Bonastia v. Berman Bros., Inc.

• Decision Date: 21 December 1995
• Docket Number: No. 94-2671-TUBRE.,94-2671-TUBRE.
• Citation: 914 F. Supp. 1533
• Parties: Paul F. BONASTIA, Plaintiff, v. BERMAN BROS., INC., Defendant.
• Court: U.S. District Court — Western District of Tennessee

914 F. Supp. 1533

Paul F. BONASTIA, Plaintiff, v. BERMAN BROS., INC., Defendant.

No. 94-2671-TUBRE.

United States District Court, W.D. Tennessee, Western Division.

December 21, 1995.

Max Ostrow, Memphis, TN, for plaintiff.

Herbert E. Gerson, Memphis, TN, for defendant.

ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

TURNER, District Judge.

Plaintiff Paul F. Bonastia ("Bonastia") brought this action claiming defendant Berman Bros., Inc. ("Berman Bros.") breached his alleged two-year employment contract when it terminated him on June 27, 1994. Presently before the court is defendant's motion for summary judgment filed pursuant to Rule 56 of the Federal Rules of Civil Procedure.

I. FACTS

The facts relevant to this motion are largely undisputed. Berman Bros. is an Illinois corporation that maintains an office in Memphis, Tennessee. According to an October 5, 1992 letter from Jean E. Vespermann, Director of Operations for Berman Bros., plaintiff, a Tennessee resident, had previously met with Berman Bros. representatives to discuss possible employment with defendant as an account manager.

The letter provides, in relevant part:

Thank you for spending time with Dan, Abner and me in discussing your interest in joining Berman Bros. and listening to our business direction in the area of new territories and sales growth. I am pleased that you will be joining us as an Account Manager, effective Monday, October 12, 1992. I am confident that you will make an important contribution to Berman Bros.

As discussed, your annual salary will be $62,400 for the next two years. This salary is a draw against commissions and if your commission exceeds $62,400 the additional income will be paid monthly.... In addition, your job performance will be reviewed within 90 days and at a minimum once a year. ....

In addition, there are a lot of people here who will help you begin your career with Berman Bros.

The letter further states that Bonastia would be based in Memphis and would initially be responsible for the territory of Missouri, and later for the territories of Alabama, Arkansas, Louisiana, Mississippi, Oklahoma and Tennessee. Attached to the letter was a description of company benefits, including major medical benefits, long-term disability benefits, a pension plan, a profit-sharing plan, provisions for vacation and sick days, and an annual bonus to be distributed in December 1993.

On October 12, 1992, Bonastia reported to work. That day, he signed and dated a two paragraph document entitled "COMPANY'S COPY OF EMPLOYEE ACKNOWLEDGMENT AND RECEIPT." In the first paragraph, the signer of the document acknowledges having read and received the company's Employee Handbook and agrees to abide by the policies, procedures and rules it contains. The second paragraph provides:

I acknowledge that Berman Bros., Inc. Employee Handbook is not, and is not intended to be, a contract of employment. I also acknowledge that my employment is "at will" and that it will continue only as long as the Company and I mutually agree. I further acknowledge that any assurances, whether relating to continued employment or the terms and conditions of my employment, and whether written, verbal, or otherwise, shall not change my employment-at-will relationship with the Company unless specifically agreed to in writing by the President, and that nothing in this handbook or other manual, publication, practice, or policy of the Company is to be interpreted to the contrary.

On November 2, 1993, Bonastia again signed a copy of the acknowledgment form.¹

On June 27, 1994, plaintiff was terminated. On July 12, 1994, plaintiff filed suit in Tennessee state court claiming that the October 5, 1992 letter constituted a contract of employment for a term of two years that commenced on October 12, 1992 and was breached when he was terminated before the expiration of that term. In his complaint, plaintiff seeks compensatory damages for lost wages, as well as consequential and punitive damages and an award of reasonable attorneys' fees.

On August 15, 1994, defendant removed the action to this court. On March 16, 1995, defendant filed this motion, arguing that: (1) plaintiff was an at-will employee subject to termination at any time; (2) even if a valid contract is found to exist, plaintiff may not recover punitive damages in a breach of contract action; and (3) recovery of attorneys' fees is not appropriate absent express language in the contract. For the reasons discussed below, defendant's motion is granted.

II. SUBSTANTIVE LAW

A. Summary Judgment Standard

The moving party is entitled to summary judgment where there is no genuine issue of material fact and the party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). When considering a motion for summary judgment, the court's function is not to weigh the evidence or judge its truth; rather, the court must determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules ... designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 1). The substantive law governing the case will determine what issues of fact are material. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989).

A summary judgment movant "bears the burden of clearly and convincingly establishing the nonexistence of any genuine issue of material fact and the evidence as well as all inferences drawn therefrom must be read in a light most favorable to the party opposing the motion." Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir.1986). Once that burden is met, the nonmoving party must set forth specific facts showing a genuine issue of triable fact. Fed.R.Civ.P. 56(e). To meet this burden, the non-movant must do more than present some evidence that there is a disputed issue. Rather, the non-movant must present sufficient admissible evidence upon which a jury could return a verdict favorable to the non-moving party. Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2510-11. Where a disputed issue of material fact is presented by countervailing admissible evidence, the nonmovant's version of such fact is presumed correct. Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 456-58, 112 S.Ct. 2072, 2077, 119 L.Ed.2d 265 (1992).

B. Plaintiff's Claim for Breach of Contract

The resolution of this motion turns on whether Bonastia was a contract employee or an employee at-will at the time of his termination. That question raises two discrete issues: whether the October 5, 1992 letter constituted or evidenced a valid employment contract for a term of two years between Berman Bros. and Bonastia and, if so, whether either of the two acknowledgment forms vitiated that contract and created instead an employment at-will. Tennessee law governs the substantive issues raised by this motion. Erie Railroad v. Tompkins 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).

i. The October 5, 1992 Letter

Under Tennessee law, the resolution of a contract's meaning requires the separation of those issues which the court must decide from those properly left to the fact finder. If the terms of a contract are plain, simple, clear and unambiguous, then the question of the parties' intention is one for the court to decide as a matter of law. See Hamblen County v. City of Morristown, 656 S.W.2d 331, 334-36 (Tenn.1983); Shelby v. Delta Air Lines, Inc., 842 F.Supp. 999, 1007 (M.D.Tenn.1993), aff'd, 19 F.3d 1434 (6th Cir.1994). If, however, the language is ambiguous, then the fact finder must ascertain the intended meaning of the terms used. Tennessee Consol. Coal Co. v. United Mine Workers of Am., 416 F.2d 1192, 1198 (6th Cir.1969), cert. denied, 397 U.S. 964, 90 S.Ct. 999, 25 L.Ed.2d 256 (1970); Shelby, 842 F.Supp. at 1007. The language of a contract is ambiguous when its meaning is uncertain and is susceptible to more than one reasonable interpretation. Farmers-Peoples Bank v. Clemmer, 519 S.W.2d 801, 805 (Tenn.1975). Whether the contract's terms are ambiguous is for the court to determine as a matter of law. Tennessee Consol. Coal Co., 416 F.2d at 1198.

Under Tennessee law, a hiring for a general or indefinite term is presumed to create an at-will employment. Garrison v. Lannom Mfg. Co., Inc., 55 Tenn.App. 419, 402 S.W.2d 462, 467 (1966). Either party to an at-will employment relationship may terminate the employment at any time for "good cause, bad cause, or no cause." Forrester v. Stockstill, 869 S.W.2d 328, 330 (Tenn.1994). Consequently, a discharged employee may not recover in a breach of contract action against an employer unless there is a contract of employment for a definite term. Id. However, in the absence of evidence showing a contrary intention of the parties, "a hiring for so much per week, or month, or year is a hiring for that period." Delzell v. Pope, 200 Tenn. 641, 294 S.W.2d 690, 694 (1956); see also Ball v. Overton Square, Inc., 731 S.W.2d 536, 538 (Tenn.Ct.App.1987); Ward v. Berry & Assoc., Inc. 614 S.W.2d 372, 376 (Tenn.Ct. App.1981). In either event, "the intention of the parties as ascertained by the terms of the contract read in the light of the surrounding circumstances will control." McCall v. Oldenburg, 53 Tenn.App. 300, 382 S.W.2d 537, 540 (1964).

Defendant contends that the October 5, 1992 letter merely described plaintiff's compensation and does not evidence an intent to create an employment contract for a definite term. Plaintiff argues that the letter is a valid two-year employment contract.

The letter is itself not a contract, but may serve of evidence of a prior agreement between the parties. It states "I am pleased that you will be joining us" and "as...