Giles v. GEICO Gen. Ins. Co.

643 S.W.3d 171

Shannon GILES, et al.

v.GEICO GENERAL INSURANCE COMPANY

No. M2021-00165-COA-R3-CV

Court of Appeals of Tennessee, AT NASHVILLE.

September 15, 2021 Session

FILED October 28, 2021

Norris A. Kessler, III, Winchester, Tennessee, for the appellants, Shannon Giles and Thomas Giles.

C. Benton Patton and Britney K. Pope, Brentwood, Tennessee, for the appellee, Geico General Insurance Company.

Carma Dennis McGee, J., delivered the opinion of the court, in which W. Neal McBrayer and Arnold B. Goldin, JJ., joined.

Carma Dennis McGee, J.

This appeal involves the applicability of Tennessee Code Annotated section 56-7-105, the bad faith penalty statute, to automobile insurance policies. The trial court granted the insurance company's motion for summary judgment holding that Tennessee Code Annotated section 56-7-105 did not apply to automobile insurance policies. The insured appeals. We affirm.

I. FACTS & PROCEDURAL HISTORY

On December 13, 2012, Mrs. Shannon Giles and Mrs. Judith Sweatman were sitting in Mrs. Giles's vehicle at a red light when another vehicle struck them from behind. The driver of the vehicle that rear-ended them was Ms. Mandy Harris.¹ When the police and an ambulance arrived, Mrs. Giles and Mrs. Sweatman were evaluated. Mrs. Giles stated that she was scared, nervous, in shock; and her neck was hurting. When Mrs. Giles's husband arrived at the scene, he took both Mrs. Giles and Mrs. Sweatman to Erlanger Hospital. At Erlanger Hospital, Mrs. Giles was evaluated, but the hospital did not perform x-rays. Mrs. Giles was given muscle relaxers and pain pills, told to follow up with her primary care provider, and released from the hospital that night. The following day, Mrs. Giles gave a recorded statement of the accident to her insurance provider, Geico General Insurance Company. Thereafter, Geico completed its liability investigation and found that there was zero percent negligence on the part of Mrs. Giles. Mrs. Giles underwent therapy and various tests in the months that followed. She was released from further treatment in December, 2013.

In October 2013, Geico sent a letter to counsel for Mrs. Giles advising that Mrs. Giles had exhausted all of her medical payments coverage available to her under the terms of her insurance policy. Geico eventually made a payment of $10,000 directly to counsel for Mrs. Giles, which represented her available medical payments coverage. On November 4, 2013, counsel for Mrs. Giles sent a letter to Geico which advised Geico of the following:

1. Mrs. Giles received a policy limits offer of $25,000 from Alfa Insurance Company, the liability carrier of Ms. Harris;

2. Mrs. Giles's damages exceeded the policy limits of Ms. Harris;

3. Mrs. Giles requested that Geico consent to settle and release Ms. Harris and that Geico waive its subrogation claim against Ms. Harris; and

4. Mrs. Giles demanded $75,000 to settle her underinsured motorist claim with Geico.

In response, Geico sent a letter to counsel for Mrs. Giles advising him that additional information was needed in order to evaluate Mrs. Giles's injury claim. However, Geico made an offer of settlement of $22,255 to counsel for Mrs. Giles.

On November 27, 2013, Mr. and Mrs. Giles filed a lawsuit against Ms. Harris in the Marion County Circuit Court. In March 2015, Geico sent a letter to counsel for Mr. and Mrs. Giles offering $25,000 in underinsured motorist coverage, plus the $10,000 in medical payments coverage which had already been paid, in order to settle the claim. Counsel for Mr. and Mrs. Giles rejected the offer. In April 2015, counsel for Mr. and Mrs. Giles countered with an offer and sent a letter to Geico and counsel for Ms. Harris demanding a settlement of $110,000.² Additionally, counsel for Mr. and Mrs. Giles advised that he would consider it an act of bad faith if policy limits were not offered within ten days. Geico responded by stating that they could neither accept nor reject the demand for policy limits at the time because they were having a third party review the medical bills that were submitted. After not hearing back from Geico about the possibility of settlement, counsel for Mr. and Mrs. Giles sent another letter to Geico in June 2015 advising them that if they were not ready to settle the case then the parties would need to move forward with setting a trial date. Geico responded by stating that the matter was transferred to a different adjuster and the new adjuster was in the process of reviewing the file. In October 2015, counsel for Mr. and Mrs. Giles sent an offer of settlement and enclosed an offer of judgment for $110,000. Again, counsel for the Giles advised that he would be forced to take further steps regarding Geico's apparent bad faith if no fair and reasonable settlement offer was made.

On February 9, 2016, Dr. Lloyd Keith Brown issued his independent medical evaluation of Mrs. Giles. Dr. Brown concluded that Mrs. Giles's "[t]otal impairment [was] 11% whole person." In his deposition, Dr. Brown stated that throughout his exam he saw no evidence of Mrs. Giles embellishing her injuries or pain in any way. In March 2016, counsel for Mr. and Mrs. Giles sent a letter to Geico advising them of the current demand of $110,000, less the $25,000 tendered by Alfa and the $10,000 medical payments coverage already paid. In a letter to counsel for Ms. Harris, Geico agreed to waive any potential subrogation it might have had against Ms. Harris under any the provisions of its policy. In April 2016, counsel for Mr. and Mrs. Giles sent yet another letter advising Geico that Mr. and Mrs. Giles were willing to settle the matter for the total sum of $105,000. This sum included the $25,000 tendered by Alfa and the $10,000 in medical payments coverage already paid by Geico.

In April 2016, the case was tried before a jury. At the conclusion of the trial, the jury entered a total verdict of $300,082.16 for Mr. and Mrs. Giles.³ On May 11, 2016, the trial court entered its final judgment confirming the jury award. At the end of May, Geico paid the sum of $75,000, the applicable underinsured coverage limits, into the Marion County Circuit Court. In addition to the $75,000, Geico had previously paid the $10,000 in medical payments coverage to Mr. and Mrs. Giles. In June 2016, a hearing on all pending post-trial motions was held.⁴

On September 6, 2016, Mr. and Mrs. Giles filed a lawsuit in the Marion County Circuit Court seeking additional damages, pursuant to Tennessee Code Annotated section 56-7-105, for a bad faith claim against Geico as the uninsured/underinsured motorist carrier in the underlying suit. Specifically, Mr. and Mrs. Giles argued that Geico intentionally and maliciously refused to fairly and reasonably pay Mrs. Giles's uninsured/underinsured motorist claim. In October 2016, Geico filed an answer to the complaint. In August 2017, Geico filed a motion to dismiss arguing that Mr. and Mrs. Giles failed to state a claim for recovery against an uninsured/underinsured motorist carrier pursuant to Tennessee Code Annotated section 56-7-105, and that Tennessee did not recognize a claim for the common law tort of bad faith. On November 3, 2017, Mr. and Mrs. Giles filed a response to Geico's motion to dismiss arguing that the dismissal of their cause of action for failure to state a claim would be improper because the complaint clearly detailed Geico's bad faith in dealing with the underlying uninsured/underinsured motorist claim.

On November 16, 2017, the trial court denied Geico's motion to dismiss in part but granted the dismissal of Mr. and Mrs. Giles's common law bad faith claim. With regard to Geico's argument that Mr. and Mrs. Giles failed to comply with the provisions of Tennessee Code Annotated section 56-7-105, the trial court held that Geico made unsupported allegations of fact in its argument and whether Mr. and Mrs. Giles complied with this statute required an actual determination of facts.

As a result of the trial court's ruling, Geico filed a motion for interlocutory appeal which was denied by this Court. On October 5, 2020, Geico filed a motion for summary judgment arguing that Tennessee Code Annotated section 56-7-105 did not apply to automobile insurance policies. Mr. and Mrs. Giles filed a response to the motion for summary judgment, and Geico filed a reply. In December 2020, the trial court entered an order for Mr. and Mrs. Giles to revise their response to provide a concise statement of material facts that were genuinely in dispute. Thereafter, Mr. and Mrs. Giles filed their concise statement of additional material facts in support of their response, and Geico filed a response. On January 22, 2021, the trial court entered an order granting Geico's motion for summary judgment holding that Tennessee Code Annotated section 56-7-105 did not apply to automobile insurance policies. Specifically, the trial court found that:

Tennessee Supreme Court cases have determined the legislature intended T.C.A. § 56-7-105 (previously T.C.A. § 56-1105) to only apply to classes of written contracts which bear interest from the time those contracts become due, i.e., life insurance, fire insurance, and not automobile insurance policies which do not become "due and payable" until judgment. Tenn. Farmers Mutual v. Cherry , 374 S.W.2d 371 (Tenn. 1964) ; Medley v. Cimmaron Ins. Co. , 514 S.W.2d 426 (Tenn. 1974).

On February 11, 2021, Mr. and Mrs. Giles timely filed their appeal.

II. ISSUES PRESENTED

Mr. and Mrs. Giles present the following issues for review on appeal, which we have slightly restated:

1. Whether Tennessee Code Annotated section 56-7-105 applies to automobile insurance policies.

2. Whether Tennessee Code Annotated section 56-7-105, the bad-faith-failure-to-pay statute, applies to the facts of this case.

a. Whether the policy of insurance in the instant case was due and payable;

b. Whether a formal demand for payment was made by Mr. and Mrs. Giles;

c. Whether Mr. and Mrs. Giles waited more than sixty (60) days after making

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