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Goot v. Metropolitan Government of Nashville and Davidson County11/9/2005
a breach of the employment agreement because it violated their employer's implied duty of good faith and fair dealing. The Western Section resolved the claim in the employer's favor by holding that employment-at-will contracts do not contain an implied duty of good faith and fair dealing.
Employees-at-will have no contract right or expectation of continued, indefinite employment because they can be terminated at any time for any reason. However, they may have other contract rights and expectations, such as the right and expectation to be paid the agreed-upon wage and the right and expectation of having work hours consistent with applicable federal and state law. Williams v. Maremont Corp., 776 S.W.2d at 81. Because the implied obligation of good faith and fair dealing does not create new rights or modify existing contract rights, it would have been more appropriate for the Western Section to hold that the implied duty of good faith and fair dealing cannot modify the employment-at-will doctrine and, therefore, that an employer does not breach its implied duty of good faith and fair dealing when it discharges an at-will employee for any reason.
Accordingly, we find that the Metropolitan Government's employment agreement with its employees includes an implied obligation of good faith and fair dealing on the part of both the Metropolitan Government and its employees. This obligation required both parties to act in good faith or "to act in word and deed, in a responsible manner." Williams v. Maremont Corp., 776 S.W.2d at 81 (quoting Henry R. Gibson, Gibson's Suits in Chancery § 34, at 34 (William H. Inman ed., 6th ed. 1982)).
3. The Metropolitan Government's Performance of Its Contractual Obligations Regarding the Waiver of Premium Benefit
When employers procure group insurance policies to cover their employees, they are acting for themselves and as agents for their employees. Boseman v. Conn. Gen. Life Ins. Co., 301 U.S. 196, 204-05, 57 S.Ct. 686, 690 (1937); Hale v. Am. Home Assurance Co., 224 Tenn. 650, 656, 461 S.W.2d 384, 386 (1970); Bates v. Jim Rule Chevrolet, Inc., No. 16, 1990 WL 51295, at *6 (Tenn. Ct. App. Apr. 26, 1990) (No Tenn. R. App. P. 11 application filed); Nidiffer v. Clinchfield R.R. Co., 600 S.W.2d 242, 246 (Tenn. Ct. App. 1980). Accordingly, they have a duty to act in good faith and with due diligence in obtaining insurance for their employees. Estate of Saffles v. Reliance Universal, Inc., 701 S.W.2d 821, 823-24 (Tenn. Ct. App. 1985); Nidiffer v. Clinchfield R.R. Co., 600 S.W.2d at 246. The surviving spouses are not taking issue in this case with the manner in which the Metropolitan Government obtained the group life insurance policies first from the New York Life Insurance Company and later from Aetna Life Insurance Company. Accordingly, for the purpose of this appeal, we presume that the Metropolitan Government breached no obligation to its employees when it obtained the group life insurance policy.
However, an employer's duty to inform its employees of their rights and benefits under a group insurance policy is independent from its obligation to procure the policy. The source of this duty may be statutory or contractual or may even be imposed by the common law. Burnette v. Purolator Courier Corp., No. 1284, 1990 WL 801, at *2 (Tenn. Ct. App. Jan. 9, 1990), perm. app. denied (Tenn. Mar. 26, 1990). In this case, Metro. Code § 3.08.040(A)(3) required the Metropolitan Government to explain the employee benefit system "in full detail" and to make available in the retirement office "full information" concerning the employees' "status and . . . rights concerning the system. . . ." Accordingly, the Metropolitan Government, as part of its emplo
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