Court Opinion

ID: 4361670
Source: CourtListenerOpinion
Date Created: 2019-01-24 17:15:09.979563+00
Date Added: 2024-06-11T14:48:21.063817
License: Public Domain

01/24/2019
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                              December 4, 2018 Session

        BYRON L. JACKSON, JR. V. JAY HOWARD CRIPPEN ET AL.

                 Appeal from the Chancery Court for Knox County
               No. 190047-2   Clarence E. Pridemore, Jr., Chancellor

                            No. E2018-00850-COA-R3-CV

At an earlier time, Byron L. Jackson, Jr. (plaintiff) and defendant Jay Howard Crippen
operated a company named Swiss Technologies, Inc. There were disagreements. The
parties engaged in mediation. Following mediation, the parties, including Swiss, entered
into a three year consulting agreement for Jackson pursuant to which he was to be paid
$30,000 annually, “less the cost of health and related insurance.” The contract provides
that plaintiff “shall be entitled to health and related insurance . . . on the same term as
other employees of [Swiss].” The parties stipulated that every other employee paid no
more than one-half the cost of their health insurance, and employer paid the other half.
Defendants Crippen and Swiss (collectively defendants) deducted the full amount of
health insurance premiums from plaintiff’s pay. Plaintiff brought this action for breach
of contract. The trial court held that the contract was unambiguous, and that it required
defendants to pay one-half of plaintiff’s health care insurance costs. We affirm.

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

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J.,W.S., and THOMAS R. FRIERSON, II, J., joined.

Jon M. Cope, Knoxville, Tennessee, for the appellants, Jay Howard Crippen and Swiss
Technologies, Inc.

James H. Price and Michael R. Franz, Knoxville, Tennessee, for the appellee, Byron L.
Jackson, Jr.

                                            -1-
                                        OPINION

                                             I.

        As previously noted, Swiss is a company that plaintiff and defendant Crippen
operated together for many years. They were opposing parties in a prior lawsuit that was
characterized in the trial court as a “business divorce.” They reached a mediated
settlement agreement in the prior lawsuit. Among other things, Crippen agreed to buy
plaintiff’s interest in Swiss Technologies for a lump sum of $1,650,000. The parties also
agreed to execute the employment agreement presently at issue. The agreement provides,
in pertinent part, as follows:

              1. Term.      This Employment Agreement shall become
              effective on the date referenced above [Feb. 18, 2015], and
              shall terminate on January 31, 2018. This Employment
              Agreement may not be terminated for any reason prior to
              January 31, 2018.

              2. Employment. Employer does hereby employ Employee as
              a freelance consultant, with no specific duties assigned except
              as may be required from time to time by Employer, and with
              no duty or right for Employee to be present on Employer’s
              business premises.

              3. Compensation. Employee shall be compensated at the
              annual rate of $30,000 per year, less the cost of health and
              related insurance for Employee and Employe[e]’s spouse.
              The net amount due Employee shall be paid by Employer to
              Employee consistent with Employer’s normal payroll cycle.
              Employee shall be entitled to health and related insurance for
              the term of the Employment Agreement on the same terms as
              other employees of Employer.

(Numbering and underlining in original.)

       Employer deducted the full amount of plaintiff’s health insurance premiums from
his salary. Plaintiff sued, alleging that defendants breached the contract by deducting the
full amount rather than one-half the total cost, as was done for all other Swiss
Technologies employees. Both sides moved for summary judgment, which the trial court
denied. At the beginning of the bench trial, the parties agreed to stipulate to the material
facts. Among the stipulated facts was the following:
                                            -2-
             With limited exceptions, Defendant Swiss Technologies, Inc.
             (“STI”) has had a practice of paying one-half of each
             employee’s health and related insurance premiums and
             deducting the other one-half of the premium amount from
             each employee’s pay. STI has continued this practice to the
             date of these Stipulations of Fact for Trial.

             Since the execution of the Employment Agreement,
             Defendants have deducted 100% of Plaintiff’s health and
             related insurance premiums from his salary. Defendants have
             not paid any portion of Plaintiff’s premiums. Since the
             execution of the Employment Agreement, Plaintiff is the only
             person employed by STI that has not had one-half or more of
             his applicable health and related insurance premiums paid by
             Defendants.

             The total amount of health and related insurance premiums
             deducted from Plaintiff’s pay over the entire three-year term
             of the Employment Agreement totals $40,455.00. Had
             Defendants deducted one-half of the total amount of health
             and related insurance premiums from Plaintiff’s pay rather
             than the entire amount, Defendants would have deducted
             $20,227.50 less from Plaintiff’s pay over the entire three-year
             term of the Employment Agreement.

(Numbering in original omitted.)

       The trial court held that the terms of the contract were clear and unambiguous. It
concluded “that the ‘same terms’ of health and related insurance as used in Paragraph 3
of the Employment Agreement includes the cost paid by other employees.”
Consequently, the trial court ruled that “STI was obligated under the contract to deduct
only one-half of the Plaintiff’s health and related insurance premiums from Plaintiff’s
compensation, as is consistent with STI’s practice for all of its other employees.” The
court awarded plaintiff $20,227.50, plus attorney’s fees and expenses as provided by the
employment agreement. Defendants timely filed a notice of appeal.

                                           -3-
                                            II.

       Defendants raise the issue of whether the trial court erred in holding that the
employment contract required defendants to pay plaintiff $30,000 per year plus one-half
of plaintiff’s health insurance premium.

                                            III.

        There is no material fact in dispute. “Because the interpretation of a contract is a
matter of law, our review is de novo on the record with no presumption of correctness in
the trial court’s conclusions of law.” Hassler v. Hassler, No. E2017-02365-COA-R3-
CV, 2018 WL 4697012, at *2 (Tenn. Ct. App., filed Oct. 1, 2018) (quoting Barnes v.
Barnes, 193 S.W.3d 495, 498 (Tenn. 2006)).

                                            IV.

       Our review of the trial court’s interpretation of a contract is governed by these
well-established principles:

              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)). . . . 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).

Mitchell v. Mitchell, No. E2017-00100-COA-R3-CV, 2019 WL 81594, at *4 (Tenn. Ct.
App., filed Jan. 3, 2019) (quoting Kafozi v. Windward Cove, LLC, 184 S.W.3d 693, 698
(Tenn. Ct. App. 2005)).

                                            -4-
       Regarding the potential ambiguity of a contractual term, we have observed the
following:

            [i]n interpreting the contract, we must keep in mind several
            basic tenets of contract law. For instance, the language in
            dispute must be examined in the context of the entire
            agreement. Cocke County Bd. of Highway Comm’rs v.
            Newport Utils. Bd., 690 S.W.2d 231, 237 (Tenn. 1985). “All
            provisions of a contract should be construed as in harmony
            with each other, if such construction can be reasonably made,
            so as to avoid repugnancy between the several provisions of a
            single contract.” Rainey v. Stansell, 836 S.W.2d 117, 119
            (Tenn. Ct. App. 1992). Also, words must be given their usual
            and ordinary interpretation. St. Paul Surplus Lines Ins. Co.
            v. Bishops Gate Ins. Co., 725 S.W.2d 948, 951
            (Tenn.Ct.App.1986). “A strained construction may not be
            placed on the language used to find ambiguity where none
            exists.” Farmers–Peoples Bank v. Clemmer, 519 S.W.2d
801, 805 (Tenn. 1975).

            The language of a contract is ambiguous when its meaning is
            uncertain and when it can be fairly construed in more than
            one way. Id. “An ambiguity does not arise in a contract
            merely because the parties may differ as to interpretations of
            certain of its provisions.”      Cookeville Gynecology &
            Obstetrics, P.C. v. Southeastern Data Sys., Inc., 884 S.W.2d
458, 462 (Tenn. Ct. App. 1994). “Neither the parties nor the
            courts can create an ambiguity where none exists in a
            contract.” Id.

            . . . The court will look to the material contained within the
            four corners of the contract to ascertain its meaning as an
            expression of the parties’ intent. Bob Pearsall Motors, Inc.
            v. Regal Chrysler–Plymouth, Inc., 521 S.W.2d 578, 580
            (Tenn. 1975). Therefore, if a contractual clause, read in the
            proper context, unambiguously mandates a particular result,
            we will not disturb that result merely because it may be harsh
            for one party or the other.

Wager v. Life Care Ctrs. of Am., Inc., No. E2006-01054-COA-R3-CV, 2007 WL
4224723, at *10, 11 (Tenn. Ct. App., filed Nov. 30, 2007).
                                         -5-
        In this case, both plaintiff and defendants argue that the contractual language is
unambiguous, and that it supports their position. Each side likewise argues alternatively
that if the contract is ambiguous, then extrinsic parol evidence would support their
interpretation. We agree with the trial court’s determination that the language of
paragraph 3 of the employment agreement is clear, certain, and unambiguous. The
parties agreed that defendants would provide plaintiff with “health and related insurance
for the term of the Employment Agreement on the same terms as other employees of
Employer.” As plaintiff argues, common and ordinary usage of “the same terms” would
include the price or cost of health insurance premiums. Plaintiff cites Black’s Law
Dictionary (6th ed. 1990) at 1472 as defining “terms” as “[c]onditions, obligations,
rights, price, etc., as specified in a contract or instrument.” Because there is no dispute as
to the terms provided to the other employees, there is also no latent ambiguity in the
language.

        Defendants, relying on the familiar principle that “[c]ourts must avoid rewriting an
agreement under the guise of interpreting it,” e.g., CNX Gas Co. v. Miller Petroleum,
Inc., No. E2009-00226-COA-R3-CV, 2011 WL 1849082, at *9 (Tenn. Ct. App., filed
May 11, 2011), argue that the trial court “rewrote” the contract “by rearranging the
sentence structure of paragraph 3.” They point to the following statements made by the
trial court at the end of the bench trial:

              It’s this court’s interpretation of what this means, if you were
              to read this paragraph 3 in a different order, if you were to
              take the last sentence and place it first within that paragraph ‒
              I’m not changing the wording of the paragraph, I’m just
              saying if you were to read the last sentence first ‒ “Employee
              shall be entitled to health and related insurance for the term of
              the employment agreement on the same terms as other
              employees of employer.” What this court takes that to mean
              is that Swiss Technologies would have to offer the same
              brand of insurance, or same insurance company, the same
              level of coverage, etc., to Mr. Jackson.

              And then if you were to apply the first sentence and make it
              the second sentence. “Employee shall be compensated at the
              annual rate of $30,000 per year, less the cost of health and
              related insurance for employee and employe[e]’s spouse.” If
              you offer it to him at the same terms, the same insurance, they
              pay half the price of all their other employees, so therefore, I

                                             -6-
              would anticipate that they would pay half of the cost of the
              insurance of Mr. Jackson.

These statements do not amount to a “rewriting” of the contract by the trial court. The
court’s linguistic analysis is equally reasonable and valid regardless of sentence order.
Applying the usual, natural and ordinary meaning of the provisions at issue, the trial court
correctly concluded that the parties agreed that defendants would provide one-half the
cost of plaintiff’s health insurance ‒ the “same terms” as those provided to other
employees.

                                            V.

       The judgment of the trial court is affirmed. Costs on appeal are assessed to the
appellants, Jay Howard Crippen and Swiss Technologies, Inc. The case is remanded for
enforcement of the judgment and collection of costs assessed below.

                                          _______________________________
                                          CHARLES D. SUSANO, JR., JUDGE

                                            -7-