Court: Court of Appeals of North Carolina; November 2, 2004; North Carolina; State Appellate Court
Plaintiffs Kent A. Chatfield and Christianna E. Noe appealed a summary judgment favoring Wilmington Housing Finance and Development, Inc. (WHFD), seeking access to its meetings and records under North Carolina Open Meeting and Public Records Laws. The trial court's ruling was affirmed. WHFD was originally incorporated in 1982 as Wilmington Housing Authority Development (WHAD) to support the City of Wilmington's Housing Authority (WHA) in managing low and moderate-income housing. WHAD's operations were closely tied to WHA, with financial practices subject to WHA oversight and assets designated for WHA upon dissolution.
In 1987, WHAD amended its charter, changing its name to WHFD and removing provisions that tied its existence and financial benefits directly to WHA. The amended charter allowed WHFD to operate independently, with its purpose expanded to include functions requested by WHA and the City of Wilmington. The new by-laws permitted the City and New Hanover County to appoint members to WHFD's board, which has included government officials. These by-laws also granted the WHA and the City oversight of WHFD's activities and access to its records.
In 1998 and 1999, plaintiffs, employed by WHFD and Cape Fear Community College for a renovation project, raised concerns about irregularities at the job site, including improper payments and management of student-workers. They requested to attend WHFD board meetings and sought access to records but were denied both, prompting their appeal for greater transparency.
In 2001, WHFD relocated its principal office to a leased space. A bylaw amendment in March 2002 centralized the authority to appoint board members within WHFD. On August 13, 2002, WHFD adopted restated articles of incorporation that removed the WHA and the City of Wilmington's rights to inspect its records, perform functions for WHFD, or review its activities and finances annually. By July 2003, three of nine board positions were vacant, with the remaining filled by WHFD appointees, including one member who also served on the WHA board. Financial records from 2000 to 2002 indicated no funds were received from the WHA, New Hanover County, or the City, except for $15,000 in supervision fees from the WHA in 2001.
On May 20, 2002, Chatfield and Noe filed a complaint seeking a declaration that WHFD was subject to North Carolina's Open Meetings and Public Records Laws, along with an injunction against violations. A preliminary injunction was granted on July 16, 2002, requiring WHFD to comply with these laws. Following motions for summary judgment from both parties, the superior court ruled in favor of WHFD on August 21, 2003, prompting an appeal from the plaintiffs regarding the denial of their motion.
The appeal focused on whether WHFD was subject to the Open Meetings and Public Records Laws. The court determined that WHFD did not fall under the Public Records Law, emphasizing that public records are defined as documents related to public business by governmental agencies, stating that such records should be accessible to the public at minimal cost unless specified otherwise by law.
N.C.G.S. 132-1(a) defines a governmental agency, encompassing various public entities at the state and local levels. A corporate entity may be deemed an agency of local government concerning public records, but each case must be assessed individually based on the relationship between the entity and the government. The decision in News Observer Publ'g Co. v. Wake County Hospital Sys. Inc. established nine factors to determine if a corporate entity is subject to the Public Records Law, including asset transfer upon dissolution, county approval for board vacancies, lease agreements, budget reviews, audits, and revenue collection tied to county bonds.
In the current case, WHFD acknowledged that several factors from News Observer previously indicated it was subject to the Public Records Law. However, as of August 2002, these factors were no longer present due to structural changes made by WHFD, which were lawful and not contested in this appeal. Plaintiffs argued that WHFD should still be subject to the Public Records Law because it was founded as a governmental agency, but this argument was rejected. The court emphasized that public records laws apply only to entities under government control. Historical status as a government agency does not guarantee ongoing applicability of the Public Records Law, especially if the entity has transitioned into a private corporation. Additionally, merely having a public-serving purpose does not suffice to impose these laws. Thus, the assignment of error regarding WHFD's status is overruled.
WHFD is not subject to the North Carolina Open Meetings Law as defined by the North Carolina General Statutes. The law mandates that public bodies conducting state or local government business must hold open meetings, with the definition of "public body" encompassing elected or appointed authorities. WHFD does not qualify as an elected body, nor is there evidence it is currently appointed by any governmental entity. Its board alone appoints new members, and all positions were filled as of August 2003. The court noted that even applying the nine News Observer factors for determining public body status, none support WHFD's classification under the Open Meetings Law. The plaintiffs' argument that WHFD is a public body because it was founded by governmental entities is rejected; the law does not extend to entities that once served as agencies of government but do not currently do so. The court affirms its decision, emphasizing that if the Public Records Law were to apply based solely on an organization's social purpose, it could inadvertently encompass all charitable nonprofits, which the General Assembly did not intend. Judges Hunter and Geer concur with this conclusion.
