ÿWPCí …# VUNa %¯ 0GµU:üw@6 4v Š ™ B¡ ã U:ë 0J% 0To 0^à 0h! 0r‰ 0|û 0†w 0ý 1u 0dU>fU*¤B)Î B÷DC AMWà¤v~„ D3vÓ5 0@ AOHÆ— 0D] D/¡ BИHP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÈÚØÚÚØÈÚ0nLLÎ(ÈhH  Z 6Times New Roman RegularX('\$¡¡Ô€XåÙXXMXÔ,c½¬AZ‹"Arial Regular UgDD U!Ó€+DÒ 3|x+C:\WPWIN60\TEMPLATE\STANDARD.WPTÏ"Arial Regular2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New Roman< Œ 9p`(Arial% Line 7 d d$$$$7Border 1dd€-&Cþÿ << Gÿÿ ÖÝ ƒ!ÝÔ€"ÔÔ€#ÔÝ  ÝÔ€#ÔÓ  Óò òÔ YYY ÔFILEDÔ€#XÔÌÌAugust€1,€1997ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó óPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'h%%%%'ÿÿdxdStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  h HD: Geneva ÒÒ  h HD: Geneva Ò("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€"ÔÔ€#ÔÝ  ÝÑ\R AØ'\ÑÓ  ÓÑ\R AØ'\ÑÑ7€§(XXdìdÈ7Ñò ò›Þ ÞÌà@ àòŒòIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌà@ àWESTERN€SECTION€AT€NASHVILLEÌÌÌDAVID€WAYNE€GURIEN,à àà àà à)€€Ìà àà àà àà àà àà à)Ìà àà àóŒóó óPlaintiff/Appellee,ò òà àà àòŒò)€€Davidson€Chancery€No.€95„20„IÌà àà àà àà àà àà à)ÌVS.à àà àà àà àà àà à)€€Appeal€No.€œ01A01„9610„CH„00459›Ìà àà àà àà àà àà à)̜ـ€ÙßR€'(&A1-j|y ` ç `€€@ÿRß›ALLSTATE€INSURANCE€COMPANY,à à)Ìà àà àà àà àà àà à)Ìà àóŒóà àó óDefendant/Appellant.ò òòŒòà àòŒò)óŒóÌÌÌà@ àóŒóó óAPPEAL€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYÌà@ àAT€NASHVILLE,€TENNESSEEÌà@ àTHE€HONORABLE€IRVIN€H.€KILCREASE,€JR.,€CHANCELLORÌò òòŒòÌÌÌÌÌÌÌòŒòMICHAEL€P.€MILLSÌMICHELE€E.€COOPERÌBREWER,€KRAUSE,€BROOKS€&€MILLSÌóŒóóŒóó óNashville,€TennesseeÌAttorneys€for€AppellantÌò òòŒòÌÌòŒòKARYN€C.€BRYANTÌJOHN€D.€VAUGHNÌBOULT,€CUMMINGS,€CONNERS€&€BERRYÌóŒóóŒóó óNashville,€TennesseeÌAttorneys€for€AppelleeÌò òÌÌÌÌœòŒòREVERSED›ÌÌÌÌÌÌÌÌÌÌóŒóà àà àà àà àà àà àà àà àà àALAN€E.€HIGHERS,€J.ÌÌÌÌCONCUR:ÌÌW.€FRANK€CRAWFORD,€P.J.,€W.S.ÌÌHOLLY€KIRBY€LILLARD,€J.à àÌÓÓó óà àœÌÑ7€ ÍÈ XXdæXXdì7ÑIn›€this€breach€of€contract€case,€David€Wayne€Gurien€(ð ðPlaintiffðð)€filed€suit€againstÏAllstate€Insurance€Company€(ð ðDefendantðð)€for€Defendantððs€failure€to€compensate€himÏfor€the€theft€of€his€automobile€pursuant€to€the€terms€of€the€insurance€contract€that€heÏhad€with€the€€Defendant.€€The€trial€court€awarded€Plaintiff€$18,300.00€in€compensatoryÏdamages€and€$4,575.00€for€the€Defendantððs€bad€faith€refusal€to€pay€under€the€terms€ofÏthe€insurance€contract.€œ€A€motion€to€alter€or€amend€resulted€in€an€adjustment€ofÏcompensatory€damages€to€$17,300.00€to€account€for€the€deductible.€€The€issues€onÏappeal€relate€only€to€the€award€of€the€bad€faith€penalty.ò ò›ÌÌà@ àFACTSÌÌó óà àOn€the€evening€of€January€10,€1994,€Plaintiff€and€his€wife€arrived€home€atÏapproximately€10:00€p.m.€after€going€out€for€dinner€and€a€movie.€€After€parking€their€carÏin€its€designated€parking€space€near€€their€condominium,€Plaintiff€and€his€wife€wentÍinside€and€went€to€sleep.€ÌÌ€à àThe€next€morning,€Sunday,€January€11,€1994,€Plaintiff€arose€around€9:00€a.m.,Ïwalked€outside€and€allegedly€discovered€that€his€car€had€been€stolen.€€PlaintiffÏimmediately€reported€the€theft€to€the€police€and€then€went€about€the€area€questioningÏhis€neighbors€inquiring€as€to€whether€they€had€seen€anything€suspicious€the€nightÏbefore.€ÌÌà àAfter€receiving€a€claim€number€from€the€police,€Plaintiff€called€and€notified€theÏDefendant€that€his€vehicle€had€been€stolen.ÌÌà àThe€following€Monday,€January€12,€1994,€the€police€recovered€Plaintiffððs€car.€ÏThe€recovered€car€was€charred€and€burned.€ÌÌà àOn€January€13,€1994,€Plaintiff€and€his€wife€completed€and€returned€a€swornÏstatement€in€proof€of€loss€to€the€Defendant.ÌÌà àShortly€thereafter,€Plaintiff€received€a€letter€dated€July€19,€1994€fromÏDefendantððs€attorney,€Mills€(ð ðMillsðð),€requesting€that€Plaintiff€schedule€a€date€for€himÏand€his€wife€to€visit€Millsðð€office€for€an€examination€under€oath€concerning€the€eventsÏsurrounding€the€theft.€€Upon€arriving€at€Millsðð€office€for€the€examination€under€oath,ÏPlaintiff€and€his€wife€carried€with€them€copies€of€canceled€checks€for€payments€on€theÏvehicle€and€copies€of€their€federal€income€tax€returns€from€the€past€two€years€asÍrequested€by€Mills.€€Plaintiff€and€his€wife€were€separated€and€examined€at€differentÏtimes€during€the€examination€under€oath.€€Ìà àDuring€the€course€of€Defendantððs€investigation€of€Plaintiffððs€claim,€Plaintiff€visitedÏDefendantððs€office€three€times€inquiring€as€to€the€status€of€his€claim.€€On€August€15,Ï1994,€Plaintiffððs€third€visit€to€Defendantððs€office,€Defendant€verbally€denied€PlaintiffððsÏclaim.€€In€a€letter€dated€August€24,€1994,€Defendant€confirmed€its€verbal€denial€ofÏPlaintiffððs€claim€in€writing€stating€that:ÌÓÓà8 àà8 àIt€is€the€opinion€of€our€Claim€Department€that€this€loss€wasÏnot€ð ðaccidentalðð€from€your€standpoint.€€Further,€it€is€ourÏopinion€that€you€breached€the€following€clause€of€the€policy:€ÏFraud.€€We€do€not€provide€coverage€for€any€ð ðinsuredðð€whoÏhas€made€fraudulent€statements€or€engaged€in€fraudulentÏconduct€in€connection€with€any€accident€or€loss€for€whichÏcoverage€is€sought€under€this€policy.€€Therefore,€AllstateÏhas€no€choice€but€to€deny€your€claim€for€insuranceÏproceeds.€€Ì€€€ÌÌÌÓÓà àDefendantððs€investigation€of€Plaintiffððs€claim€revealed€that€Plaintiffððs€car,€whichÏhad€been€burned,€was€left€totally€intact.€€None€of€the€automobileððs€component€partsÏhad€been€removed.€Based€upon€the€opinion€of€the€Defendantððs€expert€witness,€aÏforensic€reconstructionist,€neither€the€vehicleððs€lock€assembly€system€nor€the€vehicleððsÏignition€system€had€been€defeated€in€any€way,€and€nothing€other€than€a€key€of€theÏproper€type€had€been€used€to€unlock€the€doors€of€the€vehicle€or€to€operate€the€vehicle.€ÏAll€keys€for€the€car€were€in€the€hands€of€the€Plaintiff.€€Defendantððs€investigation€alsoÏrevealed€that€Plaintiff€had€many€debts€in€comparison€to€his€income.€ÌÌà àIn€a€letter€dated€October€21,€1994,€Defendant€canceled€Plaintiffððs€automobileÍinsurance€policy€as€of€December€7,€1994€citing€Plaintiffððs€misrepresentation€of€loss€forÏhis€July€10,€1994€claim€as€the€reason€for€the€cancellation.€ÌÌà àPlaintiff€argued€that€he€and€his€wife€did€not€have€the€only€key€to€PlaintiffððsÏautomobile.€€Plaintiff€claimed€that€Crencor€Auto€Sales€(ð ðCrencorðð),€the€company€fromÏwhom€he€bought€the€car,€had€a€key€to€the€car€as€well.€€€Although€Plaintiff€testified€thatÏCrencor€never€supplied€him€with€a€second€key€to€the€car€at€the€time€he€purchased€theÏcar€and€that€Crencor€retained€an€extra€key€to€the€car,€Defendant€testified€that€it€wasÏCrencorððs€policy€to€give€all€keys€to€cars€sold€to€the€purchaser€at€the€time€of€purchase.€€ÏPlaintiff€also€testified€that€he€had€supplied€Crencor€with€a€key€to€the€car€three€monthsÏbefore€the€theft€occurred€when€Plaintiff€had€Crencor€repair€the€car,€yet€PlaintiffÏadmitted€that€Crencor€returned€the€key€to€him€after€working€on€the€car.ÌÌà àPlaintiff€filed€suit€on€January€3,€1995€seeking€compensatory€damages€and€aÏsum€equal€to€twenty„five€percent€of€his€compensatory€damages€for€Defendantððs€badÏfaith€refusal€to€pay€pursuant€to€the€terms€of€the€insurance€contract.Ì€€à àÌà àà@ àò òLAWó óÌÌò òà àó óThe€issues€before€this€Court€are€as€follow:Ìà à1)€Whether€the€trial€court€erred€in€denying€Defendantððs€motion€for€a€directedÏverdict€as€to€Plaintiffððs€claim€of€the€Defendantððs€bad€faith€refusal€to€pay€under€the€termsÏof€the€insurance€contract;Ìà à2)€Whether€the€trial€court€erred€in€permitting€the€issue€of€the€Defendantððs€badÏfaith€denial€of€insurance€coverage€to€be€submitted€to€the€jury;€andÌà à3)€Whether€the€trial€court€erred€in€denying€Defendantððs€motion€for€a€new€trial€orÏjudgment€notwithstanding€the€verdict€on€the€issue€of€the€Defendantððs€bad€faith€refusalÏto€pay€pursuant€to€the€terms€of€the€insurance€contract.ÌÌà àWhen€deciding€a€motion€for€directed€verdict,€both€the€trial€judge€and€theÏreviewing€court€on€appeal€must€look€to€all€of€the€evidence,€take€the€strongestÏlegitimate€view€of€the€evidence€in€favor€of€the€opponent€of€the€motion,€and€allow€allÏreasonable€inferences€in€favor€of€that€party.€€òòBeske€v.€Opryland€USA,€Inc.óó,€923€S.W.2dÏ544,€545€(Tenn.€Ct.€App.€1996);€òòDobson€v.€Shortóó,€929€S.W.2d€347,€349„50€(Tenn.€Ct.ÏApp.€1996);€òòWadlington€v.€Miles,€Inc.óó,€922€S.W.2d€520,€522€(Tenn.€Ct.€App.€1995);ÏòòHurley€v.€Tennessee€Farmers€Mut.€Ins.€Co.óó,€922€S.W.2d€887,€891€(Tenn.€Ct.€App.Ï1995);€òòBills€v.€Lindsayóó,€909€S.W.2d€434,€438€(Tenn.€Ct.€App.€1993);€òòDaniels€v.€WhiteÏConsolidated€Indus.,€Inc.óó,€692€S.W.2d€422,€424€(Tenn.€Ct.€App.€1985).€€The€court€mustÏdiscard€all€countervailing€evidence,€and€if€there€is€then€any€dispute€as€to€any€materialÏfact,€or€any€doubt€as€to€the€conclusions€to€be€drawn€from€the€whole€evidence,€theÏmotion€must€be€denied.€òòWharton€v.€Transport€Corp.€v.€Bridgesóó,€606€S.W.2d€521,€525Ï(Tenn.€1980);€òòCrosslin€v.€Alsupóó,€594€S.W.2d€379,€380€(Tenn.€1980);€òòHolmes€v.€Wilsonóó,Ï551€S.W.2d€682,€685€(Tenn.€1977)€òòBeskeóó,€923€S.W.2d€at€545;€òòDobsonóó,€929€S.W.2d€atÏ349„50;€òòHurleyóó,€922€S.W.2d€at€891;€òòBillsóó,€909€S.W.2d€at€438;€òòFlynn€v.€Shoneyððs,€Inc.óó,Ï850€S.W.2d€458,€459„50€(Tenn.€Ct.€App.€1992);€òòTennessee€Farmers€Mut.€Ins.€Co.€v.ÏHinsonóó,€651€S.W.2d€235€(Tenn.€Ct.€App.€1983).€€A€directed€verdict€cannot€be€sustainedÍif€there€is€any€material€evidence€in€the€record€which€would€support€a€verdict€for€theÏplaintiff€under€any€of€the€theories€plaintiff€has€advanced.€€òòWharton€Transport€Corp.€v.ÏBridgesóó,€606€S.W.2d€521€(Tenn.€1980);€òòHurleyóó,€922€S.W.2d€at€891.ÌÌà àT.C.A.€ðð€56„7„105(a)€provides€as€follows:ÌÓÓà8 àà8 àThe€insurance€companies€of€this€state,€and€foreignÏinsurance€companies€and€other€persons€or€corporationsÏdoing€an€insurance€or€fidelity€bonding€business€in€this€state,Ïin€all€cases€when€a€loss€occurs€and€they€refuse€to€pay€theÏloss€within€sixty€(60)€days€after€a€demand€has€been€madeÏby€the€holder€of€the€policy€or€fidelity€bond€on€which€the€lossÏoccurred,€shall€be€liable€to€pay€the€holder€of€the€policy€orÏfidelity€bond,€in€addition€to€the€loss€and€interest€thereon,€aÏsum€not€exceeding€twenty„five€percent€(25%)€on€the€liabilityÏfor€the€loss;€provided,€that€it€is€made€to€appear€to€the€courtÏor€jury€trying€the€case€that€the€refusal€to€pay€the€loss€wasÏnot€in€good€faith,€and€that€such€failure€inflicted€additionalÏexpense,€loss,€or€injury€upon€the€holder€of€the€policy€orÏfidelity€bond;€and€provided€further,€that€such€additionalÏliability,€within€the€limit€prescribed,€shall,€in€the€discretion€ofÏthe€court€or€jury€trying€the€case,€be€measured€by€theÏadditional€expense,€loss,€and€injury€thus€entailed.ÌÌÓÓThe€foregoing€statute€is€penal€in€nature€and€must€be€strictly€construed.€€òòSt.€Paul€FireÏand€Marine€Ins.€Co.€v.€Kirkpatrickóó,€164€S.W.€1186€(Tenn.€1914);€òòHurleyóó,€922€S.W.2d€atÏ894;€òòWalker€v.€Tennessee€Farmers€Mut.€Ins.€Co.óó,€568€S.W.2d€103€(Tenn.€Ct.€App.Ï1977).€ÌÌà àIn€òòPalmer€v.€Nationwide€Mut.€Fire€Ins.€Co.óó,€723€S.W.2d€124€(Tenn.€Ct.€App.Ï1986),€this€Court€stated:ÌÓÓà8 àà8 àUnder€the€holding€of€our€courts,€before€there€can€be€aÏrecovery€of€penalty€under€€T.C.A.€ðð€56„7„105,€(1)€the€policyÍof€insurance€must,€by€its€terms,€have€become€due€andÏpayable,€(2)€a€formal€demand€for€payment€must€have€beenÏmade,€(3)€the€insured€must€have€waited€60€days€afterÏmaking€his€demand€before€filing€suit€(unless€there€was€aÏrefusal€to€pay€prior€to€the€expiration€of€the€60€days),€and€(4)Ïthe€refusal€to€pay€must€not€have€been€in€good€faith.€€ÌÌ723€S.W.2d€at€126€(citations€omitted).ÌÌà àÌÌÓÓà àIn€assessing€the€four€requirements€necessary€for€Plaintiff€to€recover€a€bad€faithÏpenalty€against€the€Defendant,€we€note€that€there€is€no€evidence€in€the€recordÏindicating€that€Plaintiff€made€a€formal€demand€for€payment€after€the€Defendant€deniedÏPlaintiffððs€claim€in€writing€in€a€letter€dated€August€24,€1994.€€Although€Plaintiff€initiallyÏcompleted€all€of€the€forms€required€by€the€Defendant€and€cooperated€fully€inÏanswering€questions€regarding€the€theft,€this€does€not€meet€the€statutory€requirementÏthat€a€formal€demand€for€payment€must€be€made.€€òòSeeóó€òòKirkpatrickóó,€164€S.W.€at€1189„1190;€òòWalkeróó,€568€S.W.2d€at€106.€€T.C.A.€ðð€56„7„105€is€penal€in€nature€and€must€beÏstrictly€construed;€therefore,€it€is€incumbent€upon€Plaintiff€to€show€complianceÏtherewith.€€Thus,€because€there€is€no€proof€in€the€record€indicating€that€PlaintiffÏcomplied€with€the€statutory€requirements€contained€in€T.C.A.€ðð€56„7„105,€the€trial€courtÏshould€have€directed€a€verdict€œin€favor€of€the›€Defendant€on€Plaintiffððs€bad€faith€penaltyÏclaim.€€We,€therefore,€reverse€the€juryððs€verdict€of€$4,575.00€for€the€Defendantððs€badÏfaith.ÌÌà àœÌÌÌÌà àThe›€judgment€of€the€trial€court€is€œhereby›€reversed€as€to€Plaintiffððs€award€ofÏ$4,575.00€Ìfor€the€Defendantððs€bad€faith€refusal€to€pay€under€the€terms€of€the€insurance€contract.€€ÏCosts€of€appeal€are€assessed€against€the€œAppellee€›€for€which€execution€may€issue€ifÏnecessary.ÌÌÓÓÌà àà àà àà àà àà àà àà àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ïóóà àà àà àà àà àà àà àà àHIGHERS,€J.ÌÌÌÌCONCUR:ÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌCRAWFORD,€P.J.,€W.S.ÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌLILLARD,€J.