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Goot v. Metropolitan Government of Nashville and Davidson County11/9/2005
red insurance benefits. This contract must include a " aiver of premium benefits for disability occurring prior to age sixty. . . ."
The Metropolitan Government's obligation to its employees does not end with simply making arrangements to provide group benefits to its employees. Because of the complexity of group benefits, the Metropolitan Employee Benefit Board must also take steps to make sure that the employees are aware of and understand what their benefits are. Accordingly, the Metropolitan Employee Benefit Board must " irect the preparation of and approve a booklet explaining the metropolitan employee benefit system in full detail, and make available in the pension office to metropolitan employees full information concerning a metropolitan employee's status and his [or her] rights concerning the system. . . ."
2. The Metropolitan Government's Duty of Good Faith and Fair Dealing
Under Tennessee Law, every contract carries with it an implied covenant of good faith and fair dealing. Wallace v. Nat'l Bank of Commerce, 938 S.W.2d 684, 686 (Tenn. 1996); Elliott v. Elliott, 149 S.W.3d 77, 84-85 (Tenn. Ct. App. 2004). As a result of this covenant, each contracting party promises to perform its part of the contract in good faith and, in return, expects the other party to do the same.
The purpose of the implied-in-law covenant is two-fold. First, it honors the contracting parties' reasonable expectations. Bayou Land Co. v. Talley, 924 P.2d 136, 154 (Colo. 1996); Cox v. CSX Intermodal, Inc., 732 So. 2d 1092, 1097 (Fla. Dist. Ct. App. 1999); Cenac v. Murry, 609 So. 2d 1257, 1272 (Miss. 1992); Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 586 (N.J. 1997). Second, it protects the rights of the parties to receive the benefits of the agreement they entered into. Winfree v. Educators Credit Union, 900 S.W.2d 285, 289 (Tenn. Ct. App. 1995); see also Wagenseller v. Scottsdale Mem'l Hosp., 710 P.2d 1025, 1040 (Ariz. 1985); Guz v. Bechtel Nat'l, Inc., 8 P.3d 1089, 1110 (Cal. 2000); Habetz v. Condon, 618 A.2d 501, 505 (Conn. 1992). The implied obligation of good faith and fair dealing does not, however, create new contractual rights or obligations, nor can it be used to circumvent or alter the specific terms of the parties' agreement.
Despite the seemingly broad application of the implied duty of good faith and fair dealing to all contracts, this court is not of one mind regarding its application to employment contracts. The Eastern Section has held that the duty of good faith and fair dealing is part of every employment contract. Hooks v. Gibson, 842 S.W.2d 625, 628 (Tenn. Ct. App. 1992); Williams v. Maremont Corp., 776 S.W.2d 78, 80-81 (Tenn. Ct. App. 1988). However, the Western Section has held that there is no implied duty of good faith and fair dealing in employee-at-will contracts. McGee v. Best, 106 S.W.3d 48, 67 (Tenn. Ct. App. 2002); Randolph v. Dominion Bank, 826 S.W.2d 477, 479 (Tenn. Ct. App. 1991). The Middle Section has held that the employment agreements include the implied duty of good faith and fair dealing, Dunn v. Matrix Exhibits, Inc., No. M2003-02725-COA-R3-CV, 2005 WL 2604048, at *3 (Tenn. Ct. App. Oct. 13, 2005), but has also held that employers do not breach their implied duty of good faith and fair dealing when they fire an at-will employee. Whittaker v. Care-More, Inc., 621 S.W.2d 395, 396 (Tenn. Ct. App. 1981).
We have determined that the Western Section went too far when it completely excised the implied duty of good faith and fair dealing from at-will employment contracts. The cases before the Western Section involved at-will employees who believed that they had been fired unfairly. They asserted that their termination was
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