Mankin Media Systems, Inc. v. Timothy Corder

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

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No. M2021-00830-COA-R3-CV

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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 Appellate 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.

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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)

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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).

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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

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