Court Opinion

ID: 4203020
Source: CourtListenerOpinion
Date Created: 2017-09-13 16:10:11.806065+00
Date Added: 2024-06-11T14:40:56.358281
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                 No. 16-1639
                          Filed September 13, 2017

TIMOTHY T. BRADSHAW,
     Plaintiff-Appellant/Cross-Appellee,

vs.

CEDAR RAPIDS AIRPORT COMMISSION,
     Defendant-Appellee/Cross-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Linn County, Kevin McKeever,

Judge.

      Employee appeals and employer cross-appeals from summary judgment

ruling in breach of contract action. AFFIRMED ON APPEAL; REVERSED IN

PART AND REMANDED WITH DIRECTIONS ON CROSS APPEAL.

      Matt J. Reilly of Eells & Tronvold Law Offices, P.L.C., Cedar Rapids, for

appellant.

      Benjamin P. Roach of Nyemaster Goode, P.C., Des Moines, for appellee.

      Considered by Mullins, P.J., and Bower and McDonald, JJ.
                                       2

MCDONALD, Judge.

      Timothy Bradshaw sued his former employer, the Cedar Rapids Airport

Commission, for breach of contract. Bradshaw contended the Commission owed

him severance pay pursuant to an employment agreement. On cross-motions for

summary judgment, the district court held Bradshaw was not entitled to

severance pay but was entitled to compensation for an additional month of

service.   Bradshaw appeals, contending the district court erred in holding

Bradshaw was not entitled to contractual severance pay.        The Commission

cross-appeals, contending the district court erred in holding Bradshaw was

entitled to additional compensation.

                                       I.

      Bradshaw served as the Airport Director for the Eastern Iowa Airport. The

airport is owned by the City of Cedar Rapids and operated by the Cedar Rapids

Airport Commission. In 2012, Bradshaw and the Commission entered into an

amended employment agreement.

      Several provisions of the agreement are relevant to this appeal.

Paragraph 1 of the agreement sets forth the general terms of employment:

             The Commission hereby employs Bradshaw for an indefinite
      term as Airport Director effective as of June 28, 2012. . . . Such
      employment shall end upon Bradshaw’s resignation, death or
      termination for any reason by the Commission. Should Bradshaw
      voluntarily resign his employment prior to contract expiration, his
      notice of resignation shall be tendered to the Commission no less
      than [thirty] days prior to his departure date in order to assure his
      status as resigning in good standing. Nothing in this Amended
      Agreement shall be deemed to prevent or limit the right of the
      Commission to determine that Bradshaw shall no longer serve as
      Airport Director, subject to provisions of Paragraph 3 of this
      Amended Agreement.
                                            3

Paragraph 3 of the agreement provides for severance pay:

                 In the event Bradshaw is involuntarily terminated by the
         Commission for any reason other than his death, conviction of a
         felony, aggravated misdemeanor, or any public offense involving
         corruption, extortion, willful misconduct, maladministration in office,
         willful or habitual neglect, or refusal to perform the duties of office,
         he shall receive severance pay in the amount of twelve months’
         salary in effect at the time of Bradshaw’s termination. [1] Such
         severance pay shall be paid to Bradshaw, at his election, either in
         one lump sum within thirty (30) days of his effective date of
         termination [sic].     Provided however that in the event the
         Commission terminates Bradshaw’s employment on the basis of
         willful or habitual neglect, or refusal to perform the duties of office,
         in order to avoid payment of severance pay, the Commission must
         have first provided written notice of such basis and provided
         Bradshaw a reasonable opportunity to correct such basis.

And paragraph 13 of the agreement provides the agreement “represents the full

and complete understanding and agreement of the parties.”

         The circumstances surrounding the cessation of Bradshaw’s employment

are not in dispute.          On September 2, 2014, Bradshaw informed two

commissioners he had a pending job offer.             Bradshaw requested a salary

increase, and he informed some of the commissioners he would resign if the

increase was not approved. The commissioners informed Bradshaw they did not

have the authority to approve a salary increase without a vote of the full

commission and, in any event, they would not recommend a salary increase.

         On September 3, Bradshaw emailed his resignation to the Commission.

The email stated, “After careful consideration, I have decided to resign my

position here at the Eastern Iowa Airport.” The email went on to say, “My last

date of employment will be November 3, 2014. Of course I will be available

beyond that date for any transitional issues that may arise.”

1
    At the time Bradshaw’s employment ended, his salary was $161,241.
                                         4

      One of the commissioners emailed a response to Bradshaw:

              On Friday morning, the Commission will hold a special
      meeting to accept your resignation with a pay-through date [thirty]
      days thereafter which should be October 5, 2014. . . . As I
      communicated via our phone call earlier today, I believe that it
      would be in everyone’s best interests for this Friday (9/5) to be your
      last day in office. I am sure you will be available by phone or email
      after that to answer any questions, etc.

On September 5, the Commission passed a resolution accepting Bradshaw’s

resignation.   The resolution provided, among other things, “Tim Bradshaw’s

resignation as Airport Director of the Eastern Iowa Airport is hereby accepted to

be effective 30 days from the date of this Resolution.”

      After the end of Bradshaw’s service, the parties had minimal contact.

Bradshaw filed a claim for unemployment compensation benefits. At the fact-

finding hearing, Bradshaw agreed he had resigned, agreed the Commission had

accepted his resignation effective October 5, and agreed the Commission paid

his salary and benefits through October 5. Bradshaw subsequently withdrew the

claim for benefits. In February 2015, Bradshaw sent a demand letter to the

Commission, requesting twelve months’ severance pay as set forth in the

employment agreement. The Commission declined to pay severance, taking the

position Bradshaw had resigned his employment.

      Shortly after the Commission denied Bradshaw’s request for severance

pay, Bradshaw filed this suit for breach of contract. The suit was resolved on

cross-motions for summary judgment. Bradshaw’s position was he resigned his

employment effective November 3 and the airport involuntarily terminated his

employment prior to that date, on October 5. He thus concluded he was entitled

to the contractual severance payment.          The Commission’s position was
                                         5

Bradshaw voluntarily resigned his employment and the Commission accepted

the resignation.   The last date Bradshaw actually was on the payroll, the

Commission argued, did not change the nature of his separation from a voluntary

resignation to an involuntary termination. In addition, the Commission contended

Bradshaw’s claims were barred by the doctrines of estoppel and accord and

satisfaction.

       The district court granted in part and denied in part each motion. The

district court held Bradshaw voluntarily resigned his employment and was not

entitled to severance pay under the terms of the employment agreement. The

district court reasoned “the mere acceleration of the departure date does not alter

the voluntary nature of [Bradshaw’s] resignation.” The district court explained:

              To put [it] differently, the nature of the leave is defined the
       moment an employee tenders a notice of resignation, i.e., when he
       or she sets in motion the chain of events which ultimately resulted
       in the separation. In the current action, the defining moment was
       when [Bradshaw] emailed all the Commissioners about his decision
       to leave. By doing so, he set in motion a chain of events that
       ultimately resulted in his separation from the Commission.

Although the district court held Bradshaw was not entitled to severance pay

under the terms of the employment agreement, the district court also held

Bradshaw was entitled to additional compensation for the period October 5, the

date of separation, through November 3, the date identified in Bradshaw’s notice.

The parties stipulated the compensation for this period was $13,023.36, and the

district court entered judgment in favor of Bradshaw for this amount.

                                         II.

       Our review of the district court’s summary judgment ruling is for the

correction of legal error. See Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430,
                                          6

434 (Iowa 2008). Summary judgment should be granted only “if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.” Iowa R. Civ.

P. 1.981(3). The court views the summary judgment record in the light most

favorable to the party resisting the motion for summary judgment and indulges in

every legitimate inference the evidence will bear in an effort to ascertain the

existence of a genuine issue of fact. See Crippen v. City of Cedar Rapids, 618
N.W.2d 562, 565 (Iowa 2000).

       “A fact is material if it will affect the outcome of the suit, given the

applicable law.” Parish v. Jumpking, Inc., 719 N.W.2d 540, 543 (Iowa 2006). An

issue of fact is “genuine” if the evidence would allow a reasonable jury to return a

verdict for the nonmoving party. See Fees v. Mut. Fire & Auto. Ins. Co., 490
N.W.2d 55, 57 (Iowa 1992). If the summary judgment record shows that the

“resisting party has no evidence to factually support an outcome determinative

element of that party’s claim, the moving party will prevail on summary

judgment.” Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996); Iowa R. Civ. P.

1.981(3). In addition, summary judgment is correctly granted where the only

issue to be decided is what legal consequences follow from otherwise undisputed

facts. See Emmet Cty. State Bank v. Reutter, 439 N.W.2d 651, 653 (Iowa 1989).

                                         III.

       We first address the issue of whether Bradshaw is entitled to severance

pay under the terms of the employment agreement. The relevant law regarding

the interpretation and construction of contracts is well-established:
                                         7

       Interpretation is the process for determining the meaning of the
       words used by the parties in a contract. Interpretation of a contract
       is a legal issue unless the interpretation of the contract depends on
       extrinsic evidence. On the other hand, construction of a contract is
       the process a court uses to determine the legal effect of the words
       used. We always review the construction of a contract as a legal
       issue.

Pillsbury Co., 752 N.W.2d at 435–36 (citations omitted).

       In this case, the employment agreement provided Bradshaw would be

entitled to severance pay if the Commission “involuntarily terminated” his

employment. The employment agreement does not define the term. However,

the words have a commonly accepted meaning. “Involuntarily” generally means

against one’s will or a status “[n]ot resulting from a free and unrestrained choice.”

Involuntary, Black’s Law Dictionary (10th ed. 2014.); cf. Bartelt v. Emp’t Appeal

Bd., 494 N.W.2d 684, 686 (Iowa 1993) (“We understand voluntary to entail a free

choice.”). Generally, termination of employment is the “complete severance of

an employer-employee relationship.” Termination of employment, Black’s Law

Dictionary (10th ed. 2014). It means “something more than that the employee

stopped work or the employer stopped paying him.” Edwards v. Equitable Life

Assur. Soc., 177 S.W.2d 574, 577 (Ky. 1944). It requires the intention by the

employer or the employee to sever the employment relationship combined with

conduct sufficient to communicate the intent to sever the employment

relationship. See id.; see also Irving v. Emp’t Appeal Bd., 883 N.W.2d 179, 209

(Iowa 2016) (recognizing non-volitional, unexpected incarceration did not render

termination voluntary, but noting incarceration set in motion by volitional acts

could).   The language of the employment agreement thus provides the

Commission was required to pay severance only if the Commission took action to
                                          8

completely    sever   the   employment        relationship   with   Bradshaw   against

Bradshaw’s will.

       The wrinkle presented in his case is that there is no dispute Bradshaw

intended to voluntarily terminate his employment. There is also no dispute the

Commission accepted the resignation. The question presented, the question of

construction, is whether accelerating the effective date makes a voluntary

termination an involuntary termination within the meaning of the contract. There

is no controlling authority to resolve the issue.

       The authority that most directly addresses the question involves cases

relating to the payment of unemployment compensation benefits. The general

rule in unemployment compensation benefits cases appears to be that when an

employee gives notice of resignation and the employer terminates the

employment relationship prior to the end of the notice period, the employee is not

disqualified from receiving unemployment compensation benefits at least through

the end of the notice period. See, e.g., Porter v. Florida Unemployment Appeals

Comm’n, 1 So. 3d 1101, 1103–04 (Fla. Dist. Ct. App. 2009) (collecting cases).

By analogy, so the argument goes, Bradshaw should also be entitled to his

severance pay.

       The argument by analogy seems appealing, but the unemployment

compensation cases are largely immaterial to this case. First, unemployment

compensation cases have a different decision calculus than contract cases.

Unemployment compensation laws are to be liberally construed in favor of the

employee. See Bridgestone/Firestone, Inc. v. Empl’t Appeal Bd., 570 N.W.2d 85,

96 (Iowa 1997) (“The purpose of our unemployment compensation law is to
                                         9

protect from financial hardship workers who become unemployed through no

fault of their own. We are to construe the provisions of that law liberally to carry

out its humane and beneficial purpose.”).        There is no similar interpretive

framework to be applied in contract cases in favor of the employee. Instead, we

are to interpret and construe the contract in accord with the parties’ intent as

evidenced by the language used in the agreement. See Home Fed. Sav. & Loan

Ass’n v. Campney, 357 N.W.2d 613, 617 (Iowa 1984).

       Second, the question presented in unemployment cases is decidedly

different from the question presented here.      In unemployment compensation

cases, the relevant question is not the distinction between resignation and

involuntary termination per se.    Instead, the relevant question is whether the

employee is disqualified from the receipt of benefits. See, e.g., Bd. of Educ. v.

Gray, 806 S.W.2d 400, 402–03 (Ky. Ct. App. 1991) (“The system’s sole function

is to determine whether or not the affected employee meets the statutory criteria

to qualify for benefits, not to inquire or make any judgments regarding the

reasons behind an employee’s termination. Other jurisdictions have recognized

this critical distinction, and we concur with their reasoning.”); Shelton v. Oscar

Mayer Foods Corp., 481 S.E.2d 706, 708 (S.C. 1997) (stating “the narrow issue

the [Employment Security Commission] decides is simply whether the claimant is

qualified to receive employment benefits”).         The disqualification question

frequently turns on statutory or regulatory authority defining a voluntary

termination for the purposes of receipt of benefits.          For example, Iowa

Administrative Code section 871-24.25(38) explicitly provides an employee shall

not be disqualified from the receipt of unemployment compensation benefits for
                                         10

the remainder of the notice period when the employer discontinues employment

prior to the end of the notice period.

       The mere fact that many states, including Iowa, have implemented

statutes and regulations broadly extending unemployment compensation benefits

to employees has no bearing on the issue of whether an employee was

“involuntarily terminated” within the meaning of the parties’ employment

agreement. Indeed, the public policy underlying unemployment compensation is

so distinct from civil litigation that many states deny preclusive effect to

unemployment compensation proceedings. See, e.g., Powers v. Arachnid, Inc.,

617 N.E.2d 864, 868–69 (Ill. App. Ct. 1993) (“Although the parties are the same

in plaintiff’s claim for unemployment compensation and for breach of the

severance agreement, the causes of action are not identical . . . . The facts

necessary to sustain a favorable judgment for breach of the severance

agreement would be that the parties agreed to give plaintiff severance pay under

certain terms and conditions, that those conditions were met, and that defendant

failed to perform under the terms of the agreement. This evidence would not

have   sustained    nor   been    material    to   a   judgment   for unemployment

compensation.”); Gray, 806 S.W.2d at 403; Olivieri v. Y.M.F. Carpet, Inc., 897
A.2d 1003, 1014 (N.J. 2006) (holding “collateral estoppel effect is to be denied to

unemployment compensation determinations” and collecting cases); Shovelin v.

Cent. N.M. Elec. Co-op, Inc., 850 P.2d 996, 1004–05 (N.M. 1993) (holding the

doctrine of collateral estoppel would not preclude plaintiff-employee from

relitigating the nature of his separation from employer following adverse decision

regarding unemployment compensation benefits because of, among other things,
                                        11

the remedial legislative purpose underlying unemployment compensation law);

Distelzweig v. Hawkes Hosp., 518 N.E.2d 43, 46 (Ohio Ct. App. 1986) (“Although

the board properly denied plaintiff unemployment compensation because she

was discharged for ‘just cause’ within the meaning of the unemployment

compensation law, a reasonable interpretation of the employment contract raises

genuine issues of material fact as to whether the employer breached the

employment contract and was liable for corresponding damages.”); Rue v. K-

Mart Corp., 691 A.2d 498, 501 (Pa. 1997) (examining public policy underlying

unemployment compensation and civil litigation and concluding application of

estoppel was not warranted).

      In the absence of any controlling or persuasive authority, we conclude the

Commission did not involuntarily terminate Bradshaw’s employment within the

meaning of the employment agreement.              Without prompting from the

Commission, Bradshaw emailed his resignation to the Commission, stating, “I

have decided to resign my position here at the Eastern Iowa Airport.” Two days

later, the Commission formally accepted the resignation. It was Bradshaw who

intended to completely sever the employer-employee relationship and who

communicated    his   intent   to   completely   sever   the   employer-employee

relationship. The fact the parties disagreed on the last day Bradshaw would be

in the office and the last day of his employment—Bradshaw requesting

November 3, and the Commission authorizing October 5—is immaterial to the

question of who took action to sever the relationship. It seems to us who caused

the discontinuance of the employment relationship is a different question from
                                         12

when the employment relationship discontinued, at least within the meaning of

this contract.

       Our conclusion best gives effect to the parties’ intended purpose. See

Home Fed. Sav. & Loan Ass’n, 357 N.W.2d at 617 (“The purpose of contract

interpretation is to ascertain the intent of the contracting parties at the time the

contract was made.”); Haggin v. Derby, 229 N.W. 257, 260 (Iowa 1930) (“Another

well-recognized rule of construction of contracts is that it is the duty of the court

to place itself, as nearly as may be, in the situation of the parties at the time of

the making of the contract, so as to view the circumstances as the parties viewed

them. The court should consider the nature of the agreement itself, together with

all the facts and circumstances leading up to and attending its execution, the

relation and condition of the parties, the nature and situation of the subject–

matter, and the apparent purpose of making the contract.”).         The entirety of

paragraph 3 of the agreement evidences the parties’ intent to provide Bradshaw

with additional compensation in the event the Commission decided to terminate

his employment against his will (and not for any disqualifying reason) where he

could potentially find himself unemployed or underemployed. There is nothing in

the text of paragraph 3 or any other provision of the employment agreement that

evidences the severance pay provision was intended to provide Bradshaw with

bonus or additional compensation in the event he accepted other employment

and resigned his employment with the Commission.

       Our conclusion also provides reciprocal protection for each party’s interest

in achieving a fair, practical result.   We have concluded Bradshaw was not

“involuntarily terminated” when he resigned and the Commission accepted the
                                        13

resignation but with a different effective date. Consider the converse situation.

Imagine the Commission communicated to Bradshaw it intended to terminate his

employment (and not for any disqualifying reason) effective in sixty days. In

response, Bradshaw commenced a search for employment, found a new

position, and told the Commission he would not work the last thirty days of the

notice period because he was going to commence employment in his new

position. In that case, we would not conclude Bradshaw voluntarily resigned his

employment because he did not continue to work through the notice period after

the Commission already informed him it intended to terminate the employment

relationship regardless.   Instead, we would say the employer involuntarily

terminated Bradshaw’s employment even though Bradshaw voluntarily left

employment prior to the end of the notice period.

      Our conclusion also comports with common sense and practical reason.

The law “cannot be dealt with as if it contained only the axioms and corollaries of

a book of mathematics.” Oliver Wendell Holmes, Jr., The Common Law 1 (Dover

ed. 1991). “[T]he secret root from which the law draws all the juices of life” are

considerations of expediency and practicality. Id. at 35. It defies practical sense

to conclude the Commission owes severance pay to Bradshaw under the

circumstances presented. Bradshaw is asking that we “sacrifice good sense to a

syllogism.” Id. at 36. We decline to do so.

      For the foregoing reasons, we conclude the district court did not err in

granting the Commission’s motion for summary judgment and in denying

Bradshaw’s cross motion for summary judgment on the issue of whether

Bradshaw was entitled to severance pay under the terms of the employment
                                         14

agreement. The agreement provided Bradshaw would be entitled to severance

pay only where the Commission “involuntarily terminated” his employment. It is

not disputed Bradshaw intended to completely sever the employment relationship

and communicated his resignation via email.       It is also not disputed that

Commission accepted Bradshaw’s resignation.       For the purposes of contract

interpretation and construction, it is immaterial the parties disagreed on the

effective date of the resignation.   As a matter of law, Bradshaw was not

“involuntarily terminated” within the meaning of the employment agreement.

                                         IV.

      We next address the question of whether the district court erred in holding

Bradshaw was entitled to compensation for the remainder of the notice period.

We conclude the district court did err. Bradshaw resigned his employment with

the Commission. The Commission decided Bradshaw’s last date of employment

was October 5, 2014, and the Commission paid Bradshaw through that date.

There is no legal basis for concluding Bradshaw is entitled to additional

severance or compensation from the employer beyond his last date of

employment. No statute provides for it. Nothing in the employment agreement

provides for it. Bradshaw concedes in his reply brief that he is not entitled to

compensation for the additional month.

      Even if Bradshaw had not conceded the issue, to conclude to the contrary

creates an untenable result. It would allow for an employee to change his or her

status from employed-at-will to employed-for-a-definite-term by simply including

an effective date in a notice of resignation. In this case, Bradshaw gave sixty

days’ notice, and the district court held he was thus entitled to sixty days’
                                         15

compensation, without regard to whether he was employed or not. What then

stops an employee from giving six months’ or nine months’ notice? An employee

cannot guarantee himself or herself compensation from an employer for a

particular term by simply providing notice of his or her resignation to occur at

some future date. The district court erred in holding otherwise.

                                         V.

       For the foregoing reasons, we affirm in part and reverse in part the

judgment of the district court. We conclude the district court did not err in holding

Bradshaw was not entitled to severance pay under the terms of the employment

agreement.    We conclude the district court did err in holding Bradshaw was

nonetheless entitled to compensation. We remand this matter with instruction to

vacate the judgment in favor of Bradshaw and against the Commission and for

entry of judgment dismissing Bradshaw’s claim. Because we have resolved this

case on other grounds, we need not address the Commission’s arguments

regarding estoppel and accord and satisfaction.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH

DIRECTIONS ON CROSS APPEAL.

       Bower, J., concurs; Mullins, P.J., partially dissents.
                                         16

MULLINS, Presiding Judge. (concurring in part and dissenting in part)

       I concur in so much of the majority opinion that concludes as a matter of

law Bradshaw voluntarily resigned and was not terminated.

       I respectfully dissent from the part of the opinion that reverses the district

court’s order compensating Bradshaw to November 3, 2014.               The contract

provided “his notice of resignation shall be tendered to the Commission no less

than 30 days prior to his departure date.” Bradshaw complied with the terms of

the contract. The contract could have provided a strict thirty-day notice, but it did

not. The contract gave Bradshaw the right to select a voluntarily resignation date

of “no less than 30 days.” He did that. Although I would agree a reasonableness

clause could be interpreted to apply to the selection of a termination date—a date

fixed far in the future might under some circumstances be interpreted

unenforceable—that is not the case here and is not part of the majority’s

analysis. I find nothing in the contract or the case law that gave the Commission

the authority to unilaterally decide to change the voluntary resignation date.

       As a matter of contract analysis and enforcement, I would find Bradshaw

is entitled to compensation through his announced effective resignation date. I

would deny the Commission’s cross-appeal and affirm the district court.