Biggs v. Reinsman Equestrian Products, Inc.

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

September 22, 2004 Session

JERRY BIGGS v. REINSMAN EQUESTRIAN PRODUCTS, INC.

Direct Appeal from the Chancery Court for Bradley County

No. 00-369 Hon. Jerri S. Bryant, Chancellor

No. E2004-00172-COA-R3-CV - FILED DECEMBER 22, 2004

Plaintiff sued for breach of employment contract. The Trial Court found a breach and awarded

damages. On appeal we hold the employer had just cause to terminate, and reverse Judgment.

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

HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which D. MICHAEL SWINEY ,

J., and SHARON G. LEE, J., joined.

Michael A. Anderson, Chattanooga, Tennessee, for Appellant.

Charles D. Lawson, Chattanooga, Tennessee, for Appellee.

OPINION

In this breach of contract action, the Trial Court determined that defendant breached

plaintiff’s employment contract by terminating plaintiff’s employment without cause, and entered

judgment for $45,000.00 for plaintiff.

Defendant has appealed, insisting there was just cause to terminate plaintiff’s

employment.

The evidence before this Chancellor established that Biggs owned his own custom

saddle and leather working shop in Florida for about 20 years. He is a skilled craftsman, having been

schooled in the leather working crafts in his youth by his father, and had one employee in his shop.

Biggs had known Glen Taylor, one of the owners of Reinsman Equestrian Products, for several

years. Taylor was impressed with Biggs’ quality and craftsmanship with leather. In 1998 Taylor

approached Biggs about coming to work for Reinsman and starting up and running a leather-works

factory, a new product line which was an area of expansion for the company. Biggs was not

interested initially, but continued discussions with Taylor about the idea. Biggs had no experience

in factory and production work or in managing a factory and advised the defendant owners that he

did not think he was right for the job.

However, Biggs was offered the position at an annual salary of $45,000.00, and

defendant asked him to write up an agreement for them to consider.

Biggs prepared an agreement in letter form, which states in pertinent part:

This agreement is for a term of five years, starting from three to six months from the

date of this agreement. If the employer terminates the employee before the five year

term the employer agrees to pay the employee the sum of one years salary to

compensate him for the default of the agreement. The employee also agrees to a five-

year agreement, if the employee leaves the employment of the employer before the

five year agreement is fulfilled he agrees to pay the employer the sum of one years

salary to compensate the employer for default of this agreement.

The owners reviewed and accepted the terms of Biggs’ letter of agreement, and he

relocated to Cleveland, Tennessee, and began working for Reinsman in August of 1998. The initial

duties involved designing a line of leather products to be manufactured and offered for sale, setting

up equipment and fixtures in the factory, and training and supervising of new employees. This

process took 4-6 months, and production commenced in the Spring of 1999.

The employer had no problem with the product development and design. During his

tenure Biggs designed approximately 50-75 new products for the defendant. However, the employer

concluded that his performance as manager was deficient, and reached the point where termination

of the employment relationship was justified. Taylor testified that Biggs encountered problems with

employee absenteeism and retention, meeting production goals, quality control, and training, as well

as problems with Biggs’ performance of administrative duties, numerous errors and omissions in

necessary paperwork and record keeping that cost the company time and efficiency, failure to

adequately train and supervise the employees, and not maintaining the production equipment

properly. Taylor further testified that Biggs performance showed no improvement despite frequent,

and in depth counseling from his superiors for these deficiencies, all of which resulted in his failure

to attain standards sought by defendant. On September 26, 2000, the company terminated Biggs’

employment.

After hearing the evidence, the Chancellor entered judgment for the plaintiff and held

that in the circumstance of an employment contract with a definite term the employee may be

discharged before the end of the term for cause which she defined as:

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something inconsistent with the relationship of master/servant or incompatible with

the due and faithful performance of his duties. Some cases have held dishonesty,

unfaithfulness to the employer’s interest, or anything which indicates an unfitness for

service for which the employee was engaged. It must injure the master’s business or

reputation, although proof of actual damages is not necessary.

Here there’s no showing that the employee was dishonest or unfaithful or did

anything proactively adverse to the employer’s interest, so that the Court is entering

judgment in favor of the plaintiff.

Since this case was tried without a jury, we review the case de novo upon the record,

with a presumption of the correctness of the findings of fact by the Trial Court, unless the evidence

preponderates against the findings. However, we review questions of law de novo with no

presumption of correctness. Tenn. R. App. P., 13(d).

“Whether good cause exists to terminate an employment contract is a determination

made on a case-by-case basis, and exists where the discharge is ‘objectively reasonable.’” Video

Catalog Channel, Inc., v. Blackwelder, 1997 WL 581120 (Tenn. Ct. App.). When cause is required

for discharging an employee, the employer has the burden of proving the existence of good cause.

Phillips v. Morrill Electric, Inc., 1999 WL 771511 (Tenn. Ct. App.)

The failure to faithfully perform express or implied duties gives the employer the right

to terminate the employment contract for cause, prior to the expiration of its terms without incurring

liability. Jackson v. The Texas Company, 10 Tenn. App. 235 (Tenn. Ct. App. 1929).

Inattention to duty is sufficient cause for discharge, since it is incumbent upon the

employee to reasonably perform to advance and develop the employer’s business. Wyatt v. Brown,

42 S.W. 478, 481 (Tenn. Chan. App. 1897) . In general, any act which tends to injure the employer’s

business, interests, or reputation will justify termination of an employment agreement, and actual

loss need not be proven. Curtis v. Reeves, 736 S.W.2d 108, 112 (Tenn. Ct. App. 1987). As a general

rule, acts which are sufficient to be good cause for dismissal of a manager are quantitatively and

qualitatively distinct from those required to terminate an employee possessing less responsibility and

discretion. See Thomas v. Bourdette, et ux, 608 P.2d 178 (Oregon App. 1980).

The Trial Court’s reasoning in the instant case carries an implication that because

there was no intent or malice or malfeasance on plaintiff’s part, that the employer failed to show just

cause for terminating the employment. The standard does not require an element of intent to show

just cause. Sub-performance that compromises the employer’s interest or impedes the company’s

progress will justify the termination for cause. See Booth v. Fred’s Inc., 2003 WL 21998410; Wyatt

v. Brown, 42 S.W. 478 (Tenn. Chan. App. 1897).

In Lawrence v. Rawlings, 2001 WL 76266 this Court was faced with interpreting “for

cause” termination in the context of the statute providing for the grievance procedure for employees

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of Tennessee educational institutions. The statute itself did not define the term, so this Court looked

to opinions construing the term in the private employment context, observing that “[t]he types of

‘cause’ that warrant an employee’s termination include an employee’s inattention to his or her duty

to look after the employer’s best interests or performance of an action inconsistent with the

employer-employee relationship.” Id. at *5. Plaintiff points out that Lawrence deals with a statute

governing state employment situations and therefore should not be applicable to the instant case, but

there is nothing in the opinion that would distinguish the principles therein from application to the

facts of this case. The Court in Lawrence rejected the defendant’s argument attempting to limit the

scope of “for cause” termination to acts of serious misconduct, intentional wrongdoing, and other

intolerable behaviors, concluding that the concept is much broader:

We have concluded that an employee has been terminated for cause if the

employee’s termination stems from a job-related ground. A job-related ground

includes any act that is inconsistent with the continued existence of the employer-

employee relationship. Thus, an employee has been terminated for cause if the

termination stems from the employee’s failure to follow a supervisor’s directions,

poor job performance, or failure in the execution of assigned duties.

Id. at *5.

In this case, the evidence establishes that plaintiff’s job performance was deficient

across several areas, and a consistent pattern of errors and poor management did not advance the

company’s interest. Moreover, the evidence established that plaintiff was unable to improve even

though he received frequent, detailed counseling from senior management.

In this regard, plaintiff sincerely argues that defendant did not hire him for his

management skills or expertise, and since there was “not a concern” regarding the leather working

Biggs was hired to perform, and did in fact perform, defendant was precluded as a matter of law

from establishing that Briggs was terminated for cause. Plaintiff’s testimony undercuts this premise.

Plaintiff acknowledged that he knew that his job responsibilities included overseeing the lines that

he had created, and that his duties would include supervising production after the product was

developed. He admitted that he knew that he would have the additional responsibility of training

employees to do the work promptly and avoid employee turnover, and that his duties included

ordering raw materials, maintaining the equipment, and preparing work orders and assisting with

other work.

With hindsight, it is obvious that plaintiff is skilled as a craftsman, but not as a

production line manager. The law pertaining to discharge for cause does not provide for a mismatch

of employee skills to the requirements of the job as a defense to termination for unsatisfactory

performance. Contrary to the Trial Court’s conclusion, plaintiff’s inability to perform the duties

required by his position, was conduct adverse to the employer’s interest, regardless of his intention

or reason for the deficiency.

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We conclude the Trial Court erred in finding that defendant terminated plaintiff

without just cause, because the Trial Court applied the wrong standard.

The Judgment of the Trial Court is reversed and the cause remanded. The cost of the

appeal is assessed to Jerry Biggs.

______________________________

HERSCHEL PICKENS FRANKS, P.J.

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