State Farm Mutual Automobile Insurance Company v. James T. Jones, M2016-02423-COA-R3-CV

State Farm, as subrogee, sued James T. Jones and Ronald J. Jones on May 22, 2014 for injuries from an automobile accident. Defendants answered on September 9, 2015.
State Farm moved for default judgment in August 2015 but withdrew it when Defendants filed an Answer one day before the hearing.
Litigation over the plaintiff’s former law firm splitting caused about a year of inactivity; no discovery or motions were filed for roughly 370 days.
Defendants moved to dismiss for failure to prosecute on September 15, 2016; State Farm served discovery around September 19–20, 2016 and responded to the motion on September 22, 2016.
The trial court granted dismissal with prejudice, finding (1) failure to prosecute for 370 days and (2) State Farm’s failure to respond to affirmative defenses amounted to admissions; it also awarded attorneys’ fees.
State Farm filed a timely motion to alter or amend (Rule 59) with affidavit and firm history; the trial court denied it without explanation. State Farm appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether dismissal for failure to prosecute was appropriate	State Farm argued delays were due to law-firm litigation, discovery was served before motion was received, and dismissal frustrated merits disposition	Defendants argued plaintiff took no action for ~370 days and dismissal was warranted	Reversed: factual record did not support trial court’s finding of no activity (discovery served) and dismissal was too extreme
Whether failure to respond to affirmative defenses constitutes admission	State Farm: affirmative defenses labeled as such do not require a responsive pleading	Defendants: plaintiff failed to oppose affirmative defenses, so they should be treated as admitted	Reversed: court applied incorrect legal standard—affirmative defenses do not require a response under Tenn. R. Civ. P. 8.04
Whether denial of Rule 59 motion to alter or amend was proper	State Farm: presented affidavit and firm history explaining delay and merits; trial court gave no factual findings	Defendants: no response to the motion	Reversed: denial lacked factual findings and appellate court could not discern the trial court’s reasoning
Whether attorneys’ fees award was proper	State Farm: fees flowed from erroneous dismissal and should be vacated	Defendants: fees justified by dismissal	Reversed: fees vacated as dismissal reversed

Lee Medical, Inc. v. Beecher, 312 S.W.3d 515 (Tenn. 2010) (standards for reviewing discretionary decisions and abuse of discretion)
Konvalinka v. Chattanooga–Hamilton County Hosp. Auth., 249 S.W.3d 346 (Tenn. 2008) (discretionary decisions must consider applicable law and relevant facts)
Hodges v. Tennessee Attorney General, 43 S.W.3d 918 (Tenn. Ct. App. 2000) (trial courts’ inherent authority to control dockets, including dismissal for failure to prosecute, but such dismissals are extreme)
Henry v. Goins, 104 S.W.3d 475 (Tenn. 2003) (policy favoring disposition on the merits over procedural dismissals)
Underwood v. Zurich Ins. Co., 854 S.W.2d 94 (Tenn. 1993) (review standard for denying motions to vacate or post-judgment relief)
Taylor v. Fezell, 158 S.W.3d 352 (Tenn. 2005) (appellate review of discretionary rulings)
Lovlace v. Copley, 418 S.W.3d 1 (Tenn. 2013) (trial court must make factual findings to support discretionary rulings)