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Ochsner v. N.C. Department of Revenue

Court of Appeals of North Carolina

November 19, 2019

NICHOLAS A. OCHSNER, Plaintiff,
v.
N.C. DEPARTMENT OF REVENUE, Defendant.

          Heard in the Court of Appeals 8 May 2019.

          Appeal by plaintiff from order entered 4 June 2018 by Judge R. Allen Baddour, Jr. in Superior Court, Wake County No. 16 CVS 15006.

          Whitley Law Firm, by Ann C. Ochsner, for plaintiff-appellant.

          Attorney General Joshua H. Stein, by Assistant Solicitor General Kenzie M. Rakes and Deputy General Counsel Blake W. Thomas, for defendant-appellee.

          STROUD, JUDGE

         Nicholas Ochsner ("Plaintiff") appeals from the trial court's order granting the North Carolina Department of Revenue's ("NCDOR" or "Defendant") motion to enforce a mediated settlement agreement and dismissing the action as moot. After Defendant produced over 13, 000 pages of responsive documents, conducted searches of its employees and other persons identified as having potentially responsive records, and provided sworn statements that it had conducted the searches and produced all records discovered, the trial court properly determined Defendant had completed its obligations under the parties' Memorandum of Understanding and thus denied Plaintiff's motion for enforcement and dismissed the action as moot. In addition, the trial court properly exercised its judicial oversight function under the Public Records Act. We therefore affirm.

         I. Factual and Procedural Background

         On 7 December 2016, Plaintiff filed a "Complaint and Motion for Order to Show Cause" arising out of his request for production of public records from Defendant. Plaintiff alleged that on 8 June 2016, he requested production of public records from Defendant. He alleged that he filed this request "in his capacity as an investigative reporter for WBTV, the CBS affiliate serving the Charlotte, North Carolina market." He alleged in "late 2015 and early 2016" he "reported multiple stories pertaining to government officials, including members of the General Assembly and Governor Pat McCrory." In February, March, and June of 2016, he received notices from Defendant regarding "alleged taxes owed for tax year 2011." Plaintiff had requested production under the North Carolina Public Records Act, of these records:

-All written communication, including but not limited to email, text messages, letters or memos sent and received between NCDOR employees and any member of the North Carolina General Assembly, including but not limited to the Office of Speaker Tim Moore, their staff and other representatives between September 1, 2015 and June 1, 2016 containing the following words: "Oschner", "Reporter", "WBTV", "Charlotte", "2011", "audit", or "taxes"
-All written communication, including but not limited to emails, text messages, letters or memos, sent and received between NCDOR employees of the Office of the Governor between September 1, 2015 and June 1, 2016 containing the following words: "Oschner", "Reporter", "WBTV", "Charlotte", "2011", "audit", or "taxes"
-All notices of unpaid taxes, collection notices and other letters regarding unpaid taxes for the 2011 tax year sent by NCDOR between September 1, 2015 and June 1, 2016.
-The entire file and any and all documents related to the tax account of Nicholas A. Ochsner

         Defendant 's first response was an email on 9 June 2016, stating that a search would be initiated and the records would be provided as soon as possible. On 14 July, 2016, Defendant provided its initial response which included eight pages of internal documents related to Plaintiff's tax account. Plaintiff then "replied to NCDOR to address the deficiencies in" the response. On 8 August 2016, Defendant responded to several questions posed by Plaintiff and provided additional documents to Plaintiff. Defendant noted that it had narrowed the search due to the overly-broad search terms "taxes, audit, and Charlotte" to find email "which might conceivably pertain to your particular tax situation." Defendant also certified that it had confirmed no private email addresses and "non-state issued phones" were used in handling his tax matter. Defendant described the various divisions within the NCDOR which may have been involved with the "resolution of your tax matter" and efforts made to search for additional responsive documents and provided six additional documents and Plaintiff's previous state tax returns and corresponding payment information.[1] Plaintiff's complaint included attachments of additional correspondence by email and letter between Plaintiff, his counsel, and Defendant, seeking to address Plaintiff's questions regarding the scope of Defendant's search and his allegations of non-compliance with his request.

         On 9 December 2016, the Senior Resident Superior Court Judge entered an order assigning this case under Local Rules For Civil Superior Court, Tenth Judicial District, Rule 2.2 to the Honorable R. Allen Baddour, Jr. Plaintiff did not request mediation and his counsel informed Defendant by email that Plaintiff believed "mediation is not likely to yield a different result and would not be fruitful." Defendant responded that mediation was required by North Carolina General Statute § 7A-38.3E.[2] On 28 December 2016, the trial court sua sponte issued a Litigation Hold Order requiring the parties to preserve all potentially relevant records, both paper and electronic, pending resolution of the action. On 12 January 2017, the trial court issued an order requiring the parties to select a mediator and participate in a mediated settlement conference on or before 10 February 2017.

         On 24 January 2017, Defendant filed its answer to the complaint, denying the material allegations of the complaint and alleging that it had undertaken a reasonable search of its records and responded "fully and in good faith" to Plaintiff's request. Defendant also raised various affirmative defenses and moved to dismiss the action. Defendant also responded to Plaintiff's first set of interrogatories and request for production of documents.

         On 10 February 2017, the parties attended mediation and entered into a Memorandum of Understanding ("MOU"). In the MOU, Plaintiff agreed to limit the time scope of his request to 1 November 2015 to 1 June 2016. Defendant agreed to "identify staff members" of six specific members of the North Carolina House of Representatives and one State Senator within 14 days. Defendant also identified in the MOU seven other people who had a "professional association or connection with the legislature" and agreed to provide "information available to it pertaining" to those individuals within 14 days. Defendant agreed to "conduct a search of everyone in the department" of emails sent and received from personal and business email accounts; text messages sent or received on NCDOR issued phones; text messages sent or received on personal phones; to search for logs pertaining to instant messages or in the absence of such logs to provide the policy in effect for NCDOR employees at the relevant times; and to search "[a]ny and all other forms of written communication." The "goal of the parties" was to complete the searches within 30 days but it was anticipated that production of records may occur after that time, on a rolling basis and as the parties may agree. The MOU included essentially the same requirements as to the Office of the Governor, for the same time period. Within 30 days, Defendant was also required to certify the "number of notices issued, the date(s) of printing, and the date(s) of mailing" for all "notices of unpaid taxes, collection notices, and other letters regarding unpaid taxes for the 2011 tax year sent by NCDOR between January 1, 2016 and March 1, 2016." Defendant was to provide "[t]he entire file and any and all documents related to the tax account of Nicholas A. Ochsner[, ]" including "IRMF data received on or about 31 May 2013 from the IRS;" a "statement regarding its ability to identify, define, access, retrieve or otherwise provide the computer-related data connected to the IRMF file" and any notes regarding Plaintiff's tax file.[3]

         On 20 April 2017, the trial court held a status review hearing regarding the ongoing production of the requested records. Plaintiff's counsel expressed concern regarding the accuracy and completeness of the information Defendant produced. Plaintiff's questions arose primarily from the methods of electronic data processing systems of NCDOR and the "electronic footprint" and metadata showing who accessed Plaintiff's information and when. Defendant's counsel argued that Plaintiff's request was "getting beyond a question of access to records. We're getting into an issue of access to information about computer systems" which is protected by North Carolina General Statute § 132-6.1.[4] As to progress on searching for communications between the Governor's Office and Defendant, Defendant's counsel reported that "we're kind of just working through" the "109 names between the General Assembly folks and the office of the Governor." She noted NCDOR had hired additional help to assist and should be able to produce "in accordance with the schedule."

         On 8 May 2017, while the "rolling productions" contemplated by the MOU were still ongoing, Plaintiff served Defendant with a second set of discovery requests, including interrogatories, requests for production, and requests for admissions. In a letter dated 31 May 2017, Defendant informed Plaintiff that it "has met all of its obligations under the MOU." This included producing over 13, 000 pages of responsive documents and providing sworn and certified statements regarding the searches performed to find the information requested as stated in the MOU. Defendant certified that the searches required by the MOU were performed for every employee of NCDOR, the Governor's office, and the legislative staff members identified under the MOU and the responsive documents were produced.

         On or about 22 June 2017, Plaintiff served Defendant with a notice of deposition under Rule 30(b)(6) of the North Carolina Rules of Civil Procedure, seeking substantially the same information as the second discovery requests. On or about 7 July 2017, Plaintiff filed a motion under North Carolina General Statute § 132-1.9(d)(1) requesting entry of an order allowing access to records. In this motion, Plaintiff alleged he made a "second, unrelated request for public records" on 4 April 2017, in which he requested:

1) All communication-including but not limited to email, text message, iMessage, Slack message, letter or memo-sent or received between January 1, 2017 and April 4, 2017
a. by the following employees: N.C. Janke, Schorr Johnson, Alan Woodard, Jocelyn Andrews, Ronald Penny, Ken Wright, and Anthony Edwards
b. Containing the following key words: "Nicholas", "Nick", "Ochsner", "Audit", "2014", "lawsuit", "case", "Speaker", "Tim", "Moore", or "Tenisha",
2) All calendar entries maintained between March 1, 2017 and April 4, 2017 for the following individuals: N.C. Janke, Alan Woodard, Jocelyn Andrews, Ronald Penny, Jocelyn Andrews, and Anthony Edwards.
3) The entire file: and any and all documents related to the tax account of Nicholas A. Ochsner created or received between April 1, 2015 and April 4, 2017.[5]

         Defendant sent a "letter and disc" to Plaintiff on or about 30 June 2017 including its first production of documents responsive to the request of 4 April 2017, but many of the documents were redacted with notations to North Carolina General Statute § 132-1.9, or 1A-1.[6]

         On 14 July 2017, Defendant filed a motion for protective order as to the second set of discovery, notice of deposition, and first set of requests for admission, alleging that Plaintiff was seeking information outside the scope of the MOU and the Public Records Act. Defendant also filed a renewed motion to dismiss based upon North Carolina General Statute § 1A-1, Rule 12(b)(1), (2), and (6).

         On 11 August 2017, the trial court held a hearing regarding the pending motions from both parties. On or about 4 October 2017, Plaintiff filed a motion requesting that the trial court make findings of fact and conclusions of law as to its ruling denying Plaintiff's motion for access to records and granting Defendant's motion for protective order. Plaintiff also filed a motion to enforce the MOU.

         On 16 November 2017, the trial court entered an order allowing Defendant's motion for protective order, denying Plaintiff's motion for access based upon the second request of 4 April 2017, and denying Defendant's motion to dismiss the action. The trial court also entered an order to seal the documents produced in response to the 4 April 2017 request, which were reviewed in camera by the trial court based upon Defendant's claim of trial preparation materials.

         On 16 January 2018, Defendant filed a motion to enforce the MOU. Defendant alleged it had produced over 13, 000 pages of documents and fully satisfied the obligations of the MOU despite Plaintiff's claims otherwise. On 4 June 2018, the trial court entered an order and opinion releasing the Litigation Hold Order, denying Plaintiff's motion to enforce the MOU, and dismissing the action as moot based upon its determination that Plaintiff "has been given the opportunity to obtain the requested records at issue in this civil action." On 2 July 2018, Plaintiff filed notice of appeal "from the Order and Opinion signed by the Honorable R. Allen Baddour, Jr. on May 24, 2018 and filed with the Clerk on June 4, 2018 denying Plaintiff's motion to enforce mediated settlement agreement and dismissing the action as moot."

         II. Standard of Review

         Both Plaintiff and Defendant filed motions to enforce the MOU, and the trial court granted Defendant's motion and dismissed the case based upon its determination that Defendant had complied with the MOU. Prior cases have established that we review an order regarding enforcement of a settlement agreement under the Public Records Act under the same standard of review as for a summary judgment order:

We . . . apply the summary judgment standard of review. It is well-settled that the standard of review for an order granting a motion for summary judgment requires a two-part analysis of "whether, on the basis of materials supplied to the trial court, there was a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law." The moving party has the burden of demonstrating the lack of any triable issue of fact and entitlement to judgment as a matter of law. The evidence produced by the parties is viewed in the light most favorable to the non-moving party.

Hardin v. KCS Int'l, Inc., 199 N.C.App. 687, 695, 682 S.E.2d 726, 733 (2009) (citations omitted). We therefore review the trial court's order de novo.

         III. Scope of Appeal

         Portions of Plaintiff's argument are based upon his contention that the trial court abused its discretion by granting Defendant's motion for a protective order regarding his second discovery requests and notice of deposition. Plaintiff argues he was "denied the ability to support a motion to enforce the MOU by deposition and answers to his second set of interrogatories because the trial court abused its discretion in granting NCDOR's motion for a protective order." But Plaintiff appealed only from the final order, and he did not appeal from the trial court's order granting the protective order, so we have no jurisdiction to review the protective order.

         The North Carolina Rules of Appellate Procedure requires that the notice of appeal "shall designate the judgment or order from which appeal is taken and the court to which appeal is taken[.]" N.C. R. App. P. 3(d).

Proper notice of appeal is a jurisdictional requirement that may not be waived. As a general rule, the appellate court obtains jurisdiction only over the rulings specifically designated in the notice of appeal as the ones from which the appeal is being taken. As exceptions to the general rule, there are two situations in which the appellate court may liberally construe a notice of appeal to determine it has jurisdiction over a ruling not specified in the notice. First, if the appellant made a mistake in designating the judgment intended to be appealed, then the appeal will not be dismissed if the intent to appeal from the judgment can be fairly inferred from the notice and the appellee was not misled by the mistake. Second, if the appellant technically ...

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