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Today at the Court of Appeals

By Sean E. Andrussier

Today, Wednesday, February 22, 2011, a panel of the North Carolina Court of Appeals comprised of judges Calabria, Steelman, or Beasley will hear oral argument in the following case:

RS&M Appraisal Services, Inc. v. Alamance County, et al.

In May 2009, RS&M Appraisal Services, Inc, instituted suit in Lincoln County Superior Court against Alamance County alleging that the County failed to pay for services provided during the County's 2009 Reappraisal Project.  The County's Answer denied the material allegations contained in the Complaint, requested that the court transfer the matter to Alamance County, and sought to have the Complaint dismissed because (1) the contract was overbilled by RS&M and overpaid by the County; (2) that the contract was not validly amended under North Carolina General Statutes Section 159-28; and (3) that Alamance County had not waived governmental immunity. 

The County also brought several counterclaims against RS&M.  The County asserted that (1) overpayments by the County constitute exclusive emoluments under the North Carolina Constitution which must be returned to the County; (2) that RS&M breached the contract by failing "to provide competent employees of good character and having sufficient skills to perform the work" resulting in cost overruns; (3) breached the contract by failing to "furnish training, consultation, qualified appraisal personnel, qualified clerical personnel, and employee relationships"; and (4) that RS&M's actions constitute an unfair trade practice.

After the County's motion to transfer was granted, the County requested permission to add Ronald S. McCarthy, the owner of RS&M, and Kimberly D. Horton, the former Alamance County Tax Administrator, as counterclaim defendants.  The County sought to bring fraud and bid-rigging claims against the coutnerclaim defendants for various actions taken during the bid process.

Ms. Horton responded by filing crossclaims against the County alleging that the County (1) violated the North Carolina Financial Privacy Act by obtaining her records from the State Employee's Credit Union and attaching them to pleadings in this action; and (2) violated the Alamance County employee personnel policy by failing to pay her for her accrued but unused vacation time.

The County moved to dismiss the crossclaims on the basis of governmental immunity and because its actions complied with North Carolina law.  Judge Ben Tennille of the North Carolina Business Court denied the County's motion to dismiss and this appeal followed.

On appeal the County contends that it is entitled to sovereign immunity on the claim to receive compensation for unused vacation time because (1) the state wage and hour act law do not waive the County's immunity for such claims; (2) the policy providing for vacation pay was not a part of Horton's employment contract and therefore the employment contract cannot form the basis for a waiver of immunity; and (3) because Horton did not allege a waiver of immunity in her counterclaim.

The County also claims that it is entitled to have the Financial Privacy Act claim dismissed for several reasons.  First, the County focuses on the allegation that the County violated Section 53B-3.  The County contends that 53B-3 does not give rise to a cause of action because it is merely a policy statement.  According to the County, Horton may have had a cause of action if she alleged a violation of certain other parts of Article 53B (or, presumably, added an "et seq." at the end of her citation), but she does not have one under the statute cited.  The County also contends that Horton was not entitled to notice before her records were obtained and that it had the authority to publish the records after they were obtained by the Alamance County Sheriff's Office through a search warrant.  Finally, the County argues that if a violation occurred, the violation was the fault of the Alamance County Sheriff's Office and the County cannot be held liable for the actions of the Sheriff.

Horton responds that sovereign immunity does not apply to breach of contract claims or claims based on implied employment contracts.  Additionally, Horton rejects the County's assertion that 53B-3 is merely a directory statute and explains why she believes the County's actions violated the Financial Privacy Act.

Full post as published by North Carolina Appellate Blog on February 23, 2011 (boomark / email).