Fire Chief Had Binding Contract, Wins $310K

Steven Elliot began working for the Enka-Candler, North Carolina Fire and Rescue Department in 1996. On July20, 2004, Elliot signed an employment agreement that stated that “the parties desire to provide for a contract that ran from June 1, 2004 through October 31, 2008. The Employment Agreement also provided that in the event the Department terminated Elliot’s employment, it would pay Elliot the balance of his salary and provide all benefits through the end of the contract, as if Elliot had remained a full-time employee. Approximately two years later, Eliot signed an Extension Agreement, extending the termination date of the Employment Agreement to October 31, 2013.

When the Department terminated Elliot’s employment in March 2008, he sued, alleging the Department breached its contract with him. The Department argued that the contract was invalid as there “was no consideration flowing from Elliot to the Department.” The Department pointed to the fact that Elliot was already working for the Department when the Employment and Extension Agreements were executed, and thus that Elliot provided it with no additional benefit by entering into the agreements.

The North Carolina Court of Appeals found that the Department “overlooks the critical fact that by entering into the Employment Agreement, Elliot relinquished his status as an at-will employee. In North Carolina, in the absence of an employment contract for a definite period, both employer and employee are generally free to terminate their association at any time and without any reason. By entering into the Employment and Extension Agreements, Elliot promised to work for the Department through 2008 and then through 2013. In making this promise – which he was not required to make – Elliot gave up his right to leave his employment with the Department at any time, for any or no reason, without notice to the Department.

“Although when discussing at-will employment, courts more typically focus on the benefits to the employer, at-will status can be of significant value to an employee as well. For example, employees with especially desirable skills or excellent reputations may be highly sought after by other employers. An employer, by entering into a contract for a specific term with such an employee, ensures that no other employer will be able to lure that employee away for higher pay or better benefits. On the other hand, the employee, by entering into the contract, foregoes the opportunity to accept other more lucrative job offers. Thus, the promise by Elliot, in this case, to forego at-will employment constituted consideration.”

The Department also cited a North Carolina statute requiring governmental bodies to have balanced budgets, arguing that it had “made no provisions in its budget for payment of salary and benefits to the Elliot once he was no longer employed by the Department.” The Court brushed away the argument, however, finding that the Department “cites no authority, however, for the proposition that a municipality can evade payment of severance pay or breach of contract damages by simply not budgeting for them. Nor do we know of any such authority.”

The Court upheld a judgment in Elliot’s favor in the amount of $310,885.76 plus pre-judgment interest and costs.

Elliott v. Enka-Candler Fire and Rescue Dept., Inc., 2011 WL 2732244 (N.C. App. 2011).