Earlier this week, the Tennessee Court of Appeals issued a 24 page opinion addressing a variety of issues affecting insureds in the State of Tennessee. The case is Adams v. Tennessee Farmers Mutual Insurance Company, a copy of which is available here. My partner, Clint Scott, and I represented the insured in this case, which was tried way back in December 2008 before Judge Roy Morgan in Chester County. The case was defended by Charlie Trotter, a very talented and experienced defense lawyer who certainly keeps us on our toes. The Court of Appeals opinion is worthy of several blog posts, but I’ll try to summarize the major points here.

First, the Court of Appeals made it crystal clear that legal title is not required in order to have an insurable interest in real property.   Tennessee Farmers argued that an insured’s transfer of legal title to a family member mandated a finding that there was no insurable interest. The Court of Appeals disagreed, finding that any interest in property, even the mere right to use property, is enough for a finding that there is an insurable interest. All that is required is that the insured benefit from the property’s continued existence or suffer a loss as a result of its destruction.

Second, the Court of Appeals rejected the proposition that an insured has a duty to notify an insurer of a change in ownership of the insured property when the change in ownership occurs after the policy is issued. This contention actually raised an even broader issue of first impression in Tennessee, i.e., whether an insured has a duty to supplement the disclosures made on an application for insurance after a policy has been issued. After surveying several jurisdictions across the country, the Court of Appeals concluded that there is no such duty, reasoning “the burden is more appropriately placed on the insurer to specify when the insured will be required to notify it of changes in circumstances after the policy is delivered.” Because the policy at issue in this case had no such provision, there was no duty to disclose the change in legal ownership subsequent to the issuance of the policy.

Finally, the Adams case also addressed the issue of whether an insured is entitled to the full policy proceeds when he or she was occupying the property but lacked legal title. In considering this issue, the Court of Appeals again referenced decisions from our sister states and adopted the reasoning of the Oklahoma Supreme Court in concluding that “the insurable interest requirement should not be extended beyond the reasons for its existence by an overly technical construction that frustrates the legitimate expectations of the insured or that permits an insurer to avoid the very risk it intended to insure.” 

The Adams case is an important case for first party insurance practitioners on both sides of the bar, and all such lawyers would be wise to read it closely.   

 

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Photo of Brandon McWherter Brandon McWherter

J. Brandon McWherter is a Nashville-based lawyer and member of McWherter Scott & Bobbitt PLC, which has offices across the State of Tennessee and elsewhere across the Southeast.  Licensed in Tennessee, Arkansas, and Mississippi, he has dedicated his practice to assisting insurance…

J. Brandon McWherter is a Nashville-based lawyer and member of McWherter Scott & Bobbitt PLC, which has offices across the State of Tennessee and elsewhere across the Southeast.  Licensed in Tennessee, Arkansas, and Mississippi, he has dedicated his practice to assisting insurance policyholders with their claims against insurance companies, including claims for bad faith.

For well over a decade, McWherter’s practice has been focused almost exclusively on the prosecution of first party property insurance claims for policyholders.  His interest in this area of the law first started around 2003 when a tornado struck Jackson, Tennessee, where he lived and worked at the time.  Since then, McWherter has represented hundreds or thousands of policyholders whose claims have been underpaid or denied.  He advises and advocates for owners of commercial properties, industrial facilities, residential properties, churches, business owners, and other insurance policyholders.

Since he started counting in 2013, McWherter has assisted his clients in obtaining well in excess of One Hundred Million Dollars ($100,000,000) in settlements, awards, and jury verdicts against insurance companies.

In 2018, McWherter was inducted as a fellow in the American College of Coverage Counsel, which is an invitation-only organization designed to facilitate and encourage the association of lawyers who are distinguished for their skill, experience, and high standards of professional and ethical conduct in the practice or teaching of insurance coverage and extra-contractual law and who are dedicated to excellence in this area of practice.

McWherter has been featured as a “Super Lawyer” or “Rising Star” by SuperLawyers every year since 2010.  Since 2013, he has been selected each year  for inclusion in U.S News and World Reports’ The Best Lawyers in America in the field of Insurance Law.  He also enjoys an AV Preeminent ranking by Martindale-Hubbell for legal ability and ethical standards.

Mr. McWherter is a lifelong Tennesseean and received his law degree from the University of Memphis. While in law school, he was a member of the University of Memphis Law Review, and served on the Editorial Board as Notes Editor.

In advocating for clients, McWherter has trudged through fire scenes and crawled storm-damaged roofs, quizzed consulting construction experts and experts for hours on end, and deposed and cross-examined hundreds of adjusters, experts, consultants, and other professionals within the insurance industry.  He reads insurance policies nearly every day and has a working knowledge of the customs and practices of insurance companies in investigation, estimating, and payment of claims.  McWherter counsels clients on presentation of claims, assists in compiling the evidence necessary to validate the amounts owed, and then enforces his clients’ rights, if necessary, via the judicial system and other alternative dispute resolution options, such as appraisal.

Several of McWherter’s cases have developed the law governing insurance disputes in the State of Tennessee, most recently including the Tennessee Supreme Court’s 2019 decision in Lammert et al. v. Auto-Owners Ins. Co., which held that insurers may not depreciate the costs of labor in determining their actual cash value payment obligations when the policy does not clearly allow it.

When not working, you will usually find Mr. McWherter with his wife, Angela, and his two daughters. He is an avid golfer and a lifelong bass fisherman, neither of which he does as often as he would like.

Practice Areas

  • Representation of policyholders in claims and litigation against insurance companies
  • Bad faith insurance litigation
  • Insurance-based consumer class actions

Professional Associations

  • Tennessee Bar Association
  • Arkansas Bar Association
  • Mississippi Bar Association
  • Tennessee Trial Lawyers Association
  • American Trial Lawyers Association (past member)
  • American Bar Association (past member)

Education

  • B.S.B.A. – Union University (1998)
  • J.D. – University of Memphis (2001)

Bar Admissions

  • Tennessee
  • Mississippi
  • Arkansas
  • Fifth Circuit Court of Appeals
  • Sixth Circuit Court of Appeals
  • United States District Court for the Western District of Tennessee
  • United States District Court for the Middle District of Tennessee
  • United States District Court for the Eastern District of Tennessee
  • United States District Court for the Northern District of Mississippi
  • United States District Court for the Southern District of Mississippi
  • United States District Court for the Eastern District of Arkansas