With few exceptions, municipalities enjoy governmental immunity from common-law tort claims that arise out of their performance of governmental functions.

But the 4th U.S. Circuit Court of Appeals held recently that the town of Mocksville, North Carolina, is liable for the improper firing of three police officers, and that its per-claim insurance limit applies to each officer individually.

According to state law, a town waives its immunity to the extent that it has purchased liability insurance, which is undisputed in Hunter v. Town of Mocksville. The question became, once a jury found for the plaintiffs on their wrongful discharge and First Amendment claims, how liable were the defendants? The jury recommended more than $4 million in damages and front pay to the officers, but according to the town’s insurer, the million-dollar policy limit limited the plaintiffs’ aggregate recovery to $1 million. The plaintiffs argued that the policy provided up to $1 million per plaintiff, for an aggregate recovery of $3 million.

In its final judgment, the district court held the defendants—the town, its police chief, and its town manager—jointly and severally liable for $1,990,544 and ordered Chief Robert Cook and town manager Christine Bralley to pay each plaintiff $10,000 in punitive damages. Yet it also found that governmental immunity shielded it from any damages beyond the $1 million policy limit.

Unanimously, the 4th Circuit disagreed.


Plaintiffs Kenneth Hunter, Rick Donathan, and Jerry Medlin were veteran Mocksville police officers in 2011 when they became concerned about the conduct of Cook, the new administrative chief of police. They raised their concerns to Bralley but noticed no changes in Cook’s behavior or the manner in which he managed the department. The trio used a disposable phone to call the governor’s office and report the perceived “corruption and misconduct” within the department. Within a week, a State Bureau of Investigation agent paid the department a visit. The agent later called the plaintiffs on that phone, but the plaintiffs, fearing retaliation, did not return the message and disposed of the phone.

According to court records, Cook and Bralley eventually pegged the plaintiffs as the anonymous tipsters and, after consulting with the town attorney, fired all three. Despite numerous awards and commendations—and unblemished service records—the plaintiffs were told that they were fired for numerous misdeeds including insubordination, attitude, and conduct unbecoming an officer.

In their April 2012 complaint, the officers alleged that they were fired in retaliation for exercising First Amendment rights to free speech, denied their rights guaranteed by the state constitution, and wrongfully discharged against public policy.

Not just semantics

The plaintiffs were represented by Reynolds Elliot and R. Michael Elliot of Elliot Morgan Parsonage in Charlotte and Winston-Salem, respectively. Michael Elliot said of the fact-specific issue of insurance liability that the appeals court focused on the terms “related” and “interrelated” in the town’s policy.

“Our argument was maybe their acts were related, but they’re not interrelated, meaning they’re not reciprocal,” Elliot said.

The 4th Circuit bought that argument.

The policy states, in part, that claims “based on and arising out of the same act or interrelated acts of one or more insureds shall be considered to be a single claim” … “regardless of the number of persons bringing claims.”

The district court found that the claims were based on the same act—the town’s joint terminations of the officers for what Bralley and Cook viewed as insubordination—or, alternatively, that all three claims were based on “interrelated” wrongful acts which also rendered them a single claim under the policy.

For the 4th Circuit, Judge James Wynn noted that the district court acknowledged that the policy did not define “interrelated employment wrongful acts” but expressly defined “related employment wrongful acts” and that despite the policy’s failure to define “interrelated,” the district court found the term unambiguous when considered in the context of the policy.

Chief District Judge Thomas Schroeder held that for claims to be considered a single claim because they are interrelated, the wrongful acts must have some common nexus of fact or shared or mutually existing cause. Here, using a dictionary definition of “interrelated,” he found that the plaintiffs’ claims were caused by terminations that arose out of the “same” wrongful act and shared a common cause—the phone call to the governor.

Wynn, however, applied his own dictionary definition in agreeing with the plaintiffs, using the nontechnical, unambiguous definition of “same” to determine that three, not one, wrongful acts served as the basis for the lawsuit: the terminations—by separate letter and for different written reasons—of each of the three plaintiffs.

Regarding the ambiguous term “interrelated,” the 4th Circuit found itself unable to discern the scope of “interrelated” as used by the parties in the contract.

“Therefore, we must resolve the ambiguity in favor of the Plaintiffs,” Wynn wrote.

If you make the policy, you’re a policy maker

The appeals court also found that the district court erred in granting summary judgment in favor of the town regarding the plaintiffs’ First Amendment claims under Section 1983. The district court found that no evidence showed that the town had a policy of retaliation, that Bralley and Cook were final decision-makers for personnel matters only, not final policy-makers for the town.

Here, the town board has no written personnel policy, no formal grievance procedure, and no post-discharge procedural due process, the court wrote. Rather, it delegated to Bralley its statutory authority to set personnel policy, the “unconstrained authority” to define nearly all terms of employment.

To hold that Bralley is not a policy maker, Wynn wrote, would “insulate the Town from liability in virtually every case,” a result contrary to the underlying principles of Section 1983 and one that the Supreme Court has rejected.

Elliot, predictably, agreed.

“They put all the power in the hands of their town manager and then tried to hide behind that, saying they weren’t responsible for her acts,” Elliot said. “If you’re not going to have policies and you’re not going to have oversight, then you’re going to be responsible for your final policy makers.”

An attorney for the defendants, Patrick Flanagan of Cranfill, Sumner & Hartzog in Charlotte, did not immediately return a message seeking comment.

The 49-page decision is Hunter v. Town of Mocksville. (Lawyers Weekly No. 001-129-18). An opinion digest is available online at sclawyersweekly.com.

Follow Heath Hamacher on Twitter @SCLWHamacher

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