In 2021, courts across Tennessee issued a handful of decisions that continue to define the nuances of the Tennessee Court of Appeals’ opinion in Merrimack v. Batts that is now twenty years old. Suffice it to say the landscape is quickly changing and I’m excited to share the new developments. The next few posts will explore these decisions and their importance on insurance appraisals in Tennessee. First up is Ingram v. State Farm Fire & Cas. Co., a case pending in the Eastern District of Tennessee at Chattanooga.

In Ingram, my firm represents Mr. Ingram, whose home was damage in the April 2020 storms that impacted Hamilton County. After he made a claim with State Farm, a disagreement arose between he and State Farm concerning the amount of loss so he invoked his insurance policy’s appraisal clause. As has become rather commonplace over the last few years, State Farm refused to allow the appraisal process to proceed. Instead, State Farm sent a letter to Mr. Ingram declining to move forward with appraisal, stating as follows:

“After reviewing the estimate provided to us on December 1, 2020, and comparing it to the State Farm estimate, we determined there are both price and scope differences present between the two estimates. The appraisal provision in the policy is to resolve differences in the price of the repairs which State Farm determined were covered. Appraisal cannot be used to resolve disputes regarding covered damages. Therefore, appraisal would not be appropriate [as the appraisal panel has] no authority to decide questions of coverage.”

In response to State Farm’s refusal to appraise the amount of loss, Mr. Ingram filed suit asserting breach of contract and quickly filed a Motion to Compel Appraisal. State Farm of course opposed the motion and on December 14, 2021, the Court issued its ruling and ordered the appraisal process to proceed. In issuing his opinion, Judge McDonough made several key common-sense points that run contrary to many insurance companies’ routine handling of appraisal demands.

First, the Court rejected State Farm’s contention that the dispute was about “coverage” rather than amount of loss. Instead, the Court noted that because the parties agreed that there was coverage for Mr. Ingram’s loss as a general matter (State Farm had previously estimated and issued a partial payment for the storm damage), the real question was the extent and amount of the loss. Judge McDonough ruled:

“Ingram contends that that there is additional loss that is eligible for coverage, while State Farm contends that this is an issue of scope of coverage. However, this dispute must necessarily be treated as one regarding the total amount of loss, rather than coverage, as State Farm has already conceded that at least some storm damage is covered. . . . To decide otherwise in this instance would allow insurance [companies] to avoid appraisal by claiming there is a coverage issue, even when the dispute concerns additional amounts of loss. Consequently, the Court determines that this dispute falls within the appraisal provision’s ambit.”

Second, the Court was not unmindful that State Farm itself wrote the insurance policy’s appraisal clause, which is mandatory if there is a dispute about the amount of loss and appraisal is properly invoked.

Lastly, the Court cautioned the appraisal panel to be sure its appraisal of the loss is detailed and itemized so that State Farm can challenge any portions of the award that it may later determine are not covered by the terms of its insurance policies.

This case was a big win not only for Mr. Ingram but also for policyholders across Tennessee.  For years, State Farm and other insurers have tried to make a distinction between “scope of loss” and “amount of loss,” a distinction that doesn’t exist in reality. The Ingram opinion, and a few others I’ll discuss in future posts, make clear that no such distinction exists.

A copy of the case can be found here.  Congrats to Jonathan Bobbitt at McWherter Scott & Bobbitt, PLC, who is leading the litigation on this case.

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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