Defamation and Public Figures in Tennessee

The recent opinion in Byrge v. Campfield, et al., No. E2013-01223-COA-R3-CV (Tenn. Ct. App. Sept. 8, 2014) serves as a good reminder of Tennessee defamation law involving a public figure.

In October 2008, Stacey Campfield, then a Republican State Representative for Tennessee’s 18th District, posted on his political blog an entry about the 36th State House District race featuring Democrat Roger Byrge. Campfield’s blog entry alleged that Byrge had a drug-related arrest record. The blog post stated, in part:

Word is a similar mail piece has gone out exposing Byrges multiple separate drug arrests. Including arrests for possession and drug dealing. (I hear the mug shots are gold).

The big problem with Campfield’s blog post is that it was false. Byrge had no such criminal record. Byrge lost the November election. Shortly thereafter he sued Campfield for defamation.

Campfield moved for summary judgment, claiming in his affidavit that he had received the false information about Byrge from Glenn Casada, who was the Republican State Representative for the 63rd District and also Chairman of the House Republican Caucus. Campfield asserted that Casada had told him that Byrge had a criminal record that included arrests for possession of drugs and drug dealing. Campfield knew that the Tennessee Republican Caucus frequently researches political candidates and races across the state during election season, and he believed the statements about Byrge were accurate and truthful at the time they were published on his blog. Campfield said that when the accuracy of the information that Casada had provided to him about Byrge was questioned he immediately removed the post from his blog.

Casada, on the other hand, claimed that he made the comment about Byrge to Campfield during an informal phone conversation and that he had characterized the information as preliminary. Casada confirmed that the information had been provided by the Tennessee Republican Caucus, and his precise words to Campfield were: “We may have a record of a felony on Roger Byrge.” Casada said he did not intend for any unverified information to be disseminated and that he had qualified his comments to Campfield.

Turns out that Campfield, Casada, and the Tennessee Republican Caucus had mistaken candidate Byrge for his son, Roger Derick Byrge. Regardless, the trial court granted Campfield’s motion for summary judgment and Byrge appealed.

The appellate court began its decision by reviewing the elements of a defamation claim in Tennessee, which are: (1) a party publish (i.e., communicate to a third party) a statement; (2) with knowledge that the statement is false and defaming to the other; OR (3) with reckless disregard for the truth of the statement or with negligence in failing to ascertain the truth of the statement.  However, because Byrge was considered a “public figure,” the heightened standard required him to prove by clear and convincing evidence that Campfield’s statement was made with “actual malice” – that is, with knowledge that it was false or with reckless disregard of whether it was false or not.

Campfield’s defense on appeal was that he only published what Casada had told him about Byrge, that Casada was a credible source of information, and that it was not as though he had just picked up the information off the street and ran with it. However, because the summary judgment standard required that all facts be viewed in the light most favorable to Byrge, the court of appeals credited Casada’s version of the conversation over Campfield’s, placing great emphasis on the fact that Casada had been clear that the information on Byrge was preliminary and his statement to Campfield had been a qualified statement. Casada’s version of what he told Campfield (“We may have a record of a felony on Roger Byrge”) was materially different from what Campfield alleged Casada had told him (“Byrge had a criminal record that included arrests for possession of drugs and drug dealing). The appellate court ruled that reasonable minds could consider it at least reckless to publish information tending to tarnish someone’s reputation on the basis of a “may have,” especially when the record showed that Campfield had decided to publish the information without any kind of additional investigation or verification on his own or by Casada before publishing it.

Thus, according to the appellate court, there was clear and convincing evidence in the record upon which a trier of fact could find actual malice on Campfield’s part. The trial court had erred by granting Campfield’s motion for summary judgment because Campfield had not negated the essential element of actual malice.  The opinion ended with the following observations before remanding the case to the trial court:

This Court recognizes and values the robust, free exchanges in politics that are so central to democracy and our constitutional republic. However, here we have a case not about differences of ideology or opinion, but rather about factually false allegations made against a candidate for public office. Politics may be a rough and tumble endeavor, but, contrary to the vintage Cole Porter song, “anything goes” will not suffice when it comes to publishing factual falsehoods about political rivals. A public figure, even a politician, is neither totally immune from nor totally unprotected by the law of defamation.

This was the right decision.   If Campfield decides to appeal the decision to the Tennessee Supreme Court and the Court elects to hear the case, Campfield will lose again.  

By the way, Campfield received just 28% of the vote in the August 7, 2014 Republican primary.   

Tolling Agreements, The Savings Statute and Tennessee Law

The Tennessee Court of Appeals recently issued an important decision regarding the interplay between the savings statute and tolling agreements. The facts of Circle C Const., LLC v. Hilson, M2013-02330-COA-R3-CV (Tenn. App. Jul. 29, 2014), are a bit convoluted but critical to understanding the case.

Plaintiff had a judgment entered against it by a trial court. While appealing the judgment, Plaintiff entered a tolling agreement on a potential legal malpractice claim against Defendant, who was Plaintiff’s attorney in the underlying case. The tolling agreement specified the date that the statute of limitations would run – one year from the trial court’s judgment – but gave Plaintiff until 120 days after an appellate ruling in order to file any legal malpractice claim. In pertinent part, the tolling agreement stated, “[i]f Plaintiff desires to assert claims for professional negligence, it must do so on or before” 120 days after the appellate court issued its opinion.

After the tolling agreement was entered, things get strange:

·        March 2011: The original statute of limitations on the legal malpractice claim expires.

·        Sept. 2011: Plaintiff files legal malpractice lawsuit.

·        April 2012: Plaintiff nonsuits legal malpractice lawsuit.

·        Oct. 2012: Appellate court issues its opinion in the underlying case.

·        Jan. 2013: The 120 day deadline to file suit under the tolling agreement expires.

·        April 2013: Plaintiff re-files its legal malpractice lawsuit.

(It is unclear from the opinion why Plaintiff filed and nonsuited the first legal malpractice lawsuit while still awaiting the appellate ruling in the underlying case.)

So the first legal malpractice lawsuit was filed after the original statute of limitations, but within the tolling agreement period. The re-filed legal malpractice lawsuit was filed after the original statute of limitations, after the tolling agreement period, but within one year of nonsuiting the first legal malpractice lawsuit. 

Plaintiff attempted to rely upon the savings statute at Tenn. Code Ann. § 28-1-105(a). The trial court dismissed the case as untimely under the tolling agreement, and the Court of Appeals affirmed.

The Court of Appeals looked to the contractual language of the tolling agreement, focusing on the language “If Plaintiff desires to assert claims for professional negligence, it must do so” within 120 days of an appellate opinion in the underlying case. The Court of Appeals held this language was mandatory and set a “specific time limit for bringing claims agreed upon by the parties.”

The Court of Appeals then considered whether Tenn. Code Ann. § 28-1-105(a), the savings statute, would apply to a deadline for filing suit established in a tolling agreement. The court reasoned:

Subsection (a) of Tenn. Code Ann. § 28-1-105 applies “[i]f the action is commenced within the time limited by a rule or statute of limitation . . . .” By its terms, therefore, subsection (a) applies to periods of limitation established by “rule or statute of limitation.” In this case, the applicable time limitation is established by contract, not by “rule or statute of limitation.” Tenn. Code Ann. § 28-1-105(a). We must conclude that the savings statute of Tenn. Code Ann. § 28-1-105(a), by its terms, does not trump the deadline established by the parties in the tolling agreement.

The takeaway from this case? If a tolling agreement sets an absolute deadline for filing suit, the savings statute will not save a case re-filed after that deadline.

Claim Washed Down the Drain By Tennessee Statute of Repose and Lack of Constructive Notice

Tthis is a premise liability case arising from the collapse of a bench in a handicap shower at the defendant’s hotel.   Upon checking into their handicap room at the Holiday Inn Express, the Parkers noticed the bench in the handicap shower appeared to be loose.  The brackets were pulled away from the wall a bit and the bench itself was shaky when pressed on.   The Parkers reported the problem, and the hotel’s maintenance man tightened the bolts.  Both the maintenance man and the Parkers testified the tightening of the bolts on the bracket appeared to fix the problem as the bench was no longer wobbly and the brackets were flush with the wall. 

The next morning, Mr. Parker transferred himself from his wheelchair on to the shower bench.  Approximately 10 minutes into his shower, the bench collapsed and Mr. Parker struck the floor.  Ultimately, Mr. Parker was diagnosed with compression fractures at T-7, T-8 and T-9.  Mr. Parker also alleged that as a result of the fall and his spinal injuries that he suffered more frequent and more severe pressure sores, urinary tract infections and bladder pain. 

The Parkers filed suit against Holiday Inn Express.  The hotel answered and alleged the comparative fault of D & S Builders.  D & S Builders had constructed the hotel and had installed the shower benches in the handicap rooms of the hotel.   D & S Builders was dismissed due to the four year statute of repose for negligent construction claims.  In this case, the certificate of occupancy had been issued on July 31, 2006 and suit was not filed until May of 2011. 

Following the dismissal of the builder, the hotel moved for summary judgment.  It was undisputed that D & S Builders had negligently installed the shower bench by failing to secure it to the interior wall per the manufacturer’s instructions.  The hotel had no knowledge of the defective installation because it was concealed by sheetrock and tile.   While the defect could have been discovered before the sheetrock was installed, the hotel did not perform any inspections of the shower bench during construction. Instead, the hotel relied upon the builder to properly install the shower bench.  The hotel had never received any complaints about the shower benches nor had there been any prior accidents.

Based on the undisputed facts, the trial court granted summary judgment to the hotel as it was not liable for the work of the independent contractor unless the hotel knew of and accepted the negligent work or defective materials.   The undisputed evidence was the hotel was unaware of the problem with the shower bench, and the trial court ruled the hotel had no duty to inspect at the time of construction.

On appeal, the Court of Appeals agreed with the trial court that property owners are generally not liable for the negligence of their independent contractors unless they had actual or constructive knowledge of it.   While the Court of Appeals believed the facts of the case did not establish an exception to that rule, they did believe there was an issue of whether the hotel had constructive knowledge of the dangerous condition since it had existed for more than four years.  So, the Court of Appeals reversed the trial court’s grant of summary judgment.  Both parties appealed to the Supreme Court.

The Tennessee Supreme Court was asked to determine (1) if the accepted work doctrine or the non-delegable duty to the public exceptions applied in this case and (2) if there was a genuine issue of material fact as to the hotel’s constructive knowledge. 

Under the accepted work doctrine, the landowner is responsible for the negligent or defective work of an independent contractor once the landowner accepts the work.  But, the Supreme Court quickly disposed of this argument by pointing out that doctrine had been abandoned by the Court twenty years earlier.  Tennessee now follows the more modern approach which dictates that the independent contractor remains liable for his negligent work even if the landowner accepts it.  However, the Court did leave the door open by noting that if the landowner was particularly sophisticated and the defect was patently obvious then it might rise to the level of intervening causation. 

The next issue was the non-delegable duty owed to the public exception.  The Parkers relied upon a 1907 case involving a governmental entity’s duty as it related to sidewalks.  The Supreme Court quickly distinguished the decision from the present case by pointing out that the hotel did not assume any duty a governmental entity owed to the public.

Finally, the issue of constructive notice was taken up by the Court.  After citing a litany of black letter premise liability law, the Court concluded the hotel did not have constructive knowledge of the defectively installed shower bench.  There had not been any prior complaints or accidents.  Moreover, the defect was concealed by sheetrock and was not readily apparent, and the hotel did not have a duty to inspect during construction.  In addition, both the maintenance man and the Parkers themselves felt the problem had been remedied with the tightening of the bolts based upon their visual inspection and by physically testing the bench for wobbliness.   Because the hotel had relied upon D & S Builders to properly install the shower bench and the hotel did not have actual or constructive knowledge that the builder had failed to do so, the Court reinstated the trial court’s grant of summary judgment to the hotel.

It is hard not to get angry over the result in this case. I am not referring to the hotel’s non-liability. - the fact that the Court found in favor of the hotel here is not particularly surprising.  I am referring to the fact that the builder failed to follow the manufacturer’s instructions and properly install a shower seat in a handicap room.  As a result of their failure, a man already confined to a wheelchair sustains three fractures in his spine and the builder walks off scot free because of the four year statute of repose. Anger can be properly directed at a Legislature that allows this type of get-out-of-jail free statute.

One last point.  This event took place on May 13, 2010.  The COO was issued on July 31, 2006.  The statute of repose (T.C.A. Section 28-3-203) provides that the four year repose period is extended to one year beyond the date of the injury if the injury occurs during the fourth year.  Thus, the statute of repose in this case did not expire until May 13, 2011, one year after Parker was injured.  Suit was not filed until May 11, 2011.  

So what is the point?  If you are presented with a case where a statute of repose can reasonably be expected to be placed at issue it is essential to file suit earlier and force any effort to blame a non-party potentially protected by a statute of repose as early as possible.  That is difficult to do - it is hard to predict when a non-party will be blamed.  And you can't get clients in the door before they come in the door.  But statutes of repose are a ticking time bomb, and if someone hands you a box (a case) that may contain a ticking time bomb think carefully about opening it and, if you do, open it quickly and respond accordingly.

Or you may get blown up.

Parker v. Holiday Hospitality Franchising, Inc., E2013-00727-SC-R11-CV (Tenn Ct. App. September 12, 2014) 

When is a Summons and Complaint "Unclaimed" Under Tennessee Law?

The Tennessee Court of Appeals recently issued an opinion dealing with a circumstance when service of process was designed “unclaimed” by the U.S. Postal Service. In Goodman v. Ocunmola, No. E2014-00045-COA-R3-CV (Tenn. Ct. App. Sept. 4, 2014), wife sued husband for divorce and served husband with a summons and complaint through the Tennessee Secretary of State because husband lived in Kentucky. The Postal Service attempted to deliver the summons and complaint, sent via certified mail, on three separate occasions before returning the certified mail as “unclaimed.” Wife moved for and was granted a default judgment when husband failed to appear and respond to the complaint.

About a month later, husband moved to set aside the default judgment entered against him, arguing that wife intentionally failed to include husband’s apartment number on the address label for the process server (i.e., the Postal Service), with the goal of obtaining a default judgment due to husband’s failure to respond to the complaint. Husband claimed he found out about the default judgment when he discovered a letter from wife’s attorney in the trash bin by his mailbox, which he assumed was thrown away because its address label also did not include husband’s apartment number. The trial court denied husband’s request to set aside the default judgment, and husband appealed.

The appellate record didn’t include a transcript or statement of the evidence, which the court initially noted had “frustrated” its review of husband’s appeal. As for the merits of the appeal, the court observed that Tenn. R. Civ. P. 4.05 states “the United States Postal Service notation that a properly addressed registered or certified letter is “unclaimed,” or other similar notation, is sufficient evidence of the defendant’s refusal to accept delivery.” Unfortunately for husband’s appeal, the limited record was basically reduced to the fact that after making three attempts to serve the summons and complaint, the Postal Service declared the certified mail as “unclaimed.” Contrary to husband’s suggestion that the lack of an apartment number inhibited service of process, the certified mail containing the summons and complaint was not found in a trash can near the mailbox (like the letter from wife’s attorney) or returned as undeliverable because the address was insufficient. Instead the notice contained the husband’s correct name and correct apartment complex address, and the “unclaimed” designation by the Postal Service was sufficient to effectuate proper service. Accordingly, the court of appeals held that the trial court did not abuse its discretion in denying husband’s motion to set aside the default judgment.


Tennessee Tort Buffet

The  recent Tennessee Court of Appeals opinion n Davis v. Covenant Presbyterian Church discussed a host of issues.

What is Required to Properly Allege Vicarious Liability?

The Court of Appeals affirmed dismissal of vicarious liability claims against two religious organizations (one unincorporated and one a nonprofit corporation). The plaintiffs’ allegations against both organizations were essentially that each defendant existed under the laws of a state and had a principal place of business there, and had “actual and/or apparent authority” over another corporation, Covenant. The plaintiffs’ complaint did not explain how either defendant had authority over Covenant or anything else factual to create a principal/agent relationship with Covenant. Nonetheless, the plaintiffs alleged that both of the religious organization defendants were vicariously liable for Covenant and all of Covenant’s employees and agents. Because the plaintiffs’ complaint lacked any factual basis for asserting vicarious liability, the Court of Appeals affirmed dismissal of both religious organizations.

So what was missing? Any fact as to how the two religious organizations gave authority (or appeared to give authority) to the other defendants to act on their behalf in the conduct at issue in the case. Even an employer generally does not have responsibility over employees outside of business hours. Just saying “authority” and “vicarious liability” is not enough – you have to put them in the scope of activities for which the principal would be vicariously liable.

The Difference Between Publicity and Publicly

The Court of Appeals affirmed dismissal of false light invasion of privacy claims. The plaintiffs in the case claimed that the defendants had revealed false information to the plaintiffs’ “third-party family members” and “individuals that have personal relationships with plaintiffs.” Unfortunately, for the plaintiffs,

“Publicity,” . . . means that the matter is made public, by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge. The difference is not one of the means of communication, which may be oral, written or by any other means. It is one of a communication that reaches, or is sure to reach, the public.

Thus it is not an invasion of privacy, within the rule stated in this Section, to communicate a fact concerning the plaintiff’s private life to a single person or even to a small group of persons.

RESTATEMENT (SECOND) OF TORTS § 652D cmt. a (quoted in Secured Financial Solutions, LLC v. Winer, No. M2009-00885-COA-R3-CV, 2010 WL 334644, at *4 (Tenn. Ct. App. Jan. 28, 2010)).

So in this case, family members and others who have personal relationships with the plaintiffs was construed as “a small group of persons” insufficient to qualify as “publicity.”

Which begs the question: how many Twitter followers do you need for your posts to count as “publicity”? 

Not All Harassment is Malicious Harassment

Malicious harassment claims are codified at Tenn. Code Ann. § 4-21-701. They require that the defendant have intentionally intimidated the plaintiff from freely exercising a constitutional right and that the harassment was motivated by the victim’s race, color, religion, ancestry, or national origin.

In Davis v. Covenant Presbyterian Church, the plaintiffs claimed they were harassed because they were “privy to information concerning the defendants’ fraudulent concealment of the unlawful sexual abuse.” The Court of Appeals affirmed dismissal of the claim because the plaintiffs did not allege it was based on any of the motivations required for a malicious harassment claim. The Court of Appeals reversed dismissal of an assault claim based on essentially the same conduct, as assault does not have to be motivated by race, color, religion, ancestry, or national origin.

Fitting the Square Peg of Intentional Acts into the Round Hole of Negligence

The Court of Appeals also affirmed dismissal of a claim for negligence. The plaintiffs’ complaint stated that the defendants’ conduct “fell below the applicable standard of care.” The plaintiffs alleged, however, that the defendants “promoted a ‘hostile environment, failed to refrain from, inter alia, ‘attacking,’ ‘threatening,’ ‘harassing,’ ‘physically separating,’ ‘following,’ ‘blocking movement,’ and ‘verbally accosting’” the plaintiffs. The Court of Appeals agreed with the trial court that this sounded a lot more like intentional acts than negligence, even if framed as falling below a standard of care.

Civil Conspiracy of Fraudulent Concealment Does Not Include Concealment of Injuries to Non-Parties

Finally, the plaintiffs sued their former church and various individuals relating to the church. One of the plaintiffs’ claims was for “civil conspiracy,” and the plaintiffs specifically alleged that the defendants worked together to conceal molestations of a child or children. (The complaint seems to have been alternatively pled as if there were one victim but possibly more to be discovered.) Importantly, the complaint did not allege that the plaintiffs themselves were victims of the child sexual abuse.

Any civil conspiracy requires the conspirators be engaged in an underlying, actionable tort. The Court of Appeals began by trying to figure out what exact underlying tort the plaintiffs were trying to claim. The Court of Appeals determined that the plaintiffs must be claiming a conspiracy to commit the tort of fraudulent concealment.

Looking to Redwing v. Catholic Bishop for the Diocese of Memphis, 363 S.W.3d 436, 462-63 (Tenn. 2012), the Court of Appeals concluded:

[A] cause of action for fraudulent concealment applies only when the defendant engages in conduct intended to conceal the plaintiff’s injury from the plaintiff, or when the defendant engages in conduct intended to conceal the identity of the person or persons who caused the plaintiff’s injury from the plaintiff.

Again, the plaintiffs in this case alleged that there was a conspiracy to conceal abuse of some unidentified “child and perhaps other children.” Because the plaintiffs did not allege that the plaintiffs themselves were abused, they could not succeed on a claim of fraudulent concealment, or of a civil conspiracy claim based upon it.

What Happens After A Default Judgment is Entered in Tennessee?

When a party pleads a prima facie cause of action and obtains a default judgment on liability, a damages inquiry should necessarily follow, and during the damages determination the trial court should not reconsider liability issues.

In Tennison Brothers, Inc. v. Thomas, No. W2013-01835-COA-R3-CV (Tenn. Ct. App. Aug. 6, 2014), the Tennessee Court of Appeals held that a trial court erred when it refused to award damages to two parties who had already been granted default judgments on liability against a third party.   The case involved a decade-old business dispute over rights to a state permit to construct a billboard on two adjacent properties fronting Interstates 40 and 240 in Shelby County, Tennessee.

In July 2008, Tennison Brothers, Inc. sued Clear Channel Outdoor (CCO) and William Thomas for breach of contract, intentional interference with business relationships, and inducement to breach a contract and intentional interference with a contract. In September 2008, CCO asserted a cross-complaint against Thomas alleging similar causes of action as Tennison. Highlights from the ensuing four years of litigation according to the appellate opinion include:

-        Tennison files motion for default judgment against Thomas for failure to answer on December 5, 2008.

-        Thomas files answer to Tennison and to CCO on December 18, 2008.

-        Trial court denies Tennison’s motion for default judgment and allows Thomas more time to answer on January 7, 2009. (The opinion does not explain why the trial court allowed Thomas “more time to answer” after Thomas filed his answers.)

-        Thomas files motion to dismiss Tennison’s complaint and CCO’s cross-complaint on May 6, 2009.

-        Trial court denies Thomas’s motions to dismiss on November 20, 2009.

-        Also on November 20, 2009, the trial court enters an order striking Thomas’s answers as a discovery sanction under Tenn. R. Civ. P. 37.02. The court enters default judgments on liability against Thomas in favor of Tennison and CCO.

-        Trial court enters an order on April 16, 2010, setting a writ of inquiry to determine the amount of damages against Thomas.

-        Thomas files motion seeking recusal or disqualification of the chancellor on May 18, 2010.

-        Trial court denies Thomas’s motion for recusal on June 4, 2010. Trial court also grants Tennison’s second motion for sanctions against Thomas for failure to appear for his deposition and refusing to produce documents. Court rules that Thomas shall not be allowed to present proof related to or in defense of damages, but Thomas may only be allowed to cross-examine witnesses presented by other parties related to damages.

-        Thomas files motion to dismiss any claims for damages on July 2, 2010.

-        Tennison and CCO files briefs on damages on July 9, 2010.

-        Trial court enters order on December 1, 2010, setting writ of damage inquiry.

-        Thomas renews his motion to dismiss on January 25, 2011.

-        Tennison files motion to strike Thomas’s motions to dismiss on February 4, 2011.

-        Tennison files motion in opposition to Thomas’s motions to dismiss on February 17, 2011.

-        On November 2, 2011, the trial court enters an order re-setting the writ of inquiry.

-        Trial court denies Thomas’s motions to dismiss on December 6, 2011.

-        Thomas files motions to set aside the default judgments on January 10, 2012.

-        Trial court denies Thomas’s motions to set aside default judgments on July 6, 2012.

-        Case transferred to a different court based upon Thomas’s multiple motions for recusal and transfer. (Opinion does not provide specific date.)

-        Writ of damage inquiry held by new chancellor on January 7, 2013. During the damages determination, the new chancellor went outside of the pleadings to reconsider liability issues and thereafter ruled that Tennison and CCO had not proved that Thomas had breached a contract. Finding no actual breach, the chancellor held that Tennison’s and CCO’s other claims failed as well and refused to award any damages.

-        The trial court entered an order on its opinion on August 2, 2013, and Tennison and CCO appealed.

In finding that the trial court had erred during the damages inquiry by reconsidering liability issues, the court of appeals relied on long held Tennessee case law providing that so long as matters are sufficiently pled in the complaint a default judgment requires that the allegations be taken as true and determinative of liability. The appellate court reviewed the necessary elements for each of the causes of actions asserted by Tennison and CCO against Thomas and then compared the prima facie requirements to Tennison’s and CCO’s pleadings. The appellate court then found that Tennison and CCO had sufficiently pled each of their respective claims against Thomas under the applicable standard for default judgments and therefore ruled that Tennison and CCO were entitled to damages against Thomas. The case was remanded to the trial court for a damages determination, wherein Tennison and CCO can elect between treble damages and punitive damages.

This only makes sense.  If you fail or refuse to answer in a timely fashion and a default judgment is entered against you the right to contest liability should be gone.  There has to be some cost, some sanction for refusing to answer in a timely fashion.

Injury and Wrongful Death Liability of Franchisors

Under what circumstances can a franchisor be held vicariously liable for torts that occur on the premises of a franchisee?

A relatively recent court opinion has an excellent discussion of the law in this area, addressing not only the law of the state where the cause of action arose (New Mexico) but also the law from around the nation.  In Estate of Anderson v. Denny's, 2013 WL 6506319 (D.N.M. Nov. 13, 2013) the court held that a genuine issue of material fact existed on the issue of whether the franchisor was vicariously liable for the franchisee's alleged negligence, turning on the issue of right of control.


Tennessee Court Rules on Discovery of Income from Testifying Expert

This appeal arises from a medical malpractice case that went off the rails when the defense sought to discover financial information from plaintiff’s liability expert.  On further consideration, since the procedural history involves four motions for sanctions, two trial continuances, a denied interlocutory appeal, a dismissal and this appeal, perhaps I should say the case went off the rails, down an embankment into a sewage-filled ditch replete with rats the size of small dogs.   

It all started simply enough.  Defense counel served a notice of deposition for plaintiff’s liability expert, Dr. Evans, and requested financial information.  Specifically, the notice requested documents reflecting the income the good doctor had earned serving as an expert witness including his schedule of charges, all income received from reviewing cases, consulting or testifying for a 10 year period and 1099s and related documents showing his income for the same 10 year period.   No objection was filed to the notice but Dr. Evans failed to bring them to his deposition.  The deposition proceeded nonetheless and Dr. Evans was asked questions related to his income.  Dr. Evans testified he did not know how much he earned annually from his work as an expert witness and could not even give an estimate. While he estimated 15 to 20% of his income was derived from his work as an expert witness, he could not provide any information as to the actual dollar amount. 

Thereafter, a trial date was scheduled and the defense moved to compel production of the documents previously requested as part of Dr. Evans deposition.  Plaintiff urged the trial court to deny the motion as the documents were not in her possession.  Defense counsel insisted plaintiff could obtain the documents from her expert but asked the trial court to grant a motion for out-of-state subpoena if the trial court was inclined to deny the motion to compel.   While plaintiff conceded the financial information was relevant on the issue of bias, plaintiff asked the court to balance the privacy interests of the expert.  Ultimately, the trial court denied the motion to compel since the requested documents were not in the possession of the plaintiff but instructed defense counsel to file a petition for an out-of-state subpoena.  The trial court suggested the scope of the subpoena should be reduced to a five year period instead of ten and also suggested the parties agree to the production of an affidavit from Dr. Evans’ accountant giving the information as opposed to the production of the underlying documents which contained other personal, financial information.

Defense counsel moved for the out-of-state subpoena and supported the motion with information detailing Dr. Evans’ testifying history and arguing the requested documents went to the very core of proving Dr. Evans’s bias.  Specifically, the defense presented evidence that Dr. Evans had been disclosed as an expert in 179 cases in 23 different states and in 96% of those cases he offered testimony on behalf of the plaintiff.  Not surprisingly, the defense argued Dr. Evans was a professional witness and exploration of his financial interest and bias was paramount.  Plaintiff countered Dr. Evans was merely a “seasoned” expert and the subpoena was an invasion of his privacy.  At the hearing on the motion, the parties ultimately agreed an affidavit from Dr. Evans’ accountant would be a suitable means for obtaining the information.  But again, the scope of the disclosure was in dispute.  Plaintiff argued Dr. Evans should only have to disclose the percentage of his income derived from his work as an expert witness but should not have to disclose any income amounts.   The defense insisted income amounts were necessary to fully explore Dr. Evans’s financial interest and bias.

The trial court agreed with the defendant and ordered Dr. Evans accountant to produce the information within two weeks due to the looming trial date.  Before the hearing concluded, plaintiff’s counsel expressed to the trial court her concerns that Dr. Evans would not comply with the order requiring disclosure of his income amount.   The trial court reiterated her order and indicated it would apply to both plaintiff and defense expert witnesses.  She instructed plaintiff’s counsel to provide the affidavit directly to defense counsel rather than file it with the court, and she instructed defense counsel that the affidavit was not to be disseminated beyond the confines of his office.   Finally, the court ordered the affidavit could only be used for impeachment in the subject litigation and only if permitted to do so by subsequent order of the court.

Two weeks came and went.  No affidavit.  Defense counsel filed a motion for sanctions based on the failure to comply with the court order.   The defense reminded the trial court that the information had originally been requested from Dr. Evans on January 15, 2010 and the August, 2012 trial date was looming.  At the hearing, plaintiff’s counsel sought a modification of the order and requested the affidavit be provided directly to the court for an in camera review.   The court directed the parties to return the following day after plaintiff’s counsel had an opportunity to consult with Dr. Evans. 

The following day, plaintiff’s counsel indicated Dr. Evans would provide the affidavit if it was submitted only to the judge for in camera review.  Consequently, the court ordered Dr. Evans’ accountant to produce the affidavit to her.  If the affidavit was consistent with Dr. Evans’ deposition testimony (i.e. 15 to 20 % of his income was derived from expert witness work), then she would retain the affidavit and it would not be provided to defense counsel.   Defense counsel insisted he should be allowed to learn the full amount of Dr. Evans’ expert witness income.  The trial court ruled defense counsel could ask those questions on the stand but she would not require the information in the affidavit.  Plaintiff’s counsel then flatly told the court that Dr. Evans would not answer any such income-related question on the stand.   The trial court warned plaintiff that either Dr. Evans would provide the information or he would not testify at all.   The affidavit was to be provided by July 12, 2012.  Because of the delay occasioned by the discovery dispute, the trial court granted plaintiff’s motion to continue the trial date.

July 12th  came and went.  No affidavit.  A second motion for sanctions was filed.  In response to the second motion for sanctions, plaintiff’s counsel informed the court that Dr. Evans was willing to provide the affidavit provided a more explicit order was entered which (1) allowed Dr. Evans to recuse himself in the event the court found defense counsel was entitled to the affidavit and (2) under such circumstances, provided for the return of the affidavit without further dissemination.  Clearly losing patience, the trial court reminded plaintiff’s counsel that she had previously assured the court on two separate occasions that the affidavit would be forthcoming and she could no longer accommodate Dr. Evans’ demands.  The trial court excluded Dr. Evans finding he had refused to provide his affidavit in violation of a court order. 

Thereafter, plaintiff filed a motion to amend the trial court’s order excluding Dr. Evans.  Plaintiff’s counsel argued Dr. Evans had not refused to provide the affidavit but instead was waiting on the errors in a prior court order to be cured.   Plaintiff’s counsel insisted the order submitted by the defendant had failed to address the safeguards specifically ordered by the court and instead simply incorporated the oral rulings.  

After yet another hearing on the issue, the trial court agreed to set aside the order excluding Dr. Evans but again reiterated that Dr. Evans would have to provide income figures rather than just mere percentages.  However, she permitted the parties the opportunity to brief the issue, and they did.   After reviewing the briefs, the trial court ordered Dr. Evans to produce an affidavit for in camera review.  If the in camera review revealed Dr. Evans earned more than 15 to 20% of his income for expert witness fees (in contradiction to this deposition testimony), the affidavit would be supplied to defense counsel unless Dr. Evans’ elected to withdraw as a witness.  If Dr. Evans withdrew, the affidavit would be returned without disclosure to defense counsel or others.  If Dr. Evans testified at trial, defense counsel would be permitted to ask about Dr. Evans’ income for a limited number of years.

In response, Dr. Evans finally produced the affidavit.  But unfortunately, Dr. Evans was not quite done.  As part of his email to the trial court, he included two notices/conditions to the court opening the attachment containing the affidavit.   The first notice advised the court that if she found the affidavit should be provided to defense counsel then he would withdraw as an expert.  The second notice advised the court that he “definitely” and “absolutely” but yet “politely” would not answer any questions about his income. 

Three days after Dr. Evans supplied the affidavit, plaintiff filed a motion for interlocutory appeal seeking review of the income issue.  Thereafter, the trial court sent a letter to both counsel indicating she had not opened the attachment containing Dr. Evans’ affidavit given his conditions.   In response to all this, the defense filed its third motion for sanctions again asking the court to exclude Dr. Evans as it was “as plain as the fly in the buttermilk” that Dr. Evans would not comply with the court’s orders. 

Another hearing was set and the trial court denied the motion for sanctions “at this time” and granted the plaintiff’s motion for interlocutory appeal.   The Court of Appeals and the Tennessee Supreme Court denied the plaintiff’s application for permission to appeal., and defense counsel filed its fourth motion for sanctions again asking the trial court to give Dr. Evans the boot.   Because of the ongoing issue, the trial court again continued the trial while waiting for plaintiff’s response to the latest motion for sanctions.  Plaintiff responded that Dr. Evans had provided the requested affidavit but conceded he would not answer questions at trial related to his income.  At this point, the trial court had enough and told plaintiff it was time to find another witness.  Dr. Evans was excluded. 

Plaintiff asked for 45 days to find another liability expert.  The trial court gave plaintiff sixty days to disclose another expert or non-suit.  Sixty days came and went.  No new expert.  No non-suit.  The trial court dismissed the case and plaintiff appealed alleging two assignments of error:  (1) did the trial court abuse its discretion in requiring Dr. Evans to disclose his income information; and (2) did the trial court abuse its discretion in excluding Dr. Evans for failing to comply with the trial court’s orders.

The short answer to both questions is a resounding no.  In providing this answer, the Court of Appeals opinion gives us a lengthy and excellent history of the issues surrounding paid expert witnesses.  The Court of Appeals also provides us a summary of various approaches used in different states.  

Ultimately, the Court of Appeals makes clear that in Tennessee the jury can consider an expert’s bias or financial interest in determining the weight to give to the expert’s testimony.   Evidence suggesting bias is permissible under Tennessee Rule of Evidence 616.  And, Tennessee Rule of Evidence permits cross-examination on any matter relevant to the case including credibility.  

As to Dr. Evans, the Court of Appeals found the trial court had exercised the “patience of Job” in trying to fashion a “reasonably tailored and minimally intrusive” compromise for the parties’ competing interests.  Further, the Court of Appeals rejected plaintiff’s argument that the 2011 amendments to the Tennessee Rules of Civil Procedure precluded the forced disclosure of an expert’s income.  While the new rule requires the parties to provide “a statement of the compensation to be paid for the study and testimony in the case”, the Court of Appeals concluded this language was simply to facilitate the exchange of basic information and was not intended as “a ceiling on the amount of information to be discovered” 

Finally, the Court of Appeals expressly indicated its holding was limited to the facts of this particular case and their opinion was not intended to establish broad guidelines regarding financial disclosures by experts.  In fact, the Court of Appeals noted a bright line rule would not be practical.  Instead, trial courts are vested with broad discretion on discovery , the scope of cross-examination and controlling their dockets and the trial court did not abuse its discretion on any of these issues with respect to Dr. Evans. 

While the Court of Appeals expressly limits its holding to the facts of this case, if you have an issue regarding an expert’s financial interest or bias, you should read this case as it does a nice job of laying out the issues and the law.  And, as you do that, try to figure out why plaintiff's counsel made the admissions he did and why he stuck with this expert after being given the opportunity to get another.

Click on the link to read the opinion in Laseter v Regan, No. W2013-02105-COA-R3-CV  (Tenn. Ct. App. July 24, 2014).

Tennessee Law of Civil Trial - Free Sample Chapter

My newest book,  Tennessee Law of Civil Trial, examines the law of trying civil  cases in Tennessee state courts.   Here is the Table of Contents:

Chapter 1: Scheduling Orders
Chapter 2: Final Pretrial Conferences
Chapter 3: Motions in Limine
Chapter 4: Jury Selection
Chapter 5: The Rule
Chapter 6: Opening Statements and Closing Arguments
Chapter 7: Examination of Witnesses
Chapter 8: Use of Depositions at Trial
Chapter 9: Opinion and Expert Testimony
Chapter 10: Mistrials
Chapter 11: Motions for Directed Verdict
Chapter 12: Findings of Fact
Chapter 13: Jury Instructions
Chapter 14: Juror Questions
Chapter 15: Verdict Forms
Chapter 16: Discretionary Costs
Chapter 17: Motions for a New Trial and to Alter or Amend Judgment
Chapter 18: Remittitur
Chapter 19: Additur
Chapter 20: Motions for Judgment Notwithstanding the Verdict
Chapter 21: Preparing to Win at Trial

If you want to get a good feel for the book, clicking on the link and enjoy a free preview of the chapter on scheduling orders. You can purchase the 500-page book for only $49.95 by clicking on the link.

Tennessee Appellate Court Reviews Business Tort Case

This case arises from the housing market crash. First Community Bank had purchased asset-backed securities primarily in the form of collateralized debt obligations (CDOs) and residential mortgage-backed securities (RMBSs) from a number of entities including First Tennessee Bank, Morgan Keegan & Company, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bear Stearns & Company and Sun Trust Robinson Humphrey, Inc. and Keefe, Bruyette & Woods, Inc. The sale of each security was conditioned upon the receipt of a minimum rating, and all sales received the rating. While initially First Community Bank profited from these transactions, in August of 2008, after Moody’s downgraded the rating on a number of the investments, the bottom fell out. First Community Bank lost nearly 100 million dollars. 

Trying to recoup some of its massive losses, First Community sued everyone involved: the rating agencies, the placement agents and the issuing entities. In its 207 page complaint, which was later amended and expanded to 260 pages, First Community Bank alleged fraud, constructive fraud, negligent misrepresentation, civil conspiracy, unjust enrichment and a violation of the Tennessee Securities Act. Procedurally, the case took some twists and turns. The defendants initially moved to dismiss on multiple grounds: statute of limitations, statute of repose, failure to plead with specificity, the losses were caused by general market conditions and, for some defendants, lack of personal jurisdiction. The trial court granted the motions to dismiss and First Community Bank appealed. The Court of Appeals upheld the dismissal of some of the defendants based on lack of personal jurisdiction. As to the other defendants, the Court of Appeals found the trial court had considered matters outside the pleadings thereby converting the motions to dismiss into motions for summary judgment. As such, First Community Bank was entitled to discovery. The remaining defendants appealed to the Tennessee Supreme Court who found the Court of Appeals had failed to consider the trial court’s alternative basis for dismissal i.e., the failure to state a claim upon which relief may be granted (other than statute of limitations or statute of repose).   Accordingly, the case was remanded to the Court of Appeals for consideration of that lone issue. The Court of Appeals ultimately reversed the trial court’s decision on that issue and remanded for further proceedings.

Given the issue on appeal, the Court of Appeals’ analysis was limited to whether the complaint was legally sufficient as opposed to the strength of the plaintiff’s proof. Ultimately, after construing the complaint “liberally and presuming all factual allegations to be true and giving the plaintiff the benefit of all reasonable inferences”, the Court of Appeals concluded the amended complaint was sufficient to survive the motions to dismiss. 

This 25-page opinion is detailed and largely case specific. However, if you have a case involving fraud, constructive fraud, negligent misrepresentation, civil conspiracy, unjust enrichment or the Tennessee Securities Act, the decision gives a nice recitation on the law for each claim. It also provides insight into the level of specificity and detail required to properly state a claim. Notably, the fact that the complaint allegations against multiple defendants are similar or even a “verbatim recitation of the claim against the preceding defendant” does not, in and of itself, mean the claim should be dismissed for failure to state a claim. 

The case is First Community Bank v. First Tennessee Bank et al, No. E2012-01422-COA-R3-CV (Tenn App. Ct. August 20, 2014).