# FILED
June 2, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF AP PEALS OF

TENNESSEE, WESTE RN SECTION AT JACKS ON

_______________________________________________________ ) JERRY WILLIAMS , ) Shelby County Circuit Cou

rt, ) No. 52045 T.D.T Plaintiff/Appellee. ) ) VS. ) C.A. No. 02A01-9608-CV-00190 ) MEMPHIS HOUSING AUTHORITY, ) ) Defend ant/Appe

llant. ) )

______________________________________________________________________________ MABLE MONDAY , ) Shelby County Circuit Court ) No. 51932 T.D. Plaintiff/Appellee. ) ) VS. ) C.A. No. 02A01-9610-CV-00231 ) MEMPHI S HOUSING A UTHORITY , ) ) Defend ant/Appe

llant. )

______________________________________________________________________________ From the Circuit Cou

rt of Shel by C ounty

at Memphis
. Honorable Wyeth Chandler, Judge Gregory L. Perry Attorney for Def endant/A ppellant
. Alan Bryant Chambers , Jeff A. Crow, Jr. CHAMBERS, CROW, DURHAM & HOLTON, L AWYERS, Memphis, Tennessee Attorney for Plain tiffs/App ellees.
OPINI ON FIL

ED: REVERSED A ND REMAN DED FARMER, J. HIGHERS, J. : (Concur s) LILLARD, J. : (Concur s)1 See U.S. Const. amends. V , XIV ; 42 U.S.C. § 1983 (198 8); see also Ten n. C ons t. art . I,

§ 8. The Employees’ initial complaints did not include these due process claims, but the Employees later soug

ht to add these claims by filing motions to amend their complaints. The trial court’s orders effectively granted the Employees’ motions to amend.
2 The tria l court sp ecified

that William s’ reinst

atement w as contin gent up on Williams’ former position becoming available.

3 See T.R.A.P. 16(b). Defendant

Memphis Ho

using Au th ority (MH A) appeals several orders enter ed by the trial court in favor of

two of MHA’s former employees, Plaintiffs/Appellees Jerry D. Williams and Mable Monday (collectively, the Employ ees). In separ

ate actions filed below, theEmployees sued MHA for breach

of employment contract. In both cases, the trial court ente red orders granting the Employ ees’ mo tions for summary judgme nt based on the court’s conclusion that MHA’s Manual of Operations constituted part of the employ ment contract between the part ies and, fu rther, that MHA breach

ed this co ntract b y te

rminatin g the Employees without just cause. Ame nding the plead ings to confor

m to the pro of in

the records, the trial court’s foreg oing orders also granted summary judgment to the Employee s on their claims that, in terminat ing th e Employees, MHA violated their rights to substantive and procedural due pr oc ess. 1 After conducting a subsequent hearing on the issue of remedies, the trial court entered final orders gr anting the Employees back pay and reinstatement to their former positions with MHA. 2 Upon MHA’ s motion, this court consolidated MHA’s appeals of the trial court’s judg ments i n favor o f Williams a nd Monday

because the appe als involv e common q uestions o f law and

fact. 3

On appeal from the trial court’s final judgments, MHA conte nds that the trial court erred in (1) permitting the Employees to amend their c omplaints to assert claims for substantive and procedural due proc ess viola tions; (2) granting the E

mploy ees’ moti ons for su mmary judgmen t; (3) awarding the Employees back pay and reinstatement; and (4) deny ing MHA’s motions for leave to renew its motions for summary judgment. We conclude that a resolution of the second issue is dispositive

of this ap peal, and we rev erse the

trial cou rt’s judgments.

For purposes of the Employees’ summary judgment

motions, the parties stipulated to the following facts. MHA hir ed Monda

y f or th e po sition of Executive Secretary in Septembe r 1989. Williams was hired as MHA’s Directo r of Secu rity in April 19 91. MHA’soperati on ispartiall

y governed by

federal law and by

feder al rules and regulations implemented by the United States Departm

ent of Housing and Urban Development (HUD). Be tween November 1991 and February 1992, HUD ’ s district area office in Nashville conducted a Comprehe nsive Coordinated Management

Review of MHA. As a resu lt of this review, HUD issued a report in March 1992 which concluded

that Williams and Monday had been improper ly hired in that their employ ment applications were no t submitted within the

adverti sed time f

rames. Sp ecif

ica lly, Williams submitted his application prior to the date MHA posted its solicitation for the po si ti on of Di re ct or of

Se cu ri ty, wh ile Mo nd ay submitted her application after the advertised closing da te for the position of Executive Secretary . Based on t hese proce dural violations in MHA’s hiring of Williams and Mo nd ay, HUD instr

ucted MH

A to termin ate the E mployees. As instructed, MHA te rminated the Employees in April

1992. In accorda

nce with the grievance proc edures outlined in MHA’s Manual of Operations, both Employeesfiled grievances, which ultimately were denied by MHA’ s Board of Commissione

rs.

The Employ

ees subsequently

filed co mplaints agains t MHA for breach of employment

contract. In their complaints, the Employ ees alleged

that MHA’s Manual of Operations constituted an employ

ment cont

ract be tween the

parties and th at MHA ha d breached this employment

contract by

terminat ing the E mploy ees witho

ut just cau se. Bas ed on this argument, the Employees moved for summary judgment on their b

reach o f employ

ment cont ract cla ims, as well
as their cla

ims that the

y ha d been de prived of propert y rights without due process of law. After reviewing the Manual of Operations and the stipulated facts, the trial court agree d with the Employ ees’ conte ntion and, accordingly , entered summary judgment in favor of the Employees. The dispositive issue in

this appeal, therefore, is whether MHA’s Manua l of Operations constitutedan employ ment ag reemen t which co ntractu ally

limited MHA ’s righ

t to termin ate the E

mploy ees.

Because Tennessee adhe

res to the “employee -at-will” rule, a presumption arises in this state that an employee

is an employee a

t will. Davis v. Connectic ut Gen. Lif e Ins. Co. , 743 F. Supp. 1273, 1280 (M.D. Tenn. 1990). Under th is well-established rule, a contract for employ ment for an indefinite term is considered a contract at will which can be terminated by an e mployer (or
an employee) a

t any time without cause. Bringle v. M ethodist Hosp. , 701 S.W.2d 622, 625 (Tenn. App. 1985); accord Graves v . Anc hor Wire Co rp. , 692 S.W.2d 420, 422 (Tenn. App. 1985);4 See Smith v. Morris , 778 S.W.2d 857 (Tenn. App. 1988) (compensation for

accumul ated unus ed sick le ave); Williams v. Maremont Corp. , 776 S.W.2d 78 (Tenn. App. 1988) (r ecall pr ovision); Hamby v. Genesco, Inc. , 627 S.W.2d 373 (Tenn. App. 1981) (rollback provision ); see also Claiborne v. Frito-Lay, Inc. , 718 F. Su pp. 1319 (E.D. Ten

n. 1989) ( seniority provision ); MacDougal v. Sears, Roebuck & Co. , 624 F. Supp. 756 (E.D. Tenn. 1985) (service allowance).

5 See Bringle v. Methodist Hosp. , 701 S.W.2d 6 22 (Tenn . App. 198 5); Graves v. Anchor Wire Corp. , 692 S.W.2d 4 20 (Tenn . App. 198 5); Whittaker v. Care-More, Inc. , 621 S.W.2d 395 (Tenn. A pp. 1981) ; see also Gregory v. Hunt , 24 F.3d 7 81 (6th Cir . 1994); Davis v. Connectic ut Gen. Life Ins. Co. , 743 F. Supp. 1273 (M.D. Tenn. 1990). Whittaker v. Care-More, Inc. , 621 S.W.2d 395, 396 (Tenn. App. 1981).

In recent y ears, the courts of this state have recognized, at least in theory, that a n exception to the at-will rule may a rise wherean employer pr omulgates an employ ee handbook which confers certain

benefit s on employees 4 or which limits the e

mploy er’s rig

ht to termi nate emp loy ees. 5 In order to be considered part of the employ ment contrac t, howeve r, the ha ndbook mus t contain specific language showing

the employer’ s intent to be bound by the handbook’s provisions. Smith v. Morris , 778 S.W.2d 857, 858 (Tenn. App. 1988). Un less the e mploy ee hand

book cont ains spec ific guarantees or bindin g commitments, the handbook will not constitute a contract. Whittaker v. Care-More , 621 S.W.2d at 39 7. As stated by one cour t, “the la nguag e used mus t be phra sed in binding term s, int

erpr eted in the cont ext of the entire handbook, and read in conjunction with any other relevant material, such as an employ ment application.” Claiborne v. Frito-Lay, Inc. , 718 F. Supp. 1319, 1321 (E.D . Tenn. 19 89). Our resear ch has re vealed f ew instances in

which ap pellate courts of this state have concluded that the languag e of an employee ha ndbook was binding on an employer. See Williams v. Maremont Corp. , 776 S.W.2d 78 (Tenn . App. 198 8) (holdi ng that t erms of employee ha

ndbook were binding on employer where handbook provided that employ ees woul d be recalled in order of

seniority ); Hamby v. Genesco, Inc. , 627 S.W.2d 373 (Tenn. App. 1981) (holding that employee ha ndbook’s “rollback” provision was binding on employe r where handbook provided that, for so long as employ ment relationship continued, handbook contained guaran te ed policies, practices, and procedures of employ er); see also Hooks v. Gibson , 842 S.W.2d 625 (Tenn. App. 1992) (concluding that employee handbook became part of employ ment contract where handbook was promu

lgated pursuant to agreement be

tween e mploy er and st

ate and employees we

re third-party bene

ficiaries of such agree

ment).The employee ha ndbook at issue in this case is MHA’s Manual of Operations. The determination of whether the Manual of Operations constitutes part of MHA’ s employment contract with Williams and Monday depends upon the specific langua ge use d in the Manual. See Davis v. Connectic ut

Gen. Life Ins. Co. , 743 F. Sup p. at 1279 ; see also Gregory v. Hunt , 24 F.3d 781, 785 (6th Cir. 1994) ; MacDougal v. Se ars, Roebuck & Co. , 624 F. Supp. 756, 759 (E.D. Tenn. 1985). Accord ingl y, in o rder to ma ke this de

terminat ion, we ha

ve examine d the Manu al’s spe cific provision s. The Ma

nual’s f orward states:

Thi s is the official Manual of Operations for the Memphis Hous in g Au th or it y. Its purpose is to arrang e for re ady ref erence a review of the policies, relation ships, and pro ced ure s of [M HA] . It is intended primarily as a g

uide for employees in the discharge of their duties.

Article IV of the Manua

l, entitled AMENDMENTS , provide s that:

The Ma nual of Operations and the By -Laws of [MHA] may be amended by any speci al or regular meeting of the Board of Commissioners by a simpl e majority of said Commissioners, there being a quorum present.

Section 208 of the Manual, entitled EMPLOYMENT AND PERSO NNEL REGUL ATIONS , providesthat:

All employment and personne l procedures shall be regulated by the provisions hereinafter

provided in this sec tion and elsewher e in this Manual.

In this section, the Manual lists four reasons for termination of services: resig nation, dismissal for just cause, r etireme nt, and reduction in force. The Manual also lists causes for which an employee may be suspended, demoted, or te rminated , and it d

ivides the causes into two categories, major infrac tions and o ther infr

actions. After lis ting exam ples of in fractio ns, the Ma

nual state s:

None of the aforementioned Major or Ot her Infractions will be deemed to pre vent the dismissal, demotion, suspension, or disciplinary

action of an employee for just cause. JUST CAUSE sha ll exist when [MHA] has a reasonable basis for the action taken eve n though such cause is not contained in those mentioned above.Finally, Section 401 of the Ma nual, entitled PURPOSE , provide s that:

This Manual of Operations contemplates that every f ucntion [sic] of [MHA] shallbe carried

out by its member s and empl oyees strict ly in accordance

with policies and pro cedu res adopted by [MHA], and incorporated in the Manual.

After ca re fu ll y re viewing the specific languag e contained in MHA’s Manual of Operati ons, we conclude that theManual’s provisions are insufficient to overcome the presumption that Williams and Monday were at- will employees. The Employ ees contend that the Manua l contains sufficient guarantees to be binding upon M HA beca use the Ma nual spec ifically contemplates that all MHA functions “shall be carried out by its member s and empl oyees strict ly in accordance

with” the Manual’s policies and procedures and, further, bec ause the Manual states that “[a]ll employment and

personnel procedures shall be r egulat ed by ” the Man

ual’s pr ovisions. I

f this langua ge evidences an intent on the part of MHA to be bound by the Manual’s provisions, however, such intent is contradicted by the e xistence of a provision i n the Manua l giving MHA’s Board of Commissione

rs the au thority to amend the Manual at

any specia

l or regular Board mee

ting. “Any langua ge that pre serves a

unilateral right

on the par

t of the e mploy er to alte

r or modif y the conten

ts of [a] handboo

k” generally

precludes the handbook from being considered part of the employment contract. Claiborne v. F rito-Lay, Inc. , 718 F. Su pp. 1319, 1 321 (E.D. Tenn. 198 9); see, e.g. , Smith v. Morris , 778 S.W.2d 857, 858 (Tenn. Ap p. 1988) (ha ndbook’s language clea rly showed “that modifications we re antici pated”) ; Bringle v. Methodist Hosp. , 701 S.W.2d 622, 624 (Tenn. App. 1985) (ha

ndbook re served t

o employ er “rig ht to chang e and ab olish polic ies, procedures, rules and regula

tions”); Gregory v. Hunt , 24 F.3d 781, 786 (6th Cir. 1994) (handbook provi ded that policies were “ subject to chang e by

manage ment, unila

terally and without notice ”); Davis v. Connecticut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1279 (M.D. Tenn. 1990) (handbook reserved to employer

“right to change any

or all such policies, practices and procedure s in whole or in part at any time, with o

r without n otice”) . Such lan guag e instea d indicat es “that t he ha ndbook simp ly constitute [s] a set of guidelines or a source of infor mation f or an em ployee.” Claiborne v. FritoLay , 718 F. Sup

p. at 1321 . In th

e case of MHA’s Manual of Operations, this conclusion is further support ed by lang

uage indicating that the Manual’s purpose “is intended primarily as a guide foremployees in the discha rge of their duties.”

Even i f the Man ual of Operations’ languag e demonstrates an intent on the part of MHA to be bound by the Manual, we find nothing in the Manual’s provisions which would alter the Employ ees’ status as at-will employees. F irst, we note that

the Manua

l did not en

title the Employees to a specific term of employ ment because the Manu al’s provisions gave the Employ ees no assurances of em pl oym ent for any

de finite time. See Graves v. Anchor Wire Corp. , 692 S.W.2d 420, 421 (Tenn. App. 1985 ); Whittaker v. Care-More, Inc. , 621 S.W.2d 39 5, 397 (Te nn. App. 1 981); accord Davis v. Connect

icut Gen. Life Ins. Co. , 743 F. Supp. 1273, 1280 (M.D. Tenn. 1990) (concluding that, because Tennessee still clings to “employ ee-at-will” rule, presumption that employee is at

will must be overcome by

specific language g

uaranteeing definite term of employ ment). Moreover, contrary to the Employ

ees’ ar gument, the termsof the Ma nual did not limit MHA ’s righ

t to termin ate the Employees by requiring that any terminat ion of ser vices be for one o f the enu

merated reasons , such as just cause. Although the Manu a l listed only four reasons for termination, including resignation, dismissal for just cause, retirement, and reduction i n f orce, th is list did no t purport

to be exclusive. Indeed, the Manua l’s inclusion of reduction in force to this list contemplates that certain business exigencies may

arise which necessitate dismissing employ ees for reasons other than just cause. In this case, the refore, we c an find no language that unequivocally overcomes the presumption that William s and Mond ay were a t-will emp loy ees. See Gregory v. Hunt , 24 F.3d at 787; Davis v. Connecticut Gen. Life Ins. Co. , 743 F. Supp. at 1280.

Based on the foregoing analy sis, we conclude that the trial court erred in ruling that MHA’s Manual of Oper

ations co nstituted a

n employ ment cont ract whi ch limited

MHA’s rig

ht to terminat e the Employees; there

fore, we reverse the trial cour t’s orders entering summary judgment in favor of the Employ ees on their cla ims for breach of employ

ment contract. This holding leads us to the related conclusion that MHA’s Manual did not grant the Employees any

protect ible prop erty interest in continued employment with MHA. See Gregory v. Hunt , 24 F.3d at 787. Ac co rd in gl y,
we also rev erse tha

t p ortion o f the trial court’s orders entering summary judgment in favor of the Employees on their due process claims. Finally , our disposition of the Employees’ claims requires that the trial court’s final orders granting back pay and reinstatement be reversed.The trial court’s judgments are reversed and t hese causes remanded for further

procee dings. Costs of thi s appeal are taxe d one-ha

lf to William s and one-half to Monday , for which
ex ec ut io n m ay i ss ue if

ne ce ss ar y.

____________________________________ FAR MER , J.

______________________________ HIG HERS, J. (Conc

urs)

______________________________ LI LL ARD, J. (Conc

urs)