Opinion
NO. 2019-CA-000529-MR
01-24-2020
DAVID R. CLARK APPELLANT v. ELECTRIC PLANT BOARD FOR THE CITY OF PADUCAH, d/b/a PADUCAH POWER SYSTEM APPELLEE
BRIEF FOR APPELLANT: Marilyn "Linsey" Shrewsbury Chad E. Nelson Princeton, Kentucky BRIEF FOR APPELLEE: Stephen E. Smith, Jr. Hillary C. Landry Paducah, Kentucky
NOT TO BE PUBLISHED APPEAL FROM MCCRACKEN CIRCUIT COURT
HONORABLE WILLIAM A. KITCHEN III, JUDGE
ACTION NO. 15-CI-00487 OPINION
AFFIRMING
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BEFORE: COMBS, DIXON, AND TAYLOR, JUDGES. COMBS, JUDGE: David R. Clark appeals the judgment of the McCracken Circuit Court that was entered in a declaratory judgment action filed by the Electric Plant Board for the City of Paducah, Kentucky, d/b/a Paducah Power System (Paducah Power). The circuit court concluded that Paducah Power must pay to Clark all that was required under the terms of a four-sentence written agreement constituting the terms of Clark's agreement. After our review, we affirm.
The underlying facts are not in dispute. Prior to his resignation, Clark was employed as the general manager of Paducah Power, a position that he had held for fourteen years. Clark agreed to resign during a board meeting held on September 30, 2014.
A week earlier, a long-term Chairman of the Board of Directors of Paducah Power resigned under pressure from the Paducah City Commission. The City Commission acted in response to the concerns of Paducah Power customers who had become outraged by a series of decisions made by the power company. The controversial decisions caused customers' electric bills to skyrocket.
At the September 30, 2014, board meeting, the new Board Chairman, Hardy Roberts, and Paducah Power's attorney, Kent Price, informed Clark that the board wanted him to resign as well. They advised that the board was willing to pay to him the value of three-months' salary and benefits in exchange for his immediate resignation. Clark counter-offered to resign in exchange for six-months' pay and benefits. The board agreed to these terms and drafted the brief agreement. Following the meeting, Clark executed the written agreement. His access to the executive offices of Paducah Power and to his company car was restricted.
The parties' agreement provided as follows:
I hereby submit my resignation as General Manager of the Electric Plant Board of the City of Paducah . . . effective immediately. In consideration of my resignation, [Paducah Power] will pay me my full salary and benefits for a period of six months, plus any accrued benefits to date. . . . The payments shall be made in six monthly installments.
Paducah Power determined that Clark was entitled to receive $141,159.39 under the terms of the agreement. Clark argued that he was owed the sum of $265,362.55.
Paducah Power paid to Clark $105,296.38 (the net sum it calculated to be due Clark after deducting the required withholdings) and filed a declaratory judgment action in the McCracken Circuit Court. Clark answered the complaint and filed a counterclaim alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and a request for declaratory judgment. Both parties eventually filed motions for summary judgment. In an order entered March 4, 2019, the circuit court granted judgment to Paducah Power. This appeal followed.
On appeal, Clark contends that the circuit court erred in its interpretation of the contract and in its decision to dismiss his counterclaim for bad faith. However, we cannot agree that the circuit court erred in its judgment.
Upon a motion for summary judgment, the trial court must examine the record to determine if any real or genuine issues of material fact exist. CR 56. Where no genuine issue of material fact exists, summary judgment is appropriate if it appears as a matter of law that it would be impossible for the non-moving party to produce evidence at trial warranting a judgment in his favor. "[T]he interpretation of a contract . . . is a question of law for the courts and is subject to de novo review." Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. App. 2002).
Kentucky Rules of Civil Procedure. --------
The parties agree that the terms of their agreement are simple and straightforward. Clark argues that the circuit court erred by failing to conclude that he is entitled to the value of his sick leave and the value of the unused vacation benefit that would have accrued during the six-month period following his resignation. He also contends that he is entitled to the full value of the compensation he would have earned for his participation as a Kentucky Municipal Power Agency (KMPA) board member for the six-month period following his resignation. We disagree.
It is undisputed that the value of Paducah Power's contribution to Clark's retirement benefits and the value of the premiums paid for his medical, dental, life insurance, long-term disability, and accidental death insurance for six months total $27,314.34. The parties agree that Clark has been fully compensated for the value of these benefits. It is also undisputed that Clark has been compensated for the full value of his accrued vacation leave at $15,097.05 and the full value of six-months' salary at $98,748.00.
In addition to these sums, Clark contends that he is entitled to receive the value of his accumulated sick leave. The circuit court rejected this argument.
Paducah Power is not required to provide its employees with sick leave. Moreover, as the circuit court observed, the value of accumulated sick leave is not generally payable upon an employee's separation from employment. Under the circumstances of this case, Clark's absence from the workplace was not attributable to illness. While it is the policy of Paducah Power to compensate retirees for their accumulated sick leave, Clark did not retire from his employment. Clark's employment agreement did not provide that he would be entitled to accumulated sick leave upon his resignation, nor did the terms of the resignation agreement alter Paducah Power's established policy with respect to accumulated sick leave upon an employee's separation from employment. The circuit court did not err by concluding that Clark was not entitled to the value of his accumulated sick leave pursuant to the terms of the agreement.
Clark argues that he is also entitled to the value of the compensation that he would have earned for his service to the KMPA Board of Directors had he remained employed for the six months following his resignation. Clark held his position on the board of KMPA by virtue of his employment with Paducah Power. However, as the circuit court observed in its judgment, KMPA is a public entity separate and distinct from Paducah Power. While Paducah Power included Clark's compensation as a KMPA board member in its payroll, it was directly reimbursed for the sum by KMPA. The circuit court described this arrangement as a "bookkeeping artifice" that served eventually to enrich Clark's pension draw. It concluded that only KMPA was obligated to compensate Clark for his service on its board and that Clark's entitlement to this compensation ended upon his resignation. The parties' agreement did not provide that Clark would be compensated for sums he would have earned at KMPA had he not resigned. Thus, the circuit court did not err by concluding that Clark was not entitled to collect them.
Next, Clark argues that he is entitled to the value of additional vacation time that would have accrued over the course of the six months following his resignation and to "the present value of 30 years of pension benefits that would have been payable had he remained an employee" for an additional six months. Again, we must disagree.
Paducah Power has paid to Clark the value of the unused vacation time that had accrued to him as of the date of his resignation. Vacation time was earned as part of Clark's employment. He did not continue to earn and accrue vacation time following his resignation. Similarly, Clark did not continue to earn and accrue retirement benefits following his resignation. Consequently, he was not entitled to collect the value of any additional vacation time or retirement benefits, and the circuit court did not err by concluding that Clark's interpretation of the contract was erroneous as a matter of law.
As to Clark's counterclaims, the circuit court did not err by concluding that they should be dismissed. Paducah Power timely performed its obligations under the terms of the resignation agreement; it did not breach the agreement.
Finally, the circuit court did not err by concluding as a matter of law that Clark could not establish an action for bad faith or breach of an implied covenant of good faith and fair dealing.
We AFFIRM the judgment of the McCracken Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Marilyn "Linsey" Shrewsbury
Chad E. Nelson
Princeton, Kentucky BRIEF FOR APPELLEE: Stephen E. Smith, Jr.
Hillary C. Landry
Paducah, Kentucky