### IN THE SUPREME COU RT OF TEN NESSEE AT JACKSON
Nov em be r 5, 2 00 8 S es si on

MIK E ALLMAND v . JO N PAVLETI C, IND. AND AS MAY OR OF TH E

CIT Y OF RIPLEY, TE NNESSEE E T A L



### .

Rule 23 Cer tified Q uestion of Law United States Distr ict Court for the Weste rn District of T ennessee No. 06-2128 D P Bernice Bouie Donald, Ju dge

No. M2008- 00459-SC-R23- CQ - F iled Augu st 26, 2009

T h e United States District Court for the Western District of Tenne ssee has subm i t t ed a

cer tified question of law pursuant to our Rule 23 as to the validity of cer tain provisions within two
separ ate employ

ment contra cts: “Whether a municipal utilit y

board ha s the authority

to enter into

a contra ct with an appointed city officia l who serve s at the will and pleasure of the Boa rd of May or and Alderme n wher eby the utilit y board contra cts to continue to pay the officia l’s salary for a multiy ear time period [8 and 14 y ear s] afte r the officia l’s employ ment is terminated.” Be cause it is within

our discretion to do so, we have elec ted to answe r the question in a manner desig ned to fit the fac ts and circ umstances in this particula r case

. Our conclusion is that neither Ripley Power and L ight nor Ripley Gas, Water, and Wastewater

, utilit y boards for t h e C i t y o f Ripley

, Tenne ssee, had the authority to enter into multi-y ear contra cts with Mike Allmand, the former superintende nt of the two utilit ies, or to obligate the City for the pa

y ment of salar

y and bene fits as provided by the terms.

Tenn. S up. Ct. R. 23 Cer tified Q uestion of Law

G A R Y R. W A D E , J

., delivere d the opinion of the court, in which J A N I C E M. H O L D E R , C.J

., C O R N E L I A A. C L A R K , and S H A R O N G. L E E , J J

., joined. W I L L I A M C. K O C H , J R ., J

. filed a s ep arate di ssenting opinion.

Tim Edwards a

nd J ames F . Horne r, Jr., Memphis, Tennessee, f or the plaintiff, Mike A llmand.

Edwar d J

. McKe nney , J r., Me m p h i s , T en nessee , for the defe ndants, J on Pavletic, Billy Chipman, Billie Anne Hendr en, J immy Har rison, J ohn Gaines, Rober t T. Hig htower, Ripley Gas, Water and Wastewater Depa

rtment, and the City of Ripley ; and Henr y Clay Shelton, I I I

, Memphis, Tenne ssee, for the de fenda

nt, Ripl ey Power a nd L ight Company

.OP INION

I n Aug ust of 2006, the Plaintiff, Mike Allmand (“A llmand”), filed a complaint in the United States District Court for the West er n Di strict of Tenne ssee seeking damag es ag ainst the City of Ripley , Tenne ssee, its May or and B oard of Alderme n, individually

and in their official capac ities, Ripley Power and L ight Company

, and the Ripley Gas, Water an d W as t ewa ter Depa rtment (collec tively

, the “De fenda nts”), for the brea ch of two separ ate employ ment contra cts. During the 1

course of the litigation, the District Court enter ed an order cer tify ing a question of law to this Court pursuant to Rule 23 of the Tenne ssee Supreme Court Rule s

. Ou r rec itation of the fac ts and 2

proce dural history

is taken fr om the order

enter ed by

the District Court.

Background City of Ripl ey’s Chart er The City of Ripley , Tenne ssee, be came an incor porate d municipality pursuant to a Charter that was authorized by the Tenne ssee Gene ral Assembly in 1901 Pr i v at e Acts, Ch. No. 223. The Charter provides for a Boa rd of May or and Alderme n, consisting of seven members, one of whom

serve s as the May or. Pursuant to Section 5 of t h e C h ar t er , the May or and other members of the Boa rd of May or and Alderme n have terms of four y ear s. Section 7 of the Charter i n cl u d es the following lang uag e:

Be i t fu rt her enac ted, that the City shall be org anized into depar tments of g ener al
g overnme nt, police, fire, g as and water
, elec tricity

, parks and rec rea tion, and public works. Howeve r, the Boa rd of May or and Alderme n may abolish any of those depar tments, may c r e a

te n e w d e p a

rtments, and may combine, or consolidate or merg e any prese nt or future depar tments. The Boa

rd of May or and Alderme n shall appoint the heads of the depar

tments, and those heads of departments shall serve at the will and pleasure of the Board

.
(Emphasis adde d). F urther, Sec tion 17 of the Charter provides as f

ollows:

[T] he Board of May or and Alderme n may make all proper and necessar y contra cts for corpor ate purposes and uses, which shall be made in the name of the corpor ation, and signe d by the May or and Recorde r, and no person shall have power to create any

T h e D i s t r i c t C o u r t ’ s o r d e r r e f e r s t o t h e l a t t e r t w o e n t i t i e s a s “ R i p l e y P o w e r ” a n d “ R i p l e y G a s

. ” I n 2 0 0 7

, t h e 1

c e r t i f i e d p o p u l a t i o n o f R i p l e y w a s 7

, 8 4 4

. M u n i c i p a l I n c o r p o r a t i o n , C o u n t y , C h a r t e r a n d P o p u l a t i o n T a b l e , T e n n

. C o d e A n n

. V o l 1 3

, a t 2 5 0 ( 2 0 0 8 S u p p

. )

.

“ T h e S u p r e m e C o u r t m a y , a t i t s d i s c r e t i o n , a n s w e r q u e s t i o n s o f l a w c e r t i f i e d t o i t b y t h e S u p r e m e C o u r t o f 2

t h e U n i t e d S t a t e s , a C o u r t o f A p p e a l s o f t h e U n i t e d S t a t e s , a D i s t r i c t C o u r t o f t h e U n i t e d S t a t e s i n T e n n e s s e e , o r a U n i t e d
S t a t e s B a n k r u p t c y C o u r t i n T e n n e s s e e

. T h i s r u l e m a y b e i n v o k e d w h e n t h e c e r t i f y i n g c o u r t d e t e r m i n e s t h a t
, i n a
p r o c e e d i n g b e f

o r e i t
, t h e r e a r e q u e s t i o n s o f l a w o f t h i s s t a t e w h i c h w i l l b e d e t e r m i n a t i v e o f t h e c a u s e a n d a s t o w h i c h i t

a p p e a r s t o t h e c e r t i f

y i n g c o u r t t h e r e i s n o c o n t r o l l i n g p r e c e d e n t i n t h e d e c i s i o n s o f t h e S u p r e m e C o u r t o f T e n n e s s e e

. ”
T e n n

. S u p

. C t

. R

. 2 3

, § 1

.

-2-liabili ty against the corporation exc ept by expre ss authority of the Board, confe rre d

at a mee ting duly

and re g ularly

convene d.

(Emphasis adde d).

Electr ic Depart m ent On Dec ember 6, 1957, the Boa rd of M ay o r an d Al derme n, acting pursuant to authority
g rante d by the Municipal Electric Plant L aw of 1935, Tenn. Code Ann. § 7-52-101, et seq. (2005 & Supp. 2008) cre ated a

Boa rd of Public Utilities (“Elec tric De partment” ) as f ollows:

[B]e it resolved by the Boa rd o f Al d er m en of the City of Ripley that a Boa rd of Pub lic Utiliti es be, and it is here by

, constituted and established for the purpose of taking and having supervision and control of th e i m p ro v ement, opera tion, and maintenanc e of the City of Ripley ’s Electric Departme nt , which said Boa rd shall be the Supervisory Body of the said Depa rtment and shall have all the power s and duties which are , or shall be, confe rre d upon such Boa rd of Supervisory Body by the laws of Tenne ssee, including, but not limit ed to, the provisions of said Municipal Electric Plant Act . . . .

(Emphasis adde d).

The resolution, which went into eff ect on J anuar

y 1, 1958, provided that the Boa rd g overning the Electric Depa

rtment would consist of three members, one of whom was a member of the City ’s Boa rd of May or and Alderme n, with eac h serving a term of four y ear s. Tenn. Code Ann. § 7-52-107. Pursuant to Tenne ssee Code Annotated section 7-52-114( b), the 1957 resolution further authorized the Electric Depa

rtment’s Boa

rd to selec t and remove a Superintendent: “The Superintendent shall

serve at the pleasure of the Board and may be removed for cause by said Boa rd at any time.” See also Tenn. Code Ann. § 7-52-114( b) (“The superintende nt shall serve at t h e pleasure of the supervisory

body and may be re moved by

such body

at any time.”).

Gas, Wat er and Sewer Depart m ent On J uly 3, 1962, the Boa

rd of May or and Alderme n adopted a resolution establishing a Boa rd of Public Utiliti es (“G as Depa rtment”) to supervise and control natura l g as, water
, and sewe r fac iliti es:

[B]e it resolved by the Boa rd of May or and Alderme n of Ripley that a Boa rd of Public Utiliti es be, and it is here by constituted and established for the purpose of taking and having supervision and con t rol of the improvement, opera tion and maintenanc e of the City of Ripley ’s gas, water and sewer plants

, which said Boa rd shall be the Supervisory Body of the said plant s and shall have all the power s and duties which are , or shall be, confe rre d upon such Boa rd of Supervisory Body by the laws of Te nnessee

. . . .

-3-(Emphasis added)

. The 1962 resolution cre ated a Gas Depa rtment Bo ar d co n s isting of five members, one of whom is to be a member of the Ci t y ’s Boa rd of May or and Alderme n. L ike the Electric Depa

rtment Boa

rd, the Boa

rd of the Gas Depa

rtment was deleg ated the authority to se lect and remove a superintende nt: “The Superintendent shall serve at the pleasure of the Boa rd and may be remove d for cause by said Boa rd at any time, provided that such action is approve d by [t he] Boa rd of May or and Alderme n.” Whil e the state statute applicable to the Electric Depa rtment direc ts that the superintende nt “ser

ve at the pleasure of” the board, there is no simil ar statut o ry p ro vision applicable to g as, sewe r, or water utilit ies. See Tenn. Code Ann. § 7-35-101, et seq. (2005 & Supp. 2008).

The Contract s Be g inning in the 1980s, Mike Allmand worke d as t h e superintende nt for both the City ’s Electric and its Gas Depa

rtments. I n 1985, 1991, and 1996, Allmand, desirous of both job secur ity and fre edom from “political influence ,” soug ht and obtained five-y ear employ ment contra cts. Eac h of t he contra cts contained, among other things, provisions wher eby Allmand would continue to

rec eive his full salar

y if terminated, r eg ardle ss of the basis of the te rmination. 3

On October 31, 2003, the Gas Depa rtment enter ed into a new employ ment ag ree ment with Allmand, naming him “President and CEO” for an eig ht-y ear term and including the following additional lang uag e:

1. The [Gas Depa

rtment] shall continue to employ Employ ee as President and CEO, and Employ ee he reby

acc epts and a g ree s to such continued employ ment . . . .

. . . .

3. The ini tial term of this Ag ree ment shall be for a period beg inning on the date it is signe d by the parties an d en d i n g on October 31, 2011. This Agreem ent shall

a u tomatically renew for succe ssive five-y ear terms , provided that neither party submits written notice of termination six (6) months prior to the ter mination da te.

.

. .

. . . .

12. In the eve nt that the Employe r terminates Employe e’s employ me n t f or any

reason during the term of this Agreem ent, or any succe ssive term, Employe e shall be entitled to rece ive Employe e’s annual salary, compe nsation, and all benefits for the remaining term of the Agreem ent o r a p er i o d o f five years from the date of the Empl o yee ’s termination, whicheve r is greater ; provided howeve r, that if the

I n J u n e o f 2 0 0 3

, t h e D i v i s i o n o f M u n i c i p a l A u d i t f o r t h e S t a t e o f T e n n e s s e e a d v i s e d t h e C i t y t h a t t h e p o s t

3

t e r m i n a t i o n b e n e f

i t s i n t h e e m p l o y m e n t c o n t r a c t s “ d i d n o t a p p e a r t o s e r v e a v a l i d m u n i c i p a l p u r p o s e

. ” T h e a u d i t a l s o

r e p o r t e d t h a t p r o v i s i o n s a l l o w i n g A l l m a n d ’ s s p o u s e e x p e n s e s f o r t r a v e l

, m e a l s , a n d e n t e r t a i n m e n t w e r e “ v o i d

. ”

-4-E mp lo y e r c a n prove bey ond a rea sonable doubt that Employ ee voluntarily aban d o n e d his job or eng ag ed in intentional conduct that opera ted to the specific detriment of the Employ er’ s welfa

re, that the Employ er may terminate thi s Agr eement without obliga tion to provide the above- noted sever ance p ay ments. I n the event of a termination prior to the expiration of the Ag ree ment, pay ments under this provision shall be paid pursuant to the Employ er’ s normal bi-wee kly schedule . For

purposes of this provision, the annual salary

, compensa tion, bonuses and benef

its shall equal the Employ ee’ s salary

, compensa tion, bonuses and benef its exis ting at the time of his termination but in no case to be less than the salary

, compe n s at i o n , bonuses and benefi ts Employ ee rec eived during the y ear prior to his termination. The term benef its shall includ e, but not be limit ed to, medical insurance

, life insurance

, pension and supplemental pension plans, social secur ity

, and disability i nsuranc e. Employ ee shall be paid any and all acc umulated sick leave and vacation, and any other acc rued benef

its, in a single lump sum if E m p l o y ee leave s Company for any

rea son. . . .

(Emphasis adde d).

Simi larly

, on Dec emb er 1 1

, 2 003, the Electric Depa rtment enter ed into a fourtee n-y ear empl o y m en t contra ct with Allmand, providing for automatic rene wal afte r the orig inal term for

succe ssive periods of one y ear , on the condition that “neither party submits written n o t i ce of termination at least one (1) y ear prior to the termination date.” P ar agr ap h 14 of the Electric Depa rtment contra ct contained a post-termination pay ment provision simil ar to that in para g raph 12 of the Gas Depa

rtment contra ct. The only other signific ant differ ence s bet we en t h e two contra cts

wer e that para g raph 14 did not include a provision allowing for “a period of five y ear s from the date of the Employ ee’ s termination, whicheve r is g rea ter” and did not use the term “above -noted

sever ance pay

ments.”

Both contra cts provided that Allmand “wa s being called upon to ma n a g e the two depar

tments

as they wer e merged

. ” T he contra cts also included identical sever ability clause s: “Should any section or portion of this Ag ree ment be held unrea sonable or unenfor cea ble by a court of competent juri s d i cti on, such decision of t he court shall apply only to the s pecif ic s ection or portion involved and shall not invalidate the r emaining sections or portions of this Ag ree ment.”

On Novembe r 7, 2005, Allmand was discharg ed as superintende nt of t he Gas and Electric Depa rtments. He was not paid a post-termination salary and rec eived no other benef its as provided within the contrac ts.

District Court P roce edings On Aug ust 31, 2006, some ten months afte r being discharg ed fr o m h i s positions of employ ment, Allmand filed a complaint in the United States District Court for the Western District of Tenne ssee ag ainst the Def endants, seeking damag es for the brea ch of eac h of the two contra cts.

-5-On J uly 23, 2007, the District Court g rante d partial summary judgme nt for the Def endants, ruling that “the Ripley City Charter and the Municipal Electric Plant Act, Tenn. Code Ann. § 7-52- 101, et seq. did not allow the Utility Boards to enter into multi-year employm ent contracts with [ A l l ma n d ]

, an appointed official who serve s ‘at the will and pleasure of the board ’” and that “in

contra cting with [All mand] for de f in it e te r m[ s ] o f e mp lo y

me nt, the Utility Boards acted ultra vires.” (Emphasis added)

. As a result, the District Court conclude d that the October 31, 2003 and Dec ember 11, 2003 multi-y ear employ ment ag ree ments wer e “voi d ab l e as to all provisions conting ent on a definite term of employ

ment” but wer e valid as to “those provisions not conting ent upon a definite

term of employ

ment, such as compensa tion, retire ment, and annual/sick leave .” On Aug ust 7, 2007, the District Court enter ed an “Or der of Clarifica tion” which provided, in pertinent part, as follows:

The Court finds that the issue of se vera nce is not prec luded by the .

. . holding that the Boa rd lacke d the authority to contra ct for a term of y ear s. The issue of seve rance is not inconsistent with an at-will contract

. Acc ording ly

, the issue of sever ance is not rende red moot by

the Court’s ea

rlier Or der.

(Emphasis adde d).

L ater
, the District Court e ntere d an order cer tify ing the following question of law pursuant
to our Rule 23: “Whether a municipal utilit y board has the authority to enter into a contra ct with an appointed city officia l who serve s at the will and pleasure of the Boa rd of May or an d Al d erme n wher eby the utilit y board contra cts to continue to pay the officia l’s salary for a multi-y ear time period [8 and 14 y ear s] afte r the officia l’s employ ment is terminated.” The specific question, of course , is whether Allmand is entitled to co m p en s ati on under the multi-y ear contra cts if the C ity Charter or other provi s io n s o f law authorized the Electric and Gas Depa rtment Boa

rds to offe r employ

ment only upon an at- will basis.

Analysis Stand ard of Review This case prese nts a cer

tified question of law under Rule 23 of the Tenne ssee Supreme Court Rules. I n revie wing a question of law, our revie w is de novo without a presumption of corr ectne ss. Tenn. R. App. P. 13; Col onial Pipeline Co. v. Morg an, 263 S.W .3d 827, 836 (Tenn. 2008) (citing Perrin v. Gaylord Entm’t Co., 1 2 0 S

. W

. 3 d 823, 826 (Tenn. 2003); Ganzevoort v. Russell, 949 S.W .2d 293, 296 (Tenn. 1997)); S. Contractors, I nc. v. L oudon County Bd. of Educ., 58 S.W .3d 706, 710 (Tenn. 2001). More specific ally

, contra ctual interpre tation is a matter of law. See Hamblen County v. City of Morristown, 656 S.W.2d 331, 335-336 (Tenn. 1983)

.

Scope of Certified Qu estion When appropr iate, we are empower ed to “exerc ise our discretion to ref rame the Rule 2 3

cer tified question befor e us so as to provide the g uidance actua lly soug ht.” Shorts v. Ba rtholomew, 278 S.W .3d 268, 280 n.13 (Tenn. 2009) (citing 17A Charles Alan Wright, et al., Fe dera l Practice and Procedur e, J urisdiction 3d § 4248 n. 67 and acc ompany ing text (Westlaw 2009)). I t may , at times, be necessar

y to slightly expand or restrict the s co p e o f t he question posed t o the C ourt in order to

-6-further the interests of judicial eff iciency

, comity

, and fede ralism that underlie our inhere nt judicial
power to answe r cer

tified questions. See Haley v. Univ. of Tenn.-K nox ville, 188 S.W .3d 518, 523 (Tenn. 2006)

.

The district cour

t a sked “[w]hether a municipal utility board ha s the authority

to enter into

a contra ct with an appointed city officia l who serve s at the will and pleasure of the Boa rd of May or and Alder m en wh er eb y the utilit y board contra cts to continue to pay the officia l's salary for a multi-y ear time period [8 and 14 y ear s] a f ter the officia l’s employ

ment is terminated.” Read literally

, this question reque sts a ruling applicable to all municipal u t i l i t y boards. Acc ording to the United States Census Bur eau’ s 1997 census of g overnme nts, howeve r, 343 municipal g overnme nts opera te within the S tate of Tenne ssee. Census Bur eau, U.S. Dep’ t of Commerce, 1997 Census of Gover nments – Volume 1, Gover nment Org aniza t i on, app. A at A-236 (1997), available at http:// www.c ensus.g ov/prod/g c97/g c971-1.pdf

. All are differ ent. Fur

ther, as this case illust rate s, the phrase “utility board” may ref er to a vari ety of entities providing differ ent service s under differ ent leg al constraints. See Bl ac k’s L aw Dictionary 1582 (8th ed. 2004) (def ining “public utilit y ”).

I n an eff ort to avoid the “limitless field of advisory opinions,” State v. Br own & Wil liamson Tobac co Corp., 18 S.W .3d 186, 193 (Tenn. 2000) (quoting Story v. Walker, 404 S.W.2d 803, 804 (1966))

, we have ref

rame d the cer

tified question as follows: Whether the Boa rds of the Ripley Gas and Electric Depa

rtments had the authority to enter into contra cts with a superintende nt who serve d

at the will and pleasure of the Boa rd of M ay o r an d Al derme n, wher eby the superintende nt was entitled to sa lary and benef its for multi-y ear periods of time [8 and 14 y ear s] af ter the employ

ment

was terminated. For the rea sons below, we conclude that neither the Gas nor the Electric Boa rd had such authority and any provisions establishing an entitlement to salary and benef its for terms of y ear s

wer e bey ond the power s of the re spective de partments.

Dillon’s Rul e and Lon g-Term Em ployme nt Contract s “F undamental in [Tenne ssee] law is that municipalities may exercise only those express or

nece ssarily implied power s deleg ated to them by the L eg islature in their char ters or under statutes.” City of L ebanon v. Ba ird, 756 S.W .2d 236, 241 (Tenn. 1988). “The provisions of the ch ar t er are mandatory

, and must be obey ed by the city and its ag ents

. . . .” Ba rnes v. I ng ram, 397 S.W .2d 821, 825 (Tenn. 1965) (quoting Marsha ll & Br uce Co. v. City of Nashville, 71 S.W

. 815, 819 (Tenn. 1903)); see also Fa

ust v. Metro. Gov’t of Nashville & Davids o n C o u n t y , 206 S.W .3d 475, 485 (Tenn. Ct. App. 2006) (holding a r ecla ssification of civilian employ ees to be outside the authority provided by

the Metropolitan Code). T he ra tionale for the se principles is we ll-settled in the law:

“Municipal corpor ations repr esent the public, and are themsel v es to be protec ted
ag ainst the unauthorized acts of their office rs, when it can be done without injury to third parties.

. . . The protec tion of public corpor ations from such unauthorized acts of their office rs is a matter of public policy

, in which the whole communi t y i s

conce rned.”

. . . That a municipal corpor ation cannot and should not be bound by an ultra vires contra ct is a proposition that is well settled by authority

, and sustained by

-7-rea son and justice. To hold otherwise would be to vastly enlar g e the authority of

public ag ents, and permit them to bind a municipal corpor ation b y co n t ra cts absolutely

prohibited by

law, and w ould thus ex pose the public to evils and abuse s that the limit ations and restric tions thrown around corpor ate office rs are intended to
preve nt.

City of Na shville v. Sut herla

nd, 21 S.W . 674, 676-77 (Te nn. 1893) (quoting oral a rg ument).

I n conseque nce, “[w]hen a municipality fails to act within its char ter or under ap p l i cable statutory authority

, the action is ultra vires and void or voidable.” Ba ird, 756 S.W .2d at 241 (citing Crocker v. Town of M anche ster, 156 S.W .2d 383, 384 (Tenn. 1941)); see also Marsha ll & Br uce Co., 71 S.W

. at 818-19. I n summary , under Tenne ssee law a municipal action may be decla red ultra 4 vires “(1) beca

use t he action was wholly outside the s cope of the city ’s authority under its char ter

or a statute, or (2) beca

use the action was not underta ken consistent with the mandatory provisions of its char ter or a statute.” B aird, 756 S.W.2d at 241.

I n the rec ent case of Arnwine v. Union County Boa rd of Educa tion, 120 S.W .3d 804 (Tenn. 2003), we set aside a four- y ear contra ct for an assistant superinten d en t o f s ch ools (or a teac her) beca use the leng th of the term, absent specific statutory au t h ority

, was bey ond the power of the school board. The assistant superintende nt arg ued that the board of education wa s p er m i t t ed to

5

enter into such a contra ct pursuant to Tenne ssee Code Annotated section 7-51-903, which provides, in releva nt part, that

[e] x ce p t as o t h erw ise authorized or provided by law, municipalities are

. . . authoriz ed to enter into long- term contra cts for such period or duration as the

mu n icipality may deter

mine for any purpose for which short-term contra cts not

A n a c t i s u l t r a v i r e s w h e n i t i s “ b e y o n d t h e s c o p e o f p o w e r a l l o w e d o r g r a n t e d b y a c o r p o r a t e c h a r t e r o r b y 4

l a w

. ” B l a c k ’ s L a w D i c t i o n a r y 1 5 5 9 ( 8 t h e d

. 2 0 0 4 ) ; s e e S m i t h v

. N e l s o n , 1 8 V t

. 5 1 1 ( 1 8 4 6 ) ( “ I n t h e c a s e o f t h e P r e s b y t e r y o f A u c h t e r a r d e r , w h i c h c a m e b e f o r e t h e L o r d s o f t h e S e s s i o n s , a n d

, o n a p p e a l

, t o t h e H o u s e o f L o r d s , i n 1 8 3 9

, t h e a c t o f t h e p r e s b y t e r y , i n r e j e c t i n g a p e r s o n p r e s e n t e d t o t h e m t o b e o r d a i n e d

, i n p u r s u a n c e o f w h a t w a s t e r m e d t h e

v e t o a c t o f t h e G e n e r a l A s s e m b l y , w a s d e c l a r e d t o b e u l t r a v i r e s a n d c o n s e q u e n t l y v o i d

. ” ( e m p h a s i s a d d e d ) )

. A l t h o u g h

t h e u l t r a v i r e s d o c t r i n e i s o f t e n d i s c u s s e d i n t h e c o n t e x t o f p r i v a t e c o r p o r a t i o n s , s e e , e

. g

. , K e n t G r e e n f i e l d

, U l t r a V i r e s L i v e s ! A S t a k e h o l d e r A n a l y s i s o f C o r p o r a t e I l l e g a l i t y ( w i t h N o t e s o n H o w C o r p o r a t e L a w C o u l d R e i n f o r c e I n t e r n a t i o n a l
L a w N o r m s )

, 8 7 V a

. L

. R e v

. 1 2 7 9

, 1 3 0 2

- 0 4 ( 2 0 0 1 )

, t h e d o c t r i n e a p p l i e s t o m u n i c i p a l c o r p o r a t i o n s a s w e l l

. S e e 5 6 A m

. J u r

. 2 d M u n i c i p a l C o r p o r a t i o n s , C o u n t i e s , a n d O t h e r P o l i t i c a l S u b d i v i s i o n s § 4 5 4 ( 2 0 0 0 & W e s t l a w 2 0 0 8 )

. P a u l C r a i g ,
a l e g a l s c h o l a r f

r o m t h e U n i t e d K i n g d o m , d e s c r i b e d t h e u l t r a v i r e s d o c t r i n e , a s i t a p p l i e s t o g o v e r n m e n t e n t i t i e s , a s f o l l o w s : “ P a r l i a m e n t h a s f o u n d i t n e c e s s a r y t o a c c o r d p o w e r t o m i n i s t e r s , a d m i n i s t r a t i v e a g e n c i e s , l o c a l a u t h o r i t i e s a n d

t h e l i k e

. S u c h p o w e r w i l l a l w a y s b e s u b j e c t t o c e r t a i n c o n d i t i o n s c o n t a i n e d i n t h e e n a b l i n g l e g i s l a t i o n

. T h e c o u r t s ’
f u n c t i o n i s t o p o l i c e t h e b o u n d a r i e s s t i p u l a t e d b y P a r l i a m e n t

. ” P a u l C r a i g , U l t r a V i r e s a n d t h e F o u n d a t i o n s o f J u d i c i a l
R e v i e w , 5 7 C a m b r i d g e L

. J

. 6 3

, 6 4

- 6 5 ( 1 9 9 8 )

.

T h e s c h o o l b o a r d m a y e n t e r i n t o a f o u r

- y e a r c o n t r a c t w i t h 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 ) o f s c h o o l s

. T e n n

. 5

C o d e A n n

. § 4 9

- 2

- 2 0 3 ( a ) ( 1 4 ) ( A ) ( 2 0 0 2 & S u p p

. 2 0 0 8 )

. S i m i l a r l y , a s c h o o l p r i n c i p a l m a y e n t e r i n t o a m u l t i

- y e a r c o n t r a c t

s o l o n g a s i t d o e s n o t e x c e e d t h e c o n t r a c t t e r m o f t h e c u r r e n t s u p e r i n t e n d e n t

. T e n n

. C o d e A n n

. § 4 9

- 2

- 3 0 3 ( a ) ( 1 ) ( 2 0 0 2
& S u p p

. 2 0 0 8 )

.

-8-extending bey ond the term of the members of the g overning body

could be e ntere d

. . . .

Tenn. Code Ann. § 7-51-903 (2005). We conclude d, howeve r, that section 7-51-903 did not apply beca use “ther e are specific statutes ref err ing to pe rsonnel and employ ment contra cts in e ducation” and those with more specific ity preva il over the g ener al rule o f s ec t i on 7-51-903. Arnwine

, 120 S.W .3d at 809. Be cause Arnwine ’s contra ct w a s g o v e r n e d b y s p ecif

ic statutory provisions g overning

teac hers rathe r than by the g ene ral terms of section 7-51-903, we considere d whether those more specific statutes permitted a mult i-y ear contra ct in the context of “Dillon’s Rule,” which re quires 6

a “strict and narr ow construction of local g overnme ntal authority ” and allows a municipality to act only when

(1) the power is g rante d in the “express words” of the statute, private act, or char ter

cre ating the municipal corpor ation; (2) the power is “nec essar ily or fairly implied in,

or incident to[ ,] the power s expressly g rante d”; or (3) the power is one that is neither expressly g rante d nor fairly implied from the express g rants of power , but is otherwise implied as “esse ntial t o t h e decla red objects and purposes of the
corpor ation.”

I d. at 807-08 (quoting S. Constructors, 58 S.W .3d at 710-11). After confirming Dillon’s Rule as a fundame ntal canon of construction, this Court emphasized that “[a]ny fair, rea sonable doubt

conce rning the exis tence of the power is resolved by the courts ag ainst the corpor ation and the power is denied.” I d. at 808 (quoting May or of Nashville v. L inck, 80 Tenn. 499, 504 (1883) ( quoting 1 J ohn F. Dillon, Commentaries on the L aw of Municipal Corporation 173 1st ed. 1872)). Our

co n cl u s i o n was that the rele vant statutes confirme d that there was no authority for a multi-y ear contra ct for a

n assistant superintende nt of schools. I d. at 807-09.

As in Arnwine

, whether a multi-y ear employ ment contra ct would be permissible in this case depends upon the level of authority g rante d under law. I n our view, neither the City Charter nor the rele vant statutes empower the Electric Depa rtment or the Gas Depa

rt m en t t o en t er an ag ree ment containing the terms at issue.

I

. The City

Charter
I nitially

, the City Charter require d that the superintende nt serve at the “will and pleasure ” of the Boa rd of May or and Alderma n. A “plea sure a

ppointment” is “[t] he assig nment of someone to employ ment that can be taken awa y at any time, with no require ment for notice or a hear ing.” Bla ck’s L aw Dic tionary

1192 (8th ed. 2004).

J o h n F o r r e s t D i l l o n s e r v e d a s J u d g e o f I o w a ’ s S e v e n t h J u d i c i a l C i r c u i t f r o m 1 8 5 8 t o 1 8 6 2

. F o r e i g h t y e a r s 6

t h e r e a f t e r h e s e r v e d o n t h e I o w a S u p r e m e C o u r t b e f o r e b e i n g a p p o i n t e d b y P r e s i d e n t G r a n t t o w h a t e v e n t u a l l y b e c a m e
t h e E i g h t h C i r c u i t o f t h e U n i t e d S t a t e s C o u r t o f A p p e a l s

. S e e C l i n t o n v

. C e d a r R a p i d s & t h e M i s s o u r i R i v e r R

. R

. , 2 4
I o w a 4 5 5 ( 1 8 6 8 ) ; s e e a l s o H u n t e r v

. C i t y o f P i t t s b u r g h

, 2 0 7 U

. S

. 1 6 1

, 1 7 9

- 8 0 ( 1 9 0 7 ) ; M e r r i l l v

. T o w n o f M o n t e c e l l o , 1 3 8 U

. S

. 6 7 3

, 6 8 1 ( 1 8 9 1 )

. B u t s e e B e r e n t v

. C i t y o f I o w a C i t y , 7 3 8 N

. W

. 2 d 1 9 3

, 1 9 6

- 9 7 ( I o w a 2 0 0 7 ) ( e x p l a i n i n g t h a t

a l a t e r I o w a c o n s t i t u t i o n a l a m e n d m e n t “ r e v e r s e d t h e D i l l o n R u l e ” )

.

-9-I I

. The Municipal Ele ctric Plant L aw

Allmand arg ues that the Electric Depa rtment employ

ment contra ct with Al l m an d and the post-termination compensa tion provision and, by extension, the contra ct appr o ved by the Gas Depa rtment Bo ar d

, we re authorized under the Municipal Electric Plant L aw of 1935. He cites Tenne ssee Code A nnotated sec tion 7-52-103(a ), which e mpowers e very municipality

to

(1) Acquire

, improve, opera te and maintain within or without the corpor ate or county limit s of such m u n icipality

, and within the corpor ate or county limit s of any other municipality

, with the consent of such other muni ci p al i t y , an elec tric plant and to provide e lectric service to any person, firm, public or private corpor ation, or to a ny other user or consumer of elec tric power and ener g y , and char g e for the elec tric service ;

. . . .
(7) Make contra cts and execute instruments containing such coven an t s , terms and conditi o n s as in the discretion of the municipality may be nece ssary , proper or advisable for the purpose of obtaining loans from any source , or g rants, loans or other financ ial assistance from any fede ral ag ency ; make all other contra cts and execute all other inst ruments as in the di scre tion of t he municipality may be necessar y , proper

or advisable in or for the further ance of the acquisition, improvement, opera tion and maintenanc e of any elec tric plant and the furnishing of elec tric service ; and car ry out and perf orm the covena

nts and terms and conditions of all such contra cts and instruments;

. . . .
(9) Do all acts and things nece ssary or convenie nt to car ry out the power s expressly
g iven in this part.

Tenn. Code Ann. § 7-52-103( a); see also Tenn. Code Ann. § 7-52-107 (g iving municipality authority

to cre ate board of public utilit ies). Allmand also relies upon Tenne ssee Code Annotated section 7- 52-134, which pe rmits municipal authorities to “do all thing s nece ssary or conve nient to car

ry out the purposes of this part in addition to the power s express l y confe rre d in this part” and which require s that the power s g rante d by the Municipal Electric Plant L aw be “libera lly co nstrued to eff ectua te the purpose s of this part.” Te nn. Code Ann. § 7-52- 134.

The statutes cited by Allmand, howeve r, must be rea d in conjunction with Tenne ssee Code Annotated se ction 7-52-114( b), which spe cifica lly states as follows:

The supervisory body shall appoint an elec tric plant superintende nt

. . . who shall be qualified by training and experience for the g ener al superi n t en d en ce of the acquisition, improvement and opera tion of the elec tric plant. The super i n t endent

-10-need not be a resident of the state at the time of appointment. The superintende nt’s

salary shall be fix ed by the person or ag ency appointing such superintende n t

. The superintendent shall serve at the pleasure of the supervisory b o d y and may be

remov ed by suc h body at any time.

Tenn. Code Ann. § 7-52-114( b) (empha sis a dded). This spe cific provision c ontrols ove r the more g ener al ones cited by Allmand. Moreove r, this provision is almost identical to the restric tions in the Ci ty ’ s Charter

, which likewise preva ils over the g ener al statutory provisions rel ie d u p o n b y A ll ma

n d

. See Grubb v. May or of Morristown, 203 S.W .2d 593, 596 (Tenn. 1947) (holding that a g ener al law will not repe al particula

r provisions of a city char

ter unless clea

rly intended). Thus, the statutes cited by Allmand are not disposit ive of the c ertified que stion posed to this Court.

I I I

. Sewer , Gas, a

nd Waterworks Statutory Provisions
L astly

, Allmand arg ues that the employ ment contra cts with the post-termination
compensa tion provisions wer e authorized und er v ar ious statutes g overning Gas, Sewer s and Waterworks. For example, he cites the provisions of Tenne ssee C ode Annotated section 7-35- 406(a) :

Every incorpora

ted city and town in this state acquir ing a water works or sewe rag e sy stem under the pro v i s i o n s of this part shall be require d and is here by authorized and empower ed to appoint a board of water works and/or sewe rag e commissioners

t o have supervision and control of construction and opera tion of such wo rk s

. “B oard,” as used in this part, means a board of water works and/or sewe rag e commissions as require d and authorized in this section, constituted and appointed as provided in §§ 7-35- 407 – 7-35-409. The g overning body of any incorporated city

or town may , by proper ordinanc e, elec t to perf orm the duties require d of the boards under this pa

rt, in w hich event the g overning body shall have all the power s, duties and responsibilities impo s ed u p o n the board, and all ref ere nces to the board shall ref er to such g overning body acting in the capa city

of such boa

rd.

Tenn. Code Ann. § 7-35-406( a); see also Tenn. Code An n

. § 7 -35-406(b) (“Municipa lities

. . . owning or opera ting a g as sy stem shall have the power and are here by authorized to transfe r to and confe r upon the board of water works and sewe rag e comm issioners the jurisdiction over such g as sy stem.”). Allmand also points to Tenne ssee Code Annotated section 7-35-412, which provides, in part, a s follows:

The board of water

works or sewe rag e co m missioners

. . . has t he power t o take all steps and proce eding s and to make and enter into all contra cts and ag ree ments

neces s ar y or incidental to the perf ormanc e of its duties and the execution of its
power s under this part, subject only to limitati ons on matters requiring approval by

t he governing body of the city or town in question

. . . . After completio n an d

acc eptanc e of the works by the board, and approval o f s u ch acc eptanc e by the
g overning body of the city or town, the board shall have the power , and it shall be its

-11-d u ty
, to proce ed with all matters and perf orm ever y thing nece ssary to the p ro p er opera tion of t he works and collection of charg es for s er v i ce rende red, subject only to the limit ation of funds available for opera tion a nd maintenanc e. To this end, the board may employ such employ ees as in its judgme nt may be nece ssary and may fix their compe nsation, all of whom shall do such wor k as the boa

rd shall direc t.

Tenn. Code Ann. § 7- 35-412 (e mphasis added)

.
Ag ain, these g ener al statutory provisions must be rea d in conjunction with the City Charter and the prohibition ag ainst actions bey ond the power s confe rre d by the City Charter

. See Grubb, 203 S.W .2d at 596. The statutes cited by Allmand do not neg ate the require ment that he serve at the will and plea sure of

the boar d.

P ost-Ter m ination Com pensation Allmand further arg ues that the post-termination compensa tion descr ibed in the contra cts

wer e m er e s ev era

nce pay ments that would not have conflicte d with the at-will nature of his employ ment. Cf. My ers v. Town of Ply mouth, 522 S.E.2d 122, 124 (N.C. Ct. App. 1999) (holding that lump-sum se vera

nce provision did not violate require ment that town employ er manag er serve “at its pleasur e”)

. Reg ardle ss of whe ther some f orm of seve ranc e compe nsation would have be en permissible, the spec ific provisions at issue not only are inconsistent with the at-will nature of the employ ment, but also do not authorize an awa rd of se vera

nce.

By the terms in eac h of the two contra cts, Allmand would have been entitled to c ontinuing
pay and benef

its upon termination for any rea son other than “voluntarily ab an d o n [ i n g ] his job or eng ag [i ng ] in intentional conduct that opera ted to the specific detriment of the [C ity ’s] welfa re.” I f those provisions are enfor cea ble, t he Electric and Gas Departments will underg o the full cost of a superintende nt but rec eive no benef it from Allmand’s service s for a period of y ear s. S u ch an

onerous require ment would have the prac tical eff ect of establishing prec isely the ty pe of long- term obliga tion that the City ’s char ter forbids. See Hay

nes v. City of Pigeon For g e, 883 S.W .2d 619, 622 (Tenn. Ct. App. 1994). O ne ca nnot do indirectly

what is prohibited direc tly

.

Howeve r onerous the obliga tion may be, we emphasize that our response to the question of law does not rest on that fac t alone. I nstead, we further conclude that the provisions obliga ting the Depa rtments to continue to pay salary y ear s afte r the termination of employ ment have few of the char acte ristics as sociated with a traditional sever ance packa g e, and that the contra cts, rea d as a whole, do not sug g est that the par ties intended them as suc h.

A car dinal rule of contra ctual interpre tation is to asce rtain and g ive eff ect to the intent of the parties. Allstate I ns. Co. v. Watson, 195 S.W .3d 609, 611 (Tenn. 2006) (citing Christenberr y v. Tipton, 160 S.W .3d 487, 494 (Tenn. 200 5 )) ; see also U.S. Ba nk N.A. v. Tenn. Fa

rmers Mut. I ns. Co., 277 S.W .3d 381, 386-86 (Tenn. 2009) (citing Christenberr y , 160 S.W .3d at 494). Courts must look at t he plain meaning of the wor ds in a contra ct to deter mine the parties’ intent. Watson, 195 S.W .3d at 611. I f the contra ctual lang uag e is c lear and unambig uous, the literal meaning controls;

-12-howeve r, i f t he words ar e ambiguous, i .e., susceptible to more than one reasonable interpre tation,

the parties’ intent cannot b e d et er m i ned by a literal interpre tation of the lang uag e. I d. I n such circ umstances, “the court must apply established rules of construction to deter mine the intent of the parties.” I d. (citing Planters Gin Co. v. Fe d. Compress & Warehouse Co., 78 S.W .3d 8 8 5

, 890 (Tenn. 2002) ).

This Court’s decision in Guiliano v. Cleo, I nc., 995 S.W .2d 88 (Tenn. 1999), illust rate s these key principles in deter

mining whether a contra ct provides for sever ance pay o r fo r liquidated d amag es. I n Guiliano, the employ ee enter ed into a three -y ear employ ment contract wi t h h i s employ er. Parag raph 9 provided that if the employ er terminated the contra ct wi t h o u t cause , the employ ee “shall continue to rec eive [ his] then current salary from the date of termination throug h [t he contra ct expiration date].” I d. at 92-93. Although the trial court awa rded a judgme nt based on brea ch of contra ct for the balanc e due for the term, the Court of Appea ls classified the provision as

one for liquidated damag es and conclude d that the damag e awa rd qualified as an unlawful penalty

. 7
On appea l to the Court, the employ ee argue d that he was terminated without cause befor e the

contra ct expired and that he was entitled to “seve ranc e pay ,” if not liquidated damag es, pursuant to the lang uag e in pa

rag raph 9. I d. at 94. After g ranting further revie w, this Court beg an its a naly sis by descr ibing se vera

nce pa y as

a form of compensa tion paid by an employ er to an employ ee at a time when the employ ment rela tionship is terminated throug h no fault of the employ ee. Black’ s Law Dictionary 1374 (6th ed. 1990). The reason for seve ra n ce pay is to offse t the employ ee’ s monetary losses attributable to the dismiss al from em p l o y ment and to

rec ompense the employ ee for any period of time when he or she is out of work.

. . . The amount of pay

ment is g ener ally based upon the ty pes of service s and the number of ser vice y ear s perf

ormed by the employ ee on be half of the employ er.

I d. at 97 (footnote an d case citations omitted). We emphasized that sever ance , unlike liquidated damag es, is not conditioned upon a brea ch of contra ct or a rea sonable estimation of dama ges in
conseque nce there of, but is instead an absolute entitlement to rec overy reg ardle ss of any brea ch. I d. Apply ing the se principles, w e stated a s follows:

Parag raph 9 provides that if [t he employ er] terminates t h e co n trac t and [t he employ ee’ s] employ

ment without cause , the [employ ee] shall continue to rec eive his then curr ent salary from the date of termination until October 31, 1995, the contra ct expiration date. Parag raph 9 does not s t at e t hat sums pay able are based upon an

A f t e r a d o p t i n g t h e “ p r o s p e c t i v e a p p r o a c h ” a s t o l i q u i d a t e d d a m a g e s

– t h a t i s , a d e t e r m i n a t i o n b a s e d u p o n t h e 7

c i r c u m s t a n c e s e x i s t i n g a t t h e t i m e o f t h e c o n t r a c t

– t h i s C o u r t o b s e r v e d t h a t a n y a w a r d i s a n u n e n f o r c e a b l e p e n a l t y a s

a g a i n s t p u b l i c p o l i c y i f “ t h e p r o v i s i o n a n d c i r c u m s t a n c e s i n d i c a t e t h a t t h e p a r t i e s i n t e n d e d m e r e l y t o p e n a l i z e f o r a b r e a c h

. . . . ” G u i l i a n o , 9 9 5 S

. W

. 2 d a t 1 0 0

- 0 1

. A p e n a l t y i s “ a s u m i n s e r t e d i n a c o n t r a c t
, n o t a s a m e a s u r e o f c o m p e n s a t i o n f o r b r e a c h

, b u t r a t h e r a p u n i s h m e n t f o r d e f a u l t
, o r b y w a y o f s e c u r i t y f o r a c t u a l d a m a g e s w h i c h m a y b e s u s t a i n e d b y

r e a s o n o f n o n p e r f

o r m a n c e , a n d i t i n v o l v e s t h e i d e a o f p u n i s h m e n t

. ” I d

. a t 9 8 n

. 9 ( q u o t i n g 2 2 A m

. J u r

. 2 d D a m a g e s §
6 8 4 ( 1 9 8 8 ) )

.

-13-estimation of damag es in the event of a brea ch of contra ct. Howeve r, it is clear that

the provision affords the [employe e] a set amount of compe nsation in the eve nt that [the emp l o

ye r] terminates the agreem ent and [employe e’s] employm ent, without

cause, before the end of the contract

. Rely ing on the plain meaning of the lang uag e i n Parag raph 9, we conclude that rec overy there in is conditioned upon [ t h e employ er’ s] breach of

contra ct.

I d. at 97 (empha sis added)

. As a result, t he Court held that the provision was “one for liquidated damag es and not seve ranc e pay .” I d. at 97-98.

Her e, the only ref

ere nce to the term “seve ranc e pay ment” is in para g raph 12 of the Gas Depa rtment contra ct – “above -noted sever ance pay ments.” The Electric Depa rtment contra ct does

not include the term at all. The pay ments are predi ca t ed u p o n Allmand’s termination befor e the expiration of the eig ht- and fourtee n-y ear terms set forth in the ag ree ments, i.e., a brea ch of the

contra ct

. Conversely

, the contra cts contain no ref ere nce to the nature of Allmand’s service s, the leng th of his te nure to the City , or any other char acte ristics that might war rant the classifica tion of the post-termination compe nsation as seve ranc e pay . See id. at 97-98.

L abeling the pos t -t er m i nation rec ompense as a “seve ranc e pay ment” in one of the two
contra cts is not deter

minative of the parties’ intent. I d. at 98. I nstead, “[t] he better rule in all case s is to rea d the whol e i n s t ru m ent and give effe ct t o ever y part if possible, and thereby rea ch it s true meaning

, and not resor

t to artificia l or arbitrary rules unti l the former rule is exhausted.” Stratton

v. Thompson, 78 Tenn. 229, 238 (1882). I n eac h of the two contra cts, the provisions g overning pay speak in ter

ms of the entitlement to “ annual salary

, compensa tion a nd all benef

its” and require the
compensa tion to be pay able pursuant to the “norma l bi- wee kly schedule .” Be cause “provisions in [a] contra ct should be construed in harmony with eac h other, if possible, to promote consistency and

to avoid repug nancy betwee n the various provisions of a single contra ct,” Guiliano, 995 S.W .2d at 95 (citing Rainey v. Stansell, 836 S.W .2d 117, 118-19 (Tenn. Ct. App. 1992)), it is our view that the

terms of the two contra cts direc ting post- termination compensa tion do not descr ibe “seve ranc e pay ments” in any

traditional sense.

Although sever ance provisions are common and may be viewed favor ably as a matter of policy

, our established prec edent mandates that the intent of the parties controls. Her e, the pa rties

cra fted employ

ment ag ree ments in which the post-termination pay ment provisions wer e depende nt

on a brea ch of the purported employ ment terms of eig ht and fourtee n y ear s. The prac tical eff ect of the provisions would have g rante d liquidated damag es to Allmand for the brea ch of the very terms that the Depa

rtments had no author ity

to approve

.

Moreove r, it is immaterial whether the C ity was opera ting in its “g overnme ntal” or “propr ietary ” capa city when making the contra cts, as further arg ued by Allmand. He insists that the employ ment ag ree ments and the post-termination pay ments wer e authorized under the principle that “a municipality opera t[ ing] a utilit y , . . . opera tes it in a proprieta

ry capa city and is held to the same standard as a private co rp oration.” Maury County Bd. of Pub. Utils. v. City of Columbi a, 854

-14-S.W .2d 890, 892 (Tenn. Ct. App. 1993). As the Def endants corr ectly observe

, howeve r, classify ing a municipal utility

as a pr oprietar

y function is of limited significa nce:

[I ]t should be pointed out that our dec ision is not based on a ny distinction between “g overnme ntal” and “propr ietary ” functions, as mentioned in Cox [v. Gre en County

, 175 S.W .2d 150 (Tenn. Ct. App. 1943)]. As this Court not ed in State ex rel. Association for the Preser vation of T en n es s ee Antiquities v. City of J ackson, 573 S.W .2d 750, 754 (Tenn. 1978), “we do not find the dichotomy of ‘g overnme ntal’ and ‘propr ietary ’ functions to be particula rly helpful from a standpoint of leg al analy sis.

. . .” Attempts to distinguish contra cts enter ed into in “g overnme ntal” as opposed to “propr ietary ” capa cities contributes only ambig uity and confusion. Courts have been altog ether unsucce ssful in defining the scope of “governmental” functions. See Gar cia v. San Antonio Metro Transit Authority

, 469 U.S. 528, 105 S. Ct. 1005, 83 L .Ed.2d 1016 (1985).

Washington County Bd. of Educ. v. Marke tAmerica

, I nc., 693 S.W .2d 344, 348-49 (Tenn. 1985). The broa d arg ument advanc ed by Allmand does not salvag e the c laim.

Conclusion Neither the Ripley Electric nor the Ripley Gas Depa rtment Boa

rds had the authority to enter into an employ

ment ag ree ment with a superintende nt providing for mu lti-y ear post-termination
compensa tion. Their actions wer e ultra vires under Tenne ssee law. T h e provisions authorizing 8 future sa lary

and bene fits cannot be c lassified as a permissible form of se vera nce pa y

.

______________________________ GARY R. WADE, J USTI CE

O u r r e s o l u t i o n o f t h i s c e r t i f i e d q u e s t i o n d o e s n o t p r e c l u d e t h e p o s s i b i l i t y t h a t a l o c a l g o v e r n m e n t m a y , i n s o m e 8

c a s e s , b e a u t h o r i z e d t o e n t e r i n t o a n a g r e e m e n t o b l i g a t i n g i t t o p r o v i d e s e v e r a n c e p a y

. C f

. T h o m p s o n v

. M e m p h i s L i g h t
, G a s a n d W a t e r D i v

. , 2 4 4 S

. W

. 3 d 8 1 5

, 8 2 2 ( T e n n

. C t

. A p p

. 2 0 0 7 ) ( h o l d i n g “ t h a t a g e n u i n e i s s u e o f m a t e r i a l f a c t e x i s t s

r e g a r d i n g w h e t h e r t h e

. . . [ u t i l i t y b o a r d ] e x c e e d e d i t s a u t h o r i t y w h e n i t i n c l u d e d t h e p r o v i s i o n f o r e n h a n c e d s e v e r a n c e b e n e f i t s ” ) ; W a l k e r v

. C i t y o f C o o k e v i l l e , N o

. M 2 0 0 2

- 0 1 4 4 1

- C O A

- R 3

- C V

, 2 0 0 3 W L 2 1 9 1 8 6 2 5

, a t * 9 ( T e n n

. C t

. A p p

. A u g

. 1 2

, 2 0 0 3 ) ( h o l d i n g t h a t c i t y

- r u n h o s p i t a l b r e a c h e d e m p l o y m e n t c o n t r a c t b y f a i l i n g t o m a k e s e v e r a n c e p a y m e n t s )

.

-15-