On Tuesday, the North Carolina Court of Appeals issued its latest batch of opinions.  An opinion that caught my eye represents a trend in the Court of Appeals of collapsing the substantial right jurisdictional analysis into the merit-based analysis of the underlying issue being argued on appeal. Merits-jurisdiction intermingling is an issue that my colleague, Pat Kane, previously raised in two blog posts from 2012. See here and here.  Five years later, it has appeared again.

In Union County v. Town of Marshville, the Town argued—among other things—that an interlocutory order denying its motion to dismiss was immediately appealable because the motion was based on governmental immunity and, therefore, affected a substantial right.  As we have noted on numerous occasions before, trial court rulings on sovereign and governmental immunity defenses generally are immediately appealable—at least if the motion to dismiss is based on the proper subsection of N.C. R. Civ. P. 12(b).  (Thankfully, this blog post is not about THAT issue).

In Marshville, the Town contended that governmental immunity barred Union County’s claims relating to the Town’s operation of its sewer system. The trial court disagreed and denied the Town’s motion to dismiss. The Court of Appeals also rejected the Town’s governmental immunity argument, stating that the law is clear that the governmental immunity defense is inapplicable when the municipality engages in a proprietary function—such as the operation of a sewer system.

After essentially rejecting the merits of the Town’s governmental immunity argument, the Court of Appeals, however, turned its merits-based analysis into a jurisdictional one, stating:

Regardless of the clarity of North Carolina law, Defendant Town herein appeals to have this Court apply governmental immunity to claims that arose out of the operation of its sewer system. We decline to do so, and Defendant Town is, thus, unable to establish grounds for our interlocutory review because governmental immunity does not apply. We therefore dismiss this portion of the appeal.

These last two sentences had me scratching my head.  On one hand, the Marshville court appears to have rejected the Town’s governmental immunity argument on the merits.  However, in dismissing the appeal for lack of interlocutory jurisdiction, didn’t the Marshville court essentially hold that it lacked appellate jurisdiction to consider the merits of the Town’s argument—at least at this time?  Looking at it another way, if the Town’s proprietary function argument is not subject to immediate appellate review, can the merits of the Town’s argument be reviewed on appeal from a final judgment?

Of course, numerous other exceptions to the governmental immunity defense exist.  For example, a government may waive immunity from tort claims through purchase of liability insurance. And governmental immunity is not available for breach of contract claims.  Before Marshville, I would have said that an appellate court’s interlocutory determination that the government had purchased tort liability insurance covering a cause of action (and thereby waived governmental immunity) was a merits-based analysis—not a determination as to whether the appellate court had appellate jurisdiction to consider the issue in the first place.  By holding that because the underlying substantive arguments lacked merit, the appellate court did not have interlocutory jurisdiction, Marshville arguably turns that analysis on its head.

I am interested to know your thoughts.  When conducting its interlocutory jurisdiction analysis, should an appellate court presume that the underlying argument is meritorious?  If not, when should the merits of the underlying argument creep into an appellate court’s analysis of interlocutory jurisdiction?  If a court dismisses an appeal for lack of interlocutory jurisdiction, is the court’s merit-based discussion binding on the parties (or litigants in subsequent appeals)?

–Beth Scherer

P.S. The Court of Appeals’ opinions also  addressed a number of interesting substantive issues. For example, the Court of Appeals unanimously held on Tuesday that “heart balm” claims are not facially unconstitutional. (If you want to know more, check out the School of Government’s blog post on that opinion).  And if you want a mini lesson in Latin, another opinion explains that “cujus est solum, ejus usuqe ad coelom et ad inferos” means “whoever’s is the soil, it is theirs all the way to Heaven and all the way to hell.”