Opinion
No. COA10-1194
Filed 19 July 2011 This case not for publication
Appeal by defendant Alamance County from order entered 3 August 2010 by Judge Ben F. Tennille in the Special Superior Court for Complex Business Cases. Heard in the Court of Appeals 23 February 2011.
Stark Law Group, PLLC, by S.C. Kitchen, for defendant-appellant Alamance County. Gunn Messick, LLP, by Paul S. Messick, Jr., for defendant-appellee Kimberly Horton.
Alamance County No. 09 CVS 1961.
Where the record is not clear at this stage of the proceedings whether Alamance County adopted its personnel policy as an ordinance, we affirm the trial court's denial of Alamance County's motion to dismiss based upon the affirmative defense of sovereign immunity. Where Alamance County failed to show that any substantial right would be affected absent immediate review of its remaining argument, we dismiss it as interlocutory.
I. Factual and Procedural Background
On 7 June 2007, RS M Appraisal Services, Inc. (plaintiff) entered into a written contract to perform property appraisals and consulting activities as part of the statutorily required revaluation of real property in Alamance County (2009 Reappraisal Project). By the terms of the contract, Alamance County was to compensate plaintiff in the amount of $275,000.00 to be paid in twenty monthly installments. At the time the contract was awarded to plaintiff, Kimberly Horton (Horton) was employed by Alamance County as their Tax Administrator. Horton presented plaintiff's bid to the Board of Commissioners. Subsequent information revealed that at the time she presented the bid, she was also employed by plaintiff as an independent contractor and had been receiving paychecks from plaintiff. Horton had failed to disclose this dual employment to Alamance County.
In the first part of 2009, the Alamance County Sherriff's Department applied for a search warrant and obtained Horton's financial records from 4 December 2008 until 20 January 2009 based upon allegations that a crime had been committed on 5 December 2008. Financial records from the State Employees' Credit Union were turned over to Alamance County by the Sheriff's Department, which included copies of monthly paychecks to Horton from plaintiff. On 12 May 2009, Horton tendered her resignation as the Alamance County Tax Administrator effective 12 June 2009. The next day, the County Manager terminated her employment.
On 15 May 2009, plaintiff filed a complaint against Alamance County alleging that it had breached the contract by refusing to make the final payment due under the contract in the amount of $13,750.00. Alamance County filed a motion to dismiss, a motion to change venue, answer, and counterclaims for a violation of the exclusive emoluments clause of the North Carolina Constitution, breach of contract, and unfair and deceptive trade practices. On 5 November 2009, Alamance County filed a motion to add Ronald S. McCarthy (McCarthy), owner of plaintiff, and Horton as third-party defendants and alleged that they knowingly, deliberately, and intentionally concealed their long-time business relationship from Alamance County in order to ensure that plaintiff's bid would be accepted by the Board of Commissioners. That same day, Alamance County filed a separate motion to add a fifth and sixth claim against McCarthy and Horton (asserting that the contract was void due to fraud and that the contract violated N.C. Gen. Stat. §§ 133-24, 75-1, and 75-2).
The trial court granted the County's motion for a change of venue and the case was transferred from Lincoln County to Alamance County.
On 25 January 2010, Alamance County filed its amended answer and counterclaims. On 22 March 2010, Horton filed her answer and alleged two claims against Alamance County: (1) a violation of the Financial Privacy Act and (2) breach of employment policy for failure to pay her accrued vacation leave benefits in the amount of $12,100.00. On 16 April 2010, Alamance County filed motions to dismiss Horton's claims pursuant to Rule 12(b)(1), (2), and (6). On 3 August 2010, the trial court denied Alamance County's motions to dismiss Horton's claims.
Alamance County appeals.
II. Interlocutory Nature of Appeal
Generally, an order denying a motion to dismiss is interlocutory and not immediately appealable. Peverall v. County of Alamance, 154 N.C. App. 426, 429, 573 S.E.2d 517, 519 (2002), disc. review denied, 356 N.C. 676, 577 S.E.2d 632 (2003). However, "[w]here the appeal from an interlocutory order raises issues of sovereign immunity . . . such appeals affect a substantial right sufficient to warrant immediate appellate review." Id. (citation omitted). Interlocutory appeals are permitted in these instances "because `the essence of absolute immunity is its possessor's entitlement not to have to answer for his conduct in a civil damages action.'" Epps v. Duke University, 122 N.C. App. 198, 201, 468 S.E.2d 846, 849 (quotations omitted), disc. review denied, 344 N.C. 436, 476 S.E.2d 115 (1996). Thus, to the extent Alamance County's appeal is based on the affirmative defense of sovereign immunity, it is properly before us. Bolick v. County of Caldwell, 182 N.C. App. 95, 97, 641 S.E.2d 386, 388 (2007).
We note that on appeal Alamance County asserts the defense of sovereign immunity as a bar only as to Horton's claim for accrued vacation leave benefits. Therefore, that issue is properly before us. However, as to Alamance County's remaining contention regarding her claim for an alleged violation of the Financial Privacy Act, it has not been demonstrated that any substantial right would be affected absent immediate review and we dismiss this argument as interlocutory. Id.
III. Sovereign Immunity
In its first argument, Alamance County argues that Horton's claim for breach of the employment policy is barred by the affirmative defense of sovereign immunity. We disagree.
"Sovereign immunity generally operates to provide `unqualified and absolute immunity' to the state and its counties from suits brought against them in their official capacity. The general rule of immunity is subject to exceptions, however, in cases where the State is deemed to have `consented to be sued.'" Peverall, 154 N.C. App. at 429, 573 S.E.2d at 519 (quotations omitted). It is well established that "while sovereign immunity remains a valid defense in tort actions, it is not a proper defense in suits arising from contract law." Id. at 430, 573 S.E.2d at 520; see also Smith v. State, 289 N.C. 303, 320, 222 S.E.2d 412, 423-24 (1976) (seminal case abolishing the defense of sovereign immunity in breach of contract actions); Archer v. Rockingham Cty., 144 N.C. App. 550, 557, 548 S.E.2d 788, 793 (2001) (applying the reasoning of Smith to actions for breach of implied employment contracts), disc. review denied, 355 N.C. 210, 559 S.E.2d 796 (2002).
While generally a plaintiff must allege a waiver of sovereign immunity in their complaint to withstand a motion to dismiss pursuant to Rule 12(b)(6), Paquette v. County of Durham, 155 N.C. App. 415, 418, 573 S.E.2d 715, 717 (2002), disc. review denied, 357 N.C. 165, 580 S.E.2d 695 (2003), this requirement is unnecessary when the complaint alleges the existence and breach of a contract by a sovereign entity, Bolick, 182 N.C. App. at 98, 641 S.E.2d at 389.
In her second claim, Horton alleged that Alamance County breached its contractual obligation to her by failing to pay her accrued vacation leave benefits in the amount of $12,100.00. The relevant allegations of her claim are as follows:
3. As an employee of Alamance County Horton was entitled to certain benefits pursuant to the Defendant's Human Resource System or employee personnel policy (hereinafter "Policy").
4. On May 12, 2009 Horton tendered her resignation from her positions with Alamance County effective June 12, 2009. On May 13, 2009 the Defendant's County Manager preemptively terminated her services.
5. Upon her separation from service Horton was entitled to be paid for her accrued unused vacation leave pursuant to Article 6, Section 2 of the Policy, a copy of which is attached hereto as Exhibit A and incorporated herein by reference.
6. Horton had accrued 36.4 days of unused vacation leave prior to her separation from service with Defendant with a value of $12,100.00.
7. The Defendant has failed and refused to pay Horton her accumulated annual leave for vacation earned through the date of her separation.
Attached to Horton's claim are two pages of the alleged personnel policy. Section 2 is entitled "Vacation Leave" and states, inter alia, that "[u]pon submission of resignation, an employee shall be paid for vacation leave accumulated to the date of separation provided that the six-month probationary period has been completed and provided the employee has submitted notice to their immediate superior at least two weeks in advance of the effective date of resignation."
Alamance County argues that Horton's claim for vacation leave benefits is not contractual in nature and, thus, sovereign immunity is a bar to recovery.
In Bolick v. County of Caldwell, this Court addressed the issue of whether a claim against the County for severance pay pursuant to a personnel policy was contractual in nature to which sovereign immunity did not apply. 182 N.C. App. at 98-99, 641 S.E.2d at 389. In Bolick, at the time of the plaintiff's employment, Section 10 of the Caldwell County Personnel Policy provided that any Caldwell County Employee dismissed without cause would be entitled to severance pay in the amount of six months of his/her annual pay. Id. at 97, 641 S.E.2d at 388. The personnel policy was in effect as a county ordinance. Id. This Court held that "the nature of the ordinance at issue . . . turns this action into one based on contract" and that the plaintiff's action was not barred by sovereign immunity. Id. at 99, 641 S.E.2d at 389-90.
In the instant case, it is not clear from the record, upon a motion to dismiss, whether Article 6, Section 2 of the Alamance County employee personnel policy was enacted as an ordinance of the County. We note that N.C. Gen. Stat. § 153A-94(a) (2009) expressly provides that:
The board of commissioners may adopt or provide for rules and regulations or ordinances concerning but not limited to annual leave, sick leave, special leave with full pay or with partial pay supplementing workers' compensation payments for employees injured in accidents arising out of and in the course of employment, working conditions, service award and incentive award programs, other personnel policies, and any other measures that promote the hiring and retention of capable, diligent, and honest career employees.
Because we are unable to ascertain the nature of the employee personnel policy at this early stage of the proceedings, we will not hold as a matter of law that Horton has failed to state a claim for which relief can be granted. See Vereen v. Holden, 127 N.C. App. 205, 207, 487 S.E.2d 822, 823 (refusing to hold as a matter of law that a personnel policy was not adopted as an ordinance when the record was not clear as to whether the policy was adopted pursuant to the requisite statutory procedures), disc. review denied, 347 N.C. 410, 494 S.E.2d 600 (1997).
The trial court properly denied Alamance County's motions to dismiss. This argument is without merit.
AFFIRMED IN PART; DISMISSED IN PART.
Judge CALABRIA concurs.
Judge BEASLEY concurs in the result only.
Report per Rule 30(e).