Vanderbilt University v. Dinardo

174 F.3d 751 (6th Cir. 1999)


Dinardo (D) and Vanderbilt (P) executed a contract under which D was to be P’s head football coach. D promised to work for P for the entire 5-year term of the contract and if for any reason he left his employ with P prior to the expiration of the contract, that D would pay to P liquidated damages in the amount of net pay less sums withheld for taxes multiplied by the number of years remaining on the contract. During negotiations, D got P to modify the provisions of the liquidated damages clause so it would be calculated on his net pay rather than gross pay. D expressed a desire to have his contract extended and P and D discussed extending it by two years. D was presented with an extension for an additional two years and D signed the extension. At the time of the signing D was told that his present contract as exists was to be extended for the two years with everything else remaining the same. On December 12, 1994, D announced his decision to accept a job with LSU and resigned his employment with P. D now contends that the liquidated damages provision is a penalty. The district court entered summary judgment for P, awarding $281,886.43 pursuant to a damage provision in D's employment contract. D argues that the district court erred in concluding: (1) that the contract provision was an enforceable liquidated damage provision and not an unlawful penalty under Tennessee law; (2) that P did not waive its right to liquidated damages; (3) that the Addendum to the contract was enforceable; and (4) that the Addendum applied to the damage provision of the original contract.