IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 22, 2004 Session
JERRY BIGGS v. REINSMAN EQUESTRIAN PRODUCTS, INC.
Direct Appeal from the Chancery Court for Bradley County
No. 00-369 Hon. Jerri S. Bryant, Chancellor
No. E2004-00172-COA-R3-CV - FILED DECEMBER 22, 2004
Plaintiff sued for breach of employment contract. The Trial Court found a breach and awarded
damages. On appeal we hold the employer had just cause to terminate, and reverse Judgment.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Reversed.
HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which D. MICHAEL SWINEY ,
J., and SHARON G. LEE, J., joined.
Michael A. Anderson, Chattanooga, Tennessee, for Appellant.
Charles D. Lawson, Chattanooga, Tennessee, for Appellee.
OPINION
In this breach of contract action, the Trial Court determined that defendant breached
plaintiff’s employment contract by terminating plaintiff’s employment without cause, and entered
judgment for $45,000.00 for plaintiff.
Defendant has appealed, insisting there was just cause to terminate plaintiff’s
employment.
The evidence before this Chancellor established that Biggs owned his own custom
saddle and leather working shop in Florida for about 20 years. He is a skilled craftsman, having been
schooled in the leather working crafts in his youth by his father, and had one employee in his shop.
Biggs had known Glen Taylor, one of the owners of Reinsman Equestrian Products, for several
years. Taylor was impressed with Biggs’ quality and craftsmanship with leather. In 1998 Taylor
approached Biggs about coming to work for Reinsman and starting up and running a leather-works
factory, a new product line which was an area of expansion for the company. Biggs was not
interested initially, but continued discussions with Taylor about the idea. Biggs had no experience
in factory and production work or in managing a factory and advised the defendant owners that he
did not think he was right for the job.
However, Biggs was offered the position at an annual salary of $45,000.00, and
defendant asked him to write up an agreement for them to consider.
Biggs prepared an agreement in letter form, which states in pertinent part:
This agreement is for a term of five years, starting from three to six months from the
date of this agreement. If the employer terminates the employee before the five year
term the employer agrees to pay the employee the sum of one years salary to
compensate him for the default of the agreement. The employee also agrees to a five-
year agreement, if the employee leaves the employment of the employer before the
five year agreement is fulfilled he agrees to pay the employer the sum of one years
salary to compensate the employer for default of this agreement.
The owners reviewed and accepted the terms of Biggs’ letter of agreement, and he
relocated to Cleveland, Tennessee, and began working for Reinsman in August of 1998. The initial
duties involved designing a line of leather products to be manufactured and offered for sale, setting
up equipment and fixtures in the factory, and training and supervising of new employees. This
process took 4-6 months, and production commenced in the Spring of 1999.
The employer had no problem with the product development and design. During his
tenure Biggs designed approximately 50-75 new products for the defendant. However, the employer
concluded that his performance as manager was deficient, and reached the point where termination
of the employment relationship was justified. Taylor testified that Biggs encountered problems with
employee absenteeism and retention, meeting production goals, quality control, and training, as well
as problems with Biggs’ performance of administrative duties, numerous errors and omissions in
necessary paperwork and record keeping that cost the company time and efficiency, failure to
adequately train and supervise the employees, and not maintaining the production equipment
properly. Taylor further testified that Biggs performance showed no improvement despite frequent,
and in depth counseling from his superiors for these deficiencies, all of which resulted in his failure
to attain standards sought by defendant. On September 26, 2000, the company terminated Biggs’
employment.
After hearing the evidence, the Chancellor entered judgment for the plaintiff and held
that in the circumstance of an employment contract with a definite term the employee may be
discharged before the end of the term for cause which she defined as:
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something inconsistent with the relationship of master/servant or incompatible with
the due and faithful performance of his duties. Some cases have held dishonesty,
unfaithfulness to the employer’s interest, or anything which indicates an unfitness for
service for which the employee was engaged. It must injure the master’s business or
reputation, although proof of actual damages is not necessary.
Here there’s no showing that the employee was dishonest or unfaithful or did
anything proactively adverse to the employer’s interest, so that the Court is entering
judgment in favor of the plaintiff.
Since this case was tried without a jury, we review the case de novo upon the record,
with a presumption of the correctness of the findings of fact by the Trial Court, unless the evidence
preponderates against the findings. However, we review questions of law de novo with no
presumption of correctness. Tenn. R. App. P., 13(d).
“Whether good cause exists to terminate an employment contract is a determination
made on a case-by-case basis, and exists where the discharge is ‘objectively reasonable.’” Video
Catalog Channel, Inc., v. Blackwelder, 1997 WL 581120 (Tenn. Ct. App.). When cause is required
for discharging an employee, the employer has the burden of proving the existence of good cause.
Phillips v. Morrill Electric, Inc., 1999 WL 771511 (Tenn. Ct. App.)
The failure to faithfully perform express or implied duties gives the employer the right
to terminate the employment contract for cause, prior to the expiration of its terms without incurring
liability. Jackson v. The Texas Company, 10 Tenn. App. 235 (Tenn. Ct. App. 1929).
Inattention to duty is sufficient cause for discharge, since it is incumbent upon the
employee to reasonably perform to advance and develop the employer’s business. Wyatt v. Brown,
42 S.W. 478, 481 (Tenn. Chan. App. 1897) . In general, any act which tends to injure the employer’s
business, interests, or reputation will justify termination of an employment agreement, and actual
loss need not be proven. Curtis v. Reeves, 736 S.W.2d 108, 112 (Tenn. Ct. App. 1987). As a general
rule, acts which are sufficient to be good cause for dismissal of a manager are quantitatively and
qualitatively distinct from those required to terminate an employee possessing less responsibility and
discretion. See Thomas v. Bourdette, et ux, 608 P.2d 178 (Oregon App. 1980).
The Trial Court’s reasoning in the instant case carries an implication that because
there was no intent or malice or malfeasance on plaintiff’s part, that the employer failed to show just
cause for terminating the employment. The standard does not require an element of intent to show
just cause. Sub-performance that compromises the employer’s interest or impedes the company’s
progress will justify the termination for cause. See Booth v. Fred’s Inc., 2003 WL 21998410; Wyatt
v. Brown, 42 S.W. 478 (Tenn. Chan. App. 1897).
In Lawrence v. Rawlings, 2001 WL 76266 this Court was faced with interpreting “for
cause” termination in the context of the statute providing for the grievance procedure for employees
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of Tennessee educational institutions. The statute itself did not define the term, so this Court looked
to opinions construing the term in the private employment context, observing that “[t]he types of
‘cause’ that warrant an employee’s termination include an employee’s inattention to his or her duty
to look after the employer’s best interests or performance of an action inconsistent with the
employer-employee relationship.” Id. at *5. Plaintiff points out that Lawrence deals with a statute
governing state employment situations and therefore should not be applicable to the instant case, but
there is nothing in the opinion that would distinguish the principles therein from application to the
facts of this case. The Court in Lawrence rejected the defendant’s argument attempting to limit the
scope of “for cause” termination to acts of serious misconduct, intentional wrongdoing, and other
intolerable behaviors, concluding that the concept is much broader:
We have concluded that an employee has been terminated for cause if the
employee’s termination stems from a job-related ground. A job-related ground
includes any act that is inconsistent with the continued existence of the employer-
employee relationship. Thus, an employee has been terminated for cause if the
termination stems from the employee’s failure to follow a supervisor’s directions,
poor job performance, or failure in the execution of assigned duties.
Id. at *5.
In this case, the evidence establishes that plaintiff’s job performance was deficient
across several areas, and a consistent pattern of errors and poor management did not advance the
company’s interest. Moreover, the evidence established that plaintiff was unable to improve even
though he received frequent, detailed counseling from senior management.
In this regard, plaintiff sincerely argues that defendant did not hire him for his
management skills or expertise, and since there was “not a concern” regarding the leather working
Biggs was hired to perform, and did in fact perform, defendant was precluded as a matter of law
from establishing that Briggs was terminated for cause. Plaintiff’s testimony undercuts this premise.
Plaintiff acknowledged that he knew that his job responsibilities included overseeing the lines that
he had created, and that his duties would include supervising production after the product was
developed. He admitted that he knew that he would have the additional responsibility of training
employees to do the work promptly and avoid employee turnover, and that his duties included
ordering raw materials, maintaining the equipment, and preparing work orders and assisting with
other work.
With hindsight, it is obvious that plaintiff is skilled as a craftsman, but not as a
production line manager. The law pertaining to discharge for cause does not provide for a mismatch
of employee skills to the requirements of the job as a defense to termination for unsatisfactory
performance. Contrary to the Trial Court’s conclusion, plaintiff’s inability to perform the duties
required by his position, was conduct adverse to the employer’s interest, regardless of his intention
or reason for the deficiency.
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We conclude the Trial Court erred in finding that defendant terminated plaintiff
without just cause, because the Trial Court applied the wrong standard.
The Judgment of the Trial Court is reversed and the cause remanded. The cost of the
appeal is assessed to Jerry Biggs.
______________________________
HERSCHEL PICKENS FRANKS, P.J.
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