United States District Court, W.D. Tennessee, Western Division
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY
McCALLA UNITED STATES DISTRICT COURT JUDGE.
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.)
reasons stated below, the Court GRANTS Defendant's Motion
for Summary Judgment.
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.)
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.)
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,
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.)
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.)
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
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).
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
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.
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
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).