Gilreath v. North Carolina Department of Health & Human Services

BRYANT, Judge.

Teresa Smith Gilreath (plaintiff) appeals from an order entered 3 June 2005 granting summary judgment in favor of the North Carolina Department of Health and Human Services (defendant) and dismissing plaintiffs Complaint. The trial court found plaintiff was overpaid for her work for defendant and ordered plaintiff to repay $12,359.53 to the State of North Carolina. For the reasons below, we reverse the order of the trial court and remand for further proceedings.

Facts

Plaintiff is employed by defendant as an Advocate II, working at the Whitaker School located on the campus of John Umstead Hospital. Whitaker School is a separate entity from John Umstead Hospital and each facility has its own director. Beginning on or about 21 March 2001, plaintiff began receiving $2.00 per hour for on-call time she worked in her position at the Whitaker School. In August 2003, plaintiff was informed that there was a question as to whether or not she was being overpaid for her on-call time. On 25 June 2004, plaintiff received a letter from the Human Resources Director for John Umstead Hospital informing her that defendant had made a salary overpayment to her due to a miscalculation in her on-call pay rate and that she was required to repay the overpayment.

Procedural History

On 6 August 2004, plaintiff filed a complaint in this matter, seeking, inter alia, a declaratory judgment that she is the exclusive owner of the funds defendant seeks to recover ■ from her. Defendant answered on 27 August 2004 and filed a motion for summary judgment on 28 April 2005. Defendant’s motion for summary judgment was heard on 9 May 2005 in Granville County Superior Court, before the Honorable W. Russell Duke, Jr. On the same day as the hearing on defendant’s motion, plaintiff filed a cross-motion for summary judgment and a motion to strike certain paragraphs from various affidavits filed by defendant in support of its motion for summary judgment. On 3 June 2005, the trial court entered an order granting defendant’s motion for summary judgment and dismissing plaintiff’s complaint.- The trial court found plaintiff was overpaid for her work for defendant and ordered plaintiff to repay $12,359.53 to the State of North Carolina. The trial court’s order does not explicitly address either of plaintiff’s motions. Plaintiff appeals.

Plaintiff raises two issues on appeal: (I) whether the trial court erred in failing to grant plaintiff’s motion to strike; and (II) whether the trial court erred in granting defendant’s, and denying plaintiff’s, motion for summary judgment.

I

Plaintiff first claims the trial court erred in failing to. grant her motion to strike several paragraphs from affidavits submitted in support of defendant’s motion for summary judgment. Plaintiff filed her motion to strike portions of the affidavits on the grounds that the affidavits failed to comply with the requirements of Rule 56 of the North Carolina Rules of Civil Procedure. However, the trial court’s order granting defendant’s motion for summary judgment does not address plaintiff’s motion to strike and there is no indication in the record before this Court that the trial court otherwise ruled on plaintiff’s motion to strike. Rule 10(b)(1) of the North Carolina Rules of Appellate Procedure provides that in order to preserve a question for appellate review, it is “necessary for the complaining party to obtain a ruling upon the party’s request, objection or motion.” N.C. R. App. P. 10(b)(1); see also Finley Forest Condo. Ass’n v. Perry, 163 N.C. App. 735, 738, 594 S.E.2d 227, 230 (2004) (holding the Court was unable to review an issue concerning the trial court’s admission and consideration of affidavits since there was nothing in the record indicating the trial court’s ruling on the plaintiff’s objection and motion to strike). Because plaintiff failed to obtain a ruling on her motion to strike, this assignment of error is overruled.

II

Plaintiff next argues the trial court erred in granting defendants’ motion for summary judgment and in denying her own motion for summary judgment. Under Rule 56(c) of the North Carolina Rules of Civil Procedure, summary judgment shall be granted only if the trial court finds “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. Gen. Stat. § 1A-1, Rule 56(c) (2005). “[I]n ruling on a motion for summary judgment the court does not resolve issues of fact and must deny the motion if there is any issue of genuine material fact.” Singleton v. Stewart, 280 N.C. 460, 464, 186 S.E.2d 400, 403 (1972) (citations omitted). “[T]he court may consider the pleadings, depositions, admissions, affidavits, answers to interrogatories, oral testimony and documentary materials[.]” Dendy v. Watkins, 288 N.C. 447, 452, 219 S.E.2d 214, 217 (1975). “All such evidence must be considered in a light most favorable to the non-moving party.” Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004).

“On appeal, this Court has the task of determining whether, on the basis of the materials presented to the trial court, there is a genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law.” Eckard v. Smith, 166 N.C. App. 312, 318, 603 S.E.2d 134, 138 (2004) (citing Oliver v. Roberts, 49 N.C. App. 311, 314, 271 S.E.2d 399, 401 (1980)), aff'd per curiam, 360 N.C. 51, 619 S.E.2d 503 (2005). We review the trial court’s grant of summary judgment de novo. Shroyer v. County of Mecklenburg, 154 N.C. App. 163, 167, 571 S.E.2d 849, 851 (2002).

The dispositive issue in this matter is whether there is evidence to support the trial court’s determination no genuine issue of material fact exists concerning the rate at which plaintiff should have been paid for her on-call time. The trial court found as fact that plaintiff was employed as an Advocate II at the Whitaker School and that “Whitaker School established an on-call pay rate of $0.94 per hour for its eligible employees, including the Plaintiff.” Based on this finding, the trial court held that plaintiff had been mistakenly compensated at a rate of $2.00 per hour for her on-call time, resulting in a net overpayment by defendant of $12,359.53. However, the only evidence as to the on-call pay rate for employees of the Whitaker School is found in the affidavits of Debbie Johnson, Michael Sinno, and Anna Bass, each of whom asserts that the Whitaker School had established an on-call pay rate of $0.94 per hour for plaintiff.

On-call pay for plaintiff and other eligible employees at the Whitaker School and John Umstead Hospital was provided under a pilot program initiated by defendant effective 1 December 2000. The authority to establish the on-call pay rate was vested under the pilot program with the individual divisions within the Department of Health and Human Services. For the Whitaker School it is apparent from the record that this authority was vested with the Whitaker School Management Team. There is no evidence that Johnson, Sinno, or Bass are members of the Whitaker School Management Team or were otherwise involved in the establishment of the on-call pay rate for the Whitaker School. Therefore, any knowledge they have of the on-call pay rate can only be through a statement made by another, namely the Whitaker School Management Team. Each of the statements made by Johnson, Sinno and Bass establishing plaintiffs on-call pay rate in their affidavits, and in the exhibits submitted in support of their affidavits, are hearsay and are inadmissible to prove the on-call pay rate for employees at the Whitaker School. These statements should not have been considered by the trial court in ruling on defendant’s motion for summary judgment.

Affidavits supporting or opposing a motion for summary judgment “shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” N.C. Gen. Stat. § 1A-1, Rule 56(e) (2005). “Hearsay matters included in affidavits should not be considered by a trial court in entertaining a party’s motion for summary judgment.” Moore v. Coachmen Indus. Inc., 129 N.C. App. 389, 394, 499 S.E.2d 772, 776 (1998). Hearsay is defined as “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” N.C. Gen. Stat. § 8C-1, Rule 801(c) (2005).

Defendant does not address any hearsay concerns in its brief, but rather asserts that Johnson, Sinno and Bass had first-hand personal knowledge of plaintiff’s on-call pay rate which is not hearsay. The dissent, however, creates an argument for defendant that Johnson, Sinno and Bass’ personal knowledge of plaintiff’s on-call pay rate was gathered from business records which fall under the “business records exception” to the hearsay rule.¹ We agree with the dissent that “[knowledge obtained from the review of records, qualified under Rule 803(6), constitutes ‘personal knowledge’ within the meaning of Rule 56(e).” Hylton v. Koontz, 138 N.C. App. 629, 635, 532 S.E.2d 252, 256 (2000). However, “[i]f . . . the affiant obtained information from a written record and the record did not comply with requirements of the business records exception to the hearsay rule, this information would . . . not be based on the affiant’s personal knowledge.” Id. at 635 n.3, 532 S.E.2d at 257 n.3 (citations omitted).

The dissent cites to Moore v. Coachmen Indus. Inc., 129 N.C. App. 389, 499 S.E.2d 772 (1998), in support of its contention that the affidavits in the instant case provide for the establishment of plaintiff’s- on-call pay rate as acquired through business records. However, in Moore the affiant specifically addressed the foundational requirements of establishing a document under the business records exception. The affiant in Moore stated:

I am the Senior Corporate Attorney of [defendant Coachmen]. Prior to [defendant Sportscoach’s] corporate dissolution in 1995, I held the same position with both [defendants] Sportscoach and Coachmen. I have custody and access to the business records of [defendant] Sportscoach relating to [plaintiffs’] vehicle[,] which is the subject of the instant action ....

I am familiar with the system by which . . . Sportscoach records were generated. The entries in these records were made in the regular course of [defendant] Sportscoach’s business[,] at or near the time of the events recorded[, and] based upon the personal knowledge of the person making them, or upon information transmitted by the person with knowledge.

It was the regular business practice of [defendant] Sportscoach to require the dealer to deliver and have signed the Warranty Registration and pre-delivery and acceptance declaration, and to. deliver the Owners Manual and the New Recreational Vehicle Limited Warranty and other information about the Sportscoach warranty before or contemporaneously with the delivery and sale of the vehicle to the dealer’s customer. That this practice was followed with respect to the sale of the vehicle to the plaintiffs is confirmed by plaintiff Luther Deleon Moore’s signature, certifying that all warranties were clearly explained to him.

Id. at 395, 499 S.E.2d at 776. In the instant case, none of the affidavits address the foundational requirements for the admission of evidence which would establish plaintiff’s on-call pay rate through a “business record,” and thus do not present personal knowledge setting forth facts admissible in evidence.

It is uncontested that Johnson is the Director of Human Resources for John Umstead Hospital, and that office provides human resources functions to plaintiffs employer, the Whitaker School. While her affidavit states the facts within are based on her personal knowledge, Johnson also states the following:

10. Effective December 1, 2000, DHHS received approval from the Office of State Personnel to participate in an On-Call Pilot Program. The Pilot Program provided that certain classes and/or specific positions were approved for on-call consideration. Advocate II positions were included in the list of positions approved for on-call pay if the employing entities chose to participate in the program. Pursuant to the pilot program, eligible employees may be compensated at a rate ranging from $0.94 per hour up to $2.00 per hour. The decision about the applicable rate of on-call pay was determined by each individual division within DHHS.

11. Pursuant to this pilot program, John Umstead Hospital established an on-call pay rate of $2.00 per hour for its eligible employees. Whitaker School established an on-call pay rate of $0.94 per hour for its eligible employees, including Ms. Gilreath.

12. I informed the Payroll Office of Whitaker School’s decision to establish a $0.94 per hour on-call rate via facsimile on January 3 1, 2001. The document attached as Exhibit 7 is a fair and accurate copy of the facsimile I transmitted to Payroll on January 31, 2001 and bears my initials at the bottom.

(Emphasis added). The facsimile attached as Exhibit 7 to Johnson’s affidavit is merely the cover page of a seven-page set of documents. According to the handwritten note on the cover page, “All these memos were sent to Payroll and Timekeeping to inform you of the rate changes. It is official @ JUH that Physicians make $5.00/hr and others are in the 1/8/01 memo. Whitaker and Town are still .944/hr. DSJ.” None of the supporting memos mentioned in the fax cover sheet are included in the record before this Court and it appears none were submitted to the trial court for its review of this matter.

There is nothing in Johnson’s affidavit to establish the foundation that the facsimile cover page is a record of regularly conducted activity which would fall under the business records exception to the hearsay rule, as required by Rule 803(6). At best, Johnson’s affidavit could be interpreted to find that the missing memos following the facsimile cover page would so qualify, but those documents are not attached in support of the affidavit. Instead, Johnson relies on a handwritten note on a cover page that purports to summarize the contents of the missing memos. Thus, Johnson’s written note on the facsimile cover page is hearsay and as that is the only support for Johnson’s personal knowledge of the on-call rate for employee’s at the Whitaker School, the cover page and her statements as to the on-call rate contained in her affidavit cannot be considered by the court when ruling on defendant’s motion for summary judgment.

No other competent evidence exists in the record to support a finding that plaintiff’s proper on-call pay rate was $0.94/hour and plaintiff offers no uncontested evidence, other than the fact of her actual payments, to establish her proper on-call pay rate. Therefore, a genuine issue of material fact exists as to the on-call pay rate to which plaintiff was entitled and, considering the facts on record, the trial court erred in granting defendant’s motion for summary judgment. Further, as a genuine issue of material fact exists in this matter, the trial court did not err in not granting plaintiff’s motion for summary judgment.

Reversed and remanded for further proceedings.

Judge HUDSON concurs. Judge HUNTER concurs in part and dissents in part in a separate opinion.

1 . Rule 803(6) of the North Carolina Rules of Evidence provides the following exception to the hearsay rule:

Records of Regularly Conducted Activity. — A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.

N.C. Gen. Stat. § 8C-1, Rule 803(6) (2005); see also State v. Wilson, 313 N.C. 516, 533, 330 S.E.2d 450, 462 (1985) (“Business records made in the ordinary course of business at or near the time of the transaction involved are admissible as an exception to the hearsay rule if they are authenticated by a witness who is familiar with them and the system under which they are made.”).