             IN THE COURT OF APPEALS OF TENNESSEE
                         AT NASHVILLE
                                April 28, 2006 Session

      WILLIS BRUCE AMOS, et al., v. THE METROPOLITAN
    GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY,
                      TENNESSEE

                Appeal from the Chancery Court of Davidson County
                  No. 02-2622-I   Claudia C. Bonnyman, Judge


              No. M2005-00932-COA-R3-CV - Filed on August 2, 2007


This appeal involves a declaratory judgment on the issue of whether pursuant to the
Metro Code, the Metropolitan Government of Nashville and Davidson County,
Tennessee, should have included lump-sum payments for accrued vacation time in the
calculation of pension benefits for retired employees, or in the alternative, whether the
Metropolitan Government of Nashville and Davidson County, Tennessee should be
estopped from excluding lump-sum payments for accrued vacation time from the
calculation of pension benefits for retired employees. On appeal, the Appellants claim
that the trial court erred in finding that: 1) pursuant to the Metro Code, lump-sum
payments should be excluded from the calculation of pension benefits for retired
employees, 2) the Metropolitan Government of Nashville and Davidson County,
Tennessee is not estopped from excluding the lump-sum payments from the calculations,
and 3) denying certification of this matter as a class action. Finding no error, we affirm.

  Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

JERRY SCOTT , SR. J., delivered the opinion of the court, in which WILLIAM BRYAN CAIN ,
J., joined and FRANK G. CLEMENT , JR., J., dissented.

C. Dewey Branstetter, Jr., Mark A. Mayhew, and David L. Raybin, Nashville, Tennessee,
for the appellants, Willis Bruce Amos, et al.

Karl F. Dean, James L. Charles, Laura Kidwell, and Matthew J. Sweeney, Nashville,
Tennessee, for the appellee, the Metropolitan Government of Nashville and Davidson
County, Tennessee.
                                       OPINION

                                         I. Facts

        The Appellants are former employees of the police and fire departments of the
Metropolitan Government of Nashville and Davidson County, Tennessee, the Appellee,
who retired after September 13, 2001. All of the Appellants worked for over 25 years
for the Appellee, and one of the Appellants worked as long as 40 years for the Appellee.

        From 1988 to September 2001, lump-sum payments for accrued vacation time
were made to employees of the Appellee prior to their retirement date, which resulted in
an increase in pension benefits due to the inclusion of the lump-sum payments in the
calculation for pension benefits. In October 2000, Tony Driver, a Metro Benefit Board
representative, conducted a retirement seminar for the Appellee’s employees that were
contemplating retirement. At the seminar, he represented to the prospective retirees that
the lump-sum payment for accrued vacation time would be included in the calculation of
their pension benefits.

        In September 2001, the attorneys in the Metro Department of Law opined that
payment for unused vacation time in a lump-sum before an employee’s termination
should not occur. A month later, the Director of Finance instructed department heads
that lump-sum payments for accrued vacation time should not be paid until the final
paycheck was issued. As a result, the lump-sum payments were made after the
retirement date and were not included in the calculation of pension benefits. All of the
Appellants retired after the date of the directive by the Director of Finance, and the lump-
sum payments that they received for accrued vacation time were not included in the
calculation of their pension benefits. The Appellants claim that the Appellee should have
included the lump-sum payments for accrued vacation time in the calculation of their
pension benefits, or in the alternative, that the Appellee should be estopped from
excluding the lump-sum payments for accrued vacation time in the calculation of their
pension benefits. The trial court found that pursuant to the Metro Code, lump-sum
payments should be excluded from the calculation of pension benefits for retired
employees, the Metropolitan Government of Nashville and Davidson County, Tennessee
is not estopped from excluding the lump-sum payments from the calculations, and that
the matter is not the proper case for certification as a class action.

                               II. Standard of Review

        “Summary judgments enable courts to conclude cases that can and should be
resolved on dispositive legal issues.” Church v. Perales, 39 S.W.3d 149, 156
(Tenn.Ct.App.2000). Summary judgment is appropriate “when there is no genuine issue
as to any material fact and the moving party is entitled to a judgment as a matter of law.”
Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.1993). Appellate review of a trial court's grant


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of summary judgment presents a question of law, which the appellate courts review de
novo affording no presumption of correctness to the trial court's decision. Mooney v.
Sneed, 30 S.W.3d 304, 306 (Tenn.2000). The evidence must be viewed in the light most
favorable to the nonmoving party, drawing all reasonable inferences in the nonmoving
party’s favor. Edwards v. Hallsdale-Powell Utility Dist., 115 S.W.3d 461, 464 (Tenn.
2003).

                                III. Issues on Appeal

   There are two dispositive issues on appeal as follows:

   A. Whether the trial court erred by finding that pursuant to the Metro Code, lump-
      sum payments for accrued vacation time should be excluded from the calculation
      of the Appellants’ pension benefits.

   B. Whether the trial court erred by finding that the Appellee is not estopped from
      excluding lump-sum payments for accrued vacation time from the calculation of
      the Appellants’ pension benefits.


                                     IV. Analysis

   A. Whether the trial court erred by finding that pursuant to the Metro Code,
      lump-sum payments for accrued vacation time should be excluded from the
      calculation of the Appellants’ pension benefits.

        Appellants’ pensions were calculated pursuant to Chapter 3.37 of the
Metropolitan Code based upon their “average earnings.” Under Metropolitan Code §
3.08.010(1), “average earnings” is defined as the “arithmetic monthly average of a
metropolitan employee’s earnings during the period which contains the sixty consecutive
months of credited service which produces the highest average.” “Earnings” is then
defined under Metropolitan Code § 3.08.010(3), in pertinent part, as “the total cash
compensation paid by the metropolitan government . . . to a metropolitan employee for
his personal services . . . .” Therefore, “average earnings” is the “arithmetic monthly
average of [the total cash compensation paid by the metropolitan government . . . to a
metropolitan employee for his personal services . . .] during the period which contains the
sixty consecutive months of credited service which produces the highest average.”

       For the Appellants to prevail, they must prove that the lump-sum payments for
accrued vacation time are “earnings” as defined in Metropolitan Code § 3.08.010(3),
which defines earnings as the “total cash compensation paid by the metropolitan
government . . . to a metropolitan employee for his personal services . . . .” A lump-sum
payment for accrued vacation time is cash compensation; however, the issue is whether
the lump-sum payment is for “personal services.”


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       As compensation for their personal services, the Appellants received a salary,
vacation time, insurance and other benefits. Article 8.210 of the Charter of the
Metropolitan Government states that:

       Every member of the [Police] department shall be entitled to two (2) days
       off each week and to an annual vacation of twenty (20) days without
       deduction of pay. The time for vacations shall be determined and
       assigned by the chief of police. All members of the department shall be
       subject to call and assignment to duty at any time during an emergency.

Article 8.308 uses the same language except it applies to the fire department. Therefore,
for both police and fire department employees, vacation time is the right to take time off
without deduction of pay and is earned by providing personal services. If an employee
uses vacation time for a day off, the employee receives cash compensation for that day,
as if the employee had worked. When an employee retires, the employee may elect to
either receive a lump-sum cash payment for their accrued vacation time or elect to
remain on the payroll and exercise his or her right to take time off without deduction of
pay.

         Vacation pay is a form of compensation for services rendered, and when the
services are rendered, the right to secure the promised compensation is a vested right.
Whaler v. Melville Corp., No. 84-287-II, 1985 Tenn. App. LEXIS 2787, at *8 (Tenn. Ct.
App. April 3, 1985). In this case, accrued vacation time is a vested right to take time off
without deduction of pay that is earned by performing personal services. However,
accrued vacation time is not the right to receive a lump-sum payment upon retirement.
The lump-sum payment is made in lieu of the retiring employee using his/her accrued
vacation time. Stated differently, the Appellants are receiving the lump-sum payment for
their accrued vacation time, not for performing personal services. In essence, the
Appellants are selling their accrued vacation time back to their employer instead of
exercising their right to take time off without deduction of pay. Therefore, we hold that
lump-sum payments for accrued vacation time are not “earnings” as defined in
Metropolitan Code § 3.08.010(3) because the lump-sum payments are not for “personal
services”. Hence, if the lump-sum payments for accrued vacation time are not “earnings”
as defined in Metropolitan Code § 3.08.010(3), then they are not includable in the
calculation of pension benefits as “average earnings” pursuant to Chapter 3.37 of the
Metropolitan Code. Furthermore, because the lump-sum payment is not includable as
“average earnings,” the timing of the lump-sum payment, whether it was made prior to or
after retirement, does not affect this Court’s decision.


   B. Whether the trial court erred by finding that the Appellee is not estopped
      from excluding lump-sum payments for accrued vacation time from the
      calculation of the Appellants’ pension benefits.



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        The elements of equitable estoppel are: (1) acts, statements, or failures to act
made by a party that mislead the moving party, (2) the moving party lacks knowledge of
the facts and is entitled in good faith to rely on the party’s acts, statements or failures to
act, (3) a change in position by the moving party in reliance on the party’s acts,
statements or failures to act, and (4) the resulting change in position is to the moving
party's detriment. Roach v. Renfro, 989 S.W.2d 335, 339 (Tenn.Ct.App.1998); Sexton v.
Sevier County, 948 S.W.2d 747, 751 (Tenn.Ct.App.1997). Also, when equitable estoppel
is applied to a public agency, “[t]he rule in this State is that the doctrine of estoppel
generally does not apply to the acts of public officials or public agencies.” Bledsoe
County v. McReynolds, 703 S.W.2d 123, 124 (Tenn. 1985). “Public agencies are not
subject to equitable estoppel or estoppel in pias to the same extent as private parties and
very exceptional circumstances are required to invoke the doctrine against the State and
its governmental subdivisions.” Id. (emphasis added). Therefore, for equitable estoppel
to apply in this case, the Appellants must prove that the Appellee’s agents acted, made
statements, or failed to act upon which the Appellants reasonably relied, and as a result of
their reliance, changed their positions to their detriment. Furthermore, because the
Appellants are moving to estop a public agency, they must also prove that “very
exceptional circumstances” exist for the doctrine to apply to the Appellee.

        First, the Appellants must prove that agents of the Appellee made statements,
committed acts, or failed to act, which misled the Appellant. For over ten years, the
Appellee made lump-sum payments for accrued vacation time prior to termination of
employment and included the lump-sum payments in the calculation of pension benefits.
Also, at a seminar conducted by a representative from the Metro Benefit Board,
projections of monthly pension benefits for retiring officers included lump-sum payments
for accrued vacation time. Then, in 2001, the Appellee stopped making lump-sum
payments for accrued vacation time prior to termination of employment so that the
payments would not be included in the calculation of pension benefits. Based on the
foregoing, the Appellee made statements and committed acts that misled the Appellants.

        Second, the Appellants must prove that they lacked knowledge of the facts and
are entitled in good faith to rely on the Appellee’s acts, statements or failures to act. The
only interpretation of the Metro Code regarding the inclusion of lump-sum payments for
vacation pay in the calculation of pension benefits that the Appellants received was from
the Appellee’s agents. The Appellee included vacation pay in the calculation for pension
benefits for over ten years and at a seminar conducted by a representative from the Metro
Benefit Board, projections of monthly pension benefits included the lump-sum payments.
Therefore, the Appellants lacked knowledge of the facts. Furthermore, based on the
projections at the seminar and the length of time that the Appellee included the lump-sum
payments in the calculation of pension benefits, the Appellants were entitled to rely on
the Appellee’s agents’ acts and statements.

        Third, the Appellants must prove that they changed their positions in reliance on
the acts and statements of the Appellee. Arguably, the Appellants may have retired at


                                              5
different times than they otherwise would have in the belief that their pension benefits
would be higher in reliance on the Appellee’s statements and prior actions of including
the lump-sum payments for accrued vacation time into the calculation of pension
benefits. The Appellants began retiring on or about December 31, 2001, three months
after the Metropolitan Government Department of Law issued its opinion on September
13, 2001 stating that lump-sum payments for accrued vacation time would not be
included in the calculation for pension benefits. On October 31, 2001, prior to their
retirement, the Director of Finance and the Human Resources Director for the Appellee
notified department heads that lump-sum payments for accrued vacation time would be
made after retirement, and therefore, would not be included in the calculation for pension
benefits. Presumably, the Appellants knew that the lump-sum payments would no longer
be included in the calculation and could have chosen not to change their positions by
retiring when they did.

         Fourth, assuming that the Appellants changed their positions based on the acts
and statements of the Appellee by retiring, the Appellants must prove that their changes
of their positions were to their detriment. If the Appellants are claiming that the lower
pension benefits are to their detriment, then equitable estoppel does not apply to this case
because a person not entitled to receive a benefit, does not suffer a detriment by failing to
receive it. As stated in the previous section, the Metro Code did not give the Appellants
the right to have lump-sum payments for accrued vacation time included in the
calculation of their pension benefits. The Appellee mistakenly included the lump-sum
payments in the calculation of pension benefits in contradiction of the code, but the
earlier recipients never had the right to receive the benefit. Therefore, the Appellants did
not change their positions to their detriment unless they passed up opportunities or
suffered some other economic losses besides lower pension benefits. For example, if the
Appellants had a right to the pension benefits and then gave that right up in reliance on
the Appellee’s actions, then equitable estoppel may apply. Also, if the Appellants had
chosen to work for the Appellee instead of taking another employment opportunity based
on the belief that they would receive higher pension benefits, then equitable estoppel may
apply. However, the record contains no evidence that the Appellants passed up any
opportunities or suffered any other economic losses. Hence, equitable estoppel does not
apply to this case because the Appellants did not rely on the Appellee’s actions to their
detriment.

        Finally, even assuming that all four elements of equitable estoppel are met, the
Appellants must prove that “very exceptional circumstances” exist for the doctrine of
equitable estoppel to apply to the Appellee, a public agency. Determining whether “very
exceptional circumstances” exist is a fact intensive inquiry and is obviously different in
every case. In this case, the Appellants failed to receive a benefit, to which they had no
legal right. Furthermore, as stated above, the record contains no evidence that the
Appellants changed their positions to their detriment in reliance on the Appellee’s
agents’ statements, acts, or failures to act. Very exceptional circumstances were not



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shown to exist in this case and the doctrine of equitable estoppel does not apply to the
Appellee.


                                     V. Conclusion

        In conclusion, we hold that the trial court did not err by finding that lump-sum
payments for accrued vacation time should be excluded from the calculation of the
Appellants’ pension benefits. Furthermore, the trial court did not err by finding that the
Appellee is not estopped from excluding lump-sum payments for accrued vacation time
from the calculation of the Appellants’ pension benefits. Having affirmed the trial court
and found against the Appellants’ positions on the first two issues, the remaining issue
raised by the Appellants, whether the trial court erred by not certifying the case as a class
action, is moot.

        Therefore, the judgment of the trial court is affirmed with costs of appeal assessed
against appellants and their surety.




                                               ________________________________
                                                     Jerry Scott, Senior Judge




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