Robert F. Clark v. Tennessee Farmers Mutual Insurance Company

04/17/2020
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
January 21, 2020 Session

ROBERT F. CLARK v. TENNESSEE FARMERS MUTUAL INSURANCE
COMPANY

Appeal from the Chancery Court for Jefferson County
No. 16-CV-61 David R. Duggan, Judge
___________________________________

No. E2019-00746-COA-R3-CV
___________________________________

This appeal arises from an action filed by Robert F. Clark (“Plaintiff”), seeking a
declaratory judgment and damages against Tennessee Farmers Mutual Insurance
Company (“Tennessee Farmers”). Plaintiff applied for a homeowner’s insurance policy
with Tennessee Farmers upon his purchase of improved real property. The effective date
of the policy was to begin on May 29, 2013, the original date of the closing for the sale of
the property. The closing of the real property was rescheduled to an earlier date. A leak
occurred after the actual closing on the property but before the date of the original closing
and the stated effective date of the homeowner’s insurance policy. Determining that
Tennessee Farmers had not been notified of the change and that Plaintiff had signed an
authorization for work on the property, the Trial Court granted Tennessee Farmers’
motion for summary judgment. We affirm the Trial Court’s finding that the leak
occurred prior to the effective date of the policy. However, we reverse the Trial Court’s
grant of summary judgment upon our determination that genuine issues of material fact
exist to preclude summary judgment on other issues.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed in Part, Reversed in Part; Case Remanded

D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which JOHN W.
MCCLARTY and THOMAS R. FRIERSON, II, JJ., joined.

Douglas E. Taylor, Seymour, Tennessee, for the appellant, Robert F. Clark.

John T. Johnson, Jr., and Brandon L. Morrow, Knoxville, Tennessee, for the appellee,
Tennessee Farmers Mutual Insurance Company.
 OPINION

Background

Plaintiff purchased improved real property in Jefferson County, Tennessee (“the
Property”). The closing date regarding the sale of the Property initially was scheduled
for May 29, 2013, but was rescheduled to May 24, 2013, at the request of the sellers.
Prior to the rescheduling of the closing on the Property, Plaintiff had applied for
homeowner’s insurance with Tennessee Farmers with the effective date for the policy to
begin on May 29, 2013. After the closing on May 24, 2013, but before the effective date
of insurance on May 29, 2013, the home had a water leak that caused damage to the
Property. On May 26, 2013, Plaintiff contracted with ServPro of Sevier, Jefferson, and
Cocke Counties (“ServPro”) to remove the water from the Property. This project was a
one-day job, and Plaintiff signed an authorization for the performance of this work.

Plaintiff filed an insurance claim with Tennessee Farmers. Plaintiff alleged that
following the claim, Tennessee Farmers authorized ServPro to return to the Property on
May 28, 2013, to begin demolition on the Property. Tennessee Farmers does not dispute
for purposes of its summary judgment motion that it authorized ServPro to perform work
on the Property. According to Plaintiff’s complaint, Plaintiff did not sign an
authorization regarding this work, and only the representative from Tennessee Farmers
authorized this work. Plaintiff argued that he had authorized only the initial water
removal from the Property. ServPro began demolition on the Property but ceased work
when notified by Tennessee Farmers that the insurance claim would not be covered by
insurance. Tennessee Farmers averred that Plaintiff’s insurance policy regarding the
Property began on the date of the original closing, which was days after the damage to
the Property occurred. The Property remained damaged, and ServPro issued an invoice
for the work completed before it was discontinued in the amount of $13,881.96.

In June 2016, Plaintiff filed a complaint for a declaratory judgment and damages
against Tennessee Farmers and First Tennessee Bank, alleging breach of contract;
misrepresentation; fraud; fraudulent concealment; bad faith refusal to pay a legitimate
insurance claim, pursuant to Tennessee Code Annotated § 56-7-105; deceptive and unfair
business practices in violation of the Tennessee Consumer Protection Act, and conspiracy
or constructive fraud. In his complaint, Plaintiff alleged that he had relied on the
representation of the First Tennessee Bank representative who had been responsible for
dispersing funds for the closing and had agreed to make any necessary administrative
changes to give full effect to the parties’ contract. According to the complaint, Tennessee
Farmers “avers it was not notified by the Bank, or more likely it simply failed to make
the changes requested, given that the settlement statement acknowledges payment to the
Insurance Company and a Policy Number issued.” Plaintiff stated that “[e]ither the
statements of the Bank were false or the Insurance Company failed to perform the

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requirements of the transaction.” Plaintiff further alleges that “payment of $839.00 was
issued to [Tennessee Farmers] for Policy Number HP44-08176, upon the actual closing
date of May 24, 2013 . . . and before the claim for damages to the house by the Plaintiff.”
Plaintiff attached to his complaint the settlement statement from the closing on the
Property, which reflected a closing date of May 24, 2013, and a settlement charge for
homeowner’s insurance in the amount of $839.00 to Tennessee Farmers. The settlement
statement also provided as follows: “ You do not have a monthly escrow payment for
items such as property taxes and homeowner’s insurance. You must pay these items
directly yourself.”

Tennessee Farmers filed an answer denying any wrongdoing by Tennessee
Farmers and stated that neither the bank nor Plaintiff had informed it that the closing had
been rescheduled and that it did not receive the check for the premium until May 31,
2013. Tennessee Farmers presented as a defense that the water leak occurred on May 26,
2013, and there is no coverage for the loss because the coverage was not in effect at the
time of the damage to the Property.

Plaintiff filed a motion for summary judgment in December 2016, which included
substantially the same allegations as the complaint. The Trial Court subsequently denied
the motion through its order entered in February 2017. Additionally, Tennessee Farmers
filed its first motion for summary judgment, which the Trial Court then denied upon its
determination that an issue of material fact existed as to whether Plaintiff notified
Tennessee Farmers of the change in the closing date.

First Tennessee Bank filed a motion for summary judgment and memorandum of
law in support thereof, alleging that “it was Plaintiff’s responsibility – not First
Tennessee’s – to ensure the Property was covered against loss” and that Plaintiff’s
reliance on the bank’s “alleged (and vague) statement that ‘everything is taken care of’ in
connection with the rescheduled closing date was unreasonable as a matter of law.” The
Trial Court granted First Tennessee’s motion for summary judgment upon determining
that “First Tennessee acted as a lender only in connection with the purchase and sale
transaction that is the subject matter of this case” and that “[t]he loan documents are clear
that First Tennessee had no duty to purchase or maintain insurance on the Plaintiff’s
residence.”1

In June 2018, Tennessee Farmers filed their second motion for summary judgment
alleging that Plaintiff’s deposition testimony established that Plaintiff had not notified
Tennessee Farmers of the earlier closing date or asked Tennessee Farmers to change the
policy effective date from the original date of May 29, 2013. Although Plaintiff’s

1
The Trial Court’s order granting summary judgment in favor of First Tennessee Bank is not at issue in
this appeal.

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affidavit stated that he met with the insurance agent, David Haston, prior to the closing to
inquire whether any changes needed to be made since the closing date had been set,
Plaintiff’s deposition testimony reflected that he had not notified anyone at Tennessee
Farmers of the change in date for the closing. Plaintiff’s affidavit stated that a
representative from the bank showed Plaintiff a document reflecting that Tennessee
Farmers had been notified of the change.

In addition to its motion, Tennessee Farmers attached a memorandum of law in
support of its motion; statement of material facts; an affidavit of Joseph Brzozowski, the
Regional Claims Manager with Tennessee Farmers; the deposition testimony of Plaintiff;
the deposition testimony of Teresa Serdinsky, Plaintiff’s daughter; a declaration by David
Haston, a representative of Tennessee Farmers; and the transcript from the motion
hearing concerning Tennessee Farmers’ first summary judgment motion. In its
memorandum of law, Tennessee Farmers states as follows:

[A]ll claims against Tennessee Farmers fail for the same reason: Tennessee
Farmers was never put on notice, not by Plaintiff nor anyone else, that the
effective insurance policy date should be changed to match the earlier
closing date. Without this key fact, Plaintiff cannot establish that
[Tennessee Farmers] had any duty to Plaintiff, under either tort or contract,
to change the effective policy dates. [Tennessee Farmers] is entitled to
summary judgment.

(Internal citations omitted.)

The Trial Court heard the matter on two nonconsecutive days in August and
November 2018. Between the court hearings, both Plaintiff and Tennessee Farmers filed
supplemental briefs in support of their position regarding the pending summary judgment
motion. In its November 2018 order, the Trial Court granted Tennessee Farmers’ second
summary judgment motion and incorporated its findings of fact included in the hearing
transcript. During the November 2018 motion hearing, the Trial Court specifically found
the following findings of fact:

[Number 1:] Tennessee Farmers Mutual Insurance Company issued
a policy of insurance to Plaintiff for the subject improved real property
located at **** Lisa Circle, Strawberry Plains, Tennessee; 37871; bearing
policy number 44.08176.

Number 2: That policy did not take effect until May 29, 2013. This
effective date of coverage is listed on both the application for insurance
bearing the Plaintiff’s signature and the policy’s declarations page. In
finding that fact, it is noted that Plaintiff has denied that statement of fact.

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However, Plaintiff hasn’t really contested any of the facts as stated. What
Plaintiff has said is that Mr. Clark was allegedly shown a document
indicating that [Tennessee Farmers] was informed of an earlier closing date.
The Plaintiff, however, has been unable to offer any proof, including any
such document that would suggest that Tennessee Farmers was informed of
the earlier closing date. And, of course, Tennessee Farmers’ representative
in his affidavit says that they were not informed; and there is no evidence
before this Court that Tennessee Farmers was ever notified that the closing
had been moved up 5 days and that therefore the policy needed to have a
different revised effective date.

Number 3: The original closing date was scheduled for May 29,
2013.

Number 4: Plaintiff, however, actually closed on the subject
improved real property on May 24, 2013.

Number 5: Tennessee Farmers did not receive the premium payment
for Plaintiffs policy until May 31. Again, in finding that fact, Plaintiff
denies that statement of fact but in doing so says only that at that time, at
the time of the denial, a certain deposition had not yet been taken and they
wanted the opportunity to take that deposition. But there has been no proof
submitted to the Court of anything other than the fact that the premium
payment was not received until May 31, of 2013. Which would have been
consistent with Tennessee Farmers believing that the closing took place on
May 29.

Number 6: Plaintiff did not notify Tennessee Farmers of the earlier
May 24, 2013 closing date.

Number 7: Plaintiff’s daughter, Teresa Serdinsky, did not notify
Tennessee Farmers of the earlier May 24, 2013 closing date.

Number 8: Plaintiff does not believe that the agent, Mr. Haston, or
anyone at Tennessee Farmers provided him with false information
regarding his insurance claim.

Number 9: At no time was Mr. Haston notified by Mr. Clark or
anyone else that the closing on the property at **** Lisa Circle had been
moved from May 29, 2013 to May 24, 2013. Now, again, in finding that
fact it’s noted that the Plaintiff denies that statement of fact. However, the

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 denial is once again based upon an allegation of allegedly being shown
some document which has not been provided to the Court.

Number 10: . . . At no time was Mr. Haston requested by Mr. Clark
or anyone else to change the beginning of the policy period from May 29,
2013 to another date.

The Court finds, Number 11, that no misrepresentations were made
by Tennessee Farmers. An unfortunate mistake was made. The Plaintiff
changed his closing date but unfortunately no one informed Tennessee
Farmers. Tennessee Farmers, in good faith, issued its policy effective the
only date it knew, May 29, 2013. And the loss for which a claim was later
made pre-dates the effective date of the policy by 5 days.

Number 12: As for the argument that Tennessee Farmers authorized
ServPro to do the work, Plaintiff signed an authorization to perform
services in direction of payment with ServPro which stated “It is fully
understood that customer and its agents, successors, assigns, and heirs are
personally responsible for any and all deductible and any costs not covered
by insurance. Customer agrees that provider is working for the customer
and not customer’s insurance company or any agent or adjuster.” And that
was agreed to in the deposition, and that language was referred to in the
Plaintiff’s deposition on page 41. And, apparently, it was Exhibit-3 to that
deposition.

***

[Number 13:] Teresa Serdinsky testified that she contacted ServPro
about performing the work before she ever spoke to anyone at Tennessee
Farmers.

The Trial Court continued with its legal analysis:

Turning to the law, of course, the 11th Circuit case that has been
cited is not binding upon the Court. But, apparently, we’ve been unable to
find any Tennessee law addressing the question of whether it makes any
difference that Tennessee Farmers authorized ServPro to go out and begin
the work prior to determining, or making a determination, that in fact the
loss preceded the date of the policy.

The Court considers this 11th Circuit case to be persuasive authority
for the propositions that mistaken representations about coverage by an

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agent of the insurance company did not prevent the insurer from applying
the clear terms of the policy to deny coverage. And in that 11th Circuit
case, the facts were even more egregious than here for several reasons. In
that case, Allstate’s representative made recommendations regarding the
necessary repair work, assured Plaintiff that Allstate would pay for the
repairs, and told Plaintiff’s representative to . . . deal with Allstate directly.
Plaintiff signed a form authorizing a remediation company to commence
repair work on the property, and to bill Allstate directly.

Now, that form had similar language to the one present here that
warned the customer that the customer would bear responsibility for all
charges not reimbursed by the insurance company. But in that case, in the
11th Circuit, after substantial repair work had been done on the house,
Plaintiff received a letter from Allstate advising that she would actually
receive a check for $42,366.00; the amount payable under the policy. It
was only then, apparently, that Allstate realized that they had a coverage
defense, and the next month Allstate informed Plaintiff that it would not
honor the claim based on the residence requirement in the policy. Now that
was a residency issue. It was not an effective date issue.

And I think the facts of that case present, as Defendant has argued,
even a more compelling case for coverage than we have here. Yet the 11th
Circuit applied the clear terms of the policy to deny coverage. I think it
also serves public policy that an insurance company, in an effort to try to
provide coverage when coverage is due and owed, to try to act quickly on
claims; and should not, when it’s acting in good faith, forfeit because it
tries to act quickly to help its insured from being able to say, “Wait a
minute, there’s no coverage here. We didn’t realize that at first, but this
loss pre-dates the date of the policy.”

In this case, Plaintiff was on notice, again as I’ve already said in the
Findings of Fact, that he might be responsible for the work performed by
ServPro by signing that authorization. And Teresa Serdinsky testified that
she contacted ServPro about performing the work before she ever spoke to
anyone at Tennessee Farmers. By the way, I’m going add that,
commenting on the law, I also want to add that as a 13th Finding of Fact.
Based on her deposition testimony that Teresa Serdinsky testified that she
contacted ServPro about performing the work before she ever spoke to
anyone at Tennessee Farmers.

I just don’t think that it is the case, and I agree with Defendant that a
mistake in authorization to perform repairs when made in good faith,

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 somehow alters the unambiguous effective date of the insurance contract.
Here, once again, there was a very unfortunate mistake. Everybody thought
the closing was going to be on May 29. Tennessee Farmers was asked to
insure the property. They agreed to do that. They issued a policy in good
faith effective May 29, based upon the representations made to the
company about the date of the closing. And unfortunately two things
happened. Number 1, nobody notified Tennessee Farmers that the closing
was moved up 5 days to May 24. And Number 2, unfortunately the loss
pre-dated the effective date of the policy.

I believe that [Tennessee Farmers] has negated essential elements of
the Plaintiff’s claim and that the Plaintiff cannot prove the claim and that
there is no genuine issue of material fact. And, so, I’m going to grant
[Tennessee Farmers’] Motion for Summary Judgment.

In December 2018, Plaintiff filed a motion to alter, amend and/or reconsider the
Trial Court’s grant of summary judgment in favor of Tennessee Farmers. Thereafter, the
Trial Court entered an order in March 2019, awarding Tennessee Farmers discretionary
costs. Following a hearing on Plaintiff’s motion to alter, amend and/or reconsider
conducted in February 2019, the Trial Court entered an order in April 2019, denying
Plaintiff’s motion. In its April 2019 order, the Trial Court incorporated by reference the
oral ruling in the transcript from the February 2019 motion hearing. The transcript
provides the Trial Court’s ruling as follows:

Well, it remains my impression of this case that it’s the sad set of facts in
one respect. But the simple reality is that Tennessee Farmers agreed to
insure this property based on a closing dated of “X”. They were told,
Tennessee Farmers was told, that this closing was going to take place on a
certain date; and they agreed to insure the property as of that date. They
were paid for the insurance policy and they issued the policy. But it had an
effective date based on the closing date that was communicated to
Tennessee Farmers. And nobody bothered to tell Tennessee Farmers that
the closing date had changed. It’s not Tennessee Farmers fault. They
issued the policy in good faith, effective the date that they were told the
closing was going to take place. And the other parties, other than
Tennessee Farmers, decided to change the closing date but nobody
bothered to tell Tennessee Farmers. And, so, their policy was issued with
an effective date. And, unfortunately, the loss occurred prior to the
effective date. And, so, I just - it remains my position that Tennessee
Farmers has negated the essential element of the Plaintiff’s case, and that
the Plaintiff cannot prove its case, and that there’s no genuine issue of
material fact, and that Tennessee Farmers in entitled to a Summary

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 Judgment. And the only other argument that was offered was, “Well, what
about the fact that Tennessee Farmers had asked this cleaning service to go
in and start cleaning up the damage?” Well, they did. But I think that was
without waiver of their right, once they discovered that the loss pre-dated
the effective date of the policy, to say “I’m sorry, hold on. We’re not going
to clean this after all.” And I still think that that case, that was not a
Tennessee case, but I think it was persuasive authority. Because there the
facts were even more egregious for the insurance company than anything
that happened in this case. And I just feel like I made the right decision the
first time. And, so, I’m going to respectfully deny the Motion to Alter, or
Amend or Reconsider.

Plaintiff timely appealed the Trial Court’s judgment to this Court.

Discussion

Although not stated exactly as such, Plaintiff raises four issues for our review on
appeal as follows: (1) whether the Trial Court erred by granting Tennessee Farmers’
motion for summary judgment despite a genuine issue of material fact existing due to
testimony that a representative of Tennessee Farmers authorized the work on the home,
(2) whether the Trial Court erred by denying Plaintiff’s motion to alter or amend upon its
determination that Tennessee Farmers was not estopped from denying responsibility
when a representative from Tennessee Farmers, and not Plaintiff, authorized the repair
work on the home, (3) whether the Trial Court erred by relying on an out-of-state court
decision as persuasive authority in this matter, and (4) whether the Trial Court erred by
determining that the insurance policy became effective on the initially scheduled closing
date instead of the actual date on which the closing occurred.

As our Supreme Court has instructed regarding the standard of review on motions
for summary judgment:

Summary judgment is appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.”
Tenn. R. Civ. P. 56.04. We review a trial court’s ruling on a motion for
summary judgment de novo, without a presumption of correctness. Bain v.
Wells, 936 S.W.2d 618, 622 (Tenn. 1997); see also Abshure v. Methodist
Healthcare–Memphis Hosp., 325 S.W.3d 98, 103 (Tenn. 2010). In doing
so, we make a fresh determination of whether the requirements of Rule 56
of the Tennessee Rules of Civil Procedure have been satisfied. Estate of

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Brown, 402 S.W.3d 193, 198 (Tenn. 2013) (citing Hughes v. New Life Dev.
Corp., 387 S.W.3d 453, 471 (Tenn. 2012)).

***

[I]n 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 evidence at the summary judgment stage is insufficient to establish
the nonmoving party’s claim or defense. We reiterate that a moving party
seeking summary judgment by attacking the nonmoving party’s evidence
must do more than make a conclusory assertion that summary judgment is
appropriate on this basis. Rather, Tennessee Rule 56.03 requires the
moving party to support its motion with “a separate concise statement of
material facts as to which the moving party contends there is no genuine
issue for trial.” Tenn. R. Civ. P. 56.03. “Each fact is to be set forth in a
separate, numbered paragraph and supported by a specific citation to the
record.” Id. When such a motion is made, any party opposing summary
judgment must file a response to each fact set forth by the movant in the
manner provided in Tennessee Rule 56.03. “[W]hen a motion for summary
judgment is made [and] . . . supported as provided in [Tennessee Rule 56],”
to survive summary judgment, the nonmoving party “may not rest upon the
mere allegations or denials of [its] pleading,” but must respond, and by
affidavits or one of the other means provided in Tennessee Rule 56, “set
forth specific facts” at the summary judgment stage “showing that there is a
genuine issue for trial.” Tenn. R. Civ. P. 56.06. The nonmoving party
“must do more than simply show that there is some metaphysical doubt as
to the material facts.” Matsushita Elec. Indus. Co., 475 U.S. at 586, 106 S.
Ct. 1348. The nonmoving party must demonstrate the existence of specific
facts in the record which could lead a rational trier of fact to find in favor of
the nonmoving party. If a summary judgment motion is filed before
adequate time for discovery has been provided, the nonmoving party may
seek a continuance to engage in additional discovery as provided in
Tennessee Rule 56.07. However, after adequate time for discovery has
been provided, summary judgment should be granted if the nonmoving
party’s evidence at the summary judgment stage is insufficient to establish
the existence of a genuine issue of material fact for trial. Tenn. R. Civ. P.
56.04, 56.06. The focus is on the evidence the nonmoving party comes
forward with at the summary judgment stage, not on hypothetical evidence
that theoretically could be adduced, despite the passage of discovery
deadlines, at a future trial.

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Rye v. Women’s Care Cntr. of Memphis, MPLLC, 477 S.W.3d 235, 250, 264-65 (Tenn.
2015).

We first address whether the Trial Court erred in its determination that the policy
effective date was the date of the originally scheduled closing and not the actual closing
date. The initial closing date on Plaintiff’s purchase of the Property was May 29, 2013.
Plaintiff had contacted Tennessee Farmers to obtain a homeowner’s insurance policy
concerning the Property. The application for insurance reflected that the requested policy
would begin on May 29, 2013. Thereafter, the sellers of the Property requested to move
up the closing date to May 24, 2013. The closing date was, therefore, rescheduled to
May 24, 2013, five days earlier than previously scheduled.

Although Plaintiff executed an affidavit stating that he had been shown a
document reflecting that notice of the change in closing date had been provided to
Tennessee Farmers, the Trial Court found that Mr. Haston had not been provided notice
that the closing had been moved to an earlier date and that Plaintiff never requested that
Tennessee Farmers modify the effective date of the policy to the actual closing date. The
Trial Court acknowledged Plaintiff’s allegations that he had seen a document reflecting
that notice had been provided to Tennessee Farmers but found that Plaintiff had not
submitted any such documentation proving notice to the Trial Court. Pursuant to our
Supreme Court’s holding in Rye, 477 S.W.3d at 265, Plaintiff, as the non-moving party,
“must demonstrate the existence of specific facts in the record which could lead a rational
trier of fact to find in favor of the nonmoving party.” Without proof that Tennessee
Farmers had been notified that the closing had been moved to an earlier date, the Trial
Court did not err by finding that the effective date for the homeowner’s policy was the
original date of closing on May 29, 2013, and not on the actual closing date, which
occurred earlier in time.

We next address whether the Trial Court erred by granting Tennessee Farmers’
motion for summary judgment, denying Plaintiff’s motion to alter or amend, and relying
on persuasive authority. It is undisputed that on May 26, 2013, Plaintiff signed an
agreement with ServPro to perform work on the Property. According to Plaintiff’s
affidavit, the May 26, 2013 agreement with ServPro was for the sole purpose of allowing
ServPro to remove the accumulated water from the home. Plaintiff stated that it was a
one-day job and that ServPro left the Property upon completion of the job.

ServPro later returned to the home on May 28, 2013, to begin demolition on the
Property. However, there is at least a genuine question of who actually authorized the
work to be performed on Plaintiff’s home, which began on May 28, 2013. The Trial
Court found that Plaintiff had signed an authorization form authorizing ServPro to
perform work on the Property. The Trial Court further found that the authorization

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provided that Plaintiff would be responsible for costs not covered by insurance and that
the company is working for the customer, not the insurance company, agent, or adjuster.
However, Plaintiff argues that the initial authorization form to which the Trial Court
refers was for one day of work on May 26, 2013, which was completed; he did not sign
an additional authorization for the subsequent work; and the work that was authorized
and began on May 28, 2013, was authorized solely by a claims adjuster for Tennessee
Farmers, Quint Webster. Plaintiff further stated that Mr. Webster informed him that he
had authorized ServPro to place a dumpster on the Property to begin demolition on the
Property. According to Plaintiff, he relied on Mr. Webster’s representation and allowed
ServPro to begin demolition, believing that Tennessee Farmers would pay for the work.

Alicia Burch, an employee of ServPro, executed an affidavit stating that she had
corresponded with Quint Webster on May 28, 2013, concerning “the mitigation and tear
out only” and that Mr. Webster had authorized ServPro to perform work on the Property.
Ms. Burch also stated that ServPro performed work on the Property for approximately
three weeks under the authorization of Mr. Webster and then ceased work on the Property
at the direction of Tennessee Farmers.

Freda Green, also an employee of ServPro, executed an affidavit stating that she
had “worked on the emails on May 28, 2013, concerning the mitigation/tear-out” to the
Property. According to Ms. Green’s affidavit, Mr. Webster, an employee of Tennessee
Farmers, authorized ServPro to perform work on the Property on May 28, 2013.
According to Ms. Green’s affidavit, ServPro performed three weeks of work on the
Property, upon the authorization of Mr. Webster, before being instructed to stop work on
the Property by Tennessee Farmers. An email message from Ms. Green to Mr. Webster
provided as follows:

I’m in accounting at Servpro and I have been [in] a few discussions with
the Clark’s attorney regarding payment to Servpro.

As you know, Servpro was called out by our corporate office on May 26,
2013 at 5:25 PM. Teresa Clark called our corporate office and requested
Servpro’s service for her father’s (Robert Clark) water damage (not sure
how Ms. Clark knew to call Servpro.)

On 5-28-13 Alicia Burch talked to you and you ok’d for a dumpster to be
put on job site. On 5-31-13, again, you approved for a second dumpster to
be placed on job site. Servpro worked on this property for three weeks,
gutted the house and then on 6-18-13, Servpro gets the news there’s a
problem with coverage on this claim and from that point on Servpro was
forgotten about.

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 Can you let us know if and when Servpro can get paid? Our total bill for
our services is $13,881.96. If you need a copy of our estimate I will be
happy to provide. Any help you can provide will be much appreciated.

A hand-written notation was on the email printout, which read: “It appears Mr. Clark’s
Escrow company is the issue. Don’t know who that is but we were told Mr. Clark’s
insurance didn’t get paid.”

Plaintiff argues that the Trial Court erred by relying on a federal appellate court
case as persuasive authority in this matter. Upon its statement that it had been unable to
find controlling authority, the Trial Court relied on the 11th Circuit Court of Appeals case
of Mahens v. Allstate Ins. Co., 447 Fed. Appx. 51, 56 (11th Cir. 2011). The Trial Court
recognized that the federal case, which was analyzing Georgia law, was not controlling
but considered it to be persuasive in this matter. Trial courts may rely on persuasive
authority in the absence of Tennessee authority on point. See Ottinger v. Stooksbury, 206
S.W.3d 73, 79 (Tenn. Ct. App. 2006).

However, we find the Mahens case to be distinguishable from the case before us.
In Mahens, the agent for the insurance company did not authorize the company to
perform work on the plaintiff’s property. Instead, the plaintiff in Mahens personally
authorized the work to be performed on his property. In the present case, Plaintiff
presented proof that he did not authorize the demolition work performed by ServPro but
that Mr. Webster, an agent for Tennessee Farmers, solely had authorized the work.
Therefore, we find the Mahens case distinguishable from the current case.

The issue before us of whether summary judgment was appropriate turns on the
existence of genuine issues of material fact, i.e., whether Mr. Webster, while acting as an
agent for Tennessee Farmers, authorized the work performed on the Property by ServPro
and whether the scope of work authorized by Plaintiff included the work that was
authorized and began on May 28, 2013. If Mr. Webster was acting as an agent of
Tennessee Farmers and authorized the work on the Property, Mr. Webster’s actions may
be binding on Tennessee Farmers, and therefore, Tennessee Farmers could be estopped to
deny responsibility to pay for the work it authorized through its agent, Mr. Webster, and
actually performed by ServPro beginning on May 28, 2013.

This Court has held that if an agency relationship exists, “[a] principal is bound by
contracts made by its agent, provided the agent is acting within the scope of his actual or
apparent authority.” S. Rehab. Specialists, Inc. v. Ashland Health Care Ctr., Inc., No.
01A01-9607-CH-00345, 1997 WL 203607, at *4 (Tenn. Ct. App. Apr. 28, 1997) (citing
Bells Banking Co. v. Jackson Centre, Inc., 938 S.W.2d 421, 424 (Tenn. Ct. App. 1996));
see also Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d 338, 343 (Tenn. 2002)
(“When an agency relationship exists, the principal may be bound by the acts of the agent

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performed on the principal’s behalf and within the actual or apparent scope of the
agency.”); Batey v. D. H. Overmyer Warehouse Co., 446 S.W.2d 686, 694 (Tenn. Ct.
App. 1969) (“All corporate organizations act by and through boards, commissions,
officers and employees, and if they act within the apparent scope of their authority, their
actions are those of the corporation.” (citing Whitehaven Utility Dist. of Shelby County v.
Ramsay, 387 S.W.2d 351 (Tenn. 1964))). Additionally, “an agent acting within the
general scope of his apparent authority, though exceeding his authority, binds his
principal.” Indus. Life & Health Ins. Co. v. Trinkle, 206 S.W.2d 414, 415 (Tenn. 1947).
Concerning insurance companies, the Supreme Court has stated that “[a]s in the case of
agencies in general an insurance company is bound by all acts, contracts, or
representations of its agent, whether general or special, which are within the scope of his
real or apparent authority.” Bill Brown Const. Co., Inc. v. Glens Falls Ins. Co., 818
S.W.2d 1, 4 (Tenn. 1991).

In Bill Brown Const. Co., Inc., the plaintiff requested a “full coverage policy” on
the cargo transported in his business from the defendant insurer. Id. at 1. The plaintiff
showed the insurance agent photos of the oversized cargo hauled in his business. Id. at 1-
2. The insurance agent responded: “That’s no problem, you’ve got full coverage.” Id. at
2. An accident subsequently occurred where the cargo on the plaintiff’s trailer struck an
overhead bridge, damaging the cargo. Id. at 2. The insurer denied coverage because the
tractor trailer had not collided with the bridge or been damaged in the accident. Id. at 2.
According to the insurer, the policy provided coverage only if the cargo was damaged as
a result of a collision involving the vehicle. Id. at 2. The Supreme Court ultimately held
in Bill Brown Const. Co., Inc. that “an insurer may be estopped to deny coverage for any
loss by the misrepresentations of its agent upon which the insured reasonably relies.” Id.
at 12. The Court further held that insurance companies have no “immunity from legal
liability for express commitments made by his direct employee acting strictly in
accordance with his authority.” Id. at 13 (internal citation omitted).

Following the Court’s opinion in Bill Brown Const. Co., Inc., our Supreme Court
held in Allstate Ins. Co. v. Tarrant, 363 S.W.3d 508, 519-20 (Tenn. 2012), that “[a]n
insurance company is generally deemed estopped to deny policy liability on a matter
arising out of the negligence or mistake of its agent, and if either party has to suffer from
an insurance agent’s mistake, it must be the insurance company.” (Internal citations
omitted.) In Tarrant, the insured requested that a van be covered under the insured’s
commercial insurance policy, and not his personal policy. The agent assured the insured
that his request would be complied with. The insured relied on the agent to provide the
requested insurance coverage. However, due to a mistake by the agent, the van was
placed on the personal policy. Our Supreme Court held that although insurance policies
are generally controlled by basic contract principles, “as to the specific matter of a

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mistake by an insurance agent as occurred in this case, the common law clearly dictates
that the insurer is estopped to deny coverage.” 2 Id. at 521.

Although Bill Brown Const. Co., Inc. and Tarrant involved insurance agents
procuring insurance policies on behalf of their clients, we believe the Supreme Court’s
holdings would apply to a misrepresentation or a mistake made by an insurance adjuster.
Such a mistake as apparently made here by Mr. Webster in authorizing ServPro’s
additional work, is not covered by Tennessee Code Annotated § 56-7-135. See Johnson,
74 S.W.3d at 343 (“When an agency relationship exists, the principal may be bound by
the acts of the agent performed on the principal’s behalf and within the actual or apparent
scope of the agency.”). If such insurance adjuster, acting as an agent on behalf of the
insurance company, made a mistake by authorizing work on an insured’s property when
the policy does not provide coverage for the work, the agent’s actions could bind the
insurance company and estop the insurance company from denying financial
responsibility for the work authorized by only the insurance company’s agent and
performed pursuant to that authorization. As a matter of public policy, an insurer or its
agent should make a reasonable determination concerning coverage prior to authorizing
service on behalf of the insured rather than commit their insured to a liability of
thousands of dollars for work that the insured did not authorize and may never have
authorized if the insured knew there was no insurance coverage for that work. There
exists at least a genuine issue whether Mr. Webster, while acting as an agent for
Tennessee Farmers, authorized the work on May 28, 2013, which began on the same
date, even though Tennessee Farmers had both the date of the loss and the effective date
of the policy readily available to it. Given that Tennessee Farmers has successfully
argued that their policy was not in effect as of the date of the loss, Tennessee Farmers had

2
The Court in Tarrant also held that the insurer should not be relieved of liability for its agent’s mistake
due to the insured’s failure to discover the error and that the insured’s payment of the insurance premiums
did not ratify the agent’s mistaken modification of coverage. Tarrant, 363 S.W.3d at 519, 521. Shortly
after the Tarrant opinion was released, the general assembly enacted Tennessee Code Annotated § 56-7-
135 in May 2012, which provides:

(a) The signature of an applicant for or party to an insurance contract on an application,
amendment, or other document stating the type, amount, or terms and conditions of
coverage, shall create a rebuttable presumption that the statements provided by the person
bind all insureds under the contract and that the person signing such document has read,
understands, and accepts the contents of such document.

(b) The payment of premium for an insurance contract, or amendment thereto, by an
insured shall create a rebuttable presumption that the coverage provided has been
accepted by all insureds under the contract.

We do not find this statute to be relevant in the present case as to whether Tennessee Farmers should be
bound by the act of its insurance adjuster if he authorized work to be performed on the Property while
acting as an agent of the company.

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no authority to have work done on the Property and somehow obligate Plaintiff to pay for
that work he never authorized.

The Trial Court found that as to the issue of who authorized the work to be
performed on Plaintiff’s property, Plaintiff had signed an authorization for ServPro to
perform services on the Property and that the authorization form stated Plaintiff was
responsible for costs not covered by insurance and ServPro works for the customer, not
the insurance company, agent, or adjuster. However, the Trial Court failed to recognize
the affidavits executed by employees of ServPro, which stated that Quint Webster with
Tennessee Farmers actually authorized ServPro to perform the work on the Property
beginning on May 28, 2013. Additionally, Plaintiff’s affidavit states that the
authorization he signed was for only one day of work to remove the water and that he had
not signed additional documentation to authorize additional work. Plaintiff’s affidavit
further states that Mr. Webster informed him that Mr. Webster had authorized ServPro to
place a dumpster on the Property to begin demolition. We hold that (1) whether Mr.
Webster was acting as an agent of the insurance company, (2) whether Mr. Webster
authorized ServPro to perform work on the Property, and (3) the scope of ServPro’s
services authorized by Plaintiff are genuine issues of material fact relevant to whether
Tennessee Farmers can be estopped to deny responsibility to pay for the work it and only
it allegedly authorized ServPro to perform on the Property and which ServPro actually
performed. As such, we find and hold that the Trial Court erred by granting Tennessee
Farmers’ motion for summary judgment as to the work actually performed by ServPro
beginning on May 28, 2013. The Trial Court, however, did not err in its determination
that the effective date of the policy was and remained May 29, 2013. We, therefore,
modify the Trial Court’s grant of summary judgment and remand for further proceedings
consistent with this Opinion.

Conclusion

The judgment of the Trial Court is affirmed in part and reversed in part. The Trial
Court’s judgment granting summary judgment in favor of Tennessee Farmers is affirmed
as to the effective date of the policy but is reversed as to Tennessee Farmers’ liability for
the work performed by ServPro, which was authorized and began on May 28, 2013. This
cause is remanded to the Trial Court for further proceedings consistent with this Opinion
and for collection of the costs below. The costs on appeal are assessed equally against
the appellant, Robert F. Clark, and his surety, if any, and the appellee, Tennessee Farmers
Mutual Insurance Company.

_________________________________

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 D. MICHAEL SWINEY, CHIEF
JUDGE

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