Breach of Contract Cases

Elena Rosnov vs. John H. Molloy. Essex. May 5, 2011. -August 31, 2011. Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, & Duffly, JJ. Labor, Wages, Damages. Statute, Retroactive application. This court concluded that St. 2008, c. 80, § 5 (c. 80), an amendment to the enforcement section of the Massachusetts Wage Act, G. L. c. 149, § 150, which provides for a mandatory award of treble damages to a prevailing employee, should be read to apply only prospectively to claims arising on or after the amendment’s effective date, where c. 80, which alters the extent of a party’s liability, pertained to substantive rights [476-480] and therefore could be applied retroactively where there was sufficient evidence of a clear legislative intent to do so, which did not exist in this case [480-483], Civil action commenced in the Superior Court Department on April 17, 2007. The case was tried on a bifurcated basis by Leila R. Kern, J., the liability portion of the claim tried to a jury, and a motion for treble damages heard by her. The Supreme Judicial Court granted an application for direct appellate review. Richard L. Alfred (Barry J. Miller with him) for the defendant. Jeffrey R. Mazer (.Elena Rosnov with him) for the plaintiff. The following submitted briefs for amici curiae: Shannon Liss-Riordan & Hillary Schwab for Massachusetts Employment Lawyers Association & others. William J. Okerman, pro se. John Pagliaro & Martin J. Newhouse for New England Legal Foundation & another. Botsford, J. The issue we address in this case is whether a 2008 amendment to the enforcement section of the Massachusetts Wage Act, G. L. c. 149, § 150 (§ 150), providing for a mandatory award of treble damages to a prevailing employee, should be applied in an action brought by an employee against her employer for violation of the Wage Act before the amendment’s effective date. We conclude that the amendment should be read to apply only prospectively, to claims arising on or after the amendment’s effective date of July 12, 2008. Because the Superior Court judge applied the amendment retrospectively to this case, we remand to the Superior Court for further proceedings consistent with this opinion. 1. Background'. The plaintiff, Elena Rosnov, worked as an attorney in the law office of the defendant, John H. Molloy, from early February, 2006, until her resignation on June 26, 2006. As a term of her employment, Rosnov was to be provided a referral fee of forty per cent of any contingency fee that Mol-loy or his office received in connection with the settlement or damage award in any case that Rosnov referred to Molloy. In March of 2007, a case that Rosnov had referred to Molloy the preceding year reached a partial settlement of $2.5 million. Ultimately, Molloy received attorney’s fees in connection with the partial settlement in the amount of $432,500. On April 17, 2007, Rosnov filed a complaint in the Superior Court against Molloy, claiming his failure to pay her a referral fee connected to the case was a breach of contract and violated the Wage Act, G. L. c. 149, §§ 148, 150 (Wage Act). She sought to recover a portion of the attorney’s fees Molloy had received. By agreement of the parties, the trial was bifurcated, and the liability portion of Rosnov’s contract claim was tried to a jury without reference to damages; the parties agreed that if there was liability on the contract claim, the amount of contract damages was $173,000, or forty per cent of $432,500. In March, 2009, a jury found that an oral contract for the division of fees existed between Rosnov and Molloy, and that Molloy had breached the contract by not providing Rosnov a referral fee. Thereafter, the trial judge considered, without a jury, whether Rosnov’s referral fee constituted a “commission” under the Wage Act, and if so, whether Rosnov was entitled to treble damages under § 150. The judge found that Rosnov was an employee under the Wage Act and that the fee qualified as a commission. The judge further concluded the version of § 150 amended after this case was filed applied, “because violators of the Wage Act have always been subject to treble damages. . . . This is not a case where the amendment to the statute substantially changes parties’ rights and expectations.” The judge thus concluded that Rosnov was entitled to a mandatory award of treble damages, or $519,000, plus interest. Molloy appealed, and we granted his application for direct appellate review. 2. Discussion. As earlier indicated, the only question we address is which version of § 150 should be applied in this case: § 150, as amended through St. 2008, c. 80, § 5 (chapter 80), effective July 12, 2008; or § 150, as amended through St. 2005, c. 99, § 2, the version of the statute in effect in 2007 when Rosnov filed her complaint. This is a question of statutory interpretation, and therefore one that we review de novo. See, e.g., Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478, 481 (2006). See Commonwealth v. Cintolo, 415 Mass. 358, 359 (1993) (“Statutory interpretation is a pure question of law”). a. Statutory retroactivity. The presumption that statutes operate prospectively is well established. Fleet Nat’l Bank v. Commissioner of Revenue, 448 Mass. 441, 448-449 (2007) (“To the extent that there may be uncertainty about the application of new legislation, it must be resolved against retroactivity”). See 2 NJ. Singer & J.D. Shambie, Statutes and Statutory Construction § 41.4, at 400-401 (7th ed. 2009) (“Retrospective operation is not favored by courts, and a law is not construed as retroactive unless the act clearly, by express language or necessary implication, indicates that the legislature intended a retroactive application”). As this court has explained, however, statutes may operate retroactively in certain circumstances: “In the absence of an express legislative directive, this court has usually applied ‘[t]he general rule of interpretation . . . that all statutes are prospective in their operation, unless an intention that they shall be retrospective appears by necessary implication from their words, context or objects when considered in the light of the subject matter, the pre-existing state of the law and the effect upon existent rights, remedies and obligations. Doubtless all legislation commonly looks to the future, not to the past, and has no retroactive effect unless such effect manifestly is required by unequivocal terms. It is only statutes regulating practice, procedure and evidence, in short, those relating to remedies and not affecting substantive rights, that commonly are treated as operating retroactively, and as applying to pending actions or causes of action.’ ” Fontaine v. Ebtec Corp., 415 Mass. 309, 318 (1993), quoting City Council of Waltham v. Vinciullo, 364 Mass. 624, 626 (1974). See Gray v. Commissioner of Revenue, 422 Mass. 666, 670 (1996). Rosnov argues that the presumption of prospective application does not apply to chapter 80 for two reasons: because the statute relates only to remedies and not to substantive rights; and because the legislative history of this amendment evinces an intent on the part of the Legislature that the amendment be applied retroactively. Conversely, Molloy contends that chapter 80 pertains to substantive rights because it alters the extent of a party’s liability; and that in any event there is insufficient evidence of a clear legislative intent that chapter 80 be retroactively applied. For the reasons that follow, we agree with Molloy. b. Substantive right. Before chapter 80 was passed, the relevant portion of § 150, as amended through St. 2005, c. 99, § 2, read as follows: “Any employee claiming to be aggrieved by a violation of [the Wage Act or certain other statutes] may, at the expiration of ninety days after the filing of a complaint with the attorney general . . . institute and prosecute in his own name and on his own behalf, or for himself and for others similarly situated, a civil action for injunctive relief and any damages incurred, including treble damages for any loss of wages and other benefits. An employee so aggrieved and who prevails in such an action shall be entitled to an award of the costs of the litigation and reasonable attorney fees” (emphasis supplied). In Wiedmann v. Bradford Group, 444 Mass. 698 (2005) (Wiedmann), this court concluded that “there is nothing in the plain language” of § 150 requiring an automatic award of treble damages, where “[t]he text of the statute states only that a plaintiff ‘may’ institute a suit for damages that includes a request for treble damages. Id. at 709. We held that an award of treble damages under § 150 lies in the judge’s discretion, citing with approval the conclusion in Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 178-179 (2000) (Goodrow), that “treble damages are punitive in nature, allowed only where authorized by statute, and appropriate where conduct is ‘outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.’ ” Wiedmann, supra at 710, quoting Goodrow, supra at 178. The Wiedmann case was decided on July 21, 2005. Effective July 12, 2008, three years later, the provision of § 150 concerning treble damages was amended as follows: “An employee so aggrieved who prevails in such an action shall be awarded treble damages, as liquidated damages, for any lost wages and other benefits and shall also be awarded the costs of the litigation and reasonable attorneys’ fees” (emphasis supplied). Chapter 80 effected a critical change in the language of the statute, removing the provision that treble damages “may” be awarded, and replacing it with the directive that treble damages “shall be awarded.” See Wiedmann, supra at 710, and cases cited (“may” is permissive; “shall” imposes mandatory obligation). We recognize that “the distinction between legislation that concerns ‘substantive rights,’ and legislation that concerns ‘procedures’ and ‘remedies,’ has proved to be difficult to draw.” Fontaine v. Ebtec Corp., 415 Mass. at 319. In Fontaine, the court concluded that amendments to G. L. c. 151B, § 9, providing for recovery of punitive damages in a discrimination case and multiple damages in an age discrimination case, could not be retroactively applied. Id. at 317, 320-321. We explained, “legislation limiting or increasing the measure of liability, while arguably remedial in the broad sense of that word, generally is considered to impair the substantive rights of a party who will be adversely affected by the legislation. In the absence of a provision mandating retrospective application, we have not assumed that such legislation applies to claims arising prior to enactment.” Id. at 319-320, and cases cited. The damages allowed by the amended version of G. L. c. 151B, § 9, provided the potential for an increase in a defendant’s liability, that could, of course, ripen into an actual increase when those damages were imposed. See id. at 320. For that reason, in the absence of an “express directive” by the Legislature that the enhanced damage provisions of the amendments were “to apply to cases pending at the time of their enactment, or to conduct occurring prior thereto,” id., we concluded that the plaintiff there — whose age discrimination case was commenced before the amendments to c. 15IB, § 9 — could not recover increased damages. Id. at 319-321. Similarly, in this case, where only a potential for treble damages existed before, certainty of their imposition is now the rule. The 2008 amendment to § 150 increases a defendant’s measure of liability because the discretion of a judge not to award treble damages — where, for example, the judge did not find the defendant’s conduct to have been outrageous or recklessly indifferent, see Wiedmann, 444 Mass. at 710 — has been removed; treble damages must be awarded. This represents a marked increase in the liability a defendant faces, and thus affects the defendant’s substantive rights. See Landgraf v. USI Film Prods., 511 U.S. 244, 283-284 (1994) (“The extent of a party’s liability . . . is an important legal consequence that cannot be ignored .... [In no case] in which Congress ha[s] not clearly spoken, have we read a statute substantially increasing monetary liability of a private party to apply to conduct occurring before the statute’s enactment”). Cf. Cudlassi v. MacFarland, 304 Mass. 612, 613 (1939) (amendment to dog bite statute eliminating automatic double damages provision would not apply to plaintiff who was bitten by dog and brought suit before amendment took effect). Absent an express legislative directive to the contrary, therefore, the mandatory treble damages provision of § 150 should not be retroactively applied. Fontaine v. Ebtec Corp., 415 Mass. at 320-321. We turn to the question whether there is such a legislative directive. c. Legislative intent. By its terms, chapter 80 gives no indication the Legislature intended that the amended version of § 150 be applied retroactively. See Fleet Nat’l Bank v. Commissioner of Revenue, 448 Mass. 441, 450 (2007) (no “explicit pronouncement” from Legislature that statutory amendment extinguishing substantive right was to be applied retroactively; amendment held to operate prospectively only). Contrast Child Support Enforcement Div. of Alaska v. Brenckle, 424 Mass. 214, 219 (1997) (finding express intention of Legislature to apply Uniform Interstate Family Support Act retroactively in specific words of statute and given its procedural nature). Rosnov argues, however, that the legislative history of chapter 80 reveals an intent that its treble damage provision be retroactively applied, even if chapter 80’s plain text does not. The undertaking to amend the treble damage provision of § 150 began before the Wiedmann case was decided in July of 2005. See 2005 House Doc. No. 3775; 2005 Senate Doc. No. 928. Subsequent to the decision in Wiedmann, a new draft of these bills was filed, first as 2005 House Doc. No. 4343, and then as 2006 House Doc. No. 4663. The preamble of 2006 House Doc. No. 4663 stated that “the purpose of this Act is to clarify the language of the statute to reiterate the intent of the Legislature that such treble damages be mandatory.” The treble damages clause proposed in 2006 House Doc. No. 4663 read: “Any employee so aggrieved and who prevails in such an action shall be awarded treble damages, as liquidated damages, for any loss of wages and other benefits; and such employee shall also be awarded the costs of the litigation and reasonable attorneys’ fees.” House Doc. No. 4663 passed both the House of Representatives and the Senate, but then was vetoed by the Governor and was never enacted. 2006 House J. 2203. Rosnov nonetheless points to 2007 Senate Doc. No. 1059, which ultimately was enacted in 2008 as chapter 80. Senate Doc. No. 1059 was entitled “An Act to clarify the law protecting employee compensation,” and included a separate section (§ 8) that identified the purpose of the act as clarifying the existing law and “reiterat[ing] the original intention of the general court that triple damages are mandatory.” At some point — it may have been while the bill was in third reading — the title changed to “An Act further regulating employee compensation,” and that § 8 was removed. As a general rule, when language is removed from a bill before its final passage, we presume its deletion to have been intentional. See Green v. Wyman-Gordon, Co., 422 Mass. 551, 556 (1996). See also Moakley v. Eastwick, 423 Mass. 52, 59 (1996) (elimination from enacted art preservation statute of two provisions present in earlier House bill indicates “purposeful determination” to limit applicability of statute to art created after statute’s enactment). Rosnov argues this presumption does not apply here because (1) the deletion occurred while the bill was pending before the Committee on Bills in the Third Reading; (2) that committee’s authority is restricted to making changes in form but not substance; and (3) accordingly, the deletion of § 8 of the bill and change of its title “could be seen as an indication that the Legislature thought [the language] was obvious or duplicative,” and therefore unnecessary. We are unconvinced that Rosnov’s assumption about the Legislature’s thought process is correct; the best that can be said is that the Legislature’s intent on the retroactivity issue is murky. Certainly, chapter 80 does not reflect the “unequivocally clear” legislative intent required for this court to decide in favor of retrospective application. See, e.g., Sentry Fed. Sav. Bank v. Co-operative Cent. Bank, 406 Mass. 412, 414 (1990) (“Unless the legislative intent is unequivocally clear to the contrary, a statute operates prospectively, not retroactively”). Rosnov also focuses on the fact that chapter 80 originated in the Senate two years after this court’s decision in Wiedmann; she finds in this timing further support for her position that in enacting chapter 80, the Legislature was only clarifying and restating its original position in relation to mandatory treble damage awards, not changing it. We disagree. It is true that this court has interpreted “swift legislative action in the wake” of a contrary judicial ruling to evince legislative intent to clarify its position on the issue. Swift v. AutoZone, Inc., 441 Mass. 443, 449-450 (2004). See Fitz-Inn Auto Parks, Inc. v. Commissioner of Labor & Indus., 350 Mass. 39, 42 (1965) (where statutory “amendment was enacted soon after the present controversy arose . . . it is just as logical to regard it as a clarification of an ambiguity and a legislative interpretation of the original act”). But there is no basis to do so here. In Wied-mann, 444 Mass, at 709-710, we construed § 150 to vest discretion in judges regarding the award of treble damages. Chapter 80, altering this interpretation, was enacted almost three years after the Wiedmann decision with no emergency preamble. This cannot qualify as a “swift” response. Swift v. AutoZone, Inc., 441 Mass. 443, 449-450 (2004). Moreover, proposed changes to § 150 originated in the Legislature even before this court’s opinion in the Wiedmann case was issued. In the circumstances, we are left with no clear indication that chapter 80 was meant to explain § 150, rather than simply to amend it, which is the Legislature’s prerogative. The presumption of prospective operation of a statutory amendment is not overcome. 3. Conclusion. Because we conclude the 2008 amendment to G. L. c. 149, § 150, does not apply retroactively to the present case, we vacate the judgment as to damages against Molloy and remand the case to the Superior Court for consideration whether treble damages are appropriate under the standard set out in Wiedmann v. Bradford Group, 444 Mass, at 709-710. So ordered. We acknowledge the amicus briefs of the New England Legal Foundation and Associated Industries of Massachusetts; Massachusetts Employment Lawyers Association, Greater Boston Legal Services and affiliated organizations; and William J. Okerman. The facts recited here are taken primarily from the Superior Court judge’s memorandum of decision on the plaintiff’s motion for posttrial treble damages; the remaining facts recited appear to be undisputed. With respect to the Wage Act claim, Elena Rosnov first obtained a right to sue letter from the Attorney General, as required by G. L. c. 149, § 150 (§ 150). As we discuss in the text infra, effective July 12, 2008, the Legislature amended § 150 to include the mandatory imposition of treble damages for violations of § 150. G. L. c. 149, § 150, as amended through St. 2008, c. 80, § 5 (chapter 80). Beginning in 1993, § 150 had provided for treble damages, see St. 1993, c. 110, § 182, but the pertinent language of the statute was different. On appeal, Molloy does not contest the Superior Court judge’s conclusions either that Rosnov was an “employee” or that she was paid a “commissi

Pius Awuah & others vs. Coverall North America, Inc. Suffolk. May 3, 2011. -August 31, 2011. Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, & Duffly, JJ. Labor, Wages. Massachusetts Wage Act. Contract, Employment. Workers’ Compensation Act, Premium, Costs. Statute, Construction. Public Policy. Words, “Special contracts,” “Damages incurred,” “Franchise fees.” This court concluded that under the Massachusetts Wage Act (act), a franchisor may not lawfully use “customer accounts-receivable” financing to pay a franchisee who is characterized as an employee under the act; further, this court concluded that an employer could not lawfully withhold wages to an employee even if the employer and the employee have agreed that such wages are not earned until a customer remits payment. [490-493] This court concluded that under the Massachusetts Wage Act (act), the damages incurred for which a misclassified worker can seek recompense under the act include costs that an employer statutorily must bear, in particular, workers’ compensation insurance; further, this court concluded that an employee and his employer could not lawfully agree that the employee will pay some or all of the cost of workers’ compensation or other insurance procured to alleviate the liability of the employer. [493-497] This court concluded that fees such as “franchise fees,” i.e., fees that an employee agrees to pay an employer in order to enter into a direct employment relationship with the employer, constitute special contracts that, in substance, operate to require employees to buy their jobs from employers and, in that respect, violate public policy. [497-499] Certification of questions of law to the Supreme Judicial Court by the United States District Court for the District of Massachusetts. Shannon Liss-Riordan (Hillary Schwab with her) for the plaintiffs. Michael D. Vhay (.Norman M. Leon, of Illinois, & Matthew Iverson with him) for the defendant. The following submitted briefs for amici curiae: Catherine Ruckelshaus, of New York, & Audrey R. Richardson for Brazilian Immigrant Center & others. Eric H. Karp, Doris M. Fournier, Robert K. Sawyer, Jr., & Adam N. Lewis for International Franchise Association & others. Martha Coakley, Attorney General, & Karla E. Zarbo, Assistant Attorney General, for the Commonwealth. Denisse Pineda, Jai Prem, Richard Barrientos, Anthony Graffeo, Manuel DaSilva, Aldivar Brandao, Benecira Cavalcante, and Geraldo Correia. We note that some of the plaintiffs’ claims have been resolved in part or in whole. Botsford, J. A judge of the United States District Court for the District of Massachusetts mled in a case filed in that court that the defendant, Coverall North America, Inc., misclassified as independent contractors those plaintiffs who are Massachusetts residents. He has certified to this court questions related to calculation of damages for one such plaintiff, Anthony Graffeo. The certified questions relate to whether, under Massachusetts law, an employer may use a system of customer accounts receivable financing to pay its employee at the time the customer pays the employer for the employee’s work rather than when the work is performed; and whether, under the Massachusetts Wage Act, G. L. c. 149, §§ 148, 150 (Wage Act), an employer and an employee may agree that the employee will pay the cost of workers’ compensation and other work-related insurance coverage. We conclude that the accounts receivable financing system at issue improperly defers payment of the employee’s earned wages, and that an employer may not deduct the insurance costs from an employee’s earned wages. In response to the judge’s invitation to provide additional guidance, we also address the question whether Coverall may deduct “franchise fees” from such wages, and conclude that the Wage Act forbids the deductions. 1. Background. The plaintiffs are individuals who have entered into contracts, called “janitorial franchise agreements,” with Coverall for the provision of commercial janitorial services to third-party customers. See Awuah v. Coverall N. Am,., Inc., 707 F. Supp. 2d 80, 81 (D. Mass.) (Awuah I), S.C., 740 F. Supp. 2d 240, 241 (D. Mass. 2010) (Awuah II). They commenced this case in the Federal District Court for the District of Massachusetts in 2007 as a class action, alleging that Coverall misclassified the named plaintiffs and other similarly situated individuals as independent contractors. See Awuah I, supra at 81; Awuah II, supra at 241. On March 23, 2010, in Awuah I, the judge ruled that the Massachusetts “franchisees” of Coverall were misclassified as independent contractors under the Commonwealth’s misclassification statute, G. L. c. 149, § 148B, and accordingly were “employees.”- See Awuah I, supra at 84-85. After further proceedings not relevant here, the judge ruled on the remaining parties’ cross motions for summary judgment regarding damages suffered by one misclassified worker, the plaintiff Graffeo. Awuah II, supra at 241. In Awuah II, supra at 242-243, the judge addressed several types of costs and fees, the substance of which are described in more detail below. He concluded that Coverall properly could deduct from payments to Graffeo certain amounts related to “franchise fees,” royalty and management fees, and the cost of supplies and equipment, so long as Graffeo was paid at least the minimum wage. Id. at 243. However, the judge also concluded that Coverall was statutorily mandated as the employer to provide and pay for workers’ compensation insurance; to the extent Graffeo paid for insurance premiums that Coverall was required to pay, Graffeo was injured by his misclassification and could recover the premium costs as “damages incurred” under the enforcement section of the Wage Act, G. L. c. 149, § 150 (§ 150). Id. at 241-243. The judge further determined that Coverall’s “accounts-receivable financing” protocol violated another provision of the Wage Act, G. L. c. 149, § 148 (§ 148), requiring that employers pay employees within a week of the weekly or biweekly pay period during which wages were earned. Id. at 244-245. The judge ruled that, although Coverall eventually repaid to Graffeo the “chargebacks” it collected from him to offset customers’ unpaid bills under this protocol, Graffeo is owed interest on the chargebacks for the period of time they were outstanding. Id. at 243 n.2, 245. Finally, the judge concluded that the resolution of Graffeo’s claims presented issues of Massachusetts statutory law, and, accordingly, stated his intent to certify questions to this court pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981). Id. at 245. An order of certification followed. It poses four questions: “1. Under Massachusetts law, may a franchisor lawfully use customer accounts-receivable financing to pay a franchisee who is characterized as an employee under [G. L. c. 149, § 148B]? “2. Under Massachusetts law, do the ‘damages incurred’ for which a misclassified worker can seek recompense under [G. L. c. 149, § 150,] include costs that an employer statutorily must bear? “3. Under Massachusetts law, may an employer lawfully withhold wages to an employee if the employer and employee agree that such wages are not earned until a customer remits payment? “4. Under Massachusetts law, may an employee and his employer lawfully agree that the employee will pay some or all of the cost of workers’ compensation or other insurance coverage procured to alleviate the liability of the employer?” We summarize the facts of the case from the order of certification and the record before us. As previously stated, Coverall contracts in “franchise agreements” with individuals for the provision of commercial janitorial services to third-party customers. Awuah I, supra at 81. The contracts require the contracting employees to complete mandatory training programs and wear approved uniforms and identification badges. Id. at 82. Under the contracts, Coverall performs all billing and collection services, and remits payments to employees after deducting certain fees. Id. Graffeo, a Massachusetts resident, signed one such contract in 1995. He hired no employees, but instead provided cleaning services directly. The contract between Coverall and Graffeo provided that Graffeo would pay Coverall fees in several categories; five of them are at issue between the parties. First, to secure an initial package of customer accounts, the contract required Graffeo to pay Coverall an initial “franchise fee” of $3,250, of which $1,700 was payable in cash on execution of the contract; the balance, plus interest, was to be paid in instalments over the following twenty-four months. The agreement also gave Graffeo the option of securing additional customer accounts by paying additional business fees to Coverall. Second, the contract required Graffeo to pay monthly royalty and management fees equal to five per cent and ten per cent, respectively, for a total of fifteen per cent, of the amount Coverall billed customers assigned to Graffeo. Third, the contract made Graffeo responsible for all losses, damages, or personal injuries arising out of his janitorial services, and required him to maintain janitorial bonding, workers’ compensation insurance for himself and any employees, unemployment insurance as required by law, and comprehensive liability insurance. All insurance policies were to name Coverall as an additional insured. The contract gave Graffeo the option of purchasing general liability insurance and bonding through Coverall and paying Coverall for the premiums and certain surcharges. He accepted this option. In January, 2004, Graffeo also opted into Coverall’s “franchise owner job related accident program” (FOJ program), as Coverall required him to do unless he could demonstrate he had on-the-job accident insurance or workers’ compensation insurance. Fourth, the contract required Graffeo to provide replacement supplies and equipment. Although he purchased supplies primarily from third parties, on at least one occasion, Graffeo purchased supplies from Coverall and Coverall deducted the cost from the amounts it paid him. Fifth and finally, the contract provided for “accounts receivable financing” whereby Coverall would pay Graffeo “interest-free advances” for amounts billed to, but not yet collected from, customers. If customers failed to pay-Coverall within ninety days of the date the payment was due, the contract required Graffeo to “repay” Coverall the “advance.” These “charge-backs” are the final contested category of payments Graffeo made to Coverall. 2. Discussion. The Wage Act requires “prompt and full payment of wages due.” Camara v. Attorney Gen., 458 Mass. 756, 759 (2011) (Camara). Section 148 of the Wage Act provides in pertinent part: “Every person having employees in his service shall pay weekly or bi-weekly each such employee the wages earned by him to within six days of the termination of the pay period during which the wages were earned if employed for five or six days in a calendar week .... No person shall by a special contract with an employee or by any other means exempt himself from this section or from [§ 150] other than the attachment of such wages by trustee process or a valid assignment thereof or a valid set-off against the same, or the absence of the employee from his regular place of labor at the time of payment, or an actual tender to such employee at the time of payment of the wages so earned by him, shall be valid.” G. L. c. 149, § 148. Section 150 allows an employee claiming to be aggrieved by a violation of § 148 to prosecute “a civil action for injunctive relief, for any damages incurred, and for any lost wages and other benefits” (emphasis added). G. L. c. 149, § 150. An employee who prevails in such an action shall be awarded costs and reasonable attorney’s fees, and may be awarded treble damages. Id., as amended through St. 2005, c. 99, § 2. With limited exceptions, employers may not withhold pay from their employees, a point expressed in § 150 by limiting an employer’s defenses: “On the trial no defence for failure to pay as required, G. L. c. 149, § 150. a. Questions One and Three. Questions One and Three are closely related, and we answer them together. The judge’s first question asks: “Under Massachusetts law, may a franchisor lawfully use customer accounts-receivable financing[] to pay a franchisee who is characterized as an employee under [G. L. c. 149, § 148B]?” The third question asks: “Under Massachusetts law, may an employer lawfully withhold wages to an employee if the employer and employee agree that such wages are not earned until a customer remits payment?” To both questions, we answer, “No.” Coverall argues that no compensation is due to its workers until all “contingencies,” including customer payment, have been satisfied. It defends accounts receivable financing as a benefit to workers, in that advances on compensation not yet due allows them to access funds more quickly when customers are late (but not too late) in paying their bills. It argues also that conditioning compensation on customer payment allows customers to ensure adequate service via threatened withholding of payment; were Coverall to pay its workers regardless of the level of customer satisfaction, Coverall would need to supervise the workers more closely. The result, Coverall contends, would be detrimental both to workers’ freedom and to the amount they earned because of the greater intrusiveness and cost of supervision. Coverall’s arguments fail. The Wage Act requires an employer to pay “the wages earned” to an employee within a fixed period of days after the end of a pay period. G. L. c. 149, § 148. The word “earn” is not statutorily defined, but its plain and ordinary meaning is “[t]o acquire by labor, service, or performance,” or “[t]o do something that entitles one to a reward or result, whether it is received or not.” Black’s Law Dictionary 584 (9th ed. 2009). Where an employee has completed the labor, service, or performance required of him, therefore, according to common parlance and understanding he has “earned” his wage. That a Coverall customer may not have yet paid its bill within a week after the pay period does not affect Graffeo’s right to wages he has earned. Graffeo is an employee, and, therefore, the obligation to pay him earned wages rests with Coverall, not third parties. The accounts-receivable financing system incorporated into Graffeo’s contract, which classifies what are in reality wages for work performed as compensation “advances” that may be recouped, violates the “special contracts” provision of the Wage Act. See § 148 (“No person shall by a special contract with an employee or by any other means exempt himself from [§ 148 or § 150]”). At the same time, the method of recoupment under the contract, namely the “chargebacks,” constitute improper deductions for purposes of the Wage Act. See Camara, 458 Mass. at 760 (Attorney General reasonably interprets § 148 as “generally prohibiting an employer from deducting, or withholding payment of, any earned wages”). “Chargebacks” represent a means for Coverall to recapture wages already earned and paid. They are not a valid setoff; they correspond to no “clear and established debt owed to the employer by the employee.” Somers v. Converged Access, Inc., 454 Mass. 582, 593 (2009) (Somers). See Camara, supra at 763. If an employee’s work is inadequate, Coverall is free to implement sanctions, including termination; Coverall is not free to withhold — much less recapture — the employee’s earned wages. See id. at 763-764. b. Questions Two and Four. The second question asks whether, under Massachusetts law, “the ‘damages incurred’ for which a misclassified worker can seek recompense under [§ 150] include costs that an employer statutorily must bear?” The fourth question asks a related question: “Under Massachusetts law, may an employee and his employer lawfully agree that the employee will pay some or all of the cost of workers’ compensation or other insurance coverage procured to alleviate the liability of the employer?” To these questions we answer, respectively, “Yes” and “No.” i. Statutory mandates. The judge focused on workers’ compensation when discussing costs an employer is required by statute to pay. We do as well. The Workers’ Compensation Act, G. L. c. 152 (Workers’ Compensation Act), “ ‘was designed to replace tort actions,’ Alves’s Case, 451 Mass. 171, 111 n.9 (2008), by providing ‘a uniform, statutory remedy for injured workers, in contrast to a piecemeal, tort-based system.’ ” Saab v. Massachusetts CVS Pharmacy, LLC, 452 Mass. 564, 566-567 (2008), quoting Green v. Wyman-Gordon Co., 442 Mass. 551, 559-560 (1996). See G. L. c. 152, § 24 (covered employees, unless they expressly reserve rights, deemed to have waived rights to recover against employers in tort). Under the Workers’ Compensation Act, the obligation to secure workers’ compensation insurance, or to self-insure, is on the employer alone. See G. L. c. 152, § 25A (every employer “shall provide for the payment to his employees of [workers’] compensation” by obtaining insurance, membership in workers’ compensation self-insurance group, or license as self-insurer). See also G. L. c. 152, § 25C, as amended through St. 2010, c. 285, § 1 (assessments, including civil fines and criminal penalties, for employers who fail to provide for insurance or self-insurance as required by chapter). Coverall contends that, while it may be required to provide workers’ compensation insurance for its employees, nothing in the Workers’ Compensation Act prevents an employer and employee from agreeing that the employee is to be responsible for the insurance premiums. There is no merit to the claim. This court has long observed that workers’ compensation statutes, including the Commonwealth’s, represent an “exercise of the police power” that “impose on the designated classes of employers of labor the burden of compensation for injuries to employees arising out of and in the course of their employment, leaving the employer to reimburse himself for the expense as a part of the cost of his product.” Opinion of the Justices, 309 Mass. 562, 567-568 (1941), quoting Howes Bros. Co. v. Unemployment Compensation Comm’n, 296 Mass. 275, 284 (1936). Indeed, since its enactment in the early Twentieth Century, the purpose of the Workers’ Compensation Act has been “to treat the cost of personal injuries incidental to the employment as a part of the cost of the business.” Madden’s Case, 222 Mass. 487, 494-495 (1916). Reforms to the Act over time have never altered that fundamental premise. See L.Y. Nason, C.W. Koziol, & R.A. Wall, Workers’ Compensation § 2.8, at 35 (3d ed. 2003) (1991 reforms, still effective, “acknowledged the premise that workplace injuries were a factor in the costs of doing business”). Finally, employers’ responsibility for paying the cost of workers’ compensation insurance is made clear by the provision in the Act imposing criminal penalties on employers who try to evade workers’ compensation requirements by misclassifying employees. See G. L. c. 152, § 14 (3) (“any person or employer who knowingly misclassifies employees ... for the purpose of avoiding full payment of insurance premiums . . . shall be punished” [emphasis added]). In sum, to permit an employer to transfer to its employees the cost of workers’ compensation insurance premiums would be inconsistent with both the general intent and the specific language of the Workers’ Compensation Act. We therefore conclude that an employee such as Graffeo may recover, as “damages incurred,” any such insurance premiums that he was obliged to pay to Coverall under the terms of his contract. Coverall’s contrary argument notwithstanding, G. L. c. 154, § 8, does not change our view. That section states, in part: “None of the foregoing sections of this chapter [G. L. c. 154, regulatin

BRIAN W. MEEHAN, Plaintiff v. AMERICAN MEDIA INTERNATIONAL, LLC; DNA SECURITY, INC.; and RICHARD CLARK, Defendants No. COA10-1091 (Filed 2 August 2011) 1. Employer and Employee — breach of employment — conduct grounds for termination — reasons not pretextual — summary judgment proper The trial court did not err in a breach of employment contract case by granting defendants’ motion for summary judgment. There were no genuine issues of material fact as to whether plaintiff engaged in conduct that met the employment agreement’s grounds for termination and given the just cause for termination, defendant’s reasons for plaintiff’s discharge were not pretextual. 2. Employer and Employee — tortious interference with contract — no intentional inducement — summary judgment proper The trial court did not err in a tortious interference with contract case by granting defendants’ motion for summary judgment. Defendant DSI did not breach its contract with plaintiff because it had just cause for termination. Since there was no breach of contract, plaintiffs claim failed. Additionally, as just cause for termination existed, defendants Clark and AMI had legal justification for discharging plaintiff. 3. Employer and Employee — employment contracts — Wage and Hour Act — terms ambiguous — genuine issues of material fact — summary judgment improper The trial court erred in a North Carolina Wage and Hour Act claim by granting defendants’ motion for summary judgment. The language of the employment contract was ambiguous and genuine issues of material fact existed as to which iteration of the Consumer Price Index should be used. Appeal by Plaintiff from an Order entered 26 March 2010 by Judge J.B. Allen, Jr., in Alamance County Superior Court. Heard in the Court of Appeals 10 March 2011. Elliot Pishko Morgan, PA., by Robert M. Elliot, for Plaintiff-appellant. Ogletree, Deakins, Nash, Smoak & Stewart, P.C., by Robert A. Sar, Gretchen W. Ewalt, and Phillip J. Strach, for Defendantsappellee. HUNTER, JR., Robert N., Judge. Brian W. Meehan (“Plaintiff”) appeals from an Order granting Defendants’ Motion for Summary Judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. We affirm in part, and vacate and remand in part. I. Facts and Procedural History This case arises from a dispute between Plaintiff and his former employer, DNA Security, Inc. (“DSI”). In 2006, Plaintiff prepared a report analyzing DNA samples in connection with the Durham Police Department’s investigation of 46 Duke University lacrosse players on sexual assault allegations (the “Duke Lacrosse Case”). The report obscured findings that exculpated the charged players, and in the controversy that followed, DSI terminated Plaintiff’s employment. Plaintiff contends DSI did not have just cause for termination and filed the underlying action against DSI, American Media International, LLC (“AMI”), and Richard Clark (“Clark”) (collectively “Defendants”). Plaintiff, who has a Ph.D. in Marine Science, is a scientist specializing in DNA analysis and testing. In 1998, Plaintiff established and incorporated DSI as a company providing DNA forensic analysis in North Carolina and began marketing its services to sheriffs, police departments, and district attorneys. In order to be recognized by police and prosecutorial authorities as a qualified testing lab, DSI had to obtain the “gold standard” of accreditation from the American Society of Crime Laboratory Directors (“ASCLD/LAB”). To meet ASCLD/LAB accrediting standards, DSI had to prepare and submit its procedures and protocols to ASCLD/LAB to assure ASCLD/LAB that DSI test results and reports would meet required standards of accuracy and reliability. DSI obtained ASCLD/LAB certification in 2003. On 27 October 2004, Plaintiff, then the sole director, officer, and shareholder of DSI, and Clark, President of AMI, executed a stock purchase agreement under which AMI would purchase all the stock of DSI and Plaintiff would remain employed by DSI for seven years pursuant to a term sheet appended to the stock purchase agreement (“Employment Agreement”). The Employment Agreement contained four sections relevant to this appeal as follows: 5. Initial Salary: One Hundred Twenty Five Thousand Dollars ($125,000.00) per year payable in equal monthly installments. 6. Salary Adjustments: The salary shall be adjusted annually to, at least, reflect any percentage increase in the Consumer Price Index (all items) as calculated by the United States Bureau of Labor Statistics. There shall be no salary adjustment downward in any year in which the Consumer Price Index might decrease from the previous year. 7. Employment Position and Responsibilities: Employer shall engage and hire Employee for the position of Executive Director and Employee shall perform such duties as are customary by one holding such a position in a similar business or enterprise. 11. Termination of Employment: b. Employment shall terminate for just cause, including any violation of policies and procedures listed in the [DSI] employee handbook, or any terms of this agreement, or in the event the employee is convicted of a crime of moral turpitude or dishonesty. In any of these events of termination, [DSI] shall be obligated to pay Employee only such compensation as is due and payable through the date of termination. At the time of the agreement, DSI had an employee handbook, referenced in Section 11(b) of the Employment Agreement, which provided standards of conduct that Defendants assert support a contractual basis for Plaintiff’s termination. The relevant portion of this employee handbook reads as follows: 5.2 Rules of Conduct: . . . Although not all-inclusive, any of the following types of misconduct are considered unacceptable behavior and will result in disciplinary action up to and including immediate discharge. (17) Substandard performance on the job. The absence of any misconduct not listed above does not prevent its being considered a breach of our rules of conduct. If your appearance, performance, work habits, overall attitude, conduct, or demeanor become unsatisfactory in the judgment of the Company, based on violations either of the above or any other Company policies, rules or regulations, you may be subject to disciplinary action, up to and including dismissal. From the execution of the stock purchase agreement until the time of the events described hereinafter, the parties’ relationship appeared to be harmonious. In the spring of 2006, the Durham Police Department requested DSI to conduct DNA analysis in connection with the Duke Lacrosse Case. After Plaintiff agreed to conduct the testing, the State obtained a Court Order dated 5 April 2006 from Judge Ronald L. Stephens ordering: the oral, anal, vaginal and underwear swabs taken from the victim’s rape kit in this case, along with the 46 cheek swabbings taken from the group containing the suspects, be delivered to [DSI] ... for the purpose of Y STR DNA analysis, and if any male positive results are found among the victim’s swabs, to compare the DNA to the 46 cheek swabbings to determine if an identification can be made. Over the next two months, DSI staff, supervised by Plaintiff, completed the requested analysis. The test results supported two conclusions: (1) there was no match between any of the specimens provided by the lacrosse players and the alleged victim; and (2) the alleged victim had recent sexual contact with multiple men who were not among the specimens provided. Plaintiff, by affidavit, testified that in April 2006 he verbally conveyed both conclusions of the test results to District Attorney Mike Nifong (“Nifong”) and subsequently authored and signed a written report to Nifong dated 12 May 2006 providing the results of the analysis (the “12 May 2006 Report”). Plaintiff admits he is responsible for the creation of the 12 May 2006 Report and the report was his work product. While the 12 May 2006 Report can, in theory, be read to support the first conclusion of the analysis (that there was no match between any of the specimens provided by the accused and the accuser), the language used to convey both of Plaintiff’s conclusions is vague. Instead of explicitly stating both conclusions, Plaintiff used the following opaque language in the 12 May 2006 Report: “Results of DNA analysis: Individual DNA profiles for non-probative evidence specimens and suspect reference specimens are being retained at DSI pending notification of the client. Three of the reference specimens are consistent with DNA profiles obtained from some evidence items and the analysis of these specimens is below.” Specifically, Plaintiff’s use of the phrase “non-probative” in the 12 May 2006 Report obscured the actual test results. Although the test results exonerate the lacrosse players, subsequent to the State’s receipt of the 12 May 2006 Report, three of the 46 lacrosse players, Collin Finnerty, Reade Seligmann, and David Evans (collectively “the charged players”), were indicted by the State for first degree forcible rape, first degree sexual offense, and kidnapping. In response to discovery motions, the State provided the results of the lab tests to the attorneys representing the charged players in October 2006. On 14 December 2006, Nifong informed Plaintiff that the attorneys representing the charged players made a motion that Plaintiff be tendered as a witness at a hearing scheduled for 15 December 2006. As the author of the 12 May 2006 Report, Plaintiff was encouraged by Nifong and Clark, then President of DSI, to testify as to the report’s findings. Plaintiff was reluctant to testify at the hearing and cited that he would not be able to review the “volume of documents” needed for adequate trial preparation in time for his testimony. Through Plaintiffs testimony at the 15 December 2006 hearing, it became clear that the 12 May 2006 Report was flawed. The following exchange between Plaintiff and an attorney for one of the charged players illustrates the central flaw of the report: Q. Let me direct your attention to what is exhibit Attachment No. 15 of Defendants’ Exhibit No. 1. The bottom number is 3883. A. I’m there. Q. Does that appear to be the protocols for your lab— A. Yes. Q. —on how you run your lab? A. Yes. Q. Do you rely on those protocols routinely to maintain your accreditation with ASCLD/LAB? A. Yes. Q. I’d like to direct your attention to standards for reports. It says, No. 4, item reports shall include . . . A. I’m there. Q. Doesn’t it say, Results for each DNA test? A. Yes. Q. You didn’t include the results for each DNA test in your report dated May 12; is that correct? A. That’s correct. Q. So you violated this protocol of your own lab? A. That’s correct. Q. And you violated this protocol of your own lab because the district attorney told you to; is that correct? A. No. It’s not just because the district attorney told me to. And, you know, I don’t know a better way to say this. You know, we, we legitimately — and it may not hold any weight in your legal arena, but we were legitimately concerned about a report that could become explosive if it had overly detailed all those profiles from all those players in it, okay. Now, so we agreed with Mr. Nifong that we would report just the stuff that matched so that it would, so the report was limited in its scope. However, it’s not a — and by the letter of the law, by the letter of the wording of the standard, you’re absolutely correct. It diverges from the letter of that standard, okay. But we do indicate on the report that there is additional information. We would be glad to provide this information if you would like. But at this point on this report, it was limited. This, I don’t have another explanation for it. I don’t have a legal justification for it or a reason, okay. It was just trying to do the right thing. And that information is still available and it was available to you when we released the full documents. Q. Okay. Were [the prosecuting attorneys] aware that all the testing that you had done excluded Reade Seligmann with a hundred percent scientific certainty as of the date you wrote your report? A. I believe so. Q. Did you have a specific discussion with them about whether that information excluding Reade Seligmann should be included in the report? A. Not with that specific name, No. We never mentioned that specific name. Q. How about any defendant? A. We never, I actually don’t recall using any defendant’s names.... Q. Did your report set forth the results of all of the tests and examinations that you conducted in this case? A. No. It was limited to only some results. Q. Okay. And that was an intentional limitation arrived at between you and representatives of the State of North Carolina not to report on the results of all examinations and tests that you did in this case? A. Yes. Plaintiff’s 15 December 2006 testimony regarding the incomplete 12 May 2006 Report created substantial adverse reactions to DSI in the news media. The national television news program 60 Minutes produced a segment on the Duke Lacrosse Case. DSI asked Plaintiff to appear on 60 Minutes to answer questions from CBS correspondent Leslie Stahl. Plaintiff reluctantly agreed to do so. During the interview, Plaintiff made the following statements: [Leslie Stahl]: So . . . when you produced other reports if you have found information about other [suspects,] other people who aren’t suspects, you would leave it out of the report? Have you done this before? [Plaintiff]: No. I . . . wouldn’t leave it — we haven’t done that before, and I wouldn’t leave it out. [Leslie Stahl]: [D]id you just completely, totally, you, yourself, take it on yourself, all you, no influence from the District Attorney; and not put every single thing that a lot of other forensic specialists, who we’ve talked to, say should have been in that report? [Plaintiff]: It was an error by me. [Leslie Stahl]: Your error? [Plaintiff]: It was my error. [Leslie Stahl]: Not the District Attorney? [Plaintiff]: No, I’m the person that wrote that report, and — and the District [Attorney] at no time explicitly told me to include, to exclude in that report. On 10 January 2007, prior to the airing of the 60 Minutes interview on 11 February 2007, Plaintiff composed an amended laboratory report that corrected the errors in the 12 May 2006 Report. This 10 January 2007 report explicitly stated the DNA evidence provided by Nifong did not match any of the lacrosse players’ DNA. After reviewing these events, on 25 July 2007 ASCLD/LAB issued a report confirming the validity of allegations made against DSI concerning its 12 May 2006 Report; ASCLD/LAB asserted DSI inappropriately characterized certain DNA samples as non-probative. ASCLD/LAB also noted that DSI had taken actions to correct the 12 May 2006 Report. Following the broadcast of the 60 Minutes interview and other public comments about DSI, Plaintiff’s workload and DSI’s revenues declined. Defendants directly attribute this decline to Plaintiffs 12 May 2006 Report. Additionally, the charged players filed a civil action for damages against DSI and Plaintiff, which, according to the record, remains unresolved. Unbeknownst to Plaintiff, DSI began looking for a new lab director to replace Plaintiff in the spring of 2007. While DSI was securing a replacement lab director, Plaintiff continued to serve as lab director and to testify in various legal proceedings relating to the Duke Lacrosse Case. Plaintiff was scheduled to receive a “milestone” payment of $160,000 in January 2008, if he remained employed until that date, pursuant to the terms of the Employment Agreement. On 11 October 2007, Clark wrote a letter to Plaintiff terminating his employment for just cause pursuant to clause 11(b) of the Employment Agreement. The letter states, in part: While I know for certain that the allegations against you, the company and myself are completely false, your failure to adequately explain DSI’s role in this case to the public and to the lacrosse families during the multiple times you have testified has directly lead to the dire situation the company currently faces. Based on our conversations, I also know that you fully understand and acknowledge that your poor communications have put you, DSI and myself in this ridiculous situation. This letter will serve as notice that DSI is terminating your employment immediately. Standing alone, your misstatement that you committed an alleged “big error” in the handling of the Duke Lacrosse case, as you characterized it on national television during a 60 Minutes interview, constitutes just cause for ending your employment as Executive Director of the lab pursuant to the Employment Agreement the company entered into with you in October of 2004. As we have discussed many times and you have consistently told me, there in fact was no “big error.” Some months after sending the letter, Defendants sent Plaintiff a check in the amount of $6,554.24, which Defendants contend was the amount due to Plaintiff pursuant to the Employment Agreement, including any salary adjustment due to a rise in the Consumer Price Index (“CPI”). Plaintiff disputes that this is the correct amount owed to him, alleging DSI improperly calculated the amount due under the CPI salary adjustment contract provisions. Plaintiff contends he is due $10,627 for CPI adjustments dating from January 2006. Plaintiff filed claims for relief against Defendants on 11 August 2008 in Alamance County Superior Court. The Complaint alleges five claims for relief: breach of an employment contract against AMI and DSI, breach of the covenant of good faith and fair dealing against AMI and DSI, violation of the North Carolina Wage and Hour Act against AMI and DSI, tortious interference with contract against AMI and Clark, and conspiracy to engage in wrongful conduct against all of the defendants. Defendants’ Answer denied the allegations and asserted 24 affirmative defenses. After thorough discovery, Defendants filed a Motion for Summary Judgment on 12 October 2009 and Plaintiff filed a Motion for Partial Summary Judgment on 9 March 2010 based upon his claim for violation of the North Carolina Wage and Hour Act. Both Motions were supported by extensive affidavits and depositions and were heard before Judge J.B. Allen on 15 March 2010. The trial court denied Plaintiff’s Motion and granted Defendants’ Motion for Summary Judgment, dismissing all of Plaintiff’s claims with prejudice. Plaintiff timely appealed the Order. II. Jurisdiction and Standard of Review This Court has jurisdiction to hear the matter pursuant to N.C. Gen. Stat. § 7A-27(b) (2009). We review the trial court’s Order granting summary judgment de novo. Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007). The standard of review for a summary judgment motion is whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Oliver v. Roberts, 49 N.C. App. 311, 314, 271 S.E.2d 399, 401 (1980), cert. denied, 276 S.E.2d 283 (1981). “In ruling on the motion, the court must consider the evidence in the light most favorable to the nonmovant, who is entitled to the benefit of all favorable inferences which may reasonably be drawn from the facts proffered.” Averitt v. Rozier, 119 N.C. App. 216, 218, 458 S.E.2d 26, 28 (1995). Summary judgment may be properly shown by a party: “ ‘(1) proving that an essential element of the plaintiff’s case is non-existent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense.’ ” Kinesis Adver., Inc. v. Hill, 187 N.C. App. 1, 10, 652 S.E.2d 284, 292 (2007) (quoting Draughon v. Harnett Cty. Bd. of Educ., 158 N.C. App. 705, 708, 582 S.E.2d 343, 345 (2003), aff'd, 358 N.C. 137, 591 S.E.2d 520 (2004), reh’g denied, 358 N.C. 381, 597 S.E.2d

STEVEN EARL ELLIOTT, Plaintiff v. ENKA-CANDLER FIRE AND RESCUE DEPARTMENT, INC., Defendant No. COA10-1219 (Filed 5 July 2011) 1. Employer and Employee— employment agreement and extension — consideration by employee — giving up at will status There was consideration in an employment agreement and its extension where a fire chief who was already in the job gave up his employment at will status and his right to leave at any time before the dates specified in the agreements. 2. Public Officers and Employees— fire chief — employment agreements — public purpose — balanced budget A town’s employment agreements with its fire chief served a public purpose in that the town was able to retain its fire chief for a significant period of time without fear that another municipality would lure him away. The contract did not call for payment regardless of whether the chief performed his public service duties, but for salary and benefits to continue only if defendant terminated plaintiff without cause. Furthermore, despite the statutory requirement that local budgets be balanced, there is no authority for the proposition that a municipality can evade payment of severance pay or breach of contract damages by simply not budgeting for them. 3. Public Officers and Employees— employment contract— terminated fire chief — summary judgment Summary judgment was properly entered for plaintiff in an employment action against a town by a former fire chief where defendant did not show that the contract lacked consideration or violated public policy and defendant did not present any evidence that plaintiff was not performing his duties adequately under the agreements. 4. Civil Procedure— motion for relief or new trial — notice of summary judgment The trial court did not abuse its discretion by denying defendant’s motion for relief or for a new trial where plaintiff contended that it had not been provided with sufficient notice of defendant’s motion for summary judgment. Appeal by defendant from judgment entered 13 May 2010 and order entered 26 May 2010 by Judge James L. Baker, Jr. in Buncombe County Superior Court. Heard in the Court of Appeals 23 February 2011. The Bidwell Law Firm, by Paul Louis Bidwell and Jessica A. Waters, for plaintiff-appellee. The Sutton Firm, P.A., by April Burt Sutton, for defendant-appellant. GEER, Judge. Defendant Enka-Candler Fire and Rescue Department, Inc. appeals from the trial court’s grant of summary judgment to plaintiff Steven Earl Elliott, a former employee of defendant. Defendant had entered into a contract with plaintiff that provided for a specific term of employment and continued payment of salary and benefits if defendant terminated the contract prior to the end of the contract term. Defendant primarily argues on appeal that the contract between the parties is unenforceable as a matter of law because (1) there was no consideration flowing from plaintiff to defendant, and (2) the contract violated public policy. We disagree. Plaintiff, who had been employed at will by defendant, relinquished his at-will status when he agreed to work for defendant for a definite term. In making this promise, plaintiff gave up the right to terminate his employment at any time. This detriment to plaintiff constituted consideration for defendant’s promise. Additionally, because this contract secured plaintiff’s services as Fire Chief for a specified period at a specified rate, we conclude that the employment contract served a public purpose and did not otherwise violate public policy. Since the contract was enforceable and since defendant did not present any evidence that plaintiff breached the contract, the trial court properly granted summary judgment to plaintiff. We also find defendant’s remaining arguments unpersuasive and, therefore, affirm. Facts Plaintiff began working as Fire Chief for defendant in 1996 as an at-will employee. On 20 July 2004, the parties entered into an Employment Agreement. The Employment Agreement stated that “the parties desire to provide for a contract that runs from June 1, 2004 through October 31, 2008, for the retention of [plaintiff] as the Chief of [defendant] . . . .” Under the terms of the Employment Agreement, plaintiff would remain Fire Chief with his current salary and benefits. The Employment Agreement further provided that in the event defendant terminated plaintiffs employment, defendant would pay plaintiff the balance of his salary and provide all benefits through the end of the contract, as if plaintiff had remained a full-time employee. Approximately two years later, on 17 April 2006, the parties executed an Extension Agreement. The Extension Agreement extended the termination date of the Employment Agreement from 31 October 2008 to 31 October 2013. All the other terms of the Employment Agreement were to remain in full force and effect under the Extension Agreement. Defendant subsequently terminated plaintiffs employment as Fire Chief on 3 March 2008. On 15 April 2009, plaintiff filed suit against defendant alleging breach of contract based on defendant’s failure to comply with the provisions of the Employment Agreement for payment of salary and benefits following termination. On 17 June 2009, defendant filed an answer and asserted several affirmative defenses, including unclean hands, accord and satisfaction, failure of consideration, and violation of public policy. On 24 March 2010, defendant moved for summary judgment pursuant to Rule 56 of the Rules of Civil Procedure. Plaintiff later filed his own motion for summary judgment on 6 April 2010. The trial court heard the motions on 10 May 2010. In an order entered 13 May 2010, the trial court determined that there were no genuine issues of material fact as to plaintiff’s claims against defendant, defendant’s affirmative defenses, or the amount of damages to which plaintiff was entitled. The court concluded that plaintiff was entitled to summary judgment as a matter of law and entered an order (1) denying defendant’s motion for summary judgment, (2) granting plaintiff’s motion for summary judgment, and (3) awarding plaintiff $310,885.76 plus prejudgment interest and costs. On 14 May 2010, the day after summary judgment was entered, defendant filed, pursuant to Rules 59 and 60 of the Rules of Civil Procedure, a motion for relief from judgment or, in the alternative, to set aside the judgment and order a jury trial. The trial court entered an order denying defendant’s motion on 26 May 2010. Defendant timely appealed to this Court from both the summary judgment order and the order denying defendant’s motion for relief or a new trial. I Defendant first contends that the trial court erred in denying its motion and granting plaintiff’s motion for summary judgment because the Employment and Extension Agreements are unenforceable for lack of consideration. Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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.” N.C.R. Civ. P. 56(c). When appropriate, summary judgment may be rendered against the moving party. Id,. “It is well established that in an action for breach of contract, [a party’s] promise must be supported by consideration for it to be enforceable.” Labarre v. Duke Univ., 99 N.C. App. 563, 565, 393 S.E.2d 321, 323, disc. review denied, 327 N.C. 635, 399 S.E.2d 122 (1990). Consideration sufficient to support a contract consists of “ ‘any benefit, right, or interest bestowed upon the promisor, or any forbearance, detriment, or loss undertaken by the promisee.’ ” Lee v. Paragon Group Contractors, Inc., 78 N.C. App. 334, 337-38, 337 S.E.2d 132, 134 (1985) (quoting Brenner v. School House, Ltd., 302 N.C. 207, 215, 274 S.E.2d 206, 212 (1981)), disc. review denied, 316 N.C. 195, 345 S.E.2d 383 (1986). “Consideration is the ‘glue’ that binds parties together, and a mere promise, without more, is unenforceable.” Id. at 338, 337 S.E.2d at 134 (quoting In re Foreclosure of Owen, 62 N.C. App. 506, 509, 303 S.E.2d 351, 353 (1983)). In this case, defendant first argues that there was no consideration flowing from plaintiff to defendant. Defendant points to the fact that plaintiff was working for defendant when the Employment and Extension Agreements were executed and that the Agreements provided for no change in plaintiff’s duties, pay, or benefits. Defendant, however, overlooks the critical fact that by entering into the Employment Agreement, plaintiff 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.” Salt v. Applied Analytical, Inc., 104 N.C. App. 652, 655, 412 S.E.2d 97, 99 (1991) (emphasis added), cert. denied, 331 N.C. 119, 415 S.E.2d 200 (1992). See also Still v. Lance, 279 N.C. 254, 259, 182 S.E.2d 403, 406 (1971) (holding that where employee’s contract contained no provision concerning duration of employment or means by which it may be terminated, such contract was terminable at will of either party irrespective of quality of performance by other party); Gravitte v. Mitsubishi Semiconductor Am., Inc., 109 N.C. App. 466, 472, 428 S.E.2d 254, 258 (“[T]he general rule is that, absent an employment contract for a definite period of time, both employer and employee are generally free to terminate their association at any time and without reason.” (emphasis added)), disc. review denied, 334 N.C. 163, 432 S.E.2d 360 (1993). Here, the uncontradicted evidence shows that, by entering into the Employment and Extension Agreements, plaintiff promised to work for defendant through 2008 and then through 2013. In making this promise — which he was not required to make — plaintiff gave up his right to leave his employment with defendant at any time, for any or no reason, without notice to defendant. 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 plaintiff, in this case, to forego at-will employment constituted consideration. See Swenson v. Legacy Health Sys., 169 Or. App. 546, 552, 9 P.3d 145, 148 (2000) (“As a matter of law, the promise of an at-will employee to continue in an employer’s service for some specified future period of time constitutes consideration for an additional benefit promised by the employer.”). In reaching this decision, we find the case of Bennett v. Eastern Rebuilders, Inc., 52 N.C. App. 579, 279 S.E.2d 46 (1981), persuasive. In Bennett, the plaintiff was employed as a lead person on the defendant’s production line. Id. at 580, 279 S.E.2d at 48. Her position fell under a union contract giving her substantial job security. Id. The defendant persuaded the plaintiff to accept a promotion, which would result in the loss of her union protection and resulting job security, in exchange for the defendant’s promise that she would not be fired if she did not work out as a supervisor but would instead be demoted to her former position as a lead person. Id. Although Bennett is to some extent factually opposite from this case — in that the plaintiff in Bennett gave up job security (through her union membership), whereas here plaintiff gave up his right to leave his employment — the rationale of Bennett is applicable. The Court in Bennett noted as a general matter that “an agreement between an employee and her employer concerning the manner in which her job could be terminated constitutes an enforceable agreement.” Id. at 581, 279 S.E.2d at 48. As for the question of consideration, the Court observed that “[a]mple consideration for defendant’s bargained for agreement to demote plaintiff rather than fire her may be found in her agreement to give up her union position and the job security that went with it.” Id. at 582, 279 S.E.2d at 49. Thus, in Bennett, sufficient consideration was found when an employee gave up her union status and the rights that accompanied it. Here, plaintiff analogously gave up his at-will status and the rights arising from that status. Contrary to defendant’s argument that there was no consideration flowing from plaintiff, Bennett shows that plaintiff’s giving up his freedom to leave his position constituted ample consideration for the Employment and Extension Agreements. Defendant’s reliance on Franco v. Liposcience, Inc., 197 N.C. App. 59, 676 S.E.2d 500, aff’d per curiam, 363 N.C. 741, 686 S.E.2d 152 (2009), is misplaced. In Franco, the plaintiff was hired as an at-will employee. Id. at 63, 676 S.E.2d at 502. The plaintiff contended, however, that a letter from the defendant to the plaintiff formed a contract that precluded termination of his employment except for cause. Id., 676 S.E.2d at 502-03. This Court held that although the letter contained evidence of consideration flowing from the defendant to the plaintiff, the letter “did not increase or diminish [the plaintiff’s] pay, duties, rights, or anything else that could be deemed consideration flowing from [the plaintiff] to [the defendant].” Id., 676 S.E.2d at 503. The Court, therefore, affirmed the trial court’s grant of summary judgment to the defendant, noting that “mere continued employment by the employee is insufficient” to constitute consideration. Id. Defendant overlooks the key distinction between Franco and this case. The decision in Franco was based on the lack of any evidence that the plaintiff gave something or gave up something in return for the defendant’s promise; he just continued working. Here, by contrast, the uncontradicted evidence showed plaintiff did give up something — his right to leave at any time before the dates specified in the Employment and Extension Agreements. Thus, Franco is inapplicable. The trial court, in this case, properly concluded that the Employment and Extension Agreements were supported by consideration. II Defendant also contends that the Employment and Extension Agreements are unenforceable because they violate North Carolina public policy. In support of this argument, defendant first points to a portion of Article V, Section 2 of the North Carolina Constitution: (7) Contracts. The General Assembly may enact laws whereby the State, any county, city or town, and any other public corporation may contract with and appropriate money to any person, association, or corporation for the accomplishment of public purposes only. Defendant claims that the “nature of the subject employment agreements contemplates payment to the plaintiff, a private individual, regardless of whether his public service duties are performed. To find the subject employment agreements enforceable directly contradicts the constitutional limitation on contracts ‘for the accomplishment of public purposes only.’ ” (Quoting N.C. Const, art. V, § 2.) Our courts have established “[t]wo guiding principles ... for determining that a particular undertaking by a municipality is for a public purpose: (1) it involves a reasonable connection with the convenience and necessity of the particular municipality; and (2) the activity benefits the public generally, as opposed to special interests or persons[.]” Madison Cablevision, Inc. v. City of Morganton, 325 N.C. 634, 646, 386 S.E.2d 200, 207 (1989) (internal citation omitted). With respect to the first prong, we note that the general duties of a Fire Chief include preserving and caring for fire apparatus, having charge of fighting and extinguishing fires and training the fire department, seeking out and having corrected all places and conditions dangerous to the safety of the city and its citizens from fire, and making annual reports to the council concerning these duties. N.C. Gen. Stat. § 160A-292 (2009). In view of these responsibilities, we hold that the employment and retention of a qualified Fire Chief to execute these duties does involve a reasonable connection with the convenience and necessity of a municipality. We further hold, as to the second prong, that the employment of a Fire Chief benefits the public generally — not just the Fire Chief or special interests — because the Fire Chief is responsible for maintaining the “safety of the city and its citizens from fire.” Id. (emphasis added). By contracting to retain plaintiff for an extended period of time, defendant ensured that it would, for several years, have the service of a qualified Fire Chief without fear that the Fire Chief would leave defendant for a better opportunity. We, therefore, hold that the Employment and Extension Agreements in this case do serve a public purpose. Defendant further argues that the public purpose requirement is violated when a governmental body pays a private individual regardless whether he performs his public service duties. If, however, plaintiff had failed to perform his duties under the Agreements and defendant was entitled to discharge him for cause, then he would not have been paid. See Menzel v. Metrolina Anesthesia Assocs., 66 N.C. App. 53, 59, 310 S.E.2d 400, 403-04 (1984) (noting that where termination clause in parties’ contract provided that defendant would pay plaintiff two months’ severance pay if defendant terminated contract, plaintiff’s breach of contract would not trigger severance pay provisions of contract). The effect of the Agreements is that only if defendant terminates plaintiff without cause will defendant then have to pay plaintiff salary and benefits through the end of the contract, effectively severance pay. Again, we emphasize that defendant’s giving plaintiff job security and promising severance pay in the event that plaintiff was terminated without cause was in furtherance of a public benefit: defendant was able to retain a Fire Chief for a significant period of time without fear that another municipality would lure him away. Defendant next points to N.C. Gen. Stat. § 159-8(a) (2009), which provides: Each local government and public authority shall operate under an annual balanced budget ordinance adopted and administered in accordance with this Article. A budget ordinance is balanced when the sum of estimated net revenues and appropriated fund balances is equal to appropriations. ... It is the intent of this Article that... all moneys received and expended by a local government or public authority should be included in the budget ordinance. Therefore, notwithstanding any other provision of law, no local government or public authority may expend any moneys, regardless of their source . . . , except in accordance with a budget ordinance .... Defendant points to an affidavit of Donna Clark, the Buncombe County Finance Director, which defendant alleges shows that defendant “made no provisions in its budget for payment of salary and benefits to the plaintiff once he was no longer employed by the Defendant.” Defendant 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. Defendant further relies on Leete v. County of Warren, 341 N.C. 116, 462 S.E.2d 476 (1995), to support its argument that the Employment and Extension Agreements violate public policy. In Leete, a group of taxpayers filed an action to enjoin the Warren County Board of Commissioners from