September 7, 1995
The Honorable Alma S. Adams, Ph.D. North Carolina General Assembly House of Representatives Room 542, State Legislative Office Building Raleigh, North Carolina 27601-1086
RE: Request for Advisory Opinion–Maready v. City of Winston-Salem, et al. Forsyth Co. Civil Action No. 95 CVS 623
Dear Representative Adams:
We are writing in response to your 6 September 1995 request for an advisory opinion regarding the effect of the Honorable Julius A. Rousseau, Jr.’s ruling in Maready v. City of Winston-Salem, et al. upon certain economic development activities in Guilford County.
You have posed two specific inquiries: (1) May Guilford County honor an existing contract, entered into in good faith pursuant to an open meeting on 30 September 1993, to reimburse a developer for construction of water and sewer lines on the developer’s property where the water and sewer lines in question would be owned by the adjacent municipalities and would open previously unserved areas of the county for development? (2) What personal liability do the Guilford County Commissioners have in honoring the above described contract, and other economic incentive contracts executed prior to 10 August 1995? We shall address these questions seriatim.
Judge Rousseau’s judgment in the Maready case does not preclude Guilford County from honoring an existing .contract, entered into in good faith pursuant to an open meeting on 30 September 1993, to reimburse a developer for construction of water and sewer lines on the developer’s property where the water and sewer lines in question would be owned by the adjacent municipalities and would open previously unserved areas of the county for development. Judge Rousseau’s ruling is binding only upon the parties to the case before him. His ruling accordingly is not binding upon other city or county governments engaged in economic development projects under the auspices of N.C.G.S. § 158-7.1. Moreover, Judge Rousseau’s ruling is inapplicable to economic development initiatives authorized by statutes other than § 158-7.1, or pursuant to contracts executed prior to 10 August 1995. On the other hand, a ruling by the North Carolina Court of Appeals or the North Carolina Supreme Court affirming or reversing Judge Rousseau’s ruling with respect to the constitutionality of § 158-7.1 would bind all city and county governments in North Carolina.
The facts set forth in your letter indicate that the water and sewer lines in question have been built by the developer, dedicated to a municipality, and the county has agreed to reimburse the developer for their construction. These facts appear to distinguish the project about which you have inquired from the incentive projects at issue in Maready. We are aware of nothing in Judge Rousseau’s order which would preclude a city or county from entering into a contract for the construction of public works and reimbursing the contractor for the value received.
Your second question asks what personal liability the Guilford County Commissioners have in honoring the above described contract and other economic incentive contracts executed prior to 10 August 1995. It is settled law that county commissioners are public officers. Harris v. Watson, 201 N.C. 661, 664 (1931). It is also settled law that the personal liability of public officers engaged in the performance of their governmental duties is extremely narrow. In Smith v. Hefner, 235 N.C. 1, 7 (1951), the North Carolina Supreme Court held:
It is settled law in this jurisdiction that a public official, engaged in the performance of governmental duties involving the exercise of judgment and discretion, may not be held personally liable for mere negligence in respect thereto. The rule in such cases is that an official may not be held liable unless it be alleged and proved that his act, or failure to act, was corrupt and malicious [citations omitted], or that he acted outside of and beyond the scope of his duties.
As indicated, Judge Rousseau’s 10 August 1995 ruling binds only the parties to Mr. Maready’s suit, and of course the .Guilford County Commissioners were not parties to that suit. In fact, Judge Rousseau’s written order and judgment, which was entered on 28 August 1995 (copy attached), does not apply to expenditures made pursuant to contracts entered into by Forsyth County and Winston-Salem prior to 10 August 1995. It would seem difficult, if not impossible, to prove that the Commissioners of Guilford County acted corruptly and maliciously in honoring existing contracts when such contracts would not have been affected even if Guilford County and its Commissioners were bound by Judge Rousseau’s ruling, which they are not. Continuing to honor such incentive contracts would appear to be clearly within the scope of the Commissioners’ duties and responsibilities.
John R. McArthur Chief Counsel
Jane T. Friedensen
Assistant Attorney General
W. Wallace Finlator, Jr. Assistant Attorney General