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By: Andrew Kilpinen

Today in Davis v. City of Greensboro, the 4th Circuit found jurisdiction to hear an appeal, and ultimately affirmed a district court order rejecting the City of Greensboro’s governmental immunity defense in a breach of contract dispute over wage pay.

Current and retired Greensboro police officers and firefighters brought multiple suits against the City. At issue were changes to the City’s “longevity payment program,” a program through which the City provided annual lump-sum payments to police officers and firefighters based on the number of years they worked for the city. According to the complaint, the City began to reduce the amount paid and even converted some to discretionary bonuses. Additionally, these changes indirectly impacted the officer’s overtime pay-rate and contributions to their retirement funds.

As a general rule, a municipality in North Carolina waives governmental immunity when it enters into a valid contract. Thus, the central issue in this case was whether or not there existed a valid contract between the City and the police officers and firefighters.

The district court order denied the City’s motion to dismiss finding that the officer’s complaint “sufficiently alleged a contractual … obligation.” The City of Greensboro appealed.

As a preliminary matter, the Court ruled that the district court’s order rejecting the City’s governmental immunity defense was subject to interlocutory review under the collateral order doctrine, and therefore had jurisdiction to hear the City’s appeal.

On appeal, the City of Greensboro argued that:

  1. The officers were required, and failed, to allege the existence of pre-audit certificates.
  2. The officers were required, and failed, to allege that their contracts were written.

(1)

The statute only requires pre-audit certificates for contracts due the year they are formed.

N.C. Gen. Stat. §159-28 (a) provides that: “ [I]f a pre-audit certificate is necessary but lacking, there is no valid contract.” Therefore, the City argued, since the officers did not allege any pre-audit certificate in their complaint, any claim based on that contract must fail. The Court rejected this argument citing the North Carolina Court of Appeals decision in Myers v. Town of Plymouth: §159-28 (a) only applies to a “financial obligation that will come due in the year the town incurs the obligation.”

Here, the alleged contractual rights were formed years ago, and the financial obligations were due more than a year later. Therefore 159-28 (a) does not apply and the officers did not need to plead the existence of any pre-audit certificates.

 (2)

The facts alleged in the complaint are sufficient to satisfy the Greensboro Charter’s writing requirement.

Turning to the Greensboro Charter, which provides that “[a]ll contracts, except as otherwise provided for in this Charter, shall be … reduced to writing in order to be binding upon the City,” the City argued that the officer’s claims must fail because they were not reduced to writing. The Court was unimpressed.

The City cited no authority for the proposition that a plaintiff must allege that a contract be written in order to state a claim for breach of contract. Regardless, the Court pointed out that the facts contained in the complaint would have been sufficient to survive a motion to dismiss. When construed in the light most favorable to the officers, the facts alleged in the officer’s complaint satisfied the Charter’s writing requirement because their Employee Handbook listed longevity pay as a “benefit.”

In conclusion, the Court affirmed the circuit court’s order finding sufficient facts of a valid contract between the City and the officers. Thus, the City’s governmental immunity defense failed and the officer’s claims could proceed.

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