Dan Berexa's Tennessee Law Blog

Part 2 - Review of Two Years of Tennessee Tort Reform - Cap on Punitive Damages

Part 2 in this series, reviewing the significant developments in Tennessee tort reform over the last two years, addresses the punitive damages cap enacted as Tenn. Code Ann. § 29-39-104. The statute codifies many aspects of Tennessee Supreme Court’s 1992 decision in Hodges v. S.C. Toof & Co., which limited the availability of punitive damages to instances where the defendant is found, by clear and convincing evidence, to have engaged in intentional, reckless, malicious or fraudulent conduct which caused injury to the plaintiff. 

The cap generally limits punitive damages awards to two times the compensatory damages awarded to the plaintiff, or $500,000, whichever is greater. Like the cap on non-economic damages, there are exceptions were the cap does not apply, such as where the defendant intended serious physical injury; the defendant’s conduct resulted in a felony conviction; the defendant intentionally concealed or destroyed evidence; or the defendant was under the influence of alcohol, drugs or other intoxicant or stimulate. The statute also contains provisions limiting the availability of punitive damages against product manufacturers and requires that the culpability of a defendant, whose liability for punitive damages alleged to be vicarious, be determined separately from that of any agent or employee.

The punitive damages cap was enacted as part of the Tennessee Civil Justice Act of 2011 and applies to causes of action accruing on or after October 1, 2011, meaning that the provisions apply if the incident which is the subject of the lawsuit occurred on or after the effective date. 

Dan Berexa
Nashville, Tennessee

 

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Recap of Two Years of Tennessee Tort Reform - Part 1- Caps on Non-Economic Damages

Recap of Two Years of Tennessee Tort Reform - Part 1- Caps on Non-Economic Damages

The last two sessions of the Tennessee General Assembly have brought about significant tort reform, beginning with the "Tennessee Civil Justice Act of 2011" which was a legislative priority during Governor Bill Haslam’s first year in office. The next several posts provide an overview of the significant tort reforms enacted over the last two years. This summary is not meant to be exhaustive and the text of the statutes must be consulted in connection with analyzing a particular claim.

Non-Economic Damages in Most Civil Actions Capped at $750,000 Per Injured Plaintiff

Pursuant to Tenn. Code Ann. § 29-39-102, non-economic damages are broadly defined to include pain and suffering, physical impairment, mental anguish, emotional distress, loss of enjoyment of life and loss of consortium. The $750,000 cap applies per claimant, and is not increased if a claim is brought against multiple defendants. Nor is the cap increased for derivative claims brought by a spouse, or child, for loss of consortium or other noneconomic damages. There are exceptions, which increase the cap to $1,000,000 per plaintiff, in cases where the injured party sustains a catastrophic injury such as paraplegia, multiple amputations, severe burns, or the claim involves the wrongful death of a parent of one or more minor children.

 Note that the cap does not apply to economic damages such as medical expenses, lost earnings or earning capacity, property damage, loss of business or employment opportunities or other objectively verifiable monetary losses. The cap is also removed when the injury is intentional; where the defendant intentionally conceals or destroys evidence; or for injuries resulting from the defendant’s intoxication. Effective June 12, 2012, the cap is also removed if the defendant is convicted of a felony for the actions which caused the injury or damage to the plaintiff.

Part 2 of this series will discuss the cap on punitive damages.

Dan Berexa
Nashville, Tennessee

 

How Are the Net Proceeds of a Wrongful Death Claim Distributed?

You are pursuing, or defending, a wrongful death suit. To whom are the proceeds of the claim payable? The short answer is the net proceeds of a wrongful death claim are distributed in accordance with the law of intestate sucession. In a recent article published in the Tennessee Bar Journal, Distribution of Net Proceeds in Tennessee Wrongful Death Cases, attorney John Day provides a concise and well written overview of the application of the rules for distribution, with several examples of common scenarios and exceptions.

Dan Berexa
Nashville, Tennessee

Overhaul of Tennessee Post Judgment Interest Statute

Prior to the enactment of Public Chapter No. 1043, the "default" interest rate on judgments was 10% per annum, pursuant to Tenn. Code Ann. § 47-14-121. Effective July 1, 2012, the interest rate applicable to judgments will be based on the prime rate, minus 2%, unless there is a statute, note or contract that fixes the rate of interest at a specific rate. Of course, the rate set by a note or contract cannot exceed the maximum rates permitted by Tenn. Code Ann. § 47-14-103 and the maximum "default" rate is 10%.

As long as low interest rates prevail, accruing post judgment interest will not be a significant concern for judgment debtors who are considering appeal. The Tennessee Administrative Office of the Courts will post rates on its website and the applicable rate will be based on the date of the judgment.

Given current prime rates, the post judgment rate announced in July should be approximately 1.5%.   

Dan Berexa
Nashville, Tennessee

 

Contractors have a non-delegable duty to ensure work of subcontractors is performed in a careful, skillful, diligent and workmanlike manner

The liability of a general contractor for the work of its subcontractors is addressed in J. Scott Griswold's recent article in the Tennessee Bar Journal Who's to Blame. The article discusses the Tennessee Supreme Court's opinion in Federal Insurance Co. v. Winters Roofing in which the court held that a contractor has a non-delegable contractual duty to ensure work is performed in a careful, skillful, and workmanlike manner and that the general subcontractor is liable for its subcontractor's substandard work.

Dan Berexa
Nashville, Tennessee

Tennessee Local Counsel and Practicing Pro Hac Vice in Tennessee

In Tennessee, out of state lawyers who do not have a Tennessee law license are required to associate local counsel in order to qualify for admission Pro Hac Vice in our state courts. The terms and conditions for Pro Hac Vice attorneys are defined in Rule 19 of the Rules of the Supreme Court of Tennessee. Lawyers seeking admission must make filings with the Board of Professional Responsibility (BPR) in addition to seeking formal admission, on a case by case basis, from the court in which they wish to practice. Currently the BPR also requires a registration fee of $170 per calendar year.

The lawyers in my firm are often called upon to serve as local counsel. We are retained by national and regional counsel to assist in Tennessee litigation. Frequently we are associated in personal injury, product liability, health care, commercial matters and employment cases. I am often asked to assist in plaintiff's personal injury cases. The role of local counsel can be as expansive as handling alll the day to day aspects of the case or limited to offering assistance to insure compliance with local rules and practices.

Effective use of local counsel can enhance the quality of the representation, make lead counsel's job easier and acheive cost savings for the client. Some of the benefits of good local counsel are:

-Efficient handling of Pro Hac Vice admission process
-Ready knowledge of Tennessee law, procedure and local rules/practices
-Prior experience with and insight regarding judges
-Access to local experts
-Ability to conduct local investigations and call upon local resources
-Cost effective handling of motion practice, depositions and document production
-Awareness of local perceptions of parties and issues
-Knowledge of jury verdict data
-Assistance with jury panel research and jury selection
-Knowledge of local vendors (good court reporters, videographers, restaurants and lodging)

When you have the occasion to use local counsel take full advantage of all they can do for you and your client.

Dan Berexa
Nashville, Tennessee

Tennessee Supreme Court Liberalizes Application of Family Purpose Doctrine in Motor Vehicle Cases

The Family Purpose Doctrine imposes liability on the head of a household for the negligent operation of a motor vehicle by another family member. The doctrine is often used to hold a parent liable for an accident caused by a driving age child. However, it can be applied to other family relationships such as grandparent-grandchild, aunt-nephew etc. The doctrine imposes liability provided: 1) the head of the household owns and maintains the vehicle “for the purpose of providing pleasure or comfort for his or her family;” and, 2) if the vehicle was being used in the furtherance of a family purpose with either the express or implied permission of the head of the household at the time of the incident.

In the recent opinion in Starr v. Hill, the Tennessee Supreme Court liberalized the application of the Family Purpose Doctrine to meet the realities of modern domestic life, and more specifically the high divorce rate. The court held that the application of the doctrine is no longer dependent on the at-fault driver and the head of the household sharing the same residence. The court also held that there can be more than one “head of the household” for the purpose of application of the doctrine. Although not expressly stating it, the Starr opinion overrules a number of prior decisions from the Tennessee Court of Appeals, which narrowly limited the application of the doctrine.

Dan Berexa
Nashville, Tennessee

Tennessee Supreme Court Cites Study Showing that 21% of Tennessee Drivers are Uninsured

A study cited in the recent Tennessee Supreme Court decision in Starr v. Hill underscores the importance of obtaining uninsured motorist coverage. The court noted that "many drivers in our state simply disregard the requirements of the Financial Responsibility Law and fail to obtain car liability insurance."  The court noted that one study showed that 21.2 percent of drivers in Tennessee are uninsured, compared to the national average of 14.6 percent. Uninsured motorist coverage can provide a means of recovery if the at-fault driver is uninsured or does not have adequate insurance coverage.  For more information on uninsured and underinsured motorist coverage see the article Uninsured Motorist Coverage - Basics

Dan Berexa
Nashville, Tennessee  

Tennessee Supreme Court Clarifies Liability of Contractors for Work of Subcontractors

The Tennessee Supreme Court's opinion in Federal Insurance Co. v. Winters Roofing addressed the liablity of contractors for the work of their subcontractors. The court held that a contractor has a non-delegable contractual duty to perform work in a careful, skillful, and workmanlike manner. In Federal Insurance, a contractor hired to repair a roof attempted to disclaim liability for the actions of a subcontractor, which caused a fire damaging a home. The court cited Bowling v. Jones, 300 S.W.3d 288, 291 (Tenn. Ct. App. 2008), in which the Tennessee Court of Appeals made the following observation regarding the implied duties encompassed in construction contracts:

Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, failure to perform a building contract in a workmanlike manner constitutes a breach of the contract.

The bottom line is the general contractor is responsible to it's customer if the contractor or the subcontractor botches the job.

Dan Berexa
Nashville, Tennessee

Tennessee Supreme Court Rejects the Twombly/Iqbal Analysis in Motions to Dismiss for Failure to State a Claim

The Tennessee Supreme Court rejected the Twombly/Iqbal analysis applied in federal court to relate motions to dismiss for failure to state a claim. The Tennessee Supreme Court continues to apply the standard articulated in Conley v. Gibson, 355　U.S. 41 (1957) that the court should grant a motion to dismiss only when it appears that the plaintiff can prove "no set of facts" that would entitle the plaintiff to relief. Click here for an excellent article authored by my law partner, J.K. Simms, regarding the Tennessee Supreme Court’s recent ruling in Webb v. National Area Habitat for Humanity, Inc., rejecting the Twombly/Iqbal "plausibility" standard.