ÿWPCb …# VU:a %› 0(¡b ÉwÕ 0lå 0DQ 4• © ± 0JÀ 0T 0^^ 0h¼ 0r$ 0|– 0† 0˜ 1u( U, 0ÀÉ U,‰U*µB)ßDC AMK B˜ µ7Âv~ùvÓw D3J 0@} AO½Æ  0DÒ D/ BE˜HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀÌÀääÀÀÌ0 ,†r‰AZ‹"Arial RegularX($¡¡- ù -Ó€ ((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  ÚóóDÒ R#3|x 2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernPp ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓÑ\R€€\Ñ< Œ 9p`(Monaco< Œ 9p`(Arial% Line 7 d""""7Border 1dd€-#Cþÿ << Gÿÿ d Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€ÔÔ€!ÔÝ  ÝÔ€!ÔÓ  Óò òÔ YYY ÔFILEDÔ€!XÔÌÌJuly€24,€1996ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó ó -Ý ƒ!ÝÑ#€d#ÑÔ€ÔÔ€!ÔÝ  ÝÒ € ÒÒ „ ÒÓ  ÓÔ€!ôÔà àòòÚ  ÚÚ  ÚóóThe€statutory€basis€for€awarding€prejudgment€interest€is€found€in€Tenn.€Code€Ann.€ðð€47„14„123:ÌÌÒ 0 ÒÒ  Òà àPrejudgment€interest,€i.e.,€interest€as€an€element€of,€or€in€theÏnature€of,€damages,€as€permitted€by€the€statutory€and€common€laws€ofÏthe€state€as€of€April€1,€1979,€may€be€awarded€by€courts€or€juries€inÏaccordance€with€the€principles€of€equity€at€any€rate€not€in€excess€of€aÏmaximum€effective€rate€of€ten€percent€(10%)€per€annum;€provided,€thatÏwith€respect€to€contracts€subject€to€ðð€47„14„103,€the€maximumÏeffective€rates€of€prejudgment€interest€so€awarded€shall€be€the€same€asÏset€by€that€section€for€the€particular€category€of€transaction€involved.€€InÏaddition,€contracts€may€expressly€provide€for€the€imposition€of€the€sameÏor€a€different€rate€of€interest€to€be€paid€after€breach€or€default€within€theÏlimits€set€by€ðð€47„14„103.ÌPtPtStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA Op Monaco ÒÒ  BA Op Monaco Ò%%%%'ÿÿdxd("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€  X„d&ÓÑ#€  Xd#ÑÔ€!ÔÝ  ÝÒ € ÒÒ „ ÒÑ  ÑÑ\R AØ'\ÑÑ€ÑÑ7€åXXdædÈ7ÑÑ  ÑÑ  ÑWIN€MYINT€and€wife,à àà àà à)ÌPATTI€K.€MYINT,à àà àà àà à)Ìà àà àà àà àà àà à)Ìà àPlaintiffs/Appellees/à àà à)Ìà àCross„Appellants,à àà àà à)Ìà àà àà àà àà àà à)à àAppeal€No.Ìà àà àà àà àà àà à)à à01„A„01„9512„CH„00558ÌVS.à àà àà àà àà àà à)Ìà àà àà àà àà àà à)à àDavidson€ChanceryÌà àà àà àà àà àà à)à àNo.€92„3159„IIÌÙ€€ÙßL€$&#;+'h|-—` ç `€€LßMETROPOLITAN€GOVERNMENTà à)ÌOF€NASHVILLE€AND€DAVIDSONà à)ÌCOUNTY,€TENNESSEE,€MAYORà à)ÌPHIL€BREDESEN,€ANDà àà àà à)ÌMETROPOLITAN€CODES€DIRECTOR,à à)ÌTERRY€COBB,€ANDà àà àà à)ÌALLSTATE€INSURANCE€COMPANY,à à)Ìà àà àà àà àà àà à)Ìà àDefendants/Appellant/à àà à)Ìà àCross„Appellee.à àà àà à)ÌÌÌà@ àCOURT€OF€APPEALS€OF€TENNESSEEÌà@ àMIDDLE€SECTION€AT€NASHVILLEÌÌÌAPPEALED€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYÌAT€NASHVILLE,€TENNESSEEÌÌTHE€HONORABLE€CHRISTINA€NORRIS,€SPECIAL€CHANCELLORÌÌÌÌJOSEPH€H.€JOHNSTONÌ2815€Belmont€BoulevardÌP.€O.€Box€120874ÌNashville,€Tennessee€37212Ìà àAttorney€for€Plaintiffs/Appellees/Cross„AppellantsÌÌJOHN€D.€SCHWALBÌBREWER,€KRAUSE,€BROOKS€&€MILLSÌSuite€2600€The€TowerÌ611€Commerce€StreetÌNashville,€Tennessee€37203Ìà àAttorney€for€Defendant/Appellant/Cross„AppelleeÌÌÌÌà@ àAFFIRMED€IN€PART;€REVERSED€IN€PART;Ìà@ àAND€REMANDEDÌÌÌÌà àà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌCONCUR:ÌTODD,€P.J.,€M.S.ÌLEWIS,€J.ÌÓ  ÓÓÓà@ àò òòòÔ€!„ÔO€P€I€N€I€O€Nó óóóÔ€!XÔÌÌà àà àIn€this€action€on€a€fire€insurance€policy€the€insurance€companyÏasserts€that€it€no€longer€covered€the€risk€because€the€property€had€beenÏcondemned€by€the€local€government€and€the€owners€had€increased€the€hazardÏby€allowing€the€property€to€deteriorate.€€The€jury€returned€a€verdict€for€theÏhomeowner,€and€the€trial€judge€added€prejudgment€interest.€€On€appeal€theÏinsurance€company€attacks€the€amount€of€the€verdict€and€the€prejudgmentÏinterest.€€The€homeowners€assert€that€the€trial€judge€erred€in€dismissing€theirÏclaim€under€the€Consumer€Protection€Act.€€We€reverse€the€part€of€the€judgmentÏattributable€to€prejudgment€interest.€€Otherwise,€we€affirm.ÌÌà@ àò òI.ó óÌÌà àà àMr.€and€Mrs.€Myint€bought€a€house€at€224€Treutland€Street€inÏNashville€in€1983€and€they€insured€the€house€for€$61,000€through€AllstateÏInsurance€Company.€€The€house€contained€two€apartments.€€A€leak€in€the€upstairsÏbathroom€caused€extensive€water€damage.€€Despite€Mr.€Myintððs€attempts€atÏrepairs,€the€leak€continued€to€damage€the€house,€and€another€leak€in€the€upstairsÏkitchen€added€to€the€damage.ÌÌà àà àOne€of€the€tenants€applied€for€public€assistance,€which€required€anÏinspection€of€the€premises.€€The€inspection€revealed€several€building€codeÏviolations.€On€August€5,€1991€Mr.€Myint€received€notice€from€the€MetropolitanÏCodes€Department€that€the€building€was€unfit€for€human€habitation.€€Because€of€aÏmisunderstanding€Mr.€Myint€failed€to€attend€a€hearing€set€for€the€purpose€ofÏdetermining€whether€the€building€should€be€demolished.€€Consequently,€theÏCodes€Department€entered€an€order€on€August€20,€1991€that€the€building€beÏremoved€or€demolished€by€September€30,€1991.ÌÌà àà àMr.€Myint€filed€a€claim€with€Allstate€for€the€water€damage.€€TheÏadjuster€visited€the€premises€on€September€27,€1991€to€investigate€the€claim.€€HeÏdenied€the€claim€because€the€damage€was€caused€by€a€slow€leak€rather€than€byÏa€sudden€occurrence.€€The€adjuster€also€recommended€to€the€insuranceÏcompany€that€its€insurance€coverage€be€canceled€because€of€the€condition€of€theÍpremises.€€On€October€18,€1991€Allstate€notified€Mr.€Myint€that€its€coverage€wouldÏterminate€on€December€2,€1991.ÌÌà àà àOn€October€23,€1991€a€small€fire€in€the€basement€of€the€houseÏcaused€some€minor€smoke€damage.€€Mr.€Myint€notified€Allstate.€€On€October€26,Ï1991,€at€approximately€2:00€a.m.€another€fire€caused€substantial€damage€to€theÏhouse€and€Mr.€Myint€promptly€notified€Allstate.€€Mr.€Myint€finally€got€the€proofs€ofÏloss€filed,€but€Allstate€denied€coverage€on€June€23,€1992€on€the€grounds€that€(1)Ïplaintiffs€had€intentionally€set€the€fire,€and€(2)€the€failure€to€maintain€the€premisesÏincreased€the€risk€and€voided€the€insurance€coverage.ÌÌà àà àMeanwhile,€in€November€of€1991€the€Metropolitan€Board€of€HousingÏappeals€granted€Mr.€Myint€a€variance,€removing€the€house€from€the€demolition€listÏand€giving€him€until€September€1,€1992€to€make€the€necessary€repairs.€€AfterÏAllstate€refused€to€pay€the€claim,€Mr.€Myint€sought€an€extension€for€making€theÏrepairs.€€The€legal€department€of€the€Metropolitan€Government€responded€on€JulyÏ29,€1992€by€rejecting€the€request€for€an€extension.ÌÌà àà àOn€October€23,€1992€the€Myints€sued€Allstate€for€the€insuranceÏcoverage€and€the€Metropolitan€Government€for€an€injunction€to€prevent€it€fromÏtaking€any€steps€to€demolish€the€property.€€The€complaint€also€included€a€claimÏagainst€Allstate€for€violating€the€Consumer€Protection€Act,€Tenn.€Code€Ann.€ðð€47„18„101,€et€seq.,€and€for€violating€Tenn.€Code€Ann.€ðð€56„7„105€by€denying€theÏclaim€in€bad€faith.ÌÌà àà àThe€lower€court€granted€the€Metropolitan€Governmentððs€motion€toÏdismiss€for€the€failure€to€state€a€claim€upon€which€relief€could€be€granted.€€TheÏtrial€court€also€dismissed€the€plaintiffððs€claim€for€relief€under€the€ConsumerÏProtection€Act.€€The€case€went€to€the€jury€on€the€claim€against€Allstate€under€theÏinsurance€policy,€and€for€the€bad€faith€penalty.€€The€jury€returned€a€verdict€for€theÏplaintiffs€in€the€amount€of€$45,000€on€the€policy,€but€held€for€Allstate€on€the€badÏfaith€claim.ÌÌà àà àFollowing€the€entry€of€the€order€on€the€jury€verdict,€the€court€grantedÏthe€plaintiffsðð€motion€for€prejudgment€interest€and€discretionary€costs.ÌÌà@ àò òII.ó óÌÌà àà àAllstate€insists€on€appeal€that,€as€a€matter€of€law,€the€Myints€had€noÏinsurable€interest€in€the€property€on€the€date€the€fire€occurred.€€Drawing€on€theÏdefinition€of€an€insurable€interest€in€property€taken€from€òòDuncan€v.€State€FarmÏFire€&€Cas.€Co.óó,€587€S.W.2d€375€(Tenn.€1979),€Allstate€asserts€that€the€plaintiffsÏdid€not€suffer€a€loss€because€of€the€fire.€€Instead,€because€the€house€was€under€aÍdemolition€order,€Allstate€insists€that€the€fire€actually€made€it€easier€for€theÏplaintiffs€to€comply€with€the€order.ÌÌà àà àWe€think,€however,€that€the€plaintiffs€did€have€an€insurable€interestÏin€the€property€in€October€of€1991,€despite€the€demolition€order.€€The€order€wasÏsubject€to€revision€as€demonstrated€by€the€fact€that€Mr.€Myint€obtained€a€varianceÏin€November€of€1991€„„€even€after€the€fire€„„€allowing€him€until€September€1,€1992Ïto€bring€the€house€into€codes€compliance.€€The€record€shows€that€in€SeptemberÏ1991€Allstate€estimated€that€the€house€had€a€fair€market€value€of€$50,000,€andÏthat€the€necessary€repairs€could€have€been€made€for€$10,000€(Mr.€MyintððsÏestimate)€or€$15,000€to€$20,000€(the€codes€inspectorððs€estimate).€€Therefore,€weÏhold€that€the€Myints€had€an€insurable€interest€in€the€property€in€October€of€1991.ÌÌà@ àò òIII.ó óÌÌà àà àAssuming€that€the€plaintiffs€had€an€insurable€interest€in€the€property,ÏAllstate€argues€on€appeal€that€the€loss€should€have€been€limited€to€its€salvageÏvalue.€€This€argument,€however,€is€based€on€the€premise€that€the€house€wasÏunder€an€irrevocable€demolition€order.€€òòSee€Chicago€Title€&€Trust€Co.€v.€UnitedÏStates€Fidelity€&€Guaranty€Co.óó,€511€F.2d€241€(7th€Cir.€1975).€€Since€the€recordÏreveals€that€the€Metropolitan€Government€lifted€the€demolition€order€untilÍSeptember€1,€1992€to€allow€Mr.€Myint€to€repair€the€house,€this€argument€is€withoutÏmerit.ÌÌà@ àò òIV.ó óÌÌà àà àAllstate€also€asserts€that€when€the€lower€court€dismissed€theÏMetropolitan€Government,€the€conclusion€that€the€government€acted€properly€inÏcondemning€the€property€became€the€law€of€the€case.€€òòSee€Perlberg€v.€Jahnóó,€773ÏS.W.2d€925€(Tenn.€App.€1989).€€Thus,€the€insurer€argues€that€the€Myints€can€noÏlonger€dispute€the€correctness€of€the€governmentððs€action€in€issuing€theÏdemolition€order.ÌÌà àà àWe€think,€however,€that€the€motion€to€dismiss€filed€by€theÏgovernment€has€to€be€viewed€as€of€the€time€the€complaint€was€filed€asking€for€anÏinjunction€against€the€demolition€order.€€Holding€that€the€complaint€failed€to€stateÏa€claim€for€an€injunction€in€October€of€1992,€after€the€house€had€been€extensivelyÏdamaged€by€fire€and€was€yet€unrepaired€despite€the€variance€granted€by€theÏgovernment,€is€not€a€holding€that€the€original€demolition€order€was€irrevocable€orÏwas€properly€issued.€€The€dismissal€only€amounts€to€a€holding€that€the€complaintÏfailed€to€state€a€cause€of€action€for€an€injunction€in€October€of€1992.ÌÌà@ àò òV.ó óÌÌà àà àAllstate€also€argues€that,€as€a€matter€of€law,€the€Myints€neglect€of€theÏproperty€increased€the€risk€of€loss€so€as€to€void€coverage€under€the€insuranceÏpolicy.€€The€specific€policy€provision€reads€as€follows:ÌÌÒ 0 ÒÒ  ÒÓÓWe€[Allstate]€do€not€cover€loss€or€damage€to€the€propertyÏdescribed€in€the€building€protection€coverage€resultingÏdirectly€or€indirectly€from€.€.€.€[a]n€increase€in€hazard,€ifÏincreased€by€any€means€within€the€control€or€knowledgeÏof€the€insured€person.ÌÌÌÌÒ € ÒÒ „ ÒÓÓà àà àThe€lower€court€submitted€this€question€to€the€jury,€and€the€juryÏobviously€resolved€it€against€Allstate.€€Since€it€would€ordinarily€be€a€question€ofÏfact€as€to€whether€there€has€been€a€physical€change€in€the€condition€of€theÏpremises€from€the€time€the€policy€was€first€issued,€òòsee€West€v.€Greenóó,€226€So.2dÏ302€(Alabama€1969),€the€court€would€be€justified€in€taking€the€case€from€the€juryÏonly€if€the€uncontroverted€evidence€showed€that€the€plaintiffs€òòdidóó€increase€theÏhazard.€€We€think€the€evidence€is€in€conflict€on€that€question.€€Therefore,€the€courtÏcould€not€resolve€it€as€a€matter€of€law.Ìà àÌà@ àò òVI.ó óÌÌà àà àAfter€the€order€was€entered€on€the€jury€verdict,€the€plaintiffs€movedÏfor€an€award€of€prejudgment€interest.× ƒ' ××  ×€€The€trial€judge€granted€the€motion€andÏAllstate€asserts€on€appeal€that€the€award€was€an€abuse€of€discretion,€thatÏprejudgment€interest€cannot€be€awarded€without€being€specifically€set€out€in€theÏpleadings,€and€that€the€question€of€prejudgment€interest€should€have€beenÏsubmitted€to€the€jury.ÌÌà àà àAs€to€the€question€of€the€pleadings,€the€Supreme€Court€held€inÏòòMitchell€v.€Mitchellóó,€876€S.W.2d€830€(Tenn.€1994)€that€prejudgment€interest€wasÏnot€an€item€of€special€damages€that€Rule€9.07,€Tenn.€R.€Civ.€Proc.€required€to€beÏspecifically€stated.€€Therefore,€the€award€could€be€made€under€a€prayer€forÏgeneral€relief.ÌÌà àà àPassing€over€the€question€of€whether€the€òòamountóó€of€prejudgmentÏinterest€should€have€been€submitted€to€the€jury,€òòsee€Garrott€Bros.€Continuous€Mix,ÏInc.€v.€Porteróó,€No.€01„A„01„9202„CH„00059€(Filed€Nashville,€August€28,€1992),€weÏthink€the€trial€judge€abused€her€discretion€in€making€the€award€in€this€case.€€WhileÏthe€award€is€a€matter€of€discretion,€prejudgment€interest€is€not€a€matter€of€right€inÏunliquidated€damage€cases.€€òòUhlhorn€v.€Keltneróó,€723€S.W.2d€131,€138€(Tenn.ÏApp.€1987).€€Prejudgment€interest€is€allowed€as€a€general€rule€in€cases€where€theÏamount€of€the€debt€is€certain€and€not€disputed€on€reasonable€grounds.€€òòTextileÏWorkers€Union€v.€Brookside€Mills,€Inc.óó,€205€Tenn.€394,€326€S.W.2d€671€(1959).€€ItÏshould€be€allowed€in€accordance€with€the€principles€of€equity.€€òòSchoen€v.€J.C.ÏBradford€&€Co.,óó€667€S.W.2d€97€(Tenn.€App.€1984).ÌÌà àà àIn€this€case€the€amount€of€the€loss€was€not€certain€and€Allstate€had€aÏreasonable€basis€on€which€to€dispute€the€Myintððs€right€to€recovery.€€The€jury€foundÏthat€coverage€was€not€denied€in€bad€faith.€€Therefore,€we€find€as€a€matter€of€lawÏthat€this€is€not€a€proper€case€for€the€award€of€prejudgment€interest.ÌÌà@ àò òVII.ó óÌÌà àà àThe€Myints€assert€that€the€trial€court€erred€in€dismissing€their€claimÏunder€the€Consumer€Protection€Act,€Tenn.€Code€Ann.€ðð€47„18„101,€et€seq.€€In€thisÍconnection,€it€is€important€to€note€that€the€cause€of€action€alleged€arises€fromÏAllstateððs€òòdenial€of€the€claimóó.ÌÌà àà àThe€Consumer€Protection€Act€provides€a€private€right€of€action€forÏð ðunfair€or€deceptive€acts€or€practices€affecting€the€conduct€of€any€trade€orÏcommerce.ðð€€Tenn.€Code€Ann.€ðð€47„18„104(a).€€Following€that€general€statement,Ïthe€act€lists€thirty€specific€acts€or€practices€that€are€prohibited.€€The€bad€faithÏrefusal€to€settle€an€insurance€claim€is€not€in€the€list€„„€although€the€act€does€sayÏthat€it€should€be€liberally€construed€to€promote€the€public€policy€of€protecting€theÏpublic€from€unfair€or€deceptive€practices.€€Tenn.€Code€Ann.€ðð€47„18„102.ÌÌà àà àThe€bad€faith€refusal€to€settle€an€insurance€claim€is€specifically€dealtÏwith€in€Tenn.€Code€Ann.€ðð€56„7„105(a)€which€says€that€an€insured€may€recover€upÏto€a€twenty€five€percent€penalty€òòin€all€casesóó€when€the€insurer,€in€bad€faith,€refusesÏto€pay€the€claim€within€sixty€days€after€demand€has€been€made.€€In€a€number€ofÏcases€the€courts€have€held€that€this€statute€provides€the€exclusive€remedy€for€theÏbad€faith€refusal€to€pay€claims€arising€from€insurance€policies.€€òòChandler€v.ÏPrudential€ins.€Co.óó,€715€S.W.2d€615,€621€(Tenn.€App.€1986);€òòPersian€Galleries,ÏInc.€v.€Transcontinental€Ins.€Co.óó,€38€F.3rd€253,€258„9€(6th€Cir.€1994);€òòBerry€v.ÏHome€Beneficial€Life€Insurance€Co.óó,€No.€1150,€Tenn.€Court€of€Appeals€(KnoxvilleÏ1988).ÌÌà àà àWhile€the€issue€is€not€free€of€some€doubt,€due€to€the€scope€of€theÏConsumer€Protection€Act,€we€think€the€courts€that€have€previously€decided€thisÏissue€were€correct.€€Therefore,€the€trial€court€did€not€err€in€dismissing€the€MyintsÏclaims€under€the€Consumer€Protection€Act.€ÌÌà àà àThe€part€of€the€lower€courtððs€judgment€awarding€the€plaintiffsÏprejudgment€interest€is€reversed.€€Otherwise,€the€judgment€is€affirmed€and€theÏcause€is€remanded€to€the€Chancery€Court€of€Davidson€County€for€any€furtherÏproceedings€that€may€become€necessary.€€Tax€the€costs€on€appeal€to€Allstate.ÌÌÌÓÓÌà àà àà àà àà àà à_____________________________Ìà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌÌÌCONCUR:ÌÌÌÌÌ_______________________________ÌHENRY€F.€TODD,€PRESIDING€JUDGEÌMIDDLE€SECTIONÌÌÌÌÌ_______________________________ÌSAMUEL€L.€LEWIS,€JUDGEÌÌÌÌÌÌÌÌÌÇÑ  ÑÑ ° ÑÑ X Ñà@ àÔ% ‡ ÔÔ%† ;EÔ