IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON
TENNESSEE FARMERS MUTUAL ) FILED INSURANCE COMPANY, ) July 23, 1999 ) Plaintiff/Appellant, ) Gibson Circuit No. 7405 Cecil Crowson, Jr. ) Appellate Court Clerk v. ) ) Appeal No. 02A01-9711-CV-00284 MATTIE BRADFORD, NOLAN ) BRADFORD and wife, JACKIE ) BRADFORD, ) ) Defendants/Appellees. )
APPEAL FROM THE CIRCUIT COURT OF GIBSON COUNTY AT TRENTON, TENNESSEE
THE HONORABLE DICK JERMAN, JR., JUDGE
For the Plaintiff/Appellant: For the Defendants/Appellees:
Charles L. Trotter, Jr. Bill R. Barron Huntingdon, Tennessee J. Mark Johnson Trenton, Tennessee
James Belew Webb Milan, Tennessee
AFFIRMED
HOLLY KIRBY LILLARD, J.
CONCUR:
W. FRANK CRAWFORD, P.J., W.S.
DAVID R. FARMER, J. OPINION
This is a declaratory judgment action brought by an insurance company under a homeowner’s
policy against the insured, as well as her son and her daughter-in-law. The insured’s house was
damaged by fire. The insurance company contended that the fire was intentionally set. The
insurance company alleged that the insured failed to cooperate with the investigation by declining
to direct her son and daughter-in-law to submit to an examination under oath, and also contended
that the son and daughter-in-law were required to submit to examination under oath. The insurance
company filed a motion for leave to file a third-party complaint against the son and daughter-in-law.
The trial court denied the insurance company’s motion for leave to file a third party complaint,
granted a motion to dismiss in favor of the son and daughter-in law, and granted the insured’s motion
for summary judgment. We affirm.
Tennessee Farmers Mutual Insurance Company (“Tennessee Farmers”) issued
Defendant/Appellee Mattie Bradford (“Mattie”) a homeowner’s policy providing coverage for her
home, located at 72 Trenton Highway, in Bradford, Tennessee. The policy period extended from
December 12, 1995, to December 12, 1996. The policy provided:
PERILS WE INSURE AGAINST We cover direct loss to property insured under the Dwelling, Other Structure and Personal Property Coverage caused by: 1. Fire or Lightening
*** EXCLUSIONS: We do not cover loss resulting directly or indirectly from: . . . . 8. Any action, other than accidental, committed by at the direction of any insured person resulting in a loss or with the intent to cause a loss. We do not cover such loss for you or any insured person.
*** Our Right To Recover Payment After making payment under this Policy, we will have the right to recover to the extent of our payment from anyone held responsible . . . .
(emphasis in original).
On August 19, 1996, the home was damaged by fire. At the time of the fire, Mattie was
temporarily residing in a retirement home in Trenton, Tennessee, and had planned to return home.
On December 14, 1989, prior to the fire loss, Mattie executed a durable power of attorney
appointing her son, Defendant/Appellee Nolan Bradford (“Nolan”) as her attorney in fact. On
Mattie’s behalf, after the fire, Nolan submitted a proof of loss statement and a “personal property
inventory” list to Tennessee Farmers. Mattie also provided Tennessee Farmers with a supplemental proof of loss. After a request from Tennessee Farmers, Mattie submitted to an examination under
oath, pursuant to the terms of her homeowner’s policy. On September 10, 1996, Tennessee Farmers
took recorded interviews from Nolan and his wife, Defendant/Appellee Jackie Bradford (“Jackie”).
Tennessee Farmers demanded that Nolan and Jackie also submit to an examination under oath. On
November 11, 1996, Nolan arrived for the examination but Jackie did not. Tennessee Farmers
refused to examine Nolan under oath in his wife’s absence.
On March 4, 1997, Tennessee Farmers filed a declaratory judgment action against Mattie,
Nolan, and Jackie seeking a determination of the rights and obligations of the parties under the
policy. Tennessee Farmers alleged that the fire was intentionally set and that “one or more of the
defendants had opportunity to set the fires and motive to do so.” Tennessee Farmers asserted that
Nolan, by submitting forms to Tennessee Farmers on behalf of Mattie, and Jackie, by entering the
premises and obtaining personal property of Mattie’s, acted as agents on Mattie’s behalf. As
Mattie’s agents, Tennessee Farmers contended that Nolan and Jackie had a duty under the policy to
cooperate with Tennessee Farmers’ investigation of the fire and that they breached this duty by
failing to submit to examination under oath. Tennessee Farmers further alleged that Mattie breached
the duty of good faith and fair dealing by refusing to instruct Nolan and Jackie to submit to
examination under oath.
On March 10, 1997, Nolan and Jackie filed a motion to dismiss pursuant to Rule 12 of the
Tennessee Rules of Civil Procedure, asserting that they were not named insureds under the policy
issued to Mattie and that the policy required only an insured to submit to examination under oath.
On April 28, 1997, Mattie filed an answer to the complaint for declaratory judgment and a
counterclaim seeking damages for Tennessee Farmers’ refusal to pay for the loss, including a 25%
penalty for Tennessee Farmers bad faith refusal to pay the claim pursuant to Tennessee Code
Annotated § 56-7-105(a). Mattie also filed a motion to dismiss, arguing that the policy required only
that she submit to an examination under oath, which she had done, and that consequently she was
entitled to be compensated for her loss under the policy. On June 12, 1997, Mattie filed two motions
for summary judgment, along with an affidavit, asserting that she had complied with the terms of
the policy and that she had no duty to instruct Nolan and Jackie to submit to examinations under
oath. Mattie also argued that she was entitled to summary judgment on her counterclaim against
Tennessee Farmers.
2 On June 25, 1997, Nolan and Jackie filed a motion for a protective order to prevent
Tennessee Farmers from inquiring into their alleged marital problems and financial condition in
order to prove a motive for destroying Mattie’s home. Tennessee Farmers filed an answer to
Mattie’s counterclaim, a motion to amend the complaint for declaratory judgment, and a motion for
permission to file a supplemental pleading. In its motion to amend its complaint, Tennessee Farmers
set forth amended language to a policy exclusion which was in effect at the time of the fire. The
amended exclusion provides: “Any action other than accidental, committed by or at the direction of
any insured person resulting in a loss or with the intent to cause a loss. We do not cover such a loss
for you or any insured person.” Tennessee Farmers supplemental complaint alleges that the proof
of loss statement submitted by Mattie was “pretextual” and designed to prevent Tennessee Farmers
from investigating Nolan and Jackie’s alleged role in the fire. On July 14, 1997, Nolan and Jackie
signed affidavits stating that the statements in their recorded interviews given to Tennessee Farmers
were true and correct. Subsequently, Tennessee Farmers filed a motion for summary judgment
asserting that they were entitled to a judgment on all issues.
In its motion for summary judgment, Tennessee Farmers described the statements given by
Nolan and Jackie. Tennessee Farmers alleged that both Jackie and Nolan had a key to Mattie’s
house, that Jackie had incurred substantial credit card debt in the past which was discharged in
bankruptcy, that Nolan had utilized the power of attorney executed by Mattie to change some of her
certificates of deposit to his name, and that Jackie admitted being in Mattie’s home at 2:00 p.m. on
the day of the fire. Tennessee Farmers asserted that the fire was reported by an unknown person at
2:36 p.m. after Jackie left, and that evidence indicated clearly that the fire was deliberately set.
In its motion, Tennessee Farmers did not allege that Mattie participated in setting fire to her
home. Rather, Tennessee Farmers alleged that she had a duty under the policy to “require” her son
and daughter-in-law to submit to examination under oath by Tennessee Farmers, and that her refusal
to do so precluded her from recovering for her loss under the policy.
On July 21, 1997, the trial court conducted a hearing regarding the numerous pending
motions. In an order filed September 3, 1997, the trial court granted Nolan and Jackie’s motion to
dismiss for failure to state a claim. Having dismissed the case as to Nolan and Jackie, the trial court
deemed moot their motions relating to discovery. The trial court also granted Tennessee Farmers
permission to file a supplemental pleading and amend the complaint for declaratory judgment.
3 Finally, the trial court found that it was premature to hear Mattie’s motion to dismiss and motion for
summary judgment, as well as Tennessee Farmers’ motion for summary judgment; these were held
in abeyance.
On October 2, 1997, Tennessee Farmers filed a motion for leave of court to file a third party
complaint against Nolan and Jackie, alleging that the fire “was set by, or with the connivance,
acquiescence and consent, of either or both . . . Nolan . . . and . . . Jackie who alone or together had
the motive and opportunity to do so.” Tennessee Farmers renewed its allegation that Nolan and
Jackie were agents of Mattie and owed Tennessee Farmers a duty of cooperation under the policy.
The trial court conducted a second hearing on October 6, 1997. Although the record does
not contain this order, the trial court filed an order on October 14, 1997. Tennessee Farmers then
filed an Application for Extraordinary Appeal to this Court under Rule 10 of the Tennessee Rules
of Appellate Procedure asserting that the October 14, 1997, order was not a final order because it had
not been entered in accordance to Rule 58 of the Tennessee Rules of Civil Procedure. This Court
granted Tennessee Farmers’ Rule 10 motion, finding that the trial court’s order was defective
because it did not contain the signature of Tennessee Farmers’ counsel and a certificate of service
as required by Rule 58 of the Tennessee Rules of Civil Procedure. This Court also found that the
October 14, 1997, order was not a final order because it did not contain the “magic language”
required by Rule 54.02 of the Tennessee Rules of Civil Procedure, which requires “that there be an
express determination that there is no just reason for delay and that there be an express direction for
entry of a final judgment.” See Tenn. R. Civ. P. 54.02.
On January 20, 1998, Tennessee Farmers filed a motion for entry of a final judgment. On
March 6, 1998, the trial court entered two orders. In the first order, the trial court, pursuant to Rule
54.02 of the Tennessee Rules of Civil Procedure, finalized the interlocutory rulings of the July 21,
1997, and October 6, 1997, hearings, i.e. the orders entered on September 3, 1997, and the October
14, 1997. In its second order, the trial court held that Mattie was entitled to a judgment as a matter
of law. The trial court also denied Tennessee Farmers motion for leave to file a third party complaint
against Nolan and Jackie. From this order, Tennessee Farmers now appeals.
On appeal, Tennessee Farmers argues that the trial court erred (1) in granting summary
judgment in favor of Mattie; (2) in granting a motion to dismiss in favor of Nolan and Jackie; and
4 (3) in denying Tennessee Farmers’ motion to amend its answer and file a third party complaint
against Nolan and Jackie.
A motion for summary judgment should be granted when the movant demonstrates that there
are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter
of law. Tenn. R. Civ. P. 56.04. The party moving for summary judgment bears the burden of
demonstrating that no genuine issue of material fact exists. Bain v. Wells, 936 S.W.2d 618, 622
(Tenn. 1997). On a motion for summary judgment, the court must take the strongest legitimate view
of the evidence in favor of the nonmoving party, allow all reasonable inferences in favor of that
party, and discard all countervailing evidence. Id. In Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993),
our Supreme Court stated:
Once it is shown by the moving party that there is no genuine issue of material fact, the nonmoving party must then demonstrate, by affidavits or discovery materials, that there is a genuine, material fact dispute to warrant a trial. In this regard, Rule 56.05 [now Rule 56.06] provides that the nonmoving party cannot simply rely upon his pleadings but must set forth specific facts showing that there is a genuine issue of material fact for trial.
Id. at 211 (citations omitted) (emphasis in original).
Summary judgment is only appropriate when the facts and the legal conclusions drawn from
the facts reasonably permit only one conclusion. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.
1995). Since only questions of law are involved, there is no presumption of correctness regarding
a trial court's grant of summary judgment. Bain, 936 S.W.2d at 622. Therefore, our review of the
trial court’s grant of summary judgment is de novo on the record before this Court. Warren v. Estate
of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997).
Tennessee Farmers argues that the trial court erred in granting summary judgment in favor
of Mattie and argues that its motion for summary judgment should have been granted. It contends
that Mattie failed to cooperate with its investigation by refusing to direct Nolan and Jackie to submit
to examination under oath, in breach of her duty of good faith and cooperation under the policy.
Tennessee Farmers asserts that there is a genuine issue of material fact as to whether Nolan and
Jackie were acting as Mattie’s agents.
The language in an insurance policy should be given its usual, common, and ordinary
meaning. Harrell v. Minnesota Mut. Life Ins. Co., 937 S.W.2d 809, 814 (Tenn. 1996); see also
Tata v. Nichols, 848 S.W.2d 649, 650 (Tenn. 1993); Northland Ins. Co. v. State Farm Mut. Auto
5 Ins. Co., 916 S.W.2d 924, 928 (Tenn. App. 1995). Ambiguous language in the policy will be
construed against the insurer and in favor of the insured. Harrell, 937 S.W.2d at 814. The policy
provides:
What To Do In Case of Loss
If a covered loss occurs, the insured person must: . . . . (c) make a list of all damaged or destroyed property, showing in detail quantities, costs, actual cash value and amount of loss claimed; (d) send to us, within 60 days after loss, the above list and a proof of loss signed and sworn to by the insured person . . . . (f) submit to examinations under oath by a person named by us and sign the transcript of the examinations; . . . .
(emphasis in original). The policy requires only the insured to submit to examination under oath.
There is no provision in the policy requiring an agent or intermediary of the insured to submit to
examination under oath. As to Mattie, the policy contains no provision indicating a duty to direct
a third person, agent or otherwise, to submit to examination under oath.
The policy also provides:
EXCLUSIONS: We do not cover loss resulting directly or indirectly from: . . . . 8. An action by or at the direction of an insured person committed with the intent to cause a loss. This exclusion does not apply to loss sustained by an insured person who does not participate in such action nor have knowledge of such action.
*** Concealment Or Fraud This entire policy is void as to the insured, if an insured person has intentionally concealed or misrepresented any material fact or circumstances relating to this insurance, or acted fraudulently or made false statements relating to this insurance.
*** Section I is amended by deleting Exclusion 8 in EXCLUSIONS and replacing it with Exclusion 8 below: 8. Any action, other than accidental, committed by or at the direction of any insured person resulting in a loss or with the intent to cause a loss. We do not cover such loss for you or any insured person. (emphasis in original).
In its motion for summary judgment, Tennessee Farmers argued that Mattie failed to
cooperate with the investigation by refusing to direct Nolan and Jackie to submit to examination
under oath. In response to Mattie’s motion for summary judgment, Tennessee Farmers asserted that
“[a] reasonable trier of fact could conclude [that] Mattie Bradford, although she did not personally
set the fire, is covering up for her son and his wife who were acting on her behalf in this claim as her
agents.” Tennessee Farmers alleged no facts indicating that Mattie either directed, participated or
had knowledge of any plan to set fire to the property. Tennessee Farmers alleges that Mattie
6 “concealed or misrepresented [a] material fact or circumstances relating to [the] insurance . . . .” as
stated in the policy, but asserts no facts in support of its allegation. Put simply, the gist of Tennessee
Farmers’ allegation against Mattie is that she refused to “direct” Nolan and Jackie to submit to
In its brief before this Court, Tennessee Farmers asserts that a genuine issue of material fact
exists as to whether Nolan and Jackie acted as Mattie’s “agents, intermediaries or as individuals in
setting the fire and submitting the claim to the insurance company . . . .” However, in the pleadings
before the trial court, the only assertion supported by an allegation of fact is the contention that
Mattie refused to direct Nolan and Jackie to submit to examination under oath. As noted above, the
policy does not state that the insured has a duty to “direct” any third party, agent or not, to submit
to examination under oath. We find that no such duty is implied in the policy. Accordingly, as to
Mattie’s claim against Tennessee Farmers, no genuine issue of material fact exists. The trial court’s
decision to deny Tennessee Farmers’ motion as to Mattie and grant Mattie’s motion for summary
judgment is affirmed.
Second, Tennessee Farmers argues that the trial court erred in granting Nolan and Jackie’s
motion to dismiss for failure to state a claim. In Pursell v. First American National Bank, 937
S.W.2d 838, 840 (Tenn. 1996), the Supreme Court addressed the standard applied by a court in
ruling on a motion to dismiss pursuant to Rule 12.02(6) of the Tennessee Rules of Civil Procedure:
A motion to dismiss for failure to state a claim upon which relief can be granted tests the sufficiency of the complaint. The basis for the motion is that the allegations contained in the complaint, considered alone and taken as true, are insufficient to state a claim as a matter of law. The motion admits the truth of all relevant and material allegations, but asserts that such facts do not constitute a cause of action. In resolving the issues in this appeal, we are required to construe the complaint liberally in the plaintiff's favor and take the allegations of the complaint as true.
See also Engenius Entertainment, Inc. v. Herenton, 971 S.W.2d 12, 17 (Tenn. App. 1997).
In their motion to dismiss, Nolan and Jackie argue that they are not insureds under the policy
and that the policy does not require them to submit to examination under oath. Tennessee Farmers
argues that Nolan and Jackie are interested parties in this declaratory judgment action under
Tennessee Code Annotated § 29-14-107 because “they handled Mattie Bradford’s affairs.”
Tennessee Farmers argues that Nolan was Mattie’s fiduciary because he held her power of attorney
and signed a sworn statement of loss on her behalf and is subject to the policy. Tennessee Farmers
7 reiterates its allegations that Nolan and Jackie were involved in setting the fire, noting that Jackie
went to Mattie’s home just before the fire was reported and that both Nolan and Jackie had motive
and opportunity to set the fire.
Tennessee Code Annotated § 29-14-103 provides:
Any person interested under a . . . written contract, or other writings constituting a contract, or whose rights, status, or other legal relations are affected by a . . . contract . . . may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status or other legal relations thereunder.
Tenn. Code Ann. § 29-14-103 (1980). Therefore, in this declaratory judgment action, the issue is
to determine the rights and obligations of the parties under the insurance policy. In this case, the
policy at issue defines “insured” as follows:
“Insured person” means: (a) you; (b) your spouse or the relatives of either residing in your household; and (c) any other person under the age of 21 residing in your care or the care of a resident relative.
(emphasis in original). It is undisputed that Nolan and Jackie did not reside with Mattie. The policy
contains no provision making a fiduciary or agent an “insured” under the policy. Consequently,
Nolan and Jackie are not “insureds” under the policy and have no rights or duties under the policy.
The provisions of the policy do not require them to submit to examination under oath.
Tennessee Farmers appears to assert a subrogation claim against Nolan and Jackie. The
policy states: “After making payment under this Policy, we will have the right to recover to the
extent of our payment from anyone held responsible. The insured person will do whatever is
required to transfer this right to us.” (emphasis in original). Thus, under the policy, Tennessee
Farmers has the right to recover from a party who is held responsible for a loss only “[a]fter making
payment under this policy . . . .” (emphasis supplied). Tennessee case law also indicates that the
subrogation claim arises only after payment is made under the policy. In Wimberly v. American
Casualty Company, 584 S.W.2d 200, 203 (Tenn. 1979), the Court held that an insurer’s right to
subrogation arises when the insured is “made whole.” See also Mullins v. Parkey, 874 S.W.2d 12,
14-15 (Tenn. App. 1992). In this case, Tennessee Farmers has not paid Mattie for the loss.
Consequently, at this point, Tennessee Farmers may not assert a subrogation claim against Nolan
and Jackie.
Finally, Tennessee Farmers argues that the trial court erred in denying its motion for leave
to file a third party complaint against Nolan and Jackie. Tennessee Farmers alleged that, if
8 Tennessee Farmers is found liable to Mattie, it is entitled to recover from Nolan and Jackie. Rule
14.02 of the Tennessee Rules of Civil Procedure allows a plaintiff to bring in a third party when a
counterclaim is asserted against the plaintiff. See Tenn. R. Civ. P. 14.02. Rule 14.01 governs both
plaintiff and defendant third party practice and provides, in part: “[t]he third-party plaintiff need not
obtain leave to make the service if the third-party complaint is filed not later than 10 days after
service of the third-party plaintiff's original answer. Otherwise the third-party plaintiff must obtain
leave on motion upon notice to all parties to the action.” Tenn. R. Civ. P. 14.01. We have noted that
this language is identical to the federal impleader rule. Velsical Chem. Co. v. Rowe, 543 S.W.2d
337, 338 (Tenn. 1976). Under the federal impleader rule, whether to permit a third-party complaint
is within the sound discretion of the trial court; therefore, we apply an abuse of discretion standard
to the trial court’s decision to deny a motion to file a third party complaint. See Highlands Ins. Co.
v. Lewis Rail Service Co., 10 F.3d 1247, 1251 (7th Cir. 1993); Dean v. Barber, 951 F.2d 1210, 1215
(11th Cir. 1992).
In this case, Tennessee Farmers’ reluctance to pay Mattie without an adjudication of its rights
against Nolan and Jackie is understandable. Once the claim is paid to Mattie, Tennessee Farmers
may suspect that Nolan could access the insurance proceeds by utilizing the power of attorney
executed by Mattie. There is factual basis for the assertion that the fire was deliberately set and that
Nolan and Jackie had both motive and opportunity to set the fire. However, given the procedural
posture of this case, we cannot conclude that the trial court erred in its rulings. There are no facts
indicating that Mattie participated in setting the fire or had knowledge of the alleged plan by Nolan
and Jackie to set the fire. The only allegation against Mattie stems from her refusal to “direct” Nolan
and Jackie to submit to examination under oath; however, the policy does not require Mattie to do
so. Thus, Mattie is entitled under the policy to be compensated for her loss. Until Mattie is paid,
Tennessee Farmers’ claim against Nolan and Jackie does not arise. Therefore, we cannot say that
the trial court abused its discretion in denying Tennessee Farmers’ motion for leave to file a third
party complaint against Nolan and Jackie.
In sum, we find that Mattie has no duty under the policy to “direct” Nolan and Jackie to
submit to examination under oath. Therefore, no genuine issue of material fact exists as to Mattie’s
claim for payment under the policy, and the decision of the trial court to deny Tennessee Farmers’
motion for summary judgment and grant summary judgment in favor of Mattie is affirmed. Nolan
9 and Jackie are not “insureds” under the policy and thus have no duty under the policy to submit to
examination under oath. Since Mattie has not yet been compensated under the policy for her loss,
Tennessee Farmers has no subrogation claim against Nolan and Jackie, and the trial court’s denial
of Tennessee Farmers’ motion for leave to file a third party complaint against Nolan and Jackie is
affirmed. This ruling does not preclude Tennessee Farmers from asserting a claim in a separate
action against Nolan and Jackie once Mattie has been compensated under the policy for her loss.
The decision of the trial court is affirmed. Costs on appeal are taxed to the Appellant, for
which execution may issue if necessary.
W. FRANK CRAWFORD, P. J., W.S.
DAVID R. FARMER, J.