479 S.W.3d 214
Tenn. Ct. App.2015Background
- Marion Foster was CEO of Memphis Health Center (MHC) in 2004–2005 under a written employment contract requiring 60 days advance notice of unilateral termination and six months’ salary upon termination; salary set at $80,000 (rising in July 2005).
- MHC went into receivership; a new Board suspended Foster by letter dated April 29, 2005 and invited her to the May 19, 2005 meeting; she did not appear in person and instead submitted a written plan.
- Board minutes and correspondence through June–September 2005 reflect repeated discussion, postponement, and mixed statements about Foster’s status; payroll was paid through October 2005 and MHC withheld certain checks earlier.
- Foster (later substituted by Stacy Foster-Henderson as personal representative after Foster’s death) sued in May 2007 for breach, seeking six months’ salary and benefits; the chancery court found termination ~June 2005 and awarded two months’ salary.
- On appeal, the Court of Appeals held the record preponderates that Foster did not receive the required 60‑day advance notice until at least Sept./Oct. 2005, reversed the trial court, awarded six months’ salary and partial prejudgment interest, and remanded for calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination date was ~June 2005 or later | Foster: Board never gave constitutionally/contractually required 60‑day advance notice; documentary record shows final decision not until Sept. 15, 2005 | MHC: Board effectively decided to terminate in May/June 2005; witnesses recall a May decision and believed notice was sent | Held: Date of effective termination is when employee received the 60‑day advance notice; record shows notice not given until at least Sept./Oct. 2005, so termination later than trial court found |
| Whether contract required notice be given before termination effective | Foster: Plain contract language requires 60 days’ advanced notice for unilateral termination | MHC: (alternative) notice not a precondition or notice was given | Held: Contract unambiguously requires 60 days’ advance notice; termination cannot be effective until notice provided |
| Whether trial court erred in crediting testimony that termination occurred earlier | Foster: Documentary minutes and letters contradict MHC witnesses; no persuasive proof notice mailed or delivered earlier | MHC: Board members and receivership officials testified they decided earlier | Held: Trial court made no written findings; independent review finds documentary evidence and lack of proof of notice preponderate for a later date |
| Prejudgment interest entitlement and period | Foster: Entitled to prejudgment interest to fully compensate loss of use of funds withheld for ~6+ years | MHC: Prejudgment interest inequitable given plaintiff-caused delays in prosecution | Held: Prejudgment interest equitable; awarded from complaint filing date (May 22, 2007) but exclude interval June 10, 2010–July 3, 2012 when plaintiff abandoned active prosecution |
Key Cases Cited
- Guiliano v. Cleo, Inc., 995 S.W.2d 88 (Tenn. 1999) (contract construction: look to plain language to ascertain parties' intent)
- Maggart v. Almany Realtors, Inc., 259 S.W.3d 700 (Tenn. Ct. App. 2007) (clear contract language controls)
- Bob Pearsall Motors v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578 (Tenn. 1975) (contract language construed in plain, ordinary sense)
- Dick Broad. Co. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653 (Tenn. 2013) (ambiguous provisions examined by construction rules)
- Kiser v. Wolfe, 353 S.W.3d 741 (Tenn. 2011) (ambiguities construed against drafter)
- BSG, LLC v. Check Velocity, Inc., 395 S.W.3d 90 (Tenn. 2012) (interpretation of written contracts is question of law reviewed de novo)
- West v. Shelby Cnty. Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014) (contract interpretation principles)
- Teter v. Republic Parking Sys., Inc., 181 S.W.3d 330 (Tenn. 2005) (severance provisions enforceable even if employer terminates for cause, absent gross misconduct)
- Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn. 1998) (principles for awarding prejudgment interest)
- Mitchell v. Mitchell, 876 S.W.2d 830 (Tenn. 1994) (prejudgment interest criteria)
- Otis v. Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439 (Tenn. 1992) (prejudgment interest standard)
- Scholz v. S.B. Int’l, Inc., 40 S.W.3d 78 (Tenn. Ct. App. 2000) (appellate review of prejudgment interest denial)