Wray v. City of Greensboro , 247 N.C. App. 890 ( 2016 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA15-912
Filed: 7 June 2016
Guilford County, No. 09 CVS 2437
DAVID WRAY, Plaintiff,
v.
CITY OF GREENSBORO, Defendant.
Appeal by Plaintiff from order entered 8 May 2015 by Judge James C. Spencer,
Jr., in Guilford County Superior Court. Heard in the Court of Appeals 26 January
2016.
Carruthers & Roth, P.A., by Kenneth R. Keller and Mark K. York, for the
Plaintiff-Appellant.
Smith Moore Leatherwood LLP, by Patrick M. Kane, and Mullins Duncan
Harrell & Russell PLLC, by Alan W. Duncan and Stephen M. Russell, Jr., for
the Defendant-Appellee.
Wilson, Helms & Cartledge, LLP, by Lorin J. Lapidus, and NCLM, by General
Counsel Kimberly S. Hibbard and Associate General Counsel Gregory F.
Schwitzgebel, III, for Amicus Curiae, North Carolina League of Municipalities.
DILLON, Judge.
David Wray (“Plaintiff”) brought suit against his former employer (Defendant
City of Greensboro) to recover certain employee benefits he claims he was due. The
trial court dismissed Plaintiff’s claim based on governmental immunity. For the
WRAY V. CITY OF GREENSBORO
Opinion of the Court
following reasons, we reverse the order of dismissal and remand the matter for
further proceedings.
I. Background
In 1980, the City of Greensboro passed a resolution (the “City Policy”) stating
that the City would pay for the legal defense and judgments on behalf of its officers
and employees with respect to certain claims arising from their employment.
In 2003, Plaintiff became the Chief of Police for the City. In January 2006,
Plaintiff resigned from his position as Chief of Police at the request of the City
Manager, after alleged incidents within the Greensboro Police Department (the
“Department”) resulted in state and federal investigations of Plaintiff and the
Department.
After his resignation, Plaintiff was named as a defendant in actions filed by
City police officers for Plaintiff’s alleged conduct occurring while he was serving as
Chief of Police.1 Plaintiff has incurred substantial litigation expenses in these actions
and has requested reimbursement from the City under the City Policy. However, the
City has declined Plaintiff’s request.
Plaintiff filed this present action against the City seeking $220,593.71, the
amount he paid defending the lawsuits filed against him. The City moved to dismiss
the action pursuant to Rule 12(b)(1), (2) and (6) of the Rules of Civil Procedure. The
1See Fulmore v. City of Greensboro, 834 F. Supp. 2d 396 (M.D.N.C. 2011); Hinson v. City of
Greensboro, 232 N.C. App. 204, 753 S.E.2d 822 (2014).
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
trial court granted the City’s Rule 12(b) motion to dismiss Plaintiff’s complaint,
concluding that the City was shielded by the doctrine of governmental immunity,
holding that the City had not waived its immunity. Plaintiff timely appealed.
II. Summary of Holding
The City’s motion to dismiss was made pursuant to Rule 12(b)(1), (2) and (6).
The trial court granted the City’s motion on the sole ground that the City was
“shielded by the doctrine of governmental immunity, which immunity has not been
waived.” The trial court based this holding on its conclusion that the City’s enactment
of the City Policy pursuant to its authority granted under N.C. Gen. Stat. § 160A-167
was not an action which waives governmental immunity. However, we hold that
Plaintiff has, in fact, set forth allegations that the City has waived governmental
immunity, though not based on the City’s act of enacting the City Policy, but rather
based on the City’s act of entering into an employment agreement with Plaintiff.
Specifically, Plaintiff has made a breach of contract claim, essentially alleging
that he had a contract with the City to work for the City and that pursuant to the
City’s contractual obligations, the City is required to pay for his litigation expenses.
Importantly, the City is authorized to enter into employment contracts with its police
officers, and the City is authorized by N.C. Gen. Stat. § 160A-167 to enact a policy by
which it may contractually obligate itself to pay for certain legal expenses incurred
by these officers.
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
Whether the City is, in fact, contractually obligated to pay for Plaintiff’s
litigation expenses as alleged in the present case (under a theory that the City Policy
is part of his contract or based on some other theory) goes to the merits of Plaintiff’s
contract claim and is not relevant to our threshold review of whether the City is
immune from having to defend against these contract claims in court. Rather, we
merely hold that the trial court erred in dismissing Plaintiff’s complaint based on the
doctrine of governmental immunity, the only basis of its order. Accordingly, we
reverse the order of the trial court.
III. Analysis
In general, the doctrine of sovereign/governmental immunity “provides the
State, its counties, and its public officials with absolute and unqualified immunity
from suits against them in their official capacity.” Hubbard v. County of Cumberland,
143 N.C. App. 149, 151, 544 S.E.2d 587, 589 (2001). Under the doctrine of sovereign
immunity, it is the State of North Carolina which “is immune from suit [in the
absence of] waiver[,]” whereas under the doctrine of governmental immunity, counties
and cities are “immune from suit for negligence of [their] employees in the exercise of
governmental functions absent waiver of immunity.” Meyer v. Walls, 347 N.C. 97,
104, 489 S.E.2d 880, 884 (1997) (emphasis added).
Our Supreme Court has instructed that when the State has the authority to
enter into a contract and it does so voluntarily, “the State implicitly consents to be
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
sued for damages on the contract in the event it breaches the contract.” Smith v.
State, 289 N.C. 303, 320, 222 S.E.2d 412, 423-24 (1976). Likewise, a city or county
waives immunity when it “enters into a valid contract.” M Series Rebuild v. Town of
Mt. Pleasant, 222 N.C. App. 59, 65, 730 S.E.2d 254, 259 (2012) (citations omitted)
(emphasis in original). However, a municipality waives governmental immunity only
for those contracts into which it is authorized to enter. See Smith, 289 N.C. at 322,
222 S.E.2d at 425 (“The State is liable only upon contracts authorized by law.”).
The relationship between a municipality and its police officers is, indeed,
contractual in nature. And a municipality is authorized to enter into employment
contracts with individuals to serve as police officers. Further, relevant to this appeal,
the General Assembly has authorized municipalities to provide for the defense of
their officers and employees in any civil or criminal action brought against a member
in the member’s official or individual capacity. N.C. Gen. Stat. § 160A-167 (1980).
We hold that under G.S. 160A-167, one way a municipality is authorized to provide
such benefit is by contract. We note that N.C. Gen. Stat. § 160A-167 is permissive;
the General Assembly does not require a city to make any provision for the defense
of employees, contractual or otherwise, but if a municipality does so, “[t]he city
council, authority governing board, or board of county commissioners . . . shall have
adopted . . . uniform standards under which claims made or civil judgments entered
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
against . . . employees or officers, or former employees or officers, shall be paid.” N.C.
Gen. Stat. § 160A-167(c).
In the present case, pursuant to its authority under N.C. Gen. Stat. § 160A-
167, the City passed the City Policy, which provided as follows:
[It] is hereby declared to be the policy of the City of
Greensboro to provide for the defense of its officers and
employees against civil claims and judgments and to
satisfy the same, either through insurance or otherwise,
when resulting from any act done or omission made, or any
act allegedly done or omission allegedly made, in the scope
and course of their employment or duty as employees or
officers of the City, except and unless it is determined that
an officer or employee (1) acted or failed to act because of
actual fraud, corruption or actual malice[,] or (2) acted or
failed to act in a wanton or oppressive manner.
The City enacted the City Policy in 1980 and it remained in effect during the entire
time Plaintiff was employed by the City. Whether the City Policy is, in fact, an
element of Plaintiff’s employment contract and whether Plaintiff’s litigation expenses
are covered thereunder go to the merits of Plaintiff’s contract claim. However, in the
present appeal, we are not concerned with the merits of Plaintiff’s contract claims;
rather, we only address whether the City is shielded from having to defend against
those claims based on governmental immunity.
It appears that Plaintiff was an at-will employee of the City. North Carolina
has traditionally embraced a strong presumption that employment is “at-will,” that
is, terminable at the will of either party. Soles v. City of Raleigh, 345 N.C. 443, 446,
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
480 S.E.2d 685, 687 (1997) (internal citation omitted). However, the relationship
between an employer and an at-will employee is still contractual in nature. In terms
of benefits earned during employment, our Court has consistently applied a
unilateral contract theory to the at-will employment relationship. See Roberts v.
Mays Mills, Inc., 184 N.C. 406, 411-12, 114 S.E. 530, 533–34 (1922); White v. Hugh
Chatham Mem'l Hosp., Inc., 97 N.C. App. 130, 131–32, 387 S.E.2d 80, 81 (1990);
Brooks v. Carolina Telephone, 56 N.C. App. 801, 804, 290 S.E.2d 370, 372 (1982). A
unilateral contract is one where the offeror is the master of the offer and can
withdraw it at any time before it is accepted by performance. White, 97 N.C. App. at
132, 387 S.E.2d at 81. While the offer is outstanding, the offeree can accept by
meeting its conditions. Id.
In sum, Plaintiff has essentially pleaded that he had an employment
relationship with the City and that the City has contractually obligated itself to pay
for his defense as a benefit of his contract. Whether the City is, in fact, obligated to
pay contractually by virtue of its passage of the City Policy goes to the merits and is
not the subject of this appeal.
We are unpersuaded by the City’s argument that this case is controlled by our
Supreme Court’s holding in Blackwelder v. City of Winston-Salem, in which that
Court stated that “[a]ction by the City under N.C.G.S. § 160A-167 does not waive
immunity.” Blackwelder v. City of Winston-Salem, 332 N.C. 319, 324, 420 S.E.2d 432,
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
436 (1992). The Supreme Court was referring to immunity from tort actions, stating
in the previous sentence that the General Assembly has expressly prescribed in N.C.
Gen. Stat. § 160A-485 that “the only way a city may waive its governmental immunity
is by the purchase of liability insurance.” Id. Extending the language in Blackwelder
to contract claims would lead to bizarre results. For instance, an employee would
have no remedy if his city-employer breached an express provision in his written
employment contract which stated that the city would pay for any G.S. 160A-167-
type litigation expenses he might incur defending a suit brought by a third party.
We are further unpersuaded by the City’s argument that Plaintiff failed to
“specifically allege a waiver of governmental immunity.” Fabrikant v. Currituck
County, 174 N.C. App. 30, 38, 621 S.E.2d 19, 25 (2005). We agree that “[a]bsent such
an allegation, the complaint fails to state a cause of action.” Id. However, we do not
require precise language alleging that the City has waived the defense of
governmental immunity – “consistent with the concept of notice pleading, a complaint
need only allege facts that, if taken as true, are sufficient to establish a waiver[.]” Id;
see also Sanders v. State Personnel Com’n, 183 N.C. App. 15, 19, 644 S.E.2d 10, 13
(2007). Rather, we look to Plaintiff’s amended complaint to determine whether
Plaintiff has sufficiently alleged the City’s waiver of governmental immunity. See
Sanders, 183 N.C. App. at 19, 644 S.E.2d at 13. In the amended complaint, Plaintiff
alleges that he was employed by the City’s Police Department as the Chief of Police,
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WRAY V. CITY OF GREENSBORO
Opinion of the Court
that he was acting within the “course and scope of his employment” at all times
material to his claim, that pursuant to the provisions of the City Policy he is entitled
to reimbursement for his legal expenses and fees, and that the City failed to honor
the City Policy. We believe that these allegations are sufficient to establish waiver
through a breach of Plaintiff’s contractual relationship as an employee of the City.
Accordingly, this argument is overruled. In concluding as such, we take no position
as to the merits of Plaintiff’s contract action – “[t]oday we decide only that [P]laintiff
is not to be denied his day in court because his contract was with the State.” Smith,
289 N.C. at 322, 222 S.E.2d at 424.
IV. Conclusion
We hold that the City is not shielded by the doctrine of governmental immunity
to the extent that Plaintiff’s action is based in contract. We reverse the order of the
trial court and remand this case for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
Judge ZACHARY concurs.
Judge BRYANT dissents by separate opinion.
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No. COA15-912 – Wray v. City of Greensboro
BRYANT, Judge, dissenting.
Because I believe the trial court properly granted defendant City of
Greensboro’s motion to dismiss plaintiff’s complaint, I respectfully dissent.
In its 8 May 2015 order, the trial court concluded that defendant maintained
its governmental immunity from suit: “Neither the institution of a plan adopted
pursuant to N.C.G.S. § 160A-167, under which a city may pay all or part of some
claims against employees of the city, nor action taken by the city under N.C.G.S. §
160A-167, waives governmental immunity. See Blackwelder v. City of Winston-
Salem, 332 N.C. 319, 420 S.E.2d 432 (1992).” However, in reaching this conclusion,
the trial court provided no findings of fact, and the record provides no indication that
a request for findings was made by the parties. Thus, we must determine whether
there was sufficient evidence to support the trial court’s presumed finding that
defendant City of Greensboro did not waive its governmental immunity by express
waiver, purchase of liability insurance, or entry into a valid contract. See Data Gen.
Corp. v. Cnty. of Durham, 143 N.C. App. 97, 101, 545 S.E.2d 243, 246 (2001) (“In the
absence of an express waiver of sovereign immunity by [defendant], we must
determine whether there was sufficient evidence to support the presumed finding by
the trial court that the county waived its sovereign immunity as to [plaintiff’s]
contract claims either by the purchase of liability insurance or by entering [into] a
valid contract.”
WRAY V. CITY OF GREENSBORO
BRYANT, J., dissenting
In his complaint, plaintiff asserts in pertinent part that he began employment
with the Police Department of the City of Greensboro as a police officer in March of
1981, after the Greensboro City Council’s adoption of the resolution at the center of
this dispute. Through the years, plaintiff was promoted through the ranks: Sergeant,
Lieutenant, Assistant Chief, and in July 2003, Chief of Police. In January 2006,
plaintiff resigned as Chief of Police. Following his resignation, investigations into
alleged civil rights violations perpetrated by plaintiff were conducted by federal and
state bureaus of investigation. Multiple lawsuits were filed against plaintiff in
Guilford County Superior Court on the basis of conduct alleged to have occurred in
his role as Chief of Police. Plaintiff requested that the City provide him with legal
representation but was denied. Plaintiff alleged that “[a]s an employee of the City
acting within the course and scope of his employment, and pursuant to the provision
of the City Policy, [plaintiff] is entitled to indemnification and reimbursement of the
expenses he has incurred . . . in connection with his defense [of lawsuits totaling
$220,593.71].”
In response to the allegations of the complaint, defendant City of Greensboro
filed a motion to dismiss. In its motion, defendant requested that the trial court
dismiss plaintiff’s complaint for lack of personal and subject matter jurisdiction, and
for failure to state a claim. Defendant does not contest any of the allegations asserted
in plaintiff’s complaint, but rather states the following:
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WRAY V. CITY OF GREENSBORO
BRYANT, J., dissenting
4. Plaintiff contends that he is entitled to a declaratory
judgment that the City should provide for a defense and
indemnification under a 13 November 1980 Resolution (the
“Resolution”). The Resolution addresses the provision to
City Officers and employees of a defense against civil
claims for acts alleged to have been performed in the scope
and course of their employment “unless it is determined
that an officer or employee (1) acted or failed to act because
of actual fraud, corruption, or actual malice or (2) acted or
failed to act in a wanton or oppressive manner.” A copy of
that Resolution is attached as Exhibit A.
5. The Resolution vests the City Manager (or his
designee) with the authority to “determine whether or not
a claim or suit filed against an officer or employee . . . meets
the standards . . . for providing a defense for such officer or
employee.” (Ex. A. . . . .).
The Resolution declares “the policy of the City of Greensboro to provide for the
defense of its officers and employees against civil claims and judgments[.]” (emphasis
added). This statement prescribes an intent to provide for the defense of officers and
employees. See generally N.C. Gen. Stat. § 143-300.3 (2015) (“[T]he State may provide
for the defense of any civil or criminal action or proceeding brought against him in
his official or individual capacity . . . .” (emphasis added)); In re Annexation
Ordinance, 303 N.C. 220, 230, 278 S.E.2d 224, 231 (1981) (“We conclude that the
provisions of G.S. 160A-45 [(entitled “Declaration of policy”)] are statements of policy
and should not be treated as part of . . . [statutory] procedure . . . .”); Paschal v. Myers,
129 N.C. App. 23, 29, 497 S.E.2d 311, 315 (1998) (“Plaintiff maintains . . . the mere
fact that the . . . Board of County Commissioners had adopted, as an ordinance, the
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WRAY V. CITY OF GREENSBORO
BRYANT, J., dissenting
County's personnel policies contained in the Handbook demands that the Handbook's
personnel policies were a part of his [employment] contract. This argument is
unpersuasive.”); Lennon v. N.C. Dept. of Justice, No. COA15-660, 2016 WL 1565892,
at *4 (N.C. Ct. App. Apr. 19, 2016) (unpublished) (“Because petitioner cannot
establish that the State was contractually bound to provide services for his legal
defense in the underlying civil action, petitioner has consequently failed to establish
a waiver of sovereign immunity by contract.”).
Furthermore, the Resolution does not provide substantive rights or procedural
steps. Contra Bailey v. State, 348 N.C. 130, 146, 500 S.E.2d 54, 63 (1998)
(Acknowledging that “the relationship between employees vested in the retirement
system and the State [was] contractual in nature,” the Court found evidence in the
record to support the trial court’s finding that “the tax exemption was a term of the
retirement benefits offered in exchange for public service to state and local
governments.”); Pritchard v. Elizabeth City, 81 N.C. App. 543, 545, 552, 344 S.E.2d
821, 822, 826 (1986) (acting under the authority of N.C. Gen. Stat. § 160A-162 (1982),
authorizing municipal corporations to fix salaries or other compensation or to approve
and adopt pay plans to compensate city employees, the City Council passed an
ordinance wherein “[e]ach full-time employee shall earn vacation leave at the rate of
five-sixths ( 5/6 ) workdays per calendar month of service”). Thus, I would hold that
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WRAY V. CITY OF GREENSBORO
BRYANT, J., dissenting
the Resolution is not a contractual provision upon which plaintiff can compel
defendant’s performance.
While we acknowledge there is plenary support for the proposition that an
employer-employee relationship is essentially contractual and such a relationship
often waives immunity from suit on the contract, see Sanders v. State Pers. Comm'n,
183 N.C. App. 15, 21, 644 S.E.2d 10, 14 (2007) (“[T]he existence of the relation of
employer and employee . . . is essentially contractual in its nature, and is to be
determined by the rules governing the establishment of contracts, express or implied.
Hollowell v. Department of Conservation and Development, 206 N.C. 206, 208, 173
S.E. 603, 604 (1934),” as quoted by Archer v. Rockingham Cnty., 144 N.C.App. 550,
557, 548 S.E.2d 788, 792–93 (2001)); Sanders, 183 N.C. App. at 22, 644 S.E.2d at 14
(“Under [Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 424 (1976)], because the
State entered into a contract of employment with [the] plaintiffs, it now occupies the
same position as any other litigant.” (citation omitted)), here, the Resolution central
to this action is not a contractual provision.
Though the majority opinion frames the issue as purely a determination of
whether the employee-employer relationship between plaintiff and defendant is a
contractual one and reasons that that alone determines the waiver of defendant’s
immunity, I believe that the record before the trial court was sufficient to determine
that plaintiff could not establish a valid contractual agreement with defendant City
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WRAY V. CITY OF GREENSBORO
BRYANT, J., dissenting
of Greensboro on the issue central to this action, the provision of a legal defense as a
condition of employment. Moreover, there is no indication of an express waiver or an
applicable insurance provision. Thus, I would hold the trial court was correct in
concluding that defendant City of Greensboro, a municipality, did not waive its
governmental immunity to plaintiff’s suit. Therefore, I would affirm the order of the
trial court granting defendant’s motion to dismiss plaintiff’s complaint. Accordingly,
I dissent.
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