### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE Assigned on

Briefs M ay 20, 2003 Session

LOUIS FEDERICO v. ALADDIN IND USTRIES, LLC Appeal from the Chancery Court for Davidson County No. 01-1774-I Irvin H. Kilcrease, Jr., Chancellor

No. M2002-02351-COA-R3-CV - Filed June 27, 2003

LouisFederico (“Plaintiff”) beg an working for Aladdin I ndustries, LL

C (“Aladdin”) a fter they agreed in writing to his terms of employment. Among other things, they

agreed Plaint iff would receivean annua

l salary of $180,0 00, plus a g

uaranteed bonus in

the first ye ar of $72 ,000. The

y a lso agreed to a separation package whic h provided

that shoul d Plai ntiff

lose h is jo b oth er than throu gh his own volition, he wo ul d r ec ei ve “1 2 m on th s’ sa la ry, prorated bonus and outplacement services.” Plaintiff’s position was eliminated before his first y ear of employ ment was completed. Plaintiff filed this lawsuit c laiming t

he lang uage in the sepa ration pa ckage entitled h imto a “sep aration

bonus” of $72,000 in addition to the guaranteed f irst year bonus in the same amount. Aladdin disagreed, arguing Plaintiff was not entitled to any additional bonus over and above the guaranteed first y ear b onus because he never beg an working a second y ear. The Trial Court agree d w ith Aladdin an d dismissed Plaintiff’s complaint. Plaintiff appeals, and we affirm.

Tenn. R. App.P. 3 Appeal as of Right ; Judgme nt of the Chancery

Court Affir

med; C ase Rem

anded.

D. M ICHAEL S WINEY , J., delivered the opinion of the cour t, in which H OUSTON M. G ODDARD , P.J., and H ERSCHEL P. F RANKS , J., joined.

H. Rowan Leathers, I

II , Douglas B. Janney , II

I, Nashv ille , Tenne sse e, f or t he A ppe lla nt L oui s J. Federico.

William N. O zier, Nas hville, Te nnessee , for the

Appellee Aladdin I

ndustrie s, LL

C.-2- OPINION Background
After lo sing his job in New York as a result of a corporate reorganization, Plaintiff entered into negotiations with Aladdin’s CEO , Ari C haney (“ Chaney”) , regarding his potential employment

as an Executive Vic e Preside nt of Marketi

ng and Sales in Nashville. These negotiations eventua lly culminated in an offer of employ ment dated December

20, 1999 ( “the Contr

act”). This document provides , in pertin

ent part , as follo ws:
It i s with a g

reat de al of ple asure th at I o ffer to y ou emp loy ment o n behalf of Aladdin Industries, L LC, effective January

5, 2000.
Position: Executive V.P., Marketing and Sales
Sa la ry: $180,000 per annum or $6,9 23 .08 per b iweekly pa

y period
In addition to your base salary, y ou will be given a first year guaranteed bonus of $72,000....
In the event you

shoul d leav e Alad din fo r reaso ns ot her th an thr ough your own volition, you

will receive 12 months’ salary , prorated bonus and outplacement services.... Chaney signed the Contract for Aladdin. Plaintiff signed the Contract accepting its terms, moved from New Yor k to Na shvi lle, a nd bega n work ing for Aladdin o n January 5, 2000. Plaintiff’s employment with Aladdin was terminate d less than a yea r later on December 1, 2000.
Pursuant to the terms of the Contract, Plaintiff received $180,000 as an additional twelve months of s alary

after he was ter

minated. Plaintiff

also rec eived the

guara nte ed fi rst year bonus of $72,000 and outplacement services. However, Plaintiff cla imed he was entitled to another $72,000 bonus pursuant to the terms of the Contract. Aladdin disagreed a nd refused to pay

any additional compensation.

Plaintiff filed suit on June 4, 2001, c laiming Aladdin refused to pay him the separation bonus in accordance with the terms of the Co nt rac t. In his complaint, Plaintiff detailed discussions he had with Ch aney regarding separation bene fits. According to Plaintiff, “Chaney informed[Plaintiff] that he would be provided a ‘bonus’ as part of his separation package in the event Aladdin te

rminated his employ

ment. Chan

ey further repres ented tha

t this ‘bonu s’ would be in addition to

any other bonus pa

yments, gua

ranteed or otherwise which [Plaintiff] might receive as part of his re gular c ompensat

ion.” Plaintiff cla

imed Alad

din brea ched its employ

ment cont ract wit h him and also violated T enn. Co de. Ann. § 50-1-102 through false and dec eptive representations-3-

concerning separation benefits. Pla intiff sought damages in the amount of $72,000, plus attorney fees and costs.

Aladdin answered the complaint, g eneral ly denying the pertinent allegations containe d in it. Aladdin admitted Plaintiff was advised he would receive a “bonus” a s part of his separation package, but denied Chaney a greed to any

bonus over and above what was contained in the written Contract which Plaintiff already had received.
A non-jury trial was he

ld on July 24, 2002. Plaintiff testified he earned a BBA degree from Adelphi Uni versity

and an MBA degree in mar keting and international business from New York Universi ty. Prior toworking for Aladdin, Plaintiff worked for Delong hi America in New York as an Executi ve Vice -Preside nt. Plaintiff’s position with Delonghi America was eliminated as part of a corporate reorga

n ization. Soon thereafter, Plaintiff learned about a potential employ ment position with Aladdin through Hamilton Partners, a recruiting fir m based in Conne cticut. After Hamilton Partner s shared Plaintiff ’s backg round inf ormation wit h Aladd in, Plaintiff contacted Aladdin’s Vice President of Human Resources, Lillian Jenkins (“Jenkins”) , and made arrang ements to visit Nashville. On November 19, 1999, Plaintiff went to Nashville and met first with Jenkins and then wi th Ch an ey. The initia l meeting focused on Aladdin and the c ompany ’s future goals, e tc. This meeting apparently w ent well, and Plaintiff returned to Nashville on D ecember 10 , 1999, for a secondmeeting. During this trip to Nashville, Plaintiff met with se

veral Al addin sen

ior execu tives.
Plaintiff retur ned to New Yor k and b egan hav ing te lephone c onversa tions with Chaney about compensation, benefits, etc. As pertinent to this appe al, Plaintiff testified he and Chaney agreed to a

base salary

of $180,000. According to Plaintiff, the year 2000 w as going to be a “rebuilding ” yea

r for Aladdin, and he knew the first y ear would be difficult as far as produ c t volume was concerned. Beca

use of this, Plaintiff believed “a guaranteed bonus for y

ear one would be appropriate since it would be quite difficult to have any stellar year in the fir st y ear of c oming to Aladdin.” Plaintiff and Chaney ag reed to a guaranteed bonusof $72,000 for the first y ear. Plaintiff and Chaney

discussed “separation benefits” during their second telephone call. It was a greed that if Plaintiff ’s e mpl oym

ent was te

rminated other tha n throug h his own vo lition, his s alary would continue for one- ye ar and he would receiv e outplac ement se

rvices. Plaintiff

also informed Chaney he wanted the bonus to be part of a separation packa ge. Accordi ng to Plai nti ff, Chaney sta ted Plaintiff would re ceive “ a bonus c omparab le to my prior y ear bonus, whenever that occurred.” After an agreement

was reached, Plaintiff received the Contract via overnight deliver y. Plaintiff ag

reed with the terms of the Contract, signed it, and returned it to Chaney

.

When Plaintiff was asked for his interpretation of the term “prora ted bonus ” containe d in the Con

tract asit pertained to separation benefits, Plaintiff stated he and Chaney had “discusseda bonus that would be equal to last ye ar. So in reading prorated, it just seemed to me that was the word tha t applied to i t being compared to last y ear.” In other

words, it referred to “the agreed upon separation bonus of 72,000 ....” Plaintiff testified the inclusion of the $72,000 bonus1 There were sev eral ot her items of compensat ion or benef

its conta ined in t

he Cont ract , s uch as rel ocati on exp enses, v acatio n, etc. W e have discus sed o nly those por tions o f the Co ntract w hich ar e relev ant to this a ppe al. -4- as part of a separ ation pac kage w as part o f what ind

uced him t

o take the job with Ala

ddinover other potential employment opportunities he had at that time. 1

On cross-examination, Plaintiff admitted he was familiar with what the term “prorated” meant in real estate matters, and that it involved “some apportionment.” He read the term “prorated” which was contained in the Contract, but never asked Chaney or any one else at Aladdin what that term meant. Plaintiff claimed he did not seek clarification of what “pr orated” meant because it was “cry stal clear” to him what it meant. Plaintiff conceded he was not claiming Chaney had misrepresented any

thing to him. Plaintiff also admitted Chaney was the o nly

representative of Aladdin with who m he d iscussed the termsof his emp loyment. Plain tiff ack nowledg ed that a “potential interpre

tatio n” of the langua ge at issue would be that if he did not work any time in a second yea

r of employment, he w ould not receive a bonus.
The next witnes s was Chaney , who testi fied he b ecame Aladdin’s President and CEO in May of 1999, and he worked

in that capacity f

or 18 months. At the time of trial, Chaney re sided in Florida and was n ot employ

ed. As pe

rtinent to this a ppeal , Chaney claimed he and Plaintiff discussed the risks associated with Plaintiff’s accepting employ ment with Aladdin given th e company’sfinancial situation at that time. Chaney stated he

and Plaintiff agreed that if Plaintiff was terminatedother

than for his own volition, he would receive a severanc e package consistingof oneyear base salary , out placement services, and a bonus pay ment “at whatever . . . his prior bonus payment had been.”

Chaney was questioned about the severanc e package for Jeffrey Hopmayer (“Hopmaye

r”), another

Aladdin e

xecutive w

ho was hir

ed the sa m e day as Plaintif

f. Acco rding to C ha ne y, Plaintiff and Hopmayer had identical severance packa ges except for the amoun t of thei r base salary a nd guaranteed first y

ear bonus. The offer of employ ment sent to Hopmayer, however, didnot contain the term “prorated” where it discussed a bonus upon separation. Mo re sp ec if ic al ly, Hopmayer’ s offer of

employment provided that if sepa ration not of his own volition happened, he would receive “12 months salary and bonus.” When questione d about this difference in the separation packages, Chaney testified he did not notice the word “prorated” in Plaintiff’s Contract and did not know how that word came to be included in the Contract. Chaney claimed the use of the word “prorated” in Plaintiff’s Contract did not accura tely reflect what they ha

d agreed upon.
On cross-examination, Chaney admitted he too lost his job with Aladdin and was involved in litigation against the company . Chaney ’s lawsuit was for defamation of character. Plaintiff paid Chaney ’s expense s to trave l from Flo rida to Na shville fo

r the tria l. Chaney voluntar ily appeared at trial and was not under subpoena. Chaney

could not recall who typed Plaintiff’s offer of e mploy ment on his behalf, but he adm itted whoe

ver did pr

epare t hat docum

ent relied upo n in fo rm at io n h e ( i. e. , C ha ne y) provided. Chaney did not know whe re the person who prepared the-5-

letter would have “gotte

n the pror ated bonu s” lang

uage if it did not come from him. Chaney testified he un de rs to od wh at “p ro ra te d” me an t w it h r eg ar d t o r ea l e st at e. Ac co rd in g t o C ha ne y:

[I]t means an apportio nment ... [I]f, for exa mple, y ou live in a

house for part of a month or pa

rt of a y ear, y ou would pay the ... perce ntage of the time that you lived there, either in rent or taxes, if

there wa s a prorated agreement. Notwithstanding this testimony , when asked if “prorated” in the context of the bonus meant there would be an apportionment, Chaney stated: “ It does not. To me it’s nonsequitur. I don’t understand it i n this context.” Chaney then admitted that in his pre-tria l deposition, he agreed the term “prorated” as used in Plaintiff’s Contract would at least imply an a pportionment of the bonus. When Plaintiff’s employment was terminate d, Chaney was no longer employ ed by Aladdin. Chaney has a Bachelor of Science deg

ree in engineering

from the Worster Polytechnic I nstitute and a Masters in Business Administration from the University of Chica go. Plaintiff concluded his case

in chief by r eading into the record por

tions of Jenk

ins’ pre-trial deposition. In her deposition, Jenkins testified that she was the Vice President of Human Resources at the relevant ti me. Jenkins testified she prepared the initial draft of the Contract utilizing boilerplate language and a dding additional information provided by Chaney. Chaney

then reviewed the Contract and made changes. Jenkins testified the entire portion addressing separation benefits was added by

Chaney af

ter she presented him with the initial draft.
Aladdin called Jen

kins as its first and only witness. Jenkins testified when she added the words “p

rorate d bonus” to

the Contra

ct, she was using Chaney ’s own words and she never w ould have put the w ord “prorated ” in there on her own. Jenkins testified she determined how to pay Plaintiff’s separation benefits based on the terms of the Cont ract. Accord ing to Jenkins, Plaintiff was not entitle d to any

prorate d bonus sinc e he nev er compl eted his f irst full y ear. Pla intif f was, however, paid the full first yea r bonus of $72,000. Jenkins further stated that the langua ge use d in Hopmayer’ s offer of employ ment pertaining to Hopmay er’s se paratio n benefi

ts also was provided by Chaney

. On August 15, 2002, the Trial Court issued a memorandum opinion wherein it found the language of the

Contract to be cle ar and un ambiguo us, and thu s valid an d binding on the par

ties. The Trial Court then stated:

Plaintiff would o nly be e ntitled to a “prorated bonus,” if he had workeda portion of the follow in g ye ar 2001. He did not work for Aladdin in the year

2001.
Plaintiff failed to adequately

prove that he is entitled to a severance bonus of $72,000, in addition to the first year’sguaranteed bonus paid to him by Aladdin.2 Plaintiff do es no t app eal the d ismissal o f his claim b roug ht purs uant to Te nn. Co de A nn. § 5 0-1-1 02. -6- As to Plaintiff’s claim that Aladdin violated Tenn . Code Ann. § 50-1-102, the Trial Court stated there was “no c

reditab le evide

nce” tha t Aladdin ma de an y misrepresentations. A final order adopting the findings of fa ct and conclusionsof law se t f orth in the memorandum opinion was entered on September 3, 2002, thereby dismissing the complaint.
Plaintiff appeals , arguing the T

rial Cour t erred when it concluded he was not

entitled to an additional separation bonus of $72,000. 2 Aladdin claims on appeal that, while the Trial Court reached th e c or re ct re su lt , t es ti mo ny b y P laintiff and Chaney a s to what they intended the of fer of employment to mean was inadmissable pur suant to the parol evidence rule.
Discussion The factual findings of a trial court are accorded a presumption of correctness, and we will not ove

rturn tho se fact

ual findings unl ess the evidence preponderates ag ainst them. See Tenn. R. App. P. 13 (d); Bogan v. Bogan , 60 S.W.3d 721, 727 (Tenn. 2001). With respect to legal issues, our review is conducted “under a pure de novo standard of review, according no deference to the conclusions of law made by the lower courts.” Southern Constructors, Inc. v. Loudon Coun ty Bd. Of Educ. , 58 S.W.3d 706, 710 (Tenn. 2001).

In resolvin g a dispu

te conce rning c ontract

interpre tation, ou r task is to ascertain the intention of the parties based upon the usual, natural, and ordinary meaning of the contract lang uage. Planters Gin Co. v. Federal Compress & Warehouse Co., Inc. , 78 S.W.3d 885, 8 89-90 ( Tenn. 2002)(citing Guiliano v. Cleo, Inc. , 995 S.W.2d 8 8, 95 (Te nn. 1999) ). A dete

rmin ation of the intention of the parties “is generally treated as a question of law because the words of the contract are definite

and undisp

uted, and in deciding the le gal ef

fect of the word s, there is no genuine factual issue left for

a jury to decide.” Planters Gin Co. , 78 S.W.3d at 890 (citing 5 Joseph M. Perillo, Corbin on Contrac ts , § 24.30 (rev. ed. 1998) ; Doe v. H CA Health Services of Tenn., Inc. , 46 S.W.3d 191, 196 (Tenn. 2001)). The central tenet of contr act construction is that the intent of the contracting parties at the time

of execut ing the a greem ent should

govern. Planters Gin Co. , 78 S.W.3d at 890. The parties’ intent is pr

esumed to be that sp ecifica

lly expressed in the body of the c ontract. "In other words, the object to be atta ined in co nstruing

a contra ct is to ascertain the meaning and intent of the parties as expressed in the language used a nd to give effect to such

intent if it does not

conflic t with any rule of law, good mor als, or publ ic policy." Id . (quoting 17 Am. Jur. 2d, Contracts , § 245).

This Court's initial task in construi ng the contract at issue, here the off er of employ ment, is to determ ine wh ether t he lan guage of the contract is ambiguous. Planters Gin Co. , 78 S.W.3d at 890. If the languag e is clear and unambiguous, the liter al m eanin g of the langua ge controls the outcome of the dispute. Id

. A contract is ambiguous only when its me aning isuncerta in and ma y fairly

be understood in more than one way

. Id. (emphasis added). If the contract is found to be a mbiguous, we then apply established rules of construction to determine the intent of the-7-

parties

. Id . Only if ambiguity remains after apply

ing the pertinent rules of construction do es th e legal meaning of the contra ct become a question of fact. Id

. Black’s Law Dictionary

(7 th ed. 1999) at 1236 definesprorate as: “To divide , assess, or distribute proportionately.” The Oxford American College Dictionary at 1089 (2002) defines prorate as to: “a llocate, distribute , or asse ss pro ra ta,” and definespro rata

as “pro porti onal ly .” We believe the Trial Cour t was correct when it concluded the lang uage in the Contract is clear and unambig uous. Notwithsta

nding the testimony

of Plain tiff an d Chaney as to wha t they claim they really intended , we pre sume the in tent of the

parties to this Contract to be that which was “specif ically expressed in the body of the c ontract.” Planters Gin Co. , 78 S.W.3d at 890. The releva nt langu age pr

ovides:
In the event

you should leave A laddi n for re asons other than t hrough your own volition, you will receive 12 mo nt hs ’ s al ar y, prorated bonus and outplacement services....
Based upon the u sual, nat

ural, and ordinary

meaning of the Contract languag e, we do not believe this Contract can fairly

be read to mean Plaintiff would receive a “ separation bonus” of $72,000 for a year in which he

never w orked. T

he only fair interpretation of this language is that should Plaintiff work a portion of a particular y ear and then

lose his job ot her than through his own volition, he would receive a pro rata bo nus based on the percentage of the fina l year that he

worked. For example, if Plaintiff worked six months, he would receive 50% of the annual bonus. In no way can this language fairly

be read to guarantee Plaintiff, a fter termination, a full bonus for a year in whic

h he never worked. I

f that is what the parties had intended, then they

easily could hav e conve

ye d this intentutilizing language similar to that they actually did use whe

n guaranteeing Plaintiff a first y ear bonus of $72,000. We

believe the contr actual la nguag e at issue

is unambig

uous and s usceptib le only to one fa ir interp retation , and that

interpre tation is the one mad

e by the Tria l Court.
Fi na ll y, Aladdin

argue s the testimony

of Plaintif

f and Cha se with

regard to what they intended the Contract

to say or mean

was inad missible pu

rsuant to the paro l evidenc e rule because this testimony directly

contradicted wha

t the Contra ct actua

lly s aid. Be cause of

the ultima

te conclusion r eached by

the Trial Court, a conclusion which we affirm, this issue is moot, and we pretermit same.-8- Conclusion
The judgment of the Trial Court is affirmed, and this cause is remanded to the Trial Courtfor further procee dings asnecessa

ry , if any , consiste

nt with this Opinion, and for collection of the costs below. Cos ts on appe al a re as sessed a

gainst t he Appellant, L

ouis Fed erico, a nd his su re ty.

___________________________________ D. MICHAEL

SWINEY, JUDGE