Wrongful Termination Cases

JOSEPH MICHAEL GUARASCIO, Plaintiff v. NEW HANOVER HEALTH NETWORK, INC., d/b/a NEW HANOVER REGIONAL MEDICAL CENTER, NEW HANOVER REGIONAL MEDICAL CENTER and BILL CREECH, Defendants No. COA03-492 (Filed 2 March 2004) Employer and Employee— breach of contract — employment manual — failure to state a claim — unilateral contract theory The trial court did not err in a wrongful discharge case by dismissing plaintiff former employee’s breach of contract claim under N.C.G.S. § 1A-1, Rule 12(b)(6) for failure to state a claim upon which relief can be granted, because: (1) plaintiff did not have a contract for a definite period of employment and was therefore an at-will employee; (2) the complaint did not contain any allegations that the terms of defendant company’s code of conduct indicated that it was expressly included in and therefore became part of plaintiff’s employment contract, or that the employment manual was incorporated into the employment contract by virtue of a signature required at the time of hiring; and (3) the Court of Appeals has already concluded that a unilateral contract analysis will not be applied to the issue of wrongful discharge since it would in effect require the abandonment of the at-will doctrine which is the law in North Carolina. Appeal by plaintiff from order dated 12 November 2002 by Judge W. Allen Cobb, Jr. in New Hanover County Superior Court. Heard in the Court of Appeals 29 January 2004. Waller, Stroud, Stewart & Araneda, LLP, by W. Randall Stroud, for plaintiff-appellant. Hedrick & Morton, L.L.P., by B. Danforth Morton, for defendant-appellees. BRYANT, Judge. Joseph Michael Guarascio (plaintiff) appeals an order dated 12 November 2002 dismissing his breach of contract claim under N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiff filed a complaint dated 15 September 2001 against his former employer New Hanover Health Network, Inc. d/b/a New Hanover Regional Medical Center (NHRMC) and Bill Creech, NHRMC’s Chief of Special Police Services, (collectively defendants) for breach of contract, defamation per se, tortious interference with contract, and punitive damages. In an amended complaint filed 13 December 2001, plaintiff added New Hanover Regional Medical Center as an additional defendant. With respect to plaintiff’s breach of contract claim, the complaint alleged that plaintiff was employed from 6 July 1998 through 8 November 1999 as an officer for NHRMC’s Special Police Services. Having joined NHRMC with an exemplary record from the New York City Police Department, plaintiff “was promoted in rank from officer to sergeant faster than any other employee of the special police force.” Following plaintiffs promotion to sergeant, he discovered that a police supervisor was falsifying time and attendance records and that Chief Creech sanctioned this conduct. Plaintiff met with a NHRMC human resource representative on 27 August 1999 to discuss his discoveries regarding the police supervisor. Thereafter, the police supervisor and Chief Creech became aware of plaintiff’s probing into the attendance records. At the request of the police supervisor, plaintiff was subsequently investigated based on his participation in an automobile search. Plaintiff was suspended from duty following this investigation even though no other police officer, including the officer who actually conducted the search, was either suspended or reprimanded. Soon thereafter, plaintiff was asked by Chief Creech to prepare statements on: (1) the time and attendance records of the police supervisor and (2) allegations that plaintiff had disseminated information from a departmental survey. On 2 November 1999, plaintiff received his first and only employee disciplinary warning, which terminated his employment with NHRMC. When plaintiff was afforded an option on 8 November 1999 to sign a resignation letter instead, he did. The complaint further stated: 13. That, as part of plaintiffs employment with defendant hospital, plaintiff was given training in compliance with corporate procedures. At the training, plaintiff was given a written version of the NHRMC Code of Conduct which, among other things, establishes guidelines for the relationship between the defendant hospital and its employees. 19. That the NHRMC Code of Conduct says that NHRMC “will not tolerate the theft of property” nor “embezzlement of money.” 20. That the NHRMC Code of Conduct commands that “[a]ny employee who has knowledge of an actual or potential violation of the law, regulation, policy or procedure, and/or the NHRMC Code of Conduct should report the matter to a supervisor.” Alternative reporting means exist in the event the violation observed directly involves a supervisor. 21. That the NHRMC Code of Conduct further commands, in bold print, that “[a]n employee who . . . engages in, causes, or by inaction or inattention tolerates or condones any illegal or unethical conduct has automatically violated NHRMC’s Code of Conduct and will be subject to disciplinary action, up to and including discharge. Every employee of the medical center has an obligation to report illegal or unethical conduct by another employee.” 22. That in a letter to NHRMC employees printed on the first page of the NHRMC Code of Conduct, William K. Atkinson, President of the defendant corporation, wrote, “If you observe violations of this Code of Conduct, you have an obligation to report them. I can assure you that there will be no retaliation or retribution against anyone for reporting problems . . . .” Based on these factual allegations, plaintiff asserted a breach of contract claim based on retaliatory termination of his employment contract in violation of the NHRMC Code of Conduct, which plaintiff claimed to be part of his employment contract with NHRMC, and in violation of defendants’ duty of good faith and fair dealing. Defendants filed a motion to dismiss plaintiffs breach of contract claim under Rule 12(b)(6), which the trial court granted in an order dated 12 November 2002. Thereafter, plaintiff filed a voluntary dismissal without prejudice with respect to his remaining claims of defamation per se, tortious interference with contract, and punitive damages and appealed the dismissal of the breach of contract claim. The dispositive issue is whether the NHRMC Code of Conduct, an employment manual, was part of plaintiffs contract for employment with NHRMC. A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a complaint by determining “whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief can be granted under some legal theory.” Lynn v. Overlook Dev., 328 N.C. 689, 692, 403 S.E.2d 469, 471 (1991). A Rule 12(b)(6) motion to dismiss for failure to state a claim should not be granted “unless it appears to a certainty that [the] plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim.” Sutton v. Duke, 277 N.C. 94, 103, 176 S.E.2d 161, 166 (1970) (emphasis omitted). Employment Manual North Carolina courts have consistently held that in the absence of some form of contractual agreement between an employer and employee creating a definite period of employment, “the employment is presumed to be an ‘at-will’ employment, terminable at the will of either party, irrespective of the quality of the performance by the other party.” Harris v. Duke Power Co., 319 N.C. 627, 629, 356 S.E.2d 357, 359 (1987). Thus, an at-will “employee states no cause of action for breach of contract by alleging that he has been discharged without just cause.” Id. In addition, our courts have held that “ ‘unilaterally promulgated employment manuals or policies do not become part of the employment contract unless expressly included in it,’ ” Rucker v. First Union Nat. Bank, 98 N.C. App. 100, 102, 389 S.E.2d 622, 624 (1990) (quoting Rosby v. General Baptist State Convention, 91 N.C. App. 77, 81, 370 S.E.2d 605, 608 (1988)), or in the case of local governments, they are enacted as ordinances, Wuchte v. McNeil, 130 N.C. App. 738, 741, 505 S.E.2d 142, 144 (1998). The only North Carolina case that has upheld a breach of contract claim based on an employee manual is Trought v. Richardson, 78 N.C. App. 758, 338 S.E.2d 617 (1986). In Trought, this Court held that the plaintiff had properly stated a claim for breach of contract based on her allegation that the employer’s personnel policy manual was part of her employment contract where her complaint further alleged that: (1) she was required to sign a statement at the time of hiring indicating she had read the manual (2) providing she could be discharged “for cause” only and stating that certain procedures had to be followed in order for an employee to be discharged, and (3) she was discharged without cause and without the benefit of the personnel policy manual procedures. Id. at 762, 338 S.E.2d at 619-20 (reversing the trial court’s dismissal under Rule 12(b)(6) of' the plaintiff’s breach of contract action). Our Supreme Court has since limited the rule in Trought to its narrow facts. See Harris, 319 N.C. at 631, 356 S.E.2d at 360. In the case sub judice, plaintiff did not have a contract for a definite period of employment and was therefore an at-will employee. Furthermore, the complaint contains no allegations that the terms of the NHRMC Code of Conduct indicated it was “expressly included in” and therefore became part of plaintiffs employment contract, or that the employment manual was incorporated into the employment contract by virtue of a signature requirement at the time of hiring. Rucker, 98 N.C. App. at 102-03, 389 S.E.2d at 624-25 (distinguishing Trough!). Thus, as an employee at will, plaintiff’s breach of contract claim, based on the mere conclusory allegation, without supporting factual allegations, that the NHRMC Code of Conduct was part of plaintiffs employment contract, fails. See Miller v. Rose, 138 N.C. App. 582, 592, 532 S.E.2d 228, 235 (2000) (in ruling on a Rule 12(b)(6) motion to dismiss, “[l]egal conclusions . . . are not entitled to a presumption of truth”). Unilateral Contract Plaintiff contends in the alternative that the employment handbook created an independent unilateral contract between him and NHRMC. Plaintiff argues he is entitled to recover for defendants’ breach of that unilateral contract, for which he gave consideration by reporting the time and attendance record discrepancies. We disagree. North Carolina has recognized a unilateral contract theory with respect to certain benefits relating to employment. See White v. Hugh Chatham Mem’l Hosp. Inc., 97 N.C. App. 130, 387 S.E.2d 80 (1990) (where the court accepted legal theory of contractual entitlement to disability payments); Welsh v. Northern Telecom, Inc., 85 N.C. App. 281, 354 S.E.2d 746 (1987) (where the court acknowledged legal claim to vacation and retirement benefits); Brooks v. Carolina Tel., 56 N.C. App. 801, 290 S.E.2d 370 (1982) (finding severance payments part of a unilateral contract). In Rucker, however, this Court declined “to apply a unilateral contract analysis to the issue of wrongful discharge.” Rucker, 98 N.C. App. at 103, 389 S.E.2d at 625. The Court reasoned that: “[T]o apply a unilateral contract analysis to the situation before us would, in effect, require us to abandon the ‘at-will’ doctrine which is the law in this State. This we cannot do.” Id. As we are bound by prior rulings of this Court, plaintiff’s argument is without merit. In the Matter of Appeal from Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989) (“[w]here a panel of the Court of Appeals has decided the same issue, albeit in a different case, a subsequent panel of the same court is bound by that precedent, unless it has been overturned by a higher court”). Affirmed. Judges TIMMONS-GOODSON and ELMORE concur. . Although the complaint lists the date of termination as “November 8, 2001,” subsequent factual allegations establish that the date of termination was in 1999. Consequently, the 2001 designation is merely a typographical error. . North Carolina does not recognize a claim for wrongful discharge based on an employer’s bad faith. Charles E. Daye and Mark W. Morris, North Carolina Law of Torts § 12.20, at 116-17 (2d ed. 1999) (citing Amos v. Oakdale Knitting Co., 331 N.C. 348, 359-60, 416 S.E.2d 166, 173 (1992)). In any event, such a claim would fall under tort, not contract law. See generally Coman v. Thomas Mfg. Co., 325 N.C. 172, 381 S.E.2d 445 (1989); Hill v. Medford, 158 N.C. App. 618, 623-27, 582 S.E.2d 325, 328-31 (Martin, J., dissenting) (discussing tort of wrongful discharge), rev’d, 357 N.C. 650, 588 S.E.2d 467 (2003) (per curiam). . We note that plaintiff’s first claim for relief in his complaint is for breach of contract only. Plaintiff does not state a claim for the tort of wrongful discharge.

DANIELLE M. ROSE, M.D., Plaintiff v. LAKE NORMAN PEDIATRICS, P.A., Defendant and Third-Party Plaintiff No. COA02-1725 (Filed 6 January 2004) 1. Insurance— COBRA — wrongful termination of health insurance coverage — directed verdict The trial court abused its discretion by granting directed verdict in favor of defendant pediatric practice on plaintiffs claims for wrongful termination of health insurance coverage under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA), and the case is remanded to the trial court for a jury determination on this claim, because: (1) plaintiff’s employment was terminated as a result of an alleged material breach of her agreement with defendant, and the termination could be deemed a qualifying event that entitled her to continued health insurance coverage pursuant to COBRA, 29 U.S.C. § 1163(2); (2) plaintiff was never given the opportunity to continue coverage, and defendant put forth no evidence that as the plan sponsor it notified the plan administrator that plaintiff was entitled to continuation coverage; (3) defendant’s answer to plaintiff’s complaint never affirmatively denied defendant was not governed by COBRA, but only that plaintiffs alleged material breach did not obligate it to provide her notice pursuant to COBRA; and (4) plaintiff presented an exhibit that listed twenty-four employees employed by defendant during the applicable period, and COBRA only requires that there be at least twenty employees employed by the employer instead of the requirement that twenty employees participate in the employer’s health insurance plan. 2. Insurance— COBRA — directed verdict The trial court did not abuse its discretion by denying plaintiff pediatrician’s motion for directed verdict on a Consolidated Omnibus Reconciliation Act of 1985 (COBRA) claim, because: (1) the evidence was insufficient to support whether defendant pediatric practice was required to comply with COBRA notice requirements due to the size of defendant’s workforce; and (2) assuming defendant did not have at least twenty employees in its employ during the preceding calendar year, there was insufficient evidence as to whether plaintiff’s termination was a qualifying event requiring compliance with those requirements or as to whether defendant notified the plan administrator of plaintiffs entitlement to continuation coverage. 3. Employer and Employee— breach of contract — pediatric practice — directed verdict The trial court abused its discretion by granting directed verdict in favor of defendant pediatric practice on plaintiffs claim for breach of an employment contract, and the case is remanded to the trial court for a jury determination on this claim, because: (1) when viewed in the light most favorable to plaintiff, the evidence established that plaintiff had simply made plans to open her own practice and was not a competitor or rival of defendant’s at the time of her termination; and (2) there was sufficient evidence offered that plaintiff fulfilled her obligations to defendant under the parties’ agreement. Appeal by plaintiff from an order entered 26 July 2002 by Judge Susan C. Taylor in Iredell County Superior Court. Heard in the Court of Appeals 9 October 2003. Maupin, Taylor & Ellis, P.A., by Gretchen W. Ewalt and Terence D. Friedman; Massey & Cannon, P.L.L.C., by E. Bedford Cannon, for plaintiff-appellant. Homesley, Parker & Wingo, P.L.L.C., by Clifton W. Homesley and Nancy Goodman, for defendant-appellee. HUNTER, Judge. Danielle M. Rose, M.D. (“plaintiff’) appeals the trial court’s grant of directed verdict in favor of Lake Norman Pediatrics, P.A. (“defendant”) on her claims for wrongful termination of health insurance coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) and breach of contract. Plaintiff Also appeals the denial of her motion for directed verdict on the COBRA-related claim. For the reasons stated herein, we affirm the trial court’s denial of plaintiff’s motion, but reverse the grant of directed verdict in favor of defendant and remand the case to the trial court for a jury determination on both claims. On 2 January 1997, plaintiff, a pediatrician, entered into an employment contract with defendant, a pediatric practice formerly known as Mooresville Pediatric Associates. The contract incorporated by reference a “Physician Employment Agreement” (“Agreement”), which stated, inter alia: Employee’s rights with respect to [health insurance] benefits shall be subject to (a) the provisions of the relevant contracts, policies or plans providing such benefits, and (b) the right of Employer to amend, modify or terminate any of such benefits if that occurs with respect to all classes of employees covered by a given benefit. Employee shall be eligible to acquire an ownership interest in Employer at the end of one year of employment. The terms and conditions of such acquisition shall be determined at the end of eligibility by mutual agreement of both parties. . . . Employee agrees to devote his/her professional efforts in a full-time practice exclusively to the interest of Employer and shall not engage in the practice of medicine other than for Employer. Full-time practice is defined as a minimum of forty (40) hours per week plus call coverage as specified herein. . .. The term of this Agreement shall be for one (1) year from the date Employee begins employment and shall be automatically renewed for successive one year terms unless terminated . . . upon the occurrence of any of the following events: A. By notice in writing to the other party given ninety (90) days prior to the date of termination. B. Material breach of contract by Employee or Employer at the option of the non-breaching party. The Agreement did not contain a covenant not to compete clause. Plaintiff subsequently began her employment with defendant in April of 1997. Shortly thereafter, another pediatrician, Wendy Gaskins, M.D. (“Dr. Gaskins”), was hired by defendant after entering into a similar employment contract and agreement. By the summer of 1999, both plaintiff and Dr. Gaskins (“the doctors”) had twice been denied an ownership interest in the practice despite each having had two years of eligible employment with defendant. As an alternative, the doctors discussed starting a pediatric practice separate and apart from defendant. Over the next few months, the doctors engaged in several activities relevant to the establishment of that practice. In October of 1999, plaintiff spoke with the administrator of Lake Norman Regional Medical Center and learned that the hospital would provide limited assistance towards the lease of office space for their pediatric practice. In January of 2000, plaintiff had a conversation with Blair Craven (“Craven”), an employee of defendant’s and the mother of small children who were patients of defendant’s, about whether Craven would consider taking her children to plaintiff’s pediatric practice if such a practice existed. On 1 February 2000, the doctors applied with the North Carolina State Medical Board to form a limited liability company known as “Growing Up Pediatrics.” In late February of 2000, the doctors engaged in discussions to secure financing for their new practice. In February and March of 2000, the doctors retained the services of Opus Healthcare Consultants (“Opus”) to assist them with setting up their pediatric practice, which included finding property to lease for that practice. Also in March of 2000, the doctors hired a firm to design a logo for “Growing Up Pediatrics.” Finally, in early April of 2000, plaintiff conferred with and received a proposal from an architect regarding renovating office space to meet the needs of the doctors in their new practice. None of the doctors’ activities relevant to the establishment of their practice took place on defendant’s premises or during the doctors’ scheduled work hours; however, plaintiff did make three one-minute phone calls to Opus on 8 March, 30 March, and 6 April 2002 while at work on defendant’s premises. Upon learning of plaintiff’s plans, Amy Ferguson, M.D. (“Dr. Ferguson”), the principal in defendant, met with plaintiff on 14 April 2000 to discuss the matter. Plaintiff informed Dr. Ferguson of her interest in opening a pediatric practice because it was unlikely that she would be made a partner. Thereafter, on 17 April 2000, plaintiff received a termination letter from Dr. Ferguson stating that the following actions of plaintiffs were “totally unacceptable” and considered to be a “material breach” of plaintiff’s Agreement with defendant: 1. That for some time you have been discussing with certain of my staff members your plans for practice on your own with [Dr. Gaskins]. 2. That you have spoken with my patients and informed them that the change in your practice would occur within approximately six months or thereabouts and you have made efforts to recruit my patients for your practice. 3. That you intend to open your office in the Cornelius area and compete directly with me. Plaintiffs termination was effective immediately, and termination of her health insurance coverage under defendant’s group health plan was effective 1 May 2000. Dr. Gaskins was not terminated, but she gave notice to end her employment with defendant soon thereafter. Plaintiff filed a complaint on 1 December 2000 alleging that defendant had breached their Agreement by wrongfully terminating plaintiff without (1) continuing her health insurance benefits pursuant to COBRA, and (2) giving her ninety days notice prior to termination. Defendant answered and counterclaimed, but voluntarily dismissed its counterclaims on 2 April 2002. The trial was held on 8 April 2002. After resting, both parties moved for directed verdict. In an order entered on 26 July 2002, the trial court entered directed verdict in favor of defendant after concluding, inter alia: 5. When the plaintiff was terminated she formed a class of persons whose employment was terminated and the defendant had a right to terminate the insurance coverage of the plaintiff. 6. The plaintiff failed to devote her professional efforts in full-time practice exclusively to the interest of her employer (the defendant) and therefore failed to fulfill an explicit term of her employment agreement. 7. The plaintiff acquired an adverse interest in her employer, the defendant, in that she became engaged in a business which necessarily rendered her a competitor of her employer, no matter how much or how little of her time and attention she devoted to it. Plaintiff appeals. Plaintiff’s assignments of error raised on appeal all take issue with the court granting defendant’s motion for directed verdict on both of her claims. “A motion for directed verdict tests the sufficiency of the evidence to take [a] case to the jury.” Abels v. Renfro Corp., 335 N.C. 209, 214, 436 S.E.2d 822, 825 (1993). In deciding a defendant’s motion for directed verdict, “the [trial] court must consider all of the evidence in the light, most favorable to the plaintiff, including evidence elicited from the defendant favorable to the plaintiff,” Environmental Landscape Design v. Shields, 75 N.C. App. 304, 305, 330 S.E.2d 627, 628 (1985), and resolve “all inconsistences, contradictions and conflicts for [the plaintiff], giving [the plaintiff] the benefit of all reasonable inferences drawn from the evidence.” McFetters v. McFetters, 98 N.C. App. 187, 191, 390 S.E.2d 348, 350 (1990). A trial court’s decision to grant or deny a motion for directed verdict should not be disturbed absent an abuse of discretion. Crist v. Crist, 145 N.C. App. 418, 422, 550 S.E.2d 260, 264 (2001). In this case, the issues for this Court involve whether (1) plaintiff was entitled to COBRA benefits upon the termination of her employment, and (2) plaintiffs conduct and actions amounted to a breach of the employment contract. I. Plaintiffs first assignment of error argues the trial court erred as a matter of law in directing a verdict in favor of defendant on plaintiff’s claim for wrongful termination of health insurance benefits under COBRA. At the onset, defendant argues “[a]ppellate review of an order granting a directed verdict is limited to the grounds asserted by the moving party at the trial level.” Jay Group, Ltd. v. Glasgow, 139 N.C. App. 595, 598-99, 534 S.E.2d 233, 236 (2000). Specifically, defendant contends that plaintiff abandoned her COBRA-related claim because she never raised any federal law issues regarding COBRA (1) during the course of the trial, (2) as a ground for granting a motion for directed verdict in her favor, or (3) in opposition to defendant’s motion for directed verdict. While we found no reference to the words “COBRA” or “federal claim” in the transcript, plaintiff’s questions and responses regarding the lack of notice she allegedly received as to the continuation of her insurance coverage clearly imply her attempt to argue the federal claim that appeared in her complaint. Moreover, the order indicates that the trial court recognized plaintiff’s federal claim by incorporating “plaintiff’s complaint by reference . . . .” Therefore, we review the trial court’s grant of directed verdict on this claim. COBRA “demands” that, in the event of certain qualifying events, “employers who provide insurance for their employees give the employees an opportunity to continue their insurance coverage under the employer’s insurance plan . . . .” Zickafoose v. UB Servcies, Inc., 23 F. Supp. 2d 652, 655 (S.D. W. Va. 1998) (emphasis added). The “ ‘ultimate duty to assure that an employee receives COBRA benefits resides exclusively’ ” with the employer. Hamilton v. Mecca, Inc., 930 F. Supp. 1540, 1553 (S.D. Ga. 1996) (citation omitted). Thus, if the employer must comply with COBRA, the burden is on that employer to demonstrate it has implemented procedures reasonably calculated to effectuate actual notice of COBRA continuation rights. Brown v. Neely Truck Line, Inc., 884 F. Supp. 1534 (M.D. Ala. 1995). One such procedure requires the employer (or plan sponsor) to notify the plan administrator of its group health plan about the occurrence of certain qualifying events within thirty days. 29 U.S.C. § 1166(a)(2) (1999). Failure to do so will result in the employer being held solely liable for a COBRA violation. Ward v. Bethenergy Mines, Inc., 851 F. Supp. 235, 237-38 (S.D. W. Va. 1994). When considered in the light most favorable to plaintiff, the evidence offered was sufficient to support a denial of defendant’s motion for directed verdict on plaintiff’s COBRA-related claim. Here, plaintiff’s employment was terminated as a result of an alleged material breach of her Agreement with defendant. Based on the facts in this case, plaintiff’s termination could be deemed a qualifying event that entitled her to continued health insurance coverage pursuant to COBRA. 29 U.S.C. § 1163(2) (1999) (providing that “[t]he termination (other than by reason of such employee’s gross misconduct) ... of the covered employee[]” is a qualifying event). Yet despite that qualifying event, additional evidence, undisputed by defendant, established that plaintiff was never given the opportunity to continue coverage. Plaintiff simply received notice of the cancellation of her insurance coverage from defendant, and subsequently received a letter from the plan administrator, John Alden Life Insurance Company, that her coverage had ended. Defendant put forth no evidence that, as the plan sponsor, it notified the plan administrator that plaintiff was entitled to continuation coverage. Nevertheless, defendant also argues that there was insufficient evidence offered that it employed the requisite number of employees to necessitate compliance with COBRA’s notice requirements. 29 U.S.C. § 1161(b) (1999) provides that an employer must provide an employee, who loses coverage under the employer’s group health plan as a result of a qualifying event, the option to continue coverage under the plan unless the employer “maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calender year.” However, defendant’s answer to plaintiff’s complaint never affirmatively denied defendant was not governed by COBRA, only that plaintiff’s alleged material breach did not obligate it to provide her notice pursuant to COBRA. “Averments in a pleading to which a responsive pleading is required . . . are admitted when not denied in the responsive pleading.” N.C.R. Civ. P. 8(d). Moreover, plaintiff presented an exhibit that listed twenty-four employees employed by defendant during the applicable time period. Defendant, in turn, points this Court’s attention to another of plaintiffs exhibits, listing only seventeen employees on a billing statement for defendant’s group health plan for April of 2000. Yet, COBRA only requires that there be at least twenty employees employed by the employer, not that twenty employees participate in the employer’s health insurance plan. See 29 U.S.C. § 1161(b) (1999). Accordingly, the trial court’s conclusion that defendant had a right to terminate plaintiff’s insurance coverage because she “formed a class of persons whose employment was terminated,” did not automatically excuse defendant from providing plaintiff with notice of her ability to continue such coverage under COBRA. Defendant would be excused if (1) defendant employed fewer than twenty employees during the preceding calendar year (making COBRA inapplicable), or (2) plaintiff’s termination was not a qualifying event due to her gross misconduct. Since sufficient evidence was offered, when considered in the light most favorable to plaintiff, that defendant was governed by COBRA and that plaintiff’s termination was a qualifying event, the trial court abused its discretion in granting defendant’s motion for directed verdict. Therefore, plaintiff’s COBRA-related claim should have been allowed to go to the jury. II. Plaintiff’s second assignment of error argues the trial court erred as a matter of law in failing to direct a verdict in plaintiff’s favor on her COBRA-related claim. In deciding a plaintiff’s motion for directed verdict, the trial court considers the evidence in the light most favorable to the defendant, giving it the benefit of all reasonable inferences drawn from the evidence. See Environmental Landscape Design, 75 N.C. at 305, 330 S.E.2d at 628. We conclude that, when considered in the light most favorable to defendant, the evidence was insufficient to support whether defendant was required to comply with COBRA notice requirements due to the size of defendant’s workforce. Further, assuming defendant did have at least twenty employees in its employ during the preceding calendar year, there was insufficient evidence as to whether (1) plaintiff’s termination was a qualifying event requiring compliance with those requirements, or (2) defendant notified the plan administrator of plaintiff’s entitlement to continuation coverage. Thus, the trial court did not abuse its discretion in denying plaintiffs motion for directed verdict. III. Finally, plaintiffs third assignment of error argues the trial court erred in directing a verdict in favor of defendant on plaintiffs breach of contract claim. We agree. Our Supreme Court has held that “[w]here an employee deliberately acquires an interest adverse to his employer, he is disloyal, and his discharge is justified.” In re Burris, 263 N.C. 793, 795, 140 S.E.2d 408, 410 (1965) (where the Supreme Court upheld the City Manager’s discharge of an employee of the City of Asheville after that employee acquired an interest in real property that he knew the City was attempting to purchase). See also Long v. Vertical Technologies, Inc., 113 N.C. App. 598, 439 S.E.2d 797 (1994). The Burris Court reasoned that “ ‘when a servant becomes engaged in a business which necessarily renders him a competitor and rival of his master, no matter how much or h

THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL, Petitioner v. MARTIN FEINSTEIN, Respondent UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL, Petitioner v. HOWARD GORMAN, Respondent NORTH CAROLINA STATE UNIVERSITY, Petitioner v. PEARL A. WILKINS, Respondent No. COA03-225 (Filed 16 December 2003) Public Officers and Employees— termination of university employees — reduction in force — jurisdiction of Office of Administrative Hearings The trial court erred by holding that the later enacted N.C.G.S. § 126-34.1 did not supersede N.C.G.S. § 126-35(c) and that the Office of Administrative Hearings (OAH) had jurisdiction to determine whether petitioners had just cause to terminate respondent university employees through a reduction in force (RIF), because: (1) N.C.G.S. § 126-34.1 was enacted five years after N.C.G.S. § 126-35, and by its own terms of exclusion, N.C.G.S. § 126-34.1 supersedes and controls over any contrary earlier enactments; (2) N.C.G.S. § 126-34.1 supplants N.C.G.S. § 126-35 or otherwise the evident intent of the later enacted N.C.G.S. § 126-34.1 in setting out the specific contested cases that are appealable to OAH would be eliminated; and (3) N.C.G.S. § 126-34.1 is the sole source of appellate rights for university employees covered by the State Personnel Act, and it excludes appeals to OAH of RIFs on grounds of lack of just cause and procedural violations. Appeal by petitioners from order entered 12 November 2002 by Judge Howard E. Manning, Jr., in Wake County Superior Court. Heard in the Court of Appeals 12 November 2003. Attorney General Roy Cooper, by Assistant Attorney General Celia Grasty Lata and Special Deputy Attorney General Thomas J. Ziko, for petitioners-appellants. Schiller & Schiller, PLLC, by Marvin Schiller and David G. Schiller, for respondents-appellees Howard Gorman and Pearl A. Wilkins. Martin Feinstein, respondent-appellee, pro se. TYSON, Judge. The University of North Carolina at Chapel Hill (“UNC-CH”) and North Carolina State University (“NCSU”) (collectively, “petitioners”) appeal from the 12 November 2002 order holding that: (1) N.C. Gen. Stat. § 126-34.1 does not supersede N.C. Gen. Stat. § 126-35(c), and (2) that the Office of Administrative Hearings (“OAH”) has jurisdiction to determine whether petitioners had just cause to terminate the employment of Howard Gorman (“Gorman”), Pearl A. Wilkins (“Wilkins”), and Martin H. Feinstein (“Feinstein”) (collectively, “respondents”) through a reduction in force (“RIF”). We reverse and remand. I. Background Feinstein worked in the Academic Technology and Networks Department at UNC-CH. On 17 December 2001, Feinstein was dismissed from his position due to permanent reductions in State funding reductions to UNC-CH’s budget. UNC-CH’s Information Technology Division was ordered to reduce their budget by four percent for fiscal year 2001-2002. UNC-CH decided to eliminate Feinstein’s position. Feinstein’s RIF was upheld after review within the UNC-CH internal grievance process. Gorman worked as manager of UNC-CH’s Materials and Support Department. On 31 December 2001, Gorman’s position was also eliminated due to permanent reductions in State funding received by UNC-CH. In UNC-CH’s internal grievance process, Gorman claimed his notice did not conform to UNC-CH’s RIF policy. Chancellor James Moeser (“Chancellor Moeser”) found that the notice did not address the efforts made to avoid the elimination of Gorman’s position. Accordingly, Chancellor Moeser directed Roger Patterson, Associate Vice Chancellor for Finance, to address these issues and to give Gorman an additional thirty days’ pay with benefits, in order to satisfy UNC-CH’s RIF requirements. Wilkins worked as the Customer Operations Manager in the Office of Communication Technologies at NCSU. Wilkins’s position was eliminated due to reductions of State funding received by NCSU. Wilkins appealed her layoff through NCSU’s grievance process. The review panel concluded that elimination of her position was appropriate. George Worsley, Vice Chancellor for Finance and Business, reviewed the panel’s findings, accepted the panel’s recommendation, and upheld Wilkins’s RIF. Respondents, subsequently filed OAH petitions in 2002 for contested case hearings alleging improper RIFs. Petitioners moved for, but were denied, dismissal of OAH petitions. Petitioners filed Petitions for Writ of Supersedeas, Certiorari, and Prohibition to OAH in Wake County Superior Court. The trial court found that respondents were entitled to OAH hearings to determine whether petitioners had just cause to terminate respondents’ positions. Petitioners appeal. II. Issue Did the trial court err in upholding OAH of jurisdiction over RIF appeals on lack of just cause and procedural violations? III. Jurisdiction of OAH Petitioners contend that N.C. Gen. Stat. § 126-34.1 is the sole source of appellate rights for university employees covered by the State Personnel Act. They argue the statute excludes appeals to OAH of RIFs on grounds of lack of just cause and procedural violations. We agree. The General Assembly expressly exempted the University of North Carolina from all provisions of the North Carolina Administrative Procedure Act except those of Article 4. N.C. Gen. Stat. § 150B-1(f) (2001); see also Beauchesne v. University of N.C. at Chapel Hill, 125 N.C. App. 457, 468, 481 S.E.2d 685, 692 (1997). The rights of university employees to challenge any employment action in OAH must derive independently, from The State Personnel Act. N.C. Gen. Stat. § 126 (2001); see also Batten v. N.C. Dep’t of Correction, 326 N.C. 338, 342-43, 389 S.E.2d 35, 38 (1990), rev’d on other grounds, Empire Power Co. v. N.C. Dep’t of E.H.N.R., 337 N.C. 569, 447 S.E.2d 768, reh’g denied, 338 N.C. 314, 451 S.E.2d 634 (1994). OAH’s jurisdiction over appeals of university employee grievances exists solely within the limits established by the State Personnel Act. Empire Power Co., 337 N.C. at 579, 447 S.E.2d at 774. In 1995, the General Assembly enacted N.C. Gen. Stat. § 126-34.1, which specifically defined which employee appeals constitute contested case issues OAH may hear. N.C. Gen. Stat. § 126-34.1(a) (2001) explicitly states that university employees may file in OAH “only as to the following personnel actions or issues.” N.C. Gen. Stat. § 126-34.1(e) states that “[a]ny issue for which appeal to the State Personnel Commission through the filing of a contested case . . . [that] has not been specifically authorized by this section shall not be grounds for a contested case under Chapter 126.” N.C. Gen. Stat. § 126-34.1(e) (2001) (emphasis supplied). OAH’s jurisdiction over state employee RIFs are specifically limited to two narrowly defined circumstances: (2)(b) Demotion, reduction in force, or termination of an employee in retaliation for the employee’s opposition to alleged discrimination .... (4) Denial of the veteran’s preference ... or in connection with a reduction in force, for an eligible veteran .... N.C. Gen. Stat. § 126-34.1 (2001). Respondents do not fall into either one of these two defined circumstances. A. Lack of Just Cause Respondents claim that they were separated from State employment without just cause and that N.C. Gen. Stat. § 126-34.1(a)(1) provides them with a basis for appealing their RIFs. They assert N.C. Gen. Stat. § 126-34.1(a)(1) specifically refers to N.C. Gen. Stat. § 126-35, which defines actions based on just cause. N.C. Gen. Stat. § 126-34.1(a)(l) specifically refers to “dismissal, demotion, or suspension” without just cause but does not mention RIFs for lack of just cause as a basis for appealing a RIF. RIFs are specifically referred to only twice in the statute. The General Assembly clearly stated in N.C. Gen. Stat. § 126-34.1 that a contested case that “has not been specifically authorized by this section shall not be grounds for a contested case under Chapter 126.” N.C. Gen. Stat. § 126-34.1(e) (2001) (emphasis supplied). A fundamental rule of statutory interpretation requires the plain meaning of the statute to control its applicability. Campbell v. Church, 298 N.C. 476, 484, 259 S.E.2d 558, 564 (1979). A statute that provides a clear enumeration of its inclusion is read to exclude what the General Assembly did not enumerate. See Dunn v. N.C. Dep’t of Human Resources, 124 N.C. App. 158, 161, 476 S.E.2d 383, 385 (1996); see also Morrison v. Sears, Roebuck & Co., 319 N.C. 298, 303, 354 S.E.2d 495, 498 (1987) (the statutory inclusion of specific things implies the exclusion of others). Where statutory language is clear and unambiguous, there is no room for judicial construction. Begley v. Employment Security Comm’n, 50 N.C. App. 432, 436, 274 S.E.2d 370, 373 (1981). The language of N.C. Gen. Stat. § 126-34.1 clearly and unambiguously states that the statutory list of appeal grounds in N.C.Gen. Stat. § 126-34.1 is exclusive. This list does not provide for appeals to OAH of RIFs based on lack of just cause. Furthermore, N.C. Gen. Stat. § 126-34.1 was enacted in 1995, five years after N.C. Gen. Stat. § 126-35. By its own terms of exclusion, N.C. Gen. Stat. § 126-34.1 supersedes and controls over any contrary earlier enactments. N.C. Gen. Stat. § 126-35(c) existed as statutory law when N.C. Gen. Stat. § 126-34.1(e) was enacted. Our Supreme Court has held that construing conflicting statutes to give validity and effect to both is only possible if it can be done without destroying the evident intent and meaning of the later enacted act. Bank v. Loven, 172 N.C. 719, 724, 90 S.E. 948, 950 (1916). Given its clear and unambiguous language, the later enacted N.C. Gen. Stat. § 126-34.1 supplants N.C. Gen. Stat. § 126-35. Otherwise, the evident intent of the later enacted N.C. Gen. Stat. § 126-34.1 in setting out the specific contested cases that are appealable to OAH would be eliminated. Id. B. Procedural Violations Petitioners contend that N.C. Gen. Stat. § 126-34.1 also excludes appeals of RIFs on grounds of procedural violations. We agree. N.C. Gen. Stat. § 126-34.1 was ratified during the 1995 legislative session. The statute was embodied in House Bill 438 and Senate Bill 405. These bills originally set forth seven grounds for bringing contested cases before OAH. The seventh of these grounds read: “Reduction in force in violation of the policies and rules of the State Personnel Commission.” H.R. 438, 1995 Sess. (N.C. 1995); S. 405, 1995 Sess. (N.C. 1995). On 28 March 1995, the House of Representatives amended its bill by deleting this seventh ground for a contested case hearing. H.R. 438, Committee Substitute (28 March 1995). The Senate deleted the seventh ground as well on 20 April 1995. S. 405, Committee Substitute (20 April 1995). The bill ultimately ratified and enacted by the General Assembly excluded any reference to RIF procedural violations as a contested case before OAH. S. 405, 1995 Session (N.C. 1995). In Burgess v. Your House of Raleigh, our Supreme Court held that legislative history documenting rejection of a statutory provision is probative of the intent to exclude that provision from the statute as enacted. 326 N.C. 205, 209, 388 S.E.2d 134, 141 (1990). The Court found that the General Assembly had considered an amendment to the Communicable Disease Act that would have extended anti-discrimination protections to individuals with Human Immunodeficiency Virus (“HIV”). Id. at 217, 388 S.E.2d at 141. The bill was amended and the anti-discrimination provisions were deleted. Id. Relying on the General Assembly’s consideration and rejection of the anti-discrimination provisions, our Supreme Court concluded that the Handicapped Persons Act was not intended to protect those with HIV and stated, “[t]he General Assembly specifically addressed the particular question at issue here and affirmatively chose not to include persons infected with the HIV virus within the scope of the Handicapped Persons Act.” Id. at 217, 388 S.E.2d at 141-42. Here, the General Assembly considered granting state employees the right to bring RIF policy violations as a contested case before OAH. Both the House and Senate bills were amended to delete this particular ground from contested cases. The ratified bill enacted excluded this ground. The General Assembly clearly intended to deny OAH jurisdiction over challenges to RIFs on procedural violation grounds and to grant state employees the right to bring only those RIF claims that are specifically set out in N.C. Gen. Stat. § 126-34.1 before OAH. Respondents have not challenged their RIFs on any of the grounds set out under N.C. Gen. Stat. § 126-34.1. We hold OAH has no jurisdiction to hear the petitions. IV. Conclusion The trial court erred in holding that the later enacted N.C. Gen. Stat. § 126-34.1 does not supersede N.C. Gen. Stat. § 126-35(c) and that OAH has jurisdiction to determine whether respondents’ RIFs were based on lack of just cause or procedural violations. The order of the trial court is reversed. We remand with instructions to the superior court to enter an order directing OAH to grant petitioners’ motions to dismiss on the grounds of lack of statutory authority. Reversed and Remanded with instructions. Judges McCULLOUGH and BRYANT concur.