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Judicial Notice Has Its Limits, and That Can Be Dispositive

In a coastal town in North Carolina called Ocean Isle Beach, there is a small airport.  Jackson/Hill Aviation, Inc. is contracted with the Town of Ocean Isle Beach to operate that small airport. A dispute later broke out between Jackson/Hill and the Town, because Jackson/Hill did not always staff the airport with an employee. Ocean Isle Beach asserted that (1) the provisions of a Town law, or ordinance (it’s the same thing, really), require the airport to be staffed during normal business hours and (2) that the contract requires Jackson/Hill to comply with that ordinance. Thus, the Town concluded, Jackson/Hill breached the contract by failing to follow the Town law that was a part of the contract.

Well, the Town took over control of the airport and locked Jackson/Hill out of the airport on this “staffing” basis.  That didn’t sit well, and Jackson/Hill sued the Town.  The Town moved to dismiss, pointing to Jackson/Hill’s admission in the complaint that it did not staff the airport during all normal business hours, to the terms of the contract (attached to the complaint), and to the terms of the Town’s ordinance (NOT attached to the complaint).  The trial court granted the Town’s motion to dismiss.

Jackson/Hill appealed, in Jackson/Hill Aviation, Inc.  v. Town of Ocean Isle Beach, No. COA16-396 (February 7, 2017).  On appeal, the Court reversed the trial court’s decision on these two principles: (1) “[p]erhaps the most fundamental concept of motions practice under Rule 12 is that evidence outside the pleadings—such as a document attached to a motion to dismiss—cannot be considered in determining whether the complaint states a claim on which relief can be granted” and (2) “The Town’s ordinance is not mentioned in the complaint, and it is well-settled that courts ‘cannot take judicial notice of the provisions of municipal ordinances.’”  In other words: sure the contract says that it incorporates Town law, and sure Jackson/Hill admits that it did not staff the airport during all business hours, but a motion to dismiss is on the pleading, alone, and there is nothing in or attached to the pleading providing the court with the Town law at issue and, what is more, the Court cannot take judicial notice of a local ordinance in North Carolina such that the pleading is otherwise insufficient on that “backdoor” basis.

Back to the Court:  “There is an obvious (and fatal) flaw in the town’s reasoning: the complaint does not allege the existence of the town ordinance or describe what that ordinance says. At the motion to dismiss stage, the trial court (and this Court) may not consider evidence outside the four corners of the complaint and the attached contract.”  Yes, the Town did argue that “[North Carolina] courts may use judicial notice ‘to consider laws, administrative regulations, important public documents and a range of miscellaneous facts’”, and the Town “suggests that this is precisely what the trial court did when it considered the ordinance below”.  But, as the Court makes clear, “our Supreme Court repeatedly has held that courts “cannot take judicial notice of the provisions of municipal ordinances.” McEwen Funeral Serv., Inc. v. Charlotte City Coach Lines, Inc., 248 N.C. 146, 150–51, 102 S.E.2d 816, 820 (1958).”

So, take heed.  Yet another funny nuance that keeps local government practitioners busy in North Carolina.

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