Konvalinka v. Fuller

• Decision Date: 31 May 2019
• Docket Number: No. E2017-00493-COA-R3-CV,E2017-00493-COA-R3-CV
• Parties: JOHN PATRICK KONVALINKA, JR. v. CRAIG FULLER ET AL.
• Court: Tennessee Court of Appeals

JOHN PATRICK KONVALINKA, JR. v. CRAIG FULLER ET AL.

No. E2017-00493-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT KNOXVILLE

February 21, 2018 Session

May 31, 2019

Appeal from the Circuit Court for Hamilton County

No. 12C211

Robert E. Lee Davies, Senior Judge

In this retaliatory discharge action, the plaintiff filed suit against his former employer under both the common law and the Tennessee Public Protection Act. See Tenn. Code Ann. § 50-1-304 (2014). The plaintiff claimed that he was terminated for voicing his concerns about, or refusing to participate in, illegal activities. The former employer moved for summary judgment arguing, in part, that the plaintiff could not identify a specific illegal activity or a violation of a clearly established public policy. The trial court granted the summary judgment motion and dismissed the plaintiff's claims. Discerning no reversible error, we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which D. MICHAEL SWINEY, C.J., and THOMAS R. FRIERSON II, J., joined.

Joshua H. Jenne, Cleveland, Tennessee, for the appellant, John Patrick Konvalinka, Jr.

Rosemarie L. Hill and Justin L. Furrow, Chattanooga, Tennessee, for the appellees, Craig Fuller, TransCard, LLC, Ryan Rogers, and Max Fuller.

OPINION

I.

Many of the underlying facts are undisputed.¹ On January 5, 2009, John Patrick Konvalinka, Jr. began working at TransCard, LLC as the director of corporate sales. TransCard provided prepaid debit card services to clients, including corporations, banks, and government entities. During Mr. Konvalinka's employment, Max and Craig Fuller owned and managed TransCard. Craig Fuller served as chief executive officer of the company.

Max Fuller also had a partial ownership interest in a separate company, U.S. Xpress, Inc. In 2010, he asked Ryan Rogers, vice president of treasury and finance for U.S. Xpress, to become the chief strategy officer for TransCard. Mr. Rogers was never employed by TransCard; he remained at all times an employee of U.S. Xpress. Max Fuller tasked Mr. Rogers with improving TransCard's operations, efficiencies, quality control, and financial performance. Mr. Rogers's responsibilities included things such as "reviewing the accounting, finance [and] cash flow of the business" and ensuring that projects for TransCard clients were "set up properly and completed properly and clean, with as few errors as possible."

Shortly after beginning his new job responsibilities, Mr. Rogers met with Mr. Konvalinka to discuss TransCard's operations. At the time, Mr. Konvalinka worked primarily in sales. According to Mr. Konvalinka, Mr. Rogers invited him to disclose any problems he perceived in the company's operations. Mr. Rogers assured him that he could speak freely because there would be no repercussions from his disclosures. During this meeting, Mr. Konvalinka reported a number of activities or procedures that he believed were illegal, noncompliant, or simply inefficient. Mr. Rogers thanked him for his "candid and informative" input and promised to address his concerns.

Mr. Rogers recommended that Mr. Konvalinka move from sales to a business analyst position. The business analyst position focused on improving various aspects of TransCard's operations. Mr. Konvalinka reported to Mr. Rogers and "essentially [did] whatever [Mr. Rogers] instructed [him] to do." According to Mr. Konvalinka, he also continued to handle his previous card management duties and to assist with sales.

As a business analyst, Mr. Konvalinka repeatedly voiced his concerns about the company's operations to Mr. Rogers, other members of management, and his co-workers.Mr. Konvalinka agreed that the company took steps to correct some of the deficiencies he identified. His main concerns, as later outlined in his complaint, were

1. TransCard action and inaction running afoul of the US Patriot Act;

2. Violations of and/or non-compliance with the Payment Card Industry Security Standards Regulations;

3. Non-compliance with or violation of SAS 70 Type II card industry auditing standards;

4. TransCard action and/or inaction in violation of contracts with sponsors, partners, clients, and network associations;

5. TransCard actions and inactions constituting non-compliance with or violation of cardholder agreements;

6. Insurance fraud related to misrepresentations made by Craig Fuller;

7. False deposit, account balance and financial verification provided to sponsoring banks;

8. Affirmative instruction given to TransCard employees by TransCard executives in attempt to misrepresent, conceal or fabricate specifics regarding TransCard financials, operations and industry compliance, the purpose and design of which was to avoid or alleviate concerns of clients, auditors, and/or company owners;

9. Providing incorrect financial figures to prospective investors and clients;

10.Improper use of MasterCard symbols; [and]

11.Coercion and/or intimidation of TransCard staff and employees to perform tasks which they considered unethical, illegal, inappropriate and/or improper.

Mr. Konvalinka also discussed his concerns with an outside attorney. Following his attorney's suggestion, on January 20, 2011, Mr. Konvalinka memorialized his concerns in a written memorandum that he gave to Mr. Rogers. In large part, his memorandum reflected the same eleven concerns.

In July 2011, Mr. Rogers recommended to Craig Fuller that Mr. Konvalinka's employment be terminated. According to Mr. Rogers and Craig Fuller, the decision to terminate Mr. Konvalinka's employment was based on his inadequate job performance. They claimed Mr. Konvalinka was difficult to manage and did not work well with other employees or customers. On July 20, 2011, Craig Fuller informed Mr. Konvalinka that his employment was terminated.

In the Circuit Court for Hamilton County, Tennessee, Mr. Konvalinka filed a complaint and an amended complaint against TransCard, Ryan Rogers, Craig Fuller, and Max Fuller alleging multiple causes of action.² Mr. Konvalinka alleged that his employment was terminated "because of [his] refusal to participate in or remain silent about illegal practices and policies being exercised . . . by TransCard." Relevant to this appeal, the complaint sought damages from TransCard for common law retaliatory discharge and violation of the Tennessee Public Protection Act ("TPPA"). See Tenn. Code Ann. § 50-1-304 (2014).

TransCard, along with the other defendants, moved for summary judgment on multiple grounds relying on deposition testimony and Mr. Konvalinka's discovery responses. TransCard argued that Mr. Konvalinka could not establish a prima facie case of retaliatory discharge under the common law or the TPPA and that Mr. Konvalinka could not demonstrate that TransCard's proffered reason for his termination was a pretext. In opposition, Mr. Konvalinka submitted an affidavit from a former co-worker and additional deposition testimony.

The trial court dismissed the plaintiff's claims, concluding that TransCard was entitled to judgment as a matter of law for three reasons. First, the court found that Mr. Konvalinka failed to identify an illegal activity within the meaning of the TPPA or a clear violation of a well-defined and established public policy as required for a common law retaliatory discharge claim. Second, he did not report the alleged wrongdoing to an outside person or entity. Third, the record contained no evidence that Mr. Konvalinka feared dismissal or was threatened with dismissal for reporting illegal activities.

II.

Although his appeal primarily concerns the grant of summary judgment, Mr. Kovalinka also raises as an issue the trial court's denial of a motion to compel discovery. During discovery, he requested production of numerous documents, including: copies of all "SAS 70 reports" and "compliance documents" for the previous five years; copies of all contracts with sponsoring banks; network associations, and cardholders for the same time period; copies of all contracts between TransCard and 67 listed companies for a three year period; internal email communications from 2008 to thepresent; and copies of customer verifications during Mr. Konvalinka's employment. TransCard objected to these requests, and others, as irrelevant and unduly burdensome.

Mr. Konvalinka then filed a motion to compel. In a temporary order, the trial court denied the motion, in part, ruling that the documents described above were irrelevant. But the court expressly stated that "[u]pon request by either party, the Court will revisit the issues making the basis of this Temporary Order following the completion of additional discovery, including depositions."

The temporary order was filed on January 7, 2014. TransCard moved for summary judgment on December 30, 2016, over two years later. During this time, Mr. Konvalinka never asked the trial court to revisit the temporary order. We conclude that he has waived his right to pursue this issue on appeal. See Tenn. R. App. P. 36(a) ("Nothing in this rule shall be construed as requiring relief be granted to a party responsible for an error or who failed to take whatever action was reasonably available to prevent or nullify the harmful effect of an error."). Parties are not entitled to relief on appeal if they "failed to take whatever steps were reasonably available to cure an error." Id. 36(a) cmt. Perhaps as importantly, Mr. Konvalinka, in response to the motion for summary judgment, did not request a delay so that further discovery could be conducted. See Tenn. R. Civ. P. 56.07.

III.

Summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Tenn. R. Civ. P. 56.04. The party moving for summary judgment has "the burden of persuading the...