Appeals Court rules for UNC System in case over COVID semester tuition, fees

A unanimous N.C. Court of Appeals panel has ruled in favor of the University of North Carolina System in a dispute involving tuition and fees paid during the outset of the COVID-19 pandemic. The court ruled that students cannot seek partial refunds because of COVID-related shutdowns across the UNC System in spring 2020.

The decision upholds a trial court ruling in the case Dieckhaus v. Board of Governors of UNC.

Students had accused the university of breach of contract and “unjust enrichment” for keeping all tuition and fees paid during the period when universities shut down in-person operations because of COVID.

“Because sovereign immunity bars the unjust enrichment claims and because statutory immunity bars both the unjust enrichment and contract claims, we affirm the trial court’s order dismissing all claims,” wrote Chief Judge Donna Stroud for the unanimous three-judge appellate panel.

The decision arrives three months after the Appeals Court ruled in a separate case, Lannan v. Board of Governors of UNC, that students at the state’s two flagship public universities — UNC-Chapel Hill and N.C. State University — could proceed with breach-of-contract suits. The Lannan case involves student fees paid in fall 2020, the first full semester after COVID hit North Carolina.

University lawyers have asked the state Supreme Court to reverse that ruling, citing potential “massive liability” from allowing that case to proceed. The state’s highest court issued an October order temporarily blocking the Lannan suit from moving forward.

In the Dieckhaus case, five students and a parent sued the UNC System in May 2020. They argued that the university breached a contract to provide in-person instruction.

The plaintiffs sought partial refunds of tuition and fees charged for the semester that university campuses shut down because of COVID-19. Superior Court Judge Edwin Wilson dismissed their case in June 2021.

“We have appellants that have completely performed under the contract,” said Blake Abbott, the attorney representing the students and parent during oral arguments in May 2022. “They prepaid their tuition. They prepaid their fees. They know what they’re going to get, and that’s an on-campus education. But halfway through the semester, the university actually stops performing.”

“Instead of refunding appropriate amounts of tuition and fees and prepaid funds for meals, the university just elects to retain the money,” Abbott added.

The trial judge had multiple valid reasons for tossing the case last year, argued Jim Phillips, a private attorney representing the UNC System.

First, a state law approved in June 2020 (Senate Bill 208, Session Law 2020-70) specifically protected universities from the type of lawsuit the plaintiffs filed. Second, sovereign immunity blocks legal action against the university. Third, the plaintiffs failed to identify a contract that could have been breached.

“North Carolina law is clear that in the education context it is not enough to point to and rely on statements in websites, in handbooks, in bulletins, in marketing materials, and the like for the terms of a contract,” Phillips said.

“I think, quite frankly, that the university did a magnificent job here — transitioning to online and providing that semester’s education to these students,” Phillips said.  “I think the General Assembly recognized it when it passed the immunity statute. This was a hard job, and the university pulled it off. None of us got exactly what we were used to paying for during COVID, but we got what I would consider to be — if there was a contract — substantial performance.”

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