An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA14-169 NORTH CAROLINA COURT OF APPEALS
Filed: 7 October 2014
GREER L. GEIGER, M.D., Plaintiff,
v. Guilford County No. 12 CVS 5477 CENTRAL CAROLINA SURGICAL EYE ASSOCIATES, P.A., J. MARK McDANIEL, JR. and C. RICHARD EPES, Defendants.
Appeal by defendants from order entered 11 February 2013 by
Judge A. Moses Massey in Guilford County Superior Court. Heard
in the Court of Appeals 13 August 2014.
Tuggle Duggins P.A., by Denis E. Jacobson, Brandy L. Mills, and Richard W. Andrews, for plaintiff-appellee.
Rossabi Black Slaughter, P.A., by Gavin J. Reardon and Amiel J. Rossabi, for defendants-appellants Central Carolina Surgical Eye Associates, P.A. and C. Richard Epes.
Culbertson & Associates, by K.E. Krispen Culbertson, for defendant-appellant James Mark McDaniel, Jr.
HUNTER, Robert C., Judge.
Defendants appeal from the order granting plaintiff’s
motion for a directed verdict on defendants’ affirmative defense
which alleged that the terms of plaintiff’s employment were -2- modified by oral agreement. On appeal, defendants argue that
the trial court erred in granting plaintiff’s motion because
there was sufficient evidence to support a finding that the
parties had agreed to an oral modification of the written
employment agreement. Plaintiff contends that defendants’
notice of appeal was deficient and requests this Court dismiss
the appeal. However, in the alternative, plaintiff argues that
defendants could not orally modify the employment contract
pursuant to the North Carolina Wage and Hour Act and that, even
if defendants did provide written notice of the modification in
August, she did not assent to the terms of the modification nor
was it supported by consideration.
After careful review, we conclude that defendants’ notice
of appeal was sufficient to confer jurisdiction to this Court.
Moreover, we find that the trial court did not err in granting
the directed verdict because: (1) plaintiff’s employment
agreement could not be orally modified under North Carolina’s
Wage and Hour Act (“NCWHA”); and (2) even assuming that the
modified employment agreement which was provided to plaintiff in
August constitutes sufficient written notice of a change in
plaintiff’s wages under NCWHA, defendants failed to produce any
evidence that plaintiff had assented to the modified contract, a -3- required showing for the affirmative defense of modification.
Therefore, the trial court did not err in granting a directed
verdict for plaintiff on defendants’ sixth affirmative defense
of contract modification.
Background
From 2005 to 2011, plaintiff Greer L. Geiger, M.D., worked
at Kaiser Permanente (“Kaiser”) in California as an
ophthalmologist, specializing in retina surgery and care. In
2010, Kaiser started reviewing cases plaintiff had handled
relating to patients who had returned to the operating room
within six months after surgery. As a result of this review,
Kaiser presented plaintiff with ten to twelve cases in which
plaintiff had made mistakes, half of which had nothing to do
with surgery and involved administrative issues. Plaintiff
contended that the reasons for these return visits were minor in
nature and had nothing to do with patient care. However, after
Kaiser initiated the review, plaintiff felt that Kaiser would no
longer be a comfortable work environment and began looking for
another job.
In December 2010, plaintiff was contacted by a recruiter
about a potential job opportunity as a retina specialist with
defendant Central Carolina Surgical Eye Associates (“Central -4- Carolina”) in Greensboro, North Carolina. After expressing
interest in the job, plaintiff’s curriculum vitae was forwarded
to Central Carolina.
In January 2011, plaintiff interviewed for the position
with Central Carolina. On 4 January 2011, plaintiff met with
shareholders, officers, and employees of Central Carolina,
including defendant J. Mark McDaniel Jr. (“McDaniel”), the CEO
of Central Carolina, and defendant Dr. C. Richard Epes (“Epes”),
president, majority owner of, and a surgeon at Central Carolina
(collectively, Central Carolina, McDaniel, and Epes are referred
to as “defendants”). On 11 January 2011, Central Carolina
offered the job to plaintiff which would entitle plaintiff to a
base salary of $350,000 her first year.
After receiving the job offer from Central Carolina,
plaintiff resigned from Kaiser. In conjunction with her
resignation, plaintiff entered into a confidential settlement
agreement with Kaiser dated 1 February 2011. As part of the
settlement agreement, Kaiser paid plaintiff $227,000 and forgave
a $120,000 home loan in exchange for a full release of any
claims she had or might have against Kaiser. Thereafter,
plaintiff voluntarily surrendered her privileges to practice at
Kaiser’s facilities. -5- Because the settlement occurred prior to the conclusion of
Kaiser’s investigation, Kaiser felt it necessary to file a
report with the National Practitioner Data Bank (the “Data
Bank”). The report was processed on 17 March 2011 and did not
indicate any wrongdoing on the part of plaintiff. The report
stated that plaintiff resigned while under investigation to
avoid the expense of further engaging in the process and that
plaintiff disputed that her practice presented any cause for
medical discipline.
On 17 February 2011, Central Carolina and plaintiff entered
into a written, three-year employment agreement (the “Employment
Agreement”). Under the Employment Agreement, plaintiff was to
begin work no later than 2 May 2011. Plaintiff was guaranteed a
first-year salary of $350,000, payable twice monthly in payments
of $14,583.34. In addition to her base salary, plaintiff was to
receive 34% of her net collections in excess of $1,029,411.77.
Furthermore, the terms of the Employment Agreement provided
that: (1) plaintiff was required to work full time for Central
Carolina; and (2) Central Carolina had exclusive authority to
“direct and control the assignment of patients and scheduled
operation” for plaintiff. At plaintiff’s request, a handwritten
modification was included allowing for an earlier start date -6- pending completion of licensure and insurance enrollment. Both
parties understood that this also meant that the start date
could be delayed if plaintiff’s licensure or insurance
enrollment were not completed before 2 May 2011.
In April 2011, plaintiff relocated from California to
Greensboro. Plaintiff applied for and obtained her North
Carolina medical license, completed applications to become
credentialed, and worked to receive privileges to practice at
the hospital. As a result, plaintiff was ultimately
credentialed with all insurance companies from which Central
Carolina sought approval and granted privileges to practice at
Moses H. Cone Memorial Hospital.
One insurer to whom plaintiff submitted an application was
Blue Cross Blue Shield of North Carolina (“BCBS”). On 18 April
2011, plaintiff signed the attestation statement for the BCBS
application indicating that, to her knowledge, she had never
been reported to the Data Bank. Plaintiff had checked the Data
Bank as recently as February or early March and no report was
shown. Kaiser did not submit the report to the Data Bank until
17 March 2011.
On 26 May 2011, Central Carolina was informed by BCBS that
it could not approve plaintiff’s application for enrollment -7- because it contained false or incorrect information. BCBS
requested information about the report submitted by Kaiser.
Plaintiff provided BCBS with the requested information, and, on
29 July 2011, BCBS granted plaintiff’s application to be a BCBS
provider.
On or around 28 May 2011, defendants discussed the BCBS
matter with plaintiff. According to McDaniel’s testimony,
plaintiff was verbally advised that, as a result of the
discovery of the adverse report, the written Employment
Agreement was “void” and that she would not be paid under the
terms of the Employment Agreement. Instead, moving forward, she
would be compensated based on production only with no base
salary compensation. According to McDaniel, plaintiff was
“teary-eyed, emotional, [and] seemed contrite,” and did not say
much of anything but later “slammed her hand on the table and
walked out.” Although the parties did not execute a new written
agreement memorializing the changed agreement regarding
plaintiff’s pay, defendants allege that the parties thereafter
acted in accordance with the changed agreement. Most notably,
defendants argue that plaintiff was never paid the base salary
and was, instead, only paid on commission. However, plaintiff -8- disputes that any modification to her Employment Agreement was
ever discussed at the 28 May 2011 meeting.
In July 2011, plaintiff began seeing Central Carolina
patients. However, Central Carolina did not pay plaintiff for
any of the work she performed until 30 September 2011.
Plaintiff repeatedly inquired about Central Carolina’s failure
to pay her promised wages under the Employment Agreement and
demanded that she be paid. On 17 August 2011, plaintiff emailed
defendants, asking to be paid that Friday and noting that she
expected her paycheck to “reflect the agreed upon base salary.”
In August 2011, defendants presented plaintiff with a
written copy of a modified contract reflecting the changes to
her compensation which were allegedly discussed at the 28 May
2011 meeting (the “modified August contract”). The modified
August contract changed, among other things, plaintiff’s
guaranteed salary of $350,000 to a percentage of her production.
The modified August contract also removed the requirement that
plaintiff work full time for Central Carolina and gave plaintiff
control of her own scheduling. The copy of the modified August
contract included in the record on appeal is not dated nor
signed. -9- On 18 September 2011, plaintiff sent a letter to McDaniel
in which she again inquired about her unpaid wages and stated
that she was considering reporting the situation to the North
Carolina Wage and Hour Bureau. Plaintiff also noted that
defendants had promised but failed to pay her on multiple dates
“as far back as Friday the last week of July.”
Plaintiff did not receive her first paycheck until 30
September 2011. The paycheck was for less than the amount
promised under the terms of the Employment Agreement. Within
two weeks, plaintiff’s counsel sent defendants a letter
demanding plaintiff’s back wages she was due under the
Employment Agreement.
In January 2012, with defendants’ knowledge and
acquiescence, plaintiff began working part-time for other
practices in order to meet her expenses and other financial
obligations. Defendants never complained to plaintiff about her
outside employment. On 6 June 2012, after defendants repeatedly
failed to pay plaintiff under the terms of the Employment
Agreement, plaintiff ceased performing all services for
defendants.
On 13 April 2012, plaintiff commenced an action against
defendants alleging: (1) breach of contract against Central -10- Carolina, and (2) a violation of the North Carolina Wage and
Hour Act against all defendants. On 19 June 2012, defendants
filed an answer and counterclaim, alleging breach of contract.
Approximately six months later, on 12 December 2012, defendants
filed additional affirmative defenses, including the defense
that the Employment Agreement had been modified. Following a
hearing on 4 February 2013, defendants’ breach of contract
counterclaim was dismissed by Judge David L. Hall at summary
judgment. The matter came on for trial during the 11 February
2013 Civil Session of Guilford County Superior Court.
At the close of evidence, plaintiff moved for and was
granted a directed verdict on defendants’ sixth affirmative
defense, which alleged that the terms of plaintiff’s employment
were modified by an oral agreement of the parties. The jury
later found for plaintiff, finding that: (1) the Employment
Agreement between plaintiff and Central Carolina was not induced
by fraud, (2) plaintiff was entitled to recover $288,734.85 from
defendants for breach of contract and unpaid back wages, and (3)
McDaniel and Epes were employers under the North Carolina Wage
and Hour Act. On 16 April 2013, Judge Massey entered findings
of fact, an order, and a judgment reflecting the jury’s verdict.
In his findings and order, Judge Massey found that defendants’ -11- failure to pay plaintiff was not in good faith and that
defendants were liable to plaintiff, jointly and severally, for
the sum of $767,186.10 (representing prejudgment interest,
attorney’s fees, costs, and twice the amount of plaintiff’s
unpaid wages). On 22 April 2013, defendants filed a Motion for
Judgment Notwithstanding the Verdict or in the Alternative,
Motion for New Trial. On 24 July 2013, the trial court denied
defendants’ post-trial motions.
On 7 August 2013, defendants timely appealed.
Notice of Appeal
Initially, we must determine whether defendants’ notice of
appeal was proper. Pursuant to Rule 3 of the North Carolina
Rules of Appellate Procedure, plaintiff argues that defendants’
notice of appeal was deficient by failing to designate the trial
court’s order granting a directed verdict in favor of plaintiff
on defendant’s affirmative defense of modification or the order
from which the appeal was being taken. Accordingly, plaintiff
contends that the Court should dismiss the appeal for lack of
jurisdiction.
Rule 3(d) of the North Carolina Rules of Appellate
Procedure provides that an appellant’s notice of appeal “shall
designate the judgment or order from which appeal is taken[.]” -12- “An appellant’s failure to designate a particular judgment or
order in the notice of appeal generally divests this Court of
jurisdiction to consider that order.” Yorke v. Novant Health,
Inc., 192 N.C. App. 340, 347, 666 S.E.2d 127, 133 (2008); see
also Rite Color Chemical Co. v. Velvet Textile Co., 105 N.C.
App. 14, 17, 411 S.E.2d 645, 647 (1992). However, if the
appellant made “a mistake in designating the judgment”, Smith v.
Indep. Life Ins. Co., 43 N.C. App. 269, 274, 258 S.E.2d 864, 867
(1979), or if an appellant’s intent to appeal from the proper
judgment can be inferred from the notice and the appellee was
not misled by the mistake, the Court may liberally construe a
notice of appeal to obtain jurisdiction , Von Ramm v. Von Ramm,
99 N.C. App. 153, 156-57, 392 S.E.2d 422, 424 (1990).
Here, although the order granting a directed verdict for
plaintiff on defendants’ affirmative defense of modification is
not specifically mentioned in the notice, defendants’ notice of
appeal states that they are appealing, among other things:
(4) the Ruling of the Honorable A. Moses Massey rendered during the trial of the captioned matter, to exclude jury instructions and questions or issues for the jury regarding the modification of the Employment Contract between Plaintiff and CCSEA, and regarding waiver by the Plaintiff of any alleged breach of the Employment Contract by Defendants. -13- Although their notice of appeal does not specifically designate
the order from which they are appealing, construing paragraph 4
of the notice liberally, it manifests an intent to appeal the
order granting plaintiff’s motion for a directed verdict since
that order had the effect of “exclude[ing] . . . questions or
issues for the jury regarding the modification of the Employment
Contract.” Therefore, pursuant to Ramm, the notice was
sufficient to confer jurisdiction upon the Court, and we address
the merits of the defendants’ appeal below.
Standard of Review
“The standard of review of directed verdict is whether the
evidence, taken in the light most favorable to the non-moving
party, is sufficient as a matter of law to be submitted to the
jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322, 411 S.E.2d
133, 138 (1991). “In determining the sufficiency of the
evidence to withstand a motion for a directed verdict, all of
the evidence which supports the non-movant’s claim must be taken
as true and considered in the light most favorable to the non-
movant, giving the non-movant the benefit of every reasonable
inference which may legitimately be drawn therefrom and
resolving contradictions, conflicts, and inconsistencies in the
non-movant’s favor.” Turner v. Duke Univ., 325 N.C. 152, 158, -14- 381 S.E.2d 706, 710 (1989). In the case of an affirmative
defense, directed verdict is properly granted where the
defendant fails to present more than a scintilla of evidence in
support of each element of his defense. See Booker v. Everhart,
33, N.C. App. 1, 15, 234 S.E.2d 46, 56, (1977), rev’d on other
grounds, 294 N.C. 146, 240, S.E.2d 360 (1978).
Arguments
Defendants sole argument on appeal is that the trial court
erred in granting plaintiff’s motion for a directed verdict on
their defense of modification because there was sufficient
evidence showing that the parties had orally agreed to modify
the compensation terms of the Employment Agreement to submit the
issue to the jury.1 Specifically, defendants contend that they
offered evidence for both elements necessary for the defense of
contract modification: (1) plaintiff’s assent to the modified
terms can be established by her conduct; and (2) plaintiff
received new consideration for the modification. In contrast,
plaintiff argues that, pursuant to the NCWHA, defendants could
1 Although McDaniel also argues on appeal that the trial court erred in refusing to instruct the jury on the issue of modification, he concedes that this issue is moot should the Court conclude that the directed verdict for plaintiff was properly granted. -15- not orally modify the compensation terms of her Employment
Agreement.
We agree with plaintiff and conclude that defendants could
not, as a matter of law, orally modify the wage provisions of
the Employment Agreement under NCWHA. Furthermore, even if we
assume that the modified August contract constituted proper
notice under the NCWHA, defendants’ affirmative defense still
fails because there was no evidence that plaintiff assented to
the terms of the modification, a required showing to defeat
plaintiff’s motion for a directed verdict.
I. NCWHA and Oral Modifications to Employment Contracts
NCWHA, section 95–25.13(3) (2013), provides that employers
must “[n]otify its employees, in writing or through a posted
notice maintained in a place accessible to its employees, at
least 24 hours prior to any changes in promised wages. Wages
may be retroactively increased without the prior notice required
by this subsection.” This Court has interpreted the Act to mean
that “[a]n employer may provide for loss or forfeiture of wages
and benefits, or change the wages and benefits offered at any
time, but prior to such change, the employer must notify the
employee of the change in writing or through a posted notice,
and the change can only have prospective application, except in -16- the case of increases in wages and benefits.” Narron v.
Hardee's Food Sys., Inc., 75 N.C. App. 579, 583, 331 S.E.2d 205,
207-08 (1985), overruled on other grounds by J & B Slurry Seal
Co. v. Mid–South Aviation, Inc., 88 N.C. App. 1, 362 S.E.2d 812
(1987).
Here, it is undisputed that, on 17 February 2011, the
parties entered into a written Employment Agreement which
guaranteed plaintiff a first-year salary of $350,000, payable
twice monthly. The discussion defendants had with plaintiff
where they claim they orally modified the wage provisions of the
Employment Agreement occurred on or about 28 May 2011. However,
defendants never presented plaintiff with any written document
showing the modification until late August 2011 when they
provided her the modified August contract, which substantially
reduced plaintiff’s compensation to 34% of her net collections
without including any provisions for a base salary. Thus, as a
matter of law, defendants’ claim that they orally modified the
employment agreement in May fails because, under section 95–
25.13(3), an employee’s wages may not be modified orally.
Despite the fact that the parties could not orally modify
the Employment Agreement, it is undisputed that defendants did
provide plaintiff a copy of her purported new contract in -17- August. Assuming, without deciding, that this constituted
sufficient notice under NCWHA, defendants must show that they
provided more than a scintilla of evidence for each required
element of contract modification to survive plaintiff’s motion
for a directed verdict.
II. Contract Modification
Under North Carolina law, to be effective, a modification
must “contain all the essential elements of a contract.” Yamaha
Int’l Corp. v. Parks, 72 N.C. App. 625, 628, 325 S.E.2d 55, 58
(1985). “The critical elements are mutual assent to the
modification, and consideration or a substitute supporting it.”
Altman v. Munns, 82 N.C. App. 102, 105, 345 S.E.2d 419, 422
(1986). A contract “may be modified or waived by a subsequent
parol agreement, or by conduct which naturally and justly leads
the other party to believe the provisions of the contract are
modified or waived . . . . This principle has been sustained
even where the instrument provides for any modification of the
contract to be in writing.” Childress v. Trading Post, 247 N.C.
150, 154, 100 S.E.2d 391, 394 (1957) (citations omitted).
With regard to the first element of mutual assent, a
modification must reflect “an agreement between the parties that
the terms of the contract should be altered.” G. Adrian Stanley -18- & Assocs. v. Risk & Ins. Brokerage Corp., 123 N.C. App. 532,
535, 473 S.E.2d 345, 348 (1996); see also Electro Lift, Inc. v.
Miller Equip. Co., 4 N.C. App 203, 207, 166 S.E.2d 454, 457
(1969) (“Mutual consent is as much a requisite in effecting a
contractual modification as it is in the initial creation of the
contract.”). Mutual assent may be shown by an affirmative
statement agreeing to modification or by “conduct which
naturally and justly leads the other party to believe the
provisions of the contract have been modified or waived.” Son-
Shine Grading, Inc. v. ADC Constr. Co., 68 N.C. App.417, 422,
315 S.E.2d 346, 349 (1984).
Defendants present no evidence that plaintiff made any
“affirmative statement,” id., agreeing to the new terms of
compensation. Instead, they argue that plaintiff agreed to the
modification through her conduct. However, we conclude that
plaintiff’s conduct “naturally” and “justly”, id., supports an
opposite conclusion. With regard to plaintiff’s reaction at the
May meeting where plaintiff was allegedly informed about her new
compensation, she responded by slapping her hand on the table
and becoming emotional. This is certainly not indicative of
acquiescence or evidence that plaintiff agreed to be paid on a
production-only basis. Furthermore, there is overwhelming -19- evidence in the record that plaintiff consistently objected to
being paid much less than what was provided in the Employment
Agreement. Specifically, plaintiff began requesting the base
salary she was owed as early as July 2011 and thereafter
continued to inquire about defendants’ failure to pay her
“[r]egular bimonthly pay” and “base salary after taxes” which
she was entitled to under the terms of the Employment Agreement.
Both plaintiff and plaintiff’s counsel sent letters to
defendants disputing plaintiff’s wages and expressing their
inclination to report the situation to the North Carolina Wage
and Hour Bureau. Plaintiff continued to dispute her wages until
she resigned in June 2012. Most notably, plaintiff refused to
sign the modified August contract reflecting defendants’ alleged
oral modifications.
With regard to defendants’ contention that plaintiff’s
part-time work in January 2012 constituted evidence of assent
since plaintiff was prohibited under the Employment Agreement
from working for other employers but allowed to do so under the
modified August contract, their argument is without merit.
Plaintiff only began working part-time after months of
requesting her base salary and only out of desperation. After
eight months of receiving wages less than promised under the -20- written Employment Agreement and numerous letters to defendants
disputing her wages, plaintiff began working part-time to meet
her expenses and other financial obligations. Therefore,
plaintiff’s part-time work is not evidence of assent to the
modified terms of the Employment Agreement.
Thus, in sum, defendants failed to produce any evidence
showing that plaintiff mutually assented or in any way agreed to
the modified terms of the Employment Agreement. In contrast,
the evidence clearly shows conduct by plaintiff indicating that
she was acting as though the Employment Agreement was still in
place. Because there was no evidence of mutual assent, a
required element for contract modification, it is not necessary
to discuss whether the modification was supported by new
consideration.
Conclusion
Based on the foregoing reasons, we conclude that the trial
court did not err in granting a directed verdict for plaintiff
on defendants’ affirmative defense of contract modification.
NO ERROR.
Judge DILLON concurs in result.
Judge DAVIS concurs. -21- Report per Rule 30(e).