City of Omaha v. City of Elkhorn

• Decision Date: 11 July 2008
• Docket Number: No. S-07-174.,No. S-07-263.,S-07-174.,S-07-263.
• Parties: CITY OF OMAHA, Nebraska, a municipal corporation, and City of Omaha Mayor Michael Fahey, appellees, v. CITY OF ELKHORN, Nebraska, a municipal corporation, and Fraternal Order of Police Lodge No. 53, appellants.
• Court: Nebraska Supreme Court

752 N.W.2d 137

276 Neb. 70

CITY OF OMAHA, Nebraska, a municipal corporation, and City of Omaha Mayor Michael Fahey, appellees, v. CITY OF ELKHORN, Nebraska, a municipal corporation, and Fraternal Order of Police Lodge No. 53, appellants.

No. S-07-174.

No. S-07-263.

Supreme Court of Nebraska.

July 11, 2008.

Jeff C. Miller, Duncan A. Young, and Keith I. Kosaki, of Young & White, Omaha, for appellants.

William M. Lamson, Jr., Lawrence F. Harr, and Craig F. Martin, of Lamson, Dugan & Murray, L.L.P., and Paul D. Kratz, Omaha City Attorney, and Alan M. Thelen, Omaha, for appellees.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

MILLER-LERMAN, J.

I. NATURE OF CASE

These two cases, Nos. S-07-174 and S-07-263, consolidated for appeal, arise from an annexation dispute. In these appeals, we are asked to determine whether certain contract provisions requiring continued employment and allowing for the payment of severance benefits in the event the City of Elkhorn, Nebraska (Elkhorn), was annexed by the City of Omaha, Nebraska, appellee (Omaha), are valid and enforceable. In each case, Omaha sought a declaration in the district court for Douglas County that the agreements, which had been negotiated by Elkhorn prior to its annexation by Omaha, were not valid because they violated Neb. Const. art. III, § 19, which generally prohibits paying a gratuity or "extra compensation" to a public employee. The district court concluded it had jurisdiction, declared the severance provisions invalid and unenforceable, and granted summary judgment in favor of Omaha. Case No. S-07-174 involves Elkhorn and the Fraternal Order of Police Lodge No. 53. Case No. S-07-263 involves Elkhorn and management employees Donald Eikmeier, Wendy Anderson, Kevin Daly, Timothy Dempsey, Cheryl Eckerman, Steven Morrissey, Jesse Robinson, and "Jane Does" and "John Does."

We conclude that jurisdiction exists over these cases. However, contrary to the district court's ruling, we conclude that because the severance provisions were determined prior to the services rendered by the police and management appellants and are supported by adequate consideration, the severance provisions are enforceable and the payments made under the severance provisions are not unconstitutional gratuities. Accordingly, we reverse the district court's grant of summary judgment in each case, and we remand the causes for further proceedings consistent with this opinion.

II. FACTS

The material facts are essentially undisputed. Beginning in 2003, the Fraternal Order of Police Lodge No. 53 (hereinafter the police appellants); and Eikmeier, as Elkhorn's city administrator; Anderson; Daly; Dempsey; Eckerman; Morrissey; Robinson; and Jane and John Does, as management personnel within Elkhorn's government (hereinafter collectively the management appellants), entered into contracts that provided for the payment of severance benefits. The severance provisions in these contracts provided generally that in exchange for their agreement to remain employed, the police and management appellants would be entitled to the payment of severance benefits if Elkhorn was annexed and if at the time of the annexation, the individual police and management appellants were still employed by Elkhorn.

Specifically, the police appellants' severance provision provided that they would be paid compensation equal to 52 weeks in monthly installments beginning with the month after the police appellants' last day of employment with Elkhorn. The police appellants' severance provision further stated that if, during the 52-week compensation period, the police appellants were employed as law enforcement officers by any political subdivision of the State of Nebraska, the right to compensation under the severance provision terminated.

Eikmeier's agreement provided that Eikmeier would receive 6 months' pay as severance benefits, which could be paid in one lump sum at Eikmeier's election. The agreement of the remaining management appellants provided that they would receive 10 weeks' pay as severance benefits, which could be paid in one lump sum at the individual management appellant's election. There was no provision in the management appellants' contracts that their severance benefits would be terminated if they found employment subsequent to their last day of employment with Elkhorn.

Beginning in early 2005, Omaha and Elkhorn each passed annexation ordinances. Omaha annexed Elkhorn, and Elkhorn sought to annex surrounding communities in an effort to immunize itself from Omaha's annexation. On March 9, 2005, Elkhorn filed a complaint in the district court for Douglas County, seeking to prevent Omaha's annexation of Elkhorn from taking effect (the annexation case). Following a trial, the district court determined that Omaha's annexation ordinance was valid and that Elkhorn's annexation ordinance was invalid. In an opinion filed January 12, 2007, this court affirmed the district court's order in the annexation case and noted that Omaha's annexation of Elkhorn was effective March 24, 2005. See City of Elkhorn v. City of Omaha, 272 Neb. 867, 725 N.W.2d 792 (2007).

On March 31, 2006, Omaha filed two separate actions, which are the cases presently before this court. In these cases, Omaha sought declaratory judgments that the severance provisions were invalid and unenforceable under Neb. Const. art. III, § 19, which prohibits paying extra compensation to a public employee after services have been rendered. In each case, Omaha filed a motion for summary judgment, and in each case, appellants filed oppositions to the motion. Omaha's motions and appellants' opposition to the motions came on for evidentiary hearings.

During the hearings, appellants challenged the district court's subject matter jurisdiction, claiming that Omaha lacked standing to bring its declaratory judgment actions and further claiming that the issues raised therein were not ripe. The police appellants' evidence included an affidavit from Eikmeier in his capacity as city administrator. Eikmeier stated as follows:

10. In July 2003, [the police appellants] presented to me, as the chief negotiator for ... Elkhorn, a proposed Labor Agreement....

11. As part of the proposal by [the police appellants, they] requested a severance provision....

13. [The police appellants] maintained that such a severance provision was necessary to insure the ability to provide qualified police officers, in the event of annexation ... of Elkhorn by any other political entity.

19. The [severance provision] requires the [police appellants] to continue employment with [Elkhorn] until such time as [Elkhorn] no longer exists, in exchange for an agreement of [Elkhorn] to pay a retention incentive....

20. [The p]olice [appellants] are promised a retention incentive payment in exchange for such employees foregoing [sic] any opportunity of employment in other entities during any period of potential annexation, or any transition required because of annexation, in order to receive any of the severance incentive payments.

The management appellants also introduced into evidence an affidavit from Eikmeier in his capacity as city administrator. In his affidavit, Eikmeier stated as follows:

10. [As part of negotiations in] July 2003 ... [the management appellants] presented demands regarding job security and incentive payments as a condition for them to continue their employment until such time as ... Elkhorn ceased to exist as a result of ... annexation.

....

14. In the summer of 2003 I presented and recommended to the Elkhorn City Council and Mayor that ... Elkhorn take the necessary steps designed to assist ... Elkhorn in retaining the services of ... employees, and to address the concerns of losing employment as a result of ... annexation....

15. In September 2003, the City Council approved the recommendation to provide for compensation to those [employees] in exchange and in consideration for their continued service to ... Elkhorn.

16. The Severance Agreement is, in reality and by its terms, a retention incentive agreement whereby the employee agrees to continue in the employment of ... Elkhorn in exchange for [Elkhorn's] promise of a payment upon the completion of the service.

.... 18. Without the retention incentive ... Elkhorn would have lost many of its key employees ... because of the uncertainty of Elkhorn's continued existence.

Eikmeier's affidavit testimony in both cases was essentially uncontroverted by Omaha.

By entry of an order in each case, the district court sustained Omaha's summary judgment motions. The district court determined in each case that it had subject matter jurisdiction and declared that the severance provisions were void because they violated Neb. Const. art. III, § 19. The district court enjoined enforcement of the provisions. Appellants appeal from the district court's orders.

III. ASSIGNMENTS OF ERROR

Appellants raise several assignments of error that we summarize and restate as two. Appellants claim, restated, that the district court erred (1) in determining that it had subject matter jurisdiction over Omaha's declaratory judgment actions and (2) in sustaining Omaha's motions for summary judgment based upon its determination that the severance provisions violated Neb. Const. art. III, § 19.

IV. STANDARDS OF REVIEW

When a jurisdictional question does not involve a factual dispute, determination of the issue is a matter of law, which requires an appellate court to reach a conclusion independent from that of the trial court. In re Estate of Rose, 273 Neb. 490, 730 N.W.2d 391 (2007).

Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Hofferber v. City of Hastings, 275 Neb. 503,...