New Hanover County School Board Approves $640,000 Settlement in Sex Abuse Lawsuit
The New Hanover County Board of Education has unanimously approved a $640,000 settlement with three survivors of sexual abuse by former science teacher Michael Earl Kelly, marking the second settlement the district has reached in connection with Kelly’s decades of abuse.
The vote came near the end of the board’s agenda review meeting on February 24, 2026, when board member Pat Bradford made a motion to approve the settlement negotiated by the district’s insurance company. The motion passed without opposition.
Kelly was a science teacher in New Hanover County Schools for 26 years, working at both Laney High School and Isaac Bear Early College High School. Evidence gathered during the litigation revealed that more than 30 children were abused by Kelly during his tenure. In June 2019, Kelly entered guilty pleas to 59 charges, including sexual exploitation of a minor, indecent liberties with a student, and indecent liberties with a child. He was sentenced to up to 31 years in prison.
The three victims in this case were identified as John Does 15 through 17, who were former students at Isaac Bear Early College High School. They were not among the 14 survivors represented in an earlier lawsuit that concluded with a $5.75 million settlement in 2023. New Hanover County Schools did not admit any wrongdoing in that case.
Attorney Joel Rhine, who represented the victims alongside the Lea-Schultz Law Firm, P.C., stated that witnesses reported the abuse to school principals on more than eight separate occasions and nothing was done. When Kelly was ultimately arrested, he himself admitted there were two incidents where he was investigated and allowed to remain employed by the school system. Rhine emphasized that the abuse could have been prevented had the school district taken action, noting that the absence of adequate systems and processes allowed a predator to remain in the classroom for more than two decades.
Insurance Covers Nearly the Entire Settlement
A follow-up investigation by WECT revealed that the school district’s share of the $640,000 payout amounts to just a $5,000 insurance deductible — and the district’s attorney, Norwood Blanchard, is prepared to argue the district should not have to pay even that amount. Blanchard contends that a $5,000 deductible the district paid in the earlier 2023 settlement should satisfy the obligation for both cases.
According to WECT’s reporting, the settlement will be covered almost entirely by the district’s insurance carrier, Liberty Mutual, which also provided and paid for an attorney to defend the district in the lawsuit. Invoices reviewed by WECT confirmed that New Hanover County Schools has paid minimal legal expenses over the last two years in connection with the Kelly-related cases. Because of those minimal costs, school officials said the settlement will have no significant impact on the district’s budget.
Rhine told WECT that the school district and its insurance company made the case harder than it needed to be, fighting the victims on every issue rather than focusing on resolution and putting proper safety processes and procedures in place. He emphasized the importance of the community paying close attention to what insurance the school board purchases and how the insurance company treats abuse survivors during the claims process.
Blanchard told WECT that the district has seen a significant increase in insurance deductible and premium costs in recent years, though that increase is not tied specifically to these settlements. He said the trend is occurring statewide following North Carolina’s reform of the statute of limitations for such cases, making lawsuits like these more feasible.
District Pledges Reforms
New Hanover County Schools Superintendent Dr. Christopher Barnes acknowledged that the actions that led to this situation were wrong. The district has since taken significant steps, including revising board policies on student safety, employee conduct, and mandatory reporting; strengthening reporting protocols, oversight, and background checks; expanding mandatory training for all staff on preventing and reporting misconduct; and establishing clear, confidential channels for students and staff to safely raise concerns.
Board of Education Chair Pete Wildeboer said the board condemns what happened and recognizes the courage of the survivors in coming forward. He expressed hope that the settlement provides the survivors with the space and resources to focus on healing and their future.
The Rhine Law Firm, P.C. and the Lea-Schultz Law Firm, P.C. issued a joint statement following the vote, noting that the victims were each groomed and sexually abused by Kelly, and that what happened under the school system’s watch will follow the clients for the rest of their lives. The statement called on the school system to continue improving its practices to ensure this never happens again.
Rhine concluded by making the community’s expectations clear going forward: if the district does not change, his firm will hold them accountable again.
If you or someone you love has been a victim or survivor of sexual violence, of any type, we encourage you to contact the attorneys of the Rhine Law Firm, P.C. to explore your options in civil court against not only the predators who committed the abuse but the institutions who may have enabled them.
About Us
Rhine Law Firm, P.C. serves clients throughout North Carolina and nationwide, specializing in complex civil litigation led by Joel Rhine. With expertise in personal injury, car accidents, property damage, sex abuse, and more, the firm is passionate about taking on challenging cases. They emphasize providing personalized legal representation, prioritizing their clients’ best interests while offering state-of-the-art legal strategies. Rhine Law Firm’s dedicated attorneys enjoy the fight for justice and are committed to guiding clients through complicated legal processes. The firm offers free consultations, flexible appointment scheduling, and Spanish language services.
