United States District Court, E.D. Tennessee, Knoxville Division
LEON JORDAN, District Judge.
This civil action is before the court for consideration of the "Motion to Dismiss Claims for Negligent and Intentional Infliction of Emotional Distress" filed by plaintiff American National Property and Casualty Company (counter-defendant or "American National") [doc. 56]. The motion seeks to dismiss these claims that have been asserted in the counterclaim filed by defendants Carol Ann Stutte and Laura Jean Stutte (counter-plaintiffs or "the Stuttes"). The Stuttes have filed a response [doc. 59] to the motion. By an order entered October 8, 2013, the court notified the parties that it would be treating American National's motion as one for summary judgment and set a briefing schedule [doc. 62]. Because the briefing did not address the issues in the framework of the summary judgment standard, on November 19, 2013, the court ordered additional briefing for the parties to argue and document their positions regarding whether or not summary judgment was appropriate for the intentional and negligent infliction of emotional distress claims [doc. 65]. American National filed a supplemental motion to dismiss [doc. 67],  and the Stuttes filed an additional response [doc. 73]. Oral argument is unnecessary, and the motion is ripe for the court's determination. For the reasons that follow, American National's motion will be granted in part and denied in part, resulting in the dismissal of the Stuttes's claims.
The Stuttes insured their home in Vonore, Tennessee with American National. The home and all its contents were destroyed by fire on September 4, 2010. The Stuttes made a claim for the loss. The Stuttes's position is that late in the afternoon of September 4 they traveled with their daughter and a family friend to Nashville where they later had dinner at the Wildhorse Saloon. While still at the restaurant, they received a call about 8:00 p.m. informing them that their home was on fire. Carol Ann Stutte confirmed this information with a phone conversation with someone from the Monroe County Sheriff's Office. According to Carol Stutte, she returned the night of the fire, and the remainder of the group returned the next day.
In support of their claim the Stuttes provided American National with a time and date-stamped parking garage receipt, admission receipts to the Wildhorse Saloon, and a dinner receipt from the Wildhorse Saloon to show that they were in Nashville at the time of the fire. The Stuttes also assert that they provided American National with information concerning threats made by a neighbor, Janice Millsaps, that included a threat to burn down their house and information that they were not in financial distress.
By a letter dated May 12, 2011, American National denied the Stuttes's claim and filed the complaint for declaratory judgment that initiated this lawsuit on the same day. The declaratory judgment alleges that the fire was intentionally caused by the Stuttes and that they breached provisions in the policy by committing concealment or fraud relating to the claim.
The Stuttes contend that American National showed a lack of care and diligence in conducting its investigation that ultimately concluded that the Stuttes committed arson and fraud. They also contend that American National failed to consider evidence demonstrating that the Stuttes were in Nashville, including time-stamped photographs; time-stamped receipts; cell phone records; and testimony of corroborating witnesses. The Stuttes also contend that American National's investigation that included the services of a private investigator, Gary Noland, was one-sided and incomplete. They maintain that Noland showed no interest in information that supported their position and their whereabouts on the night of the fire. Also, the Stuttes point out that the original analysis of their cell phone records done by American National proved to be incorrect, but American National has not changed its position regarding the claim. The Stuttes also assert that American National has failed to consider their reasonable explanations for certain conduct that American National has relied upon in denying the claim. For example, they have offered explanations for why furniture and other items were moved from the house prior to the fire; why they raised the limits on their policy before the fire; why they changed their mailing address; why some of the group stayed in Nashville while Carol returned home the night of the fire; and why they would leave their home when they contended a neighbor had threatened to burn down the house.
American National's claims investigator, Stacey Jennings, testified in deposition concerning the factors that in combination led American National to deny the Stuttes's claim. She testified that the origin and cause investigation report showed that the fire was set; there was evidence of an explosion heard by nearby fishermen; at the scene there appeared to be an accelerant trail poured across the threshold; samples tested positive for the presence of evaporated gasoline; and the word "queers" was spray-painted on a garage left standing. When Carol Stutte was questioned about why they went to Nashville, she advised it was to celebrate living in the home for five years. According to Jennings, that raised questions because the Stuttes had reported receiving threats over that period of time and additional threats weeks leading up to the fire. The question raised at American National was, "Why would you be celebrating living in a home that - where you were being threatened constantly?" Jennings also testified that when the origin and cause investigator interviewed Carol Stutte she reported she left the others on trip in Nashville and returned; however, at the time she did not know the name of the hotel where they were staying. Also, Jennings noted that although Carol Stutte stated she was in Nashville with the group, besides not knowing the name of the hotel where she had been she did not know how the others returned from Nashville.
In addition, Jennings stated that when the neighbors and fishermen had come up to the house that was still standing, the doors were shut and there was no evidence of forced entry. A neighbor, Carl Self, who had been in the house before to do painting, came to the scene and did not notice any furniture in the house or pictures on the walls. The interview of another neighbor, Catherine Daugherty, revealed that she saw the Stuttes moving items out of the home in the two weeks leading up to the fire. Daugherty thought the Stuttes were moving because of the furniture being taken out. Also, interviews with neighbors gave different descriptions of Janice Millsaps that those held by the Stuttes. There were three dogs at the Stuttes, but none of the neighbors heard them barking prior to the fire.
Other factors noted by Jennings were that the receipt from the Wildhorse Saloon indicated that there were five people but the Stuttes reported four who traveled to Nashville. The group stayed at the restaurant after receiving notification of the fire. Jennings testified that American National had questions about why the entire group did not return on the night of the fire rather than just Carol Stutte. The reason given was that they stayed behind and she just left to check on the dogs. The next day the group did not return immediately, but stayed in Nashville for a time advising that the rental car company did not open until noon. Jennings stated that they checked about the rental car company and found out that was not necessarily the case.
Jennings also testified that in just looking at photographs, there were similarities between the word that was spray-painted on the garage and words spray-painted on a piece of plywood at the Stuttes's other home that said, "Game cameras in use." American National also had a cell phone record analysis that indicated the Stuttes were someplace different from what they testified to. [The record reflects that the initial cell phone analysis done for American National contained errors.] Further, photographs, personal papers, and furniture had been moved out of the house prior to the fire. American National was informed that Janice Millsaps did not have spray paint on her hands and she passed a polygraph test. The Stuttes had said they had had problems with Janice Millsaps the entire time they had lived in the home, but in a police report for a stolen vehicle, Laura Stutte stated she had not had prior problems or was not having any problems with anyone in the area. The Stuttes changed their address at the post office and the electric company in August before the fire. Additionally, the Stuttes testified that they had no house alarm, but a sheriff's department report showed that the police had responded to an alarm going off at the home. [Jennings later admitted on cross examination that the police report was not for the Stuttes's address.]
Standard of Review