State Automobile Insurance Company v. Jones Stone Company, Inc., No. M2009-00049-COA-R3-CV (Tenn. App. 12/15/2009)
| Decision Date | 15 December 2009 |
| Docket Number | No. M2009-00049-COA-R3-CV.,M2009-00049-COA-R3-CV. |
| Parties | STATE AUTOMOBILE INSURANCE COMPANY v. JONES STONE COMPANY, INC. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Davidson County; No. 04-1925-III; Ellen Hobbs Lyle, Chancellor.
Judgment of the Chancery Court Reversed in Part, Vacated in Part, and Case Remanded.
Mark A. Baugh and Yanika C. Smith-Bartley, Nashville, Tennessee, and Larry C. Deener, Lexington, Kentucky, pro hac vice, for the appellant, State Automobile Insurance Company.
W. David Bridgers and Elizabeth S. Tipping, Nashville, Tennessee, for the appellee, Jones Stone Company, Inc.
OPINION
Insurer filed an action seeking a declaratory judgment that it was not required to provide coverage to insured in lawsuit filed against insured; insured filed a counter-complaint against insurer. At the close of all proof, the trial court directed a verdict in favor of insured on insurer's declaratory judgment action and directed a verdict in favor of insurer on insured's counterclaims of misrepresentation, bad faith, estoppel, and punitive damages. Insured's two remaining counterclaims were submitted to the jury, which returned a verdict in favor of insured for Tennessee Consumer Protection Act ("TCPA") and breach of contract claims. Trial court subsequently awarded insured double damages and attorney's fees under the TCPA. On appeal, both parties raise numerous issues with the judgment of the trial court, some of which are without merit or as to which no relief can be granted; such issues are dismissed. We reverse the award of double damages, vacate the award of counsel fees to the insured and remand for further consideration. In all other respects the judgment is affirmed.
In February 1999, Roy and Ann Wauford solicited a proposal from Jones Stone Company ("Jones Stone") to furnish and set Indiana limestone for three porches and steps at a home they were building in Lebanon, Tennessee. The Waufords accepted Jones Stone's proposal and Jones Stone laid part of the limestone in September 1999 and the rest in the spring of 2000, after which the Waufords paid Jones Stone $53,251.19 for the limestone and installation. In the fall of 2000, the Waufords hired another company to clean the porches and steps through pressure washing; after cleaning, brown stains and effervescence appeared on the limestone. The Waufords discussed the stains with Jones Stone, who suggested that the limestone be cleaned a second time; a second cleaning did not resolve the staining.
On November 7, 2000, the Waufords sent a letter to Jones Stone seeking damages for negligent installation of the limestone. Over the next year, the Waufords and Jones Stone attempted to resolve the matter but were unsuccessful. On March 8, 2002, the Waufords filed suit against Jones Stone alleging breach of contract, negligent installation, and violations of the Tennessee Consumer Protection Act ("TCPA").1
On March 20, 2002, Jones Stone forwarded the Waufords' complaint to their insurance agent, who notified Meridian Insurance, now State Automobile Insurance Co. ("State Auto"). On March 25, Jones Stone received a document from State Auto acknowledging receipt of the complaint. On June 28, State Auto sent a Reservation of Rights letter to Jones Stone, stating that it would defend the underlying suit but that it reserved its right under the policy to deny coverage based on concerns that the claims alleged by the Waufords were outside the scope of coverage under the policy.
On June 28, 2004, State Auto filed the instant action, seeking a declaratory judgment that the Waufords' claims against Jones Stone were not covered by the insurance policy or that they fell under an exclusion to coverage; State Auto filed an amended complaint adding an allegation that Jones Stone failed to provide timely notice of the claim, in violation of the insurance policy.2 On September 3, Jones Stone filed an answer and a counter-complaint, which it amended twice; the counter-complaint, as amended, alleged violations of the TCPA, bad faith, coverage by waiver and estoppel, breach of contract, and misrepresentation. Jones Stone also sought either punitive damages on the tort claims or, in the alternative, treble damages under the TCPA.
On March 7, 2005, State Auto moved for summary judgment on its declaratory judgment action and on Jones Stone's counterclaim of violation of the TCPA.
On April 20, 2005, Jones Stone and the Waufords went to mediation in the underlying matter and settled for $53,000. Jones Stone demanded that State Auto pay the settlement; State Auto declined, stating that the damages complained of were not covered by the policy and that there was no proof that any action by Jones Stone caused the damage to the Waufords' home. Jones Stone paid the settlement with the Waufords.
Jones Stone filed a response in opposition to State Auto's motion for summary judgment on December 5, 2005. On January 19, 2006, the trial court entered an order (1) granting State Auto's summary judgment motion on the declaratory judgment claim, stating that State Auto had "no duty to defend or indemnify [Jones Stone] with respect to the underlying lawsuit"; (2) granting the motion on Jones Stone's counterclaim for estoppel and dismissed the claim;3 (3) denying the motion on State Auto's notice issue because "there exist[ed] genuine issues of material fact"; and (4) holding in abeyance the disposition of Jones Stone's counterclaim for violation of the TCPA until Jones Stone resolved inconsistencies in the positions taken in its pleadings.
On February 10, 2006, Jones Stone filed a Motion to Alter or Amend, asking the court to reconsider its ruling on State Auto's summary judgment motion based on the legal argument presented in its motion. On July 12, the trial court entered an order, reversing its grant of summary judgment to State Auto on the declaratory judgment action4 and on Jones Stone's estoppel claim; the court also found that genuine issues of material fact existed as to Jones Stone's counterclaim for violation of the TCPA. Consequently, State Auto's summary judgment motion was denied.
A trial was held over March 31 — April 3, 2008. On April 2, at the conclusion of State Auto's case-in-chief, Jones Stone informed the court that it did not have any proof to offer in addition to the evidence entered during State Auto's case;5 both sides then moved for a directed verdict on all causes of action. The trial court initially directed a verdict in favor of State Auto on its declaratory judgment claim and on Jones Stone's "[counter]claims of coverage by estoppel, negligent misrepresentation, intentional misrepresentation, bad faith, and punitive damages, as well as some of [Jones Stone's] breach of contract claims and claims under the [TCPA]."6 Jones Stone promptly moved the court to reconsider, asking the court to reconsider its grant of State Auto's directed verdict motion on the declaratoryjudgment claim and on Jones Stone's counterclaims. Following argument, the court reversed the directed verdict on State Auto's declaratory judgment claim, directed a verdict in favor of Jones Stone on the claim, and awarded Jones Stone $53,000 on that cause of action; in all other respects, the motion to reconsider was denied. The case was submitted to the jury on the remaining claims of breach of contract and violation of the TCPA.7
The jury returned a verdict in favor of Jones Stone on both remaining causes of action, awarding $53,000 on the breach of the duty to defend claim and $15,000 for the TCPA claim. Jones Stone filed a Motion for Post-Trial Relief, seeking treble damages under the TCPA, attorneys' fees, and prejudgment interest. On December 2, 2008, the trial court entered a Memorandum and Order, which awarded the following to Jones Stone: (1) $15,000 on the jury's award for violation of the TCPA; (2) $53,000 on the jury's award for breach of duty to defend; (3) $30,000 in "double damages" pursuant to the TCPA; (4) $144,439.35 in attorneys' fees pursuant to the TCPA; and (5) prejudgment interest at a rate of 10% on the jury's breach of contract award. The Memorandum and Order then stated that, "[i]n preparing the final order, counsel for [Jones Stone] shall include only one award of $53,000 since the Court's award of that amount...under the declaratory judgment claim along with the $53,000 awarded by the jury for breach of the duty to defend claim would amount to a double recovery."
On December 11, Jones Stone filed a Notice of Election of Remedies, in which it elected to accept the jury's award of $53,000 on the breach of duty to defend claim rather than the trial court's award of $53,000 on the declaratory judgment action. On December 18, the trial court entered an Order of Judgment, which recited its grant of a directed verdict in favor of Jones Stone on the declaratory judgment action and award of $53,000, noted Jones Stone's Notice of Election of Remedies, and entered judgment on the awards listed in the Memorandum and Order. State Auto appeals.
State Auto raises the following issues:
1. Whether the Chancery Court erred in not granting directed verdict to State Auto on its claim for declaratory judgment as to coverage.
2. Whether the Chancery Court erred by directing a verdict to Jones Stone on the counterclaim of breach of contract for duty to defend.
3. Whether the Chancery Court erred by not directing a verdict in favor of State Auto under the TCPA.
4. Whether the Chancery Court erred in awarding post-trial attorneys' fees, interest, and multiple damages.
Jones Stone raises the following issues:
1. Whether the trial court erred in directing a verdict against Jones Stone on its...
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