        IN THE COURT OF APPEALS OF TENNESSEE
                    AT NASHVILLE

                                                   FILED
EVELYN LOGUE,                       )
                                                    February 1, 2000
                                    )
      Petitioner/Appellant,         )              Cecil Crowson, Jr.
                                    )   Appeal No.
                                                Appellate Court Clerk
VS.                                 )   M1999-02555-COA-R3-CV
                                    )
THE SHELBYVILLE HOUSING             )   Bedford Chancery
AUTHORITY, THE BOARD OF             )   No. 22,024
COMMISSIONERS for the               )
SHELBYVILLE HOUSING                 )
AUTHORITY, and HAROLD               )
ROSE, in his official capacity as   )
Chairman of THE BOARD OF            )
COMMISSIONERS for the               )
SHELBYVILLE HOUSING                 )
AUTHORITY,                          )
                                    )
      Respondents/Appellees.        )

 APPEALED FROM THE CHANCERY COURT OF BEDFORD COUNTY
              AT SHELBYVILLE, TENNESSEE

          THE HONORABLE TYRUS H. COBB, CHANCELLOR


FOR APPELLANT:                          FOR APPELLEES:

W. GARY BLACKBURN                       JOHN R.WHITE
JOHN R. CALLCOTT                        Union Planter’s Bank Building,
414 Union Street, Suite 2050            Suite 202
Nashville, Tennessee 37219              Shelbyville, Tennessee 37160

                                        STEVEN M. BERNSTEIN
                                        DARREN T. HORVATH
                                        945 East Paces Ferry Road
                                        Atlanta, Georgia 30326


                      AFFIRMED AND REMANDED


                                        BEN H. CANTRELL,
                                        PRESIDING JUDGE, M.S.

CONCUR:
KOCH, J.
COTTRELL, J.
                               OPINION


             The controlling issues in this appeal are (1) whether under the terms

of an employee policy manual the dismissed employee was something other than

an employee at will, and (2) whether the action of the Board of the Shelbyville

Housing Authority in upholding the dismissal was arbitrary or illegal or lacked

material evidence to support it. The Chancery Court of Bedford County reviewed

the record and found that the Board’s action was supported by substantial and

material evidence and was not arbitrary nor illegal. We affirm.



                                        I.



             Early in 1998 Evelyn Logue, a Public Housing Manager with the

Shelbyville Housing Authority, received a written disciplinary warning for

insubordination and disrespectful treatment of other employees. The charge

arose from several incidents where Ms. Logue gave orders to employees in

another department in violation of the Authority’s chain of command. Ms. Logue

refused to accept the warning and insisted on presenting her case to Mr. Thrasher,

the Executive Director of the Authority.



             Mr. Thrasher met with Ms. Logue, her immediate supervisor, and

the head of the department whose workers had complained about Ms. Logue’s

dictatorial conduct. The meeting did not go well. Ms. Logue insisted that she

had done nothing wrong; she questioned the veracity of her supervisor, the other

department head, and the men who had complained.



             After considering the matter overnight Mr. Thrasher terminated Ms.

Logue for insubordination toward a supervisor and disrespectful treatment of

other employees. Ms. Logue appealed to the Board of the Housing Authority,



                                       -2-
and the Board dismissed the insubordination charge but found that Ms. Logue had

been disrespectful to other employees.



                                        II.

                     Ms. Logue’s Employment Contract



             Ms. Logue contends that the Authority’s policy manual conferred

on her certain contract rights, among which was the status of a permanent

employee that could only be dismissed for causes set out in the manual. The

Authority counters with the argument that she was an employee at will.



             The courts have had many occasions to review the status of

employees under company handbooks, policy manuals, or manuals of operation.

The results have been varied, but the courts arrived at different conclusions

through the application of some fixed principles. The first is a presumption that

employees in Tennessee are employees at will. Rose v. Tipton County Public

Works Department, 953 S.W.2d 690 (Tenn. Ct. App. 1997). Therefore a contract

for an indefinite time is a contract at will, and may be terminated by either party

at any time without cause. Bringle v. Methodist Hosp., 701 S.W.2d 622 (Tenn.

Ct. App. 1985); Whittaker v. Care-More, Inc., 621 S.W.2d 395 (Tenn. Ct. App.

1981). A promise of permanent employment is a promise for an indefinite term

unless supported by consideration beyond the services to be furnished by the

employee. Nelson v. Martin, 958 S.W.2d 643 (Tenn. 1997). An employee

manual or handbook that creates a definite term or other employee benefit must

contain specific language showing the employer’s intent to be bound by the

handbook’s provisions. Smith v. Morris, 778 S.W.2d 857 (Tenn. Ct. App 1988).

The reservation of a unilateral right to change the handbook contradicts an intent

to be contractually bound by its provisions. Id.; Williams v. Memphis Housing

Authority, No. 02A01-9608-CV-00190, 1997 WL 287645 (Tenn. Ct. App. June

2, 1997).

                                       -3-
             In this case, the personnel policy provided that the power to appoint,

promote, transfer, demote, suspend and separate personnel is vested in the

Executive Director of the Agency. In another section under the broad heading of

“Dismissals” the policy provides: “The Executive Director may dismiss or

demote any employee in the Shelbyville Housing Authority.” The policy also

provided for a probationary period of six months during which the Executive

Director must make “a decision as to whether the employee should be dismissed

or placed in the position permanently.” If the Executive Director does not act,

“the employee shall automatically achieve regular status.”



             After giving the Executive Director blanket authority to dismiss or

demote any employee, the policy provides a long list of reasons for dismissal, but

also states that the list is not exclusive.      Among the listed reasons are

“insubordination that constitutes a serious breach of discipline” and “disgraceful

personal conduct or language toward . . . fellow officers or employees.”

Disrespect of fellow employees is not a listed reason for dismissal.



             Finally, the policy provides that it may be amended by a resolution

of the Board.



             Viewing the policy as a whole and in light of the legal precedents

in this state, we conclude that the personnel policy did not become a part of Ms.

Logue’s employment contract with the Shelbyville Housing Authority. The

Authority’s reservation of a right to amend the policy generally precludes that

conclusion. Smith v. Morris, 778 S.W.2d 857 (Tenn. Ct. App. 1988); Williams

v. Memphis Housing Authority, No. 02A01-9608-CV-00190, 1997 WL 287645

(Tenn. Ct. App. June 2, 1997). The policy also lacks the specific evidence of an

intent to be bound by its provisions that we have held is essential to a finding of

a binding contract. Smith v. Morris, 778 S.W.2d 857 (Tenn. Ct. App. 1988).



                                       -4-
             Even if the policy did make a binding contract with the employee,

its provisions did not guarantee that Ms. Logue would be employed for a definite

term or that she could only be terminated for cause. The policy specifically

provides that the Executive Director had the unrestricted right to terminate

employees – subject to a review by the Housing Authority itself. The list of

reasons for dismissal set out in the policy is non-exclusive and may be taken only

as illustrative. In other words, the policy itself leaves Ms. Logue as an employee

at will.




                                       III.

                              The Board’s Action



             The conclusion that the personnel policy does not create a contract

with the Authority’s employees makes most of the issues raised on appeal moot.

Ms. Logue argues that the initial disciplinary proceeding had been closed with a

simple reprimand and that she was dismissed for protesting her innocence before

Mr. Thrasher; that the Board, therefore, affirmed her dismissal on a ground for

which she was not disciplined; and that the Board ignored its own procedural

rules in dealing with her appeal.



             We think this version of the facts ignores the undisputed testimony

that when she was first reprimanded for being disrespectful to the maintenance

workers and their supervisor, Ms. Logue refused to accept the discipline, refused

to sign the reprimand, stated this is “not over”, and insisted on taking the matter

to Mr. Thrasher. At that hearing she inpugned the truthfulness of all the

Authority’s employees involved, including the head of her department and the

head of the maintenance department. After viewing this episode, Mr. Thrasher

                                       -5-
decided to terminate her. It is, therefore, not accurate to say that Ms. Logue’s

case was closed with only a reprimand. She chose to keep it open.



             Mr. Thrasher did testify that had Ms. Logue accepted the

responsibility for her prior acts, the matter would have been settled with the

reprimand. We do not think, however, that Mr. Thrasher was bound to let the

matter stay there when Ms. Logue’s protestations of innocence included a charge

that her co-workers and two supervisors (including her own) were lying.



             With respect to the procedural requirements of the personnel policy,

we think the Board substantially complied with them. As we have pointed out

the policy gave a terminated employee the right to have the Board review the

Executive Director’s action. The policy also provided that the employee would

be given written notice of the Executive Director’s proposed action one week

prior to the effective date, in order to allow an appeal to the Board. That

provision was not complied with in this case, but the Board granted the appeal

(rescinded the termination) and when Ms. Logue’s attorney sought a clarification

of the charges against her he received the following specification from the

Board’s attorney:

             (1)    Over the past two years, Ms. Logue has engaged
                    in a pattern of conduct that included directing
                    orders to individuals over whom she had no
                    supervisory authority.

             (2)    This practice was inconsistent with internal
                    policy requiring employees to respect the
                    hierarchy of supervision within the office, and
                    to refrain from instructing employees outside
                    the chain of command.

             (3)    Ms. Logue was reminded of this policy and
                    counseled to abide by it in recent months, yet
                    she continued to deviate from it.

             (4)    On Saturday, February 28th , Ms. Logue again
                    violated this policy by directing maintenance
                    employees to perform work in the office area,
                    bypassing both the maintenance manager and
                    the maintenance superintendent in the process.


                                      -6-
                   This contravened previous directives given to
                   Ms. Logue.

             (5)   Ms. Logue compounded the problem by
                   berating these individuals and treating them
                   with a lack of respect, despite the fact that she
                   exerted no supervisory authority over them.

             (6)   On Monday, March 2nd, the maintenance
                   employees responded by complaining to the
                   maintenance superintendent, who in turn
                   directed their concerns to the maintenance
                   manager.

             (7)   That same day, Ms. Logue again deviated from
                   the chain of command by directly instructing
                   maintenance employees to leave the field and
                   report to her office, without the knowledge or
                   consent of any supervisor or manager in the
                   maintenance department. In a loud tone of
                   voice, Ms. Logue subsequently attempted to
                   give orders to the maintenance manager when
                   he questioned her about it.

             (8)   On Wednesday, March 4th, Ms. Logue was
                   presented with a written warning documenting
                   the Authority’s concerns over her recent
                   misconduct, including insubordinately refusing
                   to direct her instructions through maintenance
                   supervision, and treating her maintenance co-
                   workers with disrespect.

             (9)   In a meeting held later that day, Ms. Logue
                   refused to accept responsibility for misconduct
                   that had since been confirmed. Instead, she
                   simply insisted that no witnesses would come
                   forward to corroborate the charges against her.

             (10) On Thursday, March 5th, a second meeting was
                  convened in the presence of the Director. Ms.
                  Logue again denied the charges, questioning the
                  veracity of all witnesses to the events of
                  February 28th. Ms. Logue again refused to
                  accept responsibility for her misconduct,
                  leaving the Director with no choice but to
                  terminate her employment.



             The Board heard the proof and upheld the dismissal. We think Ms.

Logue’s rights were protected at all levels.




                                       -7-
            We conclude that the Board’s action was not illegal, arbitrary, nor

capricious, and that its findings were supported by substantial and material

evidence. See McCallen v. City of Memphis, 786 S.W.2d 633 (Tenn. 1990).



            The judgment of the court below is affirmed and the cause is

remanded to the Chancery Court of Bedford County for any further proceedings

that may become necessary. Tax the costs on appeal to the appellant, Evelyn

Logue.




                                      _______________________________
                                      BEN H. CANTRELL,
                                      PRESIDING JUDGE, M.S.




CONCUR:




____________________________
WILLIAM C. KOCH, JR., JUDGE




____________________________
PATRICIA J. COTTRELL, JUDGE




                                     -8-
