Court Opinion

ID: 2726718
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:08:19.72614+00
Date Added: 2024-06-11T09:12:46.401963
License: Public Domain

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                           NO. COA13-654

                  NORTH CAROLINA COURT OF APPEALS

                       Filed: 2 September 2014

LULA SANDERS, CYNTHIA EURE,
ANGELINE MCINERNY, JOSEPH C.
MOBLEY, on behalf of themselves
and others similarly situated,

         Plaintiffs,

    v.                                  Wake County
                                        No. 05-CVS-004322
STATE PERSONNEL COMMISSION, a body
politic; OFFICE OF STATE
PERSONNEL, a body politic; LINDA
COLEMAN, State Personnel Director
(in her official capacity);
TEACHERS’ AND STATE EMPLOYEES’
RETIREMENT SYSTEM OF NORTH
CAROLINA, a body politic and
corporate; MICHAEL WILLIAMSON,
Director of the Retirement System
Division and Deputy Treasurer of
the State of North Carolina (in
his official capacity); JANET
COWELL, Treasurer of The State of
North Carolina and Chairman of The
Board of Trustees of the
Retirement System (in her official
capacity); TEMPORARY SOLUTIONS, a
subdivision of the Office of State
Personnel, and STATE OF NORTH
CAROLINA,

           Defendants.
                                      -2-
    Appeal by Plaintiffs from order entered 18 December 2012 by

Judge Kenneth C. Titus in Wake County Superior Court.                 Heard in

the Court of Appeals 12 December 2013.

    Kilpatrick Townsend & Stockton LLP, by Adam H. Charnes,
    James H. Kelly, Jr., Susan H. Boyles, Richard D. Dietz, and
    Gregg E. McDougal, and North Carolina Justice Center, by
    Jack Holtzman, for Plaintiffs.

    Attorney General Roy Cooper, by Special Deputy Attorney
    General Lars F. Nance and Special Deputy Attorney General
    Charles Gibson Whitehead, for Defendants.

    State Employees Association of North Carolina, by Thomas A.
    Harris, amicus curiae.

    DILLON, Judge.

    This case was commenced in 2005 and has been on appeal

before   this   Court     twice   previously.      See    Sanders    v.    State

Personnel Comm’n, 183 N.C. App. 15, 644 S.E.2d 10 (“Sanders I”),

disc. review denied, 361 N.C. 696, 652 S.E.2d 653 (2007); and

Sanders v. State Personnel Comm’n, 197 N.C. App. 314, 677 S.E.2d
182 (2009) (“Sanders II”), disc. review denied, 363 N.C. 806,

691 S.E.2d 19 (2010).

    In   the    present    appeal,    Plaintiffs   Lula    Sanders,       et   al.

(“Plaintiffs”) challenge the trial court’s order denying their

motion   for    partial     summary    judgment    and    granting     summary

judgment in favor of Defendants State Personnel Commission, et
                                           -3-
al. (“Defendants”).       Defendants, on the other hand, have filed a

cross-appeal,     challenging        the    trial     court’s    award     of   costs,

including    attorneys’       fees,    in     Plaintiffs’       favor.       For      the

following reasons, we affirm the trial court’s order denying

Plaintiffs’     motion   for    partial       summary     judgment   and     granting

Defendants’ motion for summary judgment, and we affirm in part

and dismiss in part          the issues raised in               Defendants’ cross-

appeal.

                  I. Factual & Procedural Background

       Pursuant to its authority under the State Personnel Act,

N.C. Gen. Stat. § 126-4 (2013), the State Personnel Commission

(the    “Commission”)     has       promulgated       regulations     establishing

various types of appointments through which an individual may

gain    employment    with    the     State      of   North    Carolina.        See    25

N.C.A.C. 1C.0400, et seq.              For example, some individuals are

hired as permanent employees with the State through a permanent

appointment, see 25 N.C.A.C. 1C.0402, and others are hired as

temporary    employees       through    a     temporary       appointment,      see    25

N.C.A.C. 1C.0405.

       There are two differences between temporary employees and

permanent employees which are relevant to this case.                            First,

while   under   the   regulations          the   period    of    employment      for    a
                                           -4-
permanent employee is indefinite, the regulations stipulate that

a person may not be employed as a temporary employee for a

period      “exceed[ing]      12     consecutive      months”       (hereinafter,     the

“Twelve-Month         Rule”).        25   N.C.A.C.        1C.0405(a).       The   second

difference      is    that    temporary     employees         are    not   eligible   to

receive certain benefits available to permanent employees, such

as leave time, state service credit, health benefits, retirement

credit, severance pay, or priority reemployment consideration.

25 N.C.A.C. 1C.0405(b).

       Each Plaintiff was employed by the State of North Carolina

as     a    temporary       employee      for    a        period    exceeding     twelve

consecutive      months,        in   violation       of    the     Twelve-Month   Rule.

Plaintiffs commenced this action, alleging that because they had

been       employed    as    temporary     employees         for    more   than   twelve

consecutive months – in violation of the Twelve-Month Rule –

they were entitled to the “rights, compensation, benefits, and

status” of permanent employees.                  Plaintiffs alleged claims for

(1) violations of the North Carolina Administrative Code; (2)

violations of the North Carolina Constitution; and (3) breach of

contract.       Based on these claims, Plaintiffs prayed for relief

in the form of monetary damages and costs, including attorneys’

fees, in addition to declaratory relief.                     Plaintiffs also sought
                                               -5-
class   certification         for    inclusion          of    all    similarly-situated

individuals, i.e., those who had been employed by the State as

temporary employees for more than twelve consecutive months.

    Defendants          responded         by    moving       to    dismiss       Plaintiffs’

claims for lack of personal jurisdiction pursuant to N.C. R.

Civ. P. 12(b)(2) on grounds of Defendants’ sovereign immunity,

and pursuant to N.C. R. Civ. P. 12(b)(6) for failure to state a

claim for which relief could be granted.                              In Sanders I, we

affirmed     the     trial       court’s         Rule        12(b)(2)        dismissal    of

Plaintiffs’       claim   based      on    violations         of    the    North   Carolina

Administrative Code. 183 N.C. App. at 24, 644 S.E.2d at 16.                     In

Sanders     II,    we     affirmed        the        trial   court’s       Rule     12(b)(6)

dismissal    of     Plaintiffs’          constitutional            claims;     however,   we

reversed the trial court’s dismissal of Plaintiffs’ breach of

contract    claim       and   remanded          the    matter       “for   a     declaratory

judgment, to declare plaintiffs’ status and rights pursuant to

the Uniform Declaratory Judgment Act.” 197 N.C. App. at 323,

677 S.E.2d at 189.            In analyzing Plaintiffs’ breach of contract

claim, we determined that the Twelve-Month Rule and the other

“relevant     regulations           of     the        [Commission]”        are     part   of

Plaintiffs’ employment contracts with Defendants, id. at 320-21,

677 S.E.2d at 187, noting as follows:
                                        -6-
            There is an agreement between the parties
            whose term is known and agreed. What is
            unknown is what are the legal relationships
            and status of the parties when the contract
            continues in effect after the expiration of
            the agreed upon terms.

Id.     Accordingly, we instructed the trial court on remand to

determine the legal relationship between the parties, including

the precise terms of Plaintiffs’ employment with Defendants as

of the “twelve month and one day mark and beyond.”               Id. at 323,

677 S.E.2d at 188.

      On remand from Sanders II, the parties engaged in extensive

discovery regarding Plaintiffs’ breach of contract claim, after

which Plaintiffs filed motions seeking partial summary judgment

on this claim; a declaratory judgment construing their rights

under the contract pursuant to N.C. Gen. Stat. § 1-253; and

class    action   certification.         Defendants   likewise     moved    for

summary judgment with respect to Plaintiffs’ breach of contract

claim.

      Following     a    hearing   on   these   matters,   the   trial   court

entered an order on 18 December 2012 granting relief to both

Plaintiffs    and       Defendants.      Specifically,     the   trial     court

declared that Plaintiffs’ status as temporary employees did not

convert to that of permanent employees after twelve months and

that they were entitled only to the wages for which they had
                                                  -7-
bargained and             already received           for the period                that    they had

worked     as    temporary         employees        beyond      the      permissible         twelve-

month period.             Accordingly, the trial court granted Defendants’

motion for summary judgment on Plaintiffs’ breach of contract

claim      and       denied       Plaintiffs’           motions        for    partial       summary

judgment and for class certification.

      The trial court, however, also granted Plaintiffs certain

relief;     namely,         the     court         enjoined      Defendants           from       future

violations           of   the   Twelve-Month            Rule;     it     directed         the    State

Personnel Director and the Office of State Personnel to present

to   the    trial         court    “a    comprehensive            plan       [hereinafter,         the

“Comprehensive            Plan”]        to    assure       full        compliance         with    the

mandates        of    North     Carolina          General    Statutes          126-3(b)(8)         and

(9)[;]” and it taxed Defendants “with the costs of this action,

including        attorney         fees       as    provided        by        law    [hereinafter,

“Attorneys’ Fees Award”].”

      In the present appeal, Plaintiffs seek review of the trial

court’s order granting Defendants’ motion for summary judgment

and denying their motions for partial summary judgment and for

class certification.                 In Defendants’ cross-appeal,                         Defendants

seek review of the trial court’s Attorneys’ Fees Award.

                                        II. Jurisdiction
                                          -8-
       The threshold issue presented is whether and to what extent

this    Court     has        jurisdiction       over        the     parties’      appeals.

“Generally,       an     interlocutory          order         is      not    immediately

appealable.”      Builders Mut. Ins. Co. v. Meeting Street Builders,

LLC, __ N.C. App. __, __, 736 S.E.2d 197, 199 (2012).                           An order

is interlocutory where it “does not dispose of the case, but

leaves it for further action by the trial court in order to

settle and determine the entire controversy.”                        Veazey v. City of

Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950).                                  A

party     may   immediately         appeal     from     an        interlocutory     order,

however, where the issue has been certified by the trial court

for immediate appellate review pursuant to N.C. R. Civ. P. 54(b)

or where the interlocutory order “deprives the appellant of a

substantial right which would be jeopardized absent a review

prior to a final determination on the merits.”                               Jeffreys v.

Raleigh Oaks Joint Venture, 115 N.C. App. 377, 379, 444 S.E.2d
252, 253 (1994) (internal citations omitted).

       In the present case, the trial court order resolves the

entire controversy except with respect to two matters.                              First,

although the trial court has entered the Attorneys’ Fees Award,

the    court    has    not    yet   determined        the    amount     of   the    Award.

Second,     further      action      is      required        with     respect      to   the
                                          -9-
Comprehensive Plan, which the trial court has ordered certain

Defendants to prepare and present to the court for review.

      Our Supreme Court has held that “[a]n order that completely

decides the merits of an action [] constitutes a final judgment

for purposes of appeal even when the trial court reserves for

later determination collateral issues such as attorney’s fees

and costs.”       Duncan v. Duncan, 366 N.C. 544, 546, 742 S.E.2d
799, 801 (2013) (emphasis added).                 Therefore, while our Supreme

Court considers the Attorneys’ Fees Award a “collateral issue,”

it   is   unclear    whether      the     presentation       and   review    of   the

Comprehensive       Plan   also     constitutes        a     “collateral     issue.”

Notwithstanding, the trial court has certified the issues raised

in    Plaintiffs’      appeal       for       immediate       appellate      review.

Accordingly, we have jurisdiction to address the issues raised

in Plaintiffs’ appeal.

      Regarding      Defendants’        cross-appeal,        Defendants     are   not

challenging    the    trial    court’s          injunction    prohibiting     future

violations of the Twelve-Month Rule or the directive to present

the Comprehensive Plan to the court.                   Accordingly, we do not

address the propriety of those portions of the order.                        Rather,

Defendants    only     challenge        the      “collateral       issue”   of    the

“Attorneys’ Fees Award.”          In that the trial court left open for
                                          -10-
future    determination         the     amount      Defendants     would       be    taxed,

Defendants’ appeal of this collateral issue is interlocutory.1

Since the trial court did not certify the Attorneys’ Fees Award

issue for immediate appellate review, Defendants may challenge

the Attorneys’ Fees Award in this appeal only to the extent that

the Award affects a substantial right.

      Defendants        make    a   number     of      arguments   in      their      brief

challenging       the    Attorneys’      Fees       Award;     however,    their       only

argument based on a substantial right is their contention that

the     award     is     “in     derogation       of     [Defendants’]         sovereign

immunity.”      See McClennahan v. N.C. Sch. of the Arts, 177 N.C.

App. 806, 808, 630 S.E.2d 197, 199 (2006) (holding that “appeals

raising issues of governmental or sovereign immunity affect a

substantial right sufficient to immediate appellate review”),

disc.    review      denied,     361 N.C. 220,    642 S.E.2d 443      (2007).

Accordingly, we review Defendants’ appeal of the Attorneys’ Fees

Award    only   to      the    extent   that     their    challenge       is     based   on

sovereign immunity; however, we dismiss Defendants’ appeal to

1
  Under Duncan, an unresolved collateral issue does not render a
judgment or order deciding the main issues interlocutory.
However, an appeal of the collateral issue of attorney fees,
itself, is interlocutory if the trial court has not set the
amount to be awarded.
                                       -11-
the extent that Defendants’ challenge is based on some other

defense or upon the merits.

                                  III. Analysis

       We address the issues raised in Plaintiffs’ appeal and the

issue raised in Defendants’ appeal, in turn, below.

                              A. Plaintiffs’ Appeal

       Plaintiffs essentially make two arguments on appeal:                   (1)

the trial court erred in granting Defendants’ motion for summary

judgment with respect to Plaintiffs’ breach of contract claim;

and (2) the trial court erred in denying Plaintiffs’ motion for

class certification.         For the following reasons, we affirm the

trial court’s rulings on these issues.

                             1. Summary Judgment

       In their complaint, Plaintiffs alleged that Defendants had

breached      their    employment    agreements     by   failing   to     provide

Plaintiffs, after twelve months of service, with the benefits

generally provided to permanent employees.                Plaintiffs contend

that    the    trial    court’s     order     granting   Defendants’      summary

judgment      motion    on   Plaintiffs’       breach    of    contract    claim

conflicts      with    our   holding   in     Sanders    II.     Specifically,

Plaintiffs argue that our prior holding in that case establishes

as a matter of law that Defendants are liable to Plaintiffs for
                                      -12-
breach of contract, based on Defendants’ admitted violation of

the Twelve-Month Rule, and all that remained was for a jury to

decide the issue of damages.

       Plaintiffs, however, misconstrue our holding in Sanders II.

We did not hold in that case that the failure to adhere to the

Twelve-Month Rule established Defendants’ liability for breach

of    contract   as    a    matter   of   law.    We   held     only    that   the

allegations in Plaintiffs’ complaint were sufficient to survive

Defendants’ Rule 12(b)(6) motion to dismiss.                   Sanders II, 197
N.C. App. at 321, 677 S.E.2d at 187 (stating that “[b]ecause

there is a breach of the rules under which the contract was

formed, [P]laintiffs’ complaint sufficiently alleged a breach of

contract claim and should have survived [D]efendants’ motion to

dismiss”).       The   issue of whether Defendants             were    liable for

breach of contract was not ripe for consideration at the time we

decided Sanders II, as the issue then presented dealt only with

the   sufficiency      of   the   allegations    set   forth    in    Plaintiffs’

complaint.

       In Sanders II, we instructed the trial court on remand to

determine “the legal relationships and status of the parties” -

including the terms of any agreements - “at the twelve month and
                                        -13-
one day mark and beyond.”              Id. at 323, 677 S.E.2d at 188.           We

stated as follows:

              [I]t is clear that [P]laintiffs accepted
              some sort of arrangement with [D]efendants
              by    accepting     continued     work     and
              compensation,     without      a     permanent
              appointment and without benefits.      Whether
              that   arrangement    was    discussed    with
              [P]laintiffs individually or collectively
              and what [P]laintiffs understood about their
              status are relevant inquiries requiring
              further factual development.

Id. at 323, 677 S.E.2d at 189.            On remand, the parties conducted

extensive discovery, after which the trial court conducted a

hearing and granted summary judgment in favor of Defendants on

Plaintiffs’ breach of contract claim.

      We believe that the trial court correctly concluded that

Defendants      did     not   breach    their     employment   contracts     with

Plaintiffs.      Plaintiffs failed to produce any evidence to create

a   genuine     issue    of   material     fact    with   respect    to   whether

Defendants had made any promises or inducements to Plaintiffs to

cause them to continue their employment beyond twelve months,

other than to continue paying their normal wages, which were, in

fact,   paid    as    agreed.     There    was    no   evidence     presented   to

suggest that Defendants had represented to Plaintiffs that their

employment status would convert to that of a permanent employee

after twelve months of service.                Furthermore, there is nothing
                                          -14-
in the Commission rules or the relevant law that contractually

obligated Defendants to treat Plaintiffs as permanent employees

after   twelve      months    of   service.           Indeed,    we    held     just    the

opposite in Sanders II, stating that if the trial court were to

determine      on      remand       that      Plaintiffs’             employment        had

automatically       converted      to    permanent      status,    the     trial    court

would    be      “enact[ing]        an     employment           scheme     in      direct

contravention of the state constitution and other sections of

the regulatory scheme.”            Id. at 322, 677 S.E.2d at 188; see also

Cauthen v. N.C. Dept. of Human Resources, 112 N.C. App. 238,

242, 435 S.E.2d 81, 84 (1993) (refusing to allow an employee

with a permanent appointment to achieve tenure by tacking onto

her current appointment period her previous periods of temporary

employment, stating that in doing so we would effectively be

creating “a quasi-tenure system in temporary employment which

neither the General Assembly nor the State Personnel Commission

intended”).

     Plaintiffs, however, argue that Defendants’ “breach” of the

Twelve-Month     Rule    is    sufficient        to    sustain     their      breach     of

contract claim, even if such breach entitles Plaintiffs only to

nominal damages.        We are unpersuaded.             As this Court recognized

in   Sanders     II,    administrative           regulations       pertinent       to    a
                                            -15-
particular     contractual       arrangement         between       the   State     and     its

employees may properly be incorporated into, and govern, a State

employment contract.            197 N.C. App. at 320-21, 677 S.E.2d at

187.     The State, certainly, has an obligation to the public to

conduct its affairs in accordance with its own regulations.                                 We

do     not   believe,       however,    that       every    instance        in     which     a

regulation     incorporated       into       a    State    employment       contract        is

ignored provides the employee with a breach of contract claim

against the State.

       Here,    Defendants       ignored           the    Twelve     Month        Rule     by

permitting     each        Plaintiff    to       remain     employed      after      twelve

months.      Likewise, each Plaintiff ignored the Twelve Month Rule

by     continuing     to     report    to     work       beyond    twelve        months    of

employment.      We do not condone Defendants’ conduct in neglecting

to comport with its own administrative regulations.                          However, we

do not believe the trial court erred in granting Defendants’

motion for summary judgment on Plaintiffs’ breach of contract

claim, where Defendants’ conduct involved allowing Plaintiffs to

continue working under their respective contracts when they were

no longer eligible to continue performing under them -- where

the     uncontradicted         evidence          showed     that     Plaintiffs           were

compensated     as    agreed     and    where       there    is     no   law      requiring
                                           -16-
Defendants to confer any other benefit or status upon Plaintiffs

after twelve months of service.

                              2. Class Certification

      Plaintiffs further contend that the trial court erred in

denying their motion for class certification.                     Our Supreme Court

has   held    that      “[t]he     trial    court        has   broad    discretion     in

determining whether a case should proceed as a class action.”

Faulkenbury v. Teachers’ and State Employees’ Ret. Sys. Of N.C.,

345 N.C. 683, 699, 483 S.E.2d 422, 432 (1997).                         Upon review, we

discern      no    abuse    of    discretion        –    given   the     circumstances

presented and procedural posture of this case – in the trial

court’s decision to deny class certification.

                                  B. Defendants’ Appeal

      Defendants appeal from the trial court’s Attorneys’ Fees

Award.            As   previously         stated,        since    this        appeal   is

interlocutory,         we   are   compelled       only    to   consider       Defendants’

contention that the Attorneys’ Fees Award is in derogation of

its sovereign immunity, which we have held affects a substantial

right.

      Plaintiffs        argue      that    the      Attorneys’         Fees    Award   is

appropriate because the State has waived sovereign immunity in

this context under N.C. Gen. Stat. § 6-19.1, a provision which
                                          -17-
authorizes the court to award attorneys’ fees to a prevailing

party “who is contesting State action pursuant to G.S. 150B-43

or any other appropriate provisions of law[.]”                     N.C. Gen. Stat.

§   6-19.1(a).          Alternatively,           Plaintiffs       argue     that     the

Attorneys’     Fees    Award      is    appropriate       under    the    Declaratory

Judgment     Act,     N.C.    Gen.      Stat.    §     1-263   (2013)     (permitting

recovery of attorneys’ fees where “such award of costs [is]

equitable      and    just”),        because      the    Award     is     based     upon

Plaintiffs’     breach       of   contract        claims,      which     has   already

survived Defendants’ sovereign immunity challenge.

     The trial court’s order does not specify a statutory basis

for the Attorneys’ Fees Award.                  Rather, the order merely taxes

Defendants “with the costs of this action, including attorney

fees as provided by law.”               Because the order directs only that

Defendants     bear    Plaintiffs’        attorneys’      fees    “as     provided   by

law,” and because the State has, in certain instances – e.g.,

under N.C. Gen. Stat. § 6-19.1 – waived sovereign immunity with

respect to claims for attorneys’ fees, we cannot at this point

conclude that the trial court committed reversible error based

on the State’s sovereign immunity defense.                        We, accordingly,

affirm   the    portion      of   the    trial       court’s   order     imposing    the

Attorneys’ Fees Award “as provided by law” based on the State’s
                                          -18-
contention concerning its defense of sovereign immunity, but we

do not reach the merits of the State’s remaining contentions on

this    issue,      as    they     are   not    predicated         upon,       and   do   not

implicate, a substantial right of the State.                            We note that our

holding in this respect should not be construed as precluding

the State from raising sovereign immunity as a defense should

the trial court enter a subsequent order awarding attorneys’

fees on a particular, articulated basis.

                                    IV. Conclusion

       For   the     foregoing      reasons,        we    affirm    the    trial     court’s

order    granting        Defendants’     motion          for    summary    judgment       and

denying Plaintiffs’ motions for partial summary judgment and for

class certification.

       With respect to the issues raised in Defendants’ cross-

appeal,      we    affirm    the    Award,     in    part,       based    on    Defendants’

sovereign         immunity   argument;         and       we    dismiss,    in    part,    the

Defendants’         arguments      concerning            the    Award     not    based     on

sovereign immunity.

       AFFIRMED IN PART; DISMISSED IN PART.

       Judge STROUD concurs.

       Judge HUNTER, JR. dissents in a separate opinion.
                              NO. COA13-654

                   NORTH CAROLINA COURT OF APPEALS

                       Filed: 2 September 2014

LULA SANDERS, CYNTHIA EURE,
ANGELINE MCINERNY, JOSEPH C.
MOBLEY, on behalf of themselves
and others similarly situated,

    Plaintiffs,

    v.                                Wake County
                                      No. 05-CVS-004322
STATE PERSONNEL COMMISSION, a body
politic; OFFICE OF STATE
PERSONNEL, a body politic; LINDA
COLEMAN, State Personnel Director
(in her official capacity);
TEACHERS’ AND STATE EMPLOYEES’
RETIREMENT SYSTEM OF NORTH
CAROLINA, a body politic and
corporate; MICHAEL WILLIAMSON,
Director of the Retirement System
Division and Deputy Treasurer of
the State of North Carolina (in
his official capacity); JANET
COWELL, Treasurer of The State of
North Carolina and Chairman of The
Board of Trustees of the
Retirement System (in her official
capacity); TEMPORARY SOLUTIONS, a
subdivision of the Office of State
Personnel, and STATE OF NORTH
CAROLINA,

    Defendants.

    HUNTER, JR., Robert N., Judge, dissenting.

    I    dissent   from      the   majority’s   opinion    concerning

Plaintiffs’   appeal   and   Defendants’   appeal.    In   my   view,
                                        -2-
Plaintiffs are entitled to partial summary judgment on the issue

of liability for breach of contract.                I would also hold that the

trial court abused its discretion in denying Plaintiffs’ motion

for class certification.          Finally, I would dismiss Defendants’

appeal     concerning         attorneys’            fees     as         interlocutory

notwithstanding     Defendants’        claim   of    sovereign         immunity.    My

views with respect to each appeal are addressed separately, in

turn.

A. Plaintiffs’ Appeal

      1. Summary Judgment on Plaintiffs’ Breach of Contract Claim

      Despite the existence of a temporary employment contract

between the parties, the incorporation of the Twelve-Month Rule

as a condition of that contract, and the admitted violation of

the Twelve-Month Rule by Defendants, the trial court below, and

the   majority    here,     conclude    that    no    breach      of    contract   has

occurred and that Defendants are entitled to summary judgment as

a matter of law.     I respectfully dissent.

      “[The]     standard    of   review       of    an    appeal       from   summary

judgment is de novo; such judgment is appropriate only when the

record shows that ‘there is no genuine issue as to any material

fact and that any party is entitled to a judgment as a matter of

law.’”   In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,
                                       -3-
576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 523–24, 649
S.E.2d 382, 385 (2007)).

       In Sanders II, this Court said that the Twelve-Month Rule

“has the effect of law and is incorporated into the employment

contract when employees are placed into a temporary assignment.”

Sanders II, 197 N.C. App. at 321, 677 S.E.2d at 187.                    Admissions

by     Defendants     and     discovery        conducted      below        establish

conclusively that Plaintiffs and thousands of additional state

employees were placed in temporary appointments for more than

twelve consecutive months with no change in employment status in

violation of the Twelve-Month Rule.                   By doing so, Defendants

breached an implied term of the temporary employment contract.

See id. at 320, 677 S.E.2d at 187 (stating that “[i]n a breach

of contract action, a complainant must show that there is (1)

existence of a valid contract, and (2) breach of the terms of

that    contract.”      (internal       quotation       marks     and      citation

omitted)).          Notwithstanding      the     evident      nature       of   this

conclusion, the majority concludes that no breach of contract

occurred and affirms summary judgment in favor of Defendants.

       Although not addressed by the majority, the trial court

concluded    that    there    could   have     been    no   breach    of   contract

because   “the   acts    of    any    hiring    official     in   violating     the
                                        -4-
[Twelve-Month Rule] . . . were clearly ultra vires and would not

bind the State.”         Thus, the trial court went so far as to

conclude     that   there    was   no    valid   contractual        relationship

between the parties after Plaintiffs had provided twelve months

of service, resting its analysis on a defense to the contract’s

validity.2     However, the trial court’s ultra vires argument must

fail.

      The    temporary   employment      contracts    were    not   ultra   vires

when they were entered into by the parties.                   Indeed, to hold

otherwise would be to deny Defendants the ability to initially

hire anyone for a temporary appointment with the State.                 Rather,

the     contract    became   ultra      vires,   if   at     all,   because   of

Defendants breach of the Twelve-Month Rule.                   In an analogous

context, we have stated that, as a general matter,

             a municipality cannot be made liable for
             breach of an express contract for services
             when the official making the contract has
             exceeded his or her authority by entering
             into such a contract. And the city will not
             ordinarily   be  estopped  to   assert  the
             invalidity of a contract made by an officer

2
  Notably, the record in this case is devoid of any contention
from Defendants that the actions of their hiring officials
constituted ultra vires activity. Defendants’ answer and motion
to dismiss, motion for summary judgment, hearing arguments, and
brief before this Court make no mention of the ultra vires
doctrine or its application to this case. Instead, the doctrine
first appears in the trial court’s order.
                                        -5-
            of limited authority when that authority has
            been exceeded.

            However, such a contract may become binding
            and enforceable upon the corporation through
            the doctrine of estoppel based upon the acts
            or conduct of officers of the corporation
            having authority to enter into the contract
            originally, as by receiving the benefits of
            the contract, or other grounds of equitable
            estoppel.     A municipality cannot escape
            liability on a contract within its power to
            make, on the ground that the officers
            executing   it  in   its  behalf   were  not
            technically authorized in that regard, where
            they were proper officers to enter into such
            contracts.

Pritchard   v.    Elizabeth     City,    81   N.C.    App.   543,    553–54,   344
S.E.2d 821,    827   (1986)    (internal    citations      omitted).       Thus,

there is a critical distinction between the complete absence of

authority   to    enter   into    a     contract     and   the    later   improper

exercise of existing contractual authority.                      Here, Defendants

had authority to enter into temporary employment contracts with

Plaintiffs, but misused that authority in violating the Twelve-

Month Rule.3      Consistent with Pritchard, I would hold that the

defense of ultra vires is unavailable to Defendants.

3
  In Sanders II, we stated that “if the court below finds
defendants automatically converted plaintiffs’ positions from
temporary to permanent on their own accord without appropriate
classification and budgetary approval, they would have enacted
an employment scheme in direct contravention of the state
constitution and other sections of the regulatory scheme.”
Sanders II, 197 N.C. App. at 322, 677 S.E.2d at 188. Thus, the
                                             -6-
       Even    so,    the         majority      concludes      that     even     if     the

contractual relationship between the parties is valid, there has

been no breach because Plaintiffs failed to produce any evidence

that     “Defendants        had    made     any     promises    or     inducements      to

Plaintiffs to cause them to continue their employment beyond

twelve    months,     other        than    to     continue     paying    their    normal

wages,” or “that Defendants had represented to Plaintiffs that

their employment status would convert to that of a permanent

employee after twelve months of service.”                       Ante, at ___.           The

majority also notes that “there is nothing in the Commission

rules     or   the     relevant           law     that     contractually       obligated

Defendants     to    treat        Plaintiffs       as    permanent    employees       after

twelve months of service.”                   Ante, at ___.           At this point, I

believe the majority mistakes the remedial question (i.e., the

valuation of Plaintiffs damages based on Plaintiffs’ expected

compensation)        with    the     underlying          liability    question    (i.e.,

whether a breach of the Twelve-Month Rule occurred).                             I agree

that, at least with respect to the named Plaintiffs, there was

never     an   expectation         of     permanent       employee     benefits       after

Plaintiffs continued in their temporary appointments beyond the

conclusion that Defendants misused their contractual authority
in violating the Twelve-Month Rule has already been reached by
this Court and this panel is bound by that decision. In re Civil
Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989).
                                   -7-
twelve   month   mark.   Indeed,   the   trial   court   found   as   fact,

unchallenged before this Court, that:

           There is no allegation that the benefits
           sought by Plaintiffs were bargained for, or
           granted,    when  Plaintiffs    began   their
           employment. In fact, prior to employment in
           their “temporary appointment” all of the
           Plaintiffs signed a statement acknowledging
           the provisions of 25 N.C.A.C. 1C.0405(b).
           Each of the Plaintiffs indicated in their
           depositions     a  desire    for    continued
           employment with the State beyond the twelve
           (12) month mark.     Further, there are no
           allegations of promises or inducements made
           to Plaintiffs to cause them to continue
           their employment other than the payment of
           wages;      and    no     allegations      of
           representations, conduct, or acts of their
           employers indicating the employment would
           become permanent.

However, I believe these facts speak to value of Plaintiffs’

expectation interest, not Defendants’ underlying liability for

breach of contract.      In my view, Plaintiffs are entitled to an

award of nominal damages in recognition of the technical injury

resulting from Defendants breach of the Twelve-Month Rule.4             See

Cole v. Sorie, 41 N.C. App. 485, 490, 255 S.E.2d 271, 274 (1979)

4
  The majority suggests that both parties are in breach of the
employment contract, stating, “[h]ere, Defendants ignored the
Twelve Month Rule by permitting each Plaintiff to remain
employed after twelve months. Likewise, each Plaintiff ignored
the Twelve Month Rule by continuing to report to work beyond
twelve months of employment.”    Ante, at ___.    However, the
Twelve-Month Rule is a constraint on the State, not the
employees.  I would therefore hold that only Defendants are in
breach.
                                          -8-
(standing for the proposition that, “in a suit for damages for

breach   of    contract,     proof   of     the    breach    would    entitle   the

plaintiff     to   nominal      damages    at    least.”    (internal    quotation

marks, citation, and brackets omitted)).                   Accordingly, I would

grant partial summary judgment on the issue of liability for

breach   of    contract    in    favor    of    Plaintiffs    and    remand   for   a

determination of damages.

    2. Plaintiffs’ Motion for Class Certification

    With respect to the issue of class certification, I also

dissent from the majority’s opinion because I would hold that

the trial court’s decision to deny Plaintiffs’ motion for class

certification is an abuse of discretion.

    Rule 23 of        the North Carolina Rules of Civil Procedure

states, in pertinent part, that “[i]f persons constituting a

class are so numerous as to make it impracticable to bring them

all before the court, such of them, one or more, as will fairly

insure the adequate representation of all may, on behalf of all,

sue or be sued.”       N.C. R. Civ. P. 23(a).              Our Supreme Court has

recently explained the law with respect to class certification

under Rule 23 as follows:

              First, parties seeking to employ the class
              action procedure pursuant to our Rule 23
              must establish the existence of a class. A
              class exists when each of the members has an
                      -9-
interest in either the same issue of law or
of fact, and that issue predominates over
issues   affecting   only   individual   class
members. The party seeking to bring a class
action    also    bears    the    burden    of
demonstrating    the   existence    of   other
prerequisites:

     (1) the named representatives must
     establish that they will fairly
     and    adequately    represent     the
     interests of all members of the
     class;   (2)   there    must   be   no
     conflict of interest between the
     named representatives and members
     of   the   class;   (3)    the   named
     representatives     must     have    a
     genuine personal interest, not a
     mere technical interest, in the
     outcome of the case; (4) class
     representatives       within      this
     jurisdiction      will      adequately
     represent    members    outside    the
     state; (5) class members are so
     numerous that it is impractical to
     bring them all before the court;
     and (6) adequate notice must be
     given to all members of the class.

When all the prerequisites are met, it is
left to the trial court’s discretion whether
a   class   action   is   superior   to other
available methods for the adjudication of
the controversy. . . . The touchstone for
appellate review of a Rule 23 order . . . is
to honor the broad discretion allowed the
trial court in all matters pertaining to
class certification. Accordingly, we review
the   trial   court’s   order   denying class
certification for abuse of discretion.    The
test for abuse of discretion is whether a
decision is manifestly unsupported by reason
or so arbitrary that it could not have been
the result of a reasoned decision.
                              -10-

Beroth Oil Co. v. N.C. Dep’t of Transp., ___ N.C. ___, ___, 757
S.E.2d 466, 470–71 (2014) (internal quotation marks, citations,

brackets, and footnote omitted) (second alteration in original).

    Here, Plaintiffs’ motion for class certification defined

the putative class as all persons

         who have been or currently are employed by
         the State of North Carolina who are subject
         to the twelve-month limitation set forth in
         25 N.C.A.C. 1C.0405(a); and been placed in
         temporary appointment for more than twelve
         consecutive   months   in  violation   of   25
         N.C.A.C. 1C.0405(a) during the period of
         April 1, 2002 through the present; and have
         not   received    benefits   including    paid
         holidays, vacation leave, sick leave, health
         benefits, and when applicable, retirement
         benefits   and   longevity   pay;    excluding
         employees who work less than 20 hours per
         week and all employees of the sixteen
         institutions of the University of North
         Carolina system.

The trial court’s order denying class certification concluded

with respect to Plaintiffs’ motion as follows:

         The claims of the Plaintiffs and the
         putative class members have an interest in
         the same issue of law and fact; that class
         counsel and the Plaintiff will adequately
         represent the interests of all class members
         with no conflict of interest; that they have
         a genuine interest in the outcome of the
         action;    and   that   class   members   are
         sufficiently numerous that joining them
         would   be   impractical.     However,  these
         factors do not outweigh the predominant
         issues affecting individual putative class
                                         -11-
              members which are not capable of application
              of a general mathematical calculation, but
              would require extensive individual inquiry
              concerning class members’ unique employment
              circumstances (i.e., discussions concerning
              employment status, requests or promises of
              benefits, higher pay in lieu of benefits,
              requests for permanent employment, etc.)[.]

(Emphasis added).         Thus, the trial court grounded its decision

to    deny   class   certification       on     the    predominance      requirement,

concluding in effect that no “class” exists under Rule 23.                          See

Beroth, ___ N.C. at ___, 757 S.E.2d at 470 (“A class exists when

each of the members has an interest in either the same issue of

law    or    of   fact,    and    that    issue       predominates     over    issues

affecting only individual class members.”).                       Accordingly, the

question      presented    to     this   Court        by   Plaintiffs’     appeal   is

whether the trial court abused its discretion in determining

that no class existed based on the predominance inquiry.                            See

id. at ___, 757 S.E.2d at 470 n.2 (“Therefore, we review the

trial court’s determination of whether plaintiffs established

the actual existence of a class for abuse of discretion.”).

       In    my   view,   the    trial   court        abused    its   discretion     in

denying class certification because it conflated the remedial

question      concerning        the   calculation          of   damages    with     the

underlying        issue   of      liability       for      breach     of    contract.

Specifically, the trial court’s determination that “extensive
                                             -12-
individual inquiry concerning class members’ unique employment

circumstances”          would    be       necessary,       including       “discussions

concerning employment status, requests or promises of benefits,

higher     pay    in     lieu        of   benefits,       requests       for    permanent

employment, etc.[,]” is a concern for the expectation value of

Plaintiffs’ damages—whether and what each putative class member

expected    to    receive       as    compensation        after    the   expiration     of

their    twelve-month       term.           This    is   wholly    separate      from   the

underlying question of contract liability, a question common to

all putative class members based on the narrowly defined class

articulated by Plaintiffs, the incorporation of the Twelve-Month

Rule    into     each    employee’s         contract,      and    the    admissions     by

Defendant that the Twelve-Month Rule was violated.

       In Beroth, our Supreme Court stated that differences in the

amount of damages owed to putative class members should not

preclude class certification as long as the damages inquiry is

not determinative of the underlying merits claim.                          Id. at ___,

757    S.E.2d     at    475.         This    generally      comports      with    federal

precedent interpreting Fed. R. Civ. P. 23.                           See generally 2

William B. Rubenstein, Newberg on Class Actions § 4:54, at 205–

10 (5th ed. 2012) (collecting cases and stating that “Courts in

every    circuit        have . . . uniformly             held     that    the    23(b)(3)
                                            -13-
predominance requirement is satisfied despite the need to make

individualized damage determinations.”).

       Here, the trial court acknowledged that “[t]he claims of

the Plaintiffs and the putative class members have an interest

in     the    same     issue   of     law    and    fact[,]”      yet     denied      class

certification because of the possibility of individual damage

calculations.          Given the aforementioned precedent on this issue,

I believe the trial court’s action to be an abuse of discretion.

I would certify the proposed class and grant partial summary

judgment to Plaintiffs on the issue of liability for breach of

contract.

B. Defendants’ Appeal

       With respect to Defendants’ appeal of the trial court’s

award    of     attorneys’     fees     to    Plaintiffs,         I    agree    with    the

majority that Defendants’ appeal is interlocutory because the

actual amount of attorneys’ fees owed by Defendants has yet to

be decided.           Triad Women’s Ctr., P.A. v. Rogers, 207 N.C. App.
353,     358,    699 S.E.2d 657,     660–61      (2010)       (“We,    therefore,

specifically hold that an appeal from an award of attorneys’

fees    may     not    be   brought    until       the   trial    court       has   finally

determined the amount to be awarded.                      For this Court to have

jurisdiction over an appeal brought prior to that point, the
                                              -14-
appellant         would   have       to     show     that    waiting       for     the     final

determination        on    the       attorneys’       fees    issue        would    affect    a

substantial right.”).                Furthermore, I also agree that sovereign

immunity is a substantial right for purposes of appellate review

under N.C. Gen. Stat. § 1-277(a) (2013).                                Kawai Am. Corp. v.

Univ. of North Carolina at Chapel Hill, 152 N.C. App. 163, 165,

567 S.E.2d 215, 217 (2002) (“This Court has repeatedly held that

appeals    raising        issues      of    governmental       or       sovereign    immunity

affect    a   substantial            right    sufficient           to    warrant    immediate

appellate     review.”          (quotation         marks     and    citation       omitted)).

However,      I     do    not    agree       that     Defendants         are     entitled    to

sovereign     immunity          in   this    case     and    would       therefore       dismiss

Defendants’ appeal in its entirety.                         Because the majority goes

beyond a pure jurisdictional analysis and specifically affirms a

portion of the trial court’s order concerning attorneys’ fees, I

respectfully dissent.5

5
  The majority opinion states that “we review Defendants’ appeal
of the Attorneys’ Fees Award only to the extent that their
challenge is based on sovereign immunity; however, we dismiss
Defendants’ appeal to the extent that Defendants’ challenge is
based on some other defense or upon the merits.” Ante, at ___.
While the majority opinion does not go so far as to decide
whether the trial court’s award was proper under either N.C.
Gen. Stat. § 6-19.1 or § 1-263, it does decide, and explicitly
affirms “the portion of the trial court’s order imposing the
Attorneys’ Fees Award ‘as provided by law’ based on the State’s
                                        -15-
       The trial court’s order states that “Defendants are taxed

with   the     costs   of   this     action,    including     attorney   fees    as

provided by law.”           (Emphasis added).          As the majority opinion

notes, the trial court’s order does not specify the statutory

authority for its action.              Nevertheless, the parties concede

that attorneys’ fees can only be awarded in this case, if at

all, pursuant to either N.C. Gen. Stat. § 6-19.1 or § 1-263.

Thus, Defendants enjoy the right of sovereign immunity in this

case only to the extent that such a claim can shield them from

paying   out    attorney     fees    under     these   two   statutes.    If    the

doctrine of sovereign immunity does not shield Defendants from

paying out attorney fees under the statutes, the trial court’s

order cannot “deprive” Defendants of a substantial right nor

“work injury” if Defendants are forced to attend another hearing

as to the amount owed.             See Goldston v. Am. Motors Corp., 326
N.C. 723, 726, 392 S.E.2d 735, 736 (1990) (stating that to meet

the substantial right test for appealing interlocutory orders,

“the right itself must be substantial and the deprivation of

that substantial right must potentially work injury . . . if not

corrected before appeal from final judgment.”).

contention concerning          its    defense     of    sovereign   immunity[.]”
Ante, at ___.
                                           -16-
     N.C.      Gen.   Stat.    §    6-19.1,       entitled    “Attorney’s     fees   to

parties     appealing     or        defending       against     agency    decision,”

provides that if certain prerequisites are met, “the court may,

in   its    discretion,        allow    the       prevailing    party    to   recover

reasonable attorney’s fees, . . . to be taxed as court costs

against the appropriate agency[.]”                  N.C. Gen. Stat. § 6-19.1(a)

(2013).        Thus, by its express terms, N.C. Gen. Stat. § 6-19.1

allows a party who prevails on an underlying merits claim to

recover attorneys’ fees from the State.                       This is an implicit

waiver of any claim that the State has sovereign immunity from

paying attorney fees awarded under the statute.                           See Battle

Ridge Cos. v. N.C. Dep’t of Transp., 161 N.C. App. 156, 157, 587
S.E.2d 426,   427   (2003)      (“It    is     an   established     principle    of

jurisprudence, resting on grounds of sound public policy, that a

state may not be sued in its own courts or elsewhere unless it

has consented by statute to be sued or has otherwise waived its

immunity       from   suit.”       (emphasis      added)).       Accordingly,        the

defense of sovereign immunity is not available to Defendants

under N.C. Gen. Stat. § 6-19.1 and this Court should therefore

foreclose any further inquiry under the statute.

     N.C. Gen. Stat. § 1-263, entitled “Costs,” provides that

“[i]n    any    proceeding     under    [the      Uniform     Declaratory     Judgment
                                        -17-
Act]   the   court     may    make   such    award    of     costs    as    may   seem

equitable and just.”          N.C. Gen. Stat. § 1-263.                As is evident

from the text, the statute does not expressly or impliedly waive

the sovereign immunity of the State, and this Court has held

that the Uniform Declaratory Judgment Act does not act as a

general waiver of the State’s sovereign immunity in declaratory

judgment actions.        Petroleum Traders Corp. v. State, 190 N.C.

App. 542, 546–47, 660 S.E.2d 662, 664 (2008).                   Nevertheless, it

is   well-established        that    the    State’s       sovereign    immunity    is

waived in “causes of action on contract,”                    Smith v. State, 289
N.C. 303, 320, 222 S.E.2d 412, 423–24 (1976), and this Court has

recently     interpreted      that    language       to    include     “declaratory

relief actions seeking to ascertain the rights and obligations

owed under an alleged contract.”               Atl. Coast Conference v. Univ.

of Maryland, ___ N.C. App. ___, ___, 751 S.E.2d 612, 621 (2013).

       Here, the Plaintiffs’ declaratory judgment motion sought a

declaration     from    the     trial      court   concerning         the   parties’

temporary employment contracts and the admitted violation of the

Twelve-Month Rule.           Plaintiffs’ motion, and the trial court’s

subsequent order, were responsive to this Court’s disposition in

Sanders II when we remanded Plaintiffs’ breach of contract claim

with instructions for the trial court to “assess the terms of
                                            -18-
[P]laintiffs’ contracts with [D]efendants at the twelve month

and    one   day       mark   and    beyond”    and       “to    declare      [P]laintiffs’

status    and    rights”       under    the    temporary         employment         contracts.

Sanders II, 197 N.C. App. at 323, 677 S.E.2d at 188–89.                                       Thus,

the declaratory relief at issue here concerns the “rights and

obligations owed under an alleged contract.”                             By consequence,

and    consistent         with       this   Court’s        opinion       in       Atl.        Coast

Conference,        Defendants         cannot    assert          sovereign         immunity      to

shield themselves from an obligation to pay costs under N.C.

Gen.    Stat.      §    1-263.       The    defense       of    sovereign         immunity      is

therefore       not     available      to     Defendants         under     either        of    the

statutes potentially implicated by Defendants’ appeal.

       Accordingly, because the defense of sovereign immunity is

not available to Defendants under N.C. Gen. Stat. § 6-19.1 or §

1-263, I would hold that Defendants have failed to meet the

substantial right test and that we lack jurisdiction to hear

Defendants’ appeal at this time.                   Although the majority does not

engage in a full merits analysis concerning whether the award

was    proper    under        N.C.   Gen.   Stat.     §    6-19.1     or      §    1-263,       the

majority errs in affirming a portion of the order.                                    I would

dismiss      Defendants’             cross-appeal          in      its        entirety          as

interlocutory.
-19-