Swain County v. Fontana Regional Library, Inc. (26CV000161-860)
Overview
Swain County filed suit on June 17, 2026, in Swain Superior Court against Fontana Regional Library, Inc. (FRL), seeking to block the library system’s planned distribution of up to approximately $1.35 million in net surplus funds. Superior Court Judge Tessa S. Sellers immediately granted an ex parte Temporary Restraining Order (TRO) the same day. The TRO halts any distribution or related action stemming from the FRL Board’s May 12, 2026 vote. A preliminary injunction hearing is set for June 29, 2026, at 10:00 a.m. at the Clay County Courthouse.
Key Facts from the Filings
- The May 12, 2026 Board Action: The FRL Board authorized distribution of net surplus funds, conditioned on written certification by the Acting Executive Director, Finance Officer, or independent auditor that restricted/encumbered funds, payables, obligations, and required reserves are excluded. Chairman McGaha indicated specific distribution amounts (discussed as unequal shares to Jackson, Macon, and Swain Counties, not to exceed ~$1,350,311.38 total) would be set at the June 22, 2026 Board meeting.
- Triggering Context: Jackson County gave withdrawal notice in June 2025 (effective July 1, 2026). Macon County gave notice around June 9, 2026 (effective July 1, 2027, if it proceeds). The Board action occurred while all three counties remained participating members.
- Swain County’s Core Allegations (verified Complaint): The distributions violate the Fontana Regional Library Interlocal Agreement (signed ~November 12, 2024, attached as Exhibit A). The Agreement only authorizes asset/fund distributions in two scenarios: (1) county withdrawal under Article VIII (primarily tangible personal property such as books, furniture, and fixtures—cash surplus is not addressed) or (2) full dissolution under Article IX (requires a multi-party committee including a State Library of North Carolina representative; remaining funds returned to member counties after debts; State/Federal funds handled by the State Library). No dissolution has occurred or been initiated. FRL remains operational. The Complaint further alleges the calculations appeared arbitrary (prepared by a Jackson County-appointed board member), some trustees received information only ~24 hours prior, and a motion to table failed.
- Court’s TRO Findings: Likelihood of success on the merits; irreparable harm likely if funds are transferred before a hearing (imminent June 22 risk); public interest favors preserving substantial public-designated funds pending judicial determination; no adequate legal remedy at law. No security/bond required of the county plaintiff under Rule 65. Notice to FRL was not required beforehand due to substantial risk of transfer rendering later relief ineffectual.
Current Status & Next Steps
- TRO restrains FRL, its officers, directors, agents, etc., from distributing, transferring, encumbering, or taking any action in furtherance of the May 12, 2026 Board action regarding funds to Jackson, Macon, or Swain Counties. Remains in effect until June 29, 2026, or further court order.
- TRO, Complaint, and related documents were served on FRL’s registered agent (NC Secretary of State) via designated delivery service (UPS) on June 18, 2026; affidavit of service filed.
- FRL has 30 days to answer. The June 22 Board meeting can occur but cannot proceed with the enjoined distributions.
- Additional claims in the Complaint include breach of contract, specific performance, declaratory judgment, alternative unjust enrichment, attorney fees, and court costs. Motions for TRO (granted) and Preliminary Injunction are pending.
Local Context
FRL is a regional library system serving Jackson, Macon, and Swain Counties under the 2024 Interlocal Agreement. The dispute involves substantial public assets (county contributions, state aid, grants) at a time when two of three member counties are exiting. The TRO preserves the status quo pending the June 29 hearing. Macon County’s withdrawal timeline places it directly in the affected group.
Sources (primary court documents): [LINK]
- 01 26CV000161-860 TRO.pdf (Temporary Restraining Order, 2 pages)
- 02 26CV000161-860 Complaint.pdf (18-page verified Complaint + motions)
- a93b9950-ddbf-4463-8430-fd1a9f446872.pdf (Case Summary)
- Coversheet, Civil Summonses, and Affidavit of Service PDFs
Swain Superior Court Case 26CV000161-860 Centers on Whether FRL Board Had Authority to Distribute ~$1.35 Million in Net Surplus Funds Ahead of Member County Withdrawals
A Superior Court judge has temporarily halted Fontana Regional Library’s plan to distribute up to roughly $1.35 million in net surplus funds to its three member counties, ruling that Swain County demonstrated a likelihood of success on claims that the move violates the system’s governing Interlocal Agreement.
On June 17, 2026, Superior Court Judge Tessa S. Sellers signed an ex parte Temporary Restraining Order in Swain County v. Fontana Regional Library, Inc. (file 26CV000161-860), immediately enjoining the non-profit regional library system from distributing, transferring, or taking any action to disburse the disputed funds pursuant to a May 12, 2026 Board vote. The order remains in effect until at least June 29, 2026, when a preliminary injunction hearing is scheduled for 10:00 a.m. at the Clay County Courthouse.
The Board Action at Issue
According to the verified Complaint, at its May 12, 2026 meeting the FRL Board formally authorized the distribution of net surplus funds. The motion included safeguards requiring written certification that grant-restricted, donor-restricted, encumbered, and other protected funds were excluded. Chairman Bill McGaha stated that specific distribution amounts—to be made in unequal shares to Jackson, Macon, and Swain Counties—would be determined at the Board’s June 22, 2026 meeting. Discussions referenced a total not to exceed $1,350,311.38.
The timing coincided with ongoing withdrawals: Jackson County had given notice in June 2025 (effective July 1, 2026), and Macon County gave notice around June 9, 2026 (effective July 1, 2027, if finalized). All three counties remained participating members when the Board acted.
Swain County’s Legal Theory
Swain County, represented by attorney Kimberly N. Carpenter of Carpenter & Guy, PLLC, argues the distributions are unauthorized under the “Fontana Regional Library Inter-local Agreement” entered November 12, 2024 (attached to the Complaint as Exhibit A). The Agreement, authorized under Chapter 160A, Article I of the North Carolina General Statutes, governs the joint operation of the regional library system “crossing county lines for the benefit of all.”
The Complaint details that the Interlocal Agreement provides for property and fund distribution in only two circumstances:
- Article VIII (Withdrawal): Addresses distribution of certain tangible personal property (e.g., furniture, fixtures, books, and audiovisual materials purchased by Friends groups or intended for local libraries generally remain with the local facility). It does not authorize cash or surplus fund distributions.
- Article IX (Dissolution): Requires a structured process involving a committee of representatives from each county, a State Library of North Carolina representative, and the current FRL Director. After debts are resolved, remaining member-county funds are returned to the counties; State or Federal funds are handled by the State Library.
The Complaint alleges: “No provision exists within the Interlocal Agreement that allows or authorizes the distribution of funds except as provided for in Section IX upon dissolution of FRL.” It further states FRL “has not dissolved, is not presently dissolving, and has taken no formal action to commence dissolution processes,” and remains operational and capable of fulfilling its duties even after Jackson County’s withdrawal.
Additional allegations include that proposed unequal distribution calculations were prepared by a Jackson County-appointed Board member rather than independent auditors or the FRL finance officer; some trustees received materials only about 24 hours before the May 12 meeting; and a motion to table the authorization failed. The Complaint asserts the funds include public contributions, state aid, and possibly grant or federal dollars that may carry re-submission requirements.
The TRO and Court’s Reasoning
Judge Sellers found Swain County demonstrated a likelihood of success on the merits, lacked an adequate remedy at law, and that the public interest favored maintaining the disputed assets pending judicial determination. The court noted “substantial designated public funds of Plaintiff are at risk of being distributed to other accepting entities without proper authorization in violation of lawful [authority] and in violation of the Interlocal Agreement.”
Because distributions were expected imminently (tied to the June 22 Board meeting), the court determined immediate and irreparable injury would likely occur before notice and a hearing could be held, and that once transferred the funds could move beyond the parties’ and Court’s control. Notice to FRL was therefore not required prior to issuing the TRO under Rule 65 of the North Carolina Rules of Civil Procedure. No security was required of the county plaintiff.
The TRO broadly restrains FRL, its officers, directors, agents, employees, attorneys, and anyone acting in concert from distributing, transferring, assigning, conveying, disbursing, expending, encumbering, pledging, investing, dissipating, or otherwise disposing of any funds or monies to or for the benefit of Jackson, Macon, or Swain Counties pursuant to the May 12, 2026 Board action—pending further court order. It also restrains any action in furtherance of that Board action.
Procedural Status
The Complaint, Motion for TRO, Motion for Preliminary Injunction, and related documents were filed June 17, 2026. Multiple Civil Summonses were issued. The TRO and accompanying papers were served on FRL’s registered agent (North Carolina Secretary of State) via designated delivery service on June 18, 2026; an Affidavit of Service with tracking confirmation was filed the same day.
FRL has not yet filed an answer (due within 30 days of service). The case summary lists causes of action including breach of contract, declaratory judgment, specific performance, alternative unjust enrichment, temporary restraining order, preliminary injunction, court costs, and attorney fees.
Local and Regional Implications
Fontana Regional Library operates libraries across Jackson, Macon, and Swain Counties from its headquarters in a building owned by Swain County in Bryson City. The dispute arises as the regional collaboration—formed to provide more effective and efficient library services than individual counties could achieve alone—faces the departure of two of its three members.
The TRO preserves the status quo for the ~$1.35 million in disputed surplus funds while the court considers whether the Board’s action complied with the Interlocal Agreement. A June 22 FRL Board meeting can proceed, but the enjoined distributions cannot. The June 29 preliminary injunction hearing will determine whether the restraint continues.
Macon County, which has given notice of withdrawal effective July 1, 2027, is named in the TRO and would be directly affected by any distribution. The case raises broader questions about governance of regional entities, the authority of appointed boards versus the terms of interlocal agreements, transparency in surplus calculations, and the handling of public funds when member governments exit.
Swain County’s filings emphasize that the Agreement was intended to facilitate collaboration “crossing county lines for the benefit of all.” Whether the Board’s May 12 action was a good-faith attempt to equitably allocate reserves ahead of withdrawals or an unauthorized preemptive distribution will be tested at the June 29 hearing and, if the case proceeds, at trial.
Documents Referenced
Primary sources for this article include the Temporary Restraining Order (01 26CV000161-860 TRO.pdf), the verified Complaint and motions (02 26CV000161-860 Complaint.pdf), the General Civil Action Cover Sheet, Civil Summonses, Affidavit of Service of Process, and the official Case Summary (a93b9950-ddbf-4463-8430-fd1a9f446872.pdf) from Swain Superior Court. A shareable folder has been created on Google Drive for anyone to read or download. [LINK]
The next key public milestones are the June 22 FRL Board meeting and the June 29 court hearing in Clay County. Further updates will depend on filings and proceedings in 26CV000161-860.
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Published at 5.23pm on Thurssday, June 18, 2026
Author: Bobby Coggins
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