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 ...