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State’s second-highest court rejects Graham city manager Megan Garner’s appeal

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She wanted $150K severance package voted by 3 Rural Hall town council members the night she, and they, resigned; state’s second highest court agrees with superior court judge that settlement agreement is null

The state’s second-highest court has rejected an appeal that Graham city manager filed against her former employer, the town of Rural Hall in northeast Forsyth County, which she had filed last fall, hoping to enforce a “settlement agreement” that had called for the town to pay her $150,000 in severance following her resignation as town manager in October 2021.

The town of Rural Hall filed suit against Megan Garner in November 2021, seeking to nullify the “settlement agreement” that was approved by three then-town councilmen who, along with Garner, resigned October 21, 2021 – the same night that they voted to award her a $150,000 severance.  The town countered in its suit that the terms of her 2017 employment contract provided severance only if she were fired.

Graham city manager Megan Garner

Instead, the town’s attorney contended in subsequent court filings, Garner had interviewed and accepted a similar position elsewhere: as Graham’s city manager.

A Forsyth County judge, Richard Doughton, ruled in the town’s favor in October 2022, granting the town’s motion for a judgment on the pleadings, because the settlement had failed to comply with state law, based on the factual background cited in the opinion that the Court of Appeals issued Tuesday.

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Upholding Doughton’s ruling, the Appeals Court concluded that the lack of a required preaudit certification rendered the “settlement agreement” null and void.

In  his opinion for the Court of Appeals, judge Jefferson Griffin pointed to a state law that governs budgetary accounting for local units of government which states, “No obligation may be incurred in a program, function, or activity accounted for in a fund included in the budget ordinance” unless the budget ordinance has been amended to authorize the expenditure.

“Where these requirements have not been met, there is no valid contact, and any claim based upon such contract must fail,” Griffin wrote for the Appeals Court, citing multiple earlier court precedents to support his conclusion.

Garner conceded in her appeal that “the settlement agreement was not stamped with a preaudit certification as required by statute,” Griffin noted.  Though she leaned on an earlier ruling – which dealt with a workers’ compensation settlement – that claim was not analogous to her own, the Appeals Court judge concluded.

“…The parties did not enter into a valid contract as the settlement agreement did not include a preaudit certificate…Defendant [Garner] can neither recover in contracts nor upon any other” basis, as allowing her to do so “would effectively negate” the local budget control act, Griffin wrote for the Appeals Court.  Chief judge Donna Stroud and judge John Arrowood concurred with the opinion.

The town of Rural Hall was represented for the appeal by attorneys Randolph (“Randy”) James and Kyle W. Martin.  Garner was represented by attorneys Valerie L. Bateman and June K. Allison.

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