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Summary Judgment and Rule 56.03 Statements

Where plaintiff presented a statement of undisputed material facts that called into question the check cashing policies of defendant, but that statement of facts was ignored by the trial court in granting summary judgment for defendant, summary judgment was reversed.

In Great American Insurance Company v. Pilot Travel Centers, LLC, No. E2019-00649-COA-R3-CV (Tenn. Ct. App. Mar. 5, 2020), plaintiff filed a negligence suit against defendant in relation to checks that were cashed by defendant’s stores. Plaintiff was a Comdata customer and used the Comdata system to pay certain independent contractors. Using this system, plaintiff would request a code for a Comdata check to be issued, and the check would be printed by defendant Pilot Travel Centers, which was a Comdata vendor. Independent contractors could then retrieve these checks from Pilot stores.

From June 2010 to March 2011, an employee of plaintiff, “without the knowledge or permission of [plaintiff,]” presented 689 codes at Pilot stores and both retrieved and cashed the checks, totaling over $368,000. Neither the employee nor plaintiff were the payee on the checks, and she cashed the checks wearing her work uniform, but defendant’s policy was to allow the “person presenting the code” to cash the check and “did not require that the payee of the check match the identification presented when the Comchek was cashed.” The employee used the controller’s password to request the codes, and there was a General Manager at plaintiff company in charge of “reviewing and signing off on the Comdata transactions.”

Based on these facts, defendant moved for summary judgment on the basis of comparative fault. Defendant argued that “reasonable minds could not differ that [plaintiff] was fifty percent or more at fault for the loss incurred as a result of its own employee’s embezzlement.”

In response, plaintiff filed its own statement of additional material facts under Tenn. R. Civ. Pro. 56.03. Most notably, plaintiff stated:

  1. Pilot’s check-cashing policies with respect to Comcheks are that ‘the payee is irrelevant.’
  2. None of the Pilot Comcheks are, on their faces, made payable to cash or are otherwise facially bearer instruments.
  3. If [employee] had presented a Pilot clerk with a Comchek printed in that particular Pilot store payable to “Mickey Mouse,” it would be consistent with Pilot policy to allow [employee] to endorse that Comchek and negotiate that Comchek for cash in the Pilot store.
  4. If [employee] had presented a Pilot clerk with a Comchek printed in that particular Pilot store payable to “Mickey Mouse,” it would be consistent with Pilot policy not to require [employee] to present identification showing that she was indeed Mickey Mouse prior to [employee] endorsing that Comchek and negotiating that Comchek for cash in the Pilot store.

Further, plaintiff pointed out that had defendant refused to cash the checks, Comdata would have credited its account and the losses would not have occurred.

The trial court granted summary judgment to defendant, ruling that plaintiff was at least fifty percent at fault. In its ruling, the trial court quoted defendant’s statement of undisputed material facts “but never mentioned [plaintiff’s] statement of additional material facts.” On appeal, summary judgment was reversed.

In a short analysis, the Court of Appeals noted that plaintiff’s additional facts “pointed to evidence tending to make the determination of where fault lies in this case less than clear-cut.” The Court took particular notice of the admitted fact that the checks could have been made out to Mickey Mouse and defendant would have allowed them to be cashed, stating: “Pilot acknowledges, for purposes of its motion for summary judgment, that its practice was to endorse and negotiate a Comchek no matter how transparently absurd or suspicious the identity of the payee[.]” Based on the evidence as a whole, the Court ruled that a reasonable trier of fact could find plaintiff less than 50% at fault, and summary judgment was reversed.

This was a good decision by the Court of Appeals and a reminder that a strong statement of additional material facts can be an effective weapon against a motion for summary judgment.

NOTE:  To aid lawyers in giving clients guidance about how long it takes to receive an opinion after oral argument in the appellate courts, we are going to start sharing that information with readers.   Please understand that the length of time that elapses between oral argument and the date the opinion is released is dependent on a multitude of factors, not the least of which is the complexity of the issues presented.  In this case, the opinion was released two months after oral argument.

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