Appeal by plaintiff from order entered 3 January 2005 by Judge
Jesse B. Caldwell III in Gaston County Superior Court. Heard in
the Court of Appeals 9 February 2006.
Thomas B. Kakassy, P.A., by Thomas B. Kakassy, for plaintiff-
Stott, Hollowell, Palmer & Windham, LLP, by Martha Raymond
Thompson, for defendant-appellee.
Plaintiff Diane Finger appeals from the trial court's grant of
summary judgment in favor of defendant Gaston County. Finger sued
the County after it stopped paying her a special allowance based on
her retirement from the County's police force. This Court's
decision in Data Gen. Corp. v. County of Durham, 143 N.C. App. 97,
545 S.E.2d 243 (2001), holding that an agreement with a county is
not enforceable in the absence of the preaudit certificate mandatedby N.C. Gen. Stat. § 159-28(a) (2005), requires that we uphold the
order granting summary judgment.
The facts in this case are not in dispute. Finger was
employed by Gaston County as a police officer until March 1999,
when she retired on medical disability. Two and a half years
later, in October 2001, Charles Vinson, the Gaston County Human
Resources Director, informed Finger that she was entitled to
receive a supplemental retirement benefit, called a "Law
Enforcement Special Allowance," because her retirement was the
result of medical disability. In November 2001, Chuck Moore, the
Gaston County Attorney, told Finger that the County owed her
arrearages because of the County's failure to pay her the special
On 7 February 2003, Finger and Vinson signed a "Memorandum of
Understanding Between: Diane P. Finger and the County of Gaston
Regarding Law Enforcement Special Separation Allowance" ("the
Memorandum"). The Memorandum provided that: (1) Finger was
entitled to receive $687.11 per month from the date of her
retirement until she reached the age of 62; (2) the County had thus
far incorrectly denied this benefit to Finger; (3) Finger was
entitled to 46 months of arrearages totaling $31,607.25; (4) Finger
would receive half of the arrearages in a lump sum of $15,803.62
and the remainder in 23 monthly installments of $687.11 each; (5)in addition to the monthly arrearage installments, Finger would
also begin receiving her regular monthly allowance of $687.11 per
month, bringing her monthly payments to $1,374.23; and (6) after
the 23 months were finished, Finger would continue to receive
$687.11 per month until the first month after she turned 62 years
On 26 June 2003, however, the Gaston County Board of
Commissioners determined that they had misapplied N.C. Gen. Stat.
§ 143.166.41(a) (2005) when they had previously concluded that
Finger and other county employees were entitled to a special
allowance. The Board, therefore, adopted Resolution 2003-245,
which ended the supplemental benefit payment that Finger and others
had been receiving.
Once the County ceased paying Finger, Finger brought suit for
breach of contract, seeking $100,989.00 in damages, as well as
attorneys' fees. Gaston County's motion to dismiss under Rule
12(b)(6) was denied, but subsequently its motion for summary
judgment was allowed. Finger filed a timely notice of appeal to
Finger first argues that summary judgment was inappropriate
because issues of fact exist as to whether the Memorandum is an
enforceable contract. This Court has previously held that "N.C.
Gen. Stat. § 159-28(a) sets forth the requirements and obligations
that must be met before a county may incur contractual
obligations." Cincinnati Thermal Spray, Inc. v. Pender County
, 101N.C. App. 405, 407, 399 S.E.2d 758, 759 (1991). That statute
provides in pertinent part:
If an obligation is evidenced by a contract or
agreement requiring the payment of money or by
a purchase order for supplies and materials,
the contract, agreement, or purchase order
shall include on its face a certificate
stating that the instrument has been
preaudited to assure compliance with this
subsection. . . . An obligation incurred in
violation of this subsection is invalid and
may not be enforced.
N.C. Gen. Stat. § 159-28(a). It is undisputed that the Memorandum
did not include the preaudit certificate required by § 159-28(a).
In Data General
, this Court acknowledged that whenever a
county enters into a valid
contract, it waives sovereign immunity
and may be sued for damages in the event of a breach of that
contract. 143 N.C. App. at 102, 545 S.E.2d at 247. On the other
hand, "in the absence of a valid contract, a state entity
[including a county] may not be subjected to contractual
The Court then held:
Where a plaintiff fails to show that the
requirements of N.C. Gen. Stat. § 159-28(a)
have been met, there is no valid contract, and
any claim by plaintiff based upon such
contract must fail.
In the instant case, [plaintiff] Data
General has failed to make a showing that the
required preaudit certificate exists, and none
is evidenced in the record. Furthermore,
Durham County has argued that no such
certificate exists. As there is insufficient
evidence in the record that the requirements
of N.C. Gen. Stat. § 159-28(a) have been met,
we conclude that no valid contract was formed
between Data General and Durham County, and
Durham County therefore has not waived its
sovereign immunity to be sued (and DataGeneral may not maintain a suit) for contract
at 103, 545 S.E.2d at 247-28 (internal citation omitted). The
Court, therefore, affirmed dismissal of the plaintiff's breach of
contract claim. Id.
We have been unable to identify any basis for distinguishing
from this case. Because the Memorandum had no
preaudit certificate, "there is no valid contract, and any claim by
plaintiff based upon such contract must fail." Id.
, 545 S.E.2d at
247. See also Cabarrus County v. Systel Bus. Equip. Co.
, 171 N.C.
App. 423, 425, 614 S.E.2d 596, 597 ("Cabarrus County argues that
the trial court erred in concluding that a settlement agreement
between itself and [plaintiff] was valid and binding despite the
absence of a completed preaudit certificate. We agree."), disc.
, 360 N.C. 61, 621 S.E.2d 177 (2005).
Finger relies upon Lee v. Wake County
, 165 N.C. App. 154, 598
S.E.2d 427, disc. review denied
, 359 N.C. 190, 607 S.E.2d 275
(2004), in arguing that the lack of a signed preaudit certificate
does not necessarily render the Memorandum unenforceable. Lee
however, involved a memorandum agreement signed in a workers'
compensation mediation in which the parties agreed "to prepare a
formalized settlement compromise agreement for the [Industrial]
Commission's consideration." Id.
at 162, 598 S.E.2d at 433. The
Court held that this preliminary agreement did not require a
preaudit certificate "to enable the Commission to direct the
submission of a formalized compromise settlement agreement." Id.
at 163, 598 S.E.2d at 433. As this Court recognized in Systel
, in rejecting the same
argument made by Finger regarding Lee
, "the action on appeal [in
] was 'for specific performance, not for the payment of money.'"
, 171 N.C. App. at 426, 614 S.E.2d at 598 (quoting Lee
N.C. App. at 162, 598 S.E.2d at 433).
In the present case, as in
, the agreement that is the subject of this appeal is for the
payment of money, and Lee
is therefore inapplicable. See
Stat. § 159-28(a) (requiring a preaudit certificate with respect to
an "agreement requiring the payment of money").
Finger next argues that, even if the Memorandum is not legally
enforceable, a genuine issue of fact exists as to whether it is
enforceable under principles of estoppel. In Data General
Court rejected an identical argument:
We have concluded, supra
, that the lease
agreement entered between the parties was not
a valid contract sufficient to bind Durham
County as it failed to comply with the
statutory requirements in N.C. Gen. Stat. §
159-28(a). Data General may not recover under
an equitable theory such as estoppel for
breach of contract where Durham County has not
expressly entered a valid contract.
Furthermore, parties dealing with governmental
organizations are charged with notice of all
limitations upon the organizations' authority,
as the scope of such authority is a matter of
public record. Likewise, the preaudit
certificate requirement is a matter of public
record, N.C. Gen. Stat. § 159-28(a), and
parties contracting with a county within this
state are presumed to be aware of, and may not
rely upon estoppel to circumvent, such
143 N.C. App. at 104, 545 S.E.2d at 248 (internal citations
omitted). Our General Assembly has in N.C. Gen. Stat. § 159-28(a) made
a policy determination to forbid counties from entering into
contracts for payment of money that lack a preaudit certificate.
To permit a party to use estoppel to render a county contractually
bound despite the absence of the certificate would effectively
negate N.C. Gen. Stat. § 159-28(a). We are not free to allow a
party to obtain a result indirectly that the General Assembly has
expressly forbidden. The trial court, therefore, also properly
granted summary judgment with respect to Finger's claims based on
Judges HUDSON and TYSON concur.
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