C. EDDIE SHOFFNER
TENNESSEE CONSOLIDATED RETIREMENT SYSTEM
Session October 24, 2014
Appeal from the Chancery Court for Davidson County No. 130557II Carol L. McCoy, Chancellor
C. David Briley and Susan High-McAuley, Nashville, Tennessee, for the appellant, C. Eddie Shoffner.
Robert E. Cooper, Jr., Attorney General and Reporter; Joseph F. Whalen, Acting Solicitor General; and Mary Ellen Knack, Senior Counsel, for the appellee, Tennessee Consolidated Retirement System.
Andy D. Bennett, J., delivered the opinion of the court, in which Richard H. Dinkins, and W. Neal McBrayer, JJ., joined.
Andy D. Bennett, Judge
C. Eddie Shoffner ("Dr. Shoffner") was employed by Claiborne County as Director of Schools pursuant to a two-year contract beginning July 1, 2007. At the end of the two-year term, Claiborne County and Dr. Shoffner agreed that Dr. Shoffner would continue as Director of Schools for another four years. They executed another contract extending Dr. Shoffner's position as Director of Schools for four more years, from July 1, 2009, through June 30, 2013. Both contracts set Dr. Shoffner's compensation at $97, 964 per year, which was to be paid in equal monthly installments of $8, 163.67.
At a meeting on September 7, 2010, the Claiborne County Board of Education (the "Board") voted to terminate Dr. Shoffner's position as Director of Schools. The only reason given for the termination was that it was "what the voters in their district wanted." Thereafter, the Board voted in December 2010 to approve a contract modification agreement. The modification agreement was dated February 5, 2011, and provided that Dr. Shoffner would be employed by Claiborne County "in the position of Safety Coordinator and not as Director of Schools." The term of Dr. Shoffner's employment as Safety Coordinator was September 1, 2010, through June 30, 2011.
Dr. Shoffner's total compensation as Safety Coordinator was to be $236, 746.43, which equaled the twenty-nine months of pay remaining on his prior contract as Director of Schools. The compensation was to be paid in five equal monthly installments of $47, 349.29. These monthly payments were $39, 185.62 more than Dr. Shoffner had been paid under his earlier contract as Director of Schools.
The modified contract provided that Dr. Shoffner could not be terminated; he was to be paid regardless of whether or not he was relieved of his duties. Paragraph four of the modified contract stated:
Employee may not be terminated for any reason prior to June 30, 2011, but he may be relieved of any or all duties at any time. Employee shall be solely responsible for development of employment duties during the term of this agreement.
Dr. Shoffner agreed to release any claims he might have in paragraph five of the modified contract. The relevant language provided:
The parties agree that this modification of the contract of employment, previously entered into between the parties, . . . shall act as a full release and compromise of all contractual claims that could have otherwise been brought by the employee under the terms of the contract as previously entered between the parties as against anyone, including the Board, Claiborne County, and its subdivision and its employees or former employees, commissioners, boards, and officials of any type.
Then, paragraph six continued in the same vein:
Employee specifically acknowledges that he is waiving and releasing any rights he may have under the federal Age Discrimination in Employment Act in addition to any and all other federal or state statutes and any and all common law actions. . . .
In accordance with the modified contract, Dr. Shoffner received monthly payments in the amount of $47, 349.29 in February, March, April, May, and June 2011, for a total of $236, 746.45. In March 2011, Dr. Shoffner filed an application for retirement benefits with the Tennessee Consolidated Retirement System ("TCRS"). Dr. Shoffner stated that his monthly compensation for the final five months of his employment was $47, 349.29.
TCRS determined that the increase of $39, 185.62 in monthly payments Dr. Shoffner received for each of the last five months immediately preceding his retirement did not constitute "earnable compensation, " as that term is defined in Tenn. Code Ann. § 8-34-101(14)(A), and should not be considered in calculating Dr. Shoffner's monthly retirement benefits. Instead, TCRS determined that these payments were
payoffs of the remaining three years left on [Dr. Shoffner's] original contract in exchange for [Dr. Shoffner's] agreement (i) to retire from the School System earlier than he otherwise would have and (ii) to release or otherwise waive any contractual or other common law actions he may have against the Board of Education for terminating him without cause from the position of director of schools.
TCRS calculated Dr. Shoffner's retirement benefits based on the monthly salary of $8, 163.67 that Dr. Shoffner received as Director of Schools, prior to his termination. Dr. Shoffner disagreed with the refusal by TCRS to treat the full amount of his five final monthly payments as earnable compensation and requested an informal conference pursuant to Rules 1700-3-2-.03 and ...