Clifton v. Tenn. Farmers Mut. Ins. Co.

Decision Date23 June 2021
Docket NumberNo. M2019-02193-COA-R3-CV,M2019-02193-COA-R3-CV
CourtTennessee Court of Appeals

Timothy J. Crosby, Chattanooga, Tennessee, for the appellant, Charles Clifton.

Steven A. Dix, Murfreesboro, Tennessee, for the appellee, Tennessee Farmers Mutual Insurance Company.

Thomas R. Frierson, II, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Andy D. Bennett, J., joined.


Thomas R. Frierson, II, J.

In this action for breach of an insurance policy, the trial court granted summary judgment in favor of the defendant insurance company upon finding that, pursuant to an occupancy clause, the insurance policy had become "automatically void" when the plaintiff homeowner had vacated the insured residence and had allowed other individuals to occupy the insured residence without obtaining the insurance company's written consent. The trial court subsequently certified its summary judgment order as final, pursuant to Tennessee Rule of Civil Procedure 54.02, determining that although the plaintiff's claims were dismissed, the insurance company would be allowed to pursue a counter-complaint it had filed against the plaintiff. The plaintiff has appealed. Discerning no reversible error, we affirm.

I. Factual and Procedural Background

The facts underlying this action are essentially undisputed. The plaintiff, Charles Clifton, owned improved real property located at 351 West Maple Street in Morrison, Tennessee, including a residence ("the Residence") upon which he maintained an insurance policy ("the Policy") through the defendant, Tennessee Farmers Mutual Insurance Company ("Tennessee Farmers"). The Residence was destroyed by fire on October 24, 2017. After Mr. Clifton filed a claim for the loss, Tennessee Farmers issued a denial letter based on Mr. Clifton's alleged breach of an occupancy clause ("Occupancy Clause") in the Policy. Although the full Policy is not in the record on appeal, the parties quoted the language of the Occupancy Clause identically, including the emphases depicted below in the body of the clause, in pleadings before the trial court as follows:

Occupancy Without Written Consent
This policy shall be automatically void as to all insureds if:
1. no insureds occupy the residence premises ; and
2. any insured allows anyone to occupy the residence premises without our written consent.

On June 13, 2018, Mr. Clifton filed a complaint in the Warren County Circuit Court ("trial court"), alleging that Tennessee Farmers had breached the terms of the Policy by failing to pay his claim for fire damages. Mr. Clifton sought a judgment in the amount of the limits provided in the Policy plus twenty-five percent for Tennessee Farmers’ "bad faith, costs, and interest" pursuant to Tennessee Code Annotated § 56-7-105.1 He averred that the policy amounts included a maximum of $85,000.00 for losses to the Residence and $42,500.00 for losses to personal property. Mr. Clifton also requested an award of punitive damages and a jury trial. Although he did not reference the Occupancy Clause in this pleading, Mr. Clifton noted in his complaint that the Policy defines "Occupy, Occupied, or Occupancy" as "the regular use of a premise as a dwelling place by the person or persons to whom reference is made." Mr. Clifton stated in the complaint that he "was the only ‘Occupant’ of the Subject Property at the time of loss."

Tennessee Farmers filed an answer and counter-complaint on August 20, 2018, denying that it had breached the Policy and asserting that the Policy had not been in effect at the time of the fire because it had been automatically voided by Mr. Clifton's actions. Tennessee Farmers averred that Mr. Clifton had begun living with his fiancé in September or October of 2016 and that he had then given permission to Treva and Bobby Glenn to begin occupying the Residence on February 1, 2017, and charged them rent. Tennessee Farmers also averred that it had not given its permission for the Glenns to occupy the Residence and that it had returned all premiums paid since February 1, 2017, to Mr. Clifton.

As to its counter-complaint, Tennessee Farmers alleged that Mr. Clifton had filed this action in bad faith. Tennessee Farmers sought a judgment, pursuant to Tennessee Code Annotated § 56-7-106, for an amount not to exceed twenty-five percent of the loss claimed under the Policy by Mr. Clifton.2 Tennessee Farmers also requested a jury trial in its counter-complaint. Mr. Clifton filed an answer to the counter-complaint, admitting that Tennessee Farmers had not provided written permission for the Glenns to stay at the Residence and otherwise denying all substantive allegations. Upon Mr. Clifton's subsequent motion, the trial court entered an order in April 2019 setting the case for trial in November 2019.

On May 23, 2019, Tennessee Farmers filed a motion for summary judgment, arguing that the undisputed material facts demonstrated that on February 1, 2017, Mr. Clifton had committed acts that resulted in an automatic breach of the Policy and operated to make the Policy of no effect when the fire occurred in October 2017. In its memorandum in support of the summary judgment motion, Tennessee Farmers referenced a sworn statement given by Mr. Clifton on December 18, 2017, in which he purportedly stated that he had begun residing with his fiancé a year prior to the fire and that he had allowed the Glenns, who were relatives of his fiancé, to occupy the Property in February 2017 with an agreement that they would pay $300.00 in monthly rent. Tennessee Farmers attached to its memorandum a utilities invoice reflecting that the utilities at the Residence were in Bobby Glenn's name while the Glenns resided there.

Concomitant with its motion for summary judgment, Tennessee Farmers filed a notice that it was filing (1) Mr. Clifton's December 2017 sworn statement, (2) a certified copy of the Policy, and (3) a copy of Mr. Clifton's responses to Tennessee Farmers’ request for admissions. We note that although Mr. Clifton's responses to the request for admissions are in the record on appeal, his December 2017 sworn statement and the complete Policy are not in the record. In his responses, Mr. Clifton admitted that he began staying at his fiancé’s residence in McMinnville in September or October of 2016; that he allowed the Glenns to stay at the Residence beginning February 1, 2017; and that he did not have written permission from Tennessee Farmers for the Glenns’ occupancy. However, Mr. Clifton qualified this last admission by stating that "the Glenns were not occupying the premises at the time of the loss."

Mr. Clifton filed a response to the summary judgment motion on July 8, 2019, asserting that "a genuine issue of material fact" existed that "would lead a rational trier of fact to find in [his] favor" because "[a]t the time of the fire [Mr. Clifton] occupied the insured premise[s] and the policy was not void." Mr. Clifton concomitantly filed a response to Tennessee Farmers’ statement of undisputed facts and an affidavit executed by him on July 8, 2019. In the response, he added to his earlier admissions that he had begun staying with his fiancé in September or October of 2016 while he was recovering from open heart surgery

. In his July 2019 affidavit, Mr. Clifton stated the following in pertinent part:

The same day Bobby and Treva Glenn had moved out of [the Residence] I changed the locks on the doors.
The weekend of October 14th I participated in a city wide yard sale, selling items from the yard of [the Residence].
I stayed at [the Residence] throughout the evenings of the community yard sale.
After the Glenn[s] had left, I moved boxes of personal possession[s] back into [the Residence] and began fixing the bedroom floor.
I occupied [the Residence] at the time of the fire, October[ ] 24, 2017.

(Paragraph numbering omitted.)

The trial court conducted a hearing spanning three non-consecutive days on June 25, July 9, and November 12, 2019. No transcript of this summary judgment hearing is in the record on appeal. In his principal appellate brief, Mr. Clifton states that following oral arguments, "the trial court allowed for additional briefing to be submitted on the specific issue of whether a breach of an occupancy clause in a fire insurance policy avoids the policy entirely or merely suspends the policy during the existence of the breach." Mr. Clifton filed a brief addressing this issue on August 30, 2019. On appeal, the parties indicate in their respective statements of the case that the trial court heard additional oral argument on the final hearing day. On November 15, 2019, the trial court entered an order granting summary judgment in favor of Tennessee Farmers. The court found that no genuine issues of material fact existed and that as a matter of law, Mr. Clifton's actions had automatically voided the Policy when he violated the Occupancy Clause by vacating the Residence and allowing other individuals to reside there without obtaining Tennessee Farmers’ written consent.

Mr. Clifton filed a notice of appeal with this Court on December 12, 2019. On June 4, 2020, this Court entered an order directing the parties to obtain, within ninety days, a final order from the trial court disposing of Tennessee Farmers’ counterclaim or show cause why the appeal should not be dismissed for lack of subject matter jurisdiction. Mr. Clifton subsequently filed a motion in the trial court seeking to have the trial court's November 2019 order deemed a final judgment pursuant to Tennessee Rule of Civil Procedure 54.02. Tennessee Farmers filed a response objecting to the Rule 54.02 motion, arguing that its counterclaim should not be dismissed because it was valid and had not been heard on the merits. On August 19, 2020, Tennessee...

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