Rockford-Cohen Grp., LLC v. N.C. Dep't of Ins

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NO. COA13-124 NORTH CAROLINA COURT OF APPEALS Filed: 5 November 2013 ROCKFORD-COHEN GROUP, LLC and LYNETTE THOMPSON, Plaintiffs-Appellees, v. Wake County No. 12-CVS-12379 NORTH CAROLINA DEPARTMENT OF INSURANCE, COMMISSIONER OF INSURANCE WAYNE GOODWIN, NORTH CAROLINA BAIL AGENTS ASSOCIATION, a North Carolina Nonprofit Corporation, Defendants-Appellants. Appeal by Defendant North Carolina Bail Agents Association from order entered 1 October 2012 by Judge Donald W. Stephens in Superior Court, Wake County. Heard in the Court of Appeals 13 August 2013. Hartzell & Whiteman, L.L.P., by J. Jerome Hartzell, for Plaintiffs-Appellees. Ogletree, Deakins, Nash, Smoak & Stewart, P.C., by Phillip J. Strach; and Steven A. McCloskey, for Defendant-Appellant North Carolina Bail Agents Association. McGEE, Judge. Rockford-Cohen Group, LLC and Lynette Thompson ( Plaintiffs ) filed a motion for preliminary injunction against the North Carolina Department of Insurance, Commissioner of -2Insurance Wayne Association. Goodwin, and North Carolina Bail Agents Plaintiffs sought a declaration that the 2012 N.C. Sess. Law, ch. 183, An Act to Provide for the Pre-Licensing and Continuing Education of Bail Bondsmen and Runners[,] (hereinafter Act ) violated Article I, Section 34 of the North Carolina Constitution on perpetuities and monopolies. The trial court entered an order on 1 October 2012, granting Plaintiffs motion for preliminary injunction. Defendant North Carolina Bail Agents Association (hereinafter Defendant ) filed notice of appeal. Defendants North Carolina Department of Insurance and Commissioner Wayne Goodwin did not appeal the order. I. Motion to Dismiss the Appeal Plaintiffs interlocutory. moved It is to dismiss Defendant s well-established injunction is an interlocutory order. that a appeal as preliminary Revelle v. Chamblee, 168 N.C. App. 227, 229, 606 S.E.2d 712, 713-14 (2005). There is no immediate right of appeal from an interlocutory order unless the order affects a substantial right. N.C. Gen. Stat. §§ 1-277, 7A-27(d)(1) (2011). To determine whether immediate appeal is warranted, this Court uses a two-part test, with the first inquiry being whether a substantial right is affected by the challenged order and the second being whether this substantial right might be -3lost, prejudiced, or inadequately preserved in the absence of an immediate appeal. Hamilton v. Mortg. Info. Servs., Inc., 212 N.C. App. 73, 78, 711 S.E.2d 185, 189 (2011). The substantial applied. right test is more easily stated than It is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context in which the order from which appeal is sought was entered. Action Cmty. Television Broadcasting Network, Inc. v. Livesay, 151 N.C. App. 125, 129, 564 S.E.2d 566, 569 (2002). Defendant contends that a substantial right was affected because the injunction seeks to prevent [Defendant] from performing the duty that has been assigned to it by statute. However, as Plaintiffs note, the injunction does not command Defendant to perform or refrain from performing Rather, the only action the injunction requires any action. is that the North Carolina Department of Insurance shall not in any way discriminate against any approved provider. In its brief, Defendant compares itself to the North Carolina State Bar for its responsibility to protect the public. When an agent of the State that is charged with enforcing statutes chooses to appeal rulings limiting the enforcement of those statutes, the right to enforce the statute is substantial, -4and the rulings are immediately appealable. See Johnston v. State, ___ N.C. App. ___, 735 S.E.2d 859, 864 (2012), disc. review allowed, ___ N.C. ___, 738 S.E.2d 360 (2013); Gilbert v. N.C. State Bar, 363 N.C. 70, 76-77, 678 S.E.2d 602, 606 (2009). Defendant, however, is not a state agency or an agent of the State that is charged with enforcing the statutes regarding bail bondsmen. full power Rather, the Commissioner of Insurance has the and authority to administer Article 71, Bail Bondsmen and Runners. 71-5 (2011). General provisions of N.C. Gen. Stat. § 58- The Act affected provisions of Article 71 of the Statutes. Insurance the chose not As to previously appeal the noted, order. the Commissioner This argument of is therefore unavailing. Defendant further contends that the right to do business and collect remuneration as the exclusive provider of creditable bail bondsmen training constitutes a substantial right. We agree. In American Motors Sales Corp. v. Peters, 58 N.C. App. 684, 294 S.E.2d 764 (1982), rev d in part on other grounds, 311 N.C. 311, 317 S.E.2d 351 (1984), this Court held that the denial of a stay of the Commissioner of Motor Vehicles order revoking a franchise that American Motors had given 421 Motor Sales was interlocutory. This Court held that the order denying a stay -5 required [the hearing. American Motors, 58 N.C. App. at 686, 294 S.E.2d at 766. appellants] to give up a right pending a Although this Court does not state so explicitly, the context of the opinion in American Motors indicates the right at issue was the right to do business pursuant to the franchise granted by American Motors. This Court held that the right was substantial, and the appeal was heard. In the present case, the trial court s grant of Plaintiffs motion for a preliminary injunction required Defendant to give up the right to do business as the exclusive provider of creditable bail bondsmen training and to receive remuneration for providing such education. Pursuant to American Motors, we review the merits of Defendant s appeal. II. Merits of the Appeal The issue Defendant asks this Court to review is whether the General Assembly s policy decision to assign creditable bail bondsmen training impermissible Constitution. assign monopoly to in [Defendant] . . . constitutes violation of the North an Carolina The precise question of whether the decision to creditable bail bondsmen training to one particular group, where previously anyone could apply to the Commissioner of Insurance to provide such training, appears to be one of first impression. -6The Courts of this State recognize a presumption in favor of the constitutionality of a statute. Gardner v. Reidsville, 269 N.C. 581, 594, 153 S.E.2d 139, 150 (1967). It is well settled in this State that the Courts have the power, and it is their duty in proper cases, to declare an act of the General Assembly unconstitutional but it must be plainly and clearly the case. Id. If there is any reasonable doubt, it will be resolved in favor of the lawful exercise of their powers by the representatives of the people. Id. The Act at issue in this case states: (a) In order to be eligible to take the examination required to be licensed as a runner or bail bondsman under G.S. 58-71-70, each person shall complete at least 12 hours of education as provided by the North Carolina Bail Agents Association in subjects pertinent to the duties and responsibilities of a runner or bail bondsman, including all laws and regulations related to being a runner or bail bondsman. (b) Each year every licensee shall complete at least three hours of continuing education as provided by the North Carolina Bail Agents Association in subjects related to the duties and responsibilities of a runner or bail bondsman before renewal of the license. 2012 N.C. Sess. Laws, ch. 183 § 1. The underlined portion is the newly enacted language. The North Carolina Constitution states: Perpetuities and monopolies are contrary to the genius of a free state and shall -7not be allowed. N.C. constitutionality of bondsmen exclusively training a Const. Art statute to I, § 34. assigning one Although creditable group, where anyone could apply, has not been addressed by the bail previously our appellate courts, there are several instructive cases involving Article I, Section 34 of our Constitution. In American Motors Sales Corp., 311 N.C. 311, 317 S.E.2d 351 (1984), our Supreme Court reviewed the constitutionality of legislation affecting vehicle sales. Our Supreme Court described a monopoly as resulting from ownership or control of so large a portion of the market for a certain commodity that competition is stifled, freedom of commerce is restricted, and control of prices ensues. Id. at 315, 317 S.E.2d at 355. However, the Act in the present case does not affect a private market, like vehicle sales. Rather, bondsman the training Act affects that the the market General for Assembly creditable created bail when it allowed groups and individuals to apply to the Commissioner of Insurance to provide such training. Based Capital Requirements for See An Act to Adopt RiskLife and Health Insurance Companies, To Make Corrections and Technical Amendments in the Insurance Laws, And To Amend the Scholarship Provisions of the Firemen s Relief Fund in the Insurance Code , 1994 N.C. Sess. -8Laws, ch. 678 § 32. Thus, we must look beyond American Motors for guidance. Monopoly, as originally defined, consisted in a grant by the sovereign of an exclusive privilege to do something which had theretofore been a matter of common right. State v. Harris, 216 N.C. 746, 761 6 S.E.2d 854, 864 (1940). The exclusion of others from such common right is still considered a prominent feature of monopoly, and the consequent loss to those excluded of opportunity to earn a livelihood for themselves and their dependents . . . has been considered the prime reason for the public policy then adopted into the Constitution. Id. Our Supreme Court discussed the common right analysis in Thrift v. Elizabeth City, 122 N.C. 31, 30 S.E. 349 (1898). At issue was a contract between Elizabeth City and an individual to construct and maintain waterworks for a term of thirty years. Id. at 32-33, 30 S.E. at 350. to be understood The Court did not wish as conceding the power of the Legislature itself to grant such exclusive privileges. at 351. Id. at 37, 30 S.E. However, the Court acknowledged there were decisions to the contrary in other jurisdictions, but in all of them, where the power is admitted, it is strictly construed. Id. The Court observed that the error has apparently arisen from adopting the substance of Lord Coke s definition of a monopoly, -9as an exclusive right granted to a few of something, which was before of common right. Id. Our theory of government, proceeding directly from the people, and resting upon their will, is essentially different, at least in principle, from that of England; and common law maxims and definitions, framed while the judges were still under the spell of the Feudal System, must be construed by us in the light of changed conditions. Id. Under our system of government, all rights and privileges are primarily of common right, unless their restraint becomes necessary for the public good[.] Id. Defendant contends that the opportunity to provide Statemandated training to bail bondsmen is not a common right because the General Assembly created creditable bail bondsmen training. However, Defendant misconstrues the common right at issue. The General provide creditable Assembly bail created bondsmen the training right to in the apply to previous version of this statute, 1994 N.C. Sess. Laws, ch. 678 § 32. Then, the General Assembly amended the statute to exclude all others from being considered by the Commissioner of Insurance to provide creditable bail bondsmen training. 2012 N.C. Sess. Laws, ch. 183 § 1. Thus, the common right that has been lost is the right to be considered by the Commissioner of Insurance for approval to -10provide creditable bail bondsmen training. others, the opportunity General to dependents[.] earn Assembly a deprived livelihood for By excluding all all others themselves of and the their Harris, 216 N.C. at 761, 6 S.E.2d at 864. Another instructive case is Madison Cablevision v. City of Morganton, 325 Cablevision N.C. argued 634, that 386 the S.E.2d (1989). refusal City s 200 to Madison grant franchises to private applicants was unconstitutional. 653, 386 S.E.2d at 211. did not foreclose Our Supreme Court disagreed. for any period the S.E.2d possibility at 211. that The other City cable companies Id. at The City possibility franchises might be granted to other applicants. 386 cable expressly Id. at 654, left could that apply open the for and obtain a franchise in the future and committed itself to review the over-build situation five years after it issued its decision to operate a municipal system. By contrast, in the Id. present case, the General Assembly granted an exclusive right to Defendant to provide creditable bail bondsmen training, thereby foreclosing the possibility that others could provide this training. Furthermore, unlike Madison Cablevision, the General Assembly did not expressly leave open the possibility that others might be approved in the future to provide creditable bail bondsman training. -11Defendant contends that, if the General Assembly has the greater authority to license bondsmen and create for them a training requirement, then it has the lesser power to determine who will conduct that training[,] citing Watkins v. Iseley, 209 N.C. 256, 183 S.E. 365 (1936). analyzed the Our Supreme Court in Watkins constitutionality of ordinances requiring operators of taxicabs or other motor vehicles for hire in the city of Raleigh to secure liability insurance[.] 183 S.E. at 365. The challenge was that Id. at 257, the ordinances discriminated against those engaged in operating motor vehicles for hire in favor of persons operating such vehicles for their private ends[.] Watkins Id. does not cite, rely upon, prohibition on monopolies and perpetuities. Watkins were not monopolies and undermines a alleged to perpetuities. conclusion of violate Watkins the Act s or analyze the The ordinances in the prohibition neither supports constitutionality on nor under N.C. Const. Art I, § 34. In considering the constitutionality of the Act, this Court is mindful of the common right analysis that our Supreme Court discussed in Thrift. When the General Assembly previously allowed all to apply to the Commissioner of Insurance, the right to be considered to provide creditable bail bondsmen training -12was in the manner of a common right. Subsequently, the General Assembly to granted an exclusive right creditable bail bondsmen training. Assembly granted to Defendant Defendant to conduct In so doing, the General an exclusive right which was previously a common right. In accordance with the power and duty of the courts described in Gardner, this Court concludes that the Act making Defendant the exclusive provider of creditable bail bondsmen training violates Article I, Section 34 of the North Carolina Constitution. our holding The trial court s order is affirmed. as to this issue, we remaining arguments. Affirmed. Judges STEELMAN and ERVIN concur. do not reach Because of Defendant s

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