New Hanover school board reveals $640,000 settlement in Michael Kelly sex abuse lawsuit

WILMINGTON, NC (WWAY) — The New Hanover County Board of Education has approved a $640,000 settlement agreement with survivors of the Michael Kelly sexual abuse lawsuit and released a statement acknowledging the harm caused.

The agreement involves three plaintiffs identified as John Does 15-17. A fourth survivor, identified as John Doe 18, was not part of the original lawsuit but is included in the settlement.

The lawsuit, filed in New Hanover County Superior Court, alleged that former Isaac Bear Early College High School teacher Michael Earl Kelly sexually abused students and that the New Hanover County Board of Education failed to exercise reasonable care in protecting them.

In a statement following approval of the final settlement agreement, the board said the misconduct “was unacceptable and represents a profound breach of trust.”

“We condemn these actions and acknowledge the deep harm experienced by the survivors and their families,” the statement read. “While no agreement can undo the pain caused, we hope this provides the survivors with the space and resources to focus on healing and their future endeavors. We recognize their courage in coming forward and honor their voices.”

The agreement states the board denies liability for the claims but agreed to settle to resolve the matter. The settlement releases the board, unnamed co-defendants and its insurers from further claims related to the allegations. Claims against Kelly in his individual capacity are not released under the agreement.

According to court filings, the plaintiffs alleged they were sexually and/or otherwise abused by Kelly while students at Isaac Bear Early College High School, which is part of the New Hanover County School System.

As part of its statement, the board outlined steps it says have been taken since the misconduct came to light, including:

• Revising board policies on student safety, employee conduct and mandatory reporting.

• Re-evaluating district leadership to ensure accountability.

• Strengthening reporting protocols, oversight and background checks.

• Expanding mandatory training for staff on preventing and reporting misconduct.

• Establishing confidential channels for students and staff to raise concerns.

• Fostering what it described as a culture of trust, vigilance and accountability.

“The Board remains committed to continuous improvement, stronger safeguards, and a culture where every student is seen, heard, and safe,” the statement said.