Amy Diane Riggs v. Farmers Mutual Of Tennessee

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 30, 2015 Session

AMY DIANE RIGGS v. FARMERS MUTUAL OF TENNESSEE

Direct Appeal from the Circuit Court for Sullivan County
No. C39982M John S. McLellan, III, Judge

No. E2015-00293-COA-R3-CV-FILED-NOVEMBER 9, 2015

This is an appeal from the trial court’s grant of summary judgment in an action on a
homeowner’s insurance policy. The home of the insured party was damaged by a fire on
May 29, 2011. The insured submitted proof of loss to the insurer pursuant to her
homeowner’s insurance policy. The insurer requested additional information from the
insured to complete the proof of loss, which the insured provided. The insurer
subsequently denied coverage. The insured party filed suit against insurer. The trial
court granted summary judgment in favor of the insurer, finding that the insured party’s
claims were barred by the one-year contractual limitations period. We reverse.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed and
Remanded

BRANDON O. GIBSON, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, J. and J. STEVEN STAFFORD, P.J. W.S., joined.

R. Wayne Culbertson, Kingsport, Tennessee, for the appellant, Amy Diane Riggs.

Christopher Dunn Heagerty, Knoxville, Tennessee, for the appellee, Farmers Mutual of
Tennessee.

OPINION

I. BACKGROUND & PROCEDURAL HISTORY

Plaintiff/Appellant Amy Diane Riggs (hereinafter “Riggs” or “Ms. Riggs”)
purchased a homeowner’s insurance policy from Defendant/Appellee Farmers Mutual of
Tennessee (“Farmers”). The policy insured Ms. Riggs’ residence. In pertinent part, the
policy states:
GENERAL POLICY PROVISIONS

....

PAYMENT OF LOSS OR CLAIM

1. Property Coverages

a. Your Property. We will adjust all losses with you. An
insured loss will be payable 45 days after a satisfactory proof
of loss is received and the amount of the loss has been
established either by written agreement with you or the filing
of an appraisal award with us. Payment will be made to you
unless another loss payee is named in the policy.

....

d. Our Options

1) We have the option to:

(a) pay the loss in money; or

(b) rebuild, repair or replace with property of
equivalent kind and quality, to the extent
practicable, within a reasonable time. We must
give the insured notice of our intent to do so
within 30 days after receipt of a duly executed
proof of loss.

....

11. Suits Against Us

a. Property Coverages – No suit to recover for any property
claim may be brought against us unless:

1) the terms of this policy have been fully complied with;
and,
2) the suit is commenced within 1 year after the loss. If
any law of the state where the premises described in
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 the Declarations are located makes this limitation
invalid, then suit must begin within the shortest period
permitted by law.

On May 29, 2011, fire damaged Riggs’ home and personal belongings. Riggs
notified Farmers of the loss, and Farmers began investigating the claim. On August 19,
2011, Farmers sent Riggs a proof of loss form, including an attached personal property
inventory list (“inventory list”) to be filled out in accordance with the terms of the
insurance policy. Riggs returned the executed proof of loss on October 3, 2011. As part
of Farmers’ investigatory process, its counsel conducted an examination of Riggs under
oath on November 10, 2011. There, Riggs was advised that her inventory list was not
complete and that Farmers required her to submit a completed form. Riggs completed
the inventory list and did not hear from Farmers again until she received a formal denial
letter on September 24, 2012.

Riggs filed suit against Farmers on December 11, 2012, alleging that Farmers
breached their contract, did not deal with her in good faith, and was guilty of deceptive
trade practices in violation of the Tennessee Consumer Protection Act. Farmers filed a
motion for summary judgment, stating that it was entitled to summary judgment as a
matter of law based on its assertion that Riggs’ cause of action was time-barred by the
limitation period set forth in the insurance policy. The trial court granted Farmers’
motion for summary judgment. In its order, the trial court reasoned that Riggs’ cause of
action against Farmers accrued when her proof of loss was submitted on October 3, 2011.
Accordingly, the trial court determined that her suit was barred by the insurance policy’s
one-year contractual limitations provision because Riggs did not file her suit until
December 11, 2012. The trial court delayed its final judgment after taking judicial notice
that a decision pending in Lloyd L. Meyers v. Farmers Aid Association of Loudon County
could “have implications upon the final result” of this case. Meyers v. Farmers Aid Ass’n
of Loudon County, No. E2013-02585-COA-CV, 2014 WL 6889643 (Tenn. Ct. App. Dec.
9, 2014) (no perm. app. filed). After the Meyers decision was filed on December 9, 2011,
the trial court issued its final judgment in this matter and granted summary judgment in
favor of Farmers. Riggs timely filed a notice of appeal to this Court.

II. ISSUES PRESENTED

Ms. Riggs presents the following issues for review:

1. Whether the trial court committed reversible error by granting
summary judgment in favor of [Farmers] on the ground [Ms.] Riggs’
claim under the insurance policy was time barred?

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 2. Whether the trial court committed reversible error by granting
summary judgment in favor of [Farmers] on the ground suit under
the applicable insurance policy was time barred when genuine issues
of material fact relevant to the determination of whether suit was
timely filed continue to exist?

3. Whether the trial court committed reversible error by erroneously
holding the one-year contractual limitations period had run before
[Ms.] Riggs filed suit by finding the required “immunity period”
preceding the limitations period began to run with Riggs having
submitted a less than fully completed proof of claim form on
October 3, 2011 instead of when [Farmers] received “satisfactory
proof of loss” following the examination under oath of Riggs on
November 10, 2011 and her providing property loss inventory sheets
that fully completed the proof of loss form?

4. Whether the trial court committed reversible error by not finding
ambiguous policy provisions warranted denial of summary
judgment?

III. STANDARD OF REVIEW

Riggs appeals the trial court’s order granting summary judgment in favor of
Farmers. We therefore apply the standard of review applicable to summary judgment
decisions. Summary judgment is appropriate in virtually any civil case that can be
resolved on the basis of legal issues alone. CAO Holdings, Inc. v. Trost, 333 S.W.3d 73,
81 (Tenn. 2010). This appeal requires us to interpret and apply the provisions of an
insurance contract. Because the interpretation and application of a contract involves legal
issues, contract cases are particularly well-suited to disposition by summary judgment.
Campora v. Ford, 124 S.W.3d 624, 628 (Tenn. Ct. App. 2003).

Summary judgment is appropriate when the moving party can demonstrate that
there is no genuine issue as to any material fact and that it is entitled to judgment as a
matter of law. Tenn. R. Civ. P. 56.04. Our supreme court, in Rye v. Women’s Care
Center of Memphis, MPLLC, set Tennessee’s summary judgment standard as follows:

Our overruling of Hannan means that in Tennessee, as in the federal
system, when the moving party does not bear the burden of proof at
trial, the moving party may satisfy its burden of production either (1)
by affirmatively negating an essential element of the nonmoving
party’s claim or (2) by demonstrating that the nonmoving party’s
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 evidence at the summary judgment stage is insufficient to establish
the nonmoving party’s claim or defense.

Rye v. Women’s Care Ctr. of Memphis, MPLLC, --- S.W.3d ----, 2015 WL 6457768, at
*22 (Tenn. Oct. 26, 2015). A trial court’s decision to grant a summary judgment motion
presents a question of law, and we review it de novo with no presumption of correctness.
Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008). In doing so, we must
make a fresh determination that the requirements of Tennessee Rule of Civil Procedure
56 have been satisfied. Estate of Brown, 402 S.W.3d 193, 198 (Tenn. 2013).

IV. ANALYSIS

The insurance contract at issue provides that “[n]o suit to recover for any property
claim may be brought against us unless . . . the suit is commenced within 1 year after the
loss.” This Court recently addressed the legal principles applicable to such contractual
limitations clauses in the Meyers decision:

Tennessee has long held that an insurance policy provision establishing an
agreed limitations period within which suit may be filed against the
company is valid and enforceable. Guthrie v. Conn. Indem. Ass’n, 101
Tenn. 643, 49 S.W. 829, 830 (Tenn. 1899); Hill v. Home Ins. Co., 22 Tenn.
App. 635, 125 S.W.2d 189, 192 (Tenn. Ct. App. 1938). Our courts have
generally held that a contractual limitations period begins to run upon
accrual of the cause of action. Phoenix Ins. Co. v. Fidelity & Deposit Co.,
162 Tenn. 427, 37 S.W.2d 119 (1931). “We have interpreted insurance
policies containing language requiring a claim to be brought within so
many days after a property loss, but which protect the insurer from suit
until after a settlement period, as meaning that suit must be brought within
so many days after the cause of action accrues.” Certain Underwriter’s at
Lloyd’s of London v. Transcarriers Inc., 107 S.W.3d 496, 499 (Tenn. Ct.
App. 2002) (citing Boston Marine Ins. Co. v. Scales, 101 Tenn. 628, 49
S.W. 743, 747 (Tenn. 1898)). Because the settlement period provides a
period of immunity, during which the insured may not bring suit, the cause
of action has been construed as accruing once the immunity period has
expired, rather than on the date of the actual loss. Id.

Meyers, 2014 WL 6889643, at *3. “If the insurer neither pays nor denies a claim within
the settlement of loss period, it is no longer immune from suit, and the insured’s cause of
action accrues.” Daniel v. Allstate Ins. Co., No. W2014-01965-COA-R3-CV, 2015 WL
1578553, at *3 (Tenn. Ct. App. April 6, 2015) (no perm app. filed) (citing Certain
Underwriter’s, 107 S.W.3d at 500). Therefore, the general rule is that the contractual
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limitations period begins to run upon a denial of liability or upon the expiration of the
settlement period, whichever comes first. Certain Underwriter’s, 107 S.W.3d at 500.
Here, the parties dispute when the contractual 45-day immunity period began to run and,
consequently, also dispute when the limitations period on this cause of action accrued.

Farmers argues that the immunity period began when Riggs submitted the
executed proof of loss form on October 3, 2011. Keith Hairell, the Farmers claims
manager for Riggs’ policy, stated in his deposition that “[Riggs] made her claim official
when she turned in her Proof of Loss to us. That was her officially making her claim for
the amount of the loss.” Riggs argues the immunity period began to run on November
10, 2011, when she fully complied with Farmers’ investigation procedures by
examination under oath and the re-submission of a completed inventory list.

In Meyers, we examined a similar question and determined that, under the terms of
the insurance policy at issue in that case, the immunity period began when the insured
submitted his proof of loss. Meyers, 2014 WL 68889643 at *6. However, the language
of the policy at issue in Meyers differs from the language of the policy here. The
insurance policy in Meyers stated that a loss “shall be payable sixty days after proof of
loss.” Id. at *1. The insurance contract between Farmers and Riggs is similar but
modifies the “proof of loss” requirement with the additional term “satisfactory.”

This is a matter of contract interpretation. When interpreting contractual
language, courts look to the plain meaning of the words in the document to ascertain the
parties’ intent. Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885,
889-90 (Tenn. 2002). If the language is clear and unambiguous, the literal meaning
controls the outcome of the dispute. Id. Here, the parties dispute the operation of the
word “satisfactory” when combined with the required “proof of loss.” On appeal, Riggs
argues that the trial court erred in not finding the insurance policy provisions ambiguous.

We decline, however, to hold that provisions of the policy are ambiguous. In
contrast, we believe the plain meaning of the words in the policy provides the answer as
to when the immunity period began. The insurance policy itself does not provide a
definition for the term “satisfactory.” Therefore, the term “should be given [its] plain and
ordinary meaning.” Clark v. Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn. 2012). The
ordinary meaning of the adjective “satisfactory” is that the thing being described is “good
enough to fulfill a need, wish, requirement, etc.; satisfying or adequate.” WEBSTER’S
NEW WORLD COLLEGE DICTIONARY 1291 (5th ed. 2014). Farmers seemingly wants this
Court to ignore the fact that it did not deem Riggs’ proof of loss adequate until at least
November 10, 2011, when it stopped requesting additional information from her. It is
illogical to say that Riggs’ proof of loss was satisfactory on October 3 when additional
information, including an examination under oath and completed inventory list, was
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required to actually prove the loss. In our view, Riggs did not provide a satisfactory
proof of loss until Farmers had all of the information it required in order to determine
whether or not to pay the claim. This did not occur until November 10. Accordingly,
Riggs proof of loss could not be considered satisfactory until at least that time.

Additionally, there is some question of whether Riggs’ proof of loss was ever
satisfactory based on the language of the insurance policy itself. The policy states that
“[a]n insured loss will be payable within 45 days after a satisfactory proof of loss is
received. . . .” If a loss is payable 45 days after Farmers receives a satisfactory proof of
loss, it necessarily follows that, if Farmers declines to pay, Farmers did not consider the
insured’s proof of loss satisfactory. Simply stated, Farmers’ interpretation leaves Riggs
with no way of knowing when her proof of loss was satisfactory or when the immunity
period began to run. If the proof of loss became satisfactory, it did so at a definite time,
and the language of the insurance contract points to that time being November 10, 2011.
Accordingly, the immunity period would have ended on December 25, 2012, and Riggs’
suit was not time-barred when she filed it on December 11, 2012. Because this action
was not time-barred when it was filed, the circuit court erred in granting Farmers’ motion
for summary judgment.

V. CONCLUSION

For these reasons, the decision of the circuit court is reversed and remanded.
Costs of this appeal are taxed to the appellee, Farmers Mutual of Tennessee, for which
execution may issue, if necessary.

_________________________________
BRANDON O. GIBSON, JUDGE

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