Undue Influence Not Proven in Will Contest

End of life planning is very important, especially if some of those plans involve selectively making gifts to some relatives and not others. Such estate plans often result in will contests or challenges by adversely affected heirs. The recent case of In re Estate of Link, highlights such a result.

Ms. Link was a widow, and had no children. Ms. Link had several siblings, but she was especially close to her younger sister and that sister’s children. In 1989, Ms. Link asked, Mr. Layne, the nephew of her older sister for help drawing up a will as he was an attorney. Layne, said no, but referred his aunt to another attorney who drafted her will. The 1989 will split the estate equally among the four nieces and nephews of her younger sister and Layne.

Time passed, and Ms. Link began relying more and more upon Layne for advice and assistance. In 1996, Ms. Link asked Layne to draw up a general power of attorney granting him authority over Ms. Link’s financial affairs. Again, Layne said no, but referred his aunt to the same attorney to draft it. In 1998, Ms. Link asked Layne to draw up a new will for her, which would give all of her estate to Layne as opposed to splitting it up five ways. Layne again said no, and referred his aunt to the same attorney who drew up the new will as she wanted.

Over the next several years, Ms. Link’s health deteriorated and she relied more and more upon Layne, who used the power of attorney and Ms. Link’s finances to see that his aunt was taken care of properly. Eventually Ms. Link passed away and Layne presented her 1998 will to the probate court. Not surprisingly, the disinherited nieces and nephews challenged the will on several grounds. One such challenge was that Layne unduly influenced his aunt to change her 1989 will and replace it with the 1998 will, which gave everything to Layne.

After several years of litigation, the parties tried the case and the jury concluded that Ms. Link was competent when she drafted the 1998 will and that there was insufficient evidence to suggest that Layne unduly influenced his aunt’s will. In effect, the 1998 will stood and Ms. Link’s estate passed entirely to Layne, which was her apparent wish.

Decisions regarding how one’s estate are to be divided up at death are often difficult to make and presumably, Ms. Link gave great consideration to how she wanted her assets to pass upon her death. If an estate plan treats some people in the same class differently than others (e.g. some nieces as opposed to all nieces), then it is important to communicate the reasons behind this to the drafting attorney so that he or she can fully document the decision as well as give consideration to whether additional steps may be appropriate. Likewise, if someone comes along who may have motives not consistent with the best wishes of an elderly person, but then gains all the assets in a will to the exclusion of other similarly situated people, speaking with an attorney who is familiar with estate litigation is a good idea. As, unfortunately, for every good intentioned Layne out there, there are others who have ulterior motives. 

Waivers on Behalf of Children in Tennessee are Ineffective

As parents, when we take our children to the roller rink or jump park, we are often asked to sign a waiver in exchange for their participation. In many states, such a waiver may be enforceable. In Tennessee, however, the recent case of Blackwell v. Sky High Sports Nashville Operations, LLC, reinforced Tennessee’s prohibition against enforcing waivers for minors.

In Blackwell, Jacob Blackwell’s mother took him to a trampoline jump park in Nashville when Jacob was a minor. In order to permit Jacob to jump, Jacob’s mother signed a participation waiver, which attempted to do several things: 1) require any lawsuits to be solely brought in California, 2) waive any claims Jacob may have regarding future injuries, and 3) waive any claims Jacob’s parents may have.

Jacob jumped, he got hurt, and his parents sued in Nashville, Tennessee. In response to the lawsuit, the jump park moved to dismiss and/or transfer the suit to California. The Tennessee Court, however, disagreed. After a lengthy analysis of Tennessee’s law regarding waivers and comparisons to other States, the Court ultimately concluded that the lawsuit would remain in Tennessee and that Jacob’s waiver was ineffective. Thus, Jacob had a right to sue for his injuries. The Court held, “the law in Tennessee states that parents may not bind their minor children to pre-injury waivers of liability, releases, or indemnity agreements[.]”

In reaching this conclusion, the Court looked at Tennessee’s public policy regarding protecting the rights of minors and the fact that the Tennessee legislature has never taken steps, like some other states, to permit such waivers. The Court also reasoned that the public policy argument that youth recreational activities would disappear was not persuasive as Tennessee and other states in line with Tennessee have thriving recreation industries. In other words, the Court didn’t see any reason to change the status quo.

Statutory Immunity for AED Use

Tragedies happen too often. And, when tragedies do occur, it’s difficult not to place blame. Placing blame, however, does not always mean that someone is legally liable for the tragedy.

In the recent case of Sandra Wallis v. Brainerd Baptist Church, et al., a tragedy occurred. During a cycling class, the Plaintiff’s husband collapsed and ultimately died. The instructor and other responders immediately gave first aid. It appears that since a slight pulse was found, the responders chose not to use the onsite AED (defibrillator). The Plaintiff-Widow sued the church arguing that it was liable primarily because the AED was not used. The church denied liability and filed a claim against the company that sold it the AED, provided training, and agreed to maintain the church’s physician oversight program.

The very lengthy Tennessee Supreme Court decision addressed numerous legal and factual issues, which won’t all be discussed in this post. However, relevant to this post is the Court’s discussion about the legislature’s decision to adopt laws intend to increase the availability of AEDs. See Tenn. Code Ann. §§ 68-140-401. Although encouraging the use of AEDs, the laws, however, do not mandate their use if a business chooses to have one onsite. But, if a business chooses to have an AED, the business must satisfy Tenn. Code Ann. §§ 68-140-408 and the TN Dept. of Health requirements. These laws generally require certain training, maintenance, registration and program development before an AED may actually be used.

Of note to the Wallis case, is the law which generally statesthat if a business acquires an AED and complies with the law, the business “receives statutory immunity from civil liability for negligent acts or omissions arising from use of an AED, although this immunity does not extend to willful or wanton misconduct or gross negligence.” Wallis at p. 17.

In other words, the business having an onsite AED, which follows the training/registration laws, shouldn’t be liable for a tragic situation such as the one the Plaintiff went through.

Although, the Court didn’t dismiss the entire case due to the current way in which it was on appeal, it seems clear that businesses which choose to have, maintain, and properly use AEDs in emergency situations should not be liable under most tragic situations. As with any application of the law to a specific set of facts, businesses wishing to explore whether they are in compliance with the law should do so in conjunction with legal counsel.

Damages Cap and the Chattanooga Bus Crash

Recently, Chattanooga saw another tragedy when a school bus driver lost control and crashed, killing six children and injuring even more. Though news reports continue to evolve, at present it appears that numerous complaints were written by students and educators alike noting the reckless driving patterns of the 24 year old driver. Lawsuits will, and should, follow. Parents lost children and families have been torn apart.

From a litigation standpoint, those affected by the bus crash will likely file suit against the County school system, the private bus contracting company, and the driver. The allocation of fault among the parties won't be known until a jury finally decides, although many people have opinions.

Setting fault aside, however, damages are equally interesting. In 2011, the Tennessee legislature passed and the Governor signed, TCA § 29-39-102, which limits damages in civil lawsuits. This law caps non-economic damages in most instances at $750,000. Non-economic damages include things such as pain and suffering, disfigurement or scarring, the loss of enjoyment of life, etc. All of which likely affect the children on the bus and their families. As a parent, I wonder to myself, “if my daughters had been on that bus, would $750,000 fully compensate them for their pain and suffering, disfigurement, scarring and the loss of enjoyment of life?”

Another interesting issue which may arise, is whether the County or the private bus company performing the County's duties, can argue additional defenses such as those created under Tennessee's Governmental Tort Liability Act. Again, like the apportionment of fault, these issues won't be known until well into the forthcoming litigation. Ultimately, however, the impacted children and families will never be the same regardless of the amount of monetary damages they receive. 

Failing to Effectively Prove Lost Profits at Trial

We recently examined the case of Aqua-Chem, Inc. v. D&H Machine Service, Inc. regarding the importance of written terms and conditions in contracts. This same case also illustrates the need to properly prove lost profit damages at trial.

As a reminder, Aqua-Chem owned large coolers that were to be installed on U.S. Navy destroyers. Aqua-Chem hired D&H to modify the coolers to fit the ships. However, D&H damaged the coolers.  Aqua-Chem spent approximately $191,000 to replace the coolers, which the trial court awarded as damages. The court, however, refused to award Aqua-Chem lost profits.

Lost profits following a breach of contract can be extensive. In this case, Aqua-Chem consumed an additional 730 labor hours rebuilding the damaged coolers. Those labor hours could have gone to other projects and other customers, thus giving Aqua-Chem additional profit. At trial, an Aqua-Chem executive testified that its profit margin on each hour of labor was $25.96. Aqua-Chem argued that it was entitled to an additional lost profit award of $18,951.

The court, however, disagreed, finding that Aqua-Chem didn't prove its lost profit damages with "reasonable certainty". The court found that Aqua-Chem's testifying witness was unable to establish how its CFO came up with the calculation. As such, Aqua-Chem didn't meet its burden of presenting evidence that "provid[ed] a satisfactory basis for estimating what [its] probable earnings and expenses would have been had the wrongdoing not occurred."

 Presentation of evidence at trial is crucial. If Aqua-Chem had presented underlying testimony supporting the $25.96/labor hour profit margin, then the court may have awarded the additional $18,951 in damages. However, because the trial presentation lacked the supporting data, Aqua-Chem wasn't made whole.

Lawsuit Amendments must be Timely

Car accidents can be traumatic and result in significant injuries and high medical bills. Sometimes, the at fault driver is underinsured and may not be collectible beyond  insurance limits. In such cases, injured parties must ensure that they seek damages from all at fault parties. Two keys to such an approach, are timely pleading the appropriate theories of liability against such additional parties, and also making sure that the facts support the claims.

In the case of Bowman v. Benouttas, et al., Ms. Bowman's car was struck by a tractor-trailer driven by an independent owner operator, Mr. Benouttas. Benouttas was hauling a load as an independent contractor for MGR Freight Systems, Inc. MGR, in turn was hauling the load on a contractual basis for AllStates Trucking, Inc., who was first hired by the shipping party.

In other words: Shipper to AllStates to MGR to Benouttas.

Bowman, the injured Plaintiff, sued Benouttas, MGR, and AllStates. When she filed her complaint, Bowman asserted theories of negligence against Benouttas and that MGR/AllStates were also vicariously liable under agency and joint venture theories. Over two years of litigation and discovery followed and towards the end of the written motion for summary judgment stage (i.e. to dismiss unwarranted claims in light of the facts elicited), Bowman sought to amend her complaint adding additional claims against MGR and AllStates including implied partnership, loaned servant doctrine, vicarious liability for an independent contractor, and negligent hiring. The trial court denied this motion finding that it was too late in the case and further, dismissed AllStates from the case based on the theories actually plead by Bowman.

The appellate court decision is quite lengthy and includes an analysis of the dismissed claims. However, for the purpose of this article, the procedural step of denying the motion to amend so late in the case highlights the importance of timely pleading all available claims, and if the facts show that additional claims are warranted, then to promptly seek leave to amend the complaint.

Based on the facts discussed surrounding the relationship of the three parties, it would have been interesting to know how the court would have viewed the untimely offered new claims at the written motion stage. However, since the motion to amend was filed so late in the case, the prejudice to the defendants outweighed Bowman's right to have those claims heard.

High Personal Injury Damages Despite Modest Medical Bills

Injuries can be traumatic, even if they result from relatively low impact events. In the recent case of Glasgow v. K-VA-T Food Stores, Inc., the Plaintiff was a shopper at a Food City grocery store. The Plaintiff was a diabetic who had one prosthetic leg. He used the restroom. While attempting to stand, the Plaintiff became dizzy and started to fall. He grabbed the handrail, but it pulled out of the wall and the Plaintiff fell and struck his head.

Following the fall, the Plaintiff developed uncontrollable migraines accompanied by light sensitivity. At the time of the fall, the Plaintiff was only 42 years old and had been employed in the television and video production field for 14 years, but he was unable to continue working in that field due to the use of the bright lights. He switched careers and was employed at the time of the trial. He incurred $5,310 in medical bills.

The Plaintiff sued claiming personal injuries as a result of the fall, which would not have occurred but for the faulty handrail and Food City's prior knowledge and failure to fix it. At trial, the Plaintiff presented the testimony of his treating family doctor and neurologist who both testified that the fall caused the headaches and that the headaches may continue into the future. Ultimately, the jury found in the Plaintiff's favor and awarded him $350,000. From a technical standpoint, the trial court reduced this amount to $250,000, as that was the maximum amount the Plaintiff had asked for in his complaint.

Food City appealed the amount of the jury's verdict only on the ground that it was excessive. The Plaintiff and, more importantly, the court disagreed. The appellate court noted that the determination of the amount of damages is for the jury to decide and would not be disturbed if material evidence supported the verdict amount. The court found that the testimony of the two doctors, the previously non-existent migraines, and the impact on the Plaintiff's employment could result in the award given by the jury. Thus, the reduced verdict in the amount of $250,000 for the Plaintiff's fall was affirmed. Overall, it appears that the Plaintiff and his counsel presented an effective case to the jury, which resulted in a fairly high damages amount in light of the relatively modest amount of medical bills. This case emphasizes the importance of solid trial preparation, but also highlights that juries can be unpredictable.

Buyer Beware When Purchasing Without a Title

What happens when an innocent buyer spends his hard earned money buying a trailer from a seller without receiving a certificate of title? Well, the buyer runs the risk of being sued by the trailer's lawful owner, losing the trailer, and losing his money. The case of Duffy v. Elam focuses on this.

Duffy owned a trailer that was originally purchased for about $45,000. Duffy had a side business with Smith, who had been using the trailer for several years. Eventually, Duffy demanded that Smith return the trailer, but Smith claimed the trailer was stolen some time ago. Duffy called the police, who promptly located the trailer on the property of a Mr. Elam. Elam testified that Smith sold him the trailer and gave him a bill of sale, but no certificate of title transferring ownership. After making the purchase, Elam then invested about $20,000 in repairs and upgrades to the trailer. When Duffy asked Elam to return the trailer, Elam said no, claiming he was an innocent good faith purchaser. Ultimately, the court agreed with Duffy, finding that the trailer should be returned to him, but that Elam could remove improvements he made from the trailer so long as he didn't damage it.

What about Smith, the man who initially refused to return the trailer to Duffy, then claimed the trailer was stolen, but in fact had sold it to Elam? Nothing in this case. However, the court noted in passing that Smith was in bankruptcy and was under federal investigation.

Individuals and business buy and sell assets regularly. Many assets, such as cars or trailers can be transferred using a certificate of title. In situations involving the buying or selling of assets, it is important to document the transaction and make sure that all evidence of title is properly conveyed.

A Curse Be Upon...Me?

Yesterday, I experienced a first as a trial lawyer. After I won a jury trial on my motion for directed verdict, the pro se litigant's sister placed a curse upon me, prompting me to over-enthusiastically address the indignities of such an offence. Her uttered incantation aside, I find myself reflecting on some lessons learned about the case.

In short, the case was a simple car crash. The Plaintiff claimed a host of physical and mental injuries all attributed to my now deceased driver/client. Unfortunately for the Plaintiff, she burned through two highly competent attorneys and opted to try her luck on her own, proceeding pro se. More unfortunately for the Plaintiff, she neglected to 1) offer any admissible evidence at trial, 2) offer any medical testimony linking up her injuries to the crash, or 3) offer any evidence or testimony regarding her claimed medical bills. So, after we picked a jury, made opening statements, and the Plaintiff testified, I moved for directed verdict (i.e. to dismiss the lawsuit on legal grounds as the Plaintiff failed to prove the essential elements of her claim.) Although the trial ended favorably for me, the Plaintiff will likely file an appeal, and I may be cursed.

What can be learned from all of this?

First, don't upset someone who freely casts curse-filled spells. Second, don't burn through competent counsel – they tend to know how to present a case to a jury. Third, if you do burn through competent counsel, hire another one. Trying a case to a jury requires some attention to detail, such as knowing the rules of evidence. Finally, follow the rules of civil procedure and the local rules so the court doesn't exclude witnesses and evidence on technical grounds.

When an Employee Serves Two Masters

An interesting case arose out of the Middle District of Tennessee, which explored the overlapping claims involving an employer suing some of its former employees for trade secret misappropriation, breach of the duty of good faith and loyalty, and civil conspiracy. In Ram Tool & Supply Company, Inc. v. HD Supply Construction LTD., et al., the court allowed the common law claims of breach of duty of good faith/loyalty and civil conspiracy to survive the former employees' motion for summary judgment, notwithstanding the preemption of factually similar claims by the Tennessee Uniform Trade Secrets Act.

The facts appear quite colorful. Briefly, two businesses (Ram Tool & Supply and White Cap Construction Supply) compete in the construction tools and materials distribution industry. Ram Tool had a sales team in Nashville. White Cap didn't, but planned on opening one. Ram Tool alleged that over a period of about six months, White Cap targeted Ram Tool's Nashville manager, who agreed to move over to White Cap. While still employed with Ram Tool, the Nashville manager heavily recruited other Ram Tool employees; negotiated the hiring of Ram Tool employees for White Cap, while the manager was still on the Ram Tool payroll; and identified himself as the White Cap branch manager on White Cap letterhead while still employed by Ram Tool. To add insult to injury, on his last day of employment with Ram Tool, the Nashville manager received an order at Ram Tool, which he promptly forwarded to his new White Cap team calling it the "first order".

None of the Ram Tool employees were bound by any non-compete agreements or non-solicitation agreements. Rather, the claims against them were brought under common law theories that apply to all employees.

The court did not reach the merits of the dispute or opine on fault as the matter must still be tried to conclusion. Instead, the case dealt with the legal ruling of whether the Tennessee Uniform Trade Secrets Act precluded all of the common law claims, as is often the result. The court said no – the common law claims (i.e. breach of duty of loyalty, etc.) survived as the facts supporting those claims did not involve any alleged trade secret theft. In other words, the former Nashville manager and others, have quite the uphill battle to tread as they attempt to defeat of multiple claims being levied against them.

Situations involving employee dishonesty and switching over to competitors, both with and without non-compete agreements, often result in contentious litigation. And, as shown by this case, require a solid understanding of the interplay of the various overlapping claims.

My Suspended Lawyer Failed to Show Up

What happens when your attorney fails to show up for trial because he's suspended from practicing law? Oh, and the suspended lawyer apparently never bothered to tell you that he wasn't going to be there or that he was suspended? A woman in Lawrence County, Tennessee recently found out – albeit fairly late in the process.

In Tidwell v. Burkes, two sisters sued each other over whether a real property deed was forged or not. Both sisters had legal representation who participated in the case for about 1 ½ years. Sister A's lawyer, however, was suspended from practicing law at some point before trial (we don't know why). The now suspended lawyer never told his client that he was suspended or that trial was set for September.

What does the trial court do on the day of trial? It moves on and makes Sister A try her case with no lawyer!

Sister A testified that her lawyer never told her about the trial and that she didn't learn about the suspension until that same morning. She pleaded with the court that she wasn't prepared. The trial court didn't seem concerned with this, finding that because her now suspended lawyer had notice, she did too, and that the court would accommodate the out of state witnesses over her.

Obviously, Sister A lost, but she hired new counsel who appealed. The court of appeals reversed the trial court, finding that Sister A should have been granted a continuance to hire a new lawyer and that it was error for the trial court to make her try the case.

It will be interesting to see how the case ends up now that both sides appear to have counsel, who aren't suspended, and who likely will show up for the new trial. What's the takeaway? Hire an attorney who you trust and with whom you can communicate effectively.

Wage Garnishments Gone Wrong

When someone obtains a judgment against another, the person or company with the judgment becomes a judgment creditor, while the party against whom the judgment was rendered becomes a judgment debtor. A judgment creditor has several available options when trying to collect money from the judgment debtor. One such option is a wage garnishment.

Generally, to perform a wage garnishment, the judgment creditor files it with the appropriate court and obtains service of process on the judgment debtor's employer. In other words, proper notice must be given to the employer who is being asked to pay the judgment debtor's wages directly to the judgment creditor. If proper notice is given, and the employer refuses to cooperate, the judgment creditor can seek a judgment directly against the employer. In other words, the employer, who had nothing to do with the underlying lawsuit, could be on the hook for the full amount owed.

The recent case of Cash America International, Inc. v. Geico General Ins. Co. touches upon the potential perils when an employer ignores a wage garnishment, but, equally importantly, reinforces the hard and fast rule that the judgment creditor's failure to properly give notice to the employer voids the proceeding (as if it never occurred). In the Geico case, Geico first set in motion the wage garnishment by hand delivering a copy of the garnishment to an hourly employee at a local branch who had no management authority. This "notice" wasn't sufficient and the subsequent judgment Geico obtained against the employer was deemed void, long after both sides spent a lot of time and money in litigation.

Why is all of this important? First, anytime you receive documents from a court, it is important to share those with your attorney so that a plan to respond can be made. Simply ignoring such papers is not typically a sound approach. Second, companies may consider putting in place basic employee training of what to do if they receive court documents. Had the hourly worker been trained properly, the employer may have been able to avoid much of the hassle it endured. Third, if you are owed money, an attorney can work with you to determine whether or not it makes economic sense to pursue a claim against the debtor. In the case where the debtor is gainfully employed such as in Geico, it may make sense to explore collection avenues. A wage garnishment, done properly, can chip away at the judgment much like an annuity.

Don't Go Pro Se

A recent article in USA Today highlights the perils of trying to handle your own litigation without the benefit of counsel. According to the article, a Massachusetts man sold his used black and white printer on Craigslist for $40 in 2009. Unfortunately, for the seller, the purchaser was a vexatious litigator - someone who frequently uses lawsuits to harass people. The purchaser  sued the seller for all sorts of frivolous claims, starting out first in small claims court. But, over the course of the litigation, the seller missed a deadline in responding to written requests for admissions and eventually ended up with a judgment against him in an amount over $30,000.

The seller's pain continued with the trial court upholding the verdict on a technicality. At some point, the seller finally hired counsel - one who had litigated against the same purchaser before - and took the case to the court of appeals. Eventually, but only recently, the court of appeals reversed the trial court's damages award. 

Handling a case pro se is difficult enough, but when one is up against a vexatious litigator, the task can be even more daunting. Fortunately, the seller in this situation appears to have found solid counsel, albeit late, to help him hopefully bring this matter to a close. One wonders whether the seller's problems could have been avoided had counsel been hired sooner.

The article is found here.

Judge Didn't Have Judicial Immunity for Firing

The Tennessee Supreme Court decided an interesting case earlier this week, when it considered whether a newly elected judge could raise the defense of judicial immunity in an effort to defeat a tortious interference with employment lawsuit filed by a terminated judicial assistant. The Court ultimately said no.
The underlying facts show that the Plaintiff had been a judicial assistant with a former judge in Knox County. However, said judge lost his reelection bid. The newly elected judge told the Plaintiff that she was let go and HR issued her a separation notice shortly thereafter. Well, the Plaintiff sued, creatively arguing that the new judge tortiously (i.e. wrongfully) interfered with her employment with the prior judge.
The Plaintiff argued that the timing of her firing was crucial. Seemingly although the new judge could have fired her after he took office as he was permitted to choose his staff, he actually fired her during the interim period of time between his election victory and the swearing in ceremony. In other words, he wasn't actually a judge when he told HR to let her go. Further, he wasn't even her employer – the prior judge was. In other words, the newly elected judge was merely a third party interfering with the Plaintiff's employment with the prior judge.
This argument was enough for the Tennessee Supreme Court, which found that the timing of the firing was crucial. When the new judge acted, he did so as a private citizen, not in his capacity as a judge (as he wasn't yet one), and not as the Plaintiff's employer. The Court allowed the case to go forward. As time passes it will be interesting to see what damages the Plaintiff suffered (presuming she wins) given that her job seemingly could have been terminated a few days later after the swearing in ceremony took place.
Although this case will likely never impact the average person, it does highlight a few key points to remember. First, details, contracts, or laws can never be read too carefully when making crucial decisions. And second, if you are facing a problematic situation, engaging competent and creative counsel is important.

Hypothetical Analysis of the Erin Andrews Verdict

Recently, the topic of the Erin Andrews Nashville lawsuit against Michael David Barrett, West End Hotel Partners and Capital Group (hotel owner and operator franchisees), and Marriott International has been in the news. On March 7, 2016, a jury found that Mr. Barrett was 51% liable to Ms. Andrews and that West End Hotel Partners/Capital Group were 49% liable to Ms. Andrews for Mr. Barrett's actions in surreptitiously filming Ms. Andrews nude in her hotel room. The jury awarded $55M as the total amount of damages. Earlier in the year, the Judge dismissed Marriott International, finding that the franchisee, not the franchisor, was responsible for security at the hotel.
This case is interesting on several levels. However, for brevity, we'll look at the damages here. First, how does Tennessee's adoption of comparative fault affect the numbers? Presuming the verdict stands as it is now (uncertain as an appeal is likely), then Ms. Andrews can recover 49% of the total award from the hotel franchisees and 51% of the total award from Mr. Barrett. But, let's make a few reasonable assumptions. First, Ms. Andrews likely owes her attorneys anywhere from 33% to 50% of the total award, which comes off the top. So, using the lower percentage, about $18 Million is allocated to the attorneys, leaving about $37M. Second, Mr. Barrett is in prison and is likely broke. Thus, the approximate $28M he owed, will be uncollectible. What about the franchisees? They still owe about $27 Million and likely are collectible. But, remember, the attorneys get paid first ($18M), which leaves about $11M for Ms. Andrews.
Second, where does the franchisees' money come from? Insurance? Bank accounts? Assets? There is likely insurance, but, let's assume that the policy is a general commercial liability policy capped at $10M (this would be a large policy as many businesses carry lower amounts). Let's also assume that the carrier doesn't raise any policy defenses to payment. So, the carrier pays $10M and the franchisees need to scrape up the remaining $17M. Presuming this amount isn't sitting in their bank accounts, the franchisees will need to find other ways to pay this debt or Ms. Andrews's legal team may begin aggressive collection efforts.
Third, what about an appeal? If the franchisees appeal, Ms. Andrews's legal team presumably will insist upon the franchisees obtaining an appeal bond securing their portion of the judgment. Anyone want to underwrite that $27M bond?
All of this is important, but usually omitted from the headlines. But, in reality, getting paid on your judgment is the part that is most near and dear to the client's heart. Working with competent counsel enables one to understand the nuances of this process and to be fully informed about making crucial decisions.

Property Damage Appraisal Methods in Insurance Contracts

Insurance policies are often an overlooked part of our day-to-day lives. However, when a claim must be made, those overlooked (or never read) provisions may limit your recovery. After over four years of arguing and litigation, two homeowners may have learned this lesson.

In the case of Thomas v. The Standard Fire Ins. Co., et al., a home in Chattanooga suffered extensive storm damage in April 2011. Over 130 trees on the property were damaged along with the house. The homeowners turned in a claim and quickly reached an agreement on the value of the tree damage. However, the insurance company and the homeowners had differing opinions on the cost to repair the home. The difference in estimates is unknown; however, the court noted that a neutral umpire found the damage to be approximately $133,000. The homeowners were unhappy and sued.

At issue in the lawsuit was the appraisal process contractually agreed to by the homeowners and the insurance company. In short, the appraisal process stated that if the parties can't agree on the repair estimate, then each party will pick an independent appraiser, and, if those two can't agree, they will then select a "competent, impartial umpire" to determine the cost of the repairs. This was the process that the parties agreed to, and did, follow, yet the homeowners were unhappy with the resulting number.

Both the trial court and court of appeals found in favor of the insurance company. The courts concluded that the appraisal process was not an arbitration clause subject to the Uniform Arbitration Act. Further, the courts found that the homeowners did not take issue with the appraisal clause or practically any part of the process taken under the clause. Rather, they just wanted more money. The courts found that this was not a sufficient reason to vacate the umpire's finding, and further that the valuation should stand, as the umpire clearly acted within the scope of authority granted to him under the appraisal clause. In other words, the homeowners were stuck.

Although insurance policies are often non-negotiable, there are a multitude of carriers which may offer differing policy terms and valuation methods. Understanding what such policies say upfront can be helpful in knowing what you are or are not entitled to as an insured. Further, understanding the policy is crucial in determining the appropriate path to resolve disputes should they arise.    

Sirens, Flashers and Car Crashes

I had the privilege of trying a case with a skilled and hard-working local trial attorney, Flossie Weil, in late 2014. The Court of Appeals recently affirmed the favorable verdict.

The case of Jones, et al. v. Bradley County involved personal injury claims resulting from a motor vehicle crash between a responding emergency vehicle and another motorist, Ms. Jones. The emergency vehicle approached an intersection on a red light. The emergency responder testified that had his flashers and sirens on as he approached the red light. He further testified that he "eased into [the other driver's] lane of traffic" without being able to determine whether or not the lane was clear. It turned out that the lane wasn't clear and he struck Ms. Jones’s vehicle, resulting in serious injuries to Ms. Jones.
Since the emergency responder was working at the time of the accident for the County, the suit was filed as a permissible claim under Tennessee's version of the Governmental Tort Liability Act. The case was tried over four days and resulted in a verdict in favor of Ms. Jones. The trial court, determined that the emergency responder was 60% at fault in causing the accident, notwithstanding his use of flashers and sirens. The court of appeals agreed and affirmed the judgment award in favor of Ms. Jones.
This case is illustrative for a few reasons. First, the mere use of flashers and sirens by an emergency vehicle does not remove the need for that driver to still use reasonable care. In this case, the driver's failure to clear all the lanes of travel before entering the intersection was one shortcoming. Second, the Government Tort Liability Act does not exist to prevent a person injured by an emergency vehicle, as here, to be left without recourse. Rather, these laws try to strike a balance between public and private interests. In Ms. Jones' case, her interests were protected as shown by the resulting favorable verdict. Third, establishing a theme is a crucial component to any trial. In this case, the theme of "he took a chance" carried through at trial and into the court of appeals, which cited to the emergency responder's admission that he did, in fact, “take a chance,” as the court went on to ultimately uphold Ms. Jones’ verdict.

Personally Guaranteeing Company Debt

One of the benefits of forming a company instead of operating as a sole proprietorship, is to try and limit personal liability for company debts. Generally, an owner of a company is not liable for the company's obligations so long as the company and its owner act as distinct and separate entities. However, in practice, personal liability cannot always be guarded against, especially when the company's owner signs a personal guaranty.
In the recent case of Cardinal Health 108, Inc., et al. v. East Tenn. Hematology-Oncology Associates, P.C., et al., a physician medical practice entered into a credit application with a specialty pharmaceutical supplier for various medications. As part of the application, the three physician-owners of the medical practice company each signed a personal guaranty for all supplies purchased. The medical practice racked up over $1.2 Million in unpaid orders and the supplier demanded payment. Ultimately, the supplier filed a lawsuit and obtained a judgment against the practice as well as the individual practice owner physicians. The Court of Appeals affirmed the judgment.
Personal guarantees may appear inescapable as many business owners find that suppliers or lenders require such documents. However, in negotiating for any business transaction which seemingly requires such a guaranty, it never hurts to try to negotiate the guaranty out of the transaction, a limitation on the amount guaranteed, or simply negotiate with other suppliers who may not require such agreements. If a guaranty is in place, however, and a dispute arises between the company and the supplier, care must be taken in the approach to resolving that dispute, or more than just the company's assets will be at stake. Legal counsel can be helpful with both the negotiations as well as if a dispute arises.

Family Business Woes

Family businesses are everywhere. They often start with an idea, a part-time job, and a transition to full-time work. Running a business involves understanding a myriad of employment laws, tax issues, and filing requirements, all on top of simply trying to make a profit. More often than should occur, family run businesses fall short in one crucial area – transitioning from current to successive owners while instilling that founder mindset in second or third generations. The recent case of Carlene Guye Judd v. Carlton Guye, et al. highlights these issues.
In short, the parents started a business in 1961. They had two children. In 1995, the parents incorporated the business. One year later, the parents and both children entered into a series of agreements, whereby all shares in the company were sold equally to the two children, with the company making the required payments.
In 2013, Carlene Judd, the daughter/sister, became concerned that Carlton Guye, the son/brother, was misusing company funds for his own personal benefit. Ms. Judd sued her brother to recover the misused funds and to judicially dissolve the company. These issues went to trial and Ms. Judd won. The court ordered the company dissolved and found that Mr. Guye misused company funds. The parents appealed, but neglected to have the order stayed (halted) during the pending appeal. By the time oral argument took place, the company's assets were fully liquidated.
The court of appeals never weighed in on the merits of the case because it found that the parents' failure to seek a stay made moot the entire appeal. Compounding the founding parents' problems, the court of appeals additionally found the appeal frivolous and awarded Ms. Judd her attorneys' fees in defending against the appeal.
Without weighing in on whether the case was lost due to procedural or substantive reasons, it can't be overlooked that the family business, which existed for four decades, is now shut down completely. Readers are left to ponder whether the involvement of trusted legal and financial counsel earlier in the company's history may have helped to safeguard against the problems of greed which apparently afflicted one of the second generation owners. Unfortunately, absent such safeguards, litigating this type of dispute can be costly and involves an understanding of both corporate and trial law. In the end, it is unclear if this case saw any real winners.

Whether a Funeral Home Consumer Expects to Arbitrate

After a rather lengthy, albeit unintentional hiatus, we are back and looking at a topic previously explored but apparently recurring: whether arbitration clauses in certain consumer contracts are enforceable.

In the recent case of Akilah Wofford, et al. v. Edwards & Sons Funeral Home, Inc., et al., the Court of Appeals said no. The case turned on the discussions had and paperwork signed over a two day period following the death of Ms. Wofford's father. Three days after her father died, Ms. Wofford began making the funeral arrangements with Edwards & Sons Funeral Home which included embalming, ordering a casket, and the general cost of the funeral home's services. Ms. Wofford signed a document titled "Statement of Funeral Goods and Services" that day too. The following day, Ms. Wofford was asked to return and complete the final paperwork, which she did. Unlike the first day's documents, however, the final paperwork included a clear, all capital letters, and bold notice of an arbitration clause directly above Ms. Wofford's signature line. However, the notice referenced a "part 3" containing the actual arbitration clause, which was never given to Ms. Wofford. 

Eventually a dispute arose, Ms. Wofford sued, and Edwards & Sons moved to compel arbitration. Sadly, the dispute dealt with Ms. Wofford's class action claims involving the alleged improper handling of human remains at the cemetery. The Court of Appeals noted that although arbitration clauses are enforceable and favored in Tennessee, parties "cannot be forced to arbitrate claims that they did not agree to arbitrate." On the record before it, the Court concluded that Ms. Wofford didn't agree to arbitrate her claims and thus, the clause was unenforceable. The Court found that the signed notice referencing the actual arbitration clause in part 3 without giving part 3 to Ms. Wofford was not enough. The Court went even further, however, and found that the particular contract was a contract of adhesion (i.e. Ms. Wofford had no realistic chance to negotiate its terms differently in light of the multiple day signing period) and that the arbitration clause was unconscionable.

Several important items can be learned from this case including not just what the contract says, but how it's presented and under what time period. Also, clients in emotionally taxing situations such as funeral home service providers, should be especially mindful of these issues.