Steven Sudbury v. Sumner County Regional Airport Authority ( 2020 )

06/24/2020
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 6, 2020 Session
STEVEN SUDBURY v. SUMNER COUNTY REGIONAL AIRPORT
AUTHORITY
Appeal from the Chancery Court for Sumner County
No. 2015-CV-4 Kathryn Wall Olita, Judge
___________________________________
No. M2019-01322-COA-R3-CV
___________________________________
The plaintiff filed this action against his employer for breach of contract by failing to
provide the plaintiff with severance pay after the employer terminated the contract
without cause. The trial court granted summary judgment to the plaintiff, determining
that it was undisputed that the plaintiff was terminated without cause, which entitled him
to severance pay pursuant to the employment contract. On appeal, the defendant argues
that a genuine issue of material fact exists and that the trial court erred in granting the
plaintiff’s motion for summary judgment by failing to conduct an objective inquiry as to
whether cause was present to terminate the plaintiff’s employment. We affirm the
judgment of the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which RICHARD
H. DINKINS and W. NEAL MCBRAYER, JJ., joined.
Gregory Hall Oakley, Nashville, Tennessee, for the appellant, Sumner County Regional
Airport.
Jonathan L. Bobbitt and Emily Stone Emmons, Franklin, Tennessee, for the appellee,
Steven Sudbury.
OPINION
Steven Sudbury (“Mr. Sudbury”) entered into a written employment agreement
(the “Employment Agreement”) with the Sumner County Regional Airport Authority
(“the Airport Authority”) on February 25, 2013. The Employment Agreement was for a
term of five years, and Mr. Sudbury was to be paid $3,750.00 per month plus benefits,
with the option of annual increases at the discretion of the Airport Authority Board of
Directors.
Pursuant to the Employment Agreement, Mr. Sudbury’s employment could be
terminated by either Mr. Sudbury or the Board. In pertinent part, Paragraph 7 provided
that if the Airport Authority terminated the Employment Agreement without cause, Mr.
Sudbury would be entitled to severance pay for the remainder of the term, but no less
than twelve (12) months of compensation. The severance pay was to be paid monthly at
Mr. Sudbury’s rate of base salary pay at the time his contract was terminated without
cause.
The Employment Agreement was executed by Chairman of the Board David
Hunter, and the attorney for the Airport Authority, Arthur E. McClellan, on February 25,
2013, following approval from the Board of Directors. Four months later, in June 2013, a
new Board of Directors began operating the Airport Authority with James Egan serving
as Chairman of the Board.
At the Board’s meeting on October 28, 2013 (the “October Meeting”), Board
Member Diana Denson made a motion for the Board to declare its intent for Mr. Sudbury
to be an “independent contractor” rather than an “employee,” as he was characterized in
the Employment Agreement. The Board then voted to “rule [Mr. Sudbury’s] current
contract invalid,” but it also voted “that Mr. Sudbury continue to work at current pay
level and current duties until further notice.” The Board did not cite or discuss cause for
invalidating the contract aside from its desire that Mr. Sudbury be an independent
contractor rather than an employee.
At its meeting on November 25, 2013 (the “November Meeting”), the Board
articulated its belief that the Employment Agreement was void and voted to terminate
Mr. Sudbury as administrator with 90-days severance pay.
On January 9, 2015, Mr. Sudbury filed a complaint against the Airport Authority
in Sumner County Chancery Court. Mr. Sudbury alleged that the Airport Authority
materially breached the Employment Agreement by paying him 90-days severance pay
(approximately $11,250) instead of 51-months of severance pay (approximately
$180,000) as required by Paragraph 7 of the Employment Agreement. The Airport
Authority filed an answer, asserting that Mr. Sudbury was not entitled to severance pay
because the Employment Agreement was terminated for cause.
On November 7, 2019, and after discovery, Mr. Sudbury filed a motion for
summary judgment contending he was entitled to judgment as a matter of law because the
Airport Authority failed to produce evidence that it terminated the Employment
Agreement for cause.
-2-
The trial court granted Mr. Sudbury’s motion for summary judgment, determining
that no genuine issue of material fact existed. More specifically, the court held that it was
undisputed that the Airport Authority terminated the Employment Agreement without
cause, and therefore, Mr. Sudbury was entitled to severance pay for the remainder of the
contract term. The trial court entered a final judgment in favor of Mr. Sudbury on June
27, 2019.
This appeal followed.
ISSUE
The sole issue raised by the Airport Authority is whether the trial court erred in
granting summary judgment in favor of Mr. Sudbury. Mr. Sudbury phrased the issue as
follows:
Was the Trial Court correct in granting summary judgment to Plaintiff on
his breach of contract claim where it was undisputed that Plaintiff’s
employment contract was terminated for a reason that did not fall within the
“with cause” provision of the contract and Defendant failed to comply with
its obligations set-forth in the “without cause” provision of the contract?
STANDARD OF REVIEW
This court reviews a trial court’s decision on a motion for summary judgment de
novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,
MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015). Accordingly, this court must make a fresh
determination of whether the requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.
In so doing, we consider the evidence in the light most favorable to the nonmoving party
and draw all reasonable inferences in that party’s favor. Godfrey v. Ruiz, 90 S.W.3d 692,
695 (Tenn. 2002).
Summary judgment should be granted when “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.” Tenn. R. Civ. P. 56.04. When a motion for summary
judgment is made and supported as provided in Tenn. R. Civ. P. 56, the nonmoving party
may not rest on the allegations or denials in its pleadings. Rye, 477 S.W.3d at 265.
Instead, the nonmoving party must respond with specific facts showing there is a genuine
issue for trial. Id. A fact is material “if it must be decided in order to resolve the
substantive claim or defense at which the motion is directed.” Byrd v. Hall, 847 S.W.2d
208, 215 (Tenn. 1993). A “genuine issue” exists if “a reasonable jury could legitimately
resolve that fact in favor of one side or the other.” Id.
-3-
To satisfy the requirements of Rule 56 when the moving party bears the burden of
proof, as is the case here, “that party must produce at the summary judgment stage
evidence that, if uncontroverted at trial, would entitle it to a directed verdict.” TWB
Architects, Inc. v. Braxton, LLC, 578 S.W.3d 879, 888 (Tenn. 2019) (citing Celotex Corp.
v. Catrett, 477 U.S. 317, 331 (1986) (Brennan, J., dissenting)).
ANALYSIS
In a breach of contract action, the elements of the plaintiff’s burden of proof
include “the existence of a valid and enforceable contract, a deficiency in the
performance amounting to a breach, and damages caused by the breach.” Fed. Ins. Co. v.
Winters, 354 S.W.3d 287, 291 (Tenn. 2011). When interpreting a contract, “the words
expressing the parties’ intentions should be given their usual, natural and ordinary
meaning.” Forrest Const. Co., LLC v. Laughlin, 337 S.W.3d 211 (Tenn. Ct. App. 2009)
(citing Taylor v. White Stores, Inc., 707 S.W.2d 514 (Tenn. Ct. App. 1985)).
There is no dispute that the Airport Authority and Mr. Sudbury entered into a valid
contract on February 25, 2013; nevertheless, the Airport Authority contends that the
Employment Agreement was no longer valid when the Board voted to terminate Mr.
Sudbury’s employment at the November Meeting. Alternatively, if the Agreement was
still valid, the Airport Authority asserts that it fulfilled its obligations under the
Agreement because the Board had cause for terminating Mr. Sudbury.1
Conversely, Mr. Sudbury maintains that the Airport Authority failed to produce
evidence that it terminated him for any reason other than a desire for him to “be an
independent contractor,” as recorded in the minutes of its October Meeting.
The Airport Authority contends it did not breach the Employment Agreement in
November when it voted to terminate Mr. Sudbury’s employment because the month
before, at the October Meeting, the Board “ruled the current contract invalid.” Because
the Agreement was invalid, void as of the November Meeting, the Airport Authority
contends it was absolved of its duties when it terminated Mr. Sudbury’s employment at
the November Meeting. We respectfully disagree with this novel argument for several
reasons.
The Employment Agreement reads in pertinent part:
1
The relevant provision of the Employment Agreement reads as follows:
8. TERMINATION BY THE BOARD WITH CAUSE. The Board, as its option, may terminate
this agreement with cause at any time, without advance notice if the Employee has been convicted
of a crime involving a breach of professional ethics or moral turpitude or a felony of any type, or
the Employee is engaged in conduct which constitutes a material breach of this Agreement. The
Board will determine if severance pay or other benefits are entitled, following such action.
-4-
Board may terminate this Agreement without cause. . . . In the event the
Board terminates this Agreement without cause, the Employee shall be
compensated for the remainder of the contract term, but no less than twelve
(12) months of compensation.
(Emphasis added).
The undisputed fact is that the Board did indeed terminate “this Agreement” at the
October Meeting by ruling that it was “invalid.” The October minutes also clearly state
that the reason for invalidating the Agreement was because the Board wanted Mr.
Sudbury to be an independent contractor instead of an employee. Further, the minutes
clearly establish that Mr. Sudbury was not terminated for cause because the minutes
affirmatively state that Mr. Sudbury would continue to serve as its administrator at the
same pay and benefits as before, which directly conflicts with and completely negates the
Board’s contention that Mr. Sudbury’s employment was terminated for cause.
Nevertheless, the Board asks us to ignore its minutes and official actions and
explanations for its official actions so it can tell an entirely different story. But it is not at
liberty to do so. As a public governing body, the Airport Authority’s Board of Directors
is bound by the Open Meetings Act, Tenn. Code Ann. § 8-44-101 to -111. “The policy
behind the [Act] is stated clearly and simply in Tenn. Code. Ann. § 8-44-101: ‘The
general assembly hereby declares it to be the policy of this state that the formation of
public policy and decisions is public business and shall not be conducted in secret.’”
Zseltvay v. Metro. Gov’t of Nashville & Davidson Cty., 986 S.W.2d 581, 583 (Tenn. Ct.
App. 1998) (quoting Tenn. Code Ann. § 8-44-101(a)). The Act requires that all votes of
the governing body be by public vote, public ballot, or public roll call, and prohibits
governing bodies from conducting secret votes. Tenn. Code Ann. § 8-44-104. Further, the
Act requires that the minutes of a meeting of a governing body to be promptly and fully
recorded, and open to the public. Id. The Open Meetings Act defines “governing body”
as a “public body which consists of two (2) or more members, with the authority to make
decisions for or recommendations to a public body on policy or administration.” Tenn.
Code Ann. § 8-44-102(b)(1)(A).
Thus, as the governing body of the Airport Authority, the Board was required to
conduct business in public and to keep official records of the business it conducts. As we
explained in Zseltvay, “strict compliance with the Act is a necessity if it is to be
effective.” 986 S.W.2d at 585. Accordingly, the Board was required to reflect all
decisions within its published minutes as evidence of its official decisions. Thus, the
minutes from the Board’s meetings serve as the official record for the Board’s decision to
terminate the Employment Agreement.
The relevant portion of the October Meeting minutes is quoted as follows:
-5-
Motion by Mr. Downs that we establish a special meeting date to discuss
this matter. Second by Mr. Berwind. Motion withdrawn.
Motion by Dr. Taylor that we revisit the contract to bring it into compliance
with the wishes of the [Airport Authority]. No second made.
Motion by Mrs. Denson that we discuss whether to have an employee or
independent contractor as manager. Second by Mr. McConnell- Motion
withdrawn.
Discussion of the contract included comments by Attys. Mark Smith and
Josh Sudbury.
Motion by Mrs. Denson that we desire that our airport manager to be
an independent contractor.
Second by Mr. Downs. Motion amended by Mr. Drayton that this
motion rules the current contract invalid. Amendment seconded by Dr.
Taylor. Vote on amendment- motion passed. Motion as amended- Passed
New Business:
Motion by Mr. Williams, second by Mr. Downs that Mr. Sudbury continue
to work at current pay level and current duties until further notice. Motion
passed.
(Emphasis added).
The only discussion of Mr. Sudbury’s employment stems from Mrs. Denson’s
motion to discuss whether to have an employee or independent contractor serve as the
Airport manager. Following Mrs. Denson’s motion, the Board addressed the Employment
Agreement. The Board then voted and passed a motion by Mrs. Denson, as amended by
Mr. Drayton, that the Board desired the Airport manager to be an independent contractor
and voided the Agreement.
Furthermore, Mr. Egan, the Chairman of the Board, testified by deposition that the
reason for voiding the Employment Agreement at the October Meeting was the Board’s
desire for the Airport manager to be an independent contractor. Mr. Egan testified as
follows:
Q. And the reason the only reason that that contract was unilaterally
terminated at that time was because the authority desired that Mr.
Sudbury be an independent contractor and not an employee, correct?
-6-
A. At that time, yes.
Q. Right. So[,] when you say “at that time,” that’s the only time,
correct, that the contract was terminated.
A. Yes.
Q. I just want to make sure there’s not another time that I—
A. That’s the only time we took a vote on the contract that affected the
contract. Yeah.
Q. And in that meeting, nobody brought up anything about Mr.
Sudbury’s work performance, correct?
A. That’s correct.
Q. They didn’t bring up anything about him being incompetent,
correct?
A. Correct.
Q. Nobody said anything about him being lazy in that meeting, did
they?
A. No.
Q. In fact, he was allowed to keep working, wasn’t he?
A. Yes.
Q. He was allowed to keep doing the same duties he had been doing,
right?
A. Yes.
The testimony by Mr. Egan supports the fact that the Board did not terminate the
Employment Agreement for conduct that constituted “a material breach of [the]
Agreement.”
The Open Meetings Act requires the Board’s decisions to be reflected in the
minutes of the October Meeting. See Tenn. Code Ann. § 8-44-104. Therefore, even if the
Board did discuss other reasons for terminating Mr. Sudbury’s employment, the only
competent evidence for its official decision to terminate “this Agreement” is the singular
reason cited in the October Meeting minutes. See id. The minutes from the October
Meeting state that the Agreement was terminated solely because the Board wanted Mr.
-7-
Sudbury to be an “independent contractor.” Therefore, no rational trier of fact could
conclude that the Board terminated the Employment Agreement for cause as required by
Paragraph 8 of the Agreement.
The Airport Authority proffers another argument to show that the trial court erred
in granting summary judgment in favor of Mr. Sudbury. The contention is that the trial
court failed to perform “an objective inquiry” as to whether cause existed to terminate
Mr. Sudbury. The Airport Authority contends that deposition testimony provided
objective evidence of just cause to terminate Mr. Sudbury. We disagree because the
Board deliberations and decisions must be in public, and those decisions must be set forth
in its official minutes. To consider proffered evidence that is in direct conflict with the
Board’s actions and the reasons given for those actions, as reflected in its official
minutes, would completely undermine the letter and the spirit of the Open Meetings Act.
Thus, we find no merit to the objective evidence argument.
For the foregoing reasons, we affirm the judgment of the trial court.
IN CONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against Sumner County Regional Airport Authority.
________________________________
FRANK G. CLEMENT JR., P.J., M.S.
-8-