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Savage v. Shelter Insurance Companies

United States District Court, W.D. Tennessee, Western Division

July 5, 2017




         This action concerns a breach of contract to insure an allegedly stolen vehicle. Before the Court is Defendant Shelter Insurance Companies d/b/a Shelter Mutual Insurance Company d/b/a Shelter Insurance d/b/a Shelter General Insurance Company (“Shelter Insurance”)'s Motion for Summary Judgment, filed May 9, 2017. (ECF No. 23.) Plaintiffs Tony Savage and Beverly Savage responded in opposition on June 6, 2017. (ECF Nos. 26-27.) Defendant filed a reply on June 19, 2017. (ECF No. 28.) The Court ordered the filing of supplemental briefing, and the parties complied. (ECF Nos. 29, 32, 38.)

         For the reasons stated below, the Court GRANTS Defendant's Motion for Summary Judgment.

         I. BACKGROUND

         A. Factual Background

         Plaintiffs, Tennessee residents, bring suit against Defendant Shelter Insurance, a foreign corporation with a principal place of business outside of Tennessee, for damages arising out of a breach of the contract to insure Plaintiffs' 1948 Chevrolet pickup truck. (ECF No. 1-1 ¶¶ 1-2.) While insured by Defendants, Plaintiffs contracted with NSane Hot Rodz (“NSane”) for restoration of the truck. (Id. ¶¶ 3-6.) Plaintiffs became frustrated by their arrangement with NSane and sent a private investigator to NSane to ascertain the truck's status. (See ECF No. 1 ¶ 7-8; see also ECF No. 26 at PageID 199.) Thereafter, Plaintiffs believed “some of the vehicle parts were missing.” (ECF No. 26; see also ECF No. 33 at PageID 303.) After Plaintiff sought to have their parts and truck returned to them, NSane's sent them a demand letter, requiring payment of unpaid labor and storage. (ECF Nos. 27-5, 26-3.) Plaintiffs then reported the truck stolen, believing NSane had sold the truck and its parts without permission. (See ECF No. 1 ¶ 9; ECF No. 33 at PageID 303; ECF No. 27-6.) Plaintiff then sought coverage for theft from Defendant. (ECF No. 1 ¶ 10; ECF No. 27 ¶ 5.) Defendant's adjuster investigated the claim, determined the truck was still in NSane's possession, and refused to cover the claim for theft under Plaintiffs' insurance policy. (ECF No. 1 ¶ 11; ECF No. 27 ¶ 7.) NSane then sold the truck at auction to repay Plaintiffs' debt in 2015. (ECF No. 26 at PageID 206.)

         B. Procedural Background

         On June 9, 2016, Plaintiffs Tony Savage and Beverley Savage filed suit in the Circuit Court for Shelby County, Tennessee. (ECF No. 1-1.) Plaintiffs seek compensatory and punitive damages, bad faith penalties, pre- and post-judgment interest, and a jury trial. (Id.)

         The Complaint alleges two causes of action: breach of contract and bad faith. (See id.) The Complaint alleges three bases for bad faith. First, it cites to Tenn. Code Ann. § 56-8-105, a provision of the Tennessee Unfair Trade Practices and Unfair Claims Settlement Act of 2009. (Id. ¶ 15.) However, Tenn. Code Ann. § 56-8-101(c) vests the exclusive authority to bring a claim under § 56-8-105 with the Commissioner of Commerce and Insurance. Accordingly, this Court lacks authority to adjudicate bad faith on this basis. Second, the Complaint alleges a claim for bad faith based on Tenn. Code Ann. § 56-7-105 for failure to pay. (Id. ¶ 16.) Third, the Complaint seeks “bad faith penalties, including common law bad faith.” (Id. ¶ 19(c).) Because “under Tennessee law . . . no common law cause of action for bad faith between an insured and its insurer exists outside of § 56-7-105, ” Plaintiffs may not seek relief for common law bad faith. 6111 Ridgeway Grp., LLC v. Philadelphia Indem. Ins. Co., No. 15-2561-STA-CGC, 2016 WL 1045570, at *2 (W.D. Tenn. Mar. 15, 2016).

         On July 13, 2016, Defendant removed this action, pursuant to 29 U.S.C. § 1441(a), based on diversity of citizenship. (ECF No. 1.) On July 13, 2016, the Defendant filed an Answer. (ECF No. 3.) The Court held a telephonic scheduling conference on August 15, 2016. (ECF No. 12.)

         On May 9, 2017, the Defendant filed a Motion for Summary Judgment. (ECF Nos. 23, 24.) Defendant also filed a Statement of Undisputed Facts in Support of Motion for Summary Judgment on May 9, 2017. (ECF No. 25.) On June 6, 2017, Plaintiffs responded in opposition. (ECF No. 26.) The same day, Plaintiffs filed a Response to Defendant's Statement of Undisputed Facts. (ECF No. 27.) On June 19, 2017, Defendant filed a reply. (ECF No. 28.)

         On June 20, 2017, the Court filed an Order for Supplemental Briefing on Validity of Lien. (ECF No. 29.) Defendant filed a timely supplemental brief on June 27, 2017. (ECF No. 32.) Plaintiffs then filed a timely supplemental brief on July 4, 207. (ECF No. 38.)


         A. Summary Judgment

         Under Federal Rule of Civil Procedure 56, summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists for trial “if the evidence [presented by the nonmoving party] is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The initial burden rests on the moving party to show that there is no dispute regarding any genuine issue of material fact, and this burden can be met by demonstrating that there is no evidence underlying the nonmoving party's case. Slusher v. Carson, 540 F.3d 449, 453 (6th Cir. 2008). When confronted with a properly-supported motion for summary judgment, the nonmoving party must “set out specific facts showing a genuine issue for trial.” Fed.R.Civ.P. 56(e); see also Abeita v. TransAm. Mailings, Inc., 159 F.3d 246, 250 (6th Cir. 1998). “Once the moving party satisfies its initial burden, the burden shifts to the nonmoving party to set forth specific facts showing a triable issue of material fact.” Mosholder v. Barnhardt, 679 F.3d 443, 448-49 (6th Cir. 2012). In reviewing a motion for summary judgment, the court must view the evidence “in the light most favorable to the nonmoving party, and draw all reasonable inferences in that party's favor.” Smith v. Perkins Bd. of Educ., 708 F.3d 821, 825 (6th Cir. 2013) (quoting Slusher, 540 F.3d at 453); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3). “[T]he district court has no ‘duty to search the entire record to establish that it is bereft of a genuine issue of material fact.'” Pharos Capital Partners, L.P. v. Deloitte & Touche, 535 F. App'x 522, 523 (6th Cir. 2013) (per curiam) (quoting Tucker v. Tennessee, 539 F.3d 526, 531 (6th Cir. 2008), abrogation recognized by Anderson v. City of Blue Ash, 798 F.3d 338 (6th Cir. 2015)). “‘[J]udges are not like pigs, hunting for truffles' that might be buried in the record.” Emerson v. Novartis Pharm. Corp., 446 F. App'x 733, 736 (6th Cir. 2011) (alteration in original) (quoting United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991)). In essence, the inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. “[A] mere ‘scintilla' of evidence in support of the non-moving party's position is insufficient to defeat summary judgment; rather, the non-moving party must present evidence upon which a reasonable jury could find in her favor.” Tingle v. Arbors at Hilliard, 692 F.3d 523, 529 (6th Cir. 2012) (quoting Anderson, 477 U.S. at 251).

         B. Contract Interpretation

         An insurance policy is to be interpreted as any other contract. Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 814 (2000). Accordingly, a valid and enforceable choice-of-law provision of an insurance policy dictates the applicable state law. See Banek Inc. v. Yogurt Ventures U.S.A., Inc., 6 F.3d 357, 360 (6th Cir. 1993); GTP Structures I, LLC v. Wisper II, LLC, 2015 WL 9413890 at *3 (W.D. Tenn. Dec. 22, 2015) (quoting Bourland, Heflin, Alvarez, Minor & Matthews, PLC v. Heaton, 393 S.W.3d 671, 674 (Tenn. Ct. App. 2012)). The insurance policy at issue includes a choice-of-law provision that provides for the application of Tennessee law. (ECF No. 25-1 at PageID 125.) Therefore, without evidence suggesting this choice-of-law provision is either invalid or unenforceable, the Court will apply Tennessee law with regard to the interpretation of the insurance policy in the instant case.

         Under Tennessee law, “[t]he question of the extent of insurance coverage is a question of law involving the interpretation of contractual language. . . .” Clark v. Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn. 2012). “Insurance contracts are ‘subject to the same rules of construction as contracts generally, ' and in the absence of fraud or mistake, the contractual terms ‘should be given their plain and ordinary meaning, for the primary rule of contract interpretation is to ascertain and give effect to the intent of the parties.'” Id. (quoting U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., 277 S.W.3d 381, 386-87 (Tenn. 2009)). Tennessee courts also consider the policy as a whole and construe its terms “in a reasonable and logical manner.” Merrimack Mut. Fire Ins. Co. v. Batts, 59 S.W.3d 142, 148 (Tenn. Ct. App. 2001). ...

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