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Town of Rural Hall threatens lawsuit against former town manager over severance, according to court document.
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Town of Rural Hall threatens lawsuit against former town manager over severance, according to court document.

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Three former members of the Rural Hall Town Council are being accused of violating state law in approving a six-figure severance package for the former town manager, according to a court document filed in Forsyth Superior Court Tuesday.

The document was filed by Randolph James, who was appointed Monday as the interim town attorney. D. Barrett Burge resigned as town attorney on Oct. 21, the same day that Council Members John McDermon, Ricky Plunkett and Jesse Stigall and Town Manager Megan M. Garner resigned. Town Clerk Dora K. Moore, who served briefly as interim town manager after Garner left, resigned on Oct. 13. Her last day was Wednesday.

Frank James, who Garner replaced as town manager in 2017, is the interim town manager. Terry Bennett and Eddie Horn have been appointed to fill in the remaining weeks of the unexpired terms for Plunkett and Stigall, whose names are still on the Nov. 2 ballot for Rural Hall’s municipal election. McDermon was not up for election until 2023 and his former seat remains open for now.

McDermon, Plunkett and Stigall all cited conflicts among the town’s elected officials and what they called unfounded allegations against Garner as the reasons they resigned. Burge and Moore did not cite those reasons for resigning, according to their resignation letters. Moore said she was leaving to pursue another position.

The day after Garner resigned, she accepted an offer to become the city manager in Graham. As Rural Hall’s town manager, Garner was paid an annual salary of $111,514, according to Wade Gilley Jr., the town’s finance director.

In the court document filed Tuesday, James announced his intent to file a lawsuit on behalf of the town of Rural Hall against Garner at least by Nov. 15. Garner is scheduled to start her new job in Graham on Nov. 15, where she will be paid an annual salary of $120,000 and up to $5,000 in moving expenses, according to an Oct. 22 story in the Burlington Times-News.

James said in the document that a six-figure settlement agreement, or severance package, should never have been paid to Garner for a number of reasons. James said the agreement violates state law because the finance director did not get a chance to do a pre-audit to figure out whether there was enough money to pay. As a result, the agreement is null and void, James said.

And the agreement also “would have required a payment not provided for in the budget for the Town of Rural Hall and would have necessitated an amendment to the budget in a public meeting with notice for the appropriation.” James said in the court document that this was not done and is another reason why the severance package was not proper.

Garner’s contract, which James cites in the court document, said that the town is not obligated to pay Garner severance if she resigns and takes a new position.

James also alleges that this settlement “is the result of an orchestrated manipulation of applicable laws related to closed sessions by prior elected officials and a breach of the defendant’s fiduciary duty to the Town of Rural Hall.”

In an interview on Wednesday, James said he believes that McDermon, Plunkett and Stigall held illegal meetings that violated the state’s open meetings law prior to the meeting on Oct. 21.

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The Rural Hall Town Council held a special meeting on that day in which the council held a closed session to discuss attorney-client privilege as well as the potential council resignations and potential plan of succession.

James said that the town council voted on the severance package in open session. McDermon, Plunkett and Stigall voted for the package and Council Member Susan Gordon dissented.

James said that he could not disclose the amount of the severance package because the agreement is labeled confidential. When he files the lawsuit, James said he will file the settlement agreement under seal and ask a judge to make a decision whether to make it public.

“That’s another example of a lack of transparency by the three former council members,” James said. “It should never have been confidential. The taxpayers need to know. It’s a substantial sum of money.”

Under state law, settlements made on behalf of public agencies, public officials or public employees are public records.

Garner could not immediately be reached for comment. McDermon, Stigall and Gordon did not return messages Wednesday seeking comment.

Plunkett said Wednesday that there were no secret meetings.

“Any meetings held were publicized as emergency meetings or specially called meetings (that were) going into closed sessions,” he said.

Asked whether he was comfortable with voting for a confidential settlement agreement for a public official, he said he was and that his decision was based on legal advice from Burge, who did not return a message seeking comment.

Plunkett also said that he voted for the settlement agreement because Garner had been the subject of what he said were unfair allegations.

“Yes because she was constantly being bashed by other members of the board and citizens, false accusations, lies, et cetera,” he said. “I’m just telling you what it was. It was confidential. There was nothing orchestrated by (our) resignations.”

He said Garner was an outstanding town manager and that she rose to the top of the list from 39 potential candidates.

“She worked tirelessly for four solid years,” Plunkett said.

336-727-7326

@mhewlettWSJ

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On her first day as city manager for Graham, Megan Garner got sued by her former employer, the Town of Rural Hall. Garner and three council members who resigned after a meeting on Oct. 21 are accused of violating state law and town protocols in negotiating and approving a six-figure severance package. No one on either side has disclosed the amount of the severance package, or settlement agreement, even though state law says it should be a public record. 

Two weeks after three Rural Hall town council members and the town manager resigned, the interim town manager, Frank James, resigned Wednesday. James, who retired in 2017 after 38 years as town manager, came back to resume duties after Megan M. Garner resigned and then took a position as city manager for Graham. On Oct. 21, three council members abruptly resigned after a meeting, citing conflicts among elected officials and what they called harassment and unfounded allegations of financial impropriety lodged againt Garner. State Treasure Dale Folwell has called for an investigation into the town's financial statements as a way to settle the matter once and for all. 

Megan Garner, the former town manager of Rural Hall, is starting her new job as city manager for Graham on Monday. Also on Monday, a lawsuit might be filed by her former employer over an undisclosed six-figure severance package she received. This is just the latest in the turmoil that is ever-evolving in Rural Hall swirling around allegations that $1.5 million vanished from town coffers. But a town audit says no money was missing, but other questions remain, including how much Garner was paid in a settlement agreement. 

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