### IN THE COURT OF APP EALS OF TENNESS EE AT KNOXVI LLE Fe br ua ry 15, 200 5 S es sio n
WAR REN E. HEA THER LY v. C AM PB ELL C OUN TY BOA RD OF ED U C A TI ON , e t al.
Appeal f romthe Chancer y Court for Cam pbell Cou nty No. 15,826 Billy Joe Whi te, C hancellor

No. E2004-02004-COA- R3-CV - F ILED MARCH 10, 2005

The plaintiff in this case was employ ed as the direc tor of schools for Campbell County , Tenne ssee, under a contra ct of e m p l o y m en t which was de emed by the def endant Campbe ll Count y Boa rd of Educa tion to have terminate d afte r four y ear s. The plaintiff sue d the B oard f or bre ach of

contra ct
asserting that the c ontrac t contained a clause which provide d t h at i f t h e B oard took no a ction by Ap ri l 15 of

e a c h y e ar o f the c on tr a c t to e ith e r e xten d o r n on -r e ne w, the c on tr a c t w a s auto ma tic a lly extended one y ear . The plainti ff contended that, in view of this clause and a ccompa ny ing non- action by the Board, the contra ct di d not terminate upon the expiration of four y ear s, but rather extended bey ond that period of time. The plaintiff alter natively asserted that, pursuant to a prior order of the trial court e ntere d in a matter unrela ted t o the present case , he was entitled to an annual salary of not less than ten per cent be low that of the dire ctor of sc hools. The B oard f iled a motion for summary judgme nt reque sting a

ruling that the automatic e x tension clause of t he contract wa s invalid and that the contra ct expired ac cording to its t erms. The Boa rd’s motion also reque sted that the trial court rule that, upon e x piration of the c ontrac t, the plaintiff enjoy s no rig hts to salary bey ond those of a classroom tea cher . The trial c ourt denied the Boa rd’s motion with respec t to the automatic extension clause , decla

ring the clause to be valid and enf orce able; howe ver, the Boa rd’s motion was g rante d
w ith r e s p e c t t o th e matt e r o f th e p la in ti f

f ’ s r ig h ts to s a la

r y g r a n te d by the court’s p r io r o r d e r

. We hold that the automatic ex tension clause is invalid, but that the pl aintiff re tains those rig hts gr anted h i m u n d e r t h e p r i o r o r d e r o f t h e t r i a l c o u r t s u b j e c tt o f u r t h e r r e v i e w b y t h e t r i a l c o u r t

. A c c o r d i n g l y, we r ever se the judg ment of the trial c ourt and re mand.

Te nn. R . A pp. P . 3 App e al a s o f Rig ht ; J udgm e nt of t he Cha nc e r y C our t R e ve r se d; Ca use Rem anded

S HAR ON G. LEE , J. , d e li v e r e d th e o p in io n o f th e c o u rt, in which H ER SCH EL P. F RAN KS , P.J ., and C H A RLES D. S US ANO , J R ., J ., joined.

David Scott Be nnett, Chattanoog a, Te nnessee and Da il Ca n t re l l , Clint on, Tenne ssee, f or the appellants, Campbell County Boa rd of Educ ation and Jeff Mar low, C am p b el l CountyFinanc ial Direc tor.-2-

Michae l G. Hatmake r, Jacksboro, Tenne ssee, f or the a ppellee, War

ren E. H eathe rly

. OP IN ION

The de fenda nt/appellant in this case is the C ampbell C ounty Boa rd of Education (her einaf

ter “the B oard” ), which is an e lected body responsible for

g overning the public s chool sy stem for C a m p b e l l C o u n t y , T e n n e s s e e

. O n J a n u ar y 1 , 1 9 9 9 , t h e p l a i n t i f f / ap p e l l e e , W arr e n E

. H e a t h e r l y, enter ed into an employ ment contra ct (he reina fter " the con tr a c t" ) w ith the Boa rd whe rein he was hire d to serve a s director

for the Ca mpbell Countyschool sy stem. The contr act include s the following pr ov isi on pe rt a ini ng to d ur a tio n o f e mpl oy me nt:

1. E m p l o y m e n t o f t h e D i r e c t o r / S u p e r i n t e n d e n t u n d e r t h i s c o n t r a c t sh a ll
c omm e nc e on the fi rs t day of Janu ary , 19 99 , a ndsh a ll e xten d u nti l th e thi rt y -f ir st day of De cembe r, 2002, for a term of four y ear s. On or bef

ore A pril 15 of ea ch y ear of this contrac t, the Boa

rd m ay , at its option act to ex tend this contrac t for a period not exceeding one y ear or non-r enew this contract upon its expiration on the date he rein a

pproved. I f no ac tion is t aken by the B oard by

s u ch date, the contra ct shall automatica lly be extended one y ear

.
I n April of 2001, the B oard c onsidered a motion not t o extend the contrac t with Mr. He a the rl y ; ho we ve r, thi s mot ion did no t re c e ive ma jority su pp ort fr om the B oa rd a nd fa ile d. I n A pr il of 2002, a subse quent motion to ex tend the contr act for an additional y ear also failed. T here afte r, the B oa rdre qu e ste d a n o pin ion of the Te nn e sse e At torne y Ge ne ra l as to the va lid ity of the a uto ma tic extension clause of th e above r efe renc ed provision of the c ontrac t. The Attorney Gene ral opined that “a r ollover clause t hat has the effec t of ex tending a contr act be y ond four y ear s from the e ffe ctive date of the contra ct is impermissible.” Guided by the Attorney

Gene ral’s opinion, at its meeting on Oc tob e r 1 0, 20 02 , th e B oa rda g re e d b y a ma

jority vo te that the c on tr a c t wi th M r. He a the rl y wo uld be dee med to have e x pired on De cembe r 31, 2002, at whic h time his employ ment as d i rec tor of schools would end.

On De c e mbe r 3 1, 20 02 , Mr

. He a the rl y fi le d a c omp la int

in the Cha nc e ry

Cou rt of Ca mpb e ll Countyag ainst the Boa

rd and Campbe ll C ounty financ ial direc tor, J eff

Marlow. The complaint
a ve rs that “ pu rsu ant t o th e la wf ul t e rm s o f h is c on tr a c t e nte re d in to o n Jan ua ry 1, 19 99 , h e ha s a lawful c ontrac t of employ ment until J anuary 1, 2007” and that the contra ct was illeg ally terminated i n De ce m b ero f 2 0 0 2

. T h e c o m p l ai n tal s o s t at es t h e f o l l o wi n g:
Plaintiff aver s that pursuant to prior c ourt ruling s he wa s d et er m ined to be a tenure d principal a t Campbell County Hig h School with a neg otiated contra ct. As
a re su lt o f s a id r

uli ng

.. . h e is e nti tle d to pla c e me nt in th e Ca mpb e ll Co un ty Sc ho ol S y ste m a t 10 % b e low the Di re c tor of Sc ho ols sa lary , if

his c on tr a c t is deeme d lawfully

terminated.-3-

The c omplaint requests that Mr. He ather ly be paid the va lue of the c ontrac t, “including be nefi ts , cal cula te d f

or a fo ur y e ar p e ri odfr om Ja nu a

ry 1, 20 03 .” Th e c omp la int a dd iti on a lly
re qu e sts a n a wa

rdof c omp e ns a tory a nd pu nit ive da ma g e s a nd a te mpo ra ry re str a ini ng or de r t o e njo in the B oard “ from not pay ing the Plaintiff under his Dire ctor’s Contract, or alternatively pay ing the Pla int if f at a rate o f 10% be low the Di re c tor ’s sa lary , u nti l su c h ti me a s h e te rm inate s h is employ ment with the Campbell CountySchool Sy stem.”

On Dec ember

30, 2002, the trial court entere d a tempora ry restra ining or der enjoining the Boa rd and Jeff Ma

rlow from withholding pay to Mr. Hea therly under the contra ct pending a hea ring on his cause of

action.
On September

8, 2003, the B oard f

iled a motion for summary judgme nt and supporting memorandum of la w, asserting that the c on trac t with Mr. Heathe rly expired by

its terms on Dec ember

31, 2002, and that the automatic extension clause in the contra ct is inva lid as a matter of law. The Boa

rd’s motion further

asserts that, under the Educa tion I mprovement Ac t of 1999, Mr. Hea therly is not entitl ed to tenure as a principal and that the Boa rd is not obliga ted to pay

him any more than he might ea

rn as a classroom tea cher

.
B y or de r en te re d J uly 19 , 200 4, the tr ia l cou rt g ra nte d the mot ion fo r sum mary jud g me nt w ith respe ct t o the i ssue of tenure , holding that Mr. Heatherly is not entitled to tenure or salary bey ond that of a c lassroom teac her. H oweve r, the c ourt dec ree d the automatic e x tension cl au s e in the contra ct to be “va lid and enfor cea ble ac cording to its t erms” a nd g ra n t ed M r. Heatherly summary jud g me nt sua sponte in that reg ard. B oth parties appe al this order.
The following issues are prese nted for our revie w: 1) Whether the tr ial court e rre d in holding that the automatic extension clause is valid and enfor cea ble.

2 ) W h e t h e r

t h e t r i a l c o u r te rr e d i n h o l d i n g t h a tM r

. H e a t h e r l y i s n o te n t i t l e d t o a s a l ar y, commensura te with the position of a tenure d principal, in a n amount ten per cent be low that of the dir e c tor of sc ho ols

. 3) Whether the B oard’ s appea l should be dis m i s s ed o n g rounds that the B oard did not
a uth or ize fi lin g of

the app e a l by

a ma jority vo te of B oa rdme mbe rs

. The standa

rd by which we revie w a summary judgme nt is well s ettled. S ummary judgme nt proce eding s are eff

icient and e ffe ctive vehicles for concluding case s that can a nd should be dec ided
on le g a l is s u e s a lo n e

. H o w e v e r , th e s e p r o c e e d in g s s h o u ld n o t s e r v e a s a s u b s ti tu te f o r a tria l of g enuine a nd materia l fac tual matters. By rd v . H all , 8 47 S.W. 2d20 8, 21 0- 21 1 ( Te nn . 1 99 7) ; Bellamy v. Fe deral Expre ss Corp. , 749 S.W .2d 31, 33 (Tenn. 1988). Summary judgme nts should be aw arde d only when the moving party has demonstrated that there is no g enuine issue as to any materia l fac t-4-

a ndthat th e mov ing pa

rt y is e nti tle d to a jud g me nt a s a ma tte r of la w. Te nn . R. Civ .P. 56 .0 4; Ba in
v . W e lls , 9 36 S.W. 2d61 8, 62 2 ( Te nn . 1 99 7) ; Carvell v. Bottoms , 900 S.W . 2d 23, 26 (Tenn. 1995)

.
No pr e su mpt ion of

c or re c tne ss atta c he s to the low e r court ’s judg me nt a ndou r t a sk is confine d to review ing the rec ord to determine whether the require ments of Tenn. R. Civ. P . 56 have be e n me t. We mus t vi e w the e vid e nc e in the lig ht mos t fa vo ra ble to the no nmo vin g pa

rt y a ndmus t draw all rea sonable infere nces in fa vor of the nonmoving party

. Staples v. CBL & Associates, Inc ., 15 S.W .3d 83, 89 (Tenn. 2000)

. We further note that the Tenne ssee Supreme Court ha s rec og nized that the sc ope of a school board’ s authority

to contrac t with an employ ee is a question of law a nd, there fore , subject to de novo revie w with no presumption of cor rec tness. Arnwine v. Union County Board o f Education , 120 S.W .3d 804, 806 (Tenn. 2003)

. Th e fi rs t is su e we a dd re ss i s w he the r the tria l c ou rt e rr e d in ho ldi ng that th e a uto ma tic extension clause of the c ontrac t is valid and enf orce able. It is our determination that the trial c ourt
err ed in so holding.

Tenn. Code Ann. § 49-2-203( a)( 14)(A) provides in pertinent part that a local school board has a duty to, “[n] otwithstanding any other publi c or private act t o the contra ry , employ

a dire ctor
o f s c h o o ls u n d e r

a w r it te n c o n tr a c t o f

u p to f o u r ( 4 ) y e ar s ’ d u r a ti o n , w h ic h may b e r e n e w e d

. ” We
are not directe d to, nor are we other wise aw are of, any authority which allows a local school board to ext end the e mploy ment of a sc hool director be y ond the four y ear s authorized by the statute as the
a uto ma tic e xten sio n c laus e pu rp orts t o d o in this ca se

. I n his br ie f, Mr . H e a the rl y app e ars to i nd ic a te tha t t h e r e i s n o d i s t i n c t i o n b e t w e e n “ r e n e w a l ” a n d “ e xt e n s i o n ” i n t h e c o n t e xt o f t h e a uto ma tic extension clause - “ [t ]he contrac t simply extends or rene ws by one y ear annually unless by April 15 of ea ch y ear

the B oard vote s not to extend or rene w.” I n fac t, the subject clause specific ally provides for exte nsion , not rene wal, o f t h e co n t rac t. The distinction is critical beca use, while the statue permits the re ne wal of a dire ctor’s f our y ea r contra ct, it does not permit the exte nsion of such.

“ Re ne wa l” is d e fi ne d a s “ [t]he re -c re a tio n o f a le g a l r e la tio ns hi p or t

he re pla c e me nt o f a n o ld contra ct with a new contra ct, as opposed to the me re ex tension of a pr evious rela tionship or contra ct.” B lack’ s L aw Dic tionary , 1299 (7 ed. 1999). Ad o pting this definition of “r enew al”, th which conte mplates “re cre ation” or “re p l acement”, it is our determination that a rene wal of the contra ct could of ne cessity not be achieved without aff irmative action by the Board. Mere inac tion would not suffice to rene w the contr act.

I n this reg ard, w e re ly

on the ruling in So uth e rn Con str uc tor s, In c . v . Lo ud

on Cou nty Bo ar

d of Education , 5 8 S. W.3 d 7 06 (T e nn . 2 00 1) in w hic h th e Cour t hel d that D ill on ’s Rul e is p ro pe rl y applied in determining the authority of loca l school boards. Dillon’s Rule is ex p l ained by the Sup re me Cou rt

a s f oll ow s:
At its most basic leve l, Dillon’s Rul e is a c anon of statutory construction t h a tc a l l s f

o r t h e s t r i c ta n d n arr o w c o n s t ru c t i o n o f l o c a l g o v e r n m e n t a l a u t h o r i t y.-5-

As orig inally

articula ted by

its au t h or, then Chief Justi ce John F. Dillon of the I owa Supre me Court, Dillon’s Rule provides the f ollowing r eg arding the nature
a n d s c o p e o f

m u n i c i p a l g o v e r n m e n ta u t h o r i t y:

I n deter mining the que stion now made, it must be taken for settled law, that a municipal cor

poration possesses and c an exerc ise the following power s a nd no oth e rs : F ir st, tho se g ra nte d in e xpre ss w or ds ; se c on d, tho se nece ssarily

implied or necessarily incident t o the powers expressly g rante d; third, those absolutely essential to the decla red obje cts and purpose s of the
c or po ratio n - - n ot s imp ly conve nie nt, bu t in dis pe ns able ; f ou rth, a ny

fa ir doubt a s to the exis tence of a power is r esolved by the courts ag ains t the corpor ation - - a g ainst the exist ence of the powe r.
Southern Constructors, Inc., 58 S.W .3d at 710.
Guided by

this rule of construction, we hold that the automatic extension of the e mploy ment contra ct with Mr. Heatherly bey ond the s pecif

ied t erm of four y ear s was not within the B oard’ s scope o f a u t h o r i t y.
The next issue we addre ss is whether the trial court err ed in holding that Mr. He ather ly is not entitled to a salary

commensura te with that of a te nured principal. I t is our determination that the t ri al co u rt er re d i n s o h o l d i n g.

I n support of his position on t his issue, Mr. Heat h er l y re l i es upon lang uag e fr om an orde r e nte re d b y

the tr ia l c ou rt on Ap ri l 15 , 19 96 , in a se pa rate a nd un re la te d c a us e of a c tio n f ile d a g a ins t the B oard by

Mr. Heatherly . I n that case , the trial court found that Mr. Hea therly beca me a tenur ed principa l as o f t he 1992-1993 sc hool y ear and orde red tha t he “r ece ive a sa lary set at ten pe r ce nt (10%) below the Super intendent’s sala ry ” and “ all other be nefits commensura te with the tenure d position of Principal at Campbell CountyHig h School.” Mr. Hea therly contends that, upon a finding that his c ontrac t was lawf ully terminated, he is entitled to an annual sala ry not less than ten per cent of the dire ctor’s sa lary

. The Boa rd arg ues that the trial court’s prior decision finding Mr. Heatherly to be a tenur ed principal wa s corr ect unde r t he law as embodied in the C ampbell C ounty Private Tenure Ac t which was in ef fec t at the time. T he Boa

rd, howeve r, arg ues, in a ccor dance with the trial court’ s final orde r in the pr e se nt c a se , th a t th e Ca mpb e ll Co un ty Pr ivate Te nu re Ac t w a s r e pe a le d b y imp lic a tio n w ith Campbell County ’s 1999 adoption of the Educa tion I mprovement Act of 1992 and that, under the la tte r a c t, M r. He a the rl y

is n ot e nti tle d to the sa lary he no w re qu e sts

. I n sup po rt of thi s a rg ume nt, the B oa rdc ite s Knox County Education Association v. Knox C ounty Board of Education , 60 S.W .3d 65 (Tenn. App. 2001). I n that case we found that a private tenur e ac t applicable in Knox Countyand the Education I mprovement Act could not be rec onciled beca use they “provide differ ent standar ds for the e mploy ment and tenur e of principals” and we ruled that the Knox County private tenure act was, ther efor e, re peale d by implication. Id. at 74.-6-

I f the tenur e rig hts asserted by Mr. Heatherly derive d solely from the e arlier

private te nure act we would perhap s b e co m p el led to ag ree that such rig hts disappear ed whe n the 1992 ac t was adopted by

Campbell County . Howeve r, the rig hts asserted by Mr. Heatherly

wer e g rante d pursuant to a valid final judgment of the court and as a g ener al rule “ [t ]he leg islature may not by retroa ctive st atu te a nn ul, se t a sid e , o r i mpa ir fi na l ju dg me nts or

ri g hts the re in a dju dic a te d” 16 A C .J.S. Con sti tut ion al L aw § 2 74 (1 98 4) . We de e m th e ri g hts to t e nu re a ndsa lary g ra ntedMr . H e a the rl y pu rs ua nt t o th e tr ia l c ou rt ’s jud g me nt o f A pr il 1 5, 19 96 , to be ve ste d r ig hts wh ic h h e re ta ins de sp ite l at er contra

ry leg islation. Tenn. Const. art. I § 20 proscr ibes leg islation im pairing contra ctual or vested leg al rig hts. Dark Tobacco Growers’ Co-op. Ass’n v. Du nn , 266 S.W . 308, 312 (1924). Howeve r, while we acknow ledg e Mr. Heatherly ’s continuing rig hts under the pr ior judg ment of the trial court, the r ecor d befor e us conta ins inadequate inf o rm at i o n from which w e mig ht discern whether Mr. Heatherly

curr ently holds a position of emp l oy ment which entitles him to an annua l
sa lary a t te n p e r c e nt l e ss tha n t hat of th e dir e c tor of sc ho ols . T he re fo re , w e fi ndit a pp ro pr ia te to
rema nd the ca se for

further finding s reg arding Mr. Heatherly ’s cur rent e mploy ment status and for
a r u l i n g as t o wh et h er M r. He at h er l y i s en t i t l ed t o t h e s al ar y

h e r eq u es t s b as ed u p o n s u ch fi n d i n gs and the r ights g rante d him under the orde r of April 15, 1996.

Th e fi na l iss ue pr e se nte d fo r ou r re vie w i s w he the r the B oa rd ’s app e a l is su bje c t to dis mis sa l.

Mr. Heatherly

contends that the B oard’ s appea l in this ca s e wa s fi led without the
a uth or iza tio n o f a

ma jority of the B oa rda ndis, the re fo re , s ub

je c t to dis mis sa l. We de c lin e to a dd re ss this iss ue bec ause unde r Tenn. R. App. P. 13(a ) either party may

raise a ny question of law f

or re view and re lief and separa te appeals are not require d. As we have previously noted, bot h parties f iled an appea l in this c ase. Thus, even if the Boa rd’s appea l w ere to be dismiss ed, the Boa rd could, as an app e lle e , r a ise a ll o f the iss ue s wh ic h it ha s ra ise d a s a n a pp e lla nt. We w ou ld b e a dd re ssi ng the sa me iss ue s n otw ith sta nd ing dis mis sa l of the B oa rd ’s a pp e a l. Ac c or din g ly , it is ou r de te rm inatio n that if the re wa s a ny

e rr or in f a ili ng to d ism iss the B oa

rd ’s app e a l in thi s c a se , s uc h e rr or wa s h arm le ss.

For the re asons stated, we reve rse the judg ment of the trial c ourt and re mand for f urther proce eding s consistent with our opinion herein. Costs of appea l a re assessed equally

betwee n the C a m p b e l l C o u n t y B o ar d o f E d u c a t i o n a n d W arr e n E

. H e a t h e r l y.

_________________________________________ SHARON G. LEE, J UDGE