LAURENCE M. McMILLAN, Jr., SP. J.
The Chief Executive Officer of a Company and the Company executed an Employment Agreement that covered, among other issues, consequences of termination with or without cause, either by the Officer or by the Company. A year or so later, the Officer called a meeting and issued an ultimatum to the board of directors threatening to resign if certain changes were not made. The Company later wrote a letter to the Officer accepting his resignation without "Good Reason" as defined in the Employment Agreement. The Officer asserted the Company terminated him "without cause" and that he did not resign. The Company responded that it did not terminate the Officer, but simply accepted his resignation. The Officer filed a complaint seeking severance pay and other benefits he claimed he was entitled to pursuant to the Employment Agreement. The trial court agreed with the Officer and granted his motion for summary judgment. The Company appealed, and we affirm the trial court's judgment.
Michael O'Neil was hired as the Chief Executive Officer of Clinically Home, LLC, ("Clinically Home" or the "Company") in November 2010. Mr. O'Neill and the Company executed an Employment Agreement that set forth, inter alia, the terms of Mr. O'Neil's employment, his compensation, and consequences of his resignation or termination by the Company.
On January 4, 2012, Mr. O'Neil called a special meeting of the Company's board of directors that was held telephonically.
Another board member asked Mr. O'Neil the following:
Mr. O'Neil responded,
In response to further questioning, Mr. O'Neil explained,
Another board member then said:
A different board member added:
According to a declaration by Bob Yungk, one of the Company's board members who ultimately succeeded Mr. O'Neil as the Chief Executive Officer, the Company had a meeting after the telephone meeting to which Mr. O'Neil was not invited. This meeting was not transcribed. According to Mr. Yungk, the Company decided at that meeting to reject Mr. O'Neil's suggestion that certain individuals leave the Company's board of directors. The Company also decided to accept Mr. O'Neil's resignation. Mr. Yungk stated in his affidavit,
The Company sent a letter to Mr. O'Neil dated January 11, 2012, purporting to accept his resignation as Chief Executive Officer of the Company, effective January 9, 2012. The relevant portion of the letter stated:
Mr. O'Neil filed a complaint against the Company in July 2012 asserting breach of contract. Mr. O'Neil asserted that the Company terminated his employment without "cause," as that term is defined in the Employment Agreement. As a result, Mr. O'Neil claims he is entitled to severance and other benefits as set forth in the Employment Agreement. Mr. O'Neil sought compensatory damages as well as reasonable costs and attorneys' fees, based on the terms of the Employment Agreement.
The Company denied that it terminated Mr. O'Neil. According to the Company, Mr. O'Neil resigned without Cause. Based on the terms of the Employment Agreement, the Company took the position that Mr. O'Neil is not entitled to any damages or to reasonable costs or attorneys' fees.
The parties engaged in discovery, and Mr. O'Neil filed a motion seeking summary judgment in February 2013. The trial court issued a Memorandum and Order granting Mr. O'Neil's motion. The trial court made the following pertinent findings of fact:
The trial court addressed the Employment Agreement's requirement for a writing in the event of either the employee's resignation or the employer's termination:
The trial court then explained why it rejected the Company's contention that it terminated Mr. O'Neil for "cause":
Concluding that the Company terminated Mr. O'Neil without Cause, as defined by the Employment Agreement, the trial court applied the severance provisions of the agreement that applied in the event of an employee's termination without cause and ruled that Mr. O'Neil is entitled to payment of his base salary ($350,000); twelve months of health insurance enrollment funds ($12,298.20); and 62,500 fully-vested profit interests in the Company.
The trial court issued a Final Judgment in August 2013 in which it clarified the money damages Mr. O'Neil was entitled to collect. The court also granted Mr. O'Neil's request for attorneys' fees in the amount of $73,497.50 and costs in the amount of $718.75.
Clinically Home appeals the trial court's judgment. The Company asserts the trial court erred in granting Mr. O'Neil summary judgment because there are factual disputes regarding (1) whether Mr. O'Neil resigned or was terminated; (2) whether Mr. O'Neil resigned with or without "Good Reason"; (3) whether Mr. O'Neil's termination was with or without "Cause"; and (4) whether Mr. O'Neil's profit interests in the Company were fully vested pursuant to the Profits Interest Agreement. Clinically Home also appeals the award to Mr. O'Neil of his attorneys' fees and costs.
A trial court's decision on a motion for summary judgment enjoys no presumption of correctness on appeal. Martin v. Norfolk Southern Railway Co., 271 S.W.3d 76, 84 (Tenn. 2008); Cumulus Broad., Inc. v. Shim, 226 S.W.3d 366, 373 (Tenn. 2007). We review the summary judgment decision as a question of law. Blair v. West Town Mall, 130 S.W.3d 761, 763 (Tenn. 2004). Accordingly, this court must review the record de novo and make a fresh determination of whether the requirements of Tenn. R. Civ. P. 56 have been met. Eadie v. Complete Co., Inc., 142 S.W.3d 288, 291 (Tenn. 2004); Blair, 130 S.W.3d at 763. Those requirements are that the filings supporting the motion show there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; Blair, 130 S.W.3d at 764.
The moving party has the burden of demonstrating it is entitled to judgment as a matter of law and that there are no material facts in dispute. Martin, 271 S.W.3d at 83; McCarley v. West Quality Food Service, 960 S.W.2d 585, 588 (Tenn. 1998). In our review, we must consider the evidence presented at the summary judgment stage in the light most favorable to the non-moving party, and we must afford that party all reasonable inferences to be drawn from that evidence. Green v. Green, 293 S.W.3d 493, 514 (Tenn. 2009); Doe v. HCA Health Services, Inc., 46 S.W.3d 191, 196 (Tenn. 2001); Memphis Housing Authority v. Thompson, 38 S.W.3d 504, 507 (Tenn. 2001).
Contract interpretation involves issues of law. Guiliano v. Cleo, Inc, 995 S.W.2d 88, 95 (Tenn. 1999). Therefore, we review a trial court's interpretation of a contract de novo, with no presumption of correctness on appeal. Dick Broad. Co., Inc. of Tennessee v. Oak Ridge FM, Inc., 395 S.W.3d 653, 659 (Tenn. 2013); Angus v. Western Heritage Ins. Co., 48 S.W.3d 728, 730 (Tenn. Ct. App. 2000). Appellate courts review the document at issue ourselves to make our own determination regarding its meaning and legal import. Hillsboro Plaza Enters. v. Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App. 1993). Our review is governed by well-settled principles.
The court's role in resolving disputes regarding the interpretation of a contract is to ascertain the intention of the parties based upon the usual, natural, and ordinary meaning of the language used. Dick Broad., 395 S.W.3d at 659 (citing Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn. 2009)); Marcum v. Ayers, 398 S.W.3d 624, 627 (Tenn. Ct. App. 2012); Guiliano v. Cleo, 995 S.W.2d at 95; Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth Inc., 521 S.W.2d 578, 580 (Tenn. 1975). The parties' intent is determined by examining the plain and ordinary meaning of the words contained within the four corners of the contract. Dick. Broadcasting, 395 S.W.3d at 659; 84 Lumber Co. v. Smith, 356 S.W.3d 380, 383 (Tenn. 2011) (citing Kiser v. Wolfe, 353 S.W.3d 741, 747 (Tenn. 2011)). If the language used is clear and unambiguous, the literal meaning of the words of the contract controls its interpretation. Dick Broad., 395 S.W.3d at 659; Allmand, 292 S.W.3d at 630; see Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 890 (Tenn. 2002) ("The intent of the parties is presumed to be that specifically expressed in the body of the contract").
Courts must avoid rewriting an agreement under the guise of interpreting it. Marcum, 398 S.W.3d at 629; Marshall v. Jackson & Jones Oil, Inc., 20 S.W.3d 678, 682 (Tenn. Ct. App. 1998). The courts will not make a new contract for parties who have spoken for themselves, Kwasniewski v. Lefevers, 2013 WL 3964788, at *3 (Tenn. Ct. App. July 30, 2013), nor will they relieve parties of their contractual obligations simply because these obligations later prove to be harsh or unwise. Marcum, 398 S.W.3d at 629; Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 223 (Tenn. Ct. App. 2002).
"A determination of the intention of the parties is generally treated as a question of law because the words of the contract are definite and undisputed, and in deciding the legal effect of the words, there is no genuine factual issue left for a jury to decide." Marcum, 398 S.W.3d at 627 (citing Planters Gin Co., 78 S.W.3d at 890). Therefore, when relevant facts are not at issue, contract disputes may be resolved through summary judgment. Marcum, 398 S.W.3d at 627; The Pointe, LLC v. Lake Management Ass'n, Inc., 50 S.W.3d 471, 474 (Tenn. Ct. App. 2000).
Clinically Home contends the trial court erred in granting Mr. O'Neil's motion for summary judgment because significant factual issues remain regarding whether Mr. O'Neil resigned or was terminated. If it was determined that Mr. O'Neil resigned, there would be a question of fact whether his resignation was with "Good Reason," according to the Company. In the alternative, the Company contends, if the Company terminated Mr. O'Neil, there would be a question of fact whether the Company terminated Mr. O'Neil with or without "Cause."
Mr. O'Neil's Employment Agreement includes provisions entitled "Termination By Company for Cause," "Termination Without Cause," "Termination by Executive for Good Reason," and "Termination by Executive Without Good Reason." Each of these sections requires "written notice" for the termination to be effective. Section 4(j), which is titled "Notice; Termination Date," contains the following requirement: "In the event of a termination for Cause or Good Reason, written notice shall specify the circumstances relied on to support the decision to terminate." Thus, it is clear and unequivocal that if the Company wanted to terminate Mr. O'Neil for Cause, or if Mr. O'Neil wanted to terminate his employment for Good Reason, (1) written notice was required, and (2) to be effective, the written notice was required to specify the circumstances relied upon to support the termination decision.
The parties agree to the following: the Employment Agreement governed Mr. O'Neil's employment by the Company; Mr. O'Neil discussed his separation from the Company during the telephone call on January 4, 2012; and Mr. O'Neil did not give written notice to the Company of any decision by him to terminate his employment. The parties also agree that Mr. O'Neil no longer is employed by Clinically Home.
Because Mr. O'Neil is no longer employed by Clinically Home, either he terminated his employment or the Company terminated his employment.
We agree with the Company's contention that Mr. O'Neil gave the Company an ultimatum during the telephone conference on January 4, but we disagree with the Company's assertion that Mr. O'Neil resigned during that call. Mr. O'Neil indicated he would resign if certain steps were not followed, but he did not in fact resign. According to the governing document, any resignation by Mr. O'Neil would not be effective without written notice, and Mr. O'Neil did not provide such notice. Thus, we decline to find that Mr. O'Neil in fact terminated his own employment, with or without Good Reason.
Clinically Home refers in its letter to Mr. O'Neil's "resignation without Good Reason." However, there is no evidence that Mr. O'Neil ever resigned without Good Reason. Instead, during the telephone conference on January 4, Mr. O'Neil stated, "I do think I'm resigning with good reason." He clarified his position by describing what he perceived to be "a conflict of my fiduciary responsibility" and "a de facto diminishment of my responsibilities and duties."
Clinically Home cannot change the terms of an offer, or accept something that is not offered. See Ray v. Thomas, 232 S.W.2d 32, 35 (Tenn. 1950) (rule is well-established and uniform that "acceptance of an offer must exactly and precisely accord with the terms of the offer"); Brown v. Gutierrez, 2004 WL 2086308, at *3 n.4 (Tenn. Ct. App. Sept. 20, 2004) (purported acceptance must mirror terms of the offer); Gardner v. Anesthesia & Pain Consultants, P.C., 2004 WL 2715304, at *8 (Tenn. Ct. App. Nov. 30, 2004) ("a proposal to accept, or an acceptance, upon terms varying from those offered, is a rejection of the offer and puts an end to the negotiation unless the party who made the original offer renews it, or assents to the modifications suggested"). There is no evidence that Mr. O'Neil offered to resign without Good Reason. We, therefore, reject Clinically Home's contention that Mr. O'Neil resigned, either with or without Good Reason.
Having established that Mr. O'Neil did not resign, the next question is whether the Company terminated him with or without Cause. The Employment Agreement requires that "[i]n an event of termination for Cause or Good Reason, written notice shall specify the circumstances relied on to support the decision to terminate." The effect of the Company's letter addressed to Mr. O'Neil dated January 11 was to terminate Mr. O'Neil's employment, but it did not specify any circumstances supporting a decision to terminate Mr. O'Neil for Cause. Thus, we hold that Clinically Home terminated Mr. O'Neil Without Cause.
The Employment Agreement specifies the benefits to which Mr. O'Neil is entitled if he is terminated Without Cause. These benefits include twelve months of Mr. O'Neil's base salary, which is $350,000, twelve months of health insurance premiums, which is $12,298.20, and 62,500 of profit interests in the Company.
Clinically Home disputes that Mr. O'Neil is entitled to the profit interests, arguing there is a question of fact regarding whether Mr. O'Neil's termination was substantially based on performance, which would result in the forfeiture of those units. Initially, we note that the Company denies terminating Mr. O'Neil at all. In addition, the record reveals that the Company approached Mr. O'Neil subsequent to his termination and asked him to continue working for Clinically Home as a consultant.
Reviewing the evidence presented in the light most favorable to Clinically Home, we conclude there are no genuine issues of material fact and that Mr. O'Neil is entitled to judgment as a matter of law. We affirm the trial court's judgment holding that Clinically Home terminated Mr. O'Neil Without Cause and that Mr. O'Neil is entitled to the damages he was awarded in the trial court.
Clinically Home next contends the trial court erred in its award of costs and attorneys' fees to Mr. O'Neil. The Company acknowledges that the Employment Agreement entitles the prevailing party to an award of reasonable costs and attorneys' fees. Clinically Home argues, however, that the amount of fees Mr. O'Neil sought and was awarded was not reasonable.
In awarding Mr. O'Neil costs of $718.75 and attorneys' fees of $73,497.50, the trial court wrote:
Rule 8 of the Tennessee Rules of the Supreme Court, RPC 1.5, sets forth the following factors to consider in determining the reasonableness of an attorney's fee:
The Court of Appeals has noted that the determination of reasonable attorney's fees is a discretionary inquiry, with no fixed mathematical formula. Killingsworth v. Ted Russell Ford, Inc., 104 S.W.3d 530, 534 (Tenn. Ct. App. 2002) (citing United Med. Corp. of Tenn. v. Hohenwald Bank & Trust Co., 703 S.W.2d 133, 137 (Tenn. 1986); Sanders v. Gray, 989 S.W.2d 343, 345 (Tenn. Ct. App. 1998)). An appellate court will, therefore, not interfere with a trial court's award of attorneys' fees unless there is a showing of an abuse of discretion. Killingsworth, 104 S.W.3d at 534; see Hohenwald Bank, 703 S.W.2d at 137 (determination of reasonable attorneys' fee is subjective).
A trial court abuses its discretion when it applies an incorrect legal standard or reaches a decision that is against logic or reasoning that causes an injustice to the party complaining. Williams v. Baptist Memorial Hosp., 193 S.W.3d 545, 551 (Tenn. 2006). The abuse of discretion standard of review does not permit an appellate court to substitute its judgment for that of the trial court. Id. at 551. Our Supreme Court has stated, "[T]his Court will not interfere with the allowance of attorney's fees by the trial court unless we can see that some injustice has been perpetrated." Connors v. Connors, 594 S.W.2d 672, 677 (Tenn. 1980).
In support of his motion for an award of attorneys' fees, Mr. O'Neil submitted an affidavit by one of his attorneys, Steven A. Riley, in which Mr. Riley stated that the hourly rates charged by his firm were consistent with the rates of attorneys with similar experience performing similar types of work in the area. Mr. Riley submitted excerpts from the National Law Journal's 2008 and 2009 billing surveys showing that the hourly rates he and his associate charged Mr. O'Neil were within the range of hourly rates charged by other lawyers in Nashville back in 2008, which was several years before the litigation in this case.
In addition to its contention that the rates charged by Mr. O'Neil's attorneys were abnormally high, Clinically Home claims the trial court abused its discretion by permitting Mr. O'Neil to recover for duplicative work. The trial court found, however, and we agree, that the amount of duplicative work was limited. The Company has not established how the trial court abused its discretion in determining that Mr. O'Neil's attorneys acted reasonably in working together on certain aspects of the case.
Finally, Clinically Home contends Mr. O'Neil is not entitled to collect fees for time his attorneys spent preparing their motion for an award of fees. We disagree with the Company because the only way Mr. O'Neil could be awarded his attorneys' fees was if his attorneys prepared the necessary documents describing the basis for their fees. The Employment Agreement expressly provides that "the successfully enforcing party shall recover all reasonable costs and attorneys' fees from the other." In the absence of proof that Mr. O'Neil's attorneys did not charge Mr. O'Neil for their time preparing a motion for an award of their fees, we find this time appropriate to include in the overall award of fees.
Clinically Home has failed to establish the trial court abused its discretion in awarding Mr. O'Neil his attorneys' fees and costs in the amount that was awarded. Accordingly, we affirm this aspect of the trial court's award.
The trial court's judgment is affirmed in all respects. Costs of this appeal shall be taxed to the appellant, Clinically Home, LLC, for which execution shall issue, if necessary.
