There is No Claim for Negligent Infliction of Emotional Distress on Solely Property Damage Loss Cases in Tennessee

The Tennessee Court of Appeals in Richard Lane, et al v. Estate of Gary K. Leggett, No. M2016-00448-COA-R3-CV, 2017 WL 1176982 (Tenn. Ct. App. 2017) discussed whether a Plaintiff can recover for Negligent Infliction of Emotional Distress for a claim that involves only property damage. In this case, the Plaintiff owned a business in White House, Tennessee. The Defendant rear-ended a vehicle and left the roadway at a high rate of speed, causing his car to run into the building that contained the Plaintiff’s business. The vehicle struck a gas meter which resulted in a significant fire and caused a complete loss of the Plaintiff’s business. The Plaintiff was not actually at the property at the time of the loss, but he returned shortly thereafter and witnessed the fire at his business.




Piercing the Corporate Veil in Tennessee – When Can a Judgment Against a Corporation be the Personal Responsibility of the Shareholders?

The Tennessee Court of Appeals recently decided a case (F&M Marketing Services, Inc. v. Christenberry Trucking and Farm, Inc., E2016-00205-COA-R3-CV, 2017 WL 417223_(Tenn. Ct. App. 2017)) involving a request to pierce the corporate veil of a Defendant after the Plaintiff got a substantial judgment against that Defendant for breach of contract. The total judgment in this case was $375,524.29. After the initial judgment was entered, the Plaintiff learned that the Defendant had no assets to satisfy the judgment. As a result, the Plaintiff petitioned the trial to hold the primary shareholder of the Defendant personally liable for the judgment against the Defendant corporation. The Tennessee Court of Appeals did a good job discussing the circumstances when an individual shareholder can be found personally responsible for a judgment against a corporation in Tennessee.

The Court noted that the most important case outlining when it is appropriate to pierce the corporate veil in Tennessee is the FDIC v. Allen, 584 F. Supp. 386 (E.D. Tenn. 1984) decision.




Does Employer’s Admission of Vicarious Liability for Actions of Employee Insulate the Employer from Other Causes of Action?

The Tennessee Court of Appeals recently dealt with an issue that has not been previously discussed by Tennessee Appellate courts in Melanie Jones, Individually and on behalf of Matthew H. V. Shavonna Rachelle Windham, et al., No. W2015-00973-COA-R10-CV, 2016 WL 943722 (Tenn. Ct. App. 2016).  The question deal with the situation where an employer and employee are both sued due to the actions of the employee in causing an automobile accident (while working for the employer).  The employer, in the Answer to Complaint, admitted they were vicariously liable for the actions of the employee.  The question, therefore, was whether the plaintiff could still proceed with other claims against the employer including negligent hiring, negligent retention and negligence per se for their own independent negligent actions when they had already admitted vicarious liability for the actual accident.

For some reason, the plaintiff wanted to pursue various individual cause of actions directly against the employer in this case.




Misrepresentation of Licensed Contractor Status in Tennessee Can Cause Significant Liability

Tennessee law is clear that any person, firm or corporation who misrepresents that they are a licensed contractor is subject to significant penalties.  It is also against Tennessee law to act in the capacity of a “contractor” in Tennessee when one is not properly licensed.  Specifically, T.C.A. § 62-6-136 discusses this issue in subsection (A) as follows:

(a) It is unlawful for any person, firm or corporation to represent itself as a licensed contractor or to act in the capacity of a “contractor” as defined in §§ 62-6-102, or 62-37-103, and related rules and regulations of this state, or any similar statutes, rules and regulations of another state, while not licensed, unless such person, firm or corporation has been duly licensed under § 62-6-103 or § 62-37-104.

A licensed contractor is specifically defined in this statute.




“Reasonable” Medical Expenses in Tennessee (Amount Billed or Amount Paid?) – The Law After West and Dedmon for Personal Injury Litigation

A very important Tennessee Court of Appeals opinion was issued on June 2, 2016. In this case, Jean Dedmon v. Debbie Steelman, No. W2015-01462-COA-R9-CV (Tenn. Ct. App. June 2, 2016), the Court discussed whether the amount an insurance company actually pays for medical services in a personal injury action, is, as a matter of law, the “reasonable” amount of medical expenses. In order to recover medical expenses under Tennessee law, in a personal injury action, the plaintiff must prove the medical expenses were reasonable and necessary. The reason the Dedmon decision is so important is because of the West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014) decision. In the West case, the Tennessee Supreme Court, when interpreting the Tennessee Hospital Lien Act, essentially found that a hospital’s non-discounted charges reflected in their lien, were not reasonable because they do not reflect what is actually being paid in the marketplace. The Court found that, under the Tennessee Hospital Lien Act, the amount actually paid for the hospital charges were the reasonable charges for the services provided, not the amounts billed which were, as a matter of law, unreasonable.




Plaintiff in Tennessee Slip and Fall Case Must Identify Object that Caused Fall

A recent Tennessee Court of Appeals decision, Hilda Willis v. McDonalds Restaurants of Tennessee, Inc., No. E2015-00615-COA-R3-CV, 2015 WL 9426271 (Tenn. Ct. App. 2015), involved a slip and fall at a McDonald’s in Tennessee and it provided an interesting issue.  In this case the plaintiff was maneuvering around the area where drinks were served at a McDonald’s.  As she left that area she saw a french fry on the bottom corner of the surface next to the service counter.  She stepped over the french fry and claimed that there was a sharp object that she felt through her shoe.  She believes this is what caused her to fall.  When she fell she dropped her drinks therefore there was ice everywhere.  Because of this, there was no ability to actually identify the piece of ice or other object that allegedly caused her to fall.




Tennessee Supreme Court Modifies Spoliation of Evidence Doctrine By Removing Intentional Misconduct Requirement

Tennessee has long had a doctrine of spoliation of evidence which allows the trial court to draw negative inferences or even provide dismissal against a party who destroys evidence.  Historically, Tennessee courts have required the presence of actual intentional misconduct to invoke the doctrine of spoliation of evidence particularly when providing the remedy of a negative inference or dismissal.  The Tennessee Supreme Court in Lea Ann Tatham v. Bridgestone Americas Holding, Inc., No. W2013-02604-SC-R11-CV, 2015 WL 6688035 (Tenn. 2015) dealt with an apparent conflict between the case law and Rule 34A.02 of the Tennessee Rules of Civil Procedure that was adopted on July 1, 2006.  The full text of Rule 34A.02 provides as follows:

Rule 37 sanctions may be imposed upon a party or an agent of a party who discards, destroys, mutilates, alters, or conceals evidence.

The question before the Tennessee Supreme Court in Lea Ann Tatham was whether Tennessee Courts should continue to require an intentional misconduct prerequisite for a trial court to impose sanctions for spoliation of evidence.  The Tennessee Supreme Court decided this issue and expressed the desire to provide a uniform standard on this issue.




Tennessee Court of Appeals Confirms Forum Selection Clauses are Enforceable in Tennessee Contracts

The Tennessee Court of Appeals recently discussed forum selection clauses found in contracts.  These are clauses that select the jurisdiction and court that will handle any disputes involving the contract.  The case of The Cohn Law Firm v. YP Southeast Advertising & Publishing, LLC, 2015 WL 3883242 (Tenn. Ct. App. 2015) involved a dispute between a plaintiff attorney law firm and an advertising company.  The plaintiff’s attorney sued the advertising company in Shelby County Chancery Court over the dispute.  The defendant advertising company filed a Motion to Dismiss alleging that this jurisdiction was inappropriate due to a forum selection clause in the contract.  The contract between the plaintiff’s attorney law firm and the defendant provided that any lawsuit pertaining to the agreement should only be filed in the United States District Court for the Northern District of Georgia or the Superior Court of Dekalb County, Georgia. (The Cohn Law Firm at 2).  This contract was signed by the plaintiff attorney.




Tennessee Supreme Court Assesses when Tennessee can Apply Retaliatory Taxes on Insurance Companies from Other States

The Tennessee Supreme Court recently interpreted the laws of a foreign state in order to determine whether or not the State of Tennessee could impose a “retaliatory tax” on insurance companies based in the foreign state who operated in Tennessee as authorized workers’ compensation coverage providers. See Chartis Casualty Company et al. v. State of Tennessee, No. M2013-00885-SC-R11-CV, 2015 WL 5766279 (Tenn. October 2, 2015).

The State of Tennessee had audited a number of insurance companies based in Pennsylvania and required them to pay “retaliatory taxes” under Tenn. Code Ann. § 56-4-218. This statute allows the State of Tennessee to impose additional taxes on insurance companies from other jurisdictions when insurance companies based in Tennessee are taxed to a greater degree in those jurisdictions than the insurance companies from other jurisdictions are taxed in Tennessee. The calculation takes into account “taxes, fees, fines, penalties, licenses, deposit requirements or other obligations…” § 56-4-218(a).

In the case of the Pennsylvania companies, the State of Tennessee determined that the State of Pennsylvania’s taxes and fees on Tennessee insurance companies were higher than the State of Tennessee’s taxes and fees on Pennsylvania insurance companies. Therefore, the State of Tennessee applied “retaliatory” taxes on these Pennsylvania companies. Five of these Pennsylvania insurance companies paid the taxes under dispute to the State before filing a complaint with the Tennessee Claims Commission. The Tennessee Claims Commission granted the summary judgment motions of the State of Tennessee as to all five cases involving the five Pennsylvania insurance companies, and the Court of Appeals affirmed the rulings. The Tennessee Supreme Court granted permission to appeal.

In its opinion, the Supreme Court did not question the constitutionality of Tennessee’s retaliatory laws. Rather, the Supreme Court analyzed Pennsylvania statutes to determine whether or not Pennsylvania actually did impose a financial burden on Tennessee insurance companies doing business in Pennsylvania greater than the financial burden applied by the State of Tennessee. If they did, the Court held that Tennessee’s retaliatory taxes should have applied.

The lower courts had based their opinions on three Pennsylvania statutes which applied higher financial burdens on Tennessee insurance companies than Tennessee applied on Pennsylvania insurance companies. However, a more recent statute had been passed by the Pennsylvania legislature which stated that taxes imposed under the previous statutes were no longer to be directly imposed on insurance companies but instead were to be “imposed, collected and remitted through insurers in accordance with regulations promulgated by the Department of Labor and Industry.” 71 Pa. Cons. Stat. Ann. § 578. This statute was interpreted by the Supreme Court as not requiring the workers’ compensation assessments to be paid by insurance companies but instead to be merely collected by insurance companies from their policyholders and then paid to the State of Pennsylvania. The Court found that the newer statute repealed the three older Pennsylvania statutes imposing fees directly on insurance companies, since, because “the statutory schemes are inconsistent,” the older statutes would be repealed by implication. Chartis Casualty Company, 2015 WL 5766279 at *8.

The next question the Court analyzed was whether or not the newer Pennsylvania statute continued to place a direct financial burden upon Tennessee insurance companies doing business in Pennsylvania which exceeded the reciprocal financial burden upon Pennsylvania insurance companies doing business in Tennessee. The Court found that the fact that the policyholders of the insurance, instead of the insurance companies themselves, paid directly for these fees and taxes meant that the financial burden from the three older statutes could not be factored into a determination by Tennessee of retaliatory taxes for insurance companies. The State argued that the insurance companies’ administrative role of collecting and sending payments made by its policyholders to the State of Pennsylvania was an indirect financial burden which would be considered a fee, fine, penalty, license, deposit requirement or other obligation under the TN retaliatory tax statute. The Court, however, declined to consider this argument.

While the Court noted that the newer statute was an attempt by Pennsylvania to actively avoid retaliatory taxes for insurance companies domiciled in the state which operated in other jurisdictions, this active avoidance was successful since the financial burden of the policyholders would not factor into a determination of the financial burden for insurance companies. The Court thus found that there was no financial burden on Tennessee insurance companies operating in Pennsylvania greater than the financial burden of Pennsylvania insurance companies operating in Tennessee. Therefore, the State of Tennessee had no authority to impose retaliatory taxes upon the Pennsylvania insurance companies.


Tennessee Whistleblower Claim Requires Reporting Illegal Conduct to Other Than Wrongdoer

Recently in Haynes v. Formac Stables, Inc., Judge Wade authored a Tennessee Supreme Court opinion which dismissed a retaliatory discharge case brought pursuant to both common law and the Tennessee Public Protection Act. The Complaint alleged the owner of the business had engaged in illegal conduct and had terminated the employee when he acted as a whistleblower by complaining of conduct to the owner. The Trial Court dismissed the plaintiff’s claim, because according to the employee’s own allegations, he had not reported the illegal activity to anyone other than the person responsible for the activity.

 It was determined on appeal that an employee must report an employer’s wrongdoing to someone other than the wrongdoer to qualify as a whistleblower claim. There is a requirement of reporting to an outside entity or individual when the wrongdoer is the manager, owner or highest ranking officer within the company. The decision of the Appellate Court was affirmed.