SectionsStatute of LimitationsContributory Negligence/Comparative FaultMed Pay/PIP SubrogationDeductible ReimbursementMade Whole DoctrineEconomic Loss DoctrineLandlord/Tenant SubrogationSpoliationParental ResponsibilityContribution ActionsSuspension of Drivers' LicensesAnti-Indemnity StatutesDiminution of ValueRecording ConversationsCriminal RestitutionHealth and Disability InsuranceFuneral Procession Traffic LawsWorkers’ CompensationDog Bite LawsEmployee Leasing LawsCondominium Waiver of Subrogation LawsAutomobile Total Loss Thresholds
STATUTE OF LIMITATIONS
- Personal Property3 YearsT.C.A. § 28-3-105
- Personal Injury/Death1 YearT.C.A. § 28-3-104
- Breach of Contract/Written6 YearsT.C.A. § 28-3-109(a)(3)
- Breach of Contract/Oral6 YearsT.C.A. § 28-3-109(a)(3)
- Breach of Contract/Sale of Goods4 YearsT.C.A. § 47-2-275
- Statute of Repose/Products10 YearsT.C.A. § 29-28-103
- Statute of Repose/Real Property4 YearsT.C.A. § 28-3-202
- Breach of Warranty/U.C.C.4 YearsT.C.A. § 47-2-725(1)
- Workers’ Compensation1 YearT.C.A. § 50-6-112
Contributory Negligence/Comparative Fault
Modified Comparative Fault: 50% Bar. McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992). Damaged party cannot recover if it is 50% or more at fault. If 49% or less at fault, it can recover, although its recovery is reduced by its degree of fault. Plaintiff’s right to damages may be reduced by his own liability, but he will not be barred from recovering. McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992).
Med Pay/PIP Subrogation
Med Pay: Yes. Hubble v. Dyer Nursing Home, 188 S.W.3d 525 (Tenn. 2006). Carrier entitled to reimbursement only if so provided for in policy. Subrogation is simplest when the policy provides for complete assignment of the insured’s claim against third-party tortfeasor. When the policy doesn’t accomplish insured’s entire claim against tortfeasor, the insurer has a right to reimbursement from any recovery the insured obtained in suit instituted by insured against tortfeasor and any subrogation agreement isn’t void as an unlawful assignment of a personal injury cause of action. Wilson v. Tenn. Farms’ Mut. Ins. Co., 411 S.W.2d 699 (Tenn. 1966).
The one year personal injury statute of limitations runs from the date of the insured’s accident. T.C.A. § 28-3-104 (2000).
PIP: Coverage not available.
Automobile and Property: No applicable statute, Administrative Code provision or case law exists.
Made Whole Doctrine
Tennessee adheres and subscribes to the Made Whole Doctrine. Wimberly v. American Cas. Co. of Reading, Pa., 584 S.W.2d 200 (Tenn. 1979); York v. Sevier County Ambulance Auth., 8 S.W.3d 616 (Tenn. 1999); Abbott v. Blount County, 207 S.W.3d 732 (Tenn. 2006). An insurer’s contractual right to subrogation and reimbursement are both subject to the Made Whole Doctrine. York, supra. The Supreme Court in Wimberly established that the right of an insured to be made whole before subrogation rights could be enforced could not be waived or modified by the insurance policy. Whether an insurer’s right of subrogation is contractual or equitable only comes into play to determine “whether there is a right of subrogation in the first instance, rather than in the enforcement of such right.” Id. While an insurer can not contractually modify the common law Made Whole Rule, a failure on the part of the insured to obtain contractually required permission of the insurer to a settlement preserves the latter’s subrogation rights even if the insured is not made whole. Eastwood v. Glens Falls Ins. Co., 646 S.W.2d 156, 158 (Tenn. 1983); Rader v. Traylor, No. 03A01-9403-CV-00079, 1994 Tenn. App. LEXIS 418, at *4-5 (Aug. 1, 1994). Thus, where the insurer does not participate in the settlement negotiations between its insured and the tortfeasor or does not waive any subrogation rights, such rights must be honored and the Made Whole Doctrine is inapplicable. This exception to the Made Whole Rule is subject to a further caveat which provides that if the parties agree that the insured has not been made whole or the underlying facts make clear that the recovery is for less than full compensation, the insurer’s subrogation claim is extinguished. Doss v. Tenn. Farmers Mut. Ins. Co., No. M2000-01971-COA-R3-CV, 2001 Tenn. App. LEXIS 906, at *10-11 (Dec. 10, 2001).
However, it is the insured in Tennessee who has the burden of proving that he is not made whole by a particular settlement or recovery. Hamrick’s, Inc. v. Roy, 115 S.W.3d 468 (Tenn. App. 2002); Nelson v. Innovative Recovery Services., Inc., 2001 WL 1480515 (Tenn. App. 2001) (unreported decision); Abbott, supra. An insured must be made whole for damages before an insurer is entitled to either subrogation or reimbursement, even if the insurer claims that it made a payment because it did not know of a third-party’s liability. Healthcost Controls, Inc. v. Gifford, 108 S.W.3d 227 (Tenn. 2003). This is true regardless of the language in the insurance policy. Id; Blount, supra. It is also true regardless of whether the insurer is asserting a right of subrogation or a right of reimbursement. Simpson v. Doe, 2006 WL 1627292 (Tenn. App. 2006). Whether an insured has been made whole is a matter of fact, upon which the insured has the burden of proof. Gifford, supra. Furthermore, whether or not an insured has been made whole must be determined by considering all benefits and recoveries received as a result of an incident. Id. Basically, this case means that if the insured recovers $100,000 and there is a lien of $101,000, it is not presumed that the insured has not been made whole. Instead, the court would say that the plaintiff suffered a minimum of $101,000 in damages but received $201,000 in compensation, improving the chances of recovery in spite of the made whole argument.
It should be noted that where an insured settles directly with a tortfeasor, with full knowledge of an insurer’s subrogation rights, and that settlement, together with the benefits paid under the insurance policy, do not make the insured whole, no subrogation will be allowed because the insured was not made whole. Wimberly, supra; Tennessee Farmers Mut. Ins. Co. v. Farmer, 1998 WL 695637 (Tenn. App. 1998) (unreported decision).In the absence of a judgment or jury verdict establishing a specific dollar value of each element of an injury, a court can make an equitable determination as to whether an injured party has been made whole. Farmer, supra. Ordinarily, the injured party may make such determination by settlement. Failing that, it may be made by the jury or by the judge. Id. In extraordinary circumstances, equity may intervene and make such a determination. Id.
In the absence of a judgment or jury verdict establishing a specific dollar value of each element of an injury, a court can make an equitable determination as to whether an injured party has been made whole. Id. Ordinarily, the injured party may make such determination by settlement. Failing that, it may be made by the jury or by the judge. Id. In extraordinary circumstances, equity may intervene and make such a determination. Id.
The Made Whole Doctrine applies in both legal and conventional subrogation or reimbursement disputes between insurers and their insureds. Gifford, supra; York, supra; Wimberly, supra. Thus, where the issue of whether the insured has been made whole is raised at the trial level the insurer’s subrogation claim is stayed until this issue is resolved.
Tennessee recognizes two methods for determining the subrogation rights of insurers in the context of statutory subrogation disputes. The primary objective of the court under both frameworks is to identify and give effect to the intent and purpose of the legislature. Blankenship v. Estate of Joshua, 5 S.W.3d 647, 651 (Tenn. 1999); Castleman v. Ross Eng’g, Inc., 958 S.W.2d 720, 724 (Tenn. 1997); Graves v. Cocke County, 24 S.W.3d 285, 289 (Tenn. 2000). Under one analysis, if the statute merely creates a subrogation right without embracing or abandoning the Made Whole Rule the court is prone to conclude that the legislature “intended for the statute to reflect the equitable principle that subrogation is subject to the Made Whole Doctrine.” Blankenship, supra. This method is based on the idea “that subrogation is founded upon principles of equity and ‘not dependent upon statute or custom or … contract.”’ Wimberly, supra. The second method is used when the statute provides an insurer with a statutory lien, such as in workers’ compensation. Pursuant to this analysis, a statutory lien is not subject to the equitable requirement that the insured be made whole. Castleman, supra.; Graves, supra.
In Abbott, the Tennessee Supreme Court determined that insurers may not bind the insured’s rights to settlements by using artful contract terms because “[c]ontract terms that require the consent of the insurer would allow the insurer to withhold consent from any settlement that does not make the insured whole and thereby compel the insured to seek a larger award at trial.” Abbott, supra.
Economic Loss Doctrine
Majority Rule In a contract for the sale of goods where the only damages alleged are damages to the product itself, the rights and obligations of the buyer and seller are governed exclusively by the contract. Trinity Indus., Inc. v. McKinnon Bridge Co., Inc., 77 S.W.3d 159 (Tenn. Ct. App. 2001). Tennessee accepts the ELD as a “crude proxy” for the dividing line between what is tort and what is not. The Tennessee Supreme Court decided a case involving a farmer who had used a product on tomato plants in attempt to protect plants from frost damage, resulting in economic loss in the form of lost profits due to damage to the tomatoes. Because the plaintiffs sued for “lost profits” instead of damage to the tomatoes, the Court held they could not proceed on tort theories – only warranty and contract. Ritter v. Custom Chemicides, Inc., 912 S.W.2d 128 (Tenn. 1995). In Ritter, the door appears to have been left open to pursue a tort action for damages to the product only when “the plaintiff has been exposed to an unreasonable risk of injury to his person or his property” as opposed to mere failure of the product to perform as expected. However, the Tennessee Supreme Court more recently announced that Tennessee does not adopt exceptions for unreasonably dangerous products or sudden, calamitous events. Lincoln Gen. Ins. Co. v. Detroit Diesel Corp., 293 S.W.3d 487 (Tenn. 2009).
According to a U.S. Federal District Court, a tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. Tate v. Trialco Scrap, Inc., 745 F.Supp. 458, 467 (M.D. Tenn. 1989) (subrogation was denied because the lease required the lessor to purchase insurance coverage on the building). In 2007, in an unreported decision (limited precedential value) the Tennessee Court of Appeals has decided that the case-by-case review of the lease terms to determine the intent and expectations of the parties is not the best approach, and has indicated that absent an express agreement to the contrary, a tenant should be considered a co-insured under the landlord’s property casualty insurance policy, and the insurance carrier should therefore be precluded from asserting subrogation rights against the tenant. Dattel Family Limited Partnership v. Wintz, 250 S.W.3d 883 (Tenn. App. 2007).
Adverse Inference: The doctrine of spoliation of evidence permits a court to draw a negative inference against a party that has intentionally, and for an improper purpose, destroyed, mutilated, lost, altered, or concealed evidence. Foley v. St. Thomas Hosp., 906 S.W.2d 448, 453-54 (Tenn. Ct. App. 1995); Bronson v. Umphries, 138 S.W.3d 844, 854 -855 (Tenn. Ct. App. 2003).
Willful Misconduct. Liability imposed on parents when child willfully or maliciously injures person or property. T.C.A. § 37-10-101. Cap on damages does not apply when parents know, or should know, of child’s propensity to commit injurious acts. T.C.A. § 37-10-103.
Minor’s Driving. Adult or guardian signing minor’s drivers’ license application will be jointly and severally liable for the motor vehicle negligence of the minor, and must also file proof of financial responsibility on behalf of minor. T.C.A. § 55-50-312.
The limit of liability is $10,000.00 unless there is a propensity to commit injurious acts. Child must be under 18-years-old.
Pure Several Liability. Generally several liability, except when defendants act in concert or for products liability cases. Banks v. Elks Club Pride of Tenn., 1102, 301 S.W.3d 214 (Tenn. 2010).
Joint tortfeasors have right of contribution, unless intentional. Contribution action can be brought in original action or in a separate action. T.C.A. § 29-11-102; Velsicol Chem. Corp. v. Rowe, 543 S.W.2d 337, 340 (Tenn. 1976). The statute of limitations is one year after payment (judgment or settlement). Security Fire Protection v. City of Ripley, 608 S.W.2d 874 (Tenn. App. 1980).
Suspension of Drivers' Licenses
Administrative Suspension: If the driver fails to provide proof of financial responsibility in the form of proof of insurance, their license may be suspended. T.C.A. § 55-12-115. License may be reinstated if the driver provides proof of financial responsibility and pays the appropriate fee. T.C.A. § 55-50-115.
Judgment: If a judgment is not satisfied within 60 days, the Commissioner will suspend the license of the judgment debtor until the judgment is paid, discharged, or satisfied. T.C.A. § 55-50-501(8)(b). Suspension will last until the judgment has been completely paid and/or discharged. T.C.A. § 55-50-501(8)(b).
Contact Information: State of Tennessee, Department of Safety, Financial Responsibility Section, 1150 Foster Avenue, P.O. Box 945, Nashville, TN 37243, (615) 741-3954, http://www.state.tn.us/safety/
Prohibits Broad Indemnity. Applies to Construction Contracts or Agreements. Tenn. Code § 62-6-123.
Not only applicable to architects and engineers.
Diminution of Value
First Party: The Tennessee Court of Appeals refused to apply diminution in value in Tennessee auto policies finding the wording unambiguous and limiting the insured to repairs. Black v. State Farm Mut. Auto. Ins. Co., 101 S.W.3d 427 (Tenn. App. 2002).
Third Party: No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
One-Party Consent: It is not unlawful for an individual who is a party to or has consent from a party of an in-person or electronic communication to record and or disclose the content of said communication unless the person is doing so for the purpose of committing a tortious or criminal act. An individual may also disclose the content of any electronic communication that is readily accessible to the general public. Tenn. Code Ann. § 39-13-601; Tenn. Code Ann. § 39-13-604; Tenn. Code Ann. § 40-6-303.
Under the Tennessee statute, a court can award restitution to a “victim” of criminal defendant’s conduct. T.C.A. § 40‐35‐304 However, appropriate Tennessee case law has determined that an insurer will not qualify as a victim for purposes of restitution recovery. State v. Alford, 970 S.W.2d 944 (Tenn. 1998).
Health and Disability Insurance
Statute of Limitations: 1 Year. T.C.A. § 28-3-104.
Subrogation of Medical and Disability Benefits are allowed. York v. Sevier County Ambulance Auth., 8 S.W.3d 616 (Tenn. 1999). Made-Whole and Common Fund apply. Health Cost Controls, Inc. v. Gifford, 239 S.W.3d 728, 731 (Tenn. 2007); Kline v. Eyrich, 69 S.W.3d 197 (Tenn. 2002).
Funeral Procession Traffic Laws
Tennessee law gives the procession the right-of-way if the lead vehicle has a flashing amber light or is led by a “properly identified” escort. The lead vehicle must comply with traffic lights and signs, and the other vehicles may follow without stopping if their headlights are on. Also, the procession must yield to emergency vehicles or when directed by a police officer. The procession must drive on the right side of the roadway and be as closely spaced as safely possible. It must proceed at no less than 45 miles per hour on a limited access highway and no less than five miles per hour below the posted limit on other roads. Vehicles following the procession on a two-lane road are prohibited from attempting to pass it. Other drivers are prohibited from driving between vehicles in the procession, unless directed by a police officer. Tenn. Code Ann. § 55-8-183.
Statute of Limitations: 1 Year. T.C.A. § 50-6-112.
Can Carrier Sue Third Party Directly: Yes, after 1 year. A carrier has an additional 6 months to file for a total of 18 months.
Recovery from UM/UIM Benefits: No.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: Undecided.
Recovery Allocation/Equitable Limitations: No Special Formula. First Money.
Employer Contribution/Negligence: No, a defendant can introduce evidence to show employer cause in fact.
Attorney’s Fees/Costs: Pro-rata if no active participation by carrier.
Future Credit: Yes, but no credit against unknown or incalculable future med benefits, unless carrier proves likelihood and the amount of future medicals.
Auto No-Fault: No.
Dog Bite Laws
Dog owner is liable for all damages, regardless of prior knowledge of dog’s vicious propensities. Trespass is a defense. Tenn. Code Ann. § 44-8-413.
Employee Leasing Laws
Tennessee has a specific statute dealing with employee leasing. Both the employee leasing company and the client company are entitled to the exclusive remedy protection based on a worker’s compensation policy secured by either entity. T.C.A. § 62-43-113.
Condominium Waiver of Subrogation Laws
Associations shall maintain property insurance and general liability insurance as to the common elements. Additionally, the insurer must waive rights to subrogation against any unit owner or member of their household unless it can be shown that the individual intended to cause the loss. T.C.A. § 66-27-413.
Automobile Total Loss Thresholds
Percentage of Value: 75%
Damage to vehicle equal to or more than 75% of retail market value as determined by current published retail costs. T.C.A. § 55-3-211(9)(A).