Allmand v. Pavletic, No. M2008-00459-SC-R23-CQ.

CourtSupreme Court of Tennessee
Writing for the CourtGary R. Wade, J.
Citation292 S.W.3d 618
PartiesMike ALLMAND v. Jon PAVLETIC, ind. and as Mayor of the City of Ripley, Tennessee et al.
Decision Date26 August 2009
Docket NumberNo. M2008-00459-SC-R23-CQ.
292 S.W.3d 618
Mike ALLMAND
v.
Jon PAVLETIC, ind. and as Mayor of the City of Ripley, Tennessee et al.
No. M2008-00459-SC-R23-CQ.
Supreme Court of Tennessee, at Jackson.
November 5, 2008 Session.
August 26, 2009.

[292 S.W.3d 620]

Tim Edwards and James F. Horner, Jr., Memphis, Tennessee, for the plaintiff, Mike Allmand.

Edward J. McKenney, Jr., Memphis, Tennessee, for the defendants, Jon Pavletic, Billy Chipman, Billie Anne Hendren, Jimmy Harrison, John Gaines, Robert T. Hightower, Ripley Gas, Water and Wastewater Department, and the City of Ripley; and Henry Clay Shelton, III, Memphis, Tennessee, for the defendant, Ripley Power and Light Company.

OPINION

GARY R. WADE, J., delivered the opinion of the court, in which JANICE M. HOLDER, C.J., CORNELIA A. CLARK, and SHARON G. LEE, JJ., joined. WILLIAM C. KOCH, JR., J. filed a separate dissenting opinion.


The United States District Court for the Western District of Tennessee has submitted a certified question of law pursuant to our Rule 23 as to the validity of certain provisions within two separate employment contracts: "Whether a municipal utility board has the authority to enter into a contract with an appointed city official who serves at the will and pleasure of the Board of Mayor and Aldermen whereby the utility board contracts to continue to pay the official's salary for a multi-year time period [8 and 14 years] after the official's employment is terminated." Because it is within our discretion to do so, we have elected to answer the question in a manner designed to fit the facts and circumstances in this particular case. Our conclusion is that neither Ripley Power and Light nor Ripley Gas, Water, and Wastewater, utility boards for the City of Ripley, Tennessee, had the authority to enter into multi-year contracts with Mike Allmand, the former superintendent of the two utilities, or to obligate the City for the payment of salary and benefits as provided by the terms.

292 S.W.3d 621

In August of 2006, the Plaintiff, Mike Allmand ("Allmand"), filed a complaint in the United States District Court for the Western District of Tennessee seeking damages against the City of Ripley, Tennessee, its Mayor and Board of Aldermen, individually and in their official capacities, Ripley Power and Light Company, and the Ripley Gas, Water and Wastewater Department (collectively, the "Defendants"),1 for the breach of two separate employment contracts. During the course of the litigation, the District Court entered an order certifying a question of law to this Court pursuant to Rule 23 of the Tennessee Supreme Court Rules.2 Our recitation of the facts and procedural history is taken from the order entered by the District Court.

Background
City of Ripley's Charter

The City of Ripley, Tennessee, became an incorporated municipality pursuant to a Charter that was authorized by the Tennessee General Assembly in 1901 Private Acts, Ch. No. 223. The Charter provides for a Board of Mayor and Aldermen, consisting of seven members, one of whom serves as the Mayor. Pursuant to Section 5 of the Charter, the Mayor and other members of the Board of Mayor and Aldermen have terms of four years. Section 7 of the Charter includes the following language:

Be it further enacted, that the City shall be organized into departments of general government, police, fire, gas and water, electricity, parks and recreation, and public works. However, the Board of Mayor and Aldermen may abolish any of those departments, may create new departments, and may combine, or consolidate or merge any present or future departments. The Board of Mayor and Aldermen shall appoint the heads of the departments, and those heads of departments shall serve at the will and pleasure of the Board.

(Emphasis added). Further, Section 17 of the Charter provides as follows:

T]he Board of Mayor and Aldermen may make all proper and necessary contracts for corporate purposes and uses, which shall be made in the name of the corporation, and signed by the Mayor and Recorder, and no person shall have power to create any liability against the corporation except by express authority of the Board, conferred at a meeting duly and regularly convened.

(Emphasis added).

Electric Department

On December 6, 1957, the Board of Mayor and Aldermen, acting pursuant to authority granted by the Municipal Electric Plant Law of 1935, Tenn.Code Ann. § 7-52-101, et seq. (2005 & Supp. 2008) created a Board of Public Utilities ("Electric Department") as follows:

[B]e it resolved by the Board of Aldermen of the City of Ripley that a Board

[292 S.W.3d 622

of Public Utilities be, and it is hereby, constituted and established for the purpose of taking and having supervision and control of the improvement, operation, and maintenance of the City of Ripley's Electric Department, which said Board shall be the Supervisory Body of the said Department and shall have all the powers and duties which are, or shall be, conferred upon such Board of Supervisory Body by the laws of Tennessee, including, but not limited to, the provisions of said Municipal Electric Plant Act....

(Emphasis added).

The resolution, which went into effect on January 1, 1958, provided that the Board governing the Electric Department would consist of three members, one of whom was a member of the City's Board of Mayor and Aldermen, with each serving a term of four years. Tenn.Code Ann. § 7-52-107. Pursuant to Tennessee Code Annotated section 7-52-114(b), the 1957 resolution further authorized the Electric Department's Board to select and remove a Superintendent: "The Superintendent shall serve at the pleasure of the Board and may be removed for cause by said Board at any time." See also Tenn.Code Ann. § 7-52-114(b) ("The superintendent shall serve at the pleasure of the supervisory body and may be removed by such body at any time.").

Gas, Water and Sewer Department

On July 3, 1962, the Board of Mayor and Aldermen adopted a resolution establishing a Board of Public Utilities ("Gas Department") to supervise and control natural gas, water, and sewer facilities:

B]e it resolved by the Board of Mayor and Aldermen of Ripley that a Board of Public Utilities be, and it is hereby constituted and established for the purpose of taking and having supervision and control of the improvement, operation and maintenance of the City of Ripley's gas, water and sewer plants, which said Board shall be the Supervisory Body of the said plants and shall have all the powers and duties which are, or shall be, conferred upon such Board of Supervisory Body by the laws of Tennessee....

(Emphasis added). The 1962 resolution created a Gas Department Board consisting of five members, one of whom is to be a member of the City's Board of Mayor and Aldermen. Like the Electric Department Board, the Board of the Gas Department was delegated the authority to select and remove a superintendent: "The Superintendent shall serve at the pleasure of the Board and may be removed for cause by said Board at any time, provided that such action is approved by [the] Board of Mayor and Aldermen." While the state statute applicable to the Electric Department directs that the superintendent "serve at the pleasure of" the board, there is no similar statutory provision applicable to gas, sewer, or water utilities. See Tenn. Code Ann. § 7-35-101, et seq. (2005 & Supp. 2008).

The Contracts

Beginning in the 1980s, Mike Allmand worked as the superintendent for both the City's Electric and its Gas Departments. In 1985, 1991, and 1996, Allmand, desirous of both job security and freedom from "political influence," sought and obtained five-year employment contracts. Each of the contracts contained, among other things, provisions whereby Allmand would continue to receive his full salary if terminated, regardless of the basis of the termination.3

[292 S.W.3d 623

On October 31, 2003, the Gas Department entered into a new employment agreement with Allmand, naming him "President and CEO" for an eight-year term and including the following additional language:

1. The [Gas Department] shall continue to employ Employee as President and CEO, and Employee hereby accepts and agrees to such continued employment. ...

....

3. The initial term of this Agreement shall be for a period beginning on the date it is signed by the parties and ending on October 31, 2011. This Agreement shall automatically renew for successive five-year terms, provided that neither party submits written notice of termination six (6) months prior to the termination date....

....

12. In the event that the Employer terminates Employee's employment for any reason during the term of this Agreement, or any successive term, Employee shall be entitled to receive Employee's annual salary, compensation, and all benefits for the remaining term of the Agreement or a period of five years from the date of the Employee's termination, whichever is greater, provided however, that if the Employer can prove beyond a reasonable doubt that Employee voluntarily abandoned his job or engaged in intentional conduct that operated to the specific detriment of the Employer's welfare, that the Employer may terminate this Agreement without obligation to provide the above-noted severance payments. In the event of a termination prior to the expiration of the Agreement, payments under this provision shall be paid pursuant to the Employer's normal bi-weekly schedule. For purposes of this provision, the annual salary, compensation, bonuses and benefits shall equal the Employee's salary, compensation, bonuses and benefits existing at the time of his termination but in no case to be less than the salary, compensation, bonuses and benefits Employee received during the year prior to his termination. The term benefits shall include, but not be limited to, medical insurance, life insurance, pension and supplemental pension plans, social security, and disability insurance. Employee shall be paid any and all accumulated...

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  • Dick Broad. Co. v. OAK Ridge FM, Inc., No. E2010–01685–SC–R11–CV.
    • United States
    • Supreme Court of Tennessee
    • January 17, 2013
    ...interpretation de novo. Perkins v. Metro. Gov't of Nashville & Davidson Cnty., 380 S.W.3d 73, 80 (Tenn.2012) (citing Allmand v. Pavletic, 292 S.W.3d 618, 624–25 (Tenn.2009)). We are guided by well-settled principles and general rules of construction. “A cardinal rule of contractual interpre......
  • Individual Healthcare Specialists, Inc. v. Bluecross Blueshield of Tenn., Inc., No. M2015-02524-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • January 18, 2019
    ...S.W.3d 653, 659 (Tenn. 2013) (" Dick Broadcasting "); Clark v. Sputniks, LLC , 368 S.W.3d 431, 441 (Tenn. 2012) ; Allmand v. Pavletic , 292 S.W.3d 618, 630 (Tenn. 2009) ; Allstate Ins. Co. v. Watson , 195 S.W.3d 609, 611 (Tenn. 2006) ; Frizzell Constr. Co. v. Gatlinburg, L.L.C. , 9 S.W.3d 7......
  • Batten v. Cmty. Tr. & Banking Co., No. E2017-00279-COA-R3-CV
    • United States
    • Court of Appeals of Tennessee
    • August 26, 2019
    ..."A cardinal rule of contractual interpretation is to ascertain and give effect to the intent of the parties." Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn. 2009). The parties' intent is determined by considering the "plain meaning of the words" used in the contract. Id. If the words used ......
  • Seals v. H & F, Inc., No. M2009-00330-SC-R23-CQ.
    • United States
    • Supreme Court of Tennessee
    • January 15, 2010
    ...§ 1. Nevertheless, in the interests of comity, this Court frequently accepts certified questions of law. See, e.g., Allmand v. Pavletic, 292 S.W.3d 618 (Tenn.2009); Lincoln Gen. Ins. Co. v. Detroit Diesel Corp., 293 S.W.3d 487 (Tenn.2009); In re Hogue, 286 S.W.3d 890 (Tenn.2009); Shorts v. ......
  • Request a trial to view additional results
80 cases
  • Dick Broad. Co. v. OAK Ridge FM, Inc., No. E2010–01685–SC–R11–CV.
    • United States
    • Supreme Court of Tennessee
    • January 17, 2013
    ...interpretation de novo. Perkins v. Metro. Gov't of Nashville & Davidson Cnty., 380 S.W.3d 73, 80 (Tenn.2012) (citing Allmand v. Pavletic, 292 S.W.3d 618, 624–25 (Tenn.2009)). We are guided by well-settled principles and general rules of construction. “A cardinal rule of contractual interpre......
  • Individual Healthcare Specialists, Inc. v. Bluecross Blueshield of Tenn., Inc., No. M2015-02524-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • January 18, 2019
    ...S.W.3d 653, 659 (Tenn. 2013) (" Dick Broadcasting "); Clark v. Sputniks, LLC , 368 S.W.3d 431, 441 (Tenn. 2012) ; Allmand v. Pavletic , 292 S.W.3d 618, 630 (Tenn. 2009) ; Allstate Ins. Co. v. Watson , 195 S.W.3d 609, 611 (Tenn. 2006) ; Frizzell Constr. Co. v. Gatlinburg, L.L.C. , 9 S.W.3d 7......
  • Batten v. Cmty. Tr. & Banking Co., No. E2017-00279-COA-R3-CV
    • United States
    • Court of Appeals of Tennessee
    • August 26, 2019
    ..."A cardinal rule of contractual interpretation is to ascertain and give effect to the intent of the parties." Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn. 2009). The parties' intent is determined by considering the "plain meaning of the words" used in the contract. Id. If the words used ......
  • Seals v. H & F, Inc., No. M2009-00330-SC-R23-CQ.
    • United States
    • Supreme Court of Tennessee
    • January 15, 2010
    ...§ 1. Nevertheless, in the interests of comity, this Court frequently accepts certified questions of law. See, e.g., Allmand v. Pavletic, 292 S.W.3d 618 (Tenn.2009); Lincoln Gen. Ins. Co. v. Detroit Diesel Corp., 293 S.W.3d 487 (Tenn.2009); In re Hogue, 286 S.W.3d 890 (Tenn.2009); Shorts v. ......
  • Request a trial to view additional results

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