### IN THE S UP REME COURT OF TENNESS EE AT KNOXVI LLE Se pte m be r 8, 200 5 S es sio n
ERI C TETE R v. REPUBLI C PARKING SYS TEM, I NC.
Appeal by p erm ission from the Court of Appeals, Eastern Section

Chancery Court

for Hamilton County No. 01-1311 Hon. W. F rank Brow n, III, Ch ancellor

No. E2003-02735-SC-R11- CV - F iled Novem ber 29, 2005

The dispute in this case arises out of an employ ment contra ct which pr ovides sever ance pay for a n employ ee w ho is terminated for rea sons “other than gross m isconduct, fraud, embezz lement, theft
or voluntary termination.” The defe ndant employ er cea sed providing sever ance pay to the employ ee a ft e r the e mpl oy e r d isc ov e red t hat th e e mpl oy e e ha d e ng a g e d ing ro ss m isc on du c t w hil e sti ll employ ed by

the company . The e mploy ee sue d for br eac h of contra ct, seeking the sever ance pay due
un de r the c on tr a c t; the e mpl oy e r re sp on de d that ha d it kn ow n pr e vio us ly of the g ro ss m isc on du c t, it would have fired t he employ ee, thus absolving it of any duty to provide seve ranc e pay . The trial
co u rt gra n t ed summary

judgme nt for the e mploy ee, a fter c oncluding that the employ ee ha d been involuntarily

terminated, thus trig g ering the sever ance pay provision, and that there was no c lear and
c on vincin g e vid e nc e that th e e mpl oy e r w ou ld h a ve fi re d th e e mpl oy e e ha d it kn ow n o f the g ro ss misconduct. The employ ee was awarde d $795,037.35, less thirty day s sever ance pay

alre ady paid, plus p re j udg ment interest. The Court of Appea ls affirme d. We hold that after- acquir ed evide nce of e mpl oy e e mis c on du c t ne e d o nly be sh ow n b y

a pr e po nd e ranc e of the e vid e nc e in or de r t o a vo id li ability in a br e a c h o f c on tr a c t a c tio n, a ndbe c a us e the re is a g e nu ine iss ue of

ma te ri a l f

a c t a s to whether the employ ee w ould have be en fire d had the e mploy er discove red the g ross misconduct, we
rema nd the ca se for

trial. On the re maining issues r aised by the employ er, w e af

firm the Court of Appea ls: the e mploy ee did not voluntarily resig n from his position but was involunt arily terminated; the payment schedule found in the “Employment Protection Plan” re g arding sever ance pay was incorporated into the employ ment contra ct; and the sever ance pay provisions did not constitute an illega l penalty

. Te nn. R . A pp. P . 1 1; Judg m e nt of t he Co ur t o f Appe als is A ffirm e d in P ar t a nd Reve rsed in Par t and Case Rem anded

W I L L I AM M. B ARKE R , C.J ., delivere d the opinion of the court, in which E. R I LEY A NDE R S ON , A DOL PH O A. B I RCH , J r., and J ANI CE M. H OL DER , J J . joined.-2-

John C. H arriso n a ndWilli a m H . H orton , Ch a tta no og a , T e nn e sse e , f or the app e lla nt, Re pu bli c Parking Sy stem, I nc.
B. Stewa rt J enkins, Chattanoog a, Te nnessee , for the a ppellee, E ric Te ter.
OP IN ION

F ac tu al B ac kgr ound Republic Parking Sy stem, I nc. (“ RPS ”) is a Tennessee corpor ation with its principal place of business in Chattanoog a, Te n n es s ee. I t operates numerous pa rking fac iliti es throug hout the United States. J ames Be rry (“Mr

. Be rry ”) is the majority stockholder a nd Chief Executive Off icer of RPS. Th e plaint if

f, Eric Te te r ( “ Mr . T e te r” ), prev io us ly wo rk e d f or Ce ntr a l Pa

rking Sy ste m, which w a s o n e o f RP S’ s main c o mp e ti to r s , a n d b y 1 9 9 4 , w a s th e G e n e r a l M a n a g e r and V ice President of Eur opean O perations for Central Parking Sy stem.

I n 1995, Mr. Tete r re signe d his position with Ce ntral Parking Sy stem and beg an working for RPS a s a re g ion a l vi c e pr e sid e nt. Hi s du tie s in c lud e d th e ma na g e me nt o f e xistin g bu sin e ss a s w e ll as solicitation of new business. Mr

. Teter and RPS entered into an e mploy ment ag ree ment dated November

27, 1995, containing a seve ranc e pay provision under which Mr. Tete r would re ceive 12 months ba se salary

plus twelve months bonus and commission pay ments if he we re “ discharg ed for any rea son other than g ross misconduct, fra ud, neg lect of job re sponsibili ties or voluntary termination.”

Mr. Tete r wa s later pr omoted to vice pre sident o f R P S ’s nationwide urban parking op e ratio ns , at w hic h ti me he a nd RPS e nte re d in to a ne w e mpl oyme nt c on tr a c t w ith a n e ff e c tiv e date of Janu ary 1, 19 97 (“ the 19 97 c on tr a c t” ). Th is c on tr a c t in c lud e d th e fo llo wi ng pr ov isi on s:
EMPL OYER ag ree s to pay EMPL OYEE f

or said ser vices the sum of O ne Hundr ed Thousand dollars g ross per y ear s base ( $100,000.00), plus a s u m equal to F ifteen (15.0%) of the monthly

profits g ener ated f

rom the Urban C lass “A” Oper ating Citi es abo ve < $1 2, 50 0. 00 >

. . . T he bo nu s w ill be c omp ute d a ndpa id e a c h mo nthwi thi n te n d a y s o f c los ing the a c c ou nts

.

. . . . (4) This contr act may be terminated by either pa rty upon One Hundr ed Twe nty (120) day s written notice unless EMPL OYEE i s d ischarg ed or r esig ns as a r esult of the commission b y h i m o r her of an a ct involving thef t, embezzl ement, fr aud or intentional mishandling of Company funds, in which eve nt such termination will be eff ective immediate ly

. I n the event EMPL OYEE is dischar g ed for any rea son other than g ross misconduct, fraud, embezzlement, thef t or volun t ar ytermination, EMPL OYEE will be entitl ed to sever ance pay under the terms of the “Employ ment-3-

Protection Plan-Chang e in Owne rship Structure” provision attache d.

T h e “ E m p l o y m en tP ro t ec t i o n P l an ” r ef erre d t o i n t h e 1 9 9 7 co n tra ct i n cl u d es t h e f o l l o wi n g:
A. I n t h e ev en t t h at J ames C. B erry is no longe r the a ctive Chairman and CEO of EMPL OYER or EMPL OYER is sold to an outside interest, then in such eve nt EMPL OYEE ha s the option of voluntarily resig ning, provided that such re signation be c ome s e ff

e c tiv e wi thi n on e hu nd re d e ig hty (1 80 ) d a y s f

ro m date of

c ha ng e or

sa le with said lump sum pay ment as provided be low being made on the date that su ch voluntary resig nation become eff

ective. Chang e in Owne rship Structure

Yea rs 1-2 of E mploy ment

Yea rs 3-4 of E mploy ment

Yea rs 5+ of Employ ment Employ ment Protection Plan 1.0 time previous y ear s salary and bo nu s. 2.0 times previous y ear s salary and bo nu s. 3.0 times previous y ear s salary and bo nu s.

The division of RPS of which Mr . Teter was in cha

rg e wa s profitable in 1998, 1999, a nd 2000. A s a

r e s u lt , M r
. T e te r

r e c e iv e d s ig n if

ic a n t b o n u s e s u n d e r

h is e mp lo y me n t c o n tr a c t d uring those y ear s.
I n Marc h 2001, Mark Huth ( “Mr. Huth”) bec ame pr esident and Chief Oper ating Offic er of RPS. Mr . B e rry

c on tin ue d a s th e Chi e f Ex ecu tiv e Of fi c e r andre ma ine d th e c omp a ny ’s ma jority
s t o ck h o l d er
. M r. B e rr y

an d M r. Hu t h d ec i d ed t h at t h e r egi o n o f w h i ch M r. T et erwa s i n ch ar ge sh ou ld b e re str

uc tur e d a nddiv ide d in to t wo re g ion s– on e e a st o f the Mis sis sip pi R ive r andon e we st of the Mississ ippi River. I t w as their intention to reduc e Mr. Teter ’s re g ion to onlythat part located east of the Mississ ippi Ri ver. On Aug ust 10, 2 0 0 1 , M r. Huth prese nted Mr. Te ter with a pr oposed new employ ment contra ct. Under

this new contra ct, Mr. Teter’s base salary would incre ase from $100,000 per y ear to $160,000 per y ear , but the formula by which his bonuses would be c alculate d would be chang ed so as to be less fa vorable to Mr. Teter . Additionally , the proposed e mploy ment contra ct did not contain any

provision for seve ranc e pay
. Mr. Teter m et wit h Mr. Berry and Mr. Huth on Aug ust 13, 20 01 , at w hic h ti me he re je c te d th e pr op os e d e mpl oyme nt con tr act. M r. B e rry a ndMr . H uth prese nted Mr. Te ter with other a lternative ne w contra cts, none of w hich provided f or a se vera nce packa g e as f

avora ble as unde r the 1997 c ontrac t. Mr. Teter reje cted e ach of

the new pr oposals. On September

5, 2001, Mr. B erry

told Mr. Teter to take the next two day s off fr om work, as oth e r u rb a n e xec uti ve s w e re c omi ng to C hatta no og a fo r a me e tin g a ndMr . B e rry be lie ve d it

wo uld-4-

be best if Mr. T eter

was not pre sent bec ause his contr act iss u e had not bee n resolved. B etwee n Se pte mbe r 5 , 20 01 , a nd Se pte mbe r 10 , 20 01 , wh e n Mr

. Te te r re turne d to wo rk , the loc ks to the RPS executive offic es had be en chang ed, and Mr . Teter was una ble to acc ess the off

ices. On Sept e mb e r

1 1 , 2 0 01, Mr. B erry

delivere d an inter- office memorandum to Mr. Te ter whic h pr ov ide s, in p e rt ine nt p art :

I a m dis app oin te d in that we ha ve be e n un able to r e a c h a mutua lly a c c e pta ble ag ree ment for y our continued e mploy ment and assoc iation with Republic Parki ng Sy stem . . . .

. . . . I n conclusion, I

want to emphasize ag ain, that I fee l that w e made y ou a g ood and honora

ble proposal, a nd it was a mistake f or y ou not to have give n it the serious consideration it deserved. From what I detec ted in our conve rsation y esterday , y ou wer e taking the position and made y our dec ision based upon “it’s just the principle” without giving cre dit to the overall fa irness and me rits of the off er.
Ha vin g saida ll the abo ve , s inc e y ou ha ve no de sir e to c on tin ue wi th R PS wh i ch y o u i n d i ca t ed , I

gu es s we s h o u l d p ar t co m p an y an d geto n wi th l i fe

. Al t h o u gh under the circ umstances we do not fee l that we are require d to provide a ny sever ance pay , w e wi ll p a y

y ou up to six (6 ) mon ths the sa me a s w e pa id M ark Pr a tt. Th is w ill be paid to y ou in the same manne r in which y o u we re b eing paid pre sently , twice
mon thl y , in c lud ing 50 pe rc e nt o f y ou r e sti ma te d mo nth ly bo nu s.
After Mr. Tete r re ceive d the above memorandum fr om Mr. Be rry , he began clea ning out his off ice in p re pa ratio n f or le a vin g RPS. On September

12, 2001, one of RPS’s employ ees notice d that the central processing unit of Mr. Tete r’s off

ice c omputer wa s missi ng . Mr. Tete r re turned it the next day , stat ing that he had taken it in an attempt to delete some persona l files. Appar ently co n ce rn ed that Mr. Tete r had downloaded pr oprietary

informati o n b elong ing to RPS from his office c omputer, RPS s ent the centr al proc essing unit of the computer to a data c ompany

for e x amination. Analy sis of Mr. Teter ’s computer indicated that it h ad been use d during business hours for vie wing pornog raphic sites on the int e rn e t. M r. Te te r’s in ter net us e le ft a t le a st 3 0, 00 0 im a g e fi le s o n th e ha rddrive , th e va st ma jority of wh ic h w e re se xua lly -o ri e nte d p ho tog ra ph s.
M r. Be rr y s en tM r. T et era l et t ero n Oc t o b er2 4 , 2 0 0 1 , s t at i n g:
As I told y o u d uring our discussion [of October 19, 2001], I was ve ry disappointed and shocked at the materia l that was discover ed on y our computer hard drive . . . . I nasmuch as it wa s obtained during working hours, it certa inly falls under-5-

the “Gr oss Misconduct” categ ory of y our employ ment ag ree ment dated April 16, 1997. I f I

had known this materia l exi st ed b efor e or during the time of our
e m p l o ym e n tc o n tr a c td i s c u s s i o n s , I w o u l d h a v e t e r m i n a t e d yo u i m m e d i a t e l y.
There fore , in view of the f act this new inf

o rm at i on has come to light, I am here by terminating y our employ ment on g rounds of g ross misconduct and withdrawing the entire memorandum that I prese nted to y ou on September 11, 2001 and all the pr ovisions contained there in . . . .

You have been r emoved f

rom Republic’s payroll eff ective, O ctober

16, 2001.

The re cord c ontains other evide nce, how ever , tending to contradic t the as s er t ion in Mr. Be rry ’s letter that he would have fired Mr. Teter immediately had he know n of Mr. Te ter’s vie wing of pornog raphic internet sites at work. During his Nove mber 2002 de position t estimony , Mr. B erry stated that “I

never looked at [Mr. Teter ] being terminated” a nd that “I ’d still li ke to have him back [ atwo rkfo r R ep u b l i c]

. ” T h e d ep o s i t i o n al s o i n cl u d ed t h e f o l l o wi n g: Question: Now, Mr. B erry , prior to September 10, 2001, did y ou ever tell any employ ee that y ou may

not use y our computer

during off

i ce h o urs for othe r than
c omp a ny bu sin e ss?

An sw e r: No , I

ne ve r t olda ny

e mpl oy e e a nythi ng lik e that. Question: Do y ou know of a ny executive within y our compa ny that eve r ma de
s u c h a s t a t e m e n tt o a n yo n e e l s e i n t h e e m p l o y?

An sw e r: Pe rs on a lly , I

do no t.

Mr. Tete r sued RPS on November 13, 2001, for br eac h of contra ct, see king se verance pay under the terms of the 1997 c ontrac t. Mr

. Teter later filed a motion for summary judgme nt, which the tr ia l c ou rt g rante d on July 31 , 20 03 , c on c lud ing that Mr

. Te te r wa s e nti tle d to $7 95 ,0 37 .3 5, le ss thirty day s s ev er ance pay

alre ady paid to him. This amount represe nted three times Mr. Teter ’s
annu a l s a la

r y a n d b o n u s , a s p r o v id e d in th e E mp lo y me n t Pr o te c ti o n Pl a n r e f e rr e d to in th e 1997 employ ment contra ct. Additionally , the trial court awa rded prejudg ment interest at the r ate of 10% per annum.
I n ma kin g its de c isi on , th e tr ia l c ou rt fo un d th a t RPS h a d d isc ha rg e d M r. Te te r; Mr . T e te r d id not voluntarily resig n. The trial c ourt held that af ter-a cquire d evidenc e of Mr . Teter ’s misconduct
c ou ld b e us e d a s a de fe ns e , bu t that RPS ha d to sh ow by c le ar a ndc on vin c ing e vid e nc e that it wo uld ha ve fi redMr . T e te r i mme diate ly ha d it dis c ov e re d th is m isc on du c t w hil e Mr . T e te r w a s st ill
e mpl oy e d. Th e c ou rt

c on c lud e d th a t th e re wa s n o c le ar andc on vi nci ng e vid e nc e that RPS w ou ld have f ired Mr. Te ter. T h e C o u rt o f Appeals aff irmed the de cision of the trial c ourt. We g rante d revie w.-6-

I t is RP S’s positi on that Mr. Teter voluntarily

resig ned his position with R PS and is t here fore ineligible f

or seve ranc e pay
. RPS also arg ues that the trial c ourt err ed in holding that after -ac quired evidenc e of e mploy ee misconduc t must be proven by clea r and c onvincing evidenc e rather than by
a pr e po nd e ranc e of the e vid e nc e
. I t is RPS’ s posi tio n tha t the re is a fa c tua l is su e a s to wh e the r R PS would have f

ired Mr. Te ter. Additionally , RPS arg ues that the seve ranc e pay p rovisions of the “Employ ee Protection Plan” were not applicable in this case and that the se verance pay provisions
c on sti tut e a n il le g a l pena lt y . F ina lly , RPS c on te nd s th a t th e tria l c ou rt abu se d it s d isc re tio n in
awa rding prejudg ment interest.
Stand ard of Review The purpose of summary

judgme nt is to resolve controlling issues of l aw rather tha n to find fac ts or resolve disputed issues of fac t. B ellamy v. Fe d. Ex press Corp., 749 S.W .2d 31, 33 (Tenn. 1988). Summary judgme nt is appropriate only when the moving pa rty demonstrates that there a re no g enuine issues of material fa ct and that he or she is entitled to judg ment as a matter of law . See Te nn . R. Civ . P. 56 .0 4; Pe nle y v. Ho nd a Mo tor Co. , 31 S.W. 3d 18 1, 18 3 (T e nn
. 20 00 ); B yrd v. Ha ll, 847 S.W .2d 208, 210 (Tenn. 1993) . I n revie wing the re cord, the appellate court must view all the
e vid e nc e in the lig ht mos t fa vo ra ble to the no n- mov ing pa

rt y a nd dr a w a ll re a so na

ble inf e re nc e s in favor of the non-moving party . Sta p l es v. CBL & A ssocs., I nc., 15 S.W.3d 83, 89 (Tenn. 2000). And bec ause this inquiry

involves a question of law only , the standar d of re view is de novo with no presumption of cor

rec tness attache d to the trial court’ s conclusions. See Mooney v
. S n ee d , 30 S.W .3d 304, 306 (Tenn. 2000) ; Carvell v. B ottoms, 900 S .W.2d 23, 26 (Tenn. 1995).

Ana lys is 1. Circumstances of the Cessation of Mr. Teter’s Employm ent As a pre liminary

issue, RPS arg ues t hat t he lower courts erred in f inding that RPS discharg ed Mr. Tete r, thus trig g ering the seve ranc e pay provision of the 1997 employ ment ag ree ment. I nstead, RPS claims that Mr. Tete r left the c ompany voluntarily . The t ri al court found that RPS ’s ac tions amounted to a constructive discharg e; the Court of Appe als found that RPS had ac tua lly discharg ed Mr. Tete r. The Court of Appea ls ex plained that RPS “told t he plaintiff, without equivocation, that his employ ment, as memorialized by his contrac t, was to be no more .” (Empha sis in original.)

Th e fa c ts r e g ard ing the te rm inatio n o f M r. Te te r’ s e mpl oyme nt a re no t di sp ute d; the dis pu te is whether those fac ts c onstitut e a voluntary or involuntary termination. Be cause the fa cts are not in dispute, the issue is amenable to r esolution on moti on for summary j u d gm en t

. Fo r the re asons stated below, w e ag ree with the Court of Appeals that M r. Tete r’s e mploy ment with RP S was involuntarily

terminated, thus trig g ering the seve ranc e pay provision.

Mr. Tete r si g ned an employ ment contra ct wit h RPS eff ective January

1, 1997. This contrac t did not have an e x piration date, but wa s for a n indefinite period of t ime. On Aug ust 10, 2001, Mr. Huth prese nted Mr. Tet er with a proposed ne w employ ment contra ct. The r eason f or the ne w-7-

c on tr a c t w a s n ot d ue to the e xpir a tio n o f the prior c on tr a c t, but wa s due to the c omp a ny ’s de sir e to restruc ture the division in which Mr. Teter worke d. Thus, during the time that RPS was attempting to rene g oti at e M r. Teter ’s contra ct, Mr. Te ter wa s still working under the 1997 contra ct, which
rema ined in eff

ect. RPS and Mr. Teter wer e unable to rea ch an ag ree ment reg arding a new contra ct beca use all the proposa ls contained terms less favora ble to Mr. Tete r.
On September 11, 2001, Mr. B erry wrote a letter to Mr. Te ter, e x pressing his disappointment that th e y c ou ld not

“ re a c h a mutua lly a c c e pta ble a g re e me nt f

or [his ] co nti nu e d e mpl oyme nt” wi th RPS and sug g ested that it was ti m e fo r them to “part company and g et on with life.” Mr . Be rry ’s deposit i o n testimonyclarifies furthe r that Mr. Te ter’s e mploy ment was be ing te rminated by the
c o m p a n y: Question: And unless [Eric Teter ] would acc ept the new c ontrac t, he did not have an option of remaining with y our compa ny under the old contrac t, did he?

Answer : No.

The e vidence is unequivocal that if Mr. T eter did not ag ree to a new, modifie d contra ct, he
wo uldbe te rm inate d. Th e e vid e nc e is a lso c le ar that Mr . T e te r d id n ot a g re e to a ne w c on tr a c t.
Modification of an ex isting contract cannot be ac complished by the unilatera l action of one of the parties. There must be the same mutuality of asse nt an d m ee t ing of minds as require d to make a contra ct. New neg otiations cannot aff ect a completed
c on tr a c t un le ss the y

re su lt i n a

ne w a g re e me nt.

Ba ldera cchi v. Ruth, 256 S.W .2d 390, 391 (Tenn. Ct. App. 1952) ( citing N eilson & Kittle Canning Co. v. F. G. L owe & Co., 260 S.W

. 142, 143 (Tenn. 1924)); see a lso Harbe r v. L eade r F ed. B ank for S a v
. , 1 5 9 S

. W

. 3 d 5 4 5 , 5 5 2 ( T e n n
. C t

. A p p
. 2 0 0 4 )

. T h e r e f o r e , b e c a u s e M r
. T e t e r d i d n o t a g re e to mod if y his e xistin g c on tr a c t a nd RPS wo uld no t c on tin ue to e mpl oy him un de r the oldc on tr a c t, R PS terminated Mr . Teter ’s employ ment, and Mr. Te ter did not voluntarily resig n his positi on. 2. Burden of Proof – After-Acquire d Evidenc e
Af te r R PS te rm inate d M r. Te te r’ s e mpl oyme nt, a ndwh ile it w a s p a y ing se ve ranc e pa y to him , RPS dis c ov e re d that Mr

. Te te r ha d be e n vie wi ng po rn og ra ph ic ma te ri a ls d uring wo rking ho ur s. RPS claims that had it known about the pornogra phy , it would have immediate ly fired Mr . Teter

for g ro ss mis c on du c t a nd wo uld no t ha ve ha d to pr ov ide a ny se ve ranc e pa y . U nd e r the 19 97 c on tr a c t, RPS is no t re qu ir e d to pr ov ide se ve ranc e pay if the e mpl oy e e is f ir e d f or “ g ro ss m isc on du c t.” Th us , RPS seeks to use this af t er- acquir ed evide nce to terminate any rema ining oblig ations reg arding
sever ance pay

that it would otherwise owe to Mr. Teter

. Noting that the issue of afte r-a cquire d evidenc e was one of first-impression i n T en n essee, the trial court adopted the r easoning in L ewis v. F isher Servic e Co., 495 S.E.2d 440 (S.C. 1998) , and g rante d s umm ary

jud g me nt f

or Mr . T e te r. L e wi s st a te s, in p e rt ine nt p art :-8-

Although w e find that a fter- acquir ed evide nce should be admissible on the issue of lia bil ity , w e re c og nize the po te nti a l da ng e rs of a llo wi ng e mpl oy e rs un re stric te d u se of such e vidence . . . . Thus, we c onclude that a lthough a fter- acquir ed evide nce should be allowed on the issue of liability , certain limit ations must be put into pl ace so as to preve nt abuse by employ ers. This can be achieved by restric ting use of af

teracquir ed evidenc e in two way s. First, the employ er must prove that the wrong doing was sig nificant, that it was of “such se verity

that the employ ee in f

act would ha ve be e n te rm inate d o n th os e g ro un ds a lon e if the e mpl oy e r ha d kn ow n of it at th e tim e of the discha

rg e.” . . . Second, thi s proof must be esta blished, not by

a pre ponderance of the e vidence , b u t b y cl ear and convinc ing e vidence . We believe that these two limit ations will serve to exclude doubtful or insig nifi ca nt evidence of employ ee wr on g do ing , w hil e a llo w i n g e v i d e n c eo f v e r y s e v e r ew ro ng do ing that sh ou ld p ro pe rl y be conside red.

L ewis, 495 S.E.2d at 445 (citation omi tted). View ing the evidenc e in the lig ht most favorable to the
n o n
- m o v i n g p ar t y , t h e tr i a l c o u r t f o u n d t h a t t h e r e w a s n o c l e ar a n d c o n v i n c i n g e v i d e n c e tha t RPS would have immediate l y t erminate d Mr. Tete r had it discover ed the pornog raphy while Mr. Te ter wa s st ill e mpl oy e d b y

the c omp a ny . The re fo re , th e c ou rt c on c lud e d th a t Mr . T e te r w a s e nti tle d to jud g me nt a s a

ma tte r o f la w. Th e Cou rt of Ap pe a ls a ff

ir me d th e de c isi on of

the tr ia l c ou rt , a lso adopting the af

oreme ntioned rule set f

orth in L ewis for

the use of a fter- acquir ed evide nce.
We a g re e that a n e mpl oy e r m a y us e a ft e r- a c qu ir e d e vid e nc e of e mpl oy e e mis c on du c t in defe nse of a b re ac h o f co n trac t case if the employ er c an demonstrate that it would have f ired the employ ee ha d it known of the misconduct. Howeve r, rather than a pply ing the clea

r and c onvincing standard to the e vidence , we hold that the evidence need only be shown bya pre ponderance of the evidenc e.
Whil e this is not a brea ch of c ontrac t case in the same sense as t he cases cited below dea ling with the application of the afte r-a cquire d evidenc e doctrine, the same analy sis applies. I n the ca ses that f oll ow , th e c on tr ov e rs y

aro se a ft e r the e mpl oy e e wa s te rm inate d, a ndthat e mpl oy e e br ou g ht a suit ag ainst the former employ er claiming wrong ful termination based either on brea ch of c ontrac t or on pu bli c po lic y g ro un ds

. B y c on tr a st, Mr . T e te r’ s b re a c h o f c on tr a c t c la im d oe s n ot r e la te to h is termination, but rathe r t o RPS ’s failure t o continue his sever ance pay under the contra ct. M r. Tete r’s rig ht to severa nce pay is not depende nt upon RPS ’s breach of the employ ment contra ct; rathe r, Mr. Teter is entitled to severa nce pay unless his discharg e is based on g ross misconduct or c erta in other types of conduct specifie d in the ag ree ment. Thus in this case, in the abse nce of g ross misconduct by Mr. Tete r, RPS would be in breac h of the e mploy ment agre ement in fa iling to provide the
se ve ranc e pay

re qu ir e d u nd e r that c on tr a c t.
The a pplication of the a fter- acquir ed evide nce doc trine as a bar to liability

prese nts an issue of first impression in Tenne ssee. A ma jority of jurisdictions allow the use of after -ac quired e videnceIn wro ngf ul ter m i nat i o n c ases w hi ch i m p l i cat e m ajo r p ub l i c p o l i cy co ncerns, m any jur i sdi ct i o ns ap p l y t he 1

a fter -ac q u ire d e v id e n c e d o c trine o n ly t o li m it a n e m p lo ye e ’s d a m a g e s. S e e , e.g ., M c K e n n o n v
. N a sh v ill e B a n n e r P u b l’g C o ., 5 1 3 U .S . 3 5 2 (1 9 9 5 ) (a p p lying the d o c trine in a n a g e d isc rim ina tio n c a se ); W a lter s v
. U n ited S ta te s G yp su m C o ., 5 3 7 N

. W

. 2 d 708 ( I owa 1995) ( r et al i at or y di s ch ar g e) ; T r i co T ec h

. Cor p. v
. M on t i el , 949 S. W

. 2d 308 ( T ex
. 1997) ( r et al i at or y di s ch ar g e u n der w or k er s ’ c ompen s at i on ) ; B ar l ow v
. H es t er I n du s
. , I n c. , 479 S. E. 2d 628 ( W

. V a. 1996) ( emp l oy ment di s cr i mi nat i on)

. T hi s p r ovi des “ a c om promi s e wh er ei n t he wr ongdoi ng of bot h e mp l oy er an d emp l oy ee i s c on s i der ed i n de t er mi n i n g da mag es , e n s u r i n g t h at n ei t h er pa r t y r ec ei v es a w i n df al l

. ” T r i co T ec h

. Cor p. , 949 S. W

. 2d
a t 31 2. T h i s pr ot e c t s e mp l oy e e s by a l l ow i n g c om pe n s a t i on for di s c r i mi n a t or y or r e t a l i a t or y di s c h a r g e , w h i l e a t t h e s a me t i m e p rotect i ng em p l o y ers by al l o wi ng t he wrongd o i ng of a d i shonest em p l o y ee t o be t aken i nt o acco unt and l i m i t i ng t he am o un t o f

d am ag es.

T h is d o e s n o t m e a n , ho w e v e r, tha t afte r-a c q u ire d e v id e n c e o f em p lo ye e m isc o n d u c t i s a lw a ys a c o m p le te 2 bar t o re cover y
. W e a gr ee wi t h t he r eas oni ng i n M cK enn on an d i t s proge ny t hat i n w r ongf ul t er mi nat i on ca s es wh i ch i mp l i cat e maj or publ i c pol i cy co nce r ns , su ch as di s cr i mi nat i on or r et al i at ory di s cha r ge, appl i cat i on of t he af t er
- acqui r ed evi d ence d o ct ri ne o nl y serves t o li m i t a n e m p l o y ee’ s d am ages and is no t a c o m p l et e b ar t o recove ry
. See M cK enno n, 513 U

. S. a t 362- 63.
-9- either a s a complete bar to a n employ ee’ s rec overy or to mitigate an emplo y ee ’s d am ages. See 1 g ener ally , Stephen J . Humes, Annotation, Afte r-Ac quired Evidenc e of Employ ee’ s Misconduct as B arring or

L imi tin g Re c ov e ry

I n Ac tio n F or Wro ng fu l Di sc ha rg e , 34 A. L .R. 5th69 9 ( 19 95 ); se e a lso O’Day v. McDonne ll Dougla s Helicopter Co., 959 P.2d 792, 795 (Ariz. 1998). Those jurisdictions that ha ve c on c lud e d th a t a c omp le te ba

r t o r e c ov e ry

is ap pr op ri a te , g e ne ra lly

re a so n th a t un de r w e llestablished princ iples of contra ct l aw, the prior mi sconduct of the employ ee excuses the employ er’ s subsequent bre ach. See Crawf ord Rehab. Servs., I nc. v. Weissman, 938 P.2d 540, 547 (Colo. 1997); Gassmann v. Evang elical Luthera n Good Samaritan Society , I nc., 933 P.2d 743, 745 ( Kan. 1997) ; McDill v. Environamics C orp., 757 A.2d 162, 166 (N.H. 2000); see also Restatement (Sec ond) of Contracts, § 237 (1981) . Comment c, illust ration 8 to section 237 of the Restatement is direc tly on po int :
A and B make an employ ment contra ct. Afte r the service ha s beg un, A, the
e mpl oy e e , c omm its a

ma te ri a l br e a c h o f h is d uty to g ive e ff

ic ie nt s e rv ic e that w ou ld justify B in d i s ch ar gi n g h im. B is not awar e of this but discharg es A for an ina de qu a te re a so n. A h a s n o c la im a g a ins t B fo r d isc ha rg ing him

. Courts allowing the use of a fter- acquir ed evidence have required the employ er to show that (1) the e mploy ee w as g uiltyof some mi sconduct of w hich the employ er w as unaw are ; (2) the misconduct would have justified discharg e of the employ ee; a nd (3) ha d the employ er known of the misconduct, the employ er w ould have discha rg ed the e mploy ee. See Gassmann, 933 P.2d at 745; McDill, 757 A.2d at 166. We ag ree that in a bre ach of contra ct ca se, “a fter- acquir ed ev i d ence of
e mpl oy e e mis c on du c t is a de fe ns e to a

br e a c h o f c ontr act act io n for wa g e s a ndbe ne fi ts l os t a s a re su lt of the dis c ha

rg e if the e mpl oy e r can de mon str a te that it wo uld ha ve fi re d th e e mpl oy e e ha d it known of the misconduct.” O’Day , 959 P.2d at 799. This corre sponds with the first prong of the 2 test set forth in L ewis, which r equire s evidenc e of e mploy ee w rong doing of “such severity that the employ ee in f

act would ha ve bee n terminated on those g rounds alone if the employ er had known of it at the time of the dischar g e.” 495 S.E.2d at 445 (citations omitted).-10-

I t is on the issue of burden of proof that we dis agr ee wi t h L ewis and theref ore the lower courts in this case. L ewis require s that the evidenc e of the employ ee misconduc t and the employ er’ s intent to fire the employ ee had it known of the misconduct to be clea r and convincing . 495 S.E.2d at 445. Howe ver, no othe r jurisdiction that has addressed the issue of after-a cquire d evidenc e and
acc epted its use either

as a complete bar or as a li mit to liability , require s that the evidence be clea r and convinc ing. See , e.g ., Br ooks v. L exington-F ay ette Ur ban County Housing Auth., 132 S.W .3d 79 0 ( Ky . 2 00 4) (s pe c if

ic a lly statin g that th e e vid e nc e is t o b e sh ow n b y a pr e po nd e ranc e ); se e a lso McKe nnon v. Nashville B anner Pub l’ g Co

. , 5 13 U.S. 352 (1995); McCaskill v. ConAgr a F oods, I nc., 296 F. Supp. 2d 1311 (M.D. Ala

. 2 0 03); Carroll v. B ay erische L andesbank, 150 F. Supp. 2d 531 (S.D. N.Y. 2001); Schiave llo v. Delmarva Sy s. Corp., 61 F. S upp. 2d 110 (D. De l. 1999); Camp v. J eff er, Ma ng els, Butler & Marmar o, 41 Cal.Rptr.2d 329 (1995); C raw ford, 938 P.2d at 547; Brown Distrib. Co. of West Palm Be ach v. Marc ell, 890 So.2d 1227 (Fla. D ist. Ct . App. 2005); Walters v. United States Gy

psum Co., 537 N.W .2d 708 (I owa 1995); Gassmann, 933 P.2d at 745; Tay lor v. I nt’l Maytex Tank Terminal Corp., 810 A.2d 1109 (N.J

. Super. Ct. App. Div. 2002); McDill, 757 A.2d at 166; J ohnson v. Bd. of Trs. of Dur

ham Tec hnical Cmty . Coll., 5 7 7 S

. E

. 2 d 670 (N.C. Ct. App. 2003); Ba rlow v. Hester I ndus., I nc., 479 S.E.2d 628 (W.Va. 1996). F or the re asons which f ollow,
we a g ree with the majority that the pre ponderance sta ndard is the c orre ct standar d to use in this case.

The standa

rd of proof required in a case “serve s to allocate the risk of er ror a nd to instruct the fa ctfinder

as to the deg ree of con fi d en ce society expects for a

particula r dec ision.” Estate of Acuf f v. O’Linge r, 56 S .W.3d 527, 536 (Tenn. Ct. App. 2001). Gene rally , in civil case s, fac ts are proved by a mer e pre ponderance of the evidenc e. Endowment R ank of Orde r of K.P. v. Steele, 63 S.W . 1126, 1128 (Tenn. 1909); Bur chett v. Stephens, 794 S.W.2d 745, 748 (Tenn. Ct. App. 1990). The pre pondera nce of

the evidenc e standa

rd re quires that the truth of the fac ts asserted be more probable th a n n o t, w h e r e a s th e c le ar a n d c o n v in c in g e v id e n c e s tan d ar d r e q u ire s th a t th e tr u thbe highly probable . “Clear

and convinc ing e vidence means e vidence i n wh ich there is no serious or
su bs ta nti a l do ub t a

bo ut the c or

re c tne ss of the c on c lus ion s dra wn fr om the e vid e nc e .” Ho dg e s v . S. C. Toof & Co., 833 S.W .2d 896, 901 n. 3 (Tenn. 1992)

. Th e hig he r s ta nd ardof

c le ar andc on vin c ing e vid e nc e is us e d to p ro mot e imp orta nt p ub lic policy and pre serve prior judicial o rd ers. Estate of Ac uff, 56 S.W.3d at 536. For e x ample, the Tenne ssee legis l at u re ha s imposed a clea r and c onvincing evidenc e standa rd in ce rtain instance s wher e it has found a

compelling public policy . See Te nn. Code Ann. § 3 1 -2 -1 0 5 (2004 Supp.) (establishment of pare ntal relationship for purposes of intestate succe ssion); Tenn. Code Ann. § 36- 1-113 (2004 Supp.) (te rmination of par ental rig hts); Tenn. Code Ann. § 56- 7-1201(e ) (2004 Supp.) (existence o f u n known motorist under uninsured motorist statute). The courts have also imposed a cle ar a nd convincing standard in c ircumstance s involving extraordinary reme dies. See Estate of Acuf f, 56 S.W.3d at 536 (setting a side dee d on g rounds of fr aud); Hodg es, 833 S .W.2d at 901 (award of punitive damag es); Pierce v. Fly nn, 656 S.W .2d 42, 46 (Tenn. Ct. App. 1983) ( ref ormation of a contra ct). We find no compelling publi c p o l i cyrea son for re quiring the impositi on of a c lear andT h e he igh te n e d sta n d a rd is also c o n tra ry to the tre a tm e n t o f o the r e m p lo ym e n t cla im s
. F o r e x a m p le , t o 3 di s qual i f y a t er mi nat ed empl oy ee f r om un emp l oy ment com pens at i on, emp l oy er s ar e onl y r equi r ed t o prove mi s conduct by a pr epon der an ce of

t h e ev i den ce
. Se e T en n
. Code An n
. § 50- 7- 303 ( 2004 Su pp. ) ; J ac k s on v
. B i bl e, 611 S. W

. 2d 588, 5 9 0 (T enn. C t

. A p p
. 19 8 0 ).
-11- convincing standard f

or af ter-a cquire d evidenc e i n a b rea ch of c ontrac t case

. There is nothing 3 inhere ntly

suspect about a fter- acq u ired e vidence in an employ ment contra ct dispute. I f such evidenc e is cre dible, there is no rationale for treating it differ ently from other

evidenc e in a c ontrac t dis pu te . Jurie s h a ve a lw a y s b e e n c on sid e re d c apa ble of c omp re he nd ing su c h e vid e nc e , w e ig hin g it, and dete rmining its probative value in the ultimate re solution of the case . I t is for a jury to decide if a n e mpl oy e e ’s mis c on du c t is of su c h se ve ri ty that he or sh e wo uldha vebe e n f ir e d im me diate ly ha d th e e mpl oy e r kno wn of it. A j ury c ou ld j us t a s e a sil y

de te rm ine that th e mis c on du c t di d n ot rise to that level of seve rity , and the employ er was simplyfishing f or any misconduct in the employ ee’ s past in order to justify the firing. There need not be a heig htened standard of evidence in order f or a jury to properly

make these determinations.

Th us in o rd e r t o d e fe ndthe br e a c h o f c on tr a c t c la im br ou g ht b y Mr . T e te r, we ho ld that RPS needs to show, by a preponderanc e of t he ev idence , that Mr. Teter was g uilty of g ross misconduct and that had RPS known of this misconduct, it would have fire d Mr. Tete r immediately

. Apply ing the preponde ranc e of the evidenc e standa rd, we conclude that there is an issue of materia l fac t as to whether RPS would have f

ired M r. T et er had it discovere d that Mr. Tete r wa s viewing pornog raphy

during working hours. Mr. Be rry sent Mr. Teter a letter on October 24, 2001, stating: “ I f I

had known this [porn o gra p h i c] m aterial exi sted befor e or during the time of our employ ment contra ct di scussions, I would have terminated y ou immediately .” Howe ver, the re w as a l s o e v i d e n c e t h a t s u g g e s t e d t h a t M r
. T e t e r w o u l dn o th a v e b e e n f i r e d i m m e d i a t e l y u p o n d i s c o v e r y. For example, Mr. Be rry

stated in his de position that he would still like to ha ve Mr. Tete r working for the company
. Additionally , no one ever tol d the employ ees of RPS that they wer e not to use the internet for

persona l use during working hours. The Court of A ppeals found that in light of the evidenc e sug g esting that Mr. B erry would not have fired Mr. Teter , the October 2001 letter did not amount to clear and convinc ing e vidence that RPS would have in f act f ired Mr. Te ter. How ever , under a preponde ranc e standa

rd, there is a materia l issue of fac t that c annot be resolved on motion fo r s umm ary

jud g me nt. Th e re fo re , w e re ma ndthi s c a se fo r t ri a l. 3. Incorporation of the “Employee Protection Plan ”

RPS arg ues that the e vidence did n o t s u p port the conc lusion that the 1997 contrac t unambig uously

incorporated the seve ranc e payments set forth in the Employ ment Protection Plan or th at the seve ranc e payments were applicable under the circ umstances of this case. RPS arg ues that the seve ranc e pay

provision was neve r trig g ere d beca use neither

of the threshold events, i.e., a chang e in owner ship or RPS g oing public, e ver oc curr ed.

Th e 19 97 c on tr a c t pr ov ide s th a t if a n e mpl oy e e is d ischarged for re a so ns oth e r tha n g ro ss-12-

misconduct, fraud, embezzlement, theft or voluntary termination, he is entitled to rec eive se vera nce pay “under the terms of the ‘Employ ment Protection Plan-Chang e in Owne rship Structure’ provision.” The “ Employ ment Protection Plan” discusses two sce narios under which an e mploy ee can r ece ive seve ranc e pay for v olu nta ril

y resig ning – ( a) a chang e in the CEO or sa le of the c ompany or (b ) R PS go ing pu bli c
. RPS con te nd s it on ly ow e s sev e ranc e pay if on e of the tr ig g e ri ng e ve nts set forth in the Employ ment Protection Plan occur . On the oth er h an d , M r. Teter arg ues that the 1 9 9 7 contract, by

its terms, onlyintended to incorpor ate the pa y me nt s c he du le found in the Employ ment Protection Plan, and not the trig g ering events c ontained ther ein.

T h e in te rp r e tati o n o f a c o n tr a c t is a matt e r o f la w a n d th e r e f o r e is r e v ie w e d d e novo. See Hamblen County

v. Cityof Morristown, 656 S.W.2d 331, 335-36 (Tenn. 1983). “When re solving disputes conce rning contra ct interpre tation, our task is to ascertain the intention of the parties based upon the usual, natura l, and ordinary meaning of the c ontrac tual lang uag e.” Guiliano v. Cleo, I nc., 995 S.W .2d 88, 95 (Tenn. 1999)

. I f a contra ct’s lang uag e is c lear and unambig uous, then the literal meaning of the lang uag e controls the outcome of the contra ct dispute. See Planters G in Co. v. Fed. Compress & War ehouse Co., 78 S .W.3d 885, 890 (Tenn. 2002). Additionally , “all provisions in the
c on tr a c t sh ou ld b e c on str

ue d inha rm on y wi th e a c h o the r, if

po ssi ble , to pr omo te c on sis te nc y a ndto avoid repug nancy betwee n the various provisions of a single contra ct.” Guiliano, 995 S.W .2d at 95. We ag ree with the trial court a nd Court of Appeals that the only rea sonable interpr etation of the 1997 co n t ract is that the parties intended to incor porate only

the payment schedule from the Employ ment Protection Plan into the 1997 contrac t. The Court of Appe als explained:

It i s c l e ar t h a tt h e p ar t i e s i n t e n d e d t h a tt h e p l a i n t i f f b e p r o v i d e d s e v e r a n c e p a y, pr ov ide d h e wa s n ot dis c ha rg e d f or g ro ss m isc on du c t, f

ra ud , e mbe zzle me nt o r the ft , or voluntarily

terminated his employment. The posit ion advanc ed by RPS – that the plaintiff was only

entitled to severance pay

in the event the c ompany

was sold or Mr. Be rry was re place d – is simpl y untenable. T he trig g ering event in the plaintiff’ s employ ment contra ct was clea rly intended to be wrong ful termination and wr ong ful te rm inatio n o nly . Wh ile se ve ranc e pay wa s a lso to be a va ila

ble in the e ve nt o f a

sa le of the c ompany

or a c hang e in the compa ny ’s leade rship, these trigg ering events we re in addition to, rather than in plac e of, the event of wrong ful termination.

For these re asons, M r. Tete r would be e ntitled to rece ive seve ranc e pay under the terms of the 1997 contra ct, at the amount set forth in the Employ er Protection Plan, so long as RPS cannot show that it would have fire d him for g ross misconduct, as discussed a bove. 4. Application of Guili ano v. Cleo, Inc

. RPS also contends that the se verance pay provisions c onstitut e an illega l penalty and ar g ues that the intermediate court erre d in its interpre tation of Guil iano v. Cleo, I nc., 995 S.W .2d 88 (Tenn. 1999), in finding that the seve ranc e pay provisions were valid.-13-

I n G uil ia no , w e dif

fere nti a te d b e tw e e n li qu idate d d a ma g e s, wh ic h may be fo un d to c on sti tut e a pena lty , and seve ranc e pay , wher e re covery would be absolute upon the employ ee’ s termination.

The term “liquidated damag es” is def ined by ca s e l aw as a “sum stipulated
a nda g re e d u po n b y

the pa rt ie s at th e tim e the y

e nte r the ir

c on tr a c t, t o b e paid to
c o m p e n s a t e f

o r i n j u r i e s s h o u l d a

b r e a c h o c c u r
. ” T h e s t i p u l a t e d a m o u n tr e p r e s e nts an estimate of potential damag es in the event of a contra ctual brea ch whe re da mag es are likely to be unce rtain and not e asily proven.
I n contra st, the rec overy

of seve ra n ce pay

is not conditioned upon a brea ch of c on tr a c t or

a re a so nab le e sti ma tio n o f d a ma g e s. Ge ne ra lly , s e ve ranc e pay is a form of co m p en s ati on paid by an employ er to an employ ee at a time when the employ ment relationship is terminated through no fault of the employ ee. The re ason for se verance pay

is to offset the employ ee’ s monetary losses attributable to the dis mis sa l fr om emplo y me nt an d to re c omp e ns e the e mpl oy e e fo r any pe ri odof tim e when he or she is out of work. The amount of pay ment is g ener ally based upon the types of se rvice s and the number of ser vice y ear s p er fo rm ed by the employ ee on behalf of the e mploy er.
995 S.W .2d at 96-97 (c itations and footnote omitted).

We also differ entiated betwee n liquidated damag es as compensation a nd liquidated damag es a s a p e n a l t y.
The f u n d a me n ta l p u rp o s e o f li q u id a te d d a ma g e s is to p r o v id e a me a n s of compensation in the e v en t o f a breac h wher e dama g es would be inde terminable or otherwise difficult to pr ove. By stipulating in the contra ct to the damag es that mig ht
rea sonably

arise f rom a b reach, the pa

rties essentially

estimate the a mount of po te nti a l dama g e s li ke ly to be su staine d b y the no nb re a c hin g pa

rt y . “ I f the [co ntr a c t] provisionis a

r e a s o n ab le e s ti mate o f

th e d a ma g e s th a t w o u ldo c c u r f r o m a b rea ch, then the provision is normally construed as an enforce able stipulation for liquidated da ma g e s. ” Ho we ve r, if the sti pu la te d a mou nt is un re a so na ble in re la ti on to tho se p o t e n t i a l o r

e s t i m a t e d d a m a g e s , t h e n i tw i l l b e tr e a t e d a s a p e n a l t y.
I d. at 98. Apply ing the se principles t o this case, the Court of Appea ls found that the seve ranc e pay pr ov isi on s a re n o t a p e n a l t y
. W e a g r e e
. T h e 1 9 9 7 c o n tr a c t s t a t e s t h a t M r
. T e t e r i s e n t i t l e d to
se ve ranc e pay

if he is d isc ha

rg e d f or re a so ns oth e r tha n g ro ss misc on du c t, fr a ud , etc

. I n o the r w or ds , he will rec eive se verance pay if he is “terminated throug h no fault” of his own. See id. at 97. The amount of seve ranc e pay

set forth in the Employ ment Protection Plan is based upon the plaintiff’s salary and bonuses, c ommensurate w ith “the number of service y ear s perf

ormed by ” Mr. Teter. See id. Th us we fi nd no e rr or in the low e r co urt’ s det e rm inatio n th a t th e se ve ranc e pa y pr ov isi on s d id-14-

not constitute an illeg al pena lty

. 5. Pre jud gm e nt I nte re st
Be cause we a

re va cating the t rial court’s awa rd and r emanding the ca se for trial, the issue of wh e the r the tr ia l c ou rt

abu se d it s d isc re tio n ina wa rd ing pr e jud g me nt i nte re st i s mo ot.
Conclusion I n sum, we hold that an employ er may use af ter-a cquire d evidenc e of e mploy ee misconduc t in defe nse of a

brea ch of c ontrac t action, and that evidenc e nee d only be shown by

a pre pondera nce of the e vidence . Be cause there is an issue of material fac t as to whether RPS would have f

ired Mr. Te te r h a d it

dis c ov e re d th a t Mr. Te te r w a s v ie wi ng po rn og ra ph ic ma te ri a ls d uring wo rking ho ur s, summary judgme nt w as inappropriate, and we rema nd the case for trial. On the re m ai n i n g i ssues raised by RPS , we a ffirm the Court of Appea ls: Mr. Teter did not voluntarily resig n from his position but was involuntarily

terminated; the pay ment schedule found in the Employ ment Protection Plan was incor porate d into the 1 9 9 7 co n t rac t; and the seve ranc e pay provisions did not constit ute an illega l penalty . Acc ording ly , the Court of Appe als is affirmed in part a nd reve rsed in part, and the
c a se is r e ma nd e d to the tr ia l c ou rt fo r t ri a l.

Costs of this appea l are assessed equally betwee n the parties Eric Te ter a nd Republic Parking S ys t e m , In c
. , a n d t h e i r

s u r e t i e s , f

o r w h i c h e x e c u t i o n m a y i s s u e i f n e c e s s ar y.

_____________________________ WI LL I AM M. B AR KE R, JUS TI CE