307 Ga. 330 FINAL COPY

S18G1419. DEKALB COUNTY SCHOOL DISTRICT et al. v. GOLD et al.

MELTON, Chief Justice.

In March 2011, Elaine Gold, Amy Shaye, Heather Hunter, and

Roderick Benson (“Appellees”) sued Appellants, the DeKalb County

School District (“the District”) and the DeKalb County Board of

Education (“the Board”) for, inter alia, breaching an agreement to

provide two-years advance notice prior to suspending contributions

to their DeKalb County Tax-Sheltered Annuity Plan (“TSA Plan”)

accounts. Finding that Appellees failed to establish the existence of

an enforceable contract, the trial court granted summary judgment

in favor of Appellants, and Appellees appealed to the Court of

Appeals. The Court of Appeals reversed the grant of summary

judgment on the issue of liability, vacated the remainder of the

court’s order, and remanded the case with direction. See Gold v.

DeKalb County School Dist., 346 Ga. App. 108 (815 SE2d 259) (2018) (“Gold III”).1

We granted certiorari to decide whether the Court of Appeals

erred by concluding that the two-year notice provision became part

of Appellees’ employment contracts. Though we disagree with the

Court of Appeals’ analysis, we agree with the court’s ultimate

conclusion. Accordingly, we affirm.

1. Factual Background.

As recounted by the Court of Appeals, in 1979, the Board

withdrew from Social Security in favor of an alternative benefits

plan, which included a Tax-Sheltered Annuity Plan managed by an

1 As explained in Gold III, the procedural history of this case in the Court

of Appeals is as follows: We note that this appeal is the third appearance of this case before [the Court of Appeals]. In DeKalb County School Dist. v. Gold, 318 Ga. App. 633 (734 SE2d 466) (2012) (“Gold I”), overruled on other grounds, Rivera v. Washington, 298 Ga. 770, 778 n. 7 (784 SE2d 775) (2016), we affirmed the trial court’s order denying the school district’s motion to dismiss the plaintiffs’ claims for breach of contract and the associated implied covenant of good faith and fair dealing. Finding that the district was entitled to sovereign immunity, we reversed the lower court’s judgment in all other respects. Id. at 635-641 (1). A few years later, we then upheld the trial court’s denial of the plaintiffs’ class certification motion in an unpublished decision, Gold v. DeKalb County School Dist., 331 Ga. App. XXV (Case No. A14A1557) (March 30, 2015) (“Gold II”). Gold III, 346 Ga. App. at 109, n.3.

2 outside insurance company.2 Gold III, supra, at 109-110.

In September 1980, the Board authorized the DeKalb County

Superintendent “to appoint an Employee Trust Fund Advisory

Committee to recommend to the Superintendent changes and

improvements in the Employees’ Alternative Plan to Social

Security.” In May 1982, the Chairman of the Employee Trust Fund

Advisory Committee proposed an amendment to the Board’s bylaws

and policies concerning the “Social Security/Alternative Plan of

Benefits.” The proposed amendment stated:

[The Board] shall provide all full-time employees with an alternative program to Social Security. The amount of funds placed annually in the alternative program shall equal the amount that the school system would have paid had the school system remained under Social Security.

The Alternative Plan to Social Security shall include, at a minimum, the following: 1. Improvements to the survivor benefit life insurance plan in existence in September, 1979.

2 As noted by the Court of Appeals:

A § 403 (b) Tax-Sheltered Annuity (TSA) Plan is a retirement plan offered by public schools and certain tax-exempt organizations. See 26 USC § 403 (b). An individual’s 403 (b) annuity can be obtained only under an employer’s TSA plan. Id. Generally, these annuities are funded by elective deferrals made under salary reduction agreements and nonelective employer contributions. Id. Gold III, supra, at 112, n.7. 3 The survivor benefit plan is designed to provide lump sum payments to beneficiaries and monthly income to eligible surviving family members upon the death of an employee. 2. Improvements to the long-term disability plan in existence in September, 1979. The disability benefits plan provides disabled employees a coordinated benefit for a specified period of time following an established elimination period. 3. Supplemental retirement plan paid for by [the Board]. The supplemental retirement plan provides retirement benefits through legally mandated and/or Board approved contribution and investment strategies. [The Board] shall give a two-year notice to employees before reducing the funding provisions of the Alternative Plan to Social Security. Procedure number 7085 defines the method for distributing the Alternative Plan funds.3

3 Procedure 7085 stated:

Each year a determination shall be made as to the amount that would have been required for continued participation in Social Security during the forthcoming fiscal year, and this amount shall be budgeted to fund the Alternative Plan to Social Security. The amount determined above shall be distributed as follows:

1. Cost for improvements to the survivor benefit plan over and above the cost of the September, 1979 base plan.

2. Cost for improvements to the long-term disability plan over and above the cost of the

4 (Emphasis supplied.) The proposed amendment, including the two-

year notice requirement, was then placed on the table until the June

1982 meeting where, with a unanimous vote, the Board amended its

bylaws and policies concerning the Alternative Plan to Social

Security (“the 1982 Amendment”); this amendment was then

published. Gold III, supra, at 110.

In 1983, the county’s Risk Management Director presented the

Board with a proposed TSA Plan document that detailed a defined-

contribution, employer-funded § 403 (b) plan. Gold III, supra, at

111. Subsection 3.05 of the document provided that “[a]ll

September, 1979 base plan.

3. Cost for contributions to the Teachers Retirement System for the DeKalb County Board of Education’s contribution to the employees’ annuity (Ga. Code 32-2901 provides that all money paid by an employer for a member or by a member into any plan of Tax Sheltered Annuity shall be included as earnable compensation for the purpose of computing any contributions required to be made to the Teachers Retirement System, and also for the purpose of computing any benefits).

4. Remainder to employees’ annuity plan. 5 contributions under the Plan shall be made by [the Board],” and

explained that “Participant contributions are not required; however,

the Employer maintains the right to require contributions from Plan

Participants when deemed appropriate.” Subsection 6.02 of the TSA

Plan provided that “[t]his Plan may be amended or terminated by

the Employer at any time. No amendment or termination of the

Plan shall reduce or impair the rights of any Participant or

Beneficiary that have already accrued.” The Board voted to adopt

the 1983 TSA Plan during the same meeting at which it was first

presented. In 2003, the Board approved a restatement of the TSA

Plan, once again adopting the document at the same meeting at

which it was presented. Subsection 4.5 of the 2003 TSA Plan stated

that “[p]articipant contributions to the Plan are neither required nor

permitted,” and Subsection 8.3 of the plan document provided for

the amendment or termination of the plan “at any time.” In both

1983 and 2003, the Board voted to adopt the TSA Plan, but the

Board did not vote to amend its bylaws.

The TSA Plan remained in effect until July 2009, when the

6 Board held an emergency meeting to discuss the reduction of state

funding for all of Georgia’s school systems due to the economic

recession. At this meeting, the Board voted to “temporarily

suspend” the TSA Plan and substantially amended the plan’s

funding provisions, ending all contributions to certain employees’

supplemental retirement accounts as of July 31, 2009. Though there

was no corresponding amendment to the Board’s bylaws at this time,

approximately one year later, in June 2010, the Board amended its

bylaws, eliminating the two-year notice provision adopted in 1982.

Gold III, supra, at 112.

2. Procedural Background.

In March 2011, Appellees filed suit alleging, inter alia, that the

Board and the District had breached the contractual agreement to

provide two-years notice prior to reducing funding to Appellees’

supplemental retirement plan. After the completion of discovery,

the parties filed cross-motions for summary judgment on the issue

of liability. After a hearing, the trial court found, in relevant part,

that

7 neither the 1979 Resolution nor the 1982 Policy formed an enforceable contract between [Appellees] and the School District as a matter of law. Moreover, even if those documents could give rise to an enforceable contract, the record reflects that no breach of those documents occurred as a result of certain suspension of the TSA Plan contributions in July 2009. The record further shows that if any contract does exist, it is the TSA Plan that forms the entirety of the contract during the period of time relevant to this litigation, and [Appellees] can use neither the 1979 Resolution nor the 1982 Board Policy to modify or add to the terms of that TSA Plan. Rather, the Court must enforce the unambiguous terms of the TSA Plan, which allow the School District to amend or even terminate the contributions to the Plan at any time, without the advance notice that [Appellees] seek.

Appellees appealed this decision to the Court of Appeals.

In reversing the trial court’s grant of summary judgment, the

Court of Appeals determined that: the 1982 Amendment’s two-year

notice provision was a “legislative act” that became a substantive

part of Appellees’ employment contracts; the TSA Plan was not a

legislative act and, therefore, was not a part of Appellees’

employment contracts; and even if the TSA Plan was a part of the

employment contract, its termination language could be harmonized

with the 1982 Amendment’s two-year notice provision pursuant to

8 the standard rules of contract construction. Gold III, supra, at 113-

114. We granted the petition for certiorari to review the decision of

the Court of Appeals.

3. Analysis.

The salient issue to be resolved in this case is whether the two-

year notice provision in the 1982 Amendment became a part of an

employment contract between Appellants and Appellees.

Appellants rely on Georgia case law that provides

a statute or ordinance establishing a retirement plan for a government employee becomes a part of [a] contract of employment as soon as: (1) [the employee] performs services while the statute or ordinance is in effect; and (2) [the employee] contributes at any time any amount toward the benefits [they are] to receive. See Withers v. Register, 246 Ga. 158, 159 (269 SE2d 431) (1980); Bender v. Anglin, 207 Ga. 108, 112-113 (60 SE2d 756) (1950).

Ayers v. Public School Employees Retirement System of Ga., 294 Ga. 827, 830 (2) (a) (756 SE2d 538) (2014). See also Borders v. City of

Atlanta, 298 Ga. 188 (II) (779 SE2d 279) (2015). Appellants contend

that the Court of Appeals erred in reversing the trial court because:

(a) none of the Board’s actions in this case were legislative acts; (b)

9 the Board’s 1982 Amendment did not establish a retirement plan;

and (c) Appellees did not contribute to the retirement plan and,

therefore, did not provide the proper consideration in order to form

a contract. We disagree and affirm the decision of the Court of

Appeals.

To begin, we must look to basic contract principles in order to

determine whether the Board’s actions created a binding

contractual relationship with its employees.4 See OCGA § 13-3-1

(“To constitute a valid contract, there must be parties able to

contract, a consideration moving to the contract, the assent of the

parties to the terms of the contract, and a subject matter upon which

the contract can operate.”). In conducting such a review, “[i]t is well

settled that an agreement between two parties will occur only when

the minds of the parties meet at the same time, upon the same

subject-matter, and in the same sense.” (Citations omitted.) Cox

Broadcasting Corp. v. Nat. Collegiate Athletic Assn., 250 Ga. 391,

4 The Board is generally authorized to create such retirement plans. See OCGA § 20-2-59. 10 395 (297 SE2d 733) (1982). When reviewing whether the parties

formed a contract, “the circumstances surrounding the making of

the contract, such as correspondence and discussions, are relevant

in deciding if there was a mutual assent to an agreement, and courts

are free to consider such extrinsic evidence.” Frickey v. Jones, 280 Ga. 573, 575 (630 SE2d 374) (2006).

The record shows that the Board decided to replace Social

Security with an alternative benefits plan because the Board

believed it would help with employee recruitment and retention.

Then, in 1982, upon the recommendation of the Employee Trust

Fund Committee, the Board amended its bylaws wherein it

committed to provide its employees with an alternative plan to

Social Security funded in the same amount the Board would have

paid under Social Security, and to “give a two-year notice to

employees before reducing the funding provisions of the Alternative

Plan to Social Security.” This action constituted a standing offer by

the Board to provide two-years notice to all its employees, current

and new, before reducing funding to the plan benefits for those

11 employees. And each employee accepted this offer by performing

work pursuant to these terms.

Citing Borders, 298 Ga. 188, Appellants contend that, because

the 2003 TSA Plan specifically prohibited employees from

contributing to their retirement, Appellees failed to provide the

consideration necessary to form a contract. We acknowledge the

conflict in Georgia case law concerning whether a monetary

contribution by an employee is required in order for a retirement

plan to be considered a part of an employment contract; however,

the true governing principle is to treat the government’s agreement

to pay a pension as a contract where there is consideration flowing

from both parties. See Trotzier v. McElroy, 182 Ga. 719, 723 (186 SE 817) (1936).5 “To constitute consideration, a performance or a

5 Compare Bender, 207 Ga. at 109 (holding that “a pension granted by

the public authorities is not a contractual obligation but a gratuitous allowance, in the continuance of which the pensioner has no vested right, and that a pension is accordingly terminable at the will of the grantor” unless employee contributes into the pension); Ayers, supra (statute establishing a retirement plan becomes a part of an employment contract if employee contributes and performs); Borders, 298 Ga. at 193 (II) (same); Withers, 246 Ga. at 159 (1); with Cole v. Foster, 207 Ga. 416, 420 (4) (61 SE2d 814) (1950) (“The provisions . . . requiring that peace officers pay a defined monthly sum

12 return promise must be bargained for by the parties to a contract.”

OCGA § 13-3-42 (a). See also OCGA § 13-3-42 (b) (“A performance

or return promise is bargained for if it is sought by the promisor in

exchange for his promise and is given by the promisee in exchange

for that promise.”).

Here, the record shows that Appellants offered their employees

a retirement benefits plan, and also promised to provide two-years

notice before reducing any of the funding provisions of the benefits

plan. In exchange, the employees agreed to begin to work or

continue to work for Appellants, and to wait until their retirement

to collect these funds. That bargain contemplated the necessary

consideration flowing from both parties, thus making the two-year

into the fund, create a contractual relation, and the disability and retirement pay provided therein is not a gratuity but is adjusted compensation for services rendered”); Atlantic Steel Co. v. Kitchens, 228 Ga. 708, 713 (187 SE2d 824) (1972) (“[t]he fact that the employee makes no contribution to the pension fund does not make the pension a gratuity which the employer can withhold at will. A pension is adjusted compensation for services rendered”); Malcolm v. Newton County., 244 Ga. App. 464, 467 (1) (535 SE2d 824) (2000) (same); City of Athens v. McGahee, 178 Ga. App. 76 (341 SE2d 855) (1986); Dinnan v. Totis, 159 Ga. App. 352 (283 SE2d 321) (1981). We will not go back and review the details of each of these prior cases in order to determine whether they correctly applied normal contract principles, as we make clear in this opinion that this is the proper approach. 13 notice provision a part of Appellees’ employment contracts.

Appellants contend that, to the extent that the Board’s policies

created a contract, the Board’s subsequent approval of the 1983 TSA

Plan modified the parties’ original agreement and, therefore, must

control the analysis. In support of this argument, Appellants rely

on a section of the Board’s bylaws that states, in pertinent part, the

following:

A proposed alteration, amendment, repeal, or new policy must be submitted in writing to the Board, for review by the superintendent and the public, at a regular monthly meeting with a copy for each member. No proposed alteration, amendment, repeal, or new policy shall be voted upon until the next regular monthly meeting subsequent to the meeting at which the proposal is offered. In order for any proposed alteration, amendment, repeal[, or] new policy to become effective, it must receive the affirmative vote of a majority of the Board members. No such alteration, amendment, repeal, [or] new policy shall be retroactive, but shall become operative at the time such affirmative vote is made or at such time in the future as the Board may designate.

...

Any action of the Board in apparent conflict with provisions of these policies shall constitute a suspension of the operation and effect of that conflicting policy to the extent and for such time as may be required by the action

14 taken by the Board. However, such actions shall not otherwise constitute an amendment of these policies.

(Emphasis supplied.) This so-called “policy on policies,” Appellants

argue, acts as a reservation of rights,6 thereby giving the

subsequently enacted TSA Plan superiority over the 1982

Amendment. We disagree.

By the bylaw’s plain language, when the Board does not follow

its specific protocols concerning policy adoption, then a previously

enacted bylaw cannot be amended by a later, non-conforming act of

the Board. Here, the Board followed the required protocols when it

enacted the 1982 Amendment — i.e., the amendment was proposed,

in writing, at a regular monthly meeting, and approved by a

majority vote of the Board at the next regular monthly meeting.

However, the Board did not follow these protocols when it adopted

6 Appellants argue that Appellees’ annual written contracts also contain

a reservation of rights by which Appellees agreed to abide by the Board’s policies “in effect at the time of the execution of this contract or hereafter enacted or amended.” To the extent this could be interpreted as a reservation of rights, it is undisputed that the two-year notice provision of the 1982 Amendment was in effect when Appellees signed their annual contracts in 2009, and it was not amended until June 2010. 15 the 1983 and 2003 versions of the TSA Plan. As discussed above,

each version of the TSA Plan was adopted at the same meeting at

which it was presented and was not placed on the table until the

next monthly Board meeting as required. Moreover, unlike the 1982

Amendment, the TSA Plan was never proposed as an amendment to

the Board’s bylaws.

To the extent that the “policy on policies” provides for the

suspension of conflicting provisions, suspension is only allowed “to

the extent and for such time as may be required . . . .” Simply put,

the language of the “policy on policies” provides for a temporary

override of a Board policy; however, there are no circumstances

under which a temporary action permanently amends the Board’s

bylaws and policies. Here, the TSA Plan was not a temporary action.

Moreover, the Board had ample time to follow the required protocols

and formally amend its bylaws when it adopted the TSA Plan, but it

did not do so. Based upon the language of the Board’s own bylaws,

the TSA Plan’s provision providing for the termination or

suspension of the plan “at any time” cannot amend the two-year

16 notice provision embodied in the bylaws by way of the 1982

Amendment.

Finally, Appellants argue that, to the extent that the

retirement plan was a part of Appellees’ employment contracts,

Appellees did not have a vested right in the contract benefits

because the TSA Plan states that it can be amended at any time.7

However, because we have determined that the 1982 Amendment,

and not the TSA Plan, controls as to the two-year notice provision,

this argument fails. While it may be that many terms forming the

employer-employee arrangement are subject to unilateral change by

the Board, as to the reduction of funding, the Board placed express

contractual limits on its ability to reduce funding to the alternative

benefits plan.

4. Conclusion.

7 One amicus curiae supporting Appellants also raised an argument that

the two-year notice provision is void because it violates the general principle opposing the impediment of free legislation. See generally Brown v. City of East Point, 246 Ga. 144 (268 SE2d 912) (1980). Because this issue was not raised by the parties or ruled upon by the trial court, we do not address it.

17 Based on the foregoing, we agree with the Court of Appeals,

albeit for somewhat different reasons, that the trial court erred in

granting Appellants’ motion for summary judgment and in denying

Appellees’ motion for summary judgment on the issue of liability for

breach of contract.8

Judgment affirmed. All the Justices concur, except Peterson, Bethel, and Ellington, JJ., disqualified.

DECIDED OCTOBER 21, 2019 – RECONSIDERATION DENIED NOVEMBER 14, 2019. Certiorari to the Court of Appeals of Georgia — 346 Ga. App. 108.

8 Because we affirm the judgment of the Court of Appeals, we need not

address Appellees’ other arguments in favor of that result.

18 Lawrence & Bundy, Allegra J. Lawrence, Thomas R. Bundy III, Leslie J. Bryan, Lisa M. Haldar; Robbins Ross Alloy Belinfante Littlefield, Joshua B. Belinfante, for appellants. Barnes Law Group, Roy E. Barnes, John F. Salter, Jr.; Bondurant, Mixson & Elmore, Michael B. Terry, Jason J. Carter, Naveen Ramachandrappa, for appellees. Kelly Jean L. Pridgen, Larry W. Ramsey, Jr., G. Joseph Scheuer; W. Brooks Stillwell III, Jennifer N. Herman; Brinson Askew Berry Seigler Richardson & Davis, J. Anderson Davis, Lee B. Carter; Gwin C. Hall, Caroline E. Porter; Harben, Hartley & Hawkins, Phillip L. Hartley; Donald C. English; Michael T. McGonigle, Matthew M. Pence; Williams Oinonen, Mario B. Williams, Julie J. Oinonen, amici curiae.

19