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Lee v. Hamilton County

Court of Appeals of Tennessee, Knoxville

June 28, 2019

CAROL LEE
v.
HAMILTON COUNTY, TENNESSEE

          Session April 17, 2019

          Appeal from the Circuit Court for Hamilton County No. 10C340 Kyle E. Hedrick, Judge

         The plaintiff in this action is a retired employee of the defendant county. She filed a complaint in October 2009, asserting claims of negligence, breach of contract, intentional or negligent misrepresentation, and breach of fiduciary duty related to a county employee's alleged faulty advice and lack of disclosure to her concerning the interplay of her disability benefits policy and her retirement plan. Upon the county's motion, the trial court granted partial summary judgment in favor of the county in July 2016, dismissing the plaintiff's claims of misrepresentation and breach of fiduciary duty. The trial court subsequently denied the county's motion for judgment on the pleadings as to the remaining issues. Following a bench trial in July 2018, the trial court entered a judgment awarding to the plaintiff the amount of $13, 985.52. The county timely appealed. Having determined that the trial court's final order does not sufficiently explain the legal basis upon which the money judgment was awarded, we vacate the judgment and remand to the trial court for entry of findings of fact and conclusions of law explaining the basis of the judgment or, in the alternative, reconsideration of the judgment.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated; Case Remanded.

          Mary Neill Southerland, Chattanooga, Tennessee, for the appellant, Hamilton County, Tennessee.

          Charles P. Dupree, Chattanooga, Tennessee, for the appellee, Carol Lee.

          Thomas R. Frierson, II, J., delivered the opinion of the court, in which Charles D. Susano, Jr., and John W. McClarty, JJ., joined.

          OPINION

          THOMAS R. FRIERSON, II, JUDGE

         I. Factual and Procedural Background

         The plaintiff, Carol Lee, was employed by the defendant, Hamilton County, Tennessee ("the County"), in its juvenile detention center for fourteen years prior to her retirement on September 24, 2008. On October 1, 2009, Ms. Lee filed a complaint against the County in the Hamilton County Chancery Court ("chancery court"), alleging "negligence, intentional or negligent misrepresentation, and breach of contract by misrepresentation" in the County's "selection, [maintenance], servicing, handling, advising and representing" Ms. Lee concerning "the selection and operation of a disability benefits policy and the timing and selection of [Ms. Lee's] retirement benefits" without disclosure to Ms. Lee of "the resulting effects and the damages to her." Ms. Lee also asserted a claim for breach of fiduciary duty.

         Ms. Lee specifically alleged, inter alia, that prior to her retirement, she had not realized that her long-term disability benefits, which she had acquired after attending a presentation sponsored by the County and which she been receiving for several months after the onset of an illness, would be affected by her decision to begin drawing retirement benefits from the Tennessee Consolidated Retirement Services ("TCRS"). Ms. Lee further alleged that she had made the decision to retire based on advice she had received from a County human resources employee, later identified as Brenda Hixson.

         At trial, Ms. Lee testified that she had visited the human resources department when she was contemplating her best recourse because her various forms of leave were running out and she had been informed by her physician that she should not return to work in the juvenile detention center. According to Ms. Lee, once Ms. Hixson ascertained that Ms. Lee had been employed by the County for a sufficient period of time to be vested in its retirement system, Ms. Hixson told Ms. Lee that she thought "the best thing [Ms. Lee] could do was retire." According to Ms. Lee, Ms. Hixson subsequently told her in response to a question that because Ms. Lee had already applied for the long-term disability benefits, those benefits would not be affected by her retirement.

         It is undisputed that approximately two months after Ms. Lee's retirement, she was notified by Mutual of Omaha, her long-term disability insurance provider, that her benefits would be reduced due to her receipt of retirement benefits and that she would be liable for overpayment of disability benefits.[1] According to Ms. Lee's testimony, Mutual of Omaha contacted her repeatedly by mail and telephone, urging her to apply for Social Security benefits, which would then be offset against her long-term disability benefits. In her complaint, Ms. Lee requested a total of $55, 000.00 in damages, comprised of the "lost value of her retirement and/or full value of the disability policy, damages for her stress and harassment, interest, attorney fees and costs of this cause . . . ."

         Upon the County's motion, the chancery court determined that it lacked subject matter jurisdiction, pursuant to Tennessee Code Annotated § 29-20-307 (2012) of the Governmental Tort Liability Act ("GTLA"), which provides for exclusive jurisdiction over GTLA claims in circuit court with the exception of certain counties wherein the circuit court's jurisdiction is concurrent with general sessions court. The chancery court transferred this case to the Hamilton County Circuit Court ("trial court") in an order entered on March 4, 2010. After initially being dismissed twice without prejudice on "procedural steps" orders, the case was eventually restored to the trial court docket by an agreed order entered on March 4, 2014. The County filed an answer in the trial court on July 17, 2014, inter alia, denying all substantive allegations, denying that any of its employees acted as agents for insurance or retirement benefits offered, asserting that Ms. Lee "committed comparative fault by failing to seek advice" from the benefits companies themselves, and asserting immunity under the GTLA. Upon Ms. Lee's subsequent motion to set the case for hearing, the trial court entered four successive agreed orders resetting the trial date.

         The County filed a motion for summary judgment on February 16, 2016, arguing that it was entitled to judgment as a matter of law because (1) Ms. Lee's claims of negligent misrepresentation, intentional misrepresentation, and breach of contract by misrepresentation were precluded by Tennessee Code Annotated § 29-20-205(6) of the GTLA; (2) Ms. Lee's negligence claim was time-barred by operation of Tennessee Code Annotated § 29-20-305(b) (providing a twelve-month statute of limitations for actions commenced under the GTLA); and (3) the County had not acted as Ms. Lee's agent and owed her no fiduciary duty. The County filed with its motion affidavits executed by human resources employees dealing with employee benefits, as well as specific documents pertaining to Ms. Lee's various short and long-term leaves of absence and ultimate retirement. Ms. Lee filed a response objecting to the County's motion, attaching to her response depositions taken of Ms. Lee and Ms. Hixson. The County then filed a reply.[2]

         On July 13, 2016, the trial court, with Judge W. Neil Thomas, III, then presiding, entered a "Memorandum and Order," granting partial summary judgment in favor of the County concerning Ms. Lee's claims of intentional or negligent misrepresentation and breach of fiduciary duty. The dismissal of these claims is not at issue on appeal. However, the trial court denied summary judgment "as to the remaining issues in the case."

         Following various motions filed by the parties to set the case for trial and to continue the case, the County filed a "Motion for Judgment on the Pleadings," pursuant to Tennessee Rule of Civil Procedure 12.03, on May 31, 2018. In this motion, the County stated that the trial court's July 2016 order had indicated that "the two (2) remaining matters are: (a) whether [Ms. Lee] has brought a valid claim for misrepresentation under a contract theory; and, if so, (b) when [Ms. Lee] knew, or should have known, of her alleged damages." The County then argued that "[t]here being no contract between the parties, Hamilton County cannot be held liable under a contract theory of recovery." Ms. Lee filed a response objecting to the motion on the basis that the County was attempting to re-litigate its summary judgment motion. Specifically, Ms. Lee asserted that in the July 2016 order, the trial court had "ruled then on all the [County's] objections and left the remaining issues for trial." Ms. Lee did not specify in her response what the remaining issues were. The County filed a reply, again asserting that the case was appropriate for Rule 12.03 relief.

         Following a hearing, the trial court, with Judge Kyle E. Hedrick now presiding, entered an order on July 13, 2018, denying the County's motion for judgment on the pleadings. The court found in pertinent part:

A Memorandum and Order was filed on July 13, 2016 granting summary judgment as to the claims of misrepresentation and breach of fiduciary duty, but denying the motion with respect to the remaining claims. In short, it appears as if [the County] seeks a rehearing on the denied portions of the motion for summary judgment by filing the Rule 12.03 motion. In fact, during the hearing on the current motion, counsel for [the County] relied primarily upon an admitted fact that was a part of the filing of the motion for summary judgment.
Given that this court has already addressed these same issues in its Memorandum and Order of July 13, 2018, (and denied the same); the motion of the [County] is denied.

         The trial court conducted a bench trial on July 17, 2018, hearing testimony presented by Ms. Lee; Holly Wormsley, who had overseen payroll for the County; Alecia Poe, the Administrator of Human Resources for the County; and Jim Gaines, an insurance broker who testified that he managed insurance accounts owned by County employees but was not a County employee himself. At the close of Ms. Lee's proof, her counsel requested permission to read Ms. Hixson's deposition testimony into the record. The trial court denied this request in the absence of Ms. Hixson's testimony at trial; however, the court did allow Ms. Hixson's deposition to be introduced into the record for identification purposes only.

         At the close of the County's proof, the County moved for a "directed verdict" on the basis that no contract existed between Ms. Lee and the County concerning her long-term disability insurance. On appeal, the County acknowledges that it intended to request involuntary dismissal, pursuant to Tennessee Rule of Civil Procedure 41.01(2), instead of a directed verdict pursuant to Tennessee Rule of Civil Procedure 50. Upon the County's motion, the trial court stated from the bench that the evidence demonstrated no basis to find that a contract existed between the parties and orally ruled in the County's favor on the breach of contract claim. The trial court further found, however, that the claim of negligence survived and ordered that the parties address in their closing arguments "the negligence of the County with respect to the representation that [Ms. Lee] should take her retirement benefits."

         On July 30, 2018, the trial court entered a "Judgment Order," awarding a judgment in the amount of $13, 985.52 to Ms. Lee. In the order, the court incorporated a memorandum opinion, which the court described as its "findings of fact and legal conclusions" that had been announced on the record at the close of trial. The court did not memorialize its oral ruling on the County's motion for involuntary dismissal (or directed verdict) or its ruling on the breach of contract claim in either the judgment order or the memorandum opinion. In its memorandum opinion, the court, inter alia, found Ms. Lee to be "highly credible" and found that the "only evidence" presented as to why Ms. Lee applied for retirement benefits was that "she was told to" by Ms. Hixson. Determining that the reduction in Ms. Lee's income amounted to $582.73 per month for twenty-four months, the court awarded to Ms. Lee a money judgment against the County in the amount of $13, 985.52. The County timely appealed.

         II. Issues Presented

         The County presents two issues on appeal, which we have restated as follows:

1. Whether the trial court erred by awarding damages that were not supported by its findings of fact and by issuing a decision that did not constitute a legal conclusion as required by Tennessee Rule of Civil Procedure 52.01.
2. Whether the trial court erred by denying the County's motion for involuntary dismissal.

         Ms. Lee presents an additional issue, which we have similarly restated as follows:

3. Whether the trial court properly based its judgment in favor of Ms. Lee on the negligence of a County employee in failing to advise Ms. Lee about the effect of retirement benefits on long-term disability benefits.

         III. Standard of Review

         Our review of the trial court's judgment following a non-jury trial is de novo upon the record with a presumption of correctness as to the trial court's findings of fact unless the preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d); Rogers v. Louisville Land Co., 367 S.W.3d 196, 204 (Tenn. 2012). "In order for the evidence to preponderate against the trial court's finding of fact, the evidence must support another finding of fact with greater convincing effect." Wood v. Starko, 197 S.W.3d 255, 257 (Tenn. Ct. App. 2006) (citing Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001)). We review the trial court's conclusions of law de novo with no presumption of correctness. Hughes v. Metro. Gov't of Nashville & Davidson Cty., 340 S.W.3d 352, 360 (Tenn. 2011). The trial court's determinations regarding witness credibility ...


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