Case Title: City of Gadsden v. Harbin

Citation: 

Docket Number: 1120537

State: alabama

Court: Alabama Supreme Court

Date: 2013-12-13T00:00:00Z

Document:
REL:  12/13/2013
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2013-2014
_________________________
1120537
_________________________
City of Gadsden
v.
Roy Harbin
Appeal from Etowah Circuit Court
(CV-07-0022)
WISE, Justice.
The City of Gadsden, the defendant below ("the City"),
filed a permissive appeal pursuant to Rule 5, Ala. R. App. P.,
from a January 15, 2013, order of the Etowah Circuit Court
denying the City's motion for a summary judgment as to Roy
1120537
Harbin's breach-of-contract claim against the City.  We
reverse and remand.
Facts and Procedural History
Harbin started working as a police officer for the City
in 1972.  It is undisputed that he did not have a written
employment contract with the City.  In 1972, Harbin also
started mandatory participation in the Policemen's and
Firemen's Retirement Fund of the City of Gadsden ("the PFRF"),
which was established by Act No. 226, Ala. Acts 1959.  At that
time, the PFRF provided, in part, that, after 20 or more years
of service, a participant would receive
"[a] retirement benefit equal to 50 percentum of the
current salary being paid to persons holding the
same rank as such retirement member held at the time
of his retirement."
In 1975, the PFRF was modified by Act No. 904, Ala. Acts 1975,
and 
the 
above-quoted 
"sliding 
scale 
provision" 
was 
eliminated. 
The PFRF was again modified in 1980 by Act No. 80-442, Ala.
Acts 1980.  Finally, in 2002, all the funds in the PFRF were
transferred to the Employees Retirement System of Alabama
("the ERS"), which then administered the retirement program
for the City's police officers.  Harbin retired in 2012 and
currently receives pension payments under the ERS.  
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On January 11, 2007, Harbin sued the City, alleging
breach of contract and seeking equitable relief.  Afterward,
he amended his complaint five times.  In the fifth amended
complaint, which was filed in 2011, Harbin alleged the
following regarding the contract he contends was breached:
"Roy Harbin, age 67, has an employment agreement or
contract or a memorandum of understanding with the
City of Gadsden as a police officer.  Roy Harbin was
hired in 1972 and has been a Gadsden police officer
39 years.  When Roy Harbin was hired, the City
agreed to provide police and firemen a 20 year
retirement program provided by statute whereby
police and firemen would receive 50% retirement
benefits after 20 years of service with a sliding
scale.  The City also agreed to provide lifetime
major medical coverage."
Harbin also alleged that he paid into the PFRF for 20 years,
from 1972 until 1992, and that, therefore, he "became fully
eligible for 20 years of retirement benefits in 1992."  
The City answered the complaint and denied Harbin's
allegations.  Specifically, it denied that it had ever had an
employment contract, an employment agreement, or a memorandum
of understanding with Harbin.  The City also denied that there
had ever been anything called a "City Retirement Plan."     
On November 7, 2012, Harbin filed a motion for a partial
summary judgment as to the issues whether he had a contract
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with the City and whether that contract included a pension. 
He asserted that, when he was hired in 1972, the City agreed
to provide a 20-year retirement program that was provided for
by statute by which, after 20 years of service, he would
receive 50% retirement benefits calculated on a sliding scale
and lifetime major-medical insurance coverage.  Harbin also
asserted that the "agreement or contract was confirmed and
ratified by employee handbooks issued by the City of Gadsden." 
In support of the motion, he submitted excerpts from the
City's employee handbooks from 1975, 1981-84, 1984-87, and
1987-91.
On November 27, 2012, the City filed a motion for a
summary judgment.  Referencing Harbin's admission in his
deposition, it argued that Harbin never had a written
employment contract with the City; instead, it argued that the
terms of his employment were established by rules promulgated
by the City's Civil Service Board.  In support thereof, it
attached to its motion a copy of the Civil Service Board
Rules, as adopted by the Civil Service Board on May 25, 1994. 
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Noting that Harbin had submitted excerpts from employee
handbooks, the City asserted that those handbooks simply
referred to the statutory provisions that set forth the terms
and conditions of the PFRF.  Also, citing this Court's
decision in Board of Trustees of Policemen's & Firemen's
Retirement Fund of Gadsden v. Cary, 373 So. 2d 841, 843 (Ala.
1979), the City argued that, because Harbin was hired in 1972
and had not yet vested when the legislature amended the PFRF
in 1975, the legislature had the authority to amend the terms
of the PFRF so that Harbin was no longer eligible to receive
the benefits that were available under the PFRF that was in
place when he was hired.
In Cary, employees of the City filed an action seeking to
have their rights declared following the 1975 amendment of the
PFRF.  This Court held that the benefits of those employees
who had retired before the effective date of the 1975
amendment and of those employees who had served for at least
20 years at the time the 1975 amendment became effective and
continued to serve could not be reduced and thus were not
subject to the modifications in the 1975 amendment.  Cary, 373
So. 2d at 842-43.  However, with regard to employees who had
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not become eligible for retirement before the effective date
of the 1975 amendment, this Court stated:
"[W]e are constrained to hold that their interests
had not matured into an unqualified right to receive
the benefits set out in the statutory plan.  We view
the completion of twenty years' service as a
condition precedent to the vesting of an absolute
right to receive these benefits.  Therefore, absent
this vesting, the compensatory scheme, including the
retirement 
plan, 
was 
subject 
to 
legislative
modification.  Opinion of the Justices, 249 Ala.
128, 30 So. 254 (1947); City of Birmingham v.
Penuel, 242 Ala. 167, 5 So. 2d 723 (1942); State ex
rel. Highsmith v. Brown Service Funeral Co., 236
Ala. 249, 182 So. 18 (1938); Hard v. State ex rel.
Baker, 228 Ala. 517, 154 So. 77 (1934)."
373 So. 2d at 843.    
1
On January 11, 2013, Harbin filed a response in
opposition to the City's 
summary-judgment 
motion.  
Although he
admitted that the City had never given him a written
employment contract, he asserted that the City had assured him
and had agreed with him that, if he worked 20 years, he would
receive retirement benefits that would include a pension
consisting of 50% of his wages, based on a sliding-scale
The City also filed a response to Harbin's summary-
1
judgment motion.  In that response, it referred to its
summary-judgment motion and relied on its arguments in that
motion to oppose Harbin's motion.  
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provision that allowed for annual increases, and lifetime
family medical benefits.  Harbin also asserted that the
assurances and agreement were explained and ratified by the
chief of police and by the employee handbooks issued by the
City.  Finally, he asserted:
"The City interprets the Cary case too narrowly
claiming that the 20 years must be served before the
1975 legislation.  Instead, Cary holds that rights
vest after the designated time of service.  Vesting
of rights implies a binding contract.  Therefore,
Harbin was eligible for a 20 year pension."
The trial court conducted a hearing on the summary-
judgment motions on January 15, 2013.  During the hearing,
Harbin asked the court to rule as a matter of law that a
contract existed between him and the City and to allow a jury
to determine whether there had been a breach of that contract
and damage as a result of the breach.  Harbin once again
conceded that he did not have  written contract with the City. 
Nevertheless, without specifying a basis for such a finding,
he asked the trial court to rule as a matter of law that a
contract existed and that that contract included a pension.
The City argued that the contract to which Harbin
referred was actually an act of the legislature -- i.e., the
statute that created the PFRF -- and that the PFRF was
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1120537
governed by a board of trustees.  Citing Cary, it also argued
that, in 1975, the legislature made changes to the manner in
which retirees would be paid.  The City further argued that
the legislature controlled and set the terms and conditions of
the PFRF and that the City contributed what it was required
under the PFRF to contribute.  It additionally argued that the
fact that the City had employee handbooks that said that its
police officers participated in the PFRF "doesn't change
anything" and "just says the officers are a part of this
legislative scheme."  Finally, it argued that participating 
in
a pension scheme set up by the legislature is not akin to
entering into a contract with the City.  Therefore, the City
concluded, no contract existed between it and Harbin.  
The City noted that litigation had ensued as a result of
the 1975 amendment to the PFRF and that the defendant in that
litigation was the board of trustees of the PFRF, not the
City.  See Cary, 373 So. 2d at 843.  It also argued that,
because Harbin had not vested in 1975, the terms of his
pension were subject to modification, as determined in Cary. 
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1120537
Harbin disputed the City's argument that, under this
Court's decision in Cary, the terms of his agreement with the
City were changed by the 1975 amendment because he had not yet
served 20 years before the legislature adopted the 1975
amendment.  Instead, he argued that Cary "says that rights to
a contract vest when they're made and when you complete your
contract after twenty years, in this case forty years, then
your rights are vested and you're entitled to the agreement
that you made."  Upon questioning by the trial court, Harbin
indicated that it was his position that persons who were
employed by the City at the time of the change in 1975 were
locked into the retirement plan that was in place when they
joined if they remained employed and served 20 years, that the
plan could not be changed if the employee served 20 years, and
that only people who were hired after the effective date of
the 1975 amendment were subject to the 1975 amendment.
Despite his previous arguments, during the hearing,
Harbin also stated that his breach-of-contract claim was "not
based solely on the change of the legislature" and that his
case did "not hinge on the fact of whether or not the
legislature changed [his] agreement."  He then argued:
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1120537
"We would say it did not change the agreement. But
even if we're wrong on that, it still doesn't take
away the breach of contract claim. And I think
really all the evidence needs to come out to
determine whether there's been a -- first of all, is
there a contract? We say certainly there's a
contract. But I think all the evidence is going to
have to come out and then there's going to be a
motion to throw it out for lack of evidence or lack
of damages."
Thereafter, Harbin also stated:  "If I agree to work for you
and I work twenty years or forty years, there's definitely a
contract."  Further, when the trial court asked him "what are
the four corners of that contract," Harbin simply stated:  "I
didn't ask you to define that."  Finally, Harbin's counsel
acknowledged the following:
"I think there's a disagreement that there's even a
contract, enforceable contract. ...
"....
"... Because they keep saying there's no
contract, there's no evidence of a contract.  I was
trying to eliminate that issue.  It was really a
simplistic approach."
After the hearing, the trial court denied Harbin's motion
for a partial summary judgment, denied the City's motion for
a summary judgment, and granted the City's motion to strike
Harbin's affidavit and evidentiary submissions.  The City
asked the trial court to certify a controlling question of law
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1120537
for an appeal by permission pursuant to Rule 5, Ala. R. App.
P.  The trial court certified the requested controlling
question, and the City filed a petition for permissive appeal
in this Court.  This Court granted the petition and ordered an
answer and briefs.
Question Certified for Interlocutory Appeal
The 
trial 
court 
certified 
the 
following 
as 
the
controlling question of law for this interlocutory appeal:
"Whether [Harbin] can successfully assert a contract
claim against the City of Gadsden arising from
deficiencies 
alleged 
in 
the 
'Policemen's 
and
Firemen's Fund of the City of Gadsden, Alabama'
(PFRF) --
"where the legislature created PFRF and its
governing board of trustees, and mandated the terms
and conditions of PFRF in Act 226, Acts of Alabama
1959, as amended;
"where the terms of the fund were changed by the
legislature 
subsequently, 
such 
latter 
terms
remaining effective until the plan's demise;
"where the Alabama Supreme Court determined in
[Board of Trustees of Policemen's & Firemen's
Retirement Fund of Gadsden v.] Cary, 373 So. 2d 841
(Ala. 1979), that certain employees had vested
rights under the plan as it existed when [Harbin]
was made a member of the plan, and that other member
employees did not;
"where the most recent substantive terms
affecting [Harbin] were passed by the legislature in
1980;
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"where the employer-City paid all monies into
the Fund as directed by the Act(s);
"where the City did not, nor has been shown to,
possess any authority over the terms and conditions
of PFRF."
Standard of Review
"'"This Court's review of a summary
judgment is de novo.  Williams v. State
Farm Mut. Auto. Ins. Co., 886 So. 2d 72, 74
(Ala. 2003).  We apply the same standard of
review 
as 
the 
trial 
court 
applied. 
Specifically, 
we 
must 
determine 
whether 
the
movant has made a prima facie showing that
no genuine issue of material fact exists
and that the movant is entitled to a
judgment as a matter of law.  Rule 56(c),
Ala. R. Civ. P.; Blue Cross & Blue Shield
of Alabama v. Hodurski, 899 So. 2d 949,
952-53 (Ala. 2004).  In making such a
determination, we must review the evidence
in the light most favorable to the
nonmovant.  Wilson v. Brown, 496 So. 2d
756, 758 (Ala. 1986).  Once the movant
makes a prima facie showing that there is
no genuine issue of material fact, the
burden then shifts to the nonmovant to
produce 'substantial evidence' as to the
existence of a genuine issue of material
fact.  Bass v. SouthTrust Bank of Baldwin
County, 538 So. 2d 794, 797-98 (Ala. 1989);
Ala. Code 1975, § 12-21-12.  
'[S]ubstantial
evidence is evidence of such weight and
quality that fair-minded persons in the
exercise 
of 
impartial 
judgment 
can
reasonably infer the existence of the fact
sought to be proved.'  West v. Founders
Life Assur. Co. of Fla., 547 So. 2d 870,
871 (Ala. 1989)."'
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"Prince v. Poole, 935 So. 2d 431, 442 (Ala. 2006)
(quoting Dow v. Alabama Democratic Party, 897 So. 2d
1035, 1038-39 (Ala. 2004))."
Brown v. W.P. Media, Inc., 17 So. 3d 1167, 1169 (Ala. 2009).
Discussion
The City argues that we should reverse the trial court's
denial of its motion for a summary judgment and render a
summary judgment in its favor.  Specifically, it contends, as
it did in its summary-judgment motion, that Harbin has not
established that he had a contract with the City addressing
his retirement benefits.  First, the City points out that it
is undisputed that Harbin did not have a written contract with
the City.  It also contends that, at most, Harbin appears to
rely on the terms and conditions of the PFRF as it existed
when he was hired in 1972, which terms and conditions were
created and governed by the legislature.  The City notes that,
despite this Court's decision in Cary, Harbin has asserted
that changes the legislature made to the PFRF in 1975 and 1980
do not apply to him because he served as a police officer for
at least 20 years before retiring.  However, it asserts, based
on this Court's decision in Cary, that the legislature had the
authority to make the changes it made to the PFRF in 1975;
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that, as part of those changes, the legislature eliminated the
provisions Harbin relies on; and that Harbin continued to
participate in the plan and was bound by the changes. 
Therefore, the City concludes, it was not a party to a
contract with Harbin, and the trial court should have entered
a summary judgment in its favor.  
In his brief to this Court, Harbin admits that he asked
the trial court to hold that a contract existed between him
and the City "without specifying the precise terms of the
contract."  In response to the City's 
summary-judgment 
motion,
Harbin did not establish precisely what contract he contended
the City had breached.  At most, throughout his pleadings in
the trial court, Harbin alleged that, because he paid into the
PFRF for 20 years from 1972 until 1992, he became fully
eligible for 20 years of retirement benefits as they existed
when he was hired by the City.  Harbin's argument is based on
the assumption that, because he worked for 20 years after he
was hired in 1972, he was entitled to the retirement benefits
the City offered when he was hired in 1972.  However, as the
City argued in response to Harbin's motion for a partial
summary judgment, that assumption is erroneous, based on this
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Court's decision in Cary.  The City argues that, because
Harbin had not worked for the City for 20 years at the time
the statute governing the PFRF was amended in 1975, his rights
had not vested, and the terms of the PFRF that applied to him
were subject to modification by the legislature.  
Nevertheless, even after the City presented its argument
as to Cary, Harbin continued to pursue his argument,
asserting:
"The City interprets the Cary case too narrowly
claiming that the 20 years must be served before the
1975 legislation.  Instead, Cary holds that rights
vest after the designated time of service.  Vesting
of rights implies a binding contract.  Therefore,
Harbin was eligible for a 20 year pension."
As set forth above, the holding in Cary was clear.  Because
Harbin had not retired and was not eligible to retire before
the effective date of the 1975 amendment, his rights under the
PFRF had not vested and were therefore subject to modification
by the 1975 amendment.  Nothing in Cary supports Harbin's
arguments to the contrary.  
Even during the evidentiary hearing, as set forth in more
detail 
above, 
Harbin 
never 
articulated, 
even 
when 
specifically
asked by the trial court, exactly what contract he contends
the City breached.  At various times, he appeared to rely on
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1120537
oral representations made by the chief of police when he was
hired, on the written provisions in the various employee
handbooks for City employees, and on the 
statutes 
establishing
and modifying the PFRF. 
"In order to establish a breach-of-contract
claim, a plaintiff must show '(1) the existence of
a valid contract binding the parties in the action,
(2) his own performance under the contract, (3) the
defendant's 
nonperformance, 
and 
(4) 
damages.' 
Southern Med. Health Sys., Inc. v. Vaughn, 669 So.
2d 98, 99 (Ala. 1995) (citations omitted)."
Ex parte Alfa Mut. Ins. Co., 799 So. 2d 957, 962 (Ala. 2001). 
"'"If the burden of proof at trial is
on the nonmovant, the movant may satisfy
the Rule 56[, Ala. R. Civ. P.,] burden of
production 
either 
by 
submitting 
affirmative
evidence that negates an essential element
in the nonmovant's claim or, assuming
discovery 
has 
been 
completed, 
by
demonstrating to the trial court that the
nonmovant's evidence is insufficient to
establish an essential element of the
nonmovant's claim."'
"[Ex parte General Motors Corp., 769 So. 2d 903, 909
(Ala. 1999)] (quoting Justice Houston's special
concurrence in Berner v. Caldwell, 543 So. 2d 686,
691 (Ala. 1989), overruling Berner and adopting
Justice Houston's special concurrence in Berner as
the accurate statement of the law) (emphasis
omitted)." 
Locke v. City of Mobile, 851 So. 2d 446, 448 (Ala. 2002).  In
its motion for a summary judgment, the City demonstrated that
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Harbin had not presented sufficient evidence to establish an
essential element of his claim -- i.e., that a contract
actually existed between him and the City.  Therefore, the
burden shifted to Harbin to present substantial evidence to
establish that there was a genuine issue of material fact as
to the existence of a contract between him and the City. 
Because he did not present substantial evidence to establish
such a genuine issue, Harbin did not satisfy his burden. 
Therefore, the City was entitled to a summary judgment.   
2
In his brief to this Court, Harbin again states that,
2
because he worked and paid into the PFRF from 1972 until 1992,
he was "fully eligible for 20 years of retirement benefits in
1992." However, he also states that his breach-of-contract
claim is not related to the statutes that created the pension. 
Instead, he states:  "The essence of Harbin's complaint is
that if an employer provides a pension, an implied condition
of the pension is that it be a properly funded pension." 
However, as the City has argued, although the legislature
established a pension through the PFRF, Harbin has not
established that the City had a contract with him to provide
him a pension.  Also, any argument regarding the underfunding
of the pension might be relevant to establish a breach of a
contract, but it would not be relevant to establish the
existence of a contract.  
17
1120537
Conclusion
For the above-stated reasons, we reverse the trial
court's judgment denying the City's motion for a summary
judgment and remand this case for proceedings consistent with
this opinion.
REVERSED AND REMANDED.
Stuart, Bolin, Parker, and Main, JJ., concur.
Moore, C.J., recuses himself.
18