Judge Robert F. Floyd said the school system had not waived its governmental immunity and could not be sued.
Jimmy and Kim Locklear filed the lawsuit in March on behalf of their daughter, Eden, a student at Prospect Elementary School. Eden was one of 34 people who tested positive for E. coli during an outbreak at the school in November.
Eden, who is 12, spent nearly a week at UNC Hospitals in Chapel Hill. She was diagnosed with hemolytic uremic syndrome and renal failure.
An epidemiology report said homemade butter served to students was the probable source of the E. coli.
The Locklears' lawsuit claimed that the school system was negligent because it failed to recognize the risk of serving unpasteurized butter to children. The suit also said the school system failed to take adequate steps to avoid exposing students to food-borne pathogens.
"It's a shame that the school system has isolated itself from liability,'' said William Britt, the Locklears' lawyer.
The lawyers for the school system argued that even though the school system is a part of a risk management program, it does not have insurance to cover the claim in the lawsuit.
The school system is part of the North Carolina School Boards Trust, a risk management program that allows local boards of education to set aside money to pay claims if they are sued. If the school system does not have commercial insurance to cover the claim, the system can retain its immunity granted by the North Carolina legislature.
Participation in the trust does not prohibit school systems from buying additional insurance.
The Robeson County school system does not have insurance coverage beyond what is provide by the trust, said Barbara Weyher, a lawyer for the school system.
Britt argued that the school system had excess coverage through the trust. The system has a $100,000 fund limit per claim, and an excess insurance limit of $900,000. He said the excess insurance should be considered commercial insurance.
The additional $900,000 was insurance purchased by the trust, not by the school system, Weyher said. The money is used to cover claims that are more than $100,000. If more than $100,000 is paid out, the school system has to reimburse the trust.
"That insurance was purchased solely for the protection of the North Carolina School Boards Trust,'' Weyher said.
The trust provides some coverage for claims such as wrongful termination or mismanagement of funds claims, she said.
"This is not just an empty shell. There is some coverage here,'' Weyher said. "Just that this coverage agreement does not apply to this claim.''
The trust secured additional insurance for the benefit of the local boards of education, Britt argued.
"If we are getting into semantics, and the semantics is they're trying to get out of coverage,'' Britt said. "I have to disagree.''
He said the school system has insurance through the trust, and the case shouldn't be dismissed on the grounds that the system is not covered.
Father not surprised Jimmy Locklear, who attended the hearing, said he was not surprised by the ruling.
"I'm just sad that the court would not take into account my child's safety and what happened to her,'' Locklear said. "They argued over whether they have insurance, and not over the fact that she was poisoned.''
Britt said he would have to discuss an appeal with lawyers from the Marler Clark law firm, a Seattle-based firm that specializes in cases involving food-borne illnesses. The firm also represented the Locklears.
Bruce Clark, the Locklears' lawyer, said it's unfortunate that there is no remedy when school children in North Carolina are injured through negligence.
"It's a shame that the people in North Carolina would leave their children to the mercy of the school system this way,'' he said.
Staff writer Venita Jenkins can be reached at (910) 738-7630 or firstname.lastname@example.org