IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
November 18, 2009 Session
JAMES E. DYER, Individually, and as Administrator of the Estate of
FAYE E. DYER, Deceased
v.
HILL SERVICES PLUMBING AND HVAC
Direct Appeal from the Chancery Court for Shelby County
No. CH-05-2304 Walter L. Evans, Chancellor
No. W2009-00687-COA-R3-CV - Filed January 7, 2010
This appeal arises from a dispute between Appellant employee and Appellee employer over
life insurance coverage under a group insurance policy. Employee asserts that employer was
negligent in failing to inform employee of his right of conversion under the insurance policy
and also in its failure to obtain insurance coverage for him after he was rehired. In the
alternative, employee argues that the doctrine of equitable estoppel should apply. The trial
court dismissed the complaint based upon its finding that employee failed to make out a
prima facie case for negligence, and declined to apply equitable estoppel. Finding negligence
by the employer in failing to notify employee of his right to convert, we reverse the trial
court’s dismissal of that claim and remand for further proceedings. We affirm the decision
of the trial court finding that the employer was not negligent in obtaining new insurance for
the employee after he was rehired and its decision not to apply equitable estoppel.
Tenn. R. App. P 3; Appeal as of Right; Judgment of the Chancery Court Affirmed
in Part, Reversed in Part and Remanded.
J. S TEVEN S TAFFORD, J., delivered the opinion of the court, in which H OLLY M. K IRBY, J.,
joined and D AVID R. F ARMER, J., filed a separate dissenting opinion.
Reed L. Malkin and Steven R. Walker, Memphis, TN, for appellant, James E. Dyer.
Julia Beth Crews, Memphis, TN, for appellee, Hill Services, Plumbing and HVAC.
OPINION
This Court originally received this appeal in November 2008. After review of the
record, we issued an Opinion, dismissing the appeal for lack of subject-matter jurisdiction
due to the fact that the order appealed was not final at that time. Dyer v. Hill Services
Plumbing and HVAC, No. W2008-00619-COA-R3-CV, 2008 WL 5330428 (Tenn. Ct. App.
Dec. 22, 2008). In the interest of judicial economy, we reproduce relevant facts and
procedural history as set out in our previous opinion, to wit:
In November 2004, James Dyer was hired by Hill
Services Plumbing and HVAC (“Hill Services”). Mr. Dyer
completed enrollment forms in conjunction with his employment
for among other things, life insurance coverage for himself and
his spouse, Faye Dyer. Hill Services deducted the monthly
premiums for the insurance coverage from his paycheck. Mr.
Dyer's employment was terminated on March 31, 2005. On May
1, 2005, Mr. Dyer was reinstated by Hill Services. When he was
rehired, Hill Services deducted the insurance premiums from his
paycheck as it had before. On June 25, 2005, Ms. Dyer died. Mr.
Dyer then made a claim under the group life insurance policy
only to be informed that he had no life insurance coverage.
Seeking to recover the face amount ($50,000) of the
lapsed insurance policy, Mr. Dyer, individually and as
administrator of his wife's estate, filed a Complaint against Hill
Services on December 20, 2005. The Complaint alleged that, by
deducting the premiums from his paycheck, Mr. Dyer and Hill
Services entered into an implied-in-fact contract under which
Hill Services was required to provide life insurance for Mr. Dyer
and his wife. Hill Services denied that such a contract existed.
Although Mr. Dyer never formally amended his
Complaint, he asserted, in a Memorandum in Support for
Summary Judgment, two additional claims for relief not
contained in the Complaint. In this pleading, Mr. Dyer asserted
that he was entitled to relief under the doctrine of equitable
estoppel and that Hill Services failed to give notice of the
termination of insurance coverage and of his right to convert the
group policy to an individual policy upon termination of
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employment.1 In response, Hill Services addressed both issues,
but argued that the notice issue had not been previously alleged.
On July 7, 2006, the trial court denied Mr. Dyer's summary
judgment motion. The trial court did not state its reasons for the
denial. Unfortunately, the requirement of Tenn. R. Civ. P. 56.04
for the trial court to state the legal grounds for denying a
summary judgment motion had not yet taken effect.
Following a bench trial, an Order was entered on
February 29, 2008 dismissing the Complaint. The trial court
made the following specific findings:
There was no physical evidence introduced of a
contract or a life insurance policy in effect
between the Plaintiff and the Defendant.
The Defendant is not an insurance company.
The Plaintiff did not offer documentary proof that
upon rehire he was offered the same benefits he
received in his prior employment with the
Defendant.
The Plaintiff was not sure that he had life
insurance until after the death of his wife.
The deductions for life insurance premiums were
made from the paychecks of the Plaintiff, but that,
1
In the original appeal, we noted that the life insurance policy had not been introduced into evidence
and therefore did not consider the policy’s evidentiary value. However, upon further review, we find that
both Mr. Dyer and Hill Services attached the group life insurance policy’s section on conversion to their
Memorandum’s of Law on Mr. Dyer’s Motion for Summary Judgment. Furthermore, both parties relied
on the language in the policy for their respective arguments during the Motion for Summary Judgment and
neither disputed the language of the policy. Because both parties cited to this section of the policy and both
relied on it, we find that they are bound by their admissions. “An admission is an oral or written
extrajudicial declaration made by or attributable to a party.” Pankow v. Mitchell, 737 S.W.2d 293,
298(Tenn. Ct. App. 1987)(citation omitted). The Tennessee Supreme Court has held that a party may be
bound by factual statements made by the party’s attorney in pretrial proceedings. Id. (citing Garland v.
Seaboard Coastline Railroad Co., 658 S.W.2d 528, 531 (Tenn. 1983). Mr. Dyer’s Motion for Summary
Judgment and Hill Services’ Response thereto were properly included in the record on appeal. Tenn. R. App.
P. 24(a). Therefore, we will consider the language of the policy as to the right of conversion.
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in and of itself, does not establish insurance
absent the introduction of an insurance policy.
There was no proof that any life insurance existed
as of the day of the death of Plaintiff's wife.
On the basis of these findings, the Court dismissed Mr. Dyer's
Complaint for Breach of Contract.
Dyer, 2008 WL 5330428 at *1-2(footnote omitted).
Following our dismissal of the initial appeal, the trial court heard the case again on
November 5, 2007. By Order of March 10, 2009, the trial court confirmed its previous ruling
as set out in the February 29, 2009 order, supra. In addition, the March 10, 2009 Order
states:
The Court of Appeals found that although the issue of
notice was not alleged in Plaintiff’s complaint, that the parties
nevertheless litigated the issue, but this Court did not adjudicate
that claim. Specifically, the Court of Appeals stated that this
Court’s finding that Mr. Dyer was informed that he was required
to reapply for life insurance coverage when he was rehired did
not address Mr. Dyer’s claim that he had a right to receive
notice of the conversion privilege when his employment was
terminated on March 31, 2005. Therefore, the Court had not yet
made a final judgment as to the issue of notice. As a result, the
Court of Appeals determined that it did not have jurisdiction to
decide the case on appeal and the case was remanded to this
Court for a final judgment.
In reviewing the evidence presented at trial, this Court
finds that Plaintiff failed to carry his burden of proving that
Defendant Hill Services had a duty to provide him with notice
of his conversion rights or that failure of Defendant to provide
such notice was the proximate cause of his damages. If he had
produced the applicable insurance policy, the Court would have
been able to consider the requirements of such notice. The
Plaintiff, in fact, was hired back so quickly that the time period
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of giving notice of conversion under the policy may not have
even run out before he was rehired.
It is well settled in Tennessee that the elements of duty,
breach of duty, causation and damages must be argued and
proven in order for a plaintiff to succeed in a negligence case
and that “no claim for negligence can succeed in the absence of
any one of these elements.” Bradshaw v. Daniel, 854 S.W.2d
865, 869 (Tenn. 1993). Plaintiff did not satisfy either of the
crucial elements to withstand Defendant’s Motion to Dismiss.
This Court has not seen any documents that set forth the
terms and conditions of Plaintiff’s termination on March 31,
2005 or the terms and conditions of his rehire on May 1 st.
There’s nothing in the record that establishes that when he was
rehired that he was promised all the same benefits, except for his
rate of pay, that he had prior to his termination.
But, there is testimony in the record from Defendant’s
representative, Ms. Natalie Hill, that Mr. Dyer was informed
that any insurance coverage, whether it be health, life or dental,
had to be reapplied for and that it was optional and he had to
select which of the coverages that he desired. Plaintiff Dyer,
after his rehiring elected to reapply for health insurance, but he
DID NOT reapply for life insurance.
Had Mr. Dyer applied for life insurance when he was
reinstated, he might have had life insurance at the time of the
claim. His lack of insurance coverage was NOT in fact caused
by a failure of Defendant to notify him of a conversion right, but
rather due to Plaintiff’s failure to apply for life insurance upon
his rehire after he had been terminated. Accordingly, any
alleged damages suffered by Plaintiff (money paid out under the
policy) were not due to the negligent notice, but due to the fact
that the Plaintiff did not reapply for life insurance. Thus,
Plaintiff’s claim of failure of Defendant to give him notice of his
right to convert the policy to an individual policy of life
insurance is without merit.
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IT IS THEREFORE ORDERED, ADJUDGED AND
DECREED, for all of the above reasons, that final judgment in
this cause is rendered in favor of the Defendant, Hill Services
Plumbing and HVAC and the Complaint dismissed, with
prejudice, at Plaintiff’s cost, for which execution may enter.
(Emphasis in original).
Mr. Dyer appeals, raising the same issue as raised in the first appeal, to wit:
Whether the trial court erred in entering an order of dismissal,
and in finding that Defendant was not liable to Plaintiff for the
face amount of [the] life insurance [policy] ($50,000.00), which
was to have been in effect on the life of Plaintiff’s wife.
After review of the record, we conclude that the case is now in the proper posture for
our review. However, before reaching the issues, we first note that, because this case was
tried by the court sitting without a jury, we review the case de novo upon the record with a
presumption of correctness of the findings of fact by the trial court. Unless the evidence
preponderates against the findings, we must affirm, absent error of law. See Tenn. R. App.
P. 13(d). Furthermore, when the resolution of the issues in a case depends upon the
truthfulness of witnesses, the trial judge who has the opportunity to observe the witnesses and
their manner and demeanor while testifying is in a far better position than this Court to
decide those issues. See McCaleb v. Saturn Corp., 910 S.W.2d 412, 415 (Tenn.1995);
Whitaker v. Whitaker, 957 S.W.2d 834, 837 (Tenn. Ct. App.1997). The weight, faith, and
credit to be given to any witness' testimony lies, in the first instance, with the trier of fact, and
the credibility accorded will be given great weight by the appellate court. See id.; see also
Walton v. Young, 950 S.W.2d 956, 959 (Tenn.1997).
Mr. Dyer argues that Hill Services was negligent (i.e., that Hill Services breached a
duty owed to Mr. Dyer), that the doctrine of equitable estoppel should apply, and that Hill
Services failed to act in good faith and with due diligence. As set out in its orders, the trial
court specifically found that the first two of these claims were not proven by a preponderance
of the evidence, and we will review those findings. However, it appears from our review,
that the issues of good faith and due diligence were not, in fact, raised at the trial level. As
a general rule, “questions not raised in the trial court will not be entertained on appeal.” City
of Cookeville ex rel. Cookeville Regional Med. Ctr. v. Humphrey, 126 S.W.3d 897, 905-06
(Tenn.2004); In re Adoption of E.N.R., 42 S.W.3d 26, 32 (Tenn.2001). Here, the trial court
did not make a specific finding concerning the allegation that Hill Services failed to exercise
good faith and due diligence in this case because this theory was neither set out in the initial
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complaint, nor tried by consent at the hearings. Having not raised the issues at the trial level,
Mr. Dyer cannot be heard to complain on appeal.
Negligence
A negligence claim requires proof of the following elements: (1) a duty of care owed
by the defendant to the plaintiff; (2) conduct by the defendant falling below the standard of
care amounting to a breach of that duty; (3) an injury or loss; (4) causation in fact; and (5)
proximate or legal cause. Hale v. Ostrow, 166 S.W.3d 713, 716 (Tenn.2005); Coln v. City
of Savannah, 966 S.W.2d 34, 39 (Tenn.1998). It is well settled that “no claim [for
negligence] can succeed absent any one of these elements.” Bradshaw v. Daniel, 854
S.W.2d 865, 869 (Tenn. 1993). In the instant case, it appears that the trial court based its
decision to dismiss Mr. Dyer’s complaint on a finding that Hill Services either owed no duty
to Mr. Dyer, or that, if a duty existed, it was not breached.
Legal duty has been defined as the legal obligation owed by a defendant to a plaintiff
to conform to a reasonable person standard of care for the protection against unreasonable
risks of harm. West v. East Tennessee Pioneer Oil Co., 172 S.W.3d 545, 551 (Tenn.2005).
In the instant case, it appears that Mr. Dyer asserts that Hill Services owed him two duties:
(1) to inform him of his right of conversion under the insurance policy (which duty arose at
the time Mr. Dyer’s employment was terminated), and (2) to obtain new life insurance
coverage for him after he was rehired. Whether a defendant owes the plaintiff a duty of care
is a question of law to be determined by the court. West v. East Tennessee Pioneer Oil Co.,
172 S.W.3d 545, 551 (Tenn. 2005) (citing Burroughs v. Magee, 118 S.W.3d 323, 327
(Tenn.2003)). Although duty is a question of law to be determined by the court, the nature
of the duty a defendant may owe a plaintiff is dependent upon the resolution of certain
factual issues. Downs ex rel. Downs, 263 S.W.3d 812, 821 (Tenn. 2008).
Duty to inform of right of conversion
We first address Mr. Dyer’s contention that Hill Services was negligent in not
informing him of his right to convert his life insurance policy to an individual policy when
his employment was terminated. As required by law in Tennessee, a person covered by a
group life insurance policy must have the right to convert that policy to an individual policy
if he or she ceases to be covered because of termination of employment. Tenn. Code. Ann.
§ 56-7-2305 (2009). Also, the life insurance policy itself provides the right to convert.2
2
We note that the life insurance policy contains a requirement that the person have been
continuously covered for at least five years prior to termination to have the right to convert. We recognize
(continued...)
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Accordingly, Mr. Dyer had the right to convert his life insurance policy to an individual
policy upon termination of his employment.3
In examining this claim, we must first address whether Hill Services had a duty to
notify Mr. Dyer of his right to convert. Tennessee has imposed a common law duty on
employers to notify employees of the conversion right. Estate of Saffles v. Reliance
Universal, Inc., 701 S.W.2d 821, 823 (Tenn. Ct. App. 1985)(affirming a finding of liability
for failure to notify employee of the right to convert). “The duty of the employer to give the
notice in question is but part of an employer’s duty of good faith and due care in attending
to the policy and the employer should make clear to the employee anything required of him
to keep the policy in effect....” Saffles, 701 S.W.2d at 824(quoting McGinnis v. Bankers
Life Co., 39 A.D.2d 393, 334 (N.Y. 1972). Also, the life insurance policy clearly requires
that Mr. Dyer be given notice of his right to convert. At oral argument, counsel for Hill
Services’ conceded that there is a duty to notify Mr. Dyer of his right to convert the policy.
Therefore, we find that the trial court erred in finding that Hill Services did not have a duty
to provide Mr. Dyer with notice of his conversion right.
Next, we must consider whether Hill Services breached this duty. The trial court did
not make a finding as to whether Hill Services breached this duty, but only found that no duty
existed and that Mr. Dyer’s lack of insurance was caused by his failure to reapply and not by
Hill Services’ failure to give notice of the right to convert. According to the policy, Mr. Dyer
must have been given notice of his right to convert “at least 15 days before the end of the 31
day Conversion Period.”
Hill Services’ asserts that the duty may be met by providing Mr. Dyer with the
certificate of coverage upon issuance of the policy. Any argument that Mr. Dyer received
notice of his right to convert when he was issued his policy is without merit. A similar
argument was addressed by the Sixth Circuit in Stafford v. First Tennessee National Bank,
230 F.3d 1360, 2000 WL 135961 (6 th Cir. 2000). The policy in Stafford provided that if
2
(...continued)
that Mr. Dyer did not have this insurance policy for five years prior to termination. However, any
requirement that a person be covered for a certain period of time before gaining the right to convert when
his policy is terminated due to a termination of employment, is contrary to state law. Tenn. Code Ann. § 56-
7-2305(h)(2009). By statute, all life insurance policies in Tennessee are required to contain the right to
convert when the insurance policy is terminated due to termination of employment. Id. Only when the
entire group policy terminates, may a five year coverage requirement come into play. Tenn. Code Ann. §
56-7-2305(I).
3
It is not disputed that Mr. Dyer had a life insurance policy for his wife during his first period of
employment. It is only disputed whether one existed after he was re-hired.
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notice was given within fifteen days of termination, then conversion must occur within thirty-
one days of termination. Id. at *2. The notice provision in the Saffles policy also provided
that if notice was given more than fifteen days after termination, then conversion must occur
by the earlier of either fifteen days from notice or sixty days after the expiration of the
original thirty-one day period. Id. at *2. The defendant in Stafford argued that notice had
been provided to the insured in the certificate of insurance upon issuance of the policy. Id.
at *7. The Stafford court rejected the argument based on the plain language of the policy.
Id. The Stafford court found that the first part of the notice provision required notice within
fifteen days of termination. Id. However, the court reasoned that if it accepted the
defendant’s argument, then this provision would likely never apply. Id. The certificate of
insurance would almost always be issued well before termination and therefore notice would
almost never occur within the initial fifteen day period. Id. The Stafford court then looked
at the second part of the notice provision which provided for notice more than fifteen days
from termination. Id. The Stafford court stated that “it would be ludicrous to calculate the
time period from the earlier of either fifteen days after notice is received or sixty days from
the end of the original thirty-one day period.” Id. The Stafford court reasoned that if the
original receipt of the certificate of insurance was sufficient, there would essentially be no
right to convert as the earlier of the two would always be the fifteen days after notice was
received, which would run most likely before the policy was even terminated. Id.
Accordingly, the Stafford court held that notice was required upon or after termination of the
policy. Id. at *8.
The situation in the case before this Court is practically identical. The policy
provides:
If a person eligible for Conversion is not given notice at least 15
days before the end of the 31 Day Conversion Period, the time
the person has to convert will be extended an additional 15 days
after notice is given. However, coverage under the group Policy
will not continue past the 31 Day Conversion Period. In no case
will the additional time to convert extend beyond 60 days
following the end of the 31 Day Conversion Period.
The following will constitute notice of a person’s right to
convert:
• This Certificate of insurance or other written notice
presented to the person;
• This Certificate of Insurance or other written notice
mailed by the Policyholder to the last known address of
the person; or
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• This Certificate of Insurance or other written notice
mailed by BMA to the last known address (as furnished
by the Policyholder) of the person.
As in Stafford, the time period for notice and conversion is dependent on the 31 Day
Conversion Period, which does not begin to run until the policy is terminated. It would be
ludicrous to calculate the time required for sufficient notice before the 31 Day Conversion
Period begins. Additionally, the policy provides for an extension of the right to convert if
notice is not provided fifteen days before the end of the Conversion Period. If the certificate
of insurance provided to the insured upon issuance of the policy, was deemed sufficient
notice, the need to extend the 31 Day Conversion Period, as provided for in the policy, would
never arise. Furthermore, it would be illogical to require the party to give notice of the right
to convert if the certificate of insurance detailing that right and provided to the insured upon
issuance of the policy, provided sufficient notice. Accordingly, we find that Mr. Dyer must
have been provided notice of his right to convert upon or after termination of the policy.
According to the policy, there were three ways this requirement could be met: (1) He
could have been presented with the certificate of insurance or other written notice in person;
(2)The policyholder, Hill Services, could have mailed him the certificate of insurance or
other written notice; or (3) the insurance company could have mailed the certificate of
insurance or other written notice to an address for Mr. Dyer, provided to them by Hill
Services. We have reviewed the record in this case, and find that Hill Services breached the
duty owed to Mr. Dyer by failing to provide him with notice of his right to convert after his
termination. At trial, Mr. Dyer testified that he was never provided with notice of his right
to convert after his termination. Natalie Hill testified that neither she nor any one in her
office informed Mr. Dyer of his right to convert. Additionally, Natalie Hill testified that she
“couldn’t say” whether her insurance broker had notified Mr. Dyer. Based on the evidence
in the record, we find that Hill Services breached the duty owed to Mr. Dyer to notify him
of his right to convert the policy after his termination.
Finding a duty and the breach of that duty, we must next examine the issue of
causation. The trial court found that Mr. Dyer’s damages were not caused by Hill Services’
failure to notify him of his right to convert, but by his failure to reapply for life insurance.
Moreover, at oral argument, Hill Services’ submitted that the damages were not caused by
its failure to notify, but by Mr. Dyer’s failure to reapply. It appears that the trial court and
Hill Services are merging the two separate claims. Mr. Dyer alleged first, that Hill Services’
negligence in not informing him of his right to convert caused him damages, and second, that
Hill Services’ negligence in not obtaining new life insurance for him once he was rehired
also caused him damages. Mr. Dyer consistently maintained throughout this case, that had
he known his life insurance had been terminated he would have taken steps to obtain other
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insurance. Accordingly, we find that had he been notified of his right to convert his policy
to an individual one, he would have. His failure to apply for a new policy offered to him
later is irrelevant as to his first claim. Therefore, by failing to notify Mr. Dyer of his right
to convert, Hill Services was the cause of any damages resulting from the first policy not
being converted.
The final element of a negligence action is damages. In a case where the duty to
notify of the right to convert has been breached, damages equal the amount the insurance
policy would have been converted to. Saffles, 701 S.W. 2d at 824. The policy at issue
provided:
The amount of the converted coverage will be the lesser of:
1. The amount of insurance under the Policy less any
amount provided by a new group policy for which the
insured becomes eligible within 31 days of termination;
or
2. $10,000.
However, we find no evidence in the record on what the converted coverage would be.
Accordingly, we reverse the decision of the trial court finding that there was no duty to notify
Mr. Dyer of the right to convert, and remand for an evidentiary hearing on the issue of
damages and entry of an order in accordance with this opinion.
Duty to obtain life insurance for Mr. Dyer and his wife upon his rehire.
As noted above, although duty is a question of law to be determined by the court, the
nature of the duty a defendant may owe a plaintiff is dependent upon the resolution of certain
factual issues. Downs ex rel. Downs, 263 S.W.3d 812, 821 (Tenn. 2008) As stated in the
Restatement (Second) of Torts § 324A 4 :
One who undertakes ... to render services to another which he
should recognize as necessary for the protection of a third person
4
Though the Supreme Court has not expressly adopted § 324A of the Restatement, the provision has been
extensively cited and relied upon in cases addressing the liability of a person for a breach of the assumed duty of
reasonable care, and, therefore, we find the provision applicable in this case. See Barron v. Emerson Russell
Maintenance Co., No. W2008-01409-COA-R3-CV, 2009 WL 2340990, at *8 n. 5 (Tenn .Ct. App. July 30, 2009) (citing
Biscan v. Brown, 160 S.W.2d 462, 483 (Tenn.1994); Speaker v. Cates Co., 879 S.W.2d 811, 813 (Tenn.1994); Collins
v. Arnold, No. M2004-02513-COA-R3-CV, 2007 WL 4146025, at * 14 (Tenn. Ct. App. Nov. 20, 2007) perm. app.
denied (Tenn. Apr. 14, 2008)).
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..., is subject to liability to the third person for physical harm
resulting from his failure to exercise reasonable care to protect his
undertaking, if:
(a) his failure to exercise reasonable care increases the risk of
such harm, or
(b) he has undertaken to perform a duty owed by the other to the
third person, or
(c) the harm is suffered because of reliance of the other or the
third person upon the undertaking.
Restatement (Second) of Torts § 324A (1965); see also Marr v. Montgomery Elevator Co.,
922 S.W.526, 529 (Tenn. Ct. App.1995) (citing Nidiffer v. Clinchfield Railroad Co., 600
S.W.2d 242 (Tenn. Ct. App.1980); Gaines v. Excel Industries, Inc., 667 F.Supp. 569 (M. D.
Tenn.1987)). Hill Services’ representative, Natalie Hill testified that, although it is not Hill
Services’ usual custom to repeatedly remind employees to sign up for insurance coverage, they
did so in this case, to wit:
Q. Do you always take such an active role in helping people with
their insurance applications?
A. No.
Q. What made this circumstance different?
A. Mr. Dyer and I ha[d] previous discussions about his need to
get his prescription filled.... [He needed] to stay on his
prescription drug in order for him to work effectively. So, it was
in my interest...to encourage him to get health insurance....
Giving every benefit to Mr. Dyer, we conclude that, in the instant case, Hill Services undertook
a duty.
Based upon the foregoing, and in light of the particular facts of this case, we conclude
that the trial court erred in finding that Hill Services owed no duty to Mr. Dyer vis a vis
reinstatement of his insurance. Our conclusion, however, does not, ipso facto, mandate a
reversal of the trial court’s order. Rather, it shifts the gravamen of this case to the question of
whether Hill Services breached the duty it undertook. Before addressing that question, we note
that the duty Hill Services assumed is narrow as it extends only to whether Hill Services
properly informed Mr. Dyer that he had to refile his paperwork in order to continue his
insurance coverage after he was rehired.
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Turning to the record, Mr. Dyer argues that Hill Services breached the duty owed to
inform Mr. Dyer that he needed to apply for life insurance after his reinstatement. The record,
however, does not support this assertion. Hill Services representative, Natalie Hill, testified,
in relevant part, as follows:
Q. At the time of [Mr. Dyer’s] rehiring, did you [Ms. Hill] have
conversations with him concerning insurance?
A. I did.
Q. And could you describe what those conversations were?
A. Yes. I let Mr. Dyer know that it was important for him to let
me know what coverages he would like to have, and whether it be
life, dental or health.
Q. And when was that conversation?
A. There were several conversations within the first 30-day
period.
Q. And in your first conversation, what happened?
A. In the first conversation he didn’t respond.
* * *
Q. Okay, and the subsequent conversations or conversation, did
you speak with Mr. Dyer concerning his insurance coverage?
A. Yes. I continued to remind him that it was important for him
to submit [an] application for the coverages he desired.
Q. Did he indicate his desire for any particular applications?
A. He indicated a desire for health insurance.
* * *
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Q. Had Mr. Dyer applied for any insurance at [the end of the 30
day period]?
A. No.
Q. What happened then?
A. Then I let him know again that he needed to submit
applications for the coverages that he wanted.
Q. And did he do that?
A. At this point, when I let him know “This is your last
opportunity. If you want to get on health insurance–you’ve
expressed to me that you have a need here–you need to do this,
you know, now or you’ve got to wait for a year.”
* * *
Q. ...So, he did then submit a health insurance application?
A. He did.
Mr. Dyer’s testimony contradicts Ms. Hill’s. Mr. Dyer stated that he did not know that
he had to reapply for insurance, but he also testified that he never did any of the paperwork and
that his wife took care of all the business of the house, including insurance-related information.
The Chancellor weighed the competing testimonies and concluded that:
[T]here is testimony in the record...from Ms. Hill that Mr. Dyer
was informed that any insurance coverage, whether it be health,
life or dental, had to be reapplied for and that it was optional and
he had to select which coverages he desired. Plaintiff Dyer, after
his rehiring elected to reapply for health insurance, but he DID
NOT reapply for life insurance.
As noted above, when the resolution of the issues in a case depends upon the
truthfulness of witnesses, the trial judge who has the opportunity to observe the witnesses and
their manner and demeanor while testifying is in a far better position than this Court to decide
those issues. See McCaleb v. Saturn Corp., 910 S.W.2d 412, 415 (Tenn.1995). The
Chancellor also correctly noted that the “burden [of proof] was on...Mr. Dyer.” From our
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review of the entire record in this case, we conclude that the evidence does not preponderate
against the trial court’s finding that Hill Services upheld its duty to Mr. Dyer not only by
informing him that he had to reapply for insurance coverage, but also by encouraging him to
apply for insurance coverage. Having found that the evidence does not preponderate against
this finding, Mr. Dyer has not proven an essential element to establish a prima facie case for
negligence by Hill Services for failing to obtain a new insurance policy upon Mr. Dyer’s rehire.
Based upon this finding, we pretermit discussion of the other elements of negligence.
Equitable Estoppel
In Baliles v. Cities Serv. Co., 578 S.W.2d 621 (Tenn.1979), the Tennessee Supreme
Court described equitable estoppel as follows:
Equitable estoppel, in the modern sense, arises from the “conduct”
of the party, using that word in its broadest meaning, as including
his spoken or written words, his positive acts, and his silence or
negative omission to do any thing. Its foundation is justice and
good conscience. Its object is to prevent the unconscientious and
inequitable assertion or enforcement of claims or rights which
might have existed, or have been enforceable by other rules of
law, unless prevented by estoppel; and its practical effect is, from
motives of equity and fair dealing, to create and vest opposing
rights in the party who obtains the benefit of the estoppel.
Id. at 624. Whether a party should be estopped depends upon the totality of the factual
situation. Smith v. Smith, No. M2004-00257-COA-R3-CV, 2005 WL 3132370, at *7 (Tenn.
Ct. App. Nov. 22, 2005). In Smith, we noted that:
[t]he general requirements for reliance on equitable estoppel are
conduct by the party to be estopped that is relied upon by the other
party, leading him to change his position. In most situations,[t]he
doctrine of equitable estoppel requires evidence of the following
elements with respect to the party against whom estoppel is
asserted: (1) Conduct which amounts to a false representation or
concealment of material facts, or, at least, which is calculated to
convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to
assert; (2) Intention, or at least expectation that such conduct shall
be acted upon by the other party; (3) Knowledge, actual or
constructive of the real facts.
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Equitable estoppel also requires the following elements
with respect to the party asserting estoppel: (1) Lack of
knowledge and of the means of knowledge of the truth as to the
facts in question; (2) Reliance upon the conduct of the party
estopped; and (3) Action based thereon of such a character as to
change his position prejudicially.
Smith, 2005 WL 3132370, at *7 (quoting Osborne v. Mountain Life Ins. Co., 130 S.W.3d
769, 774 (Tenn.2004) (citations omitted)).
Mr. Dyer relies on the factual dispute (i.e., whether Mr. Dyer was told he needed to
apply for the life insurance) in support of his equitable estoppel argument. Mr. Dyer asserts
that no one told him that he needed to re-apply for life insurance after his rehire. As discussed
above, there is evidence in the record to support the trial court’s conclusion that Ms. Hill told
Mr. Dyer numerous times that he needed to resubmit his application for insurance.
Consequently, the record does not support a finding that Hill Services concealed anything from
Mr. Dyer.
Concerning the fact that life insurance premiums were deducted from Mr. Dyer’s check
after his reinstatement, there is no evidence in the record that this was anything but a clerical
mistake on the part of Hill Services. Once the mistake was realized, Natalie Hill wrote a note
to Mr. Dyer apologizing for the mistake and the confusion caused thereby, and a
reimbursement was immediately issued. Again, there is no evidence that Hill Services
concealed anything from Mr. Dyer. Moreover, the evidence in the record indicates that Mr.
Dyer was not even aware that deductions from his checks for life insurance were being made
until sometime after his wife died. Consequently, we cannot expand the doctrine of equitable
estoppel to say that he detrimentally relied on an event that he was not even aware of until
after the mistake had been recognized and remedied by Hill Services.
Finally, it is clear from the record that Mr. Dyer had all of the knowledge necessary to
make a decision regarding purchasing new life insurance. From the totality of the
circumstances, there is simply no evidence that Hill Services attempted to mislead Mr. Dyer
in any way. Rather, the evidence suggests that Hill Services went to greater lengths than
normal to inform Mr. Dyer of his obligation to reapply for any insurance coverage he needed.
There is simply no basis for finding that Hill Services tried to conceal anything from Mr. Dyer;
rather, it appears that, despite Hill Services best efforts, it was Mr. Dyer who failed to take the
steps necessary to obtain new life insurance coverage in this case.
Conclusion
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For the foregoing reasons, we affirm in part and reverse in part the order of the trial
court. Costs of this appeal are assessed equally against the Appellant, James E. Dyer, and his
surety, and the Appellee, Hill Services Plumbing and HVAC.
_________________________________
J. STEVEN STAFFORD, J.
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