Denney v. Lovett, No. M2004-03020-COA-R3-CV (Tenn. App. 7/11/2006)
| Decision Date | 11 July 2006 |
| Docket Number | No. M2004-03020-COA-R3-CV.,M2004-03020-COA-R3-CV. |
| Parties | GREG DENNEY v. TOM LOVETT, et al. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Sumner County; No. 2002C-75; Tom E. Gray, Judge.
Judgment of the Chancery Court Affirmed in Part and Reversed in Part.
Louis W. Oliver, III, Hendersonville, Tennessee, for the appellant, Tom Lovett.
Dennis W. Powers, Gallatin, Tennessee, for the appellee, Greg Denney.
Frank G. Clement, Jr., J., delivered the opinion of the court, in which William B. Cain and Patricia J. Cottrell, JJ., joined.
This is an employment dispute wherein the trial court found the employer wrongfully terminated the employee six months into a two-year term of employment. The trial court awarded the employee his contractual damages, which included lost wages, insurance benefits, utilities and pre-judgment interest for the balance of the term. The employer appeals contending he is not liable for damages because the employee voluntarily quit following an argument between them. The pivotal issue in this employment dispute is whether the employer fired the employee or whether the employee quit. The employer also presents two evidentiary issues, one regarding the admission of evidence as to the employee's damages. We affirm the trial court's finding that the employer wrongfully terminated the employment contract and that the employee is entitled to recover his contractual damages for the balance of the term of employment; however, we find the award of damages must be reduced because the trial court erred by admitting evidence of the employee's net earnings which the employee was obligated to disclose but failed to disclose in discovery.
Tom Lovett, a multi-faceted businessman, owns an insurance claims company and a horse farm located in Sumner County, Tennessee, known as Kenlawn Farms. In April of 2001, Lovett was in need of an experienced horse trainer to train cutting horses at Kenlawn Farms.1 Greg Denney, a horse trainer by trade, was working in Texas in April of 2001 when he entered into discussion with Lovett about training horses for Lovett at Kenlawn Farms. Following negotiations, the parties entered into a two-year employment contract on April 12, 2001,2 pursuant to which Denney was to move to Sumner County to provide all services and other responsibilities of a trainer of a cutting horse operation, including maintenance of the barn where the horses were housed. The written employment contract provided for two years of employment, beginning May 2001, with a base salary of $2,500 per month, housing, utilities, medical and dental insurance, and relocation expenses.3
Denney moved to Kenlawn Farms and began working for Lovett as agreed. The parties started off on good terms but things changed rather quickly as their relationship deteriorated. According to trial testimony, Lovett engaged in several "heated discussions" with Denney and another employee, Keith McGhee, concerning their job performance. The incident giving rise to this dispute occurred on November 21, 2002, the Wednesday before Thanksgiving. Lovett, who was at the farm that day for other business, noticed a broken pipe, a flat tire on a piece of farm equipment, and a horse-chewed fencepost. Lovett immediately met with Denney and McGhee in the barn to discuss the deficiencies. In his trial testimony, Lovett explained that he told Denney and McGhee, "If this is the best they can do then Greg (Denney) could go back to Texas and Keith (McGhee) could go back to Nashville." McGhee testified explaining that he interpreted Lovett's statement as conditional in nature. Denney, however, disagreed claiming Lovett's statement was not conditional, but rather the unconditional termination of Denney's employment.
Both Denney and McGhee finished out the work day of November 21. Then, two days later, on Friday, November 23, Denney prepared a handwritten termination notice and took it to Lovett requesting that Lovett sign it to confirm the termination of Denney's employment. The one-sentence termination notice read:
Termination Notice
Greg Denney is terminated of employment by Tom Lovett as of 23 November 2001.
/s/ Tom Lovett
Lovett signed the notice and Denney left to seek other employment. Four days later, Denney secured new employment in Kentucky at "J Bar E Ranch," for which he was to receive a salary of $ 2,500 per month. Denney's new employment, however, did not provide for utilities or insurance as covered under his previous employment contract with Lovett.
Subsequently, Denney filed suit against Lovett for breach of the employment contract.4 Lovett answered and counter-claimed against Denney, contending Denney breached the contract by quitting with eighteen months remaining on the contract. Following discovery, a bench trial was held. The trial court dismissed Lovett's counter-claim and ruled in favor of Denney, finding that Lovett wrongfully terminated Denney's employment, and Denney was entitled to damages for the balance of the term of the contract. The trial court awarded Denney damages of $39,088.32 for lost wages, $5,729.00 for health insurance payments, $1,700.00 for utilities, and $4,807.74 in prejudgment interest, for a total judgment of $51,325.06.
Lovett presents three issues on appeal. One, he contends the trial court erred by granting Denney's motion in limine to exclude Lovett from explaining the circumstances surrounding the signing of the termination notice. Two, Lovett contends the trial court erred by finding Lovett wrongfully terminated Denney's employment. Three, he claims the trial court erred by allowing Denney to present financial evidence that Denney failed to disclose in discovery.
The standard of review of a trial court's findings of fact is de novo and we presume that the findings of fact are correct unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001). For the evidence to preponderate against a trial court's finding of fact, it must support another finding of fact with greater convincing effect. Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000); The Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999). Where the trial court does not make findings of fact, there is no presumption of correctness and we "must conduct our own independent review of the record to determine where the preponderance of the evidence lies." Brooks v. Brooks, 992 S.W.2d 403, 405 (Tenn. 1999). We also give great weight to a trial court's determinations of credibility of witnesses. Estate of Walton v. Young, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). Issues of law are reviewed de novo with no presumption of correctness. Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn. 1999).
Lovett contends the trial court erred by finding that Lovett terminated Denny's employment. He also contends the trial court erred by excluding evidence regarding the circumstances in existence at the time Lovett signed the Termination Notice. To preserve the excluded evidence, Lovett made an offer of proof, which is included in the record on appeal. Having considered both issues, we find the trial court erred by excluding the evidence; however, the error was harmless because the evidence, including the offer of proof, does not preponderate against the trial court's finding that Lovett unilaterally terminated Denny's employment in breach of the contract.
Lovett contends the trial court erred by excluding evidence regarding the circumstances in existence at the time he signed the Termination Notice. Denny contends the evidence was properly excluded, arguing, inter alia, the termination notice constituted a contract and the evidence in Lovett's offer of proof violates the parol evidence rule. We find Lovett has the better argument on this issue.
Denney filed a pre-trial Motion in Limine to exclude the evidence. The trial court granted the motion, ruling that any attempt by Lovett to contradict the plain and unambiguous terms of the written Termination Notice violated the parol evidence rule.
The parol evidence rule generally precludes the use of extrinsic evidence to vary or contradict the terms of an unambiguous and integrated contract — a writing the parties have adopted as the expression of their final agreement. Stamp v. Honest Abe Log Homes, Inc., 804 S.W.2d 455, 457 (Tenn.Ct. App. 1990); 29A AM. JUR. 2D Evidence § 1092 (2005). It is a rule of substantive law intended to protect the integrity of written contracts. Maddox v. Webb Constr. Co., 562 S.W.2d 198, 201 (Tenn.1978). Since courts should not look beyond a written contract when its terms are clear, Newark Ins. Co. v. Seyfert, 392 S.W.2d 336, 348 (Tenn. 1964), the parol evidence rule provides that contracting parties cannot use extraneous evidence to alter, vary, or qualify the plain meaning of an unambiguous written contract. Jones v. Brooks, 696 S.W.2d 885, 886 (Tenn.1985); Clayton v. Haury, 452 S.W.2d 865, 867 (Tenn. 1970). Before the parol evidence rule may be applied to preclude extrinsic evidence that will vary or contradict the stipulations of a writing alleged to be a contract between the parties, the writing must be shown to be the parties' contract. 29A AM. JUR. 2D Evidence § 1101 (2005).
Although the search for the parties' intentions begins with the written agreement, Elliott v. Elliott, 149 S.W.3d 77, 84 (Tenn. Ct. App. 2004), that search is not always limited to the writing. The parol evidence rule does not necessarily preclude our consideration of the circumstances in existence at the time...
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