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Nova University v. Board of Governors of University of North Carolina 1

Filed: March 3, 1982.


On defendants' petition for discretionary review under General Statute 7A-31(a) of a Court of Appeals' decision*fn2 reversing the denial of plaintiff's motion for summary judgment by Judge Hamilton Hobgood on 15 October 1979 in Wake Superior Court. This case was argued as No. 51, Spring Term 1981.

Exum, Justice. Justice Mitchell did not participate in the consideration or decision of this case. Justice Carlton dissenting. Justice Copeland joins in this dissent.


The question dispositive of this litigation is whether General Statute 116-15*fn3 authorizes the Board of Governors of the University of North Carolina (herein "Board") to regulate through a licensing procedure teaching in North Carolina by Nova University (herein "Nova") when the teaching leads to Nova's conferral of academic degrees in Florida and pursuant to Florida law. The Court of Appeals concluded that the statute contains no such authorization. We agree and affirm.

Defendant Board, acting under G.S. 116-15 and various regulations adopted by it pursuant to the statute, denied plaintiff Nova, a Florida nonprofit corporation, a license to teach in North Carolina curricula designed by Nova to lead to its conferral in Florida of certain academic degrees. Nova has challenged this ruling by filing in superior court what it denominates a "Petition and Complaint." Its petition is filed pursuant to G.S. 150A-45, the section of our Administrative Procedure Act (herein "APA") which provides that "judicial review of a final agency decision" may be obtained through "a petition" filed in Wake Superior Court. By its complaint, or civil action, Nova seeks both a declaratory judgment that the Board has no authority to license its teaching in North Carolina or its conferral of degrees in Florida under Florida law and injunctive relief against the Board's attempt at this kind of regulation. In superior court Nova filed both a motion for summary judgment and a motion for extension of time to conduct discovery. Both motions appear to be related to Nova's civil action, rather than its APA petition for review; but the Board resisted only Nova's motion to extend time for discovery on the ground that Nova's relief, if any, from the Board's decision was via its APA petition for review. The Board argued that the superior court could not entertain a separate civil action and Nova had no right to discovery in a proceeding to review an administrative decision.

Judge Hobgood, after a hearing, denied Nova's motion for summary judgment "without prejudice" to Nova's having its "appeal from an adverse ruling of an administrative agency heard pursuant to [the APA]." Concluding, however, that Nova had a

right to conduct discovery, Judge Hobgood allowed Nova's motion to extend time for discovery.

The Court of Appeals allowed both Nova's and the Board's petitions for certiorari, each party having sought review of the ruling adverse to it. The Court of Appeals, after concluding that under G.S. 116-15 the Board "does not have the power to license or regulate Nova University in its teaching program in this state so long as Nova does not confer degrees in this state," reversed Judge Hobgood's denial of Nova's summary judgment motion and remanded for entry of a judgment consistent with its opinion. The Court of Appeals did not, therefore, reach the discovery question raised by the Board's petition for certiorari.

Before us the Board has not sought to sustain the denial of Nova's summary judgment motion on the ground that the superior court had no jurisdiction to entertain it. It continues to argue that Nova's exclusive judicial remedy is under the APA only as a challenge to the superior court's ruling on Nova's discovery motion. Both parties have before us treated the case as if Nova's motion for summary judgment was procedurally a proper way to raise the question of the Board's authority to act. Both have vigorously and ably argued this question here and in the Court of Appeals on the basis that a conclusion that the Board lacked such authority would effectively terminate the litigation in Nova's favor whether the matter is considered as a petition under the APA or civil action against the Board, or both. We approach this aspect of the case as have the parties.

We now proceed to the question at hand.

General Statute 116-15 provides:

"Licensing of nonpublic educational institutions; regulation of degrees. -- (a) No nonpublic educational institution created or established in this State after December 31, 1960,*fn4 by any Page 159} person, firm, organization, or corporation shall have power or authority to confer degrees upon any person except as provided in this section. For the purposes of this section, the term 'created or established in this State' or 'established in this State' shall mean, in the case of an institution whose principal office is located outside of North Carolina, the act of issuance by the Secretary of State of North Carolina of a certificate of authority to do business in North Carolina.*fn5 The Board of Governors shall call to the attention of the Attorney General, for such action as he may deem appropriate any institution failing to comply with the requirements of this section.

(b) The Board of Governors, under such standards as it shall establish, may issue its license to confer degrees in such form as it may prescribe to a nonpublic educational institution established in this State after December 31, 1960, by any person, firm, organization, or corporation; but no nonpublic educational institution established in the State subsequent to that date shall be empowered to confer degrees unless it has income sufficient to maintain an adequate faculty and equipment sufficient to provide adequate means of instruction in the arts and sciences, or in any other recognized field or fields of learning or knowledge.

(c) All nonpublic educational institutions licensed under this section shall file such information with the President as the Board of Governors may direct, and the said Board may evaluate any nonpublic educational institution applying for a license to confer degrees under this section. If any such nonpublic educational institution shall fail to maintain the required standards, the Board shall revoke its license to confer degrees, subject to a right of review of this decision in the manner provided in Chapter 150A of the General Statutes." (Emphasis supplied.)

Acting pursuant to subsection (b) of the statute, the Board adopted "Rules and Standards for Licensing Non-Public Educational Institutions To Confer Degrees."*fn6 (Herein "Standards.") These Standards provide for a number of "minimum standards" with which "a non-public degree-granting educational institution operating wholly or in part in North Carolina" must comply. They relate, in part, to "the quality and content of each course or program of instruction"; the adequacy of "space, equipment, instructional materials, and personnel"; the qualifications of administrators and instructors; financial soundness; and absence of discriminatory practices. "Accreditation by the appropriate accrediting agency . . . may be accepted by the Board . . . as evidence of compliance with [the] minimum standards." The Standards then provide for a procedure whereby an institution may apply for a license. After application, an "examination visit" to the applicant institution's campus by a "team of examiners" is conducted. The Team then files its report and recommendations with the President of the University of North Carolina. After opportunity is given to the applicant to discuss and make additions to the report of the examining team, the matter is submitted to the Board for its "decision and final disposition of the institution's request for licensing." The Rules provide for judicial review of the Board's decision pursuant to Article 4 of G.S. 150A.

In addition to its Standards, the Board on 13 February 1976 adopted revised "Guidelines for Interpretation and Implementation" of its Standards (herein "Guidelines"). The Guidelines are expressly designed to "interpret the rules and minimum standards under which the Board . . . issues licenses to non-public educational institutions to confer degrees in North Carolina." (Emphasis supplied.) The Guidelines, after stating the Board's conception of the "broad purpose of higher education," outline in detail requirements for an acceptable "educational program" for each of several types of academic degrees.*fn7 After stating the Board's conception of the capacities of "[a] generally educated person" and how these capacities are generally developed, the Guidelines provide:

" Extension work Offered by Out-of-State Institutions. Any institution legally operating in another state that wishes to offer in North Carolina courses leading to a degree is to apply in the same manner for a license to grant degrees, and is to be judged by the same standards as institutions applying for initial licensure in North Carolina." (Emphasis supplied.)

The Guidelines close with a section on how an educational institution should be organized and administered.

It is against this legislative and regulatory backdrop that the dispute before us arose.

It is undisputed that Nova is a nonprofit corporation organized and existing under the laws of Florida with its principal place of business in Fort Lauderdale, Florida. In addition to undergraduate, graduate and professional curricula taught at its 200 acre campus in Fort Lauderdale, Nova, beginning in 1972 and thereafter, instituted various "non-resident" curricula designed to lead to the conferral by Nova in Florida of various degrees for professional persons.*fn8 Candidates for these degrees are not required to fulfill traditional residence requirements at the Nova campus in Fort Lauderdale. Instead, they form "clusters" of 25 to 30 persons who meet regularly at a site in the state where they live. They are taught by professors, most of whom also teach at universities with traditional residency requirements and who are flown in for weekend sessions with the candidates. The candidates listen to lectures, take notes, have class discussions and undergo examinations. In addition, candidates are required to attend summer institutes at Nova's home campus. Courses and research projects required for the degrees usually require three or more years to complete. Successful candidates receive their degrees in Florida by virtue of Nova's charter under the laws of that state. Nova is and has been since 1971 fully accredited by the Southern Association of Colleges and Schools, the officially recognized accrediting association of the southeastern United States. Nova's accreditation was most recently affirmed for a ten-year period after a review in 1974-75 of its educational programs

including its extension courses such as those here at issue. Nova offered its first nonresident curriculum leading to the Doctor of Education Degree for community college faculty in North Carolina in the fall of 1973.

According to Nova's complaint, it did not believe that it was subject to the jurisdiction of the Board; but with confidence in the quality of its curriculum and desire to cooperate with North Carolina authorities, it applied to the Board on 19 November 1976 for licensure.

This application was processed according to the Board's Standards and Guidelines. After reviewing documentary material, contacting persons familiar with Nova's curriculum and making site visits both to the North Carolina "clusters" and to the Fort Lauderdale campus, a team of examiners appointed by the Board recommended on 31 October 1977 denial of Nova's license application. This recommendation was seconded by staff personnel of the University of North Carolina; and on 7 December 1978 the Board's Committee on Educational Planning, Policies and Programs recommended that the Board deny Nova's license application. The Board by resolution on 8 December 1978 denied the application. According to the Board's resolution it found that the curriculum leading to the degrees in question lacked "sufficient depth and extensiveness in terms of time and effort required of students," lacked "an adequate faculty in terms of faculty members' contact with and accessibility to their students" and lacked "equipment in terms of libraries and instructional facilities sufficient to provide adequate means of instruction in any of the fields of learning in which" Nova proposed to confer degrees. The Board apparently had no dispute with the qualifications of the faculty generally.

In due time Nova brought this proceeding in Wake Superior Court challenging the Board's action on a multitude of grounds.*fn9

Nova's most compelling argument, and the one with which we agree, is that G.S. 116-15 expressly authorizes the Board to license only the conferral of degrees. The statute, therefore, should not be interpreted beyond its terms to authorize the Board to license teaching even though the teaching is designed to lead to a degree conferral.

The Board argues to the contrary. It agrees that the statute by its terms speaks only of the Board's authority to license degree conferrals. The Board argues, however, that because the statute authorizes the Board to license degree conferrals, the power to license ...

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