Michael Jeffries v. United States Metal Powders, Inc. ( 2014 )


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  •                 IN THE COURT OF APPEALS OF TENNESSEE
    AT KNOXVILLE
    October 9, 2013 Session
    MICHAEL JEFFRIES, ET. AL. V. UNITED STATES METAL
    POWDERS, INC.
    Appeal from the Circuit Court for Blount County
    No. L17147 Hon. David Reed Duggan, Judge
    No. E2013-00521-COA-R3-CV-FILED-JANUARY 22, 2014
    This appeal arises from a dispute concerning an employment contract between United States
    Metal Powders, Inc. and Plaintiffs, who claimed that they were owed vacation and severance
    pay when the company ceased production and sold its assets. United States Metal Powders,
    Inc. denied that Plaintiffs were owed vacation and severance pay. Following a bench trial,
    the trial court awarded severance pay but denied the claim for vacation pay. United States
    Metal Powders, Inc. appeals. We affirm the decision of the trial court and remand for
    proceedings consistent with this opinion.
    Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
    Affirmed; Case Remanded
    J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which D. M ICHAEL S WINEY
    and T HOMAS R. F RIERSON, II, JJ., joined.
    C. Scott Taylor and W. Tyler Chastain, Knoxville, Tennessee, for the appellant, United States
    Metal Powders, Inc.
    David T. Black and Andrew S. Trundle, Maryville, Tennessee, for the appellees, Michael
    Jeffries and Shirley Marie Davis.
    OPINION
    I. BACKGROUND
    Michael Jeffries and Shirley Marie Davis (collectively “Plaintiffs”) worked for United
    States Metal Powders, Inc. (“USMP”), a New York corporation with several plants in various
    locations. Mr. Jeffries worked in the maintenance division in its Maryville, Tennessee plant,
    while Ms. Davis served as the vice president of operations for the plant. USMP ceased
    production in the Maryville plant in December 2009 because of a downturn in the economy.
    Clive Ramsey, president of USMP, informed the employees that they had been “laid off”
    until USMP was able to resume production.
    When Mr. Ramsey realized he would be unable to secure financing to resume
    production in Maryville, he received an offer from American Chemet (“Chemet”), a company
    “in a similar business that was interested in buying the assets and restarting the Maryville
    operation.” While in negotiations with Chemet, he informed the employees of the change
    by letter, dated June 11, 2010, which provided, in pertinent part,
    Due to our lack of success, we have recently pursued the sale of our copper
    based powder assets to an entity that would restart the copper manufacturing
    and provide employment for our employees currently on lay-off.
    The purchase negotiation transaction is being executed as an Asset Purchase
    Agreement (APA) and expects to close shortly. The APA permits and
    encourages the purchaser to offer employment to all employees on lay-off.
    Please expect to receive this employment offer within the next weeks.
    We realize that the lay-off period has been long but our priority has been to
    secure for each employee ongoing employment with a profitable entity. For
    any employee that is on lay-off that does not receive an offer of employment,
    the company will be providing a severance package.
    The letter conflicted with the severance policy adopted by USMP in 2001 that provided, in
    pertinent part,
    STATEMENT OF POLICY: Employees will be entitled to severance
    payments provided they have completed at least one year of employment and
    are involuntarily terminated for any reason other than misconduct. Employees
    are not entitled to severance payments if they voluntarily resign, retire or are
    on personal, family or medical leave.
    Plaintiffs were offered and accepted positions with Chemet. When USMP refused to provide
    vacation and severance pay, Plaintiffs filed suit against USMP, alleging breach of contract.1
    Following the denial of USMP’s motion to dismiss, the case proceeded to a bench trial.
    1
    The trial court consolidated Mr. Jeffries’s cause of action with Ms. Davis’s cause of action.
    -2-
    Due to illness, Mr. Ramsey was unable to appear for trial. Mr. Ramsey’s video
    deposition testimony was played for the trial court and entered into evidence. Mr. Ramsey
    testified that he had been president of USMP for approximately 30 years. He stated that from
    2008 to 2010, USMP sold portions of the company and was forced to terminate several
    employment positions. He recalled that those occupying the non-union employment
    positions generally received severance packages pursuant to USMP’s severance policy.2 The
    severance payments were calculated based upon a formula that accounted for the respective
    employee’s years of service, age, and his or her difficulty in finding alternative employment
    elsewhere.
    Relative to the Maryville plant, Mr. Ramsey stated that in 2008, the operations were
    scaled back and several employment positions were terminated in an effort to maintain
    profitability. The employees that held positions that were terminated received severance
    packages pursuant to the policy. He related that the Maryville plant ceased production
    toward the end of 2009 and that the employees were told that a decision would be made
    concerning the plant’s ability to reopen in the next three to four weeks. He claimed that at
    that time, the employees began recouping unemployment compensation but still received
    ongoing employee benefits, including insurance, from USMP. He asserted that he intended
    to reopen the Maryville plant and that he made an effort to keep the employees, including Mr.
    Jeffries and Ms. Davis, informed of the company’s progress. He related that from time to
    time, Plaintiffs returned to the plant for various reasons and were paid for their time at an
    hourly rate based upon their respective salaries.
    Mr. Ramsey identified the June 2010 letter and claimed that while he had the authority
    to modify the severance policy, the letter did not modify the policy, which anticipated
    severance pay as a result of an involuntary termination. He stated that the letter simply
    offered a severance package if employment could not be secured following the sale of the
    company. He claimed that the purchase agreement contained a clause requesting that his
    employees retain their respective positions, but he admitted that he had no control concerning
    whether his employees actually received an offer from Chemet. He related that Michael
    Lutheran, who had been employed in New Jersey by USMP, was hired by Chemet to run the
    new business. He stated that Plaintiffs also accepted positions of employment with Chemet
    in substantially similar capacities as their previous positions. He recalled that the employees
    who did not receive offers of employment from Chemet were awarded severance packages.
    Mr. Ramsey testified that Ms. Davis, as the plant manager, possessed a copy of the
    policy manual and that she inquired about the fairness of the June 2010 letter in light of the
    policy manual, specifically the section concerning severance pay. He claimed that the policy
    2
    Mr. Ramsey had previously denied the existence of any policy pertaining to severance.
    -3-
    manual was not intended to be a binding, non-modifiable contract that created vested
    contractual rights and that the manual specifically provided that it was not to be interpreted
    as a promise of specific treatment. He related that the policies could be modified at any time
    and that in any event, neither Mr. Jeffries nor Ms. Davis qualified for severance pay pursuant
    to the policy or pursuant to the June 2010 letter. He asserted that Plaintiffs were never
    terminated because they left voluntarily to accept employment offers from Chemet. He later
    asserted that they were never terminated because the company was simply reinstated under
    different ownership. He admitted that USMP did not own any portion of Chemet. Despite
    his prior testimony, Mr. Ramsey then stated that the June 2010 letter was a modification of
    the policy providing for severance pay. He denied ever having made assurances to Mr.
    Jeffries or Ms. Davis concerning severance pay if the company closed.
    Ms. Davis testified that she had worked for USMP for approximately 25 years and had
    been the vice president of operations for approximately 15 of her 25 years with USMP. She
    recalled how she started with USMP as a clerk typist and eventually became vice president
    after receiving several promotions throughout her tenure with USMP. She stated that as vice
    president, she was in charge of human resources and the general running of the company.
    She related that beginning in June 2009, the plant was working a very short schedule until
    it eventually ceased production in December 2009. She claimed that she and Mr. Jeffries
    made the plant available for potential buyers even after the plant ceased operations.
    Relative to the severance plan, Ms. Davis testified that the plan had been adopted in
    2001. She acknowledged that the plan was a portion of a larger policy manual but asserted
    that she had never been given USMP’s entire policy manual. She asserted that USMP never
    operated under a company policy, with the exception of the severance plan. She had used
    the severance plan on a number of occasions to provide payments to employees whose
    employment positions had been terminated. She claimed that she never sought alternative
    employment after the plant ceased operations because Mr. Ramsey told her numerous times
    that she would be eligible for severance pay. She calculated that she was entitled to
    $35,905.50 in severance pay and $7,109.90 in vacation pay and that Mr. Jeffries was entitled
    to $29,290.00 in severance pay and $5,048 in vacation pay. She opined that she never
    resigned, retired, or requested leave from USMP and asserted that her employment with
    USMP was terminated as a result of the sale of USMP to Chemet. She conceded that USMP
    was still in operation and acknowledged that she was never specifically told that her
    employment had been terminated. She asserted that the plant was no longer operating and
    was incapable of continuing her employment.
    Ms. Davis admitted receipt of the June 2010 letter in which Mr. Ramsey asserted that
    severance pay would be made available to those who did not receive an offer of employment
    from Chemet. She identified an email she had written to Mr. Ramsey in which she objected
    -4-
    to his letter in light of the severance policy in place. She asserted that the letter served as her
    notice of termination. She acknowledged that she had accepted employment from Chemet,
    which had changed its name to Royal Metal Powders, Inc. upon taking possession of the
    Maryville plant.
    Mr. Jeffries testified that he worked for USMP for approximately 30 years until
    December 2009, when he was advised that he had been “laid off.” He recalled that Mr.
    Ramsey advised him that he would receive severance pay and that in reliance upon Mr.
    Ramsey’s assurances, he declined a job opportunity in January 2010. He stated that he first
    learned that he would not receive severance pay from the June 2010 letter. He related that
    he received an offer of employment from Chemet toward the “end of June.” He
    acknowledged that his position with Chemet carried greater responsibilities than his position
    with USMP.
    Following the presentation of the above evidence, the trial court found that Mr.
    Ramsey was not a credible witness because of his inconsistent testimony concerning whether
    he had modified the policy, whether the June 2010 letter was intended to modify the policy,
    and whether Plaintiffs’ employment positions had been terminated by the sale. The court
    further found that the policy manual contained internal contradictions concerning the
    modification process, namely it provided that “the policies may be repealed, modified or
    amended at any time and with or without notice,” while also providing that any revisions to
    the manual would “be communicated through official written notices.” The court held that
    Plaintiffs’ employment with USMP had been involuntarily terminated, that they had a vested
    right to receive severance pay, and that they relied upon the representations made to them
    that they would receive severance pay. The court awarded Plaintiffs their respective requests
    for severance pay but denied their request for the recoupment of accrued vacation pay.
    USMP filed a timely notice of appeal before the trial court addressed the issue of pre-
    judgment interest. The trial court ultimately denied the motion for pre-judgment interest
    because the notice of appeal had already been filed, thereby depriving it of jurisdiction to
    consider the issue. This court denied the request to remand the case for consideration of the
    issue, holding that the parties could address the denial of the motion on appeal.
    -5-
    II. ISSUES
    We consolidate and restate the issues raised on appeal by USMP as follows:
    A. Whether the trial court erred in awarding severance pay to Plaintiffs when
    they accepted positions of employment with Chemet.
    Plaintiffs also raised an issue for our consideration that we restate as follows:
    B. Whether Plaintiffs are entitled to pre-judgment interest.
    III. STANDARD OF REVIEW
    We review the trial court’s findings of fact de novo on the record, presuming those
    findings to be correct unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d);
    Bogan v. Bogan, 
    60 S.W.3d 721
    , 727 (Tenn. 2001); Wright v. City of Knoxville, 
    898 S.W.2d 177
    , 181 (Tenn. 1995). When the trial court’s factual determinations are based on its
    assessment of witness credibility, we will not reevaluate that assessment absent clear and
    convincing evidence to the contrary. See Jones v. Garrett, 92 S .W.3d 835, 838 (Tenn.
    2002); Sullivan v. Sullivan, 
    107 S.W.3d 507
    , 510 (Tenn. Ct. App. 2002). We review a trial
    court’s conclusions of law de novo, with no presumption of correctness. Whaley v. Perkins,
    
    197 S.W.3d 665
    , 670 (Tenn. 2006); Taylor v. Fezell, 
    158 S.W.3d 352
    , 357 (Tenn. 2005).
    IV. DISCUSSION
    A.
    USMP claims that its severance policy, along with the policy manual in general, did
    not create vested contractual rights that entitled Plaintiffs to severance pay. USMP
    alternatively argues that even if the policy created such rights, the June 2010 letter modified
    the policy. Plaintiffs assert that they had a vested right to severance pay pursuant to the
    policy and that the June 2010 letter was not an effective modification of the policy.
    In order to prevail in a breach of contract case, Plaintiffs first had to prove that an
    enforceable contract existed between the parties. See Seramur v. Life Care Ctrs. of Am. Inc.,
    No. E2008-01364-COA-R3-CV, 
    2009 WL 890885
    , at *2 (Tenn. Ct. App. Apr. 2, 2009)
    (citing BankcorpSouth Bank, Inc. v. Hatchel, 
    223 S.W.3d 223
    , 227 (Tenn. Ct. App. 2006)).
    While “[a]n employment relationship is essentially contractual,” the “employment agreement
    may be written, oral, or a combination of the two.” Vargo v. Lincoln Brass Works, Inc., 
    115 S.W.3d 487
    , 491 (Tenn. Ct. App. 2003).
    -6-
    In some cases, employee handbooks or manuals may provide additional terms to the
    employment contract. 
    Id. “[B]efore a
    particular provision in an employee handbook or
    manual will be construed to be contractually binding, the relevant language in the manual or
    handbook, viewed in light of all the documents pertaining to the contract of employment,
    must reflect the employer’s intent to be bound by the particular provision.” 
    Id. (citing Rose
    v. Tipton Cnty. Pub. Works Dep’t, 
    953 S.W.2d 690
    , 692 (Tenn. Ct. App. 1997); Smith v.
    Morris, 
    778 S.W.2d 857
    , 858 (Tenn. Ct. App. 1988)). “[C]ourts will decline to construe an
    employee [manual] to contain enforceable contractual obligations if the [manual] states that
    it is not intended to be a contract or that the provisions . . . are subject to unilateral change
    . . . without the employee’s consent.” 
    Id. (footnotes omitted).
    Despite Plaintiffs’ and the trial
    court’s claim to the contrary, this appears to be more than a general guideline. 
    Rose, 953 S.W.2d at 693-94
    (providing that an employer may not be bound by terms in its employee
    handbook unless the handbook contains language asserting contractual intent). See, e.g.,
    Guekel v. Cumberland-Swan, Inc., No. 01A01-9410-CV-00482, 
    1995 WL 386558
    , at *3
    (Tenn. Ct. App. June 30, 1995) (upholding trial court’s summary judgment of employee’s
    claim of wrongful discharge and breach of contract when the preface to the employee
    handbook provided that employer “had no intention of being contractually bound by the
    provisions set forth in the handbook”); Gaines v. Response Graphics, Inc., No. 01-A-
    019204CV00181, 
    1992 WL 319441
    , at *2 (Tenn. Ct. App. Nov.6, 1992) (holding that
    employee handbook was not a contract when the handbook provided that it was “not a
    contract, that it should not be relied on as such, and that the provisions in it may be revised
    without notice”); Crigger v. Columbia Power & Water Sys., No. 01-A-01-9001-CV00036,
    
    1990 WL 121570
    , at *2 (Tenn. Ct. App. Aug.24, 1990) (reversing trial court’s reinstatement
    of employee based upon provisions in the employee handbook when the handbook “expressly
    stated that it did not represent a contract and could be unilaterally changed at any time by the
    defendant”), perm. app. denied (Tenn. Jan. 28, 1991).
    Here, the manual provided, in pertinent part,
    [USMP] SPECIFICALLY RESERVES THE RIGHT TO REPEAL,
    MODIFY OR AMEND THESE POLICIES AT ANY TIME, WITH OR
    WITHOUT NOTICE. NONE OF THESE PROVISIONS SHALL BE
    DEEMED TO CREATE A VESTED CONTRACTUAL RIGHT IN ANY
    EMPLOYEE NOR TO LIMIT THE POWER OF [USMP] TO REPEAL
    OR MODIFY THESE RULES. THE POLICIES ARE NOT TO BE
    INTERPRETED AS PROMISES OF SPECIFIC TREATMENT.
    Likewise, the employee acknowledgment form contained within the manual provided, in
    pertinent part,
    -7-
    Since the information, policies, and benefits described herein are necessarily
    subject to change, I acknowledge that revisions to the manual may occur. All
    such changes will be communicated through official written notices, and I
    understand that revised information may supercede, modify, or eliminate
    existing policies. The President & Chief Executive Officer has the sole
    authority to approve revisions to the policies in this manual.
    Furthermore, I acknowledge that this manual is neither a contract of
    employment nor a legal document. I understand that it is my responsibility to
    read and comply with the policies contained in this manual and revisions made
    to it.
    Having considered the language contained in the manual, we conclude that the manual did
    not contain contractually enforceable terms that may be added to the employment contract.
    Accordingly, we need not consider whether the June 2010 letter was a modification of the
    severance policy. However, this conclusion does not end our inquiry.
    On appeal, Plaintiffs alternatively claim that they were entitled to severance pay
    pursuant to the theory of promissory estoppel. They claim that Mr. Ramsey made repeated
    assurances that they would receive severance pay and that they relied upon his
    representations in maintaining their respective positions with USMP, despite being laid off
    from employment. USMP responds that Plaintiffs are precluded from raising this issue on
    appeal when they failed to raise the issue at trial.
    We agree that a party may not offer a new issue for the first time on appeal. See Lane
    v. Becker, 
    334 S.W.3d 756
    , 764 (Tenn. Ct. App. 2010) (citing Campbell Cnty. Bd. of Educ.
    v. Brownlee-Kesterson, Inc., 
    677 S.W.2d 457
    , 466-67 (Tenn. Ct. App. 1984)). A review of
    the record reflects that this issue was raised by Plaintiffs at trial and addressed by the trial
    court. See Tenn. R. Civ. P. 15.02 (providing that issues tried by implied consent are not
    affected by a failure to amend the pleadings). Indeed, both parties presented evidence
    concerning Mr. Ramsey’s representations or lack thereof to Plaintiffs and Plaintiffs’ reliance
    upon those representations. The court ultimately rejected Mr. Ramsey’s assertion that he had
    not promised severance and found that “Plaintiffs did not seek other employment, in part,
    because they relied upon the representations made to them that they would receive substantial
    severance payments.” However, the court stopped short of providing relief pursuant to a
    theory of promissory estoppel, presumably because the court held that USMP breached its
    contract with Plaintiffs. With these considerations in mind, we conclude that this issue is not
    waived.
    -8-
    “Promissory estoppel is explained as: ‘A promise which the promisor should
    reasonably expect to induce action or forbearance on the part of the promisee or a third
    person and which does induce such action or forbearance is binding if injustice can be
    avoided only by enforcement of the promise.’” Calabro v. Calabro, 
    15 S.W.3d 873
    , 878
    (Tenn. Ct. App. 1999) (quoting Amacher v. Brown-Forman Corp., 
    826 S.W.2d 480
    , 482
    (Tenn. Ct. App. 1992) (quoting Restatement (Second) of Contracts § 90)); see also Barnes
    & Robinson Co., Inc. v. OneSource Facility Servs., Inc., 
    195 S.W.3d 637
    , 645 (Tenn. Ct.
    App. 2006) (upholding denial of promissory estoppel claim because the reliance was
    unreasonable in light of the circumstances of the case). “Tennessee does not liberally apply
    the doctrine of promissory estoppel.” 
    Barnes, 195 S.W.3d at 645
    . A plaintiff may not
    recover pursuant to a theory of promissory estoppel unless
    1. the detriment suffered in reliance [was] substantial in an economic sense;
    2. the substantial loss to the promisee in acting in reliance [was] foreseeable
    by the promisor; [and]
    3. the promisee . . . acted reasonable in justifiable reliance on the promise as
    made.
    
    Calabro, 15 S.W.3d at 879
    . The doctrine of promissory estoppel is also referred to as
    “detrimental reliance” because the plaintiff must show not only that a promise was made, but
    also that the plaintiff reasonably relied on the promise to his detriment. 
    Id. (quoting Engenius
    Entm’t, Inc. v. Herenton, 
    971 S.W.2d 12
    , 19-20 (Tenn. Ct. App. 1997)). “[T]he
    promise upon which the promisee relied must be unambiguous and not unenforceably
    vague.” 
    Id. (citing Amacher,
    826 S.W.2d at 482).
    In this case, Mr. Ramsey advised Plaintiffs that they would receive severance pay.
    Plaintiffs were aware that several other employees had received severance pay following
    their termination of employment for economic reasons. By the time Mr. Ramsey issued the
    June 2010 letter, Plaintiffs had already relied upon Mr. Ramsey’s representations instead of
    seeking other employment for approximately six months. With these considerations in mind,
    we conclude that Plaintiffs reasonably relied upon Mr. Ramsey’s representations to their
    detriment. In so concluding, we affirm the decision of the trial court and its award to
    Plaintiffs of their respective severance pay. See generally In re Estate of Jones, 
    183 S.W.3d 372
    , 378 n. 4 (Tenn. Ct. App. 2005) (acknowledging that this court may affirm a judgment
    on different grounds than those relied upon by the trial court when the trial court reached the
    correct result).
    -9-
    B.
    Plaintiffs ask this court to determine whether they are entitled to an award of pre-
    judgment interest because the trial court failed to address the issue prior to the filing of the
    notice of appeal. They acknowledge that remand may be appropriate for the trial court to set
    the amount of pre-judgment interest but assert that they are entitled to pre-judgment interest
    because they were deprived of the use of their severance pay for a significant period of time.
    USMP responds that an award of pre-judgment interest would be a “significant and
    inequitable windfall” to Plaintiffs.
    The trial court’s decision to award prejudgment interest is a discretionary one.
    Franklin Capital Assocs., L.P. v. Almost Family, Inc., 
    194 S.W.3d 392
    , 405 (Tenn. Ct. App.
    2005). Having affirmed the trial court’s decision that Plaintiffs are entitled to recover
    severance pay, we are reluctant to encroach upon the trial court’s ability to consider and
    apply the law applicable to pre-judgment interest. Accordingly, the trial court is directed to
    consider the issues of entitlement and rate of interest upon remand.
    V. CONCLUSION
    The judgment of the trial court is affirmed, and the case is remanded for proceedings
    consistent with this opinion. Costs of the appeal are taxed to the appellant, United States
    Metal Powders, Inc.
    ______________________________________
    JOHN W. McCLARTY, JUDGE
    -10-