Goot v. Metropolitan Government of Nashville and Davidson County, No. M2003-02013-COA-R3-CV (TN 11/9/2005), M2003-02013-COA-R3-CV.
| Decision Date | 09 November 2005 |
| Docket Number | No. M2003-02013-COA-R3-CV.,M2003-02013-COA-R3-CV. |
| Parties | DOT BUSH GOOT ET AL. v. METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY. |
| Court | Supreme Court of Tennessee |
Appeal from the Circuit Court for Davidson County; No. 01C-3841; Thomas Brothers, Judge.
Judgment of the Circuit Court Affirmed in Part And Reversed in Part.
Dan R Alexander, Nashville, Tennessee, for the appellants, Dot Bush Goot, Norma Taylor, Bobby Duke, Joe Reese, and Faye Jackson.
Karl F. Dean, Michael B. Bligh, and John L. Kennedy, for the appellee, Metropolitan Government of Nashville and Davidson County.
Patricia J. Cottrell, J., not participating.
OPINION
This appeal involves a dispute between the surviving spouses of five disabled city employees and the Metropolitan Government of Nashville and Davidson County over the amount of life insurance benefits payable after the employees died. The surviving spouses filed three separate lawsuits asserting that the city had breached their spouses' employment contracts as well as its fiduciary duty and had committed fraud by concealing information and by knowingly providing false information regarding a waiver of premium benefit that would have greatly increased their death benefits. These suits were consolidated in the Circuit Court for Davidson County. The trial court granted a summary judgment dismissing all the surviving spouses' intentional tort claims because they were barred by the Governmental Tort Liability Act. The remaining breach of contract claims of three of the surviving spouses were tried to a jury, and the trial court directed a verdict for the city at the close of the plaintiffs' proof. Thereafter, the trial court granted a summary judgment dismissing the remaining claims of the other two surviving spouses. All the surviving spouses have appealed. We affirm the summary judgment orders dismissing the surviving spouses' intentional tort claims and the breach of contract claim of one surviving spouse. We reverse the directed verdict with regard to three of the remaining surviving spouses' breach of contract claims, as well as the summary judgment dismissing the other surviving spouse's breach of contract claim.
The Metropolitan Government of Nashville and Davidson County, like most large public and private employers, provides group insurance benefits to its employees. Ever since 1965, it has provided life insurance coverage to active employees and former employees who are receiving disability or retirement benefits.1 The New York Life Insurance Company issued the first group term life insurance policy in 1965, and Aetna Life Insurance Company replaced New York Life Insurance Company in 1999. The Metropolitan Government is responsible for paying the premiums for this policy, and the insurance companies are responsible for determining eligibility and paying the claims.
At all times relevant to this case, the group term life insurance policy provided active city employees with life insurance coverage equal to twice their annual salary to a maximum of $50,000. Former employees receiving a disability or service pension were entitled to $7,500 in coverage. However, the policy also contained a waiver of premium provision that entitled employees who became disabled before their sixtieth birthday to maintain their life insurance coverage at the same level they had as active employees without continuing to pay the premiums that had been paid by the Metropolitan Government while they were active employees.2 To be eligible for this benefit, the disabled former employee was required to be "disabled" as defined in the insurance policy, and the employee seeking the waiver of premium benefit was required to apply to the insurance company for this benefit within two years after being found eligible for a disability pension.
The life insurance benefits payable to the spouses of eligible disabled employees differed significantly depending on whether the employee established his or her right to the waiver of premium benefit. The spouses of disabled employees who had not qualified for the benefit received $7,500 upon the death of their spouse. However, the spouses of disabled employees who qualified for the benefit and who had earned $ 25,000 or more when they were active employees received $50,000 upon the death of their spouse.
The three lawsuits giving rise to this appeal involve the surviving spouses of five employees of the Metropolitan Government who became disabled and took disability retirement between 1985 and 1996. Roy Bush, a budget director, began drawing disability benefits in January 1985 following his second open heart surgery. Following his death in April 14, 1992, his widow, Dot Bush Goot, received life insurance benefits in the amount of $7,548.75. Blant Duke, a civil warrant processor in the Davidson County Sheriff's Department, qualified for disability benefits in February 1985. When he died, his widow, Bobbie Jane Duke, received $7,544.68. Gene Jackson, an employee of the Department of Public Works, was a member of the old Davidson County pension plan because he had declined to become a member of the Metropolitan Employee Benefit System. He qualified for a disability pension in January 1987 because of heart problems. After he died on June 18, 1998, his widow, Wanda Faye Jackson, received $7,543.88. Clyde Taylor, a sergeant with the Metropolitan Police Department, qualified for a disability pension in 1992. Following his death on April 7, 2000, his widow, Norma H. Taylor, received $7,500. Finally, Marilyn Reese, an employee at General Hospital, qualified for disability in February 1996 after injuring her back. After she died on April 9, 2001, her surviving husband, Joe Lloyd Reese, received $ 7,500.
The surviving spouses of these five employees later discovered that they would have received a much larger death benefit had their deceased spouse qualified for the waiver of premium benefit within two years after being found eligible for a disability pension. Two of the surviving spouses, Ms. Goot and Ms. Jackson, attribute their former husbands' failure to qualify for the benefit to their ignorance of the benefit because employees of the Metropolitan Government had not provided their husbands with timely information about this benefit.
Two other spouses, Ms. Duke and Ms. Taylor, assert that their former husbands did not qualify for the waiver of premium benefit because employees of the Metropolitan Government provided them with false information regarding their eligibility. Ms. Duke asserts that her husband inquired about the waiver of premium benefit and was told that he was not eligible for the benefit because he was in the wrong department. Ms. Taylor asserts that her husband applied for the benefit after he had been disabled for one year but that he was told that his application was too late.
The remaining spouse, Mr. Reese, concedes that his wife received two documents explaining the waiver of premium benefit when she qualified for a disability retirement in 1996 and that she did not apply for the benefit within two years after she became eligible for disability payments. He also concedes that her July 1999 application for the benefit was turned down because it was too late. However, he asserts that the Metropolitan Government should have given his wife another chance in 2000 to apply for the benefit after Aetna Life Insurance Company suggested to the Metropolitan Government that it offer a one-time grace period to permit disabled employees who had not requested the waiver of premium benefit to submit their applications.
On July 18, 2001, Mmes. Goot, Taylor, and Duke filed a complaint in the Chancery Court for Davidson County seeking to recover the death benefit they would have received had their husbands qualified for the waiver of premium benefit. They alleged that they were third-party beneficiaries of their husbands' group life insurance contracts and that the Metropolitan Government had breached its contractual and fiduciary duties to their husbands "by concealing and failing to inform Plaintiffs of contract provisions that inure to their benefit . . . and by intentionally lying to the Plaintiffs to the detriment of the Plaintiffs and to the benefit of the insurance companies . . . ."
Mr. Reece, represented by the same attorney who was representing Mmes. Goot, Taylor, and Duke, filed his complaint in the Chancery Court for Davidson County on July, 30, 2001 seeking the death benefit he would have received had his wife qualified for the waiver of premium benefit. He too alleged that he was a third-party beneficiary of his wife's group life insurance contract and that the Metropolitan Government had breached its contractual and fiduciary duties by failing to notify either his wife or him of Aetna Life Insurance Company's July 20, 2000 proposal for the grace period. Like Mmes. Goot, Taylor, and Duke, Mr. Reese accused the employees of the Metropolitan Government of "concealing and failing to inform" and of "intentionally lying."
On December 7, 2001, the Chancery Court for Davidson County transferred the complaint filed by Mmes. Goot, Taylor, and Duke to the Circuit Court for Davidson County.3 On December 21, 2001, Ms. Jackson, represented by the same attorney who was representing the other four surviving spouses, filed her complaint in the Circuit Court for Davidson County. She asserted that the Metropolitan Government had breached its fiduciary duties and its employment contract with her husband by "concealing and failing to inform" her of the "waiver of premium option" that would have provided her with a larger death benefit and by "intentionally lying" to her...
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