The N.C. Supreme Court has ruled that Edgecombe County improperly threatened to withhold a special separation allowance from a recently retired sheriff’s deputy if he took a job as a part-time police officer at Raleigh-Durham International Airport.
The court held that the county’s action violated its contract with the retired deputy sheriff, according to the Contract Clause of the U.S. Constitution.
In 1984, the General Assembly created a special separation allowance to state law-enforcement officers with 30 years of creditable service who retire from police work between the ages of 55 and 62. Special separation allowance payments continue to age 62, when normal retirement benefits kick in. The legislature later extended eligibility to local law-enforcement officers, with local governments picking up the cost.
The plaintiff, Jerry Wiggs, worked for many years as an Edgecombe County deputy sheriff. He had put in sufficient time to qualify for the special separation allowance, and started receiving it when he retired April 1, 2004. The next month, he applied for a part-time police officer position with the Raleigh-Durham Airport Authority. The airport authority, which like Edgecombe County is part of the N.C. Local Government Employees’ Retirement System, advised him to contact his former employer to find out how taking the position might affect his special separation allowance payments.
Wiggs soon did so. A little over a month after he did, the Edgecombe County Commission adopted a resolution stating that special separation allowance payments would end under a number of circumstances, including if the retiree took a position in any capacity, including part-time, temporary, covered by the Local Government Employees’ Retirement System.
In October 2004, Wiggs sued Edgecombe County, alleging breach of contract and that the county violated his constitutional rights. Superior Court Judge Quentin T. Sumner ruled in Wiggs’ favor. The county appealed the ruling. Though two of the three judges of a Court of Appeals panel also sided with Wiggs, Judge Martha Geer’s dissent brought the case before the state’s highest court.
Edgecombe County’s primary argument before the Supreme Court was that it lacked the authority to enter into a contract with Wiggs that would continue payments if he were re-employed by a local government in the retirement system. The statutes covering eligibility for the special separation allowance — sections 143-166.41 and 143- 166.42 — don’t specifically say that. Rather, the county argued, their wording was ambiguous and the courts should interpret them in that manner.
The Supreme Court, however, did not agree.
“We determine that the language of section 143-166.42 is clear and unambiguous on its face,” Justice Edward Brady wrote for a unanimous Supreme Court.
“We will not engage in judicial construction merely to assume a legislative role and rectify what defendants argue is an absurd result.
“Nothing in the language of sections 143-166.41 or 143-166.42 indicate in any way that payments to an officer receiving the special separation allowance should cease upon re-employment with another Local Retirement System participant. Not only has the General Assembly authorized defendant to enter into such a contract, the General Assembly has mandated that a special separation allowance be paid by local governing authorities to qualified officers.”
The Supreme Court addressed the question of whether the county had the authority to cut off Wiggs’ benefits upon employment with the airport authority.
It had previously held that payments from the Teachers’ and State Employees’ Retirement Plan are part of a contractual relationship. It found the same sort of relationship involving the Local Government Employees’ Retirement System, and thus a contractual relationship existed between Edgecombe County and Wiggs.
The high court also found that the county’s resolution affected that contract in violation of the Contract Clause of the U.S. Constitution.
The court also examined whether the impairment “was reasonable and necessary to serve an important public purpose.” It held that it was not.
“Prohibiting ‘double-dipping,’ or allowing an employee to draw benefits while being compensated by another member of the System, is not a sufficient public purpose to justify this impairment of the contract,” Brady wrote.
“Merely because the governmental actor believes the money can be better spent or should now be conserved does not provide a sufficient interest to impair the obligation of contract.”
“In sum, we hold that the General Assembly authorized defendant to enter into a contract with plaintiff under which he would continue collecting a special separation allowance upon re-employment with another member of the Local Retirement System, and that the Contract Clause forbids retroactively modifying the terms and conditions of the special separation allowance agreement. Accordingly, we affirm the opinion of the Court of Appeals.”
The N.C. Court of Appeals held in a 2005 case that local governments can set eligibility requirements for the special separation allowance, including ending payments upon re-employment with a different agency covered by the Local Government Employees’ Retirement System, for officers not yet vested. That ruling was not at issue in Wiggs’ case, as he was vested.
The case is Wiggs v. Edgecombe County, (466A06).
Michael Lowrey is associate editor of Carolina Journal.