Flowers v. Tenn. Trucking Assn. Self Ins.
| Decision Date | 18 April 2006 |
| Citation | 209 S.W.3d 602 |
| Parties | STATE ex. rel. Paula A. FLOWERS v. TENNESSEE TRUCKING ASSOCIATION SELF INSURANCE GROUP TRUST, et al. |
| Court | Tennessee Court of Appeals |
Roland M. Lowell and Mary B. Langford, Nashville, Tennessee, for the appellants, Ocoee River Transport, Western Express, Inc., and DCI Transportation, LLC.
Renard A. Hirsch, Sr. and William H. Stover, Nashville, Tennessee, for the appellee, Paula M. Flowers, Commissioner of Commerce and Insurance for the State of Tennessee and Liquidator, Mark E. Jaquish, Special Deputy Liquidator and Joseph P. Keane, Special Deputy Liquidator.
FRANK G. CLEMENT, JR., J., delivered the opinion of the court, in which WILLIAM C. KOCH, JR., P.J., M.S., and PATRICIA J. COTTRELL, J., joined.
Three members of a workers' compensation self-insured group trust in liquidation appeal from two orders of the trial court. They contend the trial court erroneously held each of them in contempt and imposed sanctions due to their failure to make periodic payments of assessments as ordered by the court. One of the appellants additionally contends the trial court erred by assessing the Liquidator's administrative fees without affording it the opportunity to conduct discovery as to the reasonableness and necessity of the fees. We affirm the finding of contempt and the imposition of sanctions for the period the appellants are in contempt. As for the administrative fees, the burden of proof of the reasonableness and necessity of the administrative fees is on the Liquidator, and those opposing the fees should be afforded the opportunity to conduct appropriate discovery. If the Liquidator contends certain records are subject to protection, the trial court must conduct an in camera inspection to determine the propriety of a protective order. Such an inspection and determination not having occurred, we remand the issue of administrative fees for further proceedings.
This appeal arises out of the liquidation of a workers' compensation self-insured group trust, the Tennessee Trucking Association Self Insurance Group Trust. The Trust was ordered into liquidation in 2004 pursuant to the Insurers Rehabilitation and Liquidation Act, Tenn.Code Ann. § 56-9-306 et seq.
The order of liquidation followed the filing of a petition for liquidation by the Commissioner of the Tennessee Department of Commerce and Insurance. The Commissioner established to the satisfaction of the trial court that the Trust had a deficit of $2,834,287.00 for the 2002 fund year, grounds for liquidation existed, and efforts to cure the deficiencies of the Trust had proven unsuccessful.1 The trial court appointed the Commissioner as the Liquidator. With the approval of the court, the Commissioner appointed two Special Deputy Liquidators who were to administer the business operations of the Trust and assess the members to fund the Trust in order to fulfill its financial obligations.2
The Deputy Liquidators conducted a thorough financial examination of the Trust and assessed the fifty members of the Trust to fund the deficit and the ongoing operational expenses of the Trust. Not unexpectedly, members of the Trust objected to their respective assessments. As a consequence, the trial court conducted a hearing after which it issued an order requiring the members to pay the undisputed portion of the assessment by June 1 2004.3 The order set forth the respective financial obligations of each member and the dates for the periodic payments. No appeal was taken from that order. Thereafter, several members failed to pay the assessment as ordered by the court. Ocoee River Transport, Western Express, Inc., and DCI Transportation, LLC (Appellants) were among those members who failed to remit their respective payments when due.
Thereafter, the Liquidator filed a petition to hold the Appellants, among others, in contempt. Appellants filed responses to the contempt petition. Appellants did not contest the assessments. Instead, each requested the court permit them to remit their respective obligations, the arrearage each owed, pursuant to a payment plan. Ocoee and Western proposed a specific payment plan.4 DCI requested a payment plan but did not submit a specific plan. The trial court approved the plan submitted by Ocoee and Western and approved DCI's request for a payment plan. Orders were timely entered establishing a payment plan for all three of the Appellants.5 None of the Appellants objected to the orders, and no appeals were taken.
Although Appellants requested the payment plans and did not oppose the plan ordered by the court, all three Appellants failed to pay in accordance with the payment plan. The court was notified of the Appellants' non-compliance, following which an order was entered scheduling a contempt hearing for October 28, 2004. The order specifically provided notice that sanctions would be imposed upon any members failing to comply with the court-ordered payment plans. Each Appellant received a copy of the order.6
Counsel for Appellants attended the contempt hearing on October 28. At the conclusion of the hearing, the trial court entered a judgment against each Appellant for the sums then owing. The court also held each Appellant in contempt for willfully failing to comply with the court-ordered payment plan. In addition to holding each of them in contempt, the trial court entered an order that put the contemptuous members on notice that if they failed to remit the sums owing by December 31, 2004, the court would permit claimants holding a workers' compensation claim against them to elect to either proceed with their claims in the liquidation proceeding or to proceed against the contemptuous member at law as provided in Tenn.Code Ann. § 50-6-406.
Independent of the contempt proceedings, the Liquidator filed a motion to recover its administrative fees to date. In addition thereto, the Liquidator filed a motion seeking a protective order, requesting permission to submit under seal detailed descriptions and invoices of administrative services and related fees incurred in the liquidation proceedings. Western is the only member of the Trust that objected to the motion for a protective order. Western requested full disclosure of the detailed records and time sheets supporting the fee request, contending it was entitled to thoroughly examine the records if it was liable for a portion of the fees. The Liquidator countered, suggesting the trial court's review of the reasonableness and necessity of the details of the time expended, services rendered, and fees charged would suffice as the court had the duty to approve the fees, not the members. After hearing from both sides, the trial court authorized the filing of the detailed descriptions and invoices of administrative services and related fees under seal, and required the Liquidator to provide a narrative summary of the services and fees to Western for its review, in lieu of a detailed description and records. After reviewing the narrative summary, Western complained to the trial court that it was inadequate because it merely provided generalities, there was no itemization of the services performed, and the time expended was not delineated. The trial court denied Western's requests for additional details. On appeal, Western contends it is entitled to contest the reasonableness of the administrative services and fees, and to do that it must be afforded an opportunity to examine the records.
On appeal, the trial court's findings of fact are reviewed de novo, with a presumption that the findings are correct unless the evidence preponderates otherwise. Tenn. R.App. P. 13(d). Questions of law are reviewed de novo, with no such presumption of correctness. Jahn v. Jahn, 932 S.W.2d 939, 941 (Tenn.Ct.App.1996).
We review a trial court's finding of contempt under the abuse of discretion standard. Hawk v. Hawk, 855 S.W.2d 573, 583 (Tenn.1993). Pursuant to this standard of review, we will set aside a discretionary decision only when the trial court has misconstrued or misapplied the controlling legal principles or has acted inconsistently with the substantial weight of the evidence. Overstreet v. Shoney's, Inc., 4 S.W.3d 694, 695 (Tenn.Ct.App.1999); White v. Vanderbilt Univ., 21 S.W.3d 215, 222 (Tenn.Ct.App.1999). The trial court's discretionary decision will be reviewed to determine: (1) whether the factual basis for the decision is supported by the evidence, (2) whether the trial court identified and applied the applicable legal principles, and (3) whether the trial court's decision is within the range of acceptable alternatives. BIF, Inc. v. Service Constr. Co., Inc., (no appeal number given) 1988 WL 72409, at *3 (Tenn.Ct.App. July 13, 1988). The abuse of discretion standard does not permit us to substitute our judgment for that of the trial court. Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn.2001) (citing Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn.1998)).
Under the abuse of discretion standard, a trial court's ruling "will be upheld so long as reasonable minds can disagree as to the propriety of the decision made." A trial court abuses its discretion only when it "applies an incorrect legal standard, or reaches a decision which is against logic or reasoning or that causes an injustice to the party complaining."
Eldridge v. Eldridge, 42 S.W.3d at 85 (citations omitted). An abuse of discretion is found when the trial court's ruling falls outside the spectrum of rulings that might reasonably result from an application of the correct legal standards to the evidence found in the record. See, e.g., State ex. rel...
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