Court Opinion

ID: 6497721
Source: CourtListenerOpinion
Date Created: 2022-07-05 15:10:44.809893+00
Date Added: 2024-06-11T08:51:23.841399
License: Public Domain

06/30/2022
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                                  May 4, 2022 Session

         MANKIN MEDIA SYSTEMS, INC. v. TIMOTHY CORDER

              Appeal from the Chancery Court for Williamson County
                  No. 19CV-48300W Joseph A. Woodruff, Judge
                     ___________________________________

                           No. M2021-00830-COA-R3-CV
                       ___________________________________

Appellant appeals the trial court’s order affirming the award of an arbitrator. Appellant
filed suit against its former employee, the Appellee, alleging breach of contract for
violation of certain provisions of the employee handbook, which also contained an
arbitration clause. Because the handbook does not constitute an enforceable employment
contract, the trial court erred in ordering the parties to arbitrate and in affirming the
arbitrator’s award. Reversed and remanded.

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

KENNY ARMSTRONG, J., delivered the opinion of the court, in which FRANK G. CLEMENT,
JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

J. Cole Dowsley, Jr. and Sarah M. Ferraro, Nashville, Tennessee, for the appellant, Mankin
Media Systems, Inc.

James W. Cobb, Abigail M. Mabry, and Taylor M. Davidson, Hendersonville, Tennessee,
for the appellee, Timothy Corder.

                                       OPINION

                                     I. Background

       Appellant Mankin Media, Inc. (“Mankin”) is an audio, video, and lighting systems
integration company based in Franklin, Tennessee. It sells, designs, installs, and supports
technology systems primarily for churches and house-of-worship clients across the
country. In July 2014, Mankin hired Appellee Timothy Corder as a salesperson, a position
that gave Mr. Corder access to Mankin’s proprietary information, systems, and customer
information. On October 6, 2017, Mr. Corder executed an acknowledgment of receipt of
an Employee Handbook, which contained the following relevant provision:

      2.2 Dispute Arbitration

      In return for Company’s promise to do the same, your continued
      employment, and other benefits conferred through the employment
      relationship, you the employee (hereinafter “you,” “your”) promise to submit
      to binding arbitration all claims, disputes, or controversies with Mankin and
      its officers, directors, and employees, arising out of or relating to your
      employment relationship with Mankin, including disputes related to your
      wages and benefits, your termination, intellectual property rights,
      confidentiality, and any breach of this agreement, to be decided by an
      independent, mutually agreed upon arbitrator and any Mankin arbitration
      policy or agreement.

      In November 2018, Mr. Corder entered employment discussions with One
Diversified, LLC (“Diversified”). At that time, Diversified had no church or house-of-
worship division and wished to hire Mr. Corder to start and head such division. Mr. Corder
began working for Diversified in December 2018.

       Before leaving Mankin, Mr. Corder allegedly downloaded Mankin’s database of
client contacts. Mr. Corder also allegedly took other Mankin files with him, including
photos of Mankin’s projects. He also allegedly contacted three of Mankin’s clients to tell
them about his new position with Diversified and invited those clients to a trade show in
Las Vegas in early 2019 on behalf of Diversified. Several of those clients eventually
followed Mr. Corder to Diversified, ending their relationships with Mankin.

       On April 24, 2019, Mankin filed suit against Mr. Corder, alleging breach of contract
based on Mr. Corder’s alleged violation of certain provisions of the Handbook; (2) breach
of fiduciary duty; (3) intentional interference with business relationships; and (4)
conversion. On June 4, 2019, Mr. Corder filed a Tennessee Rule of Civil Procedure
12.02(3) motion to dismiss for improper venue on the ground that the Handbook contained
an arbitration provision. By order of August 16, 2019, the trial court denied Mr. Corder’s
motion to dismiss, stayed the proceedings, and ordered the parties to arbitrate.

        On or about November 19, 2019, Mr. Corder filed an answer and counter-complaint.
In his answer, Mr. Corder denied that the Handbook constituted a binding contract between
the parties. Rather, he asserted that his employment with Mankin was at-will pursuant to
the terms of an oral agreement. As such, in his counter-complaint, Mr. Corder alleged that
Mankin had breached the parties’ oral contract by withholding commissions that Mr.
Corder earned prior to his departure from Mankin.
                                            -2-
       The parties proceeded to arbitration pursuant to the trial court’s order. On April 16,
2021, the arbitrator entered a final award, wherein it found that the Handbook did not
constitute a binding contract; as such, the arbitrator dismissed Mankin’s lawsuit.
Concerning Mr. Corder’s counter-complaint, the arbitrator awarded him $23,032.15 in
damages and $3,058.19 in interest. On or about May 14, 2021, Mankin filed a motion to
vacate the arbitration award, wherein it argued that the arbitrator exceeded his authority by
finding that the Handbook was not a binding contract but then proceeding to hear the case
under the arbitration clause contained therein. On May 24, 2021, Mr. Corder moved for
entry of an order affirming the arbitrator’s award. On June 14, 2021, the trial court heard
the competing motions. By order of June 28, 2021, the trial court affirmed the arbitrator’s
award in favor of Mr. Corder. Mankin appeals.

                                          II. Issues

       Mankin raises the following issues as stated in its brief:

       1. Whether the trial court erred in ordering the parties to arbitration by finding
       the dispute resolution clause in the employee handbook to be an enforceable
       agreement to arbitrate.
       2. Whether the trial court erred in refusing to alter or amend the court’s
       August 19, 2019 order after the arbitrator concluded that the document
       containing the purported arbitration provision was not a valid, enforceable
       contract.
       3. Whether the trial court erred in confirming the arbitration award when the
       arbitrator exceeded his powers by issuing a final award despite concluding
       that the document containing the purported arbitration provision was not a
       valid, enforceable agreement.
       4. Whether the trial court lacked subject matter jurisdiction to confirm the
       arbitration award when there was no valid agreement to arbitrate between the
       parties.

                                        III. Analysis

        The threshold question in this appeal is whether the Handbook constitutes a valid
and enforceable contract between the parties. If so, the trial court’s decision to send the
matter to arbitration, under section 2.2. of the Handbook, is not reversible error. However,
if the Handbook does not constitute an enforceable contract, then there was no basis for
arbitration, and the trial court erred in ordering arbitration in lieu of a trial on the merits.
“The determination of whether a contract has been formed is a question of law.” German
v. Ford, 300 S.W.3d 692, 701 (Tenn. Ct. App. 2009) (citing Murray v. Tenn. Farmers
Assurance Co., No. M2008-00115-COA-R3-CV, 2008 WL 3452410, at *2 (Tenn. Ct.
App. Aug. 12, 2008)). “Questions of law are reviewed de novo with no presumption of
correctness.” Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000)
                                              -3-
      The Tennessee Supreme Court has recently explained:

      [A]n employee handbook can become a part of an employment contract.
      [Rose v. Tipton County Pub. Works Dep’t, 953 S.W.2d 690, 692 (Tenn. Ct.
      App. 1997)]; see also Reed v. Alamo Rent-A-Car, Inc., 4 S.W.3d 677, 688
      (Tenn. Ct. App. 1999). However,

             [i]n order to constitute a contract, . . . the handbook must
             contain specific language showing the employer’s intent to be
             bound by the handbook’s provisions. Unless an employee
             handbook contains such guarantees or binding commitments,
             the handbook will not constitute an employment contract. As
             stated by one court, in order for an employee handbook to be
             considered part of an employment contract, the language used
             must be phrased in binding terms, interpreted in the context of
             the entire handbook, and read in conjunction with any other
             relevant material, such as an employment application.

      Rose, 953 S.W.2d at 692 (internal quotation marks omitted) (citations
      omitted). Thus, there is “a high standard for establishing the existence of an
      employer’s specific intent to be bound by the terms of an employee
      handbook.” Brown v. City of Niota, 214 F.3d 718, 721 (6th Cir. 2000)
      (interpreting Tennessee law).

Keller v. Casteel, 602 S.W.3d 351, 360 (Tenn. 2020). This Court has explained the process
for making a determination of whether an employee handbook constitutes and employment
contract as follows:

      Whether an employee handbook or manual contains contractually
      enforceable terms depends upon the specific language used in the handbook
      or manual. Rose[,] 953 S.W.2d at 692. The interpretive rules used to
      determine what the language means are the same as the rules used to construe
      contracts. Accordingly, the courts will focus on the four corners of the
      manual or handbook and the other related employment documents and will
      construe these documents as written. They will also give the terms in the
      documents their natural and ordinary meaning, Williams v. Maremont Corp.,
      776 S.W.2d 78, 80 (Tenn.Ct.App.1988), and will construe these terms in the
      context of the entire agreement.

Vargo v. Lincoln Brass Works, Inc., 115 S.W.3d 487, 491-92 (Tenn. Ct. App. 2003)
(footnotes omitted).

                                          -4-
        Turning to the language used in the Handbook, in the “Foreward” section, it
provides: “It’s also a good reminder that the Employee Handbook is not an employment
contract, and nothing in this Employee Handbook gives an employee any right, express or
implied, to continue employment” (emphasis added). The “Foreword” further states that,
“[A]ll terms, conditions, policies, and procedures as stated in this document are subject to
change, and nothing stated herein is guaranteed to remain a fixed term or condition of your
employment.” Likewise, at section 1.5, the Handbook again states, “Nothing in this
employee Handbook creates a binding employment contract between Company and its
employees or provides a guaranty of continued employment for any amount of time”
(emphasis added). Rather, as the Handbook goes on to state, “At will employment status
may only be altered through an express, signed, written agreement between Company and
employee to that specific intended purpose.” No such agreement exists in this case. This
Court has explained:

       [T]he courts will decline to construe an employee handbook or manual to
       contain enforceable contractual obligations if the handbook or manual states
       that it is not intended to be a contract or that the provisions in the manual are
       subject to unilateral change by the employer without the employee’s consent.

Vargo, 115 S.W.3d at 491 (footnotes omitted). As set out above, the Handbook clearly
states that it is not intended to be a contract, and further states that the provisions therein
are subject to unilateral change without the employee’s consent. Therefore, under the
foregoing authority, we conclude that the Handbook does not constitute a valid,
enforceable contract between the parties.

       Although the trial court ultimately concluded that the Handbook was not a valid
employment contract, it nonetheless enforced the arbitration provision of the Handbook.
This was error. In the absence of a valid contract requiring arbitration, there was no basis
for the trial court to order the parties to arbitrate. Rather, the lawsuit was subject to
adjudication by the trial court and should not have been decided by arbitration.

                                       IV. Conclusion

       For the foregoing reasons, we reverse the trial court’s order affirming the arbitrator’s
award. The case is remanded for such further proceedings as may be necessary and are
consistent with this opinion. Costs of the appeal are assessed one-half to Appellant,
Mankin Media Systems, Inc., and one-half to Appellee, Timothy Corder, for all of which
execution may issue if necessary.

                                                   s/ Kenny Armstrong
                                                   KENNY ARMSTRONG, JUDGE

                                             -5-