Davis v. City of Greensboro, No. 13-1820 (4th Cir. 2014)
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Four groups of current and retired Greensboro police officers and firefighters filed separate suits against the City, alleging that the City violated state and federal law by failing to pay its employees certain wages and benefits. On appeal, the City challenged the denial of its motions to dismiss based on governmental immunity. As a preliminary matter, the court concluded that it had jurisdiction over the interlocutory orders in these consolidated appeals. On the merits, the court held that plaintiffs have sufficiently alleged valid contracts with the City and, as the City concedes, such allegations prevent a municipality from obtaining dismissal of a complaint on the basis of governmental immunity. Consequently, the district court did not err in denying the City's motions to dismiss. The court affirmed the judgments of the district court.
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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1820 BRETT DAVIS; BRIAN CHRIS SMOOT; STEVE SZYMECZEK, Plaintiffs - Appellees, v. CITY OF GREENSBORO, NORTH CAROLINA, Defendant - Appellant. No. 13-1825 WENDY CHEEK; BRIAN KEITH COLLINS; JOSEPH CASEY COUNCILMAN; WALTER STEVEN COUTURIER; TIMOTHY FIELDS; WILLIAM C. MORGAN, Plaintiffs - Appellees, v. CITY OF GREENSBORO, NORTH CAROLINA, Defendant - Appellant. No. 13-1826 DAVID MORGAN; ROGERS REYNOLDS, Plaintiffs - Appellees, v. CITY OF GREENSBORO, NORTH CAROLINA, Defendant - Appellant. No. 13-1827 MICHAEL BROWNELL; TRAYVEAWN GOODWIN; CHRISTIAN JENKS; PATRICK KENNEDY; GEORGE SIMMONS, HICKS; TY Plaintiffs - Appellees, v. CITY OF GREENSBORO, NORTH CAROLINA, Defendant - Appellant. Appeals from the United States District Court for the Middle District of North Carolina, at Greensboro. Catherine C. Eagles, District Judge. (1:12-cv-00888-CCE-JEP; 1:12-cv-00981-CCE-JEP; 1:12-cv-01110-CCE-JEP; 1:12-cv-01311-CCE-JEP) Argued: September 16, 2014 Decided: October 22, 2014 Before MOTZ and KING, Circuit Judges, and DAVIS, Senior Circuit Judge. Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge King and Senior Judge Davis joined. ARGUED: Kenneth Kyre, Jr., PINTO, COATES, KYRE & BROWN, PLLC, Greensboro, North Carolina, for Appellant. Torin L. Fury, FRAZIER HILL & FURY, RLLP, Greensboro, North Carolina, for Appellees. ON BRIEF: William L. Hill, James Demarest Secor, III, FRAZIER HILL & FURY, RLLP, Greensboro, North Carolina, for Appellees. 2 DIANA GRIBBON MOTZ, Circuit Judge: The City of Greensboro appeals the denial of motions to dismiss, arguing that the district court erred in rejecting the City s claims of governmental immunity. Before we can review the district court s judgments, we must resolve the threshold question of whether we have jurisdiction over the interlocutory orders in these consolidated appeals. For the reasons that follow, we conclude that we do have jurisdiction, and we affirm the judgments of the district court. I. Four groups of current and retired Greensboro police officers and firefighters (collectively, the Officers ) brought separate suits against the City, alleging violations of state and federal law. Broadly speaking, the Officers claims relate to the City s alleged failure to pay its employees certain wages and benefits. The only benefit at issue in these appeals is the City s longevity payment program. As recounted in the Officers complaints, the City provides annual lump-sum payments to police officers and firefighters based on the number of years they have worked for the City. completed twenty Employees hired prior to July 1, 1994, who years of service 2010, were grandfathered into a previous longevity payment program. For 3 by June 30, other employees, the longevity payments began after five years of service and increased with each additional five years on the job. The Officers allege that the longevity payments are an integral part of their employment contracts with the City, and that the City lists the payments as a benefit in its Employee Handbook. According to the complaints, the City began to modify the longevity payment program in 2010. First, the officers allege, the City capped the payments for certain employees at a lower percentage converted of the their annual longevity salary. payments discretionary bonus program. Two for some years later, employees into it a These changes lowered the amount some of the Officers were entitled to receive. The Officers also allege that the City failed to include longevity pay in calculating their base rate of pay. This inaccuracy assertedly led to underpayment of overtime wages, which in turn resulted in inadequate contributions to the Officers retirement funds. In addition to the many other causes of action in each complaint, the Officers allege that the City breached a contract for longevity pay. 1 Some of the Officers also claim that they 1 Two groups of Officers now disclaim any intention to allege breach of contract claims regarding longevity payments. To the extent they no longer pursue breach of contract claims, the disposition of these appeals will not affect their ongoing litigation. 4 are entitled to the longevity payments under the doctrines of equitable and quasi estoppel. The City moved to dismiss every cause of action in all four complaints. In response to the breach of contract and estoppel claims, the City argued that governmental immunity protected it from suit. Although a municipality in North Carolina waives governmental immunity when it enters into a valid contract, the City claimed that the Officers failed to adequately allege the existence of valid contracts for longevity pay. The district court granted in part and denied in part the City s motions to dismiss. Most of the Officers claims survived the motions, including the only claims at issue in this appeal -- the Officers breach of contract and estoppel claims, to which the City contends it enjoys governmental immunity from suit. The district court held that the Officers sufficiently alleged a contractual longevity payment obligation. Davis v. City of Greensboro, N.C., 2013 WL 2317730, at *3 (M.D.N.C. May 28, 2013). City s because After noting that any further evaluation of the immunity of necessary the to defense highly resolve was inappropriate fact-specific the immunity nature issue, the for of resolution the inquiry district court denied the City s motions to dismiss the Officers contract and estoppel claims. Id. at *2-3. 5 The City timely noted an appeal of this portion of the district court s order in all four cases. We have consolidated the cases for our review. II. Before we can address the City s governmental immunity defense, we must first determine whether we have jurisdiction over these appeals. Federal law, specifically 28 U.S.C. § 1291 (2012), limits our jurisdiction district courts. does not to appeals from final a final decision, provide the proper basis for an appeal. 515 U.S. 304, 309 (1995). our rulings that, jurisdiction appropriately of the Generally, the denial of a motion to dismiss constitute extends decisions although deemed and thus does not See Johnson v. Jones, But the collateral order doctrine to they a small do not final. class end the Mohawk of collateral litigation, Indus., Inc. are v. Carpenter, 558 U.S. 100, 106 (2009) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)). includes only decisions important questions that separate are from This small class conclusive, the merits, that and resolve that are effectively unreviewable on appeal from the final judgment in the underlying action. Swint v. Chambers Cnty. Comm n, 514 U.S. 35, 42 (1995); see also Cobra Natural Res., LLC v. Fed. 6 Mine Safety & Health Review Comm n, 742 F.3d 82, 86 (4th Cir. 2014). The Supreme Court has held that orders denying certain kinds of immunity fall within the collateral order doctrine. so doing, the Court has exercised jurisdiction In over interlocutory appeals of orders rejecting defenses of absolute immunity, Nixon v. qualified immunity, Fitzgerald, Mitchell v. 457 U.S. Forsyth, 731, 472 742 U.S. (1982), 511, 530 (1985), and a state s claim of sovereign immunity, Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147 (1993). We have similarly exercised jurisdiction over an interlocutory appeal of an order rejecting the kind of immunity at issue here, a municipality s claim of governmental immunity. Gray-Hopkins v. Prince George s Cnty., 309 F.3d 224, 231-32 (4th Cir. 2002). Only a claimed immunity from suit, not a mere defense to liability, can provide the proper basis for an interlocutory appeal. Mitchell, 472 U.S. at 526 (emphasis in original). determine whether a municipality s claim of To governmental immunity constitutes an immunity from suit, we must look to substantive state law. Here, the scope Carolina law is clear. Gray-Hopkins, 309 F.3d at 231. of governmental immunity under North The Supreme Court of North Carolina has held that governmental immunity provides a complete defense 7 that shields a defendant entirely from having to answer for its conduct at all in a civil suit for damages. Craig ex rel. Craig v. New Hanover Cnty. Bd. of Educ., 678 S.E.2d 351, 354 (N.C. 2009). As such, governmental immunity in North Carolina constitutes an immunity from suit rather than a mere defense to liability. Id. (emphasis in original) (quoting Mitchell, 472 U.S. at 526) (internal quotation mark omitted). Even when a defendant claims an immunity from suit, however, certain orders denying immunity do not provide a proper basis for doctrine. interlocutory appeal under the collateral order A district court s denial of immunity constitutes an appealable final decision only to the extent that it turns on an issue of law. Mitchell, 472 U.S. at 530. In Ashcroft v. Iqbal, the Court clarified that a ruling on the sufficiency of the pleadings at the motion-to-dismiss stage does turn on such an issue of law. explained, that established qualified 556 U.S. 662, 672 (2009). holding rule immunity is that district at a the consistent As the Court with court s the order motion-to-dismiss well rejecting stage of a proceeding is a final decision within the meaning of § 1291. Id. Thus, here the challenged district court order turned on an issue of law. in its motions The governmental immunity claim the City raised to dismiss rested 8 on the argument that the Officers had longevity pay. not adequately alleged valid contracts for The district court denied the City s motions to dismiss and ruled on the sufficiency of the pleadings, holding that the Officers sufficiently alleged a contractual longevity payment obligation. Davis, 2013 WL 2317730, at *3. Accordingly, the district court s orders rejecting the City s governmental immunity defense constitute final orders subject to interlocutory review under the collateral order doctrine. We note that the district court s comment that [t]he immunity defense is . . . inappropriate for resolution at this stage, id., does not defeat our jurisdiction. To be sure, we recently cautioned that if a court or agency expressly holds open the possibility of reconsideration, appeal should not be authorized. F.3d at 88. a collateral order Cobra Natural Res., LLC, 742 But here the district court flatly denied the City s motions to dismiss. The court did not expressly, or even implicitly, hold[] open the question of the sufficiency of the factual allegations in the Officers complaints. The district court did indicate subsequent development of the facts. at *2. an interest in the Davis, 2013 WL 2317730, But such further factual development, while certainly helpful to the district court s eventual decision about whether the Officers actually had valid contracts for longevity pay, does not affect the legal conclusion 9 that the Officers adequately pled the existence of such contracts and so their claims survived a motion to dismiss. Indeed, our precedent confirms that jurisdiction over the district court s orders here is proper. In Jenkins v. Medford, 119 F.3d 1156, 1159 (4th Cir. 1997) (en banc), we exercised jurisdiction over an interlocutory appeal when the defendant raised a qualified immunity defense in his motion to dismiss, even though the district court expressly did not resolve the immunity question. The district court denied the defendant s motion to dismiss, citing concerns about factual issues in declining to rule on the qualified immunity defense. See Jenkins v. Medford, 1995 WL 914528, at *5 (W.D.N.C. Apr. 18, 1996). We held that despite the court s failure to rule on the defense, court s the order refusal was to immediately consider the appealable question because subjected the [the defendant] to further pretrial procedures, and so effectively denied Here, him as qualified in immunity. Jenkins, delaying consideration Jenkins, question risks subject[ing] pretrial matters, and some the of [City] the 119 to rights F.3d of the the at immunity burdens inherent [governmental] immunity defense [would be] lost. 1159. Id. in of a We are therefore satisfied that we have jurisdiction over the City s interlocutory appeals. 10 III. Having concluded that we have jurisdiction, we turn to the City s contention that governmental immunity provides it with immunity from the Officers breach of contract and estoppel claims. All parties agree that, if there are valid contracts between the City and the Officers for longevity pay, the City cannot prevail on its governmental immunity defense. The City offers two arguments as to why the Officers have not alleged valid contract and estoppel claims. that the Officers were required, First, the City contends and existence of preaudit certificates. 10-19. failed, to allege Appellant Br. (Davis case) Second, the City claims that the Officers were required, and failed, to allege that their contracts were written. 19-20. the Id. at Both arguments are meritless. A. In North Carolina, certain contracts with entities must include a preaudit certificate. governmental See N.C. Gen. Stat. § 159-28(a) ( If an obligation is evidenced by a contract . . . the contract . . . shall include on its face a certificate stating that the instrument has compliance with this subsection. ). been preaudited to assure If such a certificate is required but lacking, there is no valid contract, and any claim by plaintiff based upon such contract must fail. 11 Data Gen. Corp. v. Cnty. of Durham, 545 S.E.2d 243, 247 (N.C. Ct. App. 2001). The City contends that any valid contract with the Officers for longevity requirement of pay § must comply 159-28(a), and with the that preaudit the certificate Officers failed to allege the existence of such certificates in their complaints. The Officers agree that they never alleged that preaudit certificates exist, but they contend that § 159-28(a) does not govern their alleged contracts for longevity pay. The Court of Appeals of North Carolina has held that § 15928(a) applies only to a financial obligation that will come due in the year the town incurs the obligation. Myers v. Town of Plymouth, 522 S.E.2d 122, 123 (N.C. Ct. App. 1999) (Wynn, J.). Therefore, a contract that is signed in one year but results in a financial obligation in a later year will not violate § 15928(a). Id. at 126. Under Myers, the contracts the Officers claim they have with the City need not comply with § 159-28(a) because the Officers allege contractual rights to longevity payments that were formed years ago. For some of the Officers, those rights assertedly vested after five years of service. rights to receive longevity payments would Any continuing therefore be financial obligations due more than a year after formation of the alleged contracts. 12 The City, however, urges us not to apply the holding in Myers because it supposedly conflicts with the holding of an earlier case from the same court, Watauga County Board of Education v. Town of Boone, 416 S.E.2d 411 (N.C. Ct. App. 1992). The City misreads Watauga County. The issue in that case was whether a town breached a contract it had formed with a county to provide a certain percentage of its Alcohol Beverage Control Store revenue to the school board. Id. at 412. The court held there was no breach of contract because it is outside the power of the town council to appropriate money to the county school board. Id. at 413. This central holding did not even concern § 159-28(a); the alleged contract was void and unenforceable, id., regardless of whether it was accompanied by a preaudit certificate. The Watauga County court went on to observe, briefly, that even if the town had the power to enter into the contract with the school board, the contract was still not because it does not comply with G.S. § 159-28(a). The court agreement described to designate the alleged 18% of contract [the town s] enforceable Id. at 415. at issue ABC as an profits for school board use, and apparently this alleged agreement was followed for three years. Id. at 412. It is not entirely clear, however, whether this alleged agreement was an annual contract renewed twice or a multi-year contract. 13 In any event, nowhere in Watauga County -- or in any of the other cases on which the City relies 2 -- does the court address whether § 15928(a) applies to contracts of all lengths or only to contracts that come due the year they are formed. The Myers court, on the other hand, discusses the distinction in depth. Watauga County and Myers can therefore be read harmoniously: Watauga County certain briefly confirms governmental the applicability contracts, and of Myers § 159-28(a) clarifies that to the statute only requires preaudit certificates for contracts due the year they are formed. The Court of Appeals of North Carolina itself recently held that Myers states the correct reading of § 159-28(a). See M Series Rebuild, LLC v. Town of Mount Pleasant, 730 S.E.2d 254 (N.C. Ct. App.), rev. denied, 735 S.E.2d 190 (N.C. 2012). M Series, the complaint because § 159-28(a). emphasized court upheld the contract Id. at 261. that the the case dismissal at issue of did the not In plaintiff s comply with In reaching that holding, the court involved an alleged contract and obligation to pay [that were] both created in the same fiscal year. Id. (emphasis added). 2 Citing Myers, the court See Howard v. Cnty. of Durham, 748 S.E.2d 1 (N.C. Ct. App.), rev. denied, 748 S.E.2d 321 (N.C. 2013); Data Gen. Corp. v. Cnty. of Durham, 545 S.E.2d 243 (N.C. Ct. App. 2001); Cincinnati Thermal Spray, Inc. v. Pender Cnty., 399 S.E.2d 758 (N.C. Ct. App. 1991). 14 emphasized that there is a distinction between cases where the alleged contract and resulting obligation to pay arise in the same year and cases where the obligation to pay comes due in a later year. Id. The City would have us hold that the Court of Appeals of North Carolina incorrectly interpreted its own precedent. But we see no reason to second-guess the Court of Appeals, which has never read its own interpretations of § 159-28(a) to conflict. The City s arguments to the contrary are best addressed to the North Carolina courts or legislature. Because § 159-28(a) does not apply to the Officers alleged contracts, the Officers did not need to allege the existence of preaudit certificates. 3 B. The City s second basis for challenging the adequacy of the complaints is the claim that the Officers failed to allege that the contract for longevity pay was written. (Davis case) 19 (emphasis in original). Appellant Br. The Greensboro Charter provides the source for this requirement; it states that [a]ll contracts, except as otherwise provided for in this Charter, 3 The City suggests, in a footnote, that even if the Officers are correct in their reading of North Carolina law, they still needed to assert in their amended complaints that § 159-28 does not apply to the alleged contracts. Reply Br. (Davis case) 10 n.9. This is plainly wrong. Nothing requires the Officers -- or any other plaintiff for that matter -- to plead that a law does not apply in order to state a claim upon which relief can be granted. 15 shall be . . . reduced to writing in order to be binding upon the City. City of Greensboro Charter § 4.111. The City cites no authority, however, for the proposition that a plaintiff must allege that a contract be written in order to state a claim for breach of contract. Moreover, even if the City had pointed to such authority, the Officers complaints would survive the motions to dismiss. The Officers allege that their Employee Handbook lists longevity pay as a benefit. Construing all well-pled facts in the light to most favorable the plaintiff, as we must, Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009), reduced to Further, it this writing is not allegation requirement an plausibly of unwarranted the satisfies City s inference[], the charter. id., to conclude that the Officers employment contracts with the City have been reduced to writing. Whether any written contract actually includes a provision on longevity payments constitutes a factual issue to be resolved at a later stage in the litigation. For these reasons, we hold that the Officers sufficiently alleged valid contracts with the City. have As the City concedes, such allegations prevent a municipality from obtaining dismissal of a complaint on the basis of governmental immunity. 16 Therefore, the district court did not err in denying the City s motions to dismiss the Officers breach of contract claims. 4 IV. In sum, we hold that we have jurisdiction over the orders denying the City s motions to dismiss the Officers contract and estoppel claims on governmental immunity grounds. We further hold that the district court properly denied the City s motions to dismiss because the Officers have sufficiently alleged that they have valid contracts for longevity pay with the City. Accordingly, the judgments of the district court are AFFIRMED. 4 The only other causes of action at issue in these appeals are the Officers equitable and quasi estoppel claims. The City s argument for dismissing these claims rests on the assertion that the Officers and the City have not entered into valid contracts for longevity payments. Because the Officers have sufficiently alleged the existence of such contracts, their estoppel claims must similarly survive the City s motions to dismiss. 17
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