Morris v. Esmark Apparel, Inc.

• Decision Date: 31 December 1991
• Citation: 832 S.W.2d 563
• Parties: W. Don MORRIS, Plaintiff/Appellant, v. ESMARK APPAREL, INC., Defendant/Appellee.
• Court: Tennessee Court of Appeals

Page 563

832 S.W.2d 563

W. Don MORRIS, Plaintiff/Appellant, v. ESMARK APPAREL, INC., Defendant/Appellee.

Court of Appeals of Tennessee Western Section at Jackson.

Dec. 31, 1991.

Application for Permission to Appeal

Denied by Supreme Court

April 27, 1992.

Tim Edwards, Memphis, for plaintiff/appellant.

Larry E. Parrish, Memphis, for the defendant/appellee.

TOMLIN, Presiding Judge (Western Section).

This case presents the question of whether an administrative adjudication of disqualification for unemployment compensation benefits may be used to preclude litigation of an issue in a subsequent civil suit for breach of employment contract hinging upon the same fact question, by the application of the doctrine of collateral estoppel. W. Don Morris ("Plaintiff") filed suit in the Chancery Court of Shelby County against Esmark Apparel, Inc. ("Defendant") for breach of contract, along with other claims. Plaintiff sought damages, alleging he was fired without cause and was denied severance pay, among other things. Defendant filed a motion to dismiss for failure to state a claim, which was converted into a motion for summary judgment. Defendant contended that a ruling by the Tennessee Department of Employment Security ("TDES") Board of Review following the filing of a claim for unemployment compensation by plaintiff was conclusive as to the principal issue presented by this litigation. Following a hearing the chancellor granted summary judgment in favor of defendant, applying the doctrine of collateral estoppel. The single issue presented by this appeal is whether the trial court erred in holding that plaintiff's claim for damages was barred by collateral estoppel. We hold there was no error and affirm.

Plaintiff, an upper level managerial employee of defendant for some 30 years, was discharged by defendant on October 24, 1989. At the time of his discharge he served as Director of Management Information Systems for defendant and some of its subsidiary companies, engaged in the manufacture, sale and distribution of hosiery and similar products. On October 31, 1989, plaintiff filed a claim for unemployment compensation with the Memphis office of the TDES. The claim was approved. Defendant, the employer, was notified of this approval. Within the allotted time defendant appealed the decision of the Commissioner to the TDES Appeals Tribunal, which is presided over by an Appeals Referee. The referee conducted an evidentiary hearing pursuant to statute on February 6, 1990. At this hearing both plaintiff and representatives of defendant testified. Plaintiff appeared pro se. One week later, the Appeals Tribunal acting through the appeals referee, vacated and set aside the decision of the Commissioner, disallowing plaintiff's claim pursuant to T.C.A. § 50-7-303(a)(2) and finding that plaintiff was discharged for misconduct connected with his work.

Plaintiff appealed this decision to the Board of Review on February 20, 1990. The following day, plaintiff filed the present breach of contract action in the Chancery Court.

On April 4, 1990 the three person Board of Review issued its decision. After considering the entire record in this matter the Board made Findings of Fact and Conclusions of Law, which we will discuss in more detail presently. The Board of Review affirmed the decision of the Appeals Tribunal which, as noted, rejected plaintiff's claim pursuant to T.C.A. § 50-7-303(a)(2).

Plaintiff filed a timely written request with the Board of Review seeking a reconsideration of their decision. The Board of Review treated plaintiff's petition as a petition to rehear and subsequently denied it on May 9, 1990. Plaintiff did not thereafter pursue his right to judicial review by filing a petition for certiorari in the appropriate Chancery Court, choosing instead to pursue his claim for any redress in this present litigation.

Following the evidentiary hearing conducted by the Appeals Tribunal by and through the Appeals Referee, the following findings of fact were made by the Tribunal:

FINDINGS OF FACT: The claimant's most recent employment prior to filing this claim was for Pennaco Hosiery, Memphis, Tennessee, from August 24, 1959, until October 24, 1989, when he was discharged. At the time of his separation from work, the claimant was employed in the position of director of management information systems, and as such was a highly placed managerial employee. In order to market it's product competitively, the employer developed a system of computerized inventory control and reordering for retailers whom it supplied with products. The claimant was closely involved in the development of this system and was very knowledgeable about it. A personal friend of the claimant's who was a former long term employee of the company began a small business which provided an inventory counting service for competitors of the employer. For this he recruited the claimant to write a computerized inventory control program. The claimant was aware that in so doing, he was providing proprietary information to the employer's competitors through his friend's business, and that this was information a competitor should not have. The employer learned about this and then discharged the claimant.

T.C.A. § 50-7-304(h) and § 50-7-304(i)(1) provide the circumstances under which the decision of the Board of Review becomes final, as well as proscribing the time in which judicial appeal may be taken by the aggrieved party. The record reflects that no judicial review was sought by plaintiff. In light of this, the decision of the Board of Review became final thirty days from the date that the opinion of the Board of Review denying plaintiff's petition to rehear was mailed. There is no procedure by which we could or should go behind these findings, upon which the Board of Review concluded that plaintiff was discharged for misconduct connected with his work.

The doctrine of collateral estoppel is recognized in this state. Massengill v. Scott, 738 S.W.2d 629 (Tenn.1987). Generally speaking, the term "collateral estoppel" refers to the judicially-promulgated policy of repose preventing relitigation of a particular dispositive issue which was necessarily or actually decided with finality in a previous suit involving at least one of the parties on a different cause of action. Gear v. City of Des Moines, 514 F.Supp. 1218 (S.D.Iowa 1981); See Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979).

Insofar as the law in Tennessee is concerned, there is one unique aspect of this case, the consideration of which appears to be a case of first impression. That question is whether the doctrine of collateral estoppel will be extended or applied to decisions of administrative agencies in this state. It appears however that beginning perhaps a quarter of a century ago, this reluctance to extend the doctrine of res judicata, of which collateral estoppel is a component, to administrative cases has been substantially modified. In 1966 the U.S. Supreme Court expressly applied the doctrine in the administrative law context, stating:

When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose. (Citations omitted.)

United States v. Utah Construction & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966).

Subsequently, in the case of Univ. of Tenn. v. Elliott, 478 U.S. 788, 106 S.Ct. 3220, 92 L.Ed.2d 635 (1986), that court held:

.... [W]e hold that when a state agency "acting in a judicial capacity ... resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate," [U.S. v.] Utah Construction & Mining Co., supra, 384 U.S. , at 422, 86 S.Ct. [1545], at 1560, [16 L.Ed.2d 642 (1966) ] federal courts must give the...