Brandi Burge v. Farmers Mutual of Tennessee
M2016-01604-COA-R3-CV
| Tenn. Ct. App. | Apr 13, 2017Background
- Plaintiffs Brandi Burge and her parents owned a 2009 doublewide mobile home insured by Farmers Mutual of Tennessee; the home burned down on July 10, 2013 and was a total loss.
- Plaintiffs submitted proofs, participated in examinations under oath, and received a $2,000 advance; insurer largely failed to pay, respond, or explain for nearly two years.
- Insurer defended by alleging material misrepresentation on the 2008 insurance application—specifically, that multiple mortgages on the property were not disclosed.
- Plaintiffs sued in July 2014; after discovery, insurer disclosed its mortgage-based denial theory; plaintiffs moved for summary judgment on that defense and obtained it (court found only one mortgage on the mobile home and that it had been disclosed).
- Bench trial on damages awarded $65,000 (residence), $34,500 (personal property), $500 (rental additional living expense net of $2,000 advance), prejudgment interest, and a 15% statutory bad-faith penalty, totaling $127,500; insurer appealed.
- Court of Appeals affirmed except it modified the residence award to the $69,000 policy limit and affirmed the personal property, ALE, prejudgment interest, and 15% penalty; denied additional appellate fees request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Valuation of residence | Burge: evidence (witnesses & expert) supports awarding policy limit $69,000 | Farmers: no competent proof of value at time of loss; expert valuation was dated 2016 | Court: competent evidence supported valuation; trial court erred lowering to $65,000; modify award to policy limit $69,000 |
| Valuation of personal property | Burge: detailed inventory and sworn proof of loss support recovery up to policy limit | Farmers: plaintiff testified she didn’t know value; no competent proof | Court: inventory, sworn proof, and testimony supported award of $34,500 (policy limit) |
| Additional living expenses (ALE) | Burge: seek full ALE policy limit ($13,800) including costs incurred by parents who housed family | Farmers: contested scope/amount of ALE | Court: $500 rental expense recoverable; parents’ increased expenses not covered because endorsement did not extend Coverage D to them |
| Statutory bad-faith penalty (Tenn. Code §56-7-105) | Burge: insurer acted in bad faith; seek up to 25% penalty | Farmers: had substantial legal grounds (mortgage defense) so no bad-faith penalty | Court: insurer lacked substantial grounds and delayed/inadequately investigated; 15% penalty was within court’s discretion and affirmed |
Key Cases Cited
- In re Estate of Ledford, 419 S.W.3d 269 (Tenn. Ct. App. 2013) (bench-trial factual findings presumed correct on appeal)
- Watson v. Watson, 196 S.W.3d 695 (Tenn. Ct. App. 2005) (standard for overturning trial court factual findings)
- Kelly v. Kelly, 445 S.W.3d 685 (Tenn. 2014) (deference to trial court on witness credibility)
- Gaston v. Tenn. Farmers Mut. Ins. Co., 120 S.W.3d 815 (Tenn. 2003) (explaining Tennessee’s statutory bad-faith penalty)
- Nelms v. Tenn. Farmers Mut. Ins. Co., 613 S.W.2d 481 (Tenn. Ct. App. 1980) (statutory penalty not recoverable in every refusal-to-pay case)
- Palmer v. Nationwide Mut. Fire Ins. Co., 723 S.W.2d 124 (Tenn. Ct. App. 1986) (elements required for recovery under §56-7-105)
- Riad v. Erie Ins. Exch., 436 S.W.3d 256 (Tenn. Ct. App. 2013) (delay without bad faith when genuine dispute exists)