A Venue Quiz
The facts: Plaintiff Doe presently lives in Carroll County, and his fire damaged home was also in Carroll County. Defendant Insurance Company has a claims office in Madison County. Defendant Agent resides in Carroll County, has his principal place of business in Carroll County, but also has a satellite office in Madison County. Plaintiff Doe brought suit against the Defendants for negligence, breach of contract, and violations of the Tennessee Consumer Protection Act in Madison County.
The question: Is venue appropriate in Madison County in light of the general venue rule that suit must be filed in the common county of residence?
The answer: Suit must be brought in Carroll County, right? Wrong. According to a very recent ruling by Chancellor Jimmy Butler (and the Tennessee Code), venue is appropriate in Madison County. Although the general rule is that suit must be brought in the common county of residence, the Tennessee Consumer Protection Act has a special venue statute (T.C.A. 47-18-109) that trumps the general venue rules. Under the TCPA's special venue provision, suit can be brought in the county where the defendant resides, where he has his principal place of business, or the county in which he transacts or has transacted business. Under these facts, because the agent has a satellite office in Madison County, Madison County is a proper venue even though the plaintiff and the agent both live in Carroll County, the alleged negligence occurred in Carroll County, and the the insured home was in Carroll County.
The TCPA's special venue statute can be an effective weapon in the right case, and practitioners should be aware of the options for venue that it might afford. The right judge, or the right jury pool, can obviously make a huge difference in some cases.
Full disclosure - The above facts outline the facts of a real case I am handling. To their credit, the defendant agent and his attorney, disagree with the Chancellor Butler's decision and may seek an interlocutory appeal. Although I don't anticipate that the result will change in light of the plain language of the TCPA, I'll be sure to post any contrary rulings.
What Does a Mercedes-Benz Have to Do with Insurance Litigation?
The Tennessee Court of Appeals, Eastern Section, issued a new opinion yesterday interpreting the Tennessee Consumer Protection Act. The case, Timoshchuk v. Long of Chattanooga Mercedes-Benz et al (.pdf), arose from a Mercedes dealer's sale of a "new" Mercedes which turned out to be not so new. A few months after purchasing his shiny new Mercedes, the very distraught and obviously angry new car owner discovered that the paint on the vehicle's trunk appeared discolored in certain lighting conditions. The car owner eventually learned that the car had been damaged during shipment and subsequently repaired by a dealer. Now thoroughly upset, he demanded to return the vehicle, which the dealer refused to accept. As expected, a lawsuit ensued.
The issue in the case, as relevant for our discussion here, was whether the defendants violated the Tennessee Consumer Protection Act's general prohibition "unfair or deceptive acts or practices affecting the conduct of any trade or commerce constitute unlawful acts or practices." T.C.A. 47-18-104. The defendant argued that the TCPA claim was barred because the plaintiff could not prove one of the specifically enumerated acts or practices of TCA 47-18-104(b). The Court of Appeals disagreed with this analysis, noting that such an argument ignores the fact that a specific claim was made under the broader prohibition of T.C.A. 47-18-104(a).
Although the case itself has nothing to do with insurance, it is important because it makes clear that a plaintiff does not have to plead one of the specifically enumerated unfair or deceptive acts or practices of TCA 47-18-104(b). Granted, TCA 47-18-104(b) also has a "catch-all" provision that prohibits "engaging in any other act or practice which is deceptive to the consumer." But this provision of subsection (b) only prohibits "deceptive" conduct, not both "unfair" and "deceptive" conduct. This distinction is important because "unfair" and"deceptive" have been separately defined by Tennessee courts, with the term "deceptive" having a somewhat more limited scope than "unfair."
I've had this issue come up in several cases when defense attorneys argue that a particular claim is barred when relief is sought for an act that fits into the definition of "unfair" but not "deceptive." Although I never considered it to have much merit, such an argument is now officially dead in the water. The Timoshchuk case makes clear that there are really two "catch-all" provisions in the TCPA. One is at TCA 47-18-104(b)(27) (engaging in "any other act or practice which is deceptive"), but the general prohibition in TCA 47-18-104(a) that prohibits both unfair and deceptive acts or practices is a stand-alone "catch-all" provision as well.
The lesson? If you are going to plead violations of the TCPA by pleading violations of specific portions of the statute, then be sure to plead both TCA 47-18-104(a) and (b).
By the way, the unhappy Mercedes owner didn't fare too well. His claims were dismissed (for reasons completely unrelated to the issues discussed above).
The Tennessee Supreme Court's Treatment of Tennessee Consumer Protection Act Claims in the Insurance Setting
I ran across a good article (pdf) this evening by Robins H. Ledyard entitled Treatment of Insurance Claims under Tennessee Consumer Protection Act. Published in the Federation of Regulatory Counsel Journal in the Fall of 2008, the article gives a short synopsis of our Supreme Court's analysis of TCPA claims in the insurance setting. Although not exhaustive, its a good primer for those who don't practice in this area often. The article gives a quick summary of the most often reported Tennessee Supreme Court insurance cases - - Myint v. Allstate, Sparks v. Allstate, and Gaston v. Tennessee Farmers.
Utilizing the Unfair Claims Settlement Practices Act
The Tennessee legislature has listed certain certain practices which constitute unfair acts or practices in the business of insurance. See T.C.A. § 56-8-105. The statute, known as the Unfair Claims Settlement Practices Act, creates standards and rules by which insurance companies must abide when settling claims. For example, the Unfair Claims Settlement Practices Act provides that it is unfair and deceptive to "[fail] to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed." T.C.A. § 56-8-105(7). Similarly, it is an unfair claims practice to "[fail] to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies." T.C.A. § 56-8-105(2).
Although the Unfair Claims Settlement Practices Act does not provide a private cause of action, that doesn't necessarily mean that it is irrelevant to a first party claim. Because the Unfair Claims Settlement Practices Act enumerates certain unfair or deceptive practices, it can be bootstrapped into defining violations of the Tennessee Consumer Protection Act, which obviously does provide a private cause of action. Both Acts prohibit "unfair" or "deceptive" practices, and the Unfair Claims Settlement Practices Act just happens to provide some very good guidance as to what constitutes unfair or deceptive practices by an insurance company.
Although I am aware of no Tennessee case addressing this issue head on, courts from other states have held that while there may not be a cause of action under a state's unfair claims practices act, the terms of such act are properly considered in determining whether an insurer's conduct amounts to bad faith. See, e.g., MacFarland v. United States Fidelity & Guarantee Co., 818 F.Supp. 108 (E.D. Pa. 1993); Wailua Associates v. Aetna Casualty & Surety Co., 27 F.Supp.2d 1211 (D. Hawaii 1998).
So what's the lesson? When drafting a complaint for bad faith and for violations of the Tennessee Consumer Protection Act, mimic the language of the Unfair Claims Settlement Practices Act. Although it does not provide a private cause of action, it is strong evidence of activities that reach the threshold of bad faith or unfair/deceptive actions.
