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ÆÚ3|x\(W(3Oç$¤¤Ý ƒ1˜!ÝÒ°ÒÒ„°ÒÔ€XD#XXXÔÝ  Ýà ` àòòÚ  Ú0Ú  Úóó(è–$¡¡Ñ°°ÑÑ°°ÑÒ°ÒÒ„°ÒÓ  ÓÑTR[À AØ'ÿ Legal[À AØ'ÿ Legal AØ' legal AØ' legalTÑÔ‡XäKXXXÔÔ‡U` UXXäKÔÓ$;Ó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ("ÿÿ$££Ò  ÒÒ  Ò""""'ÿÿdxd d(#Ã$òòÚ  Ú0Ú  Úóó< Œ 9p`(&Times New Roman% Line 7 d''''7Border 1dd*+ ,-Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó ó..'÷ÿ dxdüÿP Pd* (Cþÿ << Gÿÿ< Œ 9p`(Arial SÝ ƒ!ÝÑ  ÑÑ#€d#ÑÔ€&ÔÒ  ÒÒ „ ÒÔ€ÔÝ  ÝÝ ƒ+"ÝÝ  ÝÔ€0ÔÔ€0ÔÓ  ÓÔ YYY ÔFILEDÔ€0XÔÌÌò òJulyÏ1,Ï1997ÌÌCecilÏCrowson,ÏJr.ÌÔ€0ôÔAppellateÏCourtÏClerkó ó #Ý ƒ!ÝÑ#€d#ÑÔ€&ÔÒ  ÒÒ „ ÒÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  Ý€€At€all€times€relevant€to€this€dispute,€CEO€was€a€wholly€ownedÏsubsidiary€of€Gibson€Greetings,€Inc.Ì ­Ý ƒ!ÝÑ#€d#ÑÔ€&ÔÒ  ÒÒ „ ÒÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  Ý€€At€the€summary€judgment€hearing,€Cleo€insisted€that€this€affidavitÏshould€be€stricken€on€the€grounds€that€the€affidavit€set€forth€facts€that€wouldÏnot€be€admissible€in€evidence€as€required€by€Tenn.€R.€Civ.€P.€56.05.€€WeÏdisagree.€This€is€clearly€an€admission€by€an€agent€of€Cleo€that€is€against€CleoððsÏinterest,€as€argued€by€Guiliano,€and€would€be€admissible€as€such€under€theÏTennessee€Rules€of€Evidence€803(1.2)(D).€€In€any€event,€there€is€ample€otherÏevidence€to€support€our€conclusion.Ì PÝ ƒ!ÝÑ#€d#ÑÔ€&ÔÒ  ÒÒ „ ÒÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  Ý€€Cleo€makes€much€of€the€fact€that€Guiliano€indicated€that€he€wasÏcurrently€employed€on€his€application€to€Wangððs.€€This€does€not€present€aÏgenuine€issue€of€material€fact.€€The€issue€in€this€case€is€whether€the€removal€ofÏGuilianoððs€duties€was€a€constructive€termination€in€breach€of€the€contract,€notÏwhether€Guiliano€was€actually€terminated€or€whether€he€perceived€that€he€hadÏbeen€terminated.Ì< Œ 9p`(Courier NewPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'hStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  h HD: Geneva ÒÒ  h HD: Geneva ÒÝ ƒ!ÝÔ . ÔÔ€&ÔÒ  ÒÒ „ ÒÔ€ÔÝ  ÝÑ\R AØ'\ÑÑ\R AØ'\ÑÑ7€\›XXdðdÈ7ÑÑ  ÑÓ  ÓÙ€*ÙßR€/1(A1-j| ` à. `€€@ÿRßÞ ÞÌà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌà@ àWESTERN€SECTION€AT€JACKSONÌà àà à€€€€_______________________________________________ÌÌò òANTHONY€P.€GUILIANO,€ó óÌÌà àPlaintiff„Appellee,ÌÌVs.à àà àà àà àà àà àà àShelby€Circuit€No.€67428Ìà àà àà àà àà àà àà àC.A.€No.€02A01„9608„CV„00201Ìò òCLEO€INC.,€ó óÌÌà àDefendant„Appellant.Ì____________________________________________________________________________ÌÌà@ àFROM€THE€SHELBY€COUNTY€CIRCUIT€COURTÌà@ àTHE€HONORABLE€JAMES€E.€SWEARENGEN,€JUDGEÌÌÌÌà@ àFrank€L.€Watson,€III;€Waring€Cox,€PLC€of€MemphisÌà@ àFor€AppelleeÌÌà@ àJames€H.€Stock,€Jr.€and€George€H.€Rieger,€II;Ìà@ àWeintraub,€Robinson,€Weintraub,€Stock,€Bennett,€Ìà@ àEttingoff€&€Grisham,€P.C.€of€MemphisÌà@ àFor€AppellantÌÌÌÌÌÌÌà@ àò òòòREVERSED€AND€REMANDEDÌÌà@ àó óóóOpinion€filed:ÌÌÌÌÌÌÌÌÌÌò òà àà àà àà àà àà àà àà àW.€FRANK€CRAWFORD,Ìà àà àà àà àà àà àà àà àPRESIDING€JUDGE,€W.S.ÌÌÌÌÌCONCUR:ÌÌALAN€E.€HIGHERS,€JUDGEÌÌHEWITT€P.€TOMLIN,€JR.,€SENIOR€JUDGEÌó óÌ›Ñ7€\›XXdðXXdð7ÑÑ  ÑÓÓà àThis€is€a€breach€of€an€employment€contract€case.€€Defendant,€Cleo,€Inc.Ï(Cleo),€appeals€the€order€of€the€trial€court€granting€summary€judgment€in€favorÏof€plaintiff,€Anthony€P.€Guiliano€(Guiliano).Ìà àThe€material€facts€are€essentially€undisputed.€€Cleo€is€a€TennesseeÏcorporation€engaged€in€the€production€and€manufacture€of€gift€wrap€and€relatedÏaccessories,€and€its€principal€place€of€business€is€in€Memphis,€Tennessee.€€InÏ1991,€Cleo€hired€Guiliano€as€one€of€its€directors€of€marketing.€€In€November€ofÏ1992,€Cleo€promoted€Guiliano€to€Vice€President€of€Marketing€and€entered€intoÏa€contract€(Agreement)€stating€the€terms€of€this€employment.€This€Agreement,Ïconsisting€of€a€letter€from€Michael€Pietrangelo,€then€Cleoððs€President€and€ChiefÏExecutive€Officer,€provided€in€relevant€part€as€follows:ÌÓÓà8 àà8 àCleo€Inc€and€I€are€very€pleased€that€you€have€agreedÏto€serve€as€Vice€President,€Marketing€of€Cleo€Inc€(theÏð ðCompanyðð),€a€wholly€owned€subsidiary€of€GibsonÏGreetings,€Inc.× ƒ2 ××  ×€€As€Vice€President,€Marketing€youÏwill€report€to€the€President,€and€perform€thoseÏfunctions€currently€assigned,€which€functions€andÏresponsibilities€can€be€changed€at€the€discretion€ofÏthe€Company.€€The€following€terms€and€conditionsÏwill€govern€your€service€to€the€Company:ÌÌà8 àà8 à1.à àYou€will€the€serve€the€Company€on€a€full„timeÏbasis€as€a€senior€executive€employee,€and€theÏCompany€will€€employ€you€as€such,€for€a€period€ofÏthree€years€commencing€November€1,€1992€andÏending€October€31,€1995€unless€you€are€terminated€atÏan€earlier€date€pursuant€to€Paragraphs€6,€7,€or€9€ofÏthis€Agreement.€€Your€annual€salary€will€be€$103,000€.Ï.€.€.€No€later€than€six€months€prior€to€the€expirationÏof€the€original€term,€or€any€renewal€term,€of€thisÏAgreement,€it€will€be€reviewed€by€the€Company€forÏthe€purpose€of€deciding€whether€or€not€it€will€beÏrenewed€upon€its€expiration.€€You€will€be€notified€of€aÏdecision€not€to€renew.€€If€you€are€not€notified€of€aÏdecision€not€to€renew,€the€Agreement€willÏautomatically€renew€from€year€to€year.ÌÌà àà à*à àà àà àà à*à àà àà àà à*ÌÌà8 àà8 à7.à àIn€the€event€you€voluntarily€terminate€yourÏemployment€during€the€term€of€this€Agreement,€or€ifÏthe€Company€terminates€this€Agreement€and€yourÏemployment€for€cause,€your€right€to€all€compensationÏhereunder€shall€cease€as€of€the€date€of€termination.€ÏAs€used€in€this€Agreement,€ð ðcauseðð€shall€meanÏdishonesty,€gross€negligence,€or€willful€misconduct€inÍthe€performance€of€your€duties€or€a€willful€andÏmaterial€breach€of€this€Agreement.€€Termination€ofÏemployment€shall€terminate€this€Agreement€with€theÏexception€of€the€provisions€of€Paragraphs€8,€9,€10,€andÏ12.ÌÌà8 àà8 à8.€€à àAlso€in€the€event€you€voluntarily€terminate€yourÏemployment€hereunder,€or€in€the€event€the€CompanyÏterminates€this€Agreement€and€your€employment€forÏcause€you€agree€that€for€a€period€of€two€years€afterÏsuch€termination,€you€will€not€compete,€directly€orÏindirectly,€with€the€Company€or€with€any€division,Ïsubsidiary,€or€affiliate€of€the€Company€or€participateÏas€a€director,€officer,€employee,€consultant,€advisor,Ïpartner,€or€joint€venturer€in€any€business€engaged€inÏthe€manufacture€or€sale€of€greeting€cards,€gift€wrap,€orÏother€products€produced€by€the€Company,€or€by€anyÏdivision,€subsidiary,€or€affiliate€of€the€Company,Ïwithout€the€Companyððs€prior€written€consent.ÌÌà8 àà8 à9.à àIn€the€event€the€Company€terminates€thisÏAgreement€and€your€employment€without€cause,€youÏshall€continue€to€be€paid€your€then€current€salaryÏfrom€the€date€of€termination€through€October€31,Ï1995.€€ÌÌÓÓà àIn€1994,€Cleo€underwent€some€changes€in€its€upper€management.€€JackÏRohrbach€replaced€Michael€Pietrangelo€as€the€President€of€Cleo,€and€MarcÏEnglish€joined€Cleo€as€its€Senior€Vice€President€of€Marketing€and€Creative.€€OnÏSeptember€13,€1994,€Cleo€informed€Guiliano€that€it€would€not€renew€hisÏemployment€contract€and€that€his€employment€would€end€on€October€31,€1995.€ÏThere€is€no€evidence€in€the€record€that€Cleo€had€any€cause€to€terminateÍGuiliano.€€Jack€Rohrbach€later€testified€that€he€decided€at€about€this€time€notÏto€use€Guiliano€as€Vice€President€of€Marketing€in€the€future.€€On€SeptemberÏ28,€1994,€€Guiliano€received€a€letter€from€Cleo€informing€him€that€he€wasÏð ðrelieved€of€his€duties€as€Vice€President€Marketing,ðð€that€he€was€to€receive€anyÏfuture€assignments€from€the€president€of€the€company,€and€that€he€was€toÏperform€these€assignments€from€home.€€The€letter€also€advised€Guiliano€that€heÏhad€no€authority€to€bind,€represent,€or€speak€for€Cleo€in€any€manner.€€RohrbachÏalso€testified€that€it€was€his€opinion€that€Cleo€did€not€have€a€Vice€President€ofÏMarketing€at€this€time.€€Instead,€the€majority€of€Guilianoððs€authority€andÏresponsibilities€were€assumed€by€Marc€English.€€On€November€3,€1994,€CleoÏsent€Guiliano€a€letter€informing€him€that€he€was€not€authorized€to€use€anyÏcorporate€credit€cards€and€that€he€was€to€return€these€credit€cards€to€Cleo.€ÏGuiliano€later€received€another€letter,€dated€November€17,€informing€him€thatÏas€of€December€1,€1994,€Cleo€would€no€longer€answer€a€telephone€line€for€him,Ïthat€all€calls€would€be€screened€to€determine€if€they€were€of€a€business€orÏpersonal€nature,€and€that€only€the€personal€calls€would€be€directed€to€GuilianoððsÏhome€phone.€€The€letter€further€informed€Guiliano€that€he€could€retrieve€onlyÏthe€personal€names€in€his€Rolodex€because€the€business€contacts€were€theÏproperty€of€Cleo.€€In€an€affidavit€submitted€in€support€of€Guiliano,€JanÍSobierski€stated€that€upon€placing€a€telephone€call€to€Cleo€and€asking€to€speakÏto€Guiliano,€the€receptionist€said€that€Guiliano€was€no€longer€with€theÏcompany.× ƒ3 ××  ×€€Guiliano€did€not€receive€any€assignments€from€Cleo€after€SeptemberÏ28,€1994,€but€he€received€his€full€salary€and€benefits.€€On€December€12,€1994,ÏGuiliano€accepted€employment€with€Wangððs€International,€Inc.€(Wangððs)€at€aÏsalary€of€$110,000€a€year.× ƒ4 ××  ×Ìà à€€On€January€26,€1995,€Guiliano€filed€a€complaint,€alleging€that€CleoÏð ðterminatedðð€him€without€cause€in€breach€of€the€Agreement.€€In€thisÏcomplaint,€Guiliano€avers€that€Cleo€constructively€terminated€him€when€itÏreduced€and€removed€his€duties€and€that€he€is€therefore€entitled€to€damages.€ÏOn€March€29,€1995,€Cleo€filed€its€answer€admitting€that€it€relieved€Guiliano€ofÍhis€duties€as€Vice€President€of€Marketing,€but€denying€that€it€constructivelyÏterminated€him€in€breach€of€the€Agreement.€€On€January€5,€1996,€Guiliano€filedÏhis€Motion€for€Summary€Judgment.€€On€February€28,€1995,€Cleo€filed€itsÏMotion€for€Summary€Judgment€and€Response€to€Plaintiffððs€Motion€forÏSummary€Judgment.€€After€a€hearing,€the€trial€court€entered€an€order€on€AprilÏ16,€1996€granting€Guilianoððs€Motion€for€Summary€Judgment€and€denying€CleoððsÏMotion€for€Summary€Judgment.€€The€trial€court€awarded€Guiliano€his€salaryÏremaining€under€the€contract,€$90,125.00,€plus€$14,296.54€in€prejudgmentÏinterest,€for€a€total€award€of€$104,421.54.€€Cleo€appeals€the€trial€courtððsÏdecision.Ìà àOn€appeal,€Cleo€presents€two€issues€for€review€as€stated€in€its€brief:ÌÓÓà8 àà8 à1.€€Did€the€trial€court€err€in€failing€to€grantÏdefendantððs€Motion€for€Summary€Judgment€whereÏdefendant€established€that€it€did€not€terminateÏplaintiff,€it€did€not€breach€the€employment€agreementÏwith€plaintiff,€and€there€are€no€genuine€issues€ofÏmaterial€fact?ÌÓÓÓÓÌÓÓÓÓà8 àà8 à2.€€Assuming,€òòarguendoóó,€that€the€trial€court€did€notÏerr€in€granting€plaintiffððs€Motion€for€SummaryÏJudgment,€did€the€trial€court€err€in€holding€thatÏplaintiff€was€entitled€to€recover€damages?ÌÌÓÓà àA€trial€court€should€grant€a€motion€for€summary€judgment€when€theÏmovant€demonstrates€that€there€are€no€genuine€issues€of€material€fact€and€thatÍthe€moving€party€is€entitled€to€a€judgment€as€a€matter€of€law.€€Tenn.€R.€Civ.€P.Ï56.03.€€The€phrase€"genuine€issue"€as€stated€in€Rule€56.03€refers€to€genuineÏfactual€issues€and€does€not€include€issues€involving€legal€conclusions€to€be€drawnÏfrom€the€facts.€€òòò òByrd€v.€Halló óóó,€847€S.W.2d€208,€211€(Tenn.€1993).€€€Because€theÏmaterial€facts€are€undisputed€here,€we€agree€that€granting€summary€judgment€toÏone€of€the€parties€was€proper.€€€Therefore,€we€must€decide€whether€the€legalÏconclusions€on€which€the€trial€court's€grant€of€summary€judgment€was€based€areÏcorrect.€€€Our€review€is€òòò òde€novoó óóó€on€the€record€with€no€presumption€of€theÏcorrectness€of€the€trial€court's€conclusions€of€law.€€òòò òUnion€Planters€Nat'l€Bank€v.ÏAmerican€Home€Assurance€Co.ó óóó,€865€S.W.2d€907,€912€(Tenn.€App.€1993).Ìà àCleo€argues€that€the€trial€court€erred€in€granting€summary€judgment€inÏfavor€of€Guiliano€for€two€reasons.€€First,€Cleo€contends€that€the€AgreementÏguarantees€only€that€Cleo€would€employ€Guiliano€as€a€ð ðsenior€executiveÏemployee,ðð€and€not€as€its€Vice€President€of€Marketing.€€Second,€Cleo€arguesÏthat€it€did€not€breach€the€contract€because€the€Agreement€specifically€statesÏthat€Guilianoððs€functions€and€responsibilities€were€subject€to€change€at€itsÏdiscretion.€€Instead,€Cleo€maintains€that€Guiliano€voluntarily€terminated€hisÏemployment€with€Cleo€when€he€accepted€employment€with€Wangððs.€€Ìà àThis€case€centers€on€the€construction€of€the€employment€contract.€€AsÍthis€Court€stated€in€òòò ò€Park€Place€Center€Enterprises,€Inc.€v.€Park€Place€MallÏAssociatesó óóó,€836€S.W.2d€113€(Tenn.€App.€1992):ÌÓÓà8 àà8 àà àThe€cardinal€rule€for€interpretation€of€contractsÏis€to€ascertain€the€intention€of€the€parties€and€to€giveÏeffect€to€that€intention€consistent€with€legalÏprinciples.€€In€construing€contracts,€the€wordsÏexpressing€the€partiesðð€intentions€should€be€given€theirÏusual,€natural,€and€ordinary€meaning.€€€All€provisionsÏof€a€contract€should€be€construed€in€harmony€withÏeach€other,€if€such€construction€can€be€reasonablyÏmade,€so€as€to€avoid€repugnancy€between€the€severalÏprovisions€of€a€single€contract.€€If€the€provisions€areÏrepugnant€and€cannot€be€reconciled,€the€first€andÏprinciple€clause€is€controlling€and€the€subsequentÏprovisions€repugnant€thereto€are€void€andÏunenforceable.€ÌÌÓÓòòò òId.€ó óóóat€116€(citations€omitted).€à à€Ìà àWith€the€above€well„established€rules€in€mind,€we€will€now€examine€theÏcontract€in€dispute.€€The€first€clause€in€the€Agreement€provides€that€Guiliano€isÏto€serve€as€ð ðVice€President,€Marketing.ðð€€Subsequent€terms€in€the€AgreementÏprovide€that€Guiliano€will€serve€Cleo€as€a€ð ðsenior€executive€employeeðð€or€anÏð ðexecutive€employee.ðð€€To€the€extent€that€the€term€ð ðVice€President,€MarketingððÏconflicts€with€subsequent€terms€in€the€Agreement,€the€subsequent€terms€areÏtherefore€void€and€unenforceable€because€they€are€repugnant€to€the€first€andÏprinciple€term€in€the€contract.€€ò òòòId.€ó óóóat€116.€€We€find€that€Cleo€hired€Guiliano€toÏbe€its€Vice€President€of€Marketing€and€now€turn€to€whether€Cleo€breached€theÍAgreement€by€removing€all€of€Guilianoððs€duties€in€this€capacity.Ìà àCleo€relies€on€ò òòòCanady€v.€Meharry€Medical€Collegeó óóó,€811€S.W.2d€902Ï(Tenn.€App.€1991).€€In€ò òòòCanadyó óóó,€Meharry€Medical€College€decided€not€renew€theÏone„year€contract€of€one€its€resident€physicians€and€restricted€the€residentððsÏduties€for€the€remainder€of€his€contract€term.€€ò òòòId.ó óóó€at€904.€€The€resident€suedÏfor€breach€of€contract€for€the€failure€to€renew€his€contract.€€ò òòòId.€€óóó óThis€CourtÏheld€in€favor€of€the€medical€college€as€to€its€failure€to€renew€the€contract.€€ò òòòId.ó óóóÏat€906.€€The€Court€also€addressed€the€restriction€of€the€residentððs€duties,€notingÏthat€the€resident€had€no€claim€for€breach€of€contract€because€there€was€noÏprovision€in€his€contract€guaranteeing€the€he€would€he€assigned€particularÏduties.€€ò òòòId.ó óóó€at€904„05.€€€€€€€€Ìà àWe€find€that€Cleoððs€reliance€on€ò òòòCanadyó óóó€is€misplaced.€€In€ò òòòCanadyó óóó,€there€isÏnothing€to€indicate€that€the€contract€called€for€the€medical€college€to€employÏthe€plaintiff€as€anything€but€a€resident.€€In€this€case,€the€Agreement€guaranteedÏGuiliano€employment€as€the€Vice€President€of€Marketing€with€all€the€prestigeÏand€authority€that€comes€with€such€an€executive€title.€€In€addition,€the€medicalÏcollege€in€ò òòòCanady€óóó ómerely€restricted€the€residentððs€duties.€€It€did€not€remove€allÏof€his€duties€in€the€position€for€which€he€was€hired,€as€in€this€case.€€€Ìà àGuiliano€principally€relies€on€one€of€our€unpublished€cases,€ò òòòSmith€v.ÍAmerican€General€Corp.ó óóó,€No.€87„79„II,€1987€WL€15144€(Tenn.€App.€Aug.€5,Ï1987),€for€the€proposition€that€a€reduction€in€authority€and€responsibility€canÏconstitute€a€breach€of€an€employment€contract.€€In€ò òòòSmithó óóó,€NTL€CorporationÏhired€Smith€as€its€Executive€Vice€President€of€Investments€and€entered€into€anÏemployment€contract€guaranteeing€that€Smith€would€be€employed€in€ð ðsuchÏemployment€or€in€a€position€of€comparable€responsibility.ðð€€ò òòòId.ó óóó€at€*1.€ÏSubsequently,€American€General€Corporation€acquired€NTL€and€reducedÏSmithððs€authority€and€duties.€€ò òòòId.€óóó óat€*2.€€As€a€result€of€the€changes€in€hisÏauthority,€Smith€resigned€and€sued€for€breach€of€his€employment€contract€forÏthe€failure€to€employ€him€as€promised.€€ò òòòId.€€óóó óOn€appeal,€this€Court€stated€that:ÌÓÓà8 àà8 àContrary€to€the€insistence€of€defendant,€suchÏreduction€in€authority€and€responsibility€didÏconstitute€a€violation€of€the€contract€for€whichÏdefendant€was€responsible€in€damages.€€Superficially€itÏmay€be€argued€that€an€employee€whose€titularÏposition€and€salary€are€continued€has€no€basis€forÏcomplaint€as€to€reduction€in€work€load.€€However,€toÏthose€highly€skilled€and€motivated€employees€whoÏhave€the€pride€in€their€accomplishment€andÏresponsibility,€salary€is€not€the€only€remuneration€forÏemployment.€€To€such€employees,€the€loss€of€Ïresponsibility€or€authority€is€equal€to€or€worse€thanÏloss€of€pay.€€Section€5€[the€ð ðcomparableÏresponsibilityðð€provision]€of€the€contract€recognizesÏthis€situation€and€provides€for€it.ÌÌà8 àà8 àDefendant€cites€authorities€to€the€effect€that€changesÏin€authority€are€not€regarded€as€a€breach€ofÍemployment€contract,€however,€the€contract€in€theÏpresent€case€expressly€guaranteed€the€continuation€ofÏexisting€duties€and€authority€or€a€substitution€ofÏequivalent€duties€and€authority.€€Whatever€the€generalÏlaw€on€the€subject,€the€provisions€of€the€contract€areÏcontrolling€between€the€parties.ÌÌÓÓò òòòId.ó óóó€at€*4.€€ò òòòAccord€Lazenby€v.€American€Gen.€Corp.ó óóó,€No.€89„67„II,€1989€WLÏ196244€(Tenn.€App.€Sept.€13,€1989)€(holding€that€an€employer€breached€anÏemployment€contract€with€a€ð ðcomparable€responsibilityðð€provision€when€itÏreduced€an€employeeððs€duties).Ìà àCleo€argues€that€ò òòòSmith€óóó óis€distinguishable€because€the€Agreement€in€thisÏcase€does€not€contain€a€provision€guaranteeing€Guiliano€employment€in€aÏposition€of€ð ðcomparable€responsibility.ðð€€To€the€contrary,€Cleo€points€out€thatÏthe€Agreement€specifically€provides€that€Guilianoððs€functions€andÏresponsibilities€are€subject€to€change€at€its€discretion.€Ìà àWe€agree€with€the€Cleo€that€the€Agreement€is€distinguishable€from€theÏemployment€contract€in€ò òòòSmithó óóó€because€of€the€absence€of€a€ð ðcomparableÏresponsibilityðð€provision.€€Even€without€such€a€provision,€however,€Cleo€wasÏunder€a€duty€to€act€fairly€and€in€good€faith€when€exercising€its€right€to€changeÏGuilianoððs€functions€and€responsibilities€as€its€Vice€President€of€Marketing.€€AsÏstated€in€ò òòòTSC€Industries,€Inc.€v.€Tomlinó óóó,€743€S.W.2d€169€(Tenn.€App.€1987):ÌÓÓà8 àà8 àIt€is€true€that€there€is€implied€in€every€contract€aÍduty€of€good€faith€and€fair€dealing€in€its€performanceÏand€enforcement,€and€a€person€is€presumed€to€knowÏthe€law.€€òòSeeóó€Restatement€(2d)€Contracts,€ðð€205Ï(1979).€€What€this€duty€consists€of,€however,€dependsÏupon€the€individual€contract€in€each€case.€€InÏconstruing€contracts,€courts€look€to€the€language€ofÏthe€instrument€and€to€the€intention€of€the€parties,Ïand€impose€a€construction€which€is€fair€andÏreasonable.€€€òòò òSee,€e.g.,€Covington€v.€Robinsonó óóó,€723ÏS.W.2d€643,€645„6€(Tenn.€App.1986).€òòò òÌÌÓÓTSC€Industries,€ó óóó743€S.W.2d€at€173.€€Ìà àWe€do€not€believe€that€it€is€a€fair€and€reasonable€construction€of€theÏcontract€to€say€that€the€parties€intended€Guiliano€to€serve€as€Vice€President€ofÏMarketing€in€name€only€and€to€sit€at€home€and€do€nothing€until€the€term€ofÏthe€Agreement€expired.€€Our€conclusion€is€supported€by€the€testimony€ofÏMichael€Pietrangelo,€the€former€President€and€Chief€Executive€Officer€of€Cleo:ÌÓÓà8 àà8 àIn€my€opinion,€Tony€was€„„€this€document€said€youÏare€Vice€President€of€Marketing€for€the€next€threeÏyears,€and€that€meant€that€you€perform€as€ViceÏPresident€of€Marketing.€€Whether€or€not€we€add€orÏtake€away€responsibilities€could€be,€for€example,€areÏgoing€to€put€the€art€department€under€you,€or€goingÏto€take€everyday€gift€wrap€out€from€under€you,€butÏyou€are€still€the€Vice€President€of€Marketing.€€ÌÌÓÓà à€Although€the€Agreement€certainly€contemplated€a€reasonable€ð ðchangeððÏin€Guilianoððs€€functions€and€responsibilities,€it€did€not€contemplate€theÏcomplete€removal€of€his€functions€and€responsibilities€so€that€his€position€wasÍrendered€a€virtual€nullity.€€€ò òòòAccord€McLaughlin€v.€Union€Leader€Corp.ó óóó,€116€A.2dÏ489,€493€(N.H.€1955);€ò òòòsee€also€Rudman€v.€Cowles€Communications,€Inc.ó óóó,€280ÏN.E.2d€867,€872€(N.Y.€App.€1972)€(holding€that€an€œemployer›€could€notÏdischarge€employee€for€refusing€to€perform€assignments€that€were€inconsistentÏwith€the€executive€position€called€for€in€the€contract,€even€though€theÏassignments€were€at€the€companyððs€discretion).€€Therefore,€we€hold€thatÏGuiliano€was€entitled€to€treat€his€employment€as€terminated€and€the€contractÏas€breached€when€Cleo€relieved€him€of€all€of€his€duties€and€responsibilities€asÏVice€President€of€Marketing.Ìà àIn€the€second€issue,€Cleo€argues€that€the€trial€court€erred€in€awardingÏdamages€because€Guiliano€accepted€a€position€with€Wangððs€at€a€higher€salaryÏand€did€not€suffer€any€actual€harm.€€Alternatively,€Cleo€argues€that€theÏprovision€is€a€liquidated€damages€provision€that€is€unenforceable€because€it€is€aÏpenalty.€€Guiliano,€on€the€other€hand,€argues€that€the€provision€in€theÏAgreement€is€a€severance€pay€provision.€€Even€if€the€provision€is€construed€toÏbe€a€liquidated€damages€provision,€Guiliano€argues€that€it€is€not€a€penalty.€€Ìà àParagraph€nine€of€the€Agreement€stipulates€that€if€Cleo€terminatesÏGuiliano€without€cause,€Guiliano€is€entitled€to€be€paid€his€current€salary€fromÏthe€date€of€termination€to€the€date€of€the€expiration€of€the€Agreement.€€ItÍappears€to€the€Court€that€whatever€label€or€title€we€put€on€this€particularÏprovision€of€the€contract,€it€is€a€provision€calling€for€payment€of€a€sum€certainÏin€the€event€of€a€certain€occasion.€€This€is,€in€effect,€a€liquidated€damagesÏprovision,€which€is€a€sum€stipulated€by€the€parties€in€the€contract€to€be€paid€toÏcompensate€for€injuries€in€the€event€of€a€breach.€€ò òòòSee€V.L.€Nicholson€Co.€v.ÏTranscon€Inv.€&€Fin.€Ltd.ó óóó,€ò òòòInc.ó óóó,€595€S.W.2d€474,€484€(Tenn.€1980).Ìà à€Liquidated€damages€provisions€must€be€reasonable€in€relation€to€theÏterms€of€the€contract€and€the€certainty€with€which€damages€can€be€measured.€€Ïòòò òMcGann€v.€United€Safari,€Inc.ó óóó,€694€S.W.2d€332,€336€€(Tenn.€App.€1985).€ÏThere€must€be€a€reasonable€relationship€between€the€amount€stipulated€asÏliquidated€damages€and€what€might€reasonably€be€expected€in€the€event€of€aÏbreach.€€ò òòòId.ó óóó€(citing€òòò òV.L.€Nicholson€Co.,€ó óóó595€S.W.2d€at€484).€€Whether€aÏprovision€for€liquidated€damages€is€reasonable€is€determined€prospectively,€atÏthe€time€that€the€parties€entered€into€the€contract,€rather€than€retrospectively.€Ïòòò òKendrick€v.€Alexanderó óóó,€844€S.W.2d€187,€191€(Tenn.€App.1992).€€€€à àÌà àEven€if€the€liquidated€damages€provision€is€reasonable€at€the€time€ofÏcontracting,€recovery€will€be€limited€to€actual€damages€if€the€amount€stipulatedÏas€liquidated€damages€is€so€greatly€in€excess€of€actual€damages€that€it€is,€inÏeffect,€a€penalty.€€òòò òBeasley€v.€Horrelló óóó,€864€S.W.2d€45,€50€(Tenn.€App.€1993);Íòòò òHarmon€v.€Eggersó óóó,€699€S.W.2d€159,€163€(Tenn.€App.€1985).€€€BecauseÏforfeitures€and€penalties€are€not€favored,€any€doubt€as€to€whether€a€sum€is€aÏpenalty€or€liquidated€damages€will€generally€be€resolved€as€the€former.€€ò òòòBeasleyó óóó,Ï864€S.W.2d€at€50;€ò òòòHarmonó óóó,€699€S.W.2d€at€163.€€ÌÑ7€ü¡XXdðXXdð7Ñà àIn€ò òòòNorwalk€Door€Closer€Co.€v.€Eagle€Lock€&€Screw€Co.ó óóó,€220€A.2d€263Ï(Conn.€1966),€the€Court€said:ÌÓÓà8 àà8 à€€€€€The€circumstances€which€the€parties€mightÏreasonably€foresee€at€the€time€of€making€a€contractÏcould,€in€any€given€case,€be€vastly€different€from€theÏcircumstances€which€actually€exist€when€a€court€isÏcalled€upon€to€enforce€the€contract.€€It€is€not€theÏfunction€of€the€court€to€determine€by€hindsight€theÏreasonableness€of€the€expectation€of€the€parties€at€theÏtime€the€contract€was€made,€but€it€is€the€function€ofÏthe€court€at€the€time€of€enforcement€to€do€justice.€€InÏthe€ordinary€contract€action€the€court€determines€theÏjust€damages€from€evidence€offered.€€In€a€validÏcontract€for€liquidated€damages,€the€parties€areÏpermitted,€in€order€to€avoid€the€uncertainties€andÏtime„consuming€effort€involved,€to€estimate€inÏadvance€the€reasonably€probable€foreseeable€damagesÏwhich€would€arise€in€the€event€of€a€default.€€ImplicitÏin€the€transaction€is€the€premise€that€the€sum€agreedÏupon€will€be€within€the€fair€range€of€those€justÏdamages€which€would€be€called€for€and€provable€hadÏthe€parties€resorted€to€proof.€€ò òòòConsequently,€if€theÏdamage€envisioned€by€the€parties€never€occurs,€theÏwhole€premise€for€their€agreed€estimate€vanishes,€and,Ïeven€if€the€contract€was€to€be€construed€as€one€forÏliquidated€damages€rather€than€one€for€a€penalty,Ïneither€justice€nor€the€intent€of€the€parties€is€served€byÏenforcement.€€To€enforce€it€would€amount€in€reality€toÍthe€infliction€of€a€penalty.óó€€ó óÌò òòòÌIdó óóó.€at€268€(emphasis€added)€(citations€omitted).€€ÓÓ€The€ò òòòNorwalk€ó óóóopinion€is€wellÏreasoned€and€conforms€to€œthis›€Courtððs€perception€of€the€law€in€this€jurisdiction.Ìà àIn€this€case,€although€Guiliano€was€able€to€secure€employment€withÏWangððs€at€a€higher€salary,€this€was€not€certain€at€the€time€the€parties€enteredÏinto€the€contract.€€Rather,€it€was€within€the€fair€contemplation€of€the€partiesÏthat,€if€Guiliano€was€terminated€without€cause,€he€would€not€be€able€to€find€aÏcomparable€position€at€the€same€salary€or€that€he€would€suffer€damages€thatÏwould€be€difficult€to€prove,€such€as€a€loss€of€status€or€prestige€or€a€loss€ofÏadvancement€opportunities.€€€Therefore,€the€liquidated€damages€provision€wasÏreasonable€at€the€time€the€contract€was€entered€into€in€terms€of€what€mightÏhave€been€anticipated€in€the€event€of€a€breach.Ìà àNonetheless,€there€is€no€proof€in€the€record€that€Guiliano€suffered€òòanyóóÏactual€harm€as€a€result€of€the€breach.€€The€record€indicates€that€Guiliano€wasÏnot€only€able€to€find€comparable€employment,€but€that€he€found€employment€atÏa€higher€salary.€€Moreover,€he€presented€no€proof€whatsoever€as€to€any€loss€ofÏprestige,€status,€advancement€opportunities,€or€other€damages.€€In€fact,€theÏrecord€shows€that€Guiliano€did€not€even€suffer€a€loss€in€pay€between€positions.€ÏUnder€these€facts,€we€conclude€that€the€liquidated€damages€provision,€whichÍwould€allow€Guiliano€a€recovery€of€$90,125.00,€plus€interest,€is€grosslyÏdisproportionate€in€light€of€the€fact€that€he€suffered€no€actual€harm.€€TheÏpurpose€of€a€liquidated€damages€provision€is€not€to€provide€a€party€with€aÏwindfall.€€Therefore,€the€liquidated€damages€provision€in€this€case€isÏunenforceable€as€a€penalty.€€€€€€Ìà àAccordingly,€the€judgment€of€the€trial€court€is€reversed,€and€this€case€isÏremanded€for€such€further€proceedings€as€are€necessary.€€Costs€of€appeal€areÏassessed€against€the€appellee.ÌÓÓà àà àà àà àà àà àà à_________________________________Ìà àà àà àà àà àà àà àò òW.€FRANK€CRAWFORD,€Ìà àà àà àà àà àà àà àPRESIDING€JUDGE,€W.S.ó óÌò òCONCUR:ÌÌ____________________________________ÌALAN€E.€HIGHERS,€JUDGEó óÌÌ____________________________________Ìò òHEWITT€P.€TOMLIN,€JR.,€SENIOR€JUDGEó óœÔ€5ÔÔ€5Ô