July 22, 2015
MEMPHIS HEALTH CENTER, INC
June 9, 2015.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Reversed and Remanded. Appeal from the Chancery Court
for Shelby County. No. CH071016. Kenny W. Armstrong,
F. Donovan, Memphis, Tennessee, for the appellant, Stacy
H. Rasmussen and Peter D. Baskind, Memphis, Tennessee, for
the appellee, Memphis Health Center, Inc.
STEVEN STAFFORD, P.J., W.S., delivered the opinion of the
Court, in which ARNOLD B. GOLDIN, J., and BRANDON O. GIBSON,
STEVEN STAFFORD, P.J.
appeal involves a contract for employment entitling the
employee to sixty days advance notice of the employer's
decision to terminate the contract and six months additional
salary from the date of the termination. The employer argued
that the termination was effective in May 2005 and,
therefore, that the employee had been fully compensated
pursuant to the contract. The trial court ruled that the
termination occurred in June 2005 and awarded employee
damages equivalent to two months' salary. We conclude
that the evidence preponderates in favor of finding that the
employee did not receive the requisite notice of the
termination of her employment until September or October 2005
at the earliest. Accordingly, we reverse the judgment of the
trial court and award employee damages equivalent to six
months' salary, as well as partial prejudgment interest.
Reversed and remanded.
Foster served as the Chief Executive Officer of
Defendant/Appellee Memphis Health Center, Inc. ("
MHC" ) from July 2004 until sometime in 2005. The exact
date of her termination is the central issue in this appeal.
Under Ms. Foster's contract of employment, she was to
receive six months' salary upon her termination.
Specifically, her contract provides:
This Agreement may be terminated by the mutual assent of the
parties hereto; or by election by MHC or the Employee with
sixty days advanced notice.
MHC may terminate this Agreement with or without cause at any
time and shall be obligated to pay Employee the compensation
the equivalent of six (6) months salary, plus accrued
vacation and other employee benefits up to the date of
contract further provided that Ms. Foster would be paid a
salary of $80,000.00 for the first year, which would increase
to at least $82,400.00 in July 2005.
subsequently went into judicial receivership, and an entirely
new Board of Governors (" Board" ) was appointed.
Soon after the new Board was in place, the Board suspended
several employees, including Ms. Foster. Ms. Foster was
notified of her suspension by letter of April 29, 2005. It is
undisputed that MHC paid Ms. Foster her salary until October
22, 2007, Ms. Foster filed a complaint against MHC for breach
employment contract, seeking compensation for six months of
salary and benefits. Specifically, Ms. Foster alleged that
she had never been given notice that her employment with MHC
was terminated. Additionally, Ms. Foster alleged that because
her termination was not effective until after September 15,
2005, at the earliest, she was owed six months'
additional salary from the date of the termination.
filed an answer denying Ms. Foster's claim on June 14,
2007. Thereafter, the case went dormant until approximately
November 1, 2011, when MHC filed a motion to dismiss for lack
of prosecution. According to MHC's motion, Ms. Foster had
taken no action on the case since her final discovery
response occurred on June 10, 2010. On November 7, 2011, MHC
also filed a motion for summary judgment. On June 28, 2012,
Ms. Foster's counsel filed a motion to withdraw as
counsel and to substitute Christopher Donovan. A consent
order allowing the withdrawal and substitution was entered on
July 3, 2012. Ms. Foster responded in opposition to the
motion for summary judgment on July 18, 2012, and the motion
to dismiss on August 15, 2012. On September 18, 2012, the
trial court denied MHC's motions for summary judgment and
to dismiss. On November 30, 2012, Ms. Foster filed her own
motion for summary judgment, which relied on several
documents, including an affidavit provided by Ms. Foster. On
March 6, 2013, Ms. Foster's counsel filed a suggestion of
death indicating that Ms. Foster died on March 1, 2013. On
March 25, 2013, the trial court entered an order allowing the
substitution of Appellant Stacey Foster-Henderson ("
Appellant" ) in her capacity as the Personal
Representative of the Estate of Ms. Foster as the plaintiff.
Ms. Foster's death, MHC filed a motion to strike her
affidavit on March 28, 2013. Appellant responded in
opposition on April 12, 2013. In addition, Appellant filed a
motion for sanctions against MHC due to the filing of the
motion to strike, suggesting that the motion had no basis in
law. On May 20, 2013, the trial court denied the motion for
sanctions. On June 3, 2013, the trial court also denied
MHC's motion to strike Ms. Foster's affidavit.
case was heard without a jury on September 11, 2013. Ms.
Foster's deposition was admitted as an exhibit. In her
deposition, she denied that she ever received any notice of
the termination of her employment. Instead, Ms. Foster
testified that the only notice provided to her was a notice
of suspension on April 29, 2005. Ms. Foster admitted that she
eventually applied for and received unemployment benefits
after she left MHC but testified that she did not apply for
those benefits until 2006.
parties stipulated to admission of several documents related
to the termination of Ms. Foster's employment, including
minutes from the Board. Relevant to this appeal, the record
contains the April 29, 2005 letter suspending Ms. Foster
pending the next Board meeting. The letter also informed Ms.
Foster that if she had " any additional information . .
. to share with the board or that . . . will assist the Board
in making a final decision," Ms. Foster was permitted to
attend the May 19, 2005 Board meeting to address the Board
prior to a vote. According to the letter, Ms. Foster was
" expected to present a detailed and comprehensive plan
for corrective action to be put in place immediately."
Foster did not attend the May 19, 2005 meeting, instead
preferring to address the Board through a written document.
The minutes from the May 19, 2005 Board meeting do not
include any discussion of Ms. Foster or her employment
status. Instead, the record contains a letter
dated May 23, 2005 from Loyal Featherstone, the Chairman of
the Board, to Ms. Foster. The letter states:
The Board  has reviewed your letter to Chairman
Featherstone dated May 19, 2005. We are troubled by the fact
that you chose to personally bring your letter to [MHC] at
6:00 p.m. on the day of the meeting, but decided not to make
an appearance before the board. Board members observed you
drive away from the center just minutes before the start of
our meeting, and you nor anyone else offered an explanation
for your failure to appear.
In order for board members to hear your plan for corrective
action directly from you, we have tabled a final decision on
your employment status until our June 16th meeting. The board
expects you to be present and to personally present your
In the meantime, we have stopped the direct deposit of your
payroll checks. You may retrieve them after your appearance
before the Board.
Board held another meeting on June 16, 2005. The minutes
reflect that Ms. Foster was present and made a presentation
before the Board. The minutes show that the Board convened an
executive session to discuss and vote on the termination of
another MHC employee's employment. Because the Board
voted to terminate the employment of this individual, the
minutes indicate that a letter notifying the employee of the
termination would be sent by registered mail. The minutes do
not indicate that an executive session was convened to vote
on Ms. Foster's continued employment.
sent a letter to Ms. Foster on June 22, 2005. The letter
indicated that Ms. Foster's payroll check was enclosed,
which reflected three days of approved administrative leave.
However, the letter indicated that Ms. Foster's leave
during the period of May 19, 2005 to June 16, 2005 was
unapproved and that she would not be compensated for that
time. In addition, the letter stated:
Frankly, your failure to appear at the May 19, 2005 board
meeting without communicating any reason to Board Members is
tantamount to job abandonment. Any further incidents of a
similar nature will be grounds for immediate termination.
Upon your appearance at the June 16, 2005 board meeting, your
regular pay was reinstated. The new pay period began on June
20, 2005, and you will be paid for each workday until a
decision is made regarding your employment status.
Board held a " Special Call Meeting" on July 14,
2005. According to the minutes, one of the purposes of the
July 14, 2005 meeting was " discuss the employment
status" of Ms. Foster. The minutes also state: "
Suspension of Ms. Marion Foster: Ms. Foster is to be offered
three months pay and release."
Board meeting was held on July 21, 2005. The record contains
two versions of the minutes from the July 21, 2005 Board
meeting--a signed and an unsigned copy, both of which were
admitted as exhibits. According to the signed copy of the
minutes, at the meeting, the Board " raised questions
regarding the status of . . . Ms. Foster." The minutes
reflect that an attorney informed the Board that Ms. Foster
had an employment contract. The minutes go on to discuss a
possible offer by the Board to reemploy another employee that
was also suspended. The minutes
further state: " When questioned about Ms. Foster's
status [a board member] reiterated that Ms. Foster's
position was not to be rescinded. [Another board member]
stated that she has been out for three months and will be
offered three remaining months in pay."
additional Board meeting occurred on August 18, 2005. During
this meeting, Ms. Foster was again discussed. The meeting
[The Board's attorney] stated she received a call from
Ms. Foster['s] . . . Attorney . . . . She cited letter
and opinions reflecting her position on these former
employees. [Ms. Foster's attorney] will be called and
informed the Board had a pressing agenda which caused them to
table the employee issue until the next meeting.
meeting occurred on September 15, 2005, in which Ms.
Foster's employment status was again discussed. According
to the meeting minutes:
[A Board member] requested latest information regarding the
employment status of . . . Ms. Foster. . . . Sharing the
[legal counsel's] legal brief and comments by [the
Board's attorney], [the Board Member] noted the absence
of details. . . . It was noted [the Board's attorney] is
requesting additional information on . . . Ms. Foster.
After discussion it was concluded no more information is
available and a definitive decision on this matter is needed.
Possible negotiations with legal counsel or otherwise should
be arranged. However, their contracts are bonafide. It was
recommended . . . to move forward with termination and work
out the terms later. [The Board] voted to support
termination. Follow-up is needed on this matter.
on October 20, 2005, a final Board meeting occurred in which
Ms. Foster's employment status was discussed. According
to the meeting minutes, " Notification has been given to
. . . M[s.] Foster and [her] attorney. Dates (April-October,
2005) regarding outstanding payments were reconciled and
payments made which includes the checks that were being
Burress, who testified as MHC's keeper of records and who
was the director of grants, marketing, and community
development at the time of trial, testified as to her
recollection of the events surrounding the termination of Ms.
Foster's employment. When asked about the July 21, 2005
minutes that indicate that the Board was not going to rescind
the decision concerning Ms. Foster, Ms. Burress indicated
that it was her " understanding that they were not going
to rescind their position not to bring her back as [Chief
Deborah Henderson was also called to testify on behalf of MHC
over the objection of Appellant. Prior to being elected
General Sessions Judge, Judge Henderson served as the special
master overseeing MHC's receivership. According to Judge
Henderson, after a site inspection revealed numerous
inadequacies at MHC, Ms. Foster was placed on suspension.
According to Judge Henderson, when Ms. Foster failed to
appear at the May 19, 2005 Board meeting, the Board "
decided her services should be terminated." Judge
Henderson testified that soon after the May 19, 2005 meeting,
a letter was drafted informing Ms. Foster of the
termination of her employment, but Judge Henderson was unable
to consistently testify that the letter was ever mailed to
Ms. Foster. After being shown some of the letters referenced
above, Judge Henderson admitted that she did not "
recall the events happening the way [the letters] sa[y]
[they] did." Indeed, Judge Henderson admitted that the
only letter in the record sent shortly after the May 19, 2005
Board meeting indicates that, rather than voting to terminate
Ms. Foster's employment, the Board " tabled a final
decision." With regard to this letter, Judge Henderson
testified that " It would appear that as of May 23 the
[B]oard obviously decided not to make a final decision."
Judge Henderson also agreed that the June 22, 2005 letter
suggested that Ms. Foster was still employed with MHC at that
time. Regardless of these letters, Judge Henderson maintained
that Ms. Foster's employment was terminated at the May
19, 2005 Board meeting.
Stockton, the current Board chair at MHC also testified about
the termination of Ms. Foster's employment. Again, Ms.
Stockton testified that it was her belief that the Board
voted to terminate Ms. Foster's employment at the May 19,
2005 meeting but admitted that it was possible that "
nothing actually took place" due to the chaotic
atmosphere surrounding MHC at the time. Ms. Stockton admitted
that her memory of that time was not flawless.
conclusion of trial, the trial court orally ruled that Ms.
Foster's employment was terminated in approximately June
2005. The trial court specifically found that the April 25,
2005 notice of suspension was insufficient to constitute
notice of termination. Therefore, the court ruled that she
was entitled to two months' additional salary, or
$13,230.00, in damages. A final judgment was entered on
September 26, 2013. On October 15, 2013, Appellant filed a
Rule 59.06 motion for new trial. On October 22, 2013, Ms.
Foster filed a notice of appeal (" first appeal" ).
The trial court denied the motion for new trial on the basis
of a lack of jurisdiction on November 15, 2013. On November
18, 2013, Appellant filed a Stipulation of Dismissal with
prejudice of the first appeal, which was joined by MHC.
November 20, 2013, Appellant filed a motion for a new trial
pursuant to Rule 60.02 of the Tennessee Rules of Civil
Procedure. Appellant filed a second notice of appeal on
December 13, 2013. The trial court denied the request for a
new trial on December 16, 2013.
24, 2014, MHC filed a motion to dismiss Appellant's
appeal. Specifically, MHC argued that because the first
was dismissed with prejudice, any issues raised in
Appellant's second appeal are res judicata . On
October 6, 2014, this Court entered an order denying
MHC's motion. In addition, this Court indicated that
because the trial court failed to rule on Appellant's
requests for prejudgment interest and damages equivalent to
lost benefits, the trial court's judgment was not final.
Because this Court typically only has jurisdiction over final
judgments, this Court directed Appellant to obtain a final
order in the trial court adjudicating these claims. The trial
court entered an order on October 13, 2014, adjudicating the
pending claims. Accordingly, this Court is satisfied that it
has jurisdiction to consider this appeal.
raises several issues, which are taken, and slightly
restated, from her appellate brief:
1. Whether the great weight of the documentary evidence
preponderates against the trial court's finding of fact
that Marion Foster was terminated on or about June 15, 2005.
2. Whether the trial court erred as a matter of law in
failing to distinguish between (1) a private decision to
terminate; and (2) the requisite notification of such
decision to the Employee.
3. Whether the evidence preponderates against the trial
court's implicit finding of fact that Ms. Foster received
notice of her termination at the same time a private decision
to terminate was allegedly made.
4. Whether the trial court erred in allowing a sitting Shelby
County General Sessions judge to testify in favor of MHC, in
the face of her own testimony that multiple witnesses existed
competent to testify concerning the given topic.
5. Whether the trial court erred in failing to award
pre-judgment interest for the approximately six and
one-quarter (6 1/4) years during which MHC deprived Appellant
of funds to which she was entitled.
posture of Appellee, MHC raises an additional issue. As we
perceive it, MHC argues that this Court cannot consider the
issues raised in Appellant's appeal due to the dismissal
with prejudice of her first notice of appeal.
of Dismissal with Prejudice of First Appeal
brief to this Court, MHC again argues that the dismissal with
prejudice of Appellant's first notice of appeal prevents
this Court from considering the issues raised in
Appellant's appeal. As previously discussed, the trial
court entered a purported final judgment on September 26,
2013. Appellant filed a notice of appeal but later filed a
stipulation of dismissal with prejudice. Appellant then filed
a Rule 60.02 motion for a new trial. Before the trial court
ruled on that motion, Appellant filed a second notice of
appeal. Thereafter, the trial court denied the Rule 60.02
motion. Many months later, the trial court also entered an
order denying Appellant's requests for prejudgment
interest and damages equivalent to lost benefits.
support its position that this Court can no longer consider
the issues raised in this appeal, MHC cites this Court's
Opinion in Brown v. Brown, No. M2012-02084-COA-R3CV,
2014 WL 1017509 (Tenn. Ct.App. Mar. 13, 2014), perm. app.
denied (Tenn. Sept. 18, 2014). In Brown, the trial
court denied husband's motion to set aside a final
judgment pursuant to Rule 60.02 of the Tennessee Rules of
Id. at *1. Husband subsequently appealed but later
dismissed his appeal with prejudice. The trial court then set
aside its denial of the Rule 60.02 motion and entered an
order in Husband's favor. Id. at *3-*4. Wife
then appealed, and this Court reversed, holding that the
effect of the dismissal with prejudice of husband's first
appeal was to " affirm the trial court's denial of
the husband's Rule 60.02 motion, so the trial court was
precluded under the law of the case doctrine from
reconsidering its earlier denial of the Rule 60.02
motion." Id. at *8.
Brown Opinion is readily distinguishable in the case
at bar. Specifically, in Brown, husband argued that
despite his notice of appeal, the trial court maintained
continuing jurisdiction over the case due to the case's
lack of finality. Rule 3 of the Tennessee Rules of Appellate
Procedure provides that " if multiple parties or
multiple claims for relief are involved in an action, any
order that adjudicates fewer than all the claims or the
rights and liabilities of fewer than all the parties is not
enforceable or appealable[.]" Except where otherwise
provided, this Court only has subject matter jurisdiction
over final orders. See Bayberry Assocs. v.
Jones, 783 S.W.2d 553, 559 (Tenn. 1990). Husband argued
that because wife filed a response to his Rule 60.02 motion
entitled " Answer and Counterclaim," and the trial
court failed to rule on wife's counterclaim, the judgment
was not final and the trial court had continuing
Court of Appeals did not disagree with husband's argument
regarding the effect of a non-final judgment on husband's
dismissed notice of appeal but instead concluded that wife
did not actually file a counterclaim requesting relief from
the trial court. According to the Court of Appeals, the
pleading " was simply a response to Husband's Rule
60.02 motion. There was no complaint pending in the [trial
court] to which a party would file either an answer or a
counterclaim." Id. at *6. Moreover, the only
relief sought was simply a request contingent on the granting
of husband's relief; when husband's motion was
denied, the " request for relief contained in
[w]ife's responsive pleading was mooted."
Accordingly, the Court of Appeals concluded that the denial
of husband's Rule 60.02 motion was a final judgment from
which an appeal lay. Because his first notice of appeal
vested jurisdiction with the Court of Appeals, his decision
to dismiss the appeal with prejudice precluded
reconsideration of the denial of his Rule 60.02 motion.
Id. at *8.
husband's argument did not prevail in Brown, his
rationale must prevail here. As previously discussed, the
trial court's purported final order failed to
rule on Appellant's requests for prejudgment interest and
damages equivalent to lost benefits. Without ruling on these
requests, the judgment was not final, and this Court never
acquired jurisdiction over Appellant's appeal.
See Tenn. R. App. P. 3(a). Thus, any order
purporting to adjudicate Appellant's rights by the Court
of Appeals is void. Dishmon v. Shelby State Cmty.
Coll., 15 S.W.3d 477, 480 (Tenn. Ct.App. 1999) ( "
Judgments or orders entered by courts without subject matter
jurisdiction are void." ) (citing Brown v.
Brown, 198 Tenn. 600, 610, 281 S.W.2d 492, 497 (1955)).
As such, the trial court retained jurisdiction to adjudicate
these claims until it filed its October 13, 2014 final order.
Thus, although filed prematurely, Appellant's second
notice of appeal was timely and vests this Court with
jurisdiction to consider the issues raised in her brief.
See Tenn. R. App. P. 4(d) ( " A prematurely
filed notice of appeal shall be treated as filed after the
entry of the judgment from which the appeal is taken and on
the day thereof." ).
of Ms. Foster's Employment
consider Appellant's argument that the trial court erred
in finding that Ms. Foster was terminated in approximately
June 2005. In an appeal from a bench trial, we review the
trial court's findings of fact de novo with a presumption
of correctness, unless the evidence preponderates otherwise.
Tenn. R. App. P. 13(d). No presumption of correctness,
however, attaches to the trial court's conclusions of
law, and our review is de novo. Blair v. Brownson,
197 S.W.3d 681, 684 (Tenn. 2006) (citing Bowden v.
Ward, 27 S.W.3d 913, 916 (Tenn. 2000)). In this case,
the trial court's order contains no findings of fact and
conclusions of law. 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
to Appellant, the documentary evidence in the record clearly
shows that the Board did not finalize any decision to
terminate Ms. Foster's employment until the September 15,
2005 Board meeting. Thus, Appellant argues that Ms. Foster
did not receive notice of the termination until after that
date and that she is entitled to an award equivalent to six
months of Ms. Foster's salary.
contrast, MHC argues that the evidence in the record supports
the trial court's finding that the termination of Ms.
Foster's employment occurred no later than June 2005.
According to MHC, the testimony of Ms. Burress, Judge
Henderson, and Ms. Stockton all indicate that the Board voted
to terminate Ms. Foster's employment when she failed to
attend the May 15, 2005 meeting. In addition, MHC argues that
notification was promptly sent to Ms. Foster regarding the
termination. In the alternative, MHC argues
that notice was not a precondition to termination in Ms.
Foster's employment contract.
this issue involves the interpretation of a contract, we must
first consider the applicable rules of contract
interpretation. According to the Tennessee Supreme Court:
The canons of contract construction direct us to first look
to the plain language of the contract and to ascertain and
effectuate the parties' intent as reflected in that
language. Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95
(Tenn. 1999). Our focus is on the four corners of the entire
contract, the circumstances in which the contract was made,
and the parties' actions in fulfilling their contractual
obligations. Hughes v. New Life Dev. Corp., 387
S.W.3d 453, 465 (Tenn. 2012).
If the contractual language is clear and unambiguous, the
literal meaning of the contract controls the dispute,
Maggart v. Almany Realtors, Inc., 259 S.W.3d 700,
704 (Tenn. 2008), and the language used in the contract is
construed using its " plain, ordinary, and popular
sense." Bob Pearsall Motors v. Regal
Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn.
1975). If, however, contractual provisions prove to be
ambiguous (where more than one reasonable interpretation of
the provision exists), the courts will employ other rules of
contract construction to determine the parties' intent.
Dick Broad. Co., Inc. of Tenn. v. Oak Ridge FM,
Inc., 395 S.W.3d 653, 659 (Tenn. 2013). One of these
principles is that ambiguous contract provisions will be
construed against the drafter of the contract. Kiser v.
Wolfe, 353 S.W.3d 741, 748 (Tenn. 2011); Betts v.
Tom Wade Gin, 810 S.W.2d 140, 143 n.4 (Tenn. 1991).
. . . The interpretation of a written contract is  a
question of law. Accordingly, we review these questions de
novo without a presumption of correctness. . . . BSG, LLC
v. Check Velocity, Inc., 395 S.W.3d 90, 92 (Tenn. 2012)
(interpretation of written contracts).
West v. Shelby Cnty. Healthcare Corp., 459 S.W.3d
33, 41-42 (Tenn. 2014). Thus, we turn to the language of Ms.
Foster's employment contract.
previously discussed, Ms. Foster's contract provides, in
This Agreement may be terminated by the mutual assent of the
parties hereto; or by election by MHC or the Employee with
sixty days advanced notice.
MHC may terminate this Agreement with or without cause at any
time and shall be obligated to pay Employee the compensation
the equivalent of six (6) months salary, plus accrued
vacation and other employee benefits up to the date of
parties do not dispute that the above contract entitled Ms.
Foster to six months' additional compensation from the
date of her termination. Indeed, the Tennessee Supreme Court
has previously held that employment contracts whereby an
employee is entitled to severance even if his or her
employment is terminated for cause are permissible under
Tennessee law. See Teter v. Republic Parking
Sys., Inc., 181 S.W.3d 330, 344 (Tenn. 2005) (providing
severance to the employee so long as the employee did not
engage in " gross misconduct, fraud, embezzlement,
theft, or voluntary termination" ). Although unclear
from her brief, it appears that Appellant argues that the
contract also entitled Ms. Foster to advance notice before
the termination could become effective.
above employment agreement provides that if the agreement is
to be terminated unilaterally, the terminating party must
provide " sixty days advanced notice"
to the other party. Clearly, then, Ms. Foster's
employment contract requires that she receive notice of any
decision to terminate her employment contract by MHC. Thus,
the Board was required to provide Ms. Foster advance notice
of the termination prior to the termination becoming
effective. In this situation, we must conclude that by the
plain language of Ms. Foster's contract, " the date
of termination" cannot occur until Ms. Foster has been
provided the requisite notice to which she is clearly
entitled. Accordingly, while the date that the Board voted to
terminate Ms. Foster's employment is certainly relevant,
the date upon which she received notice of the termination is
dispositive of this appeal.
Ms. Foster testified unequivocally that she was never
provided any notice that her employment with MHC was
terminated. Although the various witnesses for MHC all
indicated their belief that termination occurred on May 15,
2005, none of the witnesses were able to offer any persuasive
evidence regarding the notification sent to Ms. Foster. While
Judge Henderson testified that a notification was mailed, she
also testified that she was unsure if any notification was
sent to Ms. Foster and that she did not mail any notification
letters to Ms. Foster. Other witnesses likewise believed that
notice was mailed but did not participate in the notification
or witness any other individual actually provide notice to
none of the documentary evidence in the record indicates that
Ms. Foster received notice of the termination of her
employment prior to October 2005. Importantly, despite
MHC's contention otherwise, the minutes from the May 15,
2005 Board meeting do not support a finding that the Board
voted to terminate Ms. Foster's employment on this date.
Instead, these minutes show that the Board convened an
executive session and voted to terminate the employment of a
different employee; Ms. Foster is not even mentioned in the
May 15, 2005 minutes. The record, however, does contain the
April 25, 2005 letter suspending Ms. Foster's employment.
However, the trial court orally ruled that this letter was
insufficient to constitute notice of termination, and MHC has
not appealed that finding.
other letters contained in the record and the minutes of the
Board likewise show that the decision to terminate Ms.
Foster's employment was not likely finalized until
September 15, 2005. For example, on June 22, 2005, Mr.
Featherstone sent a letter to Ms. Foster indicating that her
failure to attend the May 15, 2005 Board meeting was "
tantamount to job abandonment" and that " further
incidents of a similar nature will be grounds for immediate
termination." Clearly, then, the Board had not finalized
a decision to terminate Ms. Foster as of this date, and this
letter clearly does not provide appropriate notice to Ms.
Foster that her employment had been terminated. Although the
July 21, 2005 letter indicates that a decision regarding Ms.
Foster's status was not to be rescinded, it is entirely
unclear if this decision refers to the decision to suspend
Ms. Foster or a decision to terminate her employment. Indeed,
as late as the August 18, 2005 meeting, the Board indicates
that it is " tabl[ing]" discussion on Ms.
Foster's employment claims in favor of resolving more
pressing matters. From our review of the record, the
documentary evidence in the record supports Appellant's
contention that a " definitive decision" concerning
Ms. Foster's employment was not made until the September
15, 2005 Board meeting and that notification was not provided
until sometime thereafter.
on the foregoing, the trial court erred in finding that Ms.
only entitled to damages equivalent to two months'
salary. From our review of the evidence, Ms. Foster was not
notified of the termination of her employment until, at the
earliest, September 16, 2005. Because she was entitled to
sixty days' notice prior to the termination of her
employment becoming effective and six months' salary
after termination, we conclude MHC breached the employment
contract. See Teter, 181 S.W.3d at 339
(holding that employer would be in breach of the employment
contract if severance was not paid to the employee in
accordance with the contract). Appellant is, therefore,
entitled to the full damages requested in the complaint, an
amount equivalent to six months' salary. Any question
regarding the correctness of the trial court's decision
to allow Judge Henderson to testify is, therefore,
next argues that the trial court erred in denying
Appellant's request for prejudgment interest. The award
of prejudgment interest is governed by statute, specifically
Tennessee Code Annotated Section 47-14-123. According to
Prejudgment interest, i.e., interest as an element of, or in
the nature of, damages, as permitted by the statutory and
common laws of the state as of April 1, 1979, may be awarded
by courts or juries in accordance with the principles of
equity at any rate not in excess of a maximum effective rate
of ten percent (10%) per annum . . . .
award of prejudgment interest is within the sound discretion
of the trial court, and the decision will not be disturbed by
an appellate court unless the record reveals an abuse of
discretion. Spencer v. A-1 Crane Serv., Inc., 880
S.W.2d 938, 944 (Tenn. 1994); Otis v. Cambridge Mut. Fire
Ins. Co., 850 S.W.2d 439, 446 (Tenn. 1992).
Tennessee Supreme Court discussed prejudgment interest in
detail in Myint v. Allstate Ins. Co., 970 S.W.2d 920
Several principles guide trial courts in exercising their
discretion to award or deny prejudgment interest. Foremost
are the principles of equity. Tenn. Code Ann. §
47-14-123. Simply stated, the court must decide whether the
award of prejudgment interest is fair, given the particular
circumstances of the case. In reaching an equitable decision,
a court must keep in mind that the purpose of awarding the
interest is to fully compensate a plaintiff for the loss of
the use of funds to which he or she was legally entitled, not
to penalize a defendant for wrongdoing. Mitchell v.
Mitchell, 876 S.W.2d 830, 832 (Tenn.1994);
Otis, 850 S.W.2d at 446.
In addition to the principles of equity, two other criteria
have emerged from Tennessee common law. The first criterion
provides that prejudgment interest is allowed when the amount
of the obligation is certain, or can be ascertained by a
proper accounting, and the amount is not disputed on
reasonable grounds. Mitchell, 876 S.W.2d at 832. The
second provides that interest is allowed when the existence
of the obligation itself is not disputed on reasonable
grounds. Id. (citing Textile Workers Union v.
Brookside Mills, Inc., 205 Tenn. 394, 402, 326 S.W.2d
671, 675 (1959)).We note that these criteria, if strictly
construed, could prohibit the recovery of prejudgment
interest in the
vast majority of cases. Indeed, only a liquidated claim, for
which prejudgment interest is already recoverable as a matter
of right under Tenn. Code Ann. § 47-14-109, can truly be
considered an obligation of certain and indisputable amount.
Further, it is safe to say that, at trial, defendants usually
can articulate at least one good reason for disputing the
existence of the obligation, for were it otherwise,
defendants would rarely survive summary judgment. Finally,
the focus on whether the defendant had a reasonable defense
ignores the principle that prejudgment interest is not a
penalty imposed on the defendant for indefensible conduct.
Not surprisingly, an analysis of relevant case law reveals
that these criteria have not been used to deny prejudgment
interest in every case where the defendant reasonably
disputed the existence or amount of an obligation. More
typically, courts either use the certainty of a claim as
support for an award of prejudgment interest, or they do not
discuss the certainty of the claim at all. See,
e.g., Mitchell, 876 S.W.2d at 832 (allowing the
award of interest where the existence and amount of the
obligation under a settlement agreement were not reasonably
disputed); Otis, 850 S.W.2d at 446 (allowing the
award of interest to a plaintiff whose right to recover under
a fire insurance contract was reasonably disputed on the
grounds of arson and misrepresentation); Performance
Systems, Inc. v. First American Nat. Bank, 554 S.W.2d
616, 619 (Tenn. 1977) (allowing the award of interest,
although the existence of the defendant's obligation
under the lease was reasonably disputed); Johnson v.
Tennessee Farmers Mut. Ins. Co., 556 S.W.2d 750, 752
(Tenn. 1977) (allowing the award of interest, although the
amount of recovery under the insurance claim was reasonably
disputed); Uhlhorn v. Keltner, 723 S.W.2d 131, 138
(Tenn.App. 1986) (allowing award of interest in a boundary
dispute case, where the existence of any obligation to pay
rent and the amount of rent due were both reasonably
disputed); Schoen v. J.C. Bradford & Co., 667 S.W.2d
97, 101-02 (Tenn.App. 1984)(rejecting argument that
prejudgment interest should not be imposed when defendant
appealed in good faith).
Thus, we find that if the existence or amount of an
obligation is certain, this fact will help support an award
of prejudgment interest as a matter of equity. After all, the
more clear the fact that the plaintiff is entitled to
compensatory damages, the more clear the fact that the
plaintiff is also entitled to prejudgment interest as part of
the compensatory damages. The converse, however, is not
necessarily true. The uncertainty of either the existence or
amount of an obligation does not mandate a denial of
prejudgment interest, and a trial court's grant of such
interest is not automatically an abuse of discretion,
provided the decision was otherwise equitable. The certainty
of the plaintiff's claim is but one of many
nondispositive facts to consider when deciding whether
prejudgment interest is, as a matter of law, equitable under
Myint, 970 S.W.2d at 927-28 (footnotes omitted).
the only indication given by the trial court for the denial
of prejudgment interest was the " uncertainty about
what, if anything, [Ms. Foster] was entitled to and the fact
that she was paid all those months without working, and
really getting the benefit of  additional [salary] because
of perhaps poor record keeping." As discussed above,
however, the uncertainty of Appellant's claim is
support the denial of a request for prejudgment interest.
Id. at 928. Moreover, based upon our holding,
supra, Ms. Foster's continued employment and
MHC's corresponding obligation to pay her stemmed not
from any fault on the part of Ms. Foster but instead was the
result of delay and poor record keeping on the part of MHC.
To deny Appellant prejudgment interest on these bases is an
abuse of discretion. See Gonsewski v.
Gonsewski, 350 S.W.3d 99, 113 (Tenn. 2011) ( " An
abuse of discretion occurs when the trial court causes an
injustice by applying an incorrect legal standard, reaches an
illogical result, resolves the case on a clearly erroneous
assessment of the evidence, or relies on reasoning that
causes an injustice." ) (citing Wright ex rel.
Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011)).
Thus, we must independently consider whether Appellant was
entitled to an award of prejudgment interest. See
Scholz v. S.B. Int'l, Inc., 40 S.W.3d 78, 83
(Tenn. Ct.App. 2000) (concluding that the trial court applied
an improper standard in denying prejudgment interest, but
going on to consider the appropriate factors).
argues that she is entitled to prejudgment interest because
she lost the benefit of monies to which she was entitled for
over six years. In contrast, MHC argues that it would
inequitable to award prejudgment interest due to the
substantial delays in resolving the matter caused by
Appellant. According to this Court:
[T]he Tennessee Supreme Court has shifted the balance to
favor awarding prejudgment interest whenever doing so will
more fully compensate plaintiffs for the loss of use of their
funds. Fairness will, in almost all cases, require that a
successful plaintiff be fully compensated by the defendant
for all losses caused by the defendant, including the loss of
use of money the plaintiff should have received. Levien
v. Sinclair Oil Corp., 314 A.2d 216, 221 (Del. Ch.
1973); King v. State Roads Comm'n, 298 Md. 80,
467 A.2d 1032, 1035 (1983); Erin Rancho Motels v. United
States Fidelity & Guar. Co., 218 Neb. 9, 352 N.W.2d 561,
566 (1984) (Shanahan, J., concurring and dissenting in part).
That is not to say that trial courts must grant prejudgment
interest in absolutely every case. Prejudgment interest may
at times be inappropriate such as (1) when the party seeking
prejudgment interest has been so inexcusably dilatory in
pursuing a claim that consideration of a claim based on loss
of use of the money would have little weight, R.E.M. v.
R.C.M., 804 S.W.2d 813, 814 (Mo.Ct.App. 1991); (2) when
the party seeking prejudgment interest has unreasonably
delayed the proceedings after suit was filed, Batchelder
v. Tweedie, 294 A.2d 443, 444 (Me. 1972); or (3) when
the party seeking prejudgment interest has already been
otherwise compensated for the lost time value of its money.
Braswell v. City of El Dorado, 187 F.3d 954, 957
(8th Cir. 1999); Perlman v. Zell, 185 F.3d 850, 857
(7th Cir. 1999).
Scholz, 40 S.W.3d at 83.
courts have considered the question of what level of delay or
dilatory conduct renders prejudgment interest inappropriate.
For example, in Story v. Lanier, 166 S.W.3d 167
(Tenn. Ct.App. 2004), the Court of Appeals concluded that a
thirty-year delay was a sufficient reason to deny prejudgment
interest. Id. at 182. Others cases have awarded
prejudgment interest even in the face of delays, especially
where the delay was not wholly attributable to the
plaintiff's conduct. For instance, in General
Construction Contractors Assocation, Inc. v. Greater St.
Thomas Baptist Church, 107 S.W.3d 513 (Tenn. Ct.App.
the Court of Appeals allowed full prejudgment interest, even
during a nineteen-month delay between the trial and the entry
of the order. Id. at 526. Likewise in Christmas
Lumber Co. v. Valiga, 99 S.W.3d 585 (Tenn. Ct.App.
2002), the Court of Appeals noted that the case had been
delayed for ten years but concluded that the record failed to
establish who was at fault for the delay, the plaintiff or
the defendant. Id. at 596. Accordingly, the Court of
Appeals ruled that an award of prejudgment interest was
appropriate. Id. Finally, in Wilder v. Tennessee
Farmers Mutual Insurance Co., 912 S.W.2d 722 (Tenn.
Ct.App. 1995), the Court of Appeals awarded only partial
prejudgment interest to account for a delay in the final
judgment caused by the trial court. Id. at
MHC filed a motion to dismiss indicating that Appellant took
no action on the case after June 10, 2010. From the record,
it does not appear that Appellant resumed active
participation in the case until her current attorney entered
a notice of appearance on July 28, 2012. Appellant thereafter
filed a response to the motion to dismiss alleging that any
delays on the part of Appellant's former counsel were
" non-volitional" and had not prejudiced MHC.
Accordingly, Appellant does not appear to deny that there
were some delays in prosecuting this case. 19
previously discussed, the award of prejudgment interest is
guided by the principles of equity. See
Myint, 970 S.W.2d at 928. Equity is defined, in the
popular sense, as " the quality of being equal or fair;
fairness; impartiality; even-handed dealing."
Garner's Dictionary of Legal Usage 323 (3d ed.
2011). Here, we have found that the evidence preponderates in
favor of a finding that either: (1) Ms. Foster never received
the notice of the termination of her employment that she was
entitled to receive; or (2) MHC wrongfully withheld
additional compensation from Ms. Foster despite the fact that
Ms. Foster did not receive notice of the termination of her
employment until September or October 2005. Under either
circumstance, MHC clearly breached the contract of employment
with Ms. Foster and wrongfully deprived her of funds to which
she was entitled. On the other hand, however, this case was
substantially delayed by Appellant, regardless of how "
non-volitional" that delay might have been. In addition,
to award prejudgment interest during such delay is surely to
cause the prejudice to MHC that Appellant argued would not
occur by allowing the case to continue in spite of MHC's
motion to dismiss for lack of prosecution. Under these
circumstances, we conclude that the equitable path is to
award prejudgment interest to Appellant from the date of the
filing of the complaint, May 22, 2007. However, the award of
prejudgment interest shall exclude the period from June 10,
2010, when Appellant discontinued active participation in the
case, to July 3, 2012, when Appellant's current counsel
was substituted for Ms. Foster's initial attorney.
judgment of the Chancery Court of Shelby County is reversed.
This cause is remanded to the trial court for the calculation
of Appellant's damages, amounting to the equivalent to
six months of Ms. Foster's salary. On remand the trial
court shall also calculate the amount of Appellant's
prejudgment interest and convene any other necessary
proceedings in accordance with this Opinion. Costs of this
appeal are taxed to Appellee Memphis Health Center,
Incorporated, for which execution may issue if necessary.
The unsigned minutes provide significantly
more detail regarding this discussion. According to these
minutes, Board members generally did not want to reemploy
this employee, a physician, but were concerned about
breaching the physician's employment contract. The Board
also expressed concern regarding its contractual obligation
to pay the physician six month's salary upon
The trial court's final written order
contains no findings of fact or conclusions of law of any
kind to support the trial court's ruling. As we have
repeatedly stated, this practice violates Rule 52.01 of the
Tennessee Rules of Civil Procedure, which requires written
findings of fact and conclusions of law in a final judgment
resulting from bench trials. See Tenn.
R. Civ. P. 52.01 ( " In all actions tried upon the facts
without a jury, the court shall find the facts specially and
shall state separately its conclusions of law and direct the
entry of the appropriate judgment." ) Typically, we
would vacate the judgment and remand for further findings in
this situation. See Lake v. Haynes, No.
W2010-00294-COA-R3-CV, 2011 WL 2361563, at *1 (Tenn. Ct.App.
June 9, 2011). However, because the trial court's
reasoning is somewhat evident from its oral pronouncements,
we exercise our discretion to proceed to consider the merits
of this appeal. See Hanson v. J.C. Hobbs Co.,
Inc., No. W2011-02523-COA-R3-CV, 2012 WL 5873582, at *10
(Tenn. Ct.App. Nov.21, 2012) (indicating that we may "
solider on" with our review when the trial court's
reasoning is " readily ascertainable" ). Still, we
caution litigants that we may not choose to so in the
Rule 60.02 provides, in relevant
On motion and upon such terms as are just, the
court may relieve a party or the party's legal
representative from a final judgment, order or proceeding
for the following reasons: (1) mistake, inadvertence,
surprise or excusable neglect; (2) fraud (whether
heretofore denominated intrinsic or extrinsic),
misrepresentation, or other misconduct of an adverse party;
(3) the judgment is void; (4) the judgment has been
satisfied, released or discharged, or a prior judgment upon
which it is based has been reversed or otherwise vacated,
or it is no longer equitable that a judgment should have
prospective application; or (5) any other reason justifying
relief from the operation of the judgment. The motion shall
be made within a reasonable time, and for reasons (1) and
(2) not more than one year after the judgment, order or
proceeding was entered or taken. A motion under this Rule
60.02 does not affect the finality of a judgment or suspend
its operation, but the court may enter an order suspending
the operation of the judgment upon such terms as to bond
and notice as to it shall seem proper pending the hearing
of such motion.
In its brief, MHC argues that the trial
court's findings are entitled to a presumption of
correctness on appeal and that many of the trial court's
rulings rest on credibility. It is true that factual findings
are entitled to a presumption of correctness, see
Tenn. R. App. P. 13(d), and credibility findings may
not be overturned without clear and convincing evidence to
the contrary. See Franklin County Bd. Of Educ.
v. Crabtree, 337 S.W.3d 808, 811 (Tenn. Ct.App. 2010)
(citing Jones v. Garrett, 92 S.W.3d 835, 838 (Tenn.
2002)). The trial court's order, however, contains
neither factual findings nor credibility findings that are
subject to such deference. See Alexander v. JB
Partners, 380 S.W.3d 772, 777 (Tenn. Ct.App. 2011) (
" It is well settled, however, that a court speaks
through its orders and not through the transcript."
Although Ms. Foster's contract entitled
her to compensation for lost benefits, the trial court denied
such relief. Appellant does not raise the denial of that
relief as an issue on appeal or otherwise argue that the
trial court erred in denying such relief.
Although Wilder was decided prior
to the Tennessee Supreme Court's seminal Opinion in
Myint, it was cited favorably by the Myint
Court. See Myint, 970 S.W.2d at