For Business Court cases designated on or after October 1, 2014, the Business Court Modernization Act sends all appeals to the Supreme Court of North Carolina.
Or does it?
While preparing to deliver a joint CLE presentation on appellate traps, we noticed a couple of glitches in the revised N.C. Gen. Stat. § 7A-27 that might have big consequences. (Full text of statute available here and also set forth below). At first glance, the revised statute seems clear enough: final judgments and appealable interlocutory orders entered in a Business Court case must be appealed “directly to the Supreme Court” under § 7A-27(a)(2) and (a)(3), respectively. Conversely, judgments and orders entered by a superior court judge in a non-Business Court case would be appealed “directly to the Court of Appeals” under subsections (b)(1) and (b)(3).
But that’s not exactly what the statute says. Instead, the statute appears to vest both appellate courts with concurrent appellate jurisdiction over immediately appealable interlocutory orders, and may even vest the Court of Appeals with exclusive appellate jurisdiction over certain orders appealable under a separate statute.
To understand why these interpretations are possible, remember that the Business Court is not a separate court of jurisdiction, but is rather just “an administrative division of the General Court of Justice.” An order entered by a Business Court judge is, therefore, also an order “of a superior court.” Thus, when the statute uses the phrase “order or judgment of a superior court,” the statute should clearly note whether an “order or judgment of a [Business Court]” is meant to be excluded from its scope.
Section 7A-27 does just that for appeals from final judgments. An appeal from a final judgment entered in a Business Court case lies only to the Supreme Court under subsection (a)(2) because the parallel provision providing an appeal of right from a final judgment to the Court of Appeals, subsection (b)(1), expressly excludes Business Court cases. See N.C. Gen. Stat. § 7A-27(b)(1) (“Appeal lies of right directly to the Court of Appeals in any of the following cases: (1) From any final judgment of a superior court, other than the one described in subsection (a) of this section . . . .” (emphasis added)).
The statute fails, however, to include similar limiting language for interlocutory orders of the Business Court. Take, for example, an interlocutory order entered by a Business Court judge that affects a substantial right. A party adversely affected may appeal directly to the Supreme Court under subsection (a)(3)(a), as the order is “an interlocutory order of a Business Court Judge that … [a]ffects a substantial right.” However, based on the statute’s plain language, the party arguably has the right to instead appeal the same order to the Court of Appeals under subsection (b)(3)(a), because the Business Court order is also “any interlocutory order or judgment of a superior court . . . that … [a]ffects a substantial right.” Critically, unlike § 7A-27(b)(1)’s final judgment provision, § 7A-27(b)(3)’s interlocutory order provision does not exclude interlocutory orders of the Business Court from the set of superior court orders that may be appealed to the Court of Appeals.
In short, under the plain language of the revised statute, the Supreme Court and the Court of Appeals appear to have concurrent appellate jurisdiction over immediately appealable interlocutory orders entered by a Business Court judge.
There’s more. Some interlocutory orders are immediately appealable not because they are individually itemized in N.C. Gen. Stat. § 7A-27 (e.g., affect a substantial right), but because a separate statute grants the right to immediate appeal from these orders. For example, N.C. Gen. Stat. § 1-569.28 provides than an order denying a motion to compel arbitration is immediately appealable “as from an order or a judgment in a civil action.” This provision works hand-in-glove with N.C. Gen. Stat. § 7A-27(b)(4), which provides for an appeal of right “directly to the Court of Appeals . . . [f]rom any other order or judgment of the superior court from which an appeal is authorized by statute.”
Thus, if an order denying a motion to compel arbitration were entered by a Business Court judge, the appeal might lie exclusively to the Court of Appeals because there is no parallel subsection, say “(a)(4),” allowing appeal of right to the Supreme Court from any other Business Court “order or judgment from which an appeal is authorized by statute.” The same problem might arise in appeals from orders denying motions to dismiss for lack of personal jurisdiction. See N.C. Gen. Stat. § 1-277(b).
One might argue that such “appeal authorized by statute” orders per se affect a substantial right. Even so, that argument would only create concurrent jurisdiction in the two appellate courts in this situation. See N.C. Gen. Stat. § 7A-27(a)(3)(a), (b)(3)(a), (b)(4).
The problem here is that the Business Court Modernization Act’s history suggests that the General Assembly’s intent was to send all appeals from the Business Court directly to the Supreme Court. Nor can we think of any reason why the General Assembly would intentionally create concurrent jurisdiction in the Supreme Court and Court of Appeals for a subset of Business Court orders. In any event, the current statute has the potential to create a procedural quagmire for some unsuspecting Business Court case and its litigants. Perhaps a statutory fix is in order?
We would love to know your thoughts about the statute—along with any potential fix—in the comments below.
–Beth Scherer and Matt Leerberg
§ 7A-27. Appeals of right from the courts of the trial divisions.
(a) Appeal lies of right directly to the Supreme Court in any of the following cases:
(1) All cases in which the defendant is convicted of murder in the first degree and the judgment of the superior court includes a sentence of death.
(2) From any final judgment in a case designated as a mandatory complex business case pursuant to G.S. 7A-45.4 or designated as a discretionary complex business case pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District Courts.
(3) From any interlocutory order of a Business Court Judge that does any of the following:
a. Affects a substantial right.
b. In effect determines the action and prevents a judgment from which an appeal might be taken.
c. Discontinues the action.
d. Grants or refuses a new trial.
(a1) Appeal lies of right directly to the Supreme Court from any order or judgment of a court, either final or interlocutory, that holds that an act of the General Assembly is facially invalid on the basis that the act violates the North Carolina Constitution or federal law. Nothing in this section shall be deemed to apply to appeals from orders of the trial courts pertaining to criminal proceedings, to proceedings under Chapter 15A of the General Statutes, to proceedings making a collateral attack on any judgment entered in a criminal proceeding, or to appeals from orders of the trial courts pertaining to civil proceedings filed by a taxpayer pursuant to G.S. 105-241.17.
(b) Appeal lies of right directly to the Court of Appeals in any of the following cases:
(1) From any final judgment of a superior court, other than the one described in subsection (a) of this section, or one based on a plea of guilty or nolo contendere, including any final judgment entered upon review of a decision of an administrative agency, except for a final judgment entered upon review of a court martial under G.S. 127A-62.
(2) From any final judgment of a district court in a civil action.
(3) From any interlocutory order or judgment of a superior court or district court in a civil action or proceeding that does any of the following:
a. Affects a substantial right.
b. In effect determines the action and prevents a judgment from which an appeal might be taken.
c. Discontinues the action.
d. Grants or refuses a new trial.
e. Determines a claim prosecuted under G.S. 50-19.1.
f. Grants temporary injunctive relief restraining the State or a political subdivision of the State from enforcing the operation or execution of an act of the General Assembly as applied against a party in a civil action. This subsection only applies where the State or a political subdivision of the State is a party in the civil action. This subsection does not apply to facial challenges to an act’s validity heard by a three-judge panel pursuant to G.S. 1-267.1.
(4) From any other order or judgment of the superior court from which an appeal is authorized by statute.
(c) through (e) Repealed by Session Laws 2013-411, s. 1, effective August 23, 2013. (1967, c. 108, s. 1; 1971, c. 377, s. 3; 1973, c. 704; 1977, c. 711, s. 4; 1987, c. 679; 1995, c. 204, s. 1; 2010-193, s. 17; 2013-411, s. 1; 2014-100, s. 18B.16(e); 2014-102, s. 1.)