Court Opinion

ID: 1045428
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:26:26.636293+00
Date Added: 2024-06-11T12:53:16.990774
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                             AT KNOXVILLE
                           Assigned on Briefs November 8, 2012

       ROY W. KEITH v. MICHAEL J. JACKSON, SR., AND NATA M.
                            JACKSON

                     Appeal from the Circuit Court for Greene County
                      No. 11CV439 KTL        Kindall Lawson, Judge

              No. E2012-01056-COA-R3-CV-FILED-FEBRUARY 22, 2013

This appeal arises from a dispute concerning a contract for employment. Roy W. Keith
(“Keith”) sued Michael J. Jackson, Sr.1 and Nata M. Jackson (“the Jacksons”) in the Circuit
Court for Greene County (“the Trial Court”), alleging that he was not paid separation
payments due to him under an employment agreement. The Jacksons answered the
complaint, arguing essentially that Keith waived these payments when he accepted a job in
the new corporation. Keith filed a motion for summary judgment, which the Trial Court
granted. The Jacksons appeal to this Court. We hold that the Trial Court erred in granting
summary judgment as there remained a material controversy regarding whether Keith waived
his right to payment under the employment agreement. We vacate the judgment of the Trial
Court.

    Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Trial Court Vacated;
                                  Case Remanded

D. M ICHAEL S WINEY, J., delivered the opinion of the Court, in which C HARLES D . S USANO,
J R., P.J., and JOHN W. M CC LARTY, J., joined.

Garrett P. Swartwood, Knoxville, Tennessee, for the appellants, Michael J. Jackson, Sr., and
Nata M. Jackson.

Mark S. Dessauer, Kingsport, Tennessee, for the appellee, Roy W. Keith.

       1
         Michael J. Jackson, Sr., filed for bankruptcy. Mr. Jackson obtained a discharge from the United
States Bankruptcy Court in November 2012. The Bankruptcy Court subsequently modified the discharge
injunction to permit this Court to proceed with and decide this appeal.
                                       OPINION

                                      Background

              In September 2008, Keith entered into an employment agreement (“the
Agreement”) with EcoQuest Holding Corporation, Inc.; EcoQuest International, Inc.; and
Heartland Select Corporation (collectively, “the Company”). Michael J. Jackson, Sr. and
Nata M. Jackson signed the agreement as limited guarantors of the separation payments.
EcoQuest was a Greeneville, Tennessee based corporation that sold, among other things, air
purification devices and water purification systems. From January 2000 through March
2009, Mr. Jackson was President of EcoQuest. Under the Agreement, Keith was to serve as
in-house counsel. Keith received a signing bonus of $90,000 at the time he signed the
Agreement. The Agreement contained certain provisions concerning separation payments,
which we reproduce in pertinent part:

      2.     Compensation
             A.   Base Salary. During the Term (as defined below), Company
                  shall pay Executive a base salary of One Hundred Eighty Five
                  Thousand, Four Hundred Dollars ($185,400.00 USD) per year
                  (“Base Salary”), payable in arrears in accordance with the
                  Company’s standard payroll practices and policies for senior
                  executives. . . .

      I.     Signing Bonus. Company shall pay Executive a signing bonus in the amount
             of Ninety Thousand Dollars ($90,000.00 USD), which payment shall be
             immediately due and payable upon the execution of this agreement . . . .

      3.     Term. The term of this Agreement shall be for a period of Nine (9)
             years beginning upon the execution of this agreement and ending nine
             (9) years thereafter (the “Term”) . . . .

      4.     Termination. This Agreement may be terminated by Company for any
             of the following events:
             A.      Expiration of the Term;
             B.      Mutual written agreement between Executive and the Company
                     at any time;
             C.      Executive’s death;
             D.      Executive’s disability which renders Executive unable to
                     perform the essential functions of Executive’s job even with
                     reasonable accommodation;

                                           -2-
      E.     For Cause. For this purpose, Cause shall mean a termination by
             the Company because of any one of the following events:
             1.     Executive’s extreme, gross negligence or willful,
                    malicious misconduct or fraud that results in material
                    injury to the Company and has not been cured by
                    Executive within thirty (30) days after receipt by
                    Executive of written notice from the Company of such
                    conduct;
             2.     Executive’s voluntary resignation. For this purpose, a
                    voluntary resignation expressly excludes Executive’s
                    resignation for purposes of or on account of ethical or
                    legal obligations to withdraw, conduct of Company
                    which constitutes a constructive termination of
                    Executive’s employment within the meaning of
                    Tennessee law, or for any other reason other than in
                    order for Executive to accept other employment.
      F.     Without Cause. Without Cause shall mean any termination of
             employment by the Company which is not defined in sub-sections A-E
             above.

5.    Company’s Post-Termination Obligations . . .
      B.   If this Agreement terminates for any reason set forth in sub-
           section 4.F above, then the Company shall pay Executive (i) all
           accrued but unpaid wages through the termination date, based
           on Executive’s then current Base Salary, and (ii) Executive’s
           then current Base Salary for the remainder of the Term, to be
           paid in accordance with the Company’s regular payroll practices
           (collectively referred to herein as “Separation Payments”) . . .

                                    ***

16.   Limited Guaranty. The Limited Guarantors [Michael Jackson and Nata
      Jackson], each individually, hereby personally guarantee, jointly and
      severally, the payment of any Separation Payments due and payable to
      Executive under the terms of this agreement, in an amount equal to
      Executive’s then current Base Salary for a one-year period, reduced by
      the amount of the Signing Bonus provided for by Section 2.I of this
      agreement. The Limited Guarantors hereby agree to promptly pay
      Executive all sums subject to the guarantee of this Section 16, if and to
      the extent such payments are not paid by the Company when due.

                                     -3-
               In March 2009, Aerus Holdings, Inc. acquired substantially all the assets of the
Company. What happened next is the subject of much dispute in this case. Keith asserts that
he was terminated from employment with the Company. The Jacksons allege that Keith, in
fact, voluntarily continued his employment with the purchaser of the assets of the Company
and that this continued employment was in lieu of the separation payments.

              In August 2011, Keith sued the Jacksons in the Trial Court. In his complaint,
Keith argued that he was owed separation payments under the Agreement as a result of his
alleged termination. The Jacksons answered the complaint, arguing that Keith waived these
separation payments when he accepted a job with the new corporation.

               In January 2012, Keith filed a motion for summary judgment, together with a
statement of undisputed material facts, his affidavit, and a memorandum of law. For their
part, the Jacksons filed a memorandum of law opposing Keith’s motion for summary
judgment. The Jacksons included a response to Keith’s statement of undisputed material
facts along with their “Concise Statement of Additional Facts,” the affidavit of Mr. Jackson,
and part of the transcript of Keith’s deposition. The Jacksons also filed a motion to amend
their answer, which the Trial Court later granted. The Jacksons’ amended answer included
several affirmative defenses to Keith’s claim, such as, among others, waiver, acquiescence,
set-off, and accord and satisfaction.

             The Trial Court heard Keith’s motion for summary judgment in March 2012.
In April 2012, the Trial Court entered an order granting Keith’s motion for summary
judgment and awarding Keith a $95,400 judgment, jointly and severally, against the
Jacksons.2

                                             Discussion

              We restate the Jacksons’ issues as one dispositive issue on appeal: whether the
Trial Court erred in granting Keith’s motion for summary judgment.

              Our Supreme Court reiterated the standard of review in summary judgment
cases as follows:

               The scope of review of a grant of summary judgment is well
        established. Because our inquiry involves a question of law, no presumption
        of correctness attaches to the judgment, and our task is to review the record to

       2
       In its order, the Trial Court did not state its legal grounds for granting the motion for summary
judgment other than saying “the motion...was well taken....”

                                                  -4-
      determine whether the requirements of Rule 56 of the Tennessee Rules of Civil
      Procedure have been satisfied. Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.
      1997); Cowden v. Sovran Bank/Cent. S., 816 S.W.2d 741, 744 (Tenn. 1991).

              A summary judgment may be granted only when there is no genuine
      issue of material fact and the moving party is entitled to judgment as a matter
      of law. Tenn. R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.
      1993). The party seeking the summary judgment has the ultimate burden of
      persuasion “that there are no disputed, material facts creating a genuine issue
      for trial . . . and that he is entitled to judgment as a matter of law.” Id. at 215.
      If that motion is properly supported, the burden to establish a genuine issue of
      material fact shifts to the non-moving party. In order to shift the burden, the
      movant must either affirmatively negate an essential element of the
      nonmovant’s claim or demonstrate that the nonmoving party cannot establish
      an essential element of his case. Id. at 215 n.5; Hannan v. Alltel Publ’g Co.,
      270 S.W.3d 1, 8-9 (Tenn. 2008). “[C]onclusory assertion[s]” are not sufficient
      to shift the burden to the non-moving party. Byrd, 847 S.W.2d at 215; see also
      Blanchard v. Kellum, 975 S.W.2d 522, 525 (Tenn. 1998). Our state does not
      apply the federal standard for summary judgment. The standard established
      in McCarley v. West Quality Food Service, 960 S.W.2d 585, 588 (Tenn. 1998),
      sets out, in the words of one authority, “a reasonable, predictable summary
      judgment jurisprudence for our state.” Judy M. Cornett, The Legacy of Byrd
      v. Hall: Gossiping About Summary Judgment in Tennessee, 69 Tenn. L. Rev.
      175, 220 (2001).

              Courts must view the evidence and all reasonable inferences therefrom
      in the light most favorable to the non-moving party. Robinson v. Omer, 952
S.W.2d 423, 426 (Tenn. 1997). A grant of summary judgment is appropriate
      only when the facts and the reasonable inferences from those facts would
      permit a reasonable person to reach only one conclusion. Staples v. CBL &
      Assocs., Inc., 15 S.W.3d 83, 89 (Tenn. 2000). In making that assessment, this
      Court must discard all countervailing evidence. Byrd, 847 S.W.2d at 210-11.
      Recently, this Court confirmed these principles in Hannan.

Giggers v. Memphis Housing Authority, 277 S.W.3d 359, 363-64 (Tenn. 2009).

             Our Supreme Court has stated regarding contract interpretation:

                                              -5-
             When we interpret a contract, our role is to ascertain the intention of the
      parties. The intention of the parties is based on the ordinary meaning of the
      language contained within the four corners of the contract. The interpretation
      of a contract is a matter of law, which we review de novo with no presumption
      of correctness.

84 Lumber Co. v. Smith, 356 S.W.3d 380, 383 (Tenn. 2011) (citations omitted).

            As this Court explained in Quebecor Printing Corp. v. L & B Mfg. Co., 209
S.W.3d 565 (Tenn. Ct. App. 2006):

      In resolving a dispute concerning contract interpretation, our task is to
      ascertain the intention of the parties based upon the usual, natural, and
      ordinary meaning of the contract language. Planters Gin Co. v. Fed.
      Compress & Warehouse Co., Inc., 78 S.W.3d 885, 889-90 (Tenn. 2002)(citing
      Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999)). A determination of
      the intention of the parties “is generally treated as a question of law because
      the words of the contract are definite and undisputed, and in deciding the legal
      effect of the words, 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
      Contracts, § 24.30 (rev. ed.1998)); Doe v. HCA Health Servs. of Tenn., Inc.,
      46 S.W.3d 191, 196 (Tenn. 2001)). The central tenet of contract construction
      is that the intent of the contracting parties at the time of executing the
      agreement should govern. Planters Gin Co., 78 S.W.3d at 890. The parties'
      intent is presumed to be that specifically expressed in the body of the contract.
      “In other words, the object to be attained in construing a contract is to
      ascertain the meaning and intent of the parties as expressed in the language
      used and to give effect to such intent if it does not conflict with any rule of
      law, good morals, or public policy.” Id. (quoting 17 Am.Jur.2d, Contracts, §
      245).

             This Court's initial task in construing the [contract] ... at issue, as was
      the Trial Court's, is to determine whether the language of the contract is
      ambiguous. Planters Gin Co., 78 S.W.3d at 890. If the language is clear and
      unambiguous, the literal meaning of the language controls the outcome of the
      dispute. Id. A contract is ambiguous only when its meaning is uncertain and
      may fairly be understood in more than one way. Id. (emphasis added). If the
      contract is found to be ambiguous, we then apply established rules of
      construction to determine the intent of the parties. Id. Only if ambiguity

                                             -6-
       remains after applying the pertinent rules of construction does the legal
       meaning of the contract become a question of fact. Id.

Quebecor, 209 S.W.3d at 578.

               The Jacksons argue that the Trial Court erred in granting Keith’s motion for
summary judgment because the defenses asserted by the Jacksons have not been negated by
Keith, and, therefore, summary judgment is improper. Namely, the Jacksons assert on appeal
that Keith waived his rights under the Agreement by accepting employment with the new
corporation in lieu of the separation payments. The Jacksons cite to Tennessee law on the
subject of acquiescence and waiver:

                       “Acquiescence” has been defined as a conduct from
              which may be inferred an assent with a consequent estoppel or
              quasi-estoppel, and also has been described as a quasi-estoppel,
              or a form of estoppel. An acquiescence to a transaction is a
              person's tacit or passive acceptance, or an implied consent to an
              act. Generally, acquiescence as a defense has a dual nature in
              that, it may on the one hand, rest on the principle of ratification
              and be denominated an “implied ratification,” or, on the other
              hand, rest on the principle of estoppel and be denominated as
              “equitable estoppel.” The doctrine arises where a person knows
              or ought to know that he or she is entitled to enforce his or her
              right to impeach a transaction and neglects to do so for such a
              time as would imply that he or she intended to waive or abandon
              his or her right.

       31 C.J.S. Estoppel and Waiver § 175 (2008) (footnotes omitted); accord
       Hinton v. Stephens, No. W2000–02727–COA–R3–CV, 2001 WL 1176012, at
       *3 (Tenn. Ct. App. Oct. 4, 2001) (citation omitted).

Crye-Leike, Inc. v. Carver, No. W2010-01601-COA-R3-CV, 2011 WL 2112768, at *11
(Tenn. Ct. App. May 26, 2011), Rule 11 appl. perm. appeal denied September 21, 2011.

              The Jacksons argue that summary judgment was inappropriate in this matter
as Keith had not negated the defenses asserted, and, furthermore, credibility cannot be
determined at this stage. The Jacksons draw attention to certain assertions from Keith’s
deposition, such as the following:

                                              -7-
       Q:     And you worked on one day for one company and the next day you
              didn’t miss a lick, you went to work for another company?

       A:     That’s correct.

       Q:     And you didn’t miss one paycheck?

       A:     Well, there was a delay, but for practical purposes, no, you’re correct.

       Q:     For practical purposes you didn’t miss one hour’s worth of pay, and that
              was a transition that you acquiesced, you were in agreement with?

       A:     I went along, yes.

The Jacksons contend that the evidence demonstrates, or at least raises as a disputed issue,
that Keith acquiesced to the new situation regarding his employment in lieu of any separation
payments, and, that this had the effect of waiving his rights under the Agreement. According
to the Jacksons, summary judgment was inappropriate in this case, among other reasons
because of disputed material facts.

             The Agreement clearly defines the circumstances under which separation
payments are to be paid to Keith. We find the Agreement to be unambiguous. This,
however, is not dispositive of this case at the summary judgment stage.

               We believe that the parties had the power to agree to change that which Keith
had been entitled to, the separation payments, so that Keith would receive something else in
lieu of the separation payments. Keith’s employment with the new corporation in lieu of the
separation payments, as the Jacksons argue happened, possibly could give rise to a defense
against Keith’s claim for separation payments under the contract. There is nothing in the
record to suggest that the parties could not have arrived at some agreement whereby Keith
would have the same job in the new corporation in lieu of the separation payments due under
the Agreement. Such a determination simply cannot be made at this stage as there are
disputed material facts relevant to this issue.

              In short, there is a genuine issue as to whether the parties agreed that Keith
would have his new job with the new corporation in lieu of his separation payments. We,
therefore, hold that the Trial Court erred in granting Keith’s motion for summary judgment.
Accordingly, we vacate and remand this cause to the Trial Court, for further proceedings
consistent with this Opinion.

                                             -8-
                                       Conclusion

              The judgment of the Trial Court is vacated, and this cause is remanded to the
Trial Court for further proceedings consistent with this Opinion. The costs on appeal are
assessed against the Appellee, Roy W. Keith.

                                                  _________________________________
                                                  D. MICHAEL SWINEY, JUDGE

                                            -9-