McCoy v. Stonebridge Life Insurance Company

Filing 38

MEMORANDUM OPINION AND ORDER re 9 MOTION for Summary Judgment filed by Stonebridge Life Insurance Company. For the foregoing reasons, it is hereby ORDERED that the defendant's motion for summary judgment in regard to the plaintiff's claims of statutory bad faith is GRANTED, and these claims are DISMISSED. The plaintiff's breach of contract claim remains for trial.Signed by District Judge J Ronnie Greer on 9/25/12. (KDO)

UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF TENNESSEE
AT GREENEVILLE

BILLY R. McCOY
v.
STONEBRIDGE LIFE INSURANCE
COMPANY

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NO. 2:11-CV-178

MEMORANDUM OPINION AND ORDER
The plaintiff, Billy R. McCoy, filed the complaint in this case alleging breach of contract,
statutory bad faith pursuant to Tennessee Code Annotated § 56-7-105, and a violation of the
Tennessee Consumer Protection Act (“TCPA”), Tenn. Code Ann. § 47-18-101, et seq. The
defendant has filed a motion for summary judgment in regard to the plaintiff’s statutory bad faith
and TCPA claims. [Doc. 9]. The plaintiff has filed a response. [Doc. 11]. This matter has been fully
briefed and is ripe for disposition.
In the defendant’s motion for summary judgment, the defendant contends that the plaintiff
clearly knew when it sent the November 10, 2009 letter that the defendant was paying the plaintiff
under Part II and not under Part I of the policy, and by waiting until May 19, 2011, to file suit, the
plaintiff allowed his statutory bad faith and TCPA claims to lapse under the one-year statute of limitations
which is applicable to each of them. In addition, the November 10, 2009 letter explains why the
defendant is paying benefits under Part II and not Part I. 1

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Judgment.

The November 10, 2009 letter is attached as Exhibit 1 to the defendant’s Motion for Summary

The plaintiff contends that the letter of November 10, 2009, was an acceptance and not a
denial and that the denial did not come until a November 17, 2010 letter in which the defendant
explained to plaintiff’s counsel the reason that benefits were paid under Part II and not under Part
I of the Benefit Schedule. Significantly, this letter does not purport to deny a claim.2
I. STATEMENT OF UNDISPUTED FACTS SUBMITTED BY THE DEFENDANT
1. The plaintiff, Billy R. McCoy, is insured under the Policy attached to the Complaint and
the Answer.
2. Mr. McCoy’s wife was killed on September 15, 2009, while riding as a patient in an
ambulance.
3. Mr. McCoy made a claim (Claim No. B-823665-01) under the Policy to recover a benefit
for the death of his wife.
4. On the November 10, 2009, Stonebridge notified the plaintiff, in writing, that it would pay
a $100,000 benefit.
5. In the November 10, 2009 notice, Stonebridge stated as follows:
Please let us explain our payment. Part I of the Benefit Schedule of
the above certificate states that if a Covered Person is injured as a
direct result of a collision, crash or sinking of a duly licensed
Common Carrier while riding as a fare-paying passenger inside such
Common Carrier, we will pay the applicable benefit listed in Part I of
the Schedule of Insurance for the appropriate Loss as shown in the
Schedule of Losses and Benefits.
Common Carrier, as defined by the certificate, means a public
conveyance which is:

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The November 17, 2010 letter is attached as Exhibit F to plaintiff’s response.

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1) licensed to transport passengers for hire; and
2) provided and operated (a) for regular passenger
service by land, water, or air, and (b) on a regular
passenger route with a definite regular schedule of
departures and arrivals between established and
recognized points of departure and arrival.
We contacted the Johnson County Emergency & Rescue Squad, Inc.
and were told the ambulance that was transporting your wife from the
Johnson County Community Hospital to the Sycamore Shoals
Hospital was operating as a “on call service” and was not operating
on a regular passenger route with a definite regular schedule of
departures and arrival between established and recognized points of
departure and arrival, as required by the certificate.
Therefore, your application for benefits was paid under Part II of the
Benefit Schedule and not under Part I of the Benefit Schedule. We
will be happy to review any information you feel may affect our
handling.
6. Stonebridge actually paid the $100,000 benefit to the plaintiff.
7. The plaintiff filed his Complaint on May 19, 2011.
8. The advertisement attached to the Complaint states as follows:
Covers you for death or
dismemberment in
nearly any kind of accident:
Common Carrier Accidents: Covers you while a fare-paying
passenger on a regularly scheduled licensed common carrier,
including airplanes, buses, trains, trolleys, subways and ships. You’re
covered 24 hours a day, anywhere in the world.
Auto Accidents: Covers you as a driver, passenger or pedestrian for
vehicle accidents involving passenger cars, pickup trucks,
tractor-trailers or other land vehicles as defined in the Certificate of
Coverage.
9. The Policy states as follows:
COMMON CARRIER means a public conveyance which is:
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1. licensed to transport passengers for hire; and
2. provided and operated (a) for regular passenger
service by land, water, or air, and (b) on a regular
passenger route with a definite regular schedule of
departures and arrivals between established and
recognized points of departure and arrival; and
3. provided and operated under a Common Carrier
license at the time of loss.
....
PART I – BENEFIT FOR TRAVEL BY
REGULARLY SCHEDULED COMMON
CARRIER
If a Covered Person is injured as a direct result of
collision, crash or sinking of a duly licensed Common
Carrier while riding as a fare-paying passenger inside
such Common Carrier, the Company will pay the
applicable benefit listed in Part I of the Schedule of
Insurance for appropriate Loss as shown in the
Schedule of Losses and Benefits below.
II. UNDISPUTED FACTS SUBMITTED BY THE PLAINTIFF
1. On October 2, 2009, Mr. McCoy submitted a “Proof of Accidental Death –Affidavit of
Claimant” to Stonebridge, seeking benefits under the policy he purchased. (See Proof of Accidental
Death – Affidavit of Claimant, attached hereto as Exhibit A).
2. On November 10, 2009, Stonebridge sent Mr. McCoy a letter regarding his claim for
benefits.
3. The letter states, “Your application for benefits has been approved.” The letter then states
that a check for $100,000 is enclosed and explains that the benefits were being paid under Part II
of the Benefit Schedule.

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4. The letter does not include a copy of Part I and Part II benefits; however, the policy sent
by Stonebridge to Mr. McCoy states the following:

PART I – BENEFIT FOR TRAVEL BY REGULARLY
SCHEDULED COMMON CARRIER
If a Covered Person is injured as a direct result of collision, crash or
sinking of a duly licensed Common Carrier while riding as a
fare-paying passenger inside such Common Carrier, the Company
will pay the applicable benefit listed in Part I of the Schedule of
Insurance for the appropriate Loss as shown in the Schedule of
Losses and Benefits.
PART II – BENEFIT FOR TRAVEL BY PRIVATE
PASSENGER
AUTOMOBILE AND LAND MOTOR VEHICLE
If a Covered Person is injured:
1. by being struck by a Private Passenger Automobile; or
2. as a direct result of a collision or crash of a Private Passenger
Automobile;
3. by being struck by a Land Motor Vehicle; or
4. as a direct result of a collision or crash of a Land Motor Vehicle,
we will pay the applicable benefit specified in Part II of the Schedule
of Insurance for the appropriate Loss as shown in the Schedule of
Losses and Benefits.
5. Under the Schedule Page of the Policy, benefits paid under Part I for a spouse are
$500,000, and benefits paid under Part II for a spouse are $100,000.. Thus, Stonebridge notified Mr.
McCoy on November 10, 2009, that it was accepting his claim and paying the claim as a Part II loss.
6. Attached as Exhibit D is Stonebridge’s “Routing Slip,” which was produced by
Stonebridge in its Rule 26(a)(1) Initial Disclosures. The Routing Slip clearly delineates that
Stonebridge’s response to Mr. McCoy’s claim as a “1st Approval” and “Payment.” The box for
“Denial” is not checked.
7. On November 3, 2010, Mr. McCoy’s attorney sent a demand to Stonebridge that it pay
Mr. McCoy the benefits due under Part I of the policy. (See Letter of November 3, 2010, attached

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to Doc. 14 as Exhibit E.
8. In response, Stonebridge sent a letter on November 17, 2010, stating it would not be
paying benefits under Part I, as requested. (See Letter of November 17, 2010, attached to Doc. 14
as Exhibit F).
III. ANALYSIS
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted if
"the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). To prevail, the moving party
must meet the burden of proving the absence of a genuine issue of material fact as to an essential
element of the opposing party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);
Logan v. Denny's, Inc., 259 F.3d 558, 566 (6th Cir.2001).
In determining whether the moving party has met its burden, the court must view the factual
evidence and draw all reasonable inferences in the light most favorable to the non-moving party. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); McLean v. 988011
Ontario, Ltd., 224 F.3d 797, 800 (6th Cir.2000). "The court's function is not to weigh the evidence
and determine the truth of the matters asserted, 'but to determine whether there is a genuine issue
for trial.' " Little Caesar Enters., Inc. v. OPPCO, LLC, 219 F.3d 547, 551 (6th Cir.2000) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)).
To preclude summary judgment, the non-moving party "must go beyond the pleadings and
come forward with specific facts to demonstrate that there is a genuine issue for trial." Chao v. Hall
Holding Co., Inc., 285 F.3d 415, 424 (6th Cir.2002). "The mere existence of a scintilla of evidence

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in support of the [non-moving party's] position will be insufficient; there must be evidence on which
the jury could reasonably find for the [non-moving party]." Shah v. Racetrac Petroleum Co., 338
F .3d 557, 566 (6th Cir.2003) (quoting Anderson, 477 U.S. at 252). If the evidence offered by the
non-moving party is "merely colorable," or "not significantly probative," or not enough to lead a
fair-minded jury to find for the non-moving party, the motion for summary judgment should be
granted. Anderson, 477 U.S. at 249-52. "A genuine dispute between the parties on an issue of
material fact must exist to render summary judgment inappropriate." Hill v. White, 190 F.3d 427,
430 (6th Cir.1999) (citing Anderson, 477 U.S. at 247-49).
The TCPA provides for a one year statute of limitations. Tenn.Code Ann. § 47-18-110. When
a plaintiff alleges a violation of the TCPA, a federal court “must apply the procedural law, including
statutes of limitations, of the forum state....” Mackey v. Judy's Foods, Inc., 867 F.2d 325, 328 (6th
Cir.1989). Under Tennessee law, a “cause of action accrues and the statute of limitations begins to
run when the injury occurs or is discovered, or when in the exercise of reasonable care and
diligence, it should have been discovered.” Potts v. Celotex Corp., 796 S.W.2d 678, 680
(Tenn.1990); see also McCroskey v. Bryant Air Conditioning Co. ., 524 S.W.2d 487, 491
(Tenn.1975). A plaintiff cannot wait [to file suit] until he or she knows every injurious effect or
consequence of the wrong. Ameraccount Club, Inc. v. Hill, 617 S.W.2d 876, 878 n. 1 (Tenn.1981).
Tennessee does not recognize a general common law tort for bad faith by an insurer against
an insured; the exclusive remedy for such conduct is statutory, provided by Tennessee Code
Annotated § 56-7-105. Fred Simmons Trucking, Inc. v. U.S. Fidelity and Guar. Co., 2004 WL
2709262 at *5 (Tenn.Ct.App.2004); Persian Galleries, Inc. v. Transcontinental Ins. Co., 38 F.3d
253, 260 (6th Cir.1994); Rice v. Van Wagoner Cos., Inc., 738 F.Supp. 252, 253 (M.D.Tenn.1990);

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Chandler v. Prudential Ins. Co., 715 S.W.2d 615 (Tenn.Ct.App.1986). Tennessee Code Annotated
§ 56–7–105(a) is penal in nature. See Ginn v. American Heritage Life Ins. Co., 173 S.W.3d 433, 443
(Tenn.Ct.App. 2004).Tennessee Code Annotated § 28-3-104(a)(4) provides a one-year statute of
limitations period applicable to “actions for statutory penalties.”
The Court FINDS that the plaintiff was clearly put on notice by the November 10, 2009
letter that the defendant was paying the plaintiff under Part II and not under Part I of the policy and
was given the reasons why the defendant was paying benefits under Part II and not Part I. Because
this letter explains why benefits are not being paid under Part I , it cannot be construed as purely an
acceptance as plaintiff contends. The November 17, 2010 letter in which the defendant explained
to plaintiff’s counsel the reason that benefits were paid under Part II and not under Part I of the
Benefit Schedule does not purport to deny any pending claim. Therefore, the Court FINDS that the
statute does not run from November 17, 2010 as plaintiff contends.
The Court FINDS that the defendant has meet the burden of proving the absence of a genuine
issue of material fact as to the statute of limitations in regard to the plaintiff’s statutory bad faith
claim and his TCPA claim. The Court also FINDS that the plaintiff has not come forward with
specific facts to demonstrate that there is a genuine issue in regard to the statute of limitations for
trial.

The Court FINDS that the plaintiff allowed his statutory bad faith and TCPA claims to lapse

under the one-year statute of limitations which is applicable to each of them when he waited until
May 19, 2011 to file suit. Thus, these claims must be dismissed.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED that the defendant’s motion for summary
judgment in regard to the plaintiff’s claims of statutory bad faith pursuant to Tenn. Code Ann. §

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56-7-105, and violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101
et seq., is GRANTED, and these claims are DISMISSED. [Doc. 9]. The plaintiff’s breach of
contract claim remains for trial.
ENTER:
s/J. RONNIE GREER
UNITED STATES DISTRICT JUDGE

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