions of Court in Morganton (Psst! A Showdown on an Important Issue of Appellate Procedure Could Occur)

No tattling allowed if someone buys scalped tickets to attend this event. For the first time since the Civil War era, the Supreme Court of North Carolina is preparing a westward trek to Morganton, North Carolina for two oral argument sessions. The ticket-only event will occur on Tuesday, May 17, and Wednesday, May 18 in the Old Burke County Courthouse.

Cases being heard include a challenge by the Cleveland County Schools System to the funding of charter schools and a constitutional challenge to a statute changing control of Asheville’s water system from the city to the metropolitan sewer district. We previously blogged here about the substantial constitutional question raised by the City of Asheville case.  However, the Supreme Court also granted discretionary review on a juicy issue of appellate practice and procedure that we’ve not discussed before.

The Court of Appeals’ opinion includes both a paragraph and a footnote with the potential for creating lots of mischief for appellees.  Because the Court of Appeals’ statements are arguably ambiguous, they are quoted in their entirety below:

We do not reach any conclusion regarding Asheville’s fourth and fifth claims for relief, in which Asheville contends that the enforcement of the Transfer Provision would impermissibly impair obligations of contract in violation of our state and federal constitutions and in violation of N.C. Gen. Stat. § 159–93. The trial court made no rulings on these claims, and Asheville did not take advantage of Rule 10(c) of our Rules of Appellate Procedure, which allows an appellee to propose issues which form “an alternate basis in law for supporting the order[.]” Therefore, any argument[s] by Asheville based on these claims for relief are waived.

FN2.  The trial court refused to rule on a fourth basis in support of the injunction, namely, that the Transfer Provision unlawfully impairs Asheville’s contractual obligations with its bondholders who provided financing for its public water system, in violation of Article I, Section 10 of the United States Constitution; Article I, Section 19 of the North Carolina Constitution; and N.C. Gen. Stat. § 159–93. However, Asheville has not presented any argument regarding this fourth ground as “an alternative basis in law for supporting the [injunction],” N.C. R. App. P. 10(c), and, therefore, it is not preserved.

Appellate Rule 10(c) and companion Appellate Rule 28(c) allow appellees to argue cross-issues in their brief without taking an appeal.  Cross-issues are arguments that allow an appellee to “present issues on appeal based on any action or omission of the trial court that deprived the appellee of an alternative basis in law for supporting the judgment, order, or other determination from which appeal is taken.” Appellate Rule 28(c).  Both Appellate Rules 10(c) and 28(c) use a permissive phrase, “an appellee may,” to describe the appellee’s right to pursue cross-issues.

In City of Asheville, it was unnecessary for trial court to reach claims 4 and 5 to decide for the City of Asheville, which was the appellee at the Court of Appeals.  On appeal, the appellee did not argue those unreached claims as an alternative basis in law to support the judgment.  Thus, when the Court of Appeals’ opinion used the words “waived” and “not preserved” to described those claims in its opinion, it caused the City a bit of concern.  Was the Court of Appeals saying that by not arguing these alternative issues in its brief, the appellee had “waived” and “not preserved” those issues for purposes of the present appeal ?  Or was the Court of Appeals saying that the City’s failure to argue cross-issues in its brief was a forever waiver of its right to pursue those arguments–including on remand in the trial court?

The City of Asheville sought clarification on this issue from the Court of Appeals, but  the petition for rehearing was summarily denied the next day.  Thankfully, the waiver issue was accepted as part of the Supreme Court’s discretionary review package.  At the Supreme Court, the State (which was the appellant in the Court of Appeals and is the respondent in the Supreme Court) argues that the City of Asheville has forever waived its right to seek relief on claims 4 and 5.  On the other hand, the City of Asheville  argues that the Court of Appeals misspoke, that cross-issues are not subject to waiver if not raised on appeal, and that if this case is remanded, the trial court will still have authority to rule on these unresolved claims.

With lots of other issues involved in this appeal, there is no guarantee that the Supreme Court will reach this important issue of appellate practice and procedure.  If the Supreme Court does not provide clarity on this issue, the trial court may have to untangle whether  the City of Asheville can still pursue the alternative claims for relief that were not reached during the first round of litigation.

Moreover, the Court of Appeals’ statements regarding waiver and remand have the potential to create havoc in other cases on appeal.

Although the two Appellate Rules at issue use the permissive term “may,” the Rules do not specify how the waiver rule applies to an appellee who chooses not to raise a cross-issue on appeal.  When a trial court actually addresses an issue and decides that issue against the appellee,  conflicting policy arguments exist for requiring appellees to either raise those alternative arguments on appeal or forever waive their right to pursue them.  However, when a trial court declines to reach an alternative basis in law to support the judgment, the arguments are much stronger for allowing the trial court to address those unresolved arguments on remand–even if they were not raised in the appellee’s brief.

Indeed, many North Carolina lawyers have  encountered situations in which, as counsel for the appellee, they raised a cross-issue, but the appellate courts declined to address it for the first time on appeal   In those instances, the appellate courts will usually remand the case to the trial court, sometimes with explicit instructions for the trial court to address the alternative arguments for the first time on remand.  Given the limited briefing allowed in the Court of Appeals, and the complexity that potentially unnecessary cross-issues can bring to an appeal, appellees sometimes make the strategic decision to try to win on the limited issues addressed by the trial court and then pursue the alternative arguments on remand if the Court of Appeals decides in the appellant’s favor.  Given the Court of Appeals’ statements in City of Asheville, that  may no longer be a prudent strategy for appellees.

We are eager to hear your thoughts.  Do you think the Court of Appeals’ statements regarding waiver and preservation in City of Asheville were meant to apply to the current appeal or to the entire case?  What interpretation of the waiver rule do you think the Supreme Court should adopt?  Will the Court of Appeals’ statements influence your briefing strategies as an appellee?  And…are tickets to the oral arguments still available, and who is planning to attend?  Let us know in the comments below.

–Beth Scherer

 

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