Breach of Employment Agreements Ripe for Summary Judgment

Some employees enter into employment agreements that include the terms for severance and other benefits. In JIMMY L. HENSLEY V. COCKE FARMER’S COOPERATIVE, Mr. Hensley and Cocke Farmer’s Cooperative entered into a severance agreement in February of 2010 that stated Mr. Hensley would receive a certain amount of severance in certain circumstances, including termination without cause. This agreement was approved by the cooperative’s board. However, in 2010, in a move that should not come as a shock to any Tennessee lawyer who represents employee’s and workers, the Board moved to both RESEND the severance agreement and then to terminate Mr. Hensley’s employment contract without cause.

Both the employee’s laywer and the employer’s lawyers filed for summary judgment. The Trial Court found the agreement between the employee and the employer to be an enforceable contract, and found for summary judgement in favor of the employee Mr. Hensley, who is the plaintiff in the case. Farmer’s was ordered to pay Mr. Hensley $380,236.21 in accrued severance benefits plus pre-judgment interest (which is interest on the money that Mr. Hensley lost by not and potentially gained by Farmer’s while they withheld the funds). The Trial Court further ordered Farmer’s to pay Hensley $6,125 per month plus his premiums “for health insurance coverage equivalent to the . . . coverage in force for Jimmy Hensley immediately prior to his termination,” until August 12, 2024.

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The Court of Appeals upheld the ruling and gave us the following quality tidbits:

  • “The co-op further asserts that the agreement fails for lack of sufficient
    consideration. The agreement provides for severance pay for Hensley, an employee of
    more than thirty-five years, who had been serving as a general manager for fourteen years
    at the time the agreement was executed. The severance pay was due in the event Hensley
    was terminated without cause. The agreement also provided that Hensley’s employment
    status remained “at-will.” The consideration provided by Hensley was his continuing
    employment with the co-op.” This is great caselaw to show consideration in employment contracts. Mr. Hensley could have gone elsewhere, and possibly made more money, and would have been enticed to remain at the Farmer Co-Op because of this severance provision. This has not been explicitly laid out yet in current Tennessee case law, and is very good for Employee’s lawyers.
  • On the issue of the damages being unreasonable: “In contrast, the recovery of severance pay is not conditioned upon a breach of contract or a reasonable estimation of damages. Generally, severance pay is a form of compensation paid by an employer to an employee at a time when the employment relationship is terminated through no fault of the employee. Black’s Law Dictionary 1374 (6th ed. 1990). The reason for severance pay is to offset the employee’s monetary losses attributable to the dismissal from employment and to recompense the employee for any period of time when he or she is out of work.”

Overall, this is a great case for Tennessee lawyers representing employee’s in employment law cases and severance agreements because it clearly lays out the law for us to use for motions for summary judgment on our own.

You can read the full opinion here: https://www.tba.org/sites/default/files/hensleyj_083115.pdf

Has your employer been giving you the run around on your severance package? Call Employee’s Lawyer Morgan Smith (615) 620-5848 we have experience negotiating severance agreements and litigating in both State and Federal Courts.

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