Erik Hood v. Casey Jenkins
432 S.W.3d 814
Tenn.2013Background
- Decedent named his 16-year-old son Erik as sole beneficiary of a $100,000 life policy; Erik’s half-sister Casey sought and obtained juvenile-court orders appointing her guardian for Erik’s person and, later, his finances.
- Old Line (insurer) required proof of guardianship for payment to a minor; claims examiner requested documents, received a financial-guardianship order with handwritten additions, and obtained an exemplification from the juvenile court clerk and judge confirming the financial-guardianship order.
- Old Line issued a check to “Casey Jenkins as financial guardian for the benefit of Erik,” deposited into a joint account; Casey soon depleted most of the funds.
- Erik sued Old Line (breach of contract / negligence) and Casey (conversion); trial court awarded judgment against both Old Line and Casey; Old Line cross-claimed against Casey.
- The Court of Appeals affirmed the trial court, holding the guardianship order defective and that Old Line breached and acted in bad faith by paying Casey; Old Line appealed to the Tennessee Supreme Court.
- The Tennessee Supreme Court reversed the Court of Appeals, holding Old Line was entitled to rely on the facially valid juvenile-court order and acted in good faith after a reasonably prudent investigation; Old Line did not breach its contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer breached contract by paying proceeds to purported financial guardian based on juvenile-court order | Hood: Order failed to meet statutory guardianship requirements, so Casey was not a legally appointed financial guardian; insurer should have verified compliance | Old Line: Policy required payment on due proof of death; insurer received guardian appointment documents and an exemplification from the court and thus discharged its contractual duty | Court: Insurer entitled to rely on a facially valid court order and, having conducted reasonable inquiry, acted in good faith — no breach |
| Whether insurer acted in good faith / reasonably prudent investigation before payment | Hood: Insurer should have uncovered statutory defects and not paid | Old Line: Requested documents, sought confirmation from juvenile court, and consulted supervisor before payment | Court: Insurer’s steps met the good-faith / reasonably prudent-investigation standard; defense applies |
| Whether a collateral attack could invalidate the guardianship order for insurer-liability purposes | Hood: Order’s statutory defects render it ineffective in collateral proceeding | Old Line: Order was facially valid; collateral attack barred unless void on face for lack of jurisdiction | Court: Order was facially valid (juvenile court had jurisdiction/venue and was a court of record); collateral attack not permitted |
| Plaintiff’s capacity to consent (mature-minor argument) — raised below but not squarely resolved on appeal | Hood: Erik as a mature minor could not validly consent to appointment/use of funds | Old Line: Payment to appointed guardian insulated insurer; issue not dispositive | Court: Did not decide mature-minor issue because insurer was not in breach; issue not reached |
Key Cases Cited
- Benton v. Vanderbilt Univ., 137 S.W.3d 614 (Tenn. 2004) (third‑party beneficiary rights measured by contract terms)
- Gentry v. Gentry, 924 S.W.2d 678 (Tenn. 1996) (distinguishing void and voidable judgments; collateral-attack principle)
- Dykes v. Compton, 978 S.W.2d 528 (Tenn. 1998) (voidable judgments require proof beyond the face of the judgment)
- Cumberland Bank v. Smith, 43 S.W.3d 908 (Tenn. Ct. App. 2000) (collateral attack permissible only if prior judgment is void for lack of jurisdiction)
- Hawley v. Lavelle, 602 S.W.2d 499 (Tenn. Ct. App. 1980) (parties can rely on court orders and are not liable for damages unless they conspired to defraud the court)
- Dick Broad. Co. of Tenn. v. Oak Ridge FM, 395 S.W.3d 653 (Tenn. 2013) (recognizing implied duty of good faith and reasonableness in contract performance)
- Wilson v. Wilson, 984 S.W.2d 898 (Tenn. 1998) (enforcement of court orders tied to integrity of judicial process)
- State v. Ritchie, 20 S.W.3d 624 (Tenn. 2000) (strong presumption of validity attaches to final judgments)