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Judge rules for Graham city manager’s former town, Rural Hall: no $150K severance package allowed


A Forsyth County superior court judge has struck down a six-figure severance package that Graham’s city manager Megan Garner had obtained on the eve of her departure from her previous employer – the Winston-Salem suburb of Rural Hall.

Judge Richard L. Doughton effectively tossed this six-figure agreement on Wednesday when he issued a pre-trial judgment on behalf of the town, which took legal action against Garner on the same day in November of 2021 that she began her tenure as Graham’s city manager.

Doughton’s decision followed a court hearing on Monday when attorneys for both Garner and her former employer presented competing motions that they hoped would bring a swift end to their court battle.

During the hearing, Garner’s attorneys had asked the judge to dismiss the town’s lawsuit on the grounds that it had failed to state any actionable claim for relief. Meanwhile, Randy James, an attorney in Rural Hall’s employ, sought a judgment in the town’s favor based on various factors that he said have undermined the legitimacy of the former town manager’s severance package.

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In his subsequent ruling, Doughton accepted the town’s argument that Garner was never entitled to her six-figure golden parachute.

Graham city manager Megan Garner confers with mayor Jennifer Talley and councilman Bobby Chin at June 14 Graham city council meeting.

“The court finds that there is not a valid contract between [the] plaintiff and [the] defendant,” the judge asserts in this three-page decision. “The settlement agreement is void as a matter of law…[and the] defendant’s counterclaims for breach of contract, detrimental reliance, unjust enrichment, equitable estoppel, and quantum merit are dismissed with prejudice.”

The legal tug-of-war between Garner and Rural Hall ultimately harks back to a dramatic town council meeting on October 21, 2021 when three the council’s five members voted in favor of an undisclosed financial settlement with the outgoing manger. This vote, which followed a series of closed-door discussions, occurred on the same day that Garner formally tendered her resignation. In an added twist, the three council members who backed the agreement went on to submit their own resignations later that evening.

On the day after this tumultuous gathering in Rural Hall, Graham’s city council unanimously voted to appoint Garner as their own top-ranking administrator. Garner went on to embark on her new gig on November 15 amid a pall cast by the simultaneous submission of her former employer’s lawsuit. In his legal complaint on behalf of the town, James presented a whole host of reasons why, in his view, the financial settlement with Garner ought not to be honored.

The town’s attorney argued that, under an earlier employment agreement, the town was under no obligation to pay severance to its former manager if she resigned to take another position. James also insisted that Garner had failed to give her contractually-mandated 90-days notice to the entire town council and that her six-figure parting gift exceeded a cap that the council had previously imposed on payroll transactions. The town’s attorney also observes that the town council never passed a budget amendment to account for the outlay and that the agreement itself lacked a “pre-audit” stamp from the town’s finance officer to confirm that it, indeed, had the funds to cover the payment.

James went on to observe that, under North Carolina’s Public Records Law, the sum of a financial settlement like Garner’s must be publicly disclosed even if it’s initially approved in closed session. Subsequent court filings placed the amount of the settlement at $150,000 – more than the $111,514.62 a year that Garner had earned at the time of her departure.

Less than a month after James filed the town’s original suit, he submitted an updated legal complaint that included some bombshell allegations about Garner’s tenure in Rural Hall.

Among other things, the town’s attorney accused the former manager of engaging in a “personal dating relationship” with then fire-chief Andy Marshall – an entanglement that allegedly led to the dissolution of Marshall’s marriage and a violation of the town’s “non-fraternization” policy.

Garner addressed these allegations head-on in a subsequent court filing where she flatly denied any “such rumors, allegations, and innuendo regarding her personal life.” Garner went on to assert that she had left her post with the town due to a hostile work environment, and she characterized the $150,000 settlement as compensation for the abuse she endured.

Garner also took her adversaries in Rural Hall to task for the apparent shortcomings in her financial settlement. She contended, for instance, that hostile members of the town council had handicapped the agreement when they refused to pass the required budget amendment during her last meeting as manager. She added that, even without the amendment, the town’s finance officer could’ve affixed the required “pre-audit” stamp to the document, but didn’t.

In addition to her legal retorts, Garner also lodged a complaint with the U.S. Equal Employment Opportunity Commission shortly before the town filed its lawsuit against her.

Garner’s court filings note that this complaint outlined a pattern of harassment by certain municipal officials, including town councilmember Susan Gordon, who “repeatedly circulated rumors about her” before her departure.

In his ruling on Wednesday, Doughton gives wide berth to some of the more salacious claims that the litigants in this case have lobbed at each other. He focuses, instead, on the validity of the settlement agreement, which he ultimately finds wanting in several respects.

Doughton puts particular emphasis on the omitted budget amendment as well as the absence of a “pre-audit” stamp on the actual settlement. He goes on to conclude that the agreement “is void as a matter of law” for want of the “requisite pre-audit stamp from the finance director.”

In any event, the judge’s ruling in Rural Hall’s favor doesn’t appear to have any immediate financial impact on Garner – who, it seems, never received a dime of her settlement. In fact, James told The Alamance News that the aforementioned cap on the municipality’s payroll transactions has prevented the six-figure payment from ever reaching the former town manager’s pocket.

“She received no benefit whatsoever,” the town’s attorney went on to confirm in an interview Wednesday.

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