TBA Law Blog


Posted by: Christy Gibson on Dec 19, 2012

by Marnie Huff*

NEWS

January 25, 2013 Deadline for Comments on Changes to Supreme Court Rule 31

The Tennessee Supreme Court has asked for comments on proposed changes to Rule 31 requested by the Tennessee ADR Commission. The commission filed a petition asking the court to amend Sections 11(b)(6) and (12) dealing with operations of its Grievance Committee.  The deadline for written comments is January 25, 2013. A copy of the court order and proposed changes is at http://www.tncourts.gov/sites/default/files/sc_order_soliciting_comment_sc_rule_31_section_11-_11-2012.pdf.

January 25, 2013 Deadline for Comments on Attorney Advertising Petition

The Tennessee Association for Justice filed a petition to amend the Rules of Professional Conduct regarding advertising, in order to “reduce the threats to the civil justice system posed by some advertising in the State of Tennessee and to help civil justice clients receive fair and unbiased consideration by juries.”  The Tennessee Supreme Court is accepting written comments on proposed amendments to the Rules, with a January 25, 2013 deadline.  A copy of the Court’s order and the petitions to adopt changes to the rules is at https://www.tba.org/sites/default/files/TAJ_Petition_11262012.pdf.

ADR Commission’s New Policy 15 on Training Waiver and Policies 13 and 14 Encouraging Pro Bono Mediation

On October 23, 2012, the ADR Commission adopted Policy 15.  The new policy provides that “applicants applying for a training waiver for the ‘specially trained in domestic violence issues’ designation will pay $50.00 to the ADRC” for the waiver.  On April 24, the Tennessee ADR Commission adopted Policies 13 and 14, encouraging pro bono mediation.  The complete set of ADRC policies is at http://www.tncourts.gov/programs/mediation/resources-mediators/policies.

Judicial Ethics Committee Weighs in on Social Media – May Provide Some Guidance for Arbitrators and Mediators

On October 23, 2012, the Tennessee Judicial Ethics Committee issued Advisory Opinion 12-01 regarding the use of social media among judges.  The opinion states in part: “… while judges may participate in social media, they must do so with caution and with the expectation that their use of the media likely will be scrutinized . . .”  Because of the constantly changing nature of social media, the committee could not be specific as to allowable or prohibited activity.  Judges “must be constantly aware of ethical implications as they participate in social media and whether disclosure must be made.”  A copy of the advisory opinion is at http://www.tncourts.gov/sites/default/files/docs/advisory_opinion_12-01.pdf.

Reminder on Rule 31 Reports Where Co-Mediators Involved

In its spring 2012 newsletter, the ADR Commission provided advice on Rule 31 Reports when there are co-mediators:  “ If you are a co-mediator in a case, please note that only ONE mediator per mediation needs to fill out the online mediation report pursuant to ADRC Policy 10. In the “other” section of the online report, type in the co-mediator’s name.”  ADR News at http://www.tncourts.gov/sites/default/files/docs/2012_adrc_spring_newsletter.pdf

WEBSITES YOU CAN USE

Check out these websites, full of information helpful to neutrals as well as advocates in alternative dispute resolution:

TENNESSEE CASES

ARBITRATION

Two Related Cases on Scope of Arbitration Clause: Claims not Preempted by Federal Law or Barred Due to Prior Arbitration in Crop Insurance Case

In Plants, Inc. v. Fireman’s Fund Insurance Company et al., No. M2011-02063-COA-R3-CV (Tenn. Ct. App. August 13, 2012), the Court of Appeals addressed the scope of a binding arbitration clause in a federally-reinsured multiple peril crop insurance policy and the scope of federal preemption of state common law claims. Plants, Inc. had catastrophic loss of nursery stock, primarily trees and shrubs, due to a tornado.  The adjuster determined, due to “under-reporting of inventory,” that Plants, Inc. was entitled to recover only $195,225 on a claim in excess of $1 million. Plants, Inc. demanded arbitration where the arbitrator determined that Plants, Inc. was due no additional payment.  Plants, Inc. then filed this action asserting common law claims against the insurer, its adjustment firm, and the independent insurance agency that solicited the policy, for breach of contract, negligence, breach of the duty of care, negligent misrepresentation, and statutory bad faith. The trial court granted summary judgment with regard to all claims against the insurer and its adjustment firm, who had been parties to the arbitration, on collateral estoppel and res judicata grounds because the issues were decided at arbitration and Plant, Inc.’s only remedy was judicial review of the arbitration decision.  On appeal, the Court held that Plant, Inc.’s state law claims for breach of contract, breach of duty of care, and statutory bad faith were preempted by federal law because  they “pertain to actions or inactions ‘required or authorized’ under the FCIC [Federal Crop Insurance Corporation].”  The claims for negligence and negligent misrepresentation, on the other hand, were not preempted by federal law and not barred by collateral estoppel or res judicata: the arbitrator “only considered the state law claims in the context of reforming the insurance policy” and did not consider the merits of the negligence or negligent misrepresentation claims “except to evaluate them in the context of whether [one of the parties] failed to comply with FCIC procedures.”  Copy of opinion at https://www.tba.org/sites/default/files/plantsinc1_081412.pdf.

In Plants, Inc. v. Fireman’s Fund Insurance Company et al., No. M2011-02274-COA-R3-CV (Tenn. Ct. App. August 13, 2012), the second appeal among the same parties, the Court of Appeals again considered the scope of a binding arbitration clause in a federally-reinsured multiple peril crop insurance policy and the scope of federal preemption of common law claims. In this case, the insured, Plants, Inc., suffered a catastrophic loss due to a severe freeze in 2007. The adjuster determined there was “under-reporting of inventory,” so the insured was only entitled to recover $115,822. Plants, Inc. initiated arbitration pursuant to the insurance policy, but then withdrew from arbitration.  Instead, it filed suit, asserting common law claims against the insurer, its adjustment firm, and the independent insurance agency that solicited the policy, for negligent misrepresentation, breach of duty of care, negligence, breach of contract, and statutory bad faith. The trial court granted summary judgment on the claims against the insurer and its adjustment because the policy mandated arbitration. The Court of Appeals determined the breach of contract, breach of duty of care, and statutory bad faith claims were preempted by federal law that requires arbitration and judicial review of the arbitration as the exclusive remedy for such claims, in addition to permitted mediation.  The negligence and negligent misrepresentation claims, on the other hand, were not preempted and did not fall within the scope of the arbitration clause.  Copy of opinion at https://www.tba.org/sites/default/files/plantsinc2_081412.pdf.

Court Rejects Challenge to Selection of Arbitrator

In Pediatrix Medical Group of Tennessee, P.C., v. Victor J. Thomas, M.D., et al., No. E2011-02421-COA-R3-CV (Tenn. Ct. App. October 29, 2012), an employment contract dispute, the parties had been ordered to arbitrate.  The parties’ contract provided for selection of one arbitrator by the employer, one by the employee doctors, and one selected by the other two arbitrators.  Another provision stated that the arbitration proceedings “shall be conducted in accordance with the American Health Lawyer’s Association [AHLA] Dispute Resolution Service, Rules of Procedure for Arbitration.”  The doctors challenged the employer’s selected arbitrator on two grounds: 1) the selection process was limited to the default process in the AHLA Rules; 2) an unsupported allegation that the employer’s arbitrator had previously served as an arbitrator in a matter where the employer or a related party had been successful.  Rejecting the doctors’ claims on appeal, the Court affirmed the trial judge’s ruling that 1) the employer’s selection was appropriate because that the AHLA default rule for arbitrator selection did not apply where the parties’ contract spelled out a selection process; and 2) the trial court did not have subject matter jurisdiction (at this time) to appoint one or more arbitrators pursuant to the Tennessee Uniform Arbitration Act, Tenn. Code Ann. § 29-5-304, because the agreed selection method had not “failed.”  Copy of opinion at https://www.tba.org/sites/default/files/pediatrix_102912.pdf.

Nursing Home Contract with Arbitration Clause

In Mary Ann Caudle, Next of Kin and Co-Executor of Estate of Louise K. Fite, Deceased, and on Behalf of Wrongful Death Beneficiaries of Louise K. Fite v. Columbia Operations, LLC d/b/a Life Care Centers of Columbia and Life Care Centers of America, Inc., No. M2011-02194-COA-R9-CV (Tenn. Ct. App.August 27, 2012), the Court of Appeals reversed and remanded thetrial court’s grant of a motion to compel arbitration in a nursing home wrongful death case.  Pursuant to a durable power of attorney, the decedent’s daughter had signed nursing home admission documents, including an agreement to arbitrate disputes with the nursing home.  The arbitration clause provided that the arbitrator would be selected from the AAA and AAA rules of procedure would apply.  Relying on Wilson v. Americare Systems, Inc., No. M2008-00419-COA-R3-CV, 2009 WL 890870 (Tenn. Ct. App. March 31, 2009), the Court held that the daughter’s authority to contract for her mother’s “entry into and maintenance” at the nursing home, including the authority to execute the arbitration agreement, was subject to the power of attorney’s condition precedent that, in the opinion of her physician, the mother was “incompetent or incapable of action” for herself.  Declining to consider a second issue that was not certified for the interlocutory appeal, the Court stated that, on remand, if the trial court were to find that the mother was incompetent, then it will consider the second issue of whether the arbitration agreement is not enforceable because the AAA no longer takes such cases.  Copy of opinion at https://www.tba.org/sites/default/files/caudlem_082812.pdf.

Legal Malpractice Claim Regarding Representation in Securities Arbitration

In Joseph Barna v. Preston Law Group, P.C. et al., No. M2011-02016-COA-R3-CV (Tenn. Ct. App. May 31, 2012), the Court of Appeals affirmed summary judgment in favor of the plaintiff’s former attorney in a legal malpractice case because the defendants negated an essential element of the plaintiff’s claim.  The attorney had represented the plaintiff in an arbitration of a securities dispute.  In an earlier appeal involving the same parties, the Court had reversed summary judgment because the attorney had submitted insufficient conclusory opinions in an affidavit.  In this second appeal, the record now included the affidavit of a Nashville attorney, who was an expert in securities litigation, stating that the arbitration case was not winnable by any attorney.  The affidavit of the plaintiff’s expert was insufficient to create a disputed issue of fact.  Copy of opinion at https://www.tba.org/sites/default/files/barnaj_060112.pdf.

SETTLEMENT

Settlement of Employment Discrimination Suit Does Not Preclude Subsequent Suit for Federal Retaliatory Discharge Claims.

In Porsha Perkins v. Metropolitan Government of Nashville and Davidson County, No. M2010-02021-SC-R11-CV (Tenn. August 22, 2012), an employee of a Metro Nashville agency was discharged after she filed complaints with the EEOC and sued Metro alleging employment discrimination. After appealing her termination to the Metro Civil Service Commission, she settled, receiving backpay and other consideration in exchange for her agreement not to apply for or accept future employment with the agency that discharged her. The employee subsequently sued Metro alleging, among other things, retaliatory discharge in violation of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (“ADEA”). Reversing and vacating the judgment of the Court of Appeals, the Tennessee Supreme Court relied on Burlington N. & Santa Fe Ry. V. White, 548 U.S. 53 (2006)to hold that the employee’s acceptance of the settlement did not preclude her from establishing that her termination constituted an adverse employment action for purposes of her federal retaliatory discharge claims.  The settlement expressly excluded the employee’s EEOC complaints.  Copy of opinion at https://www.tba.org/sites/default/files/perkinsp_082312.pdf.

Mediated Settlement on Fraud in Inducement Grounds Not Overturned

In Tia Gentry v. Dale Larkin, No. E2011-02402-COA-R3-CV (Tenn. Ct. App. July 13, 2012), a minor child, Tia Gentry, and her stepfather had entered into a mediatedsettlement of a prior lawsuit in which Gentry alleged that her stepfather had killed her mother, and was therefore not entitled to any life insurance proceeds or inheritance per the “Slayer’s Statute,” Tenn. Code Ann. § 31-1-106.  Later, the stepfather was convicted of first degree murder in the death of the minor’s mother.  Upon reaching majority, Gentry filed suit seeking to overturn the settlement agreement based upon fraud in the inducement, as her stepfather had represented that he did not kill Gentry’s mother. Affirming the trial court’s decision to dismiss, the Court of Appeals agreed that the issues in this new lawsuit already had been, or could have been, litigated.  The Court noted that Gentry had never relied on her stepfather’s assertion that he did not kill her mother.  Also, the mediated settlement was entered into as a judicially approved settlement with all the requisite safeguards, given Gentry’s minority status at the time.  Copy of opinion at https://www.tba.org/sites/default/files/gentryt_071312.pdf.

Portion of Breach of Contract Case Re: Settlement of Employment Case Not Time-Barred

In Michael McGhee v. Shelby County Government, No. W2012-00185-COA-R3-CV (Tenn. Ct. App. June 11, 2012), a former employee of Shelby County sued the county for breach of a settlement agreement executed in 2000.  He alleged that the county failed to change his employment record to reflect that he resigned, pursuant to a settlement agreement, and/or by informing a potential employer that he was fired. The trial court granted the county’s motion to dismiss statute of limitations grounds.  On appeal, affirming in part and reversing in part, the Court of Appeals concluded that: 1) the contract is severable, therefore, the former employee has two separate causes of action for each breach of the contract; 2) the cause of action for breach of an obligation to change the employment records was correctly dismissed on statute of limitations grounds; 3) the county’s contractual obligation to answer employment inquiries per the settlement agreement  was not implicated until a condition precedent occurred (when a third party inquired as to employment record); and 4) the breach of this obligation accrued when the county disseminated information counter to that contemplated in the settlement agreement.  Accordingly, the former employee’s claim that Shelby County violated the express terms of the settlement agreement in 2010, by informing his potential employer that he was fired, is not time-barred.  Copy of opinion at http://www.tncourts.gov/sites/default/files/mcghemopn.pdf.

Settlement Unambiguous; Fraud Claim Not Considered

In Timothy Scott Marcum, et al. v. Haskel “Hack” Ayers, et al., No. E2012-00721-COA-R3-CV-(Tenn. Ct. App. October 15, 2012), the Court of Appeals held that the parties’ settlement agreement, resolving a dispute between the buyer and seller of real estate, was an unambiguous release of all claims past, present, and future.  Any alleged fraud was committed in connection with the real estate sale, not to induce the buyer into entering into the settlement.  Copy of opinion at https://www.tba.org/sites/default/files/marcumt_101512.pdf.

Forgetting County Policy When Agreeing to Settlement at Judicial Settlement Conference

In James Lewis Jackson v. John N. Jewell et al., No. M2011-01838-COA-R3-CV (Tenn. Ct. App. June 6, 2012), the Court of Appeals affirmed the trial court’s denial of defendant Wilson County’s Tenn. R. Civ. P. 60.02 motion to set aside an agreed order of compromise and settlement reached at a Judicial Settlement Conference.  Wilson County asserted that the agreement would violate a policy of the Wilson County Road Commission and that it “forgot” the policy when entering into the agreed order.  County representatives with authority to settle were present at the Judicial Settlement Conference.  The trial court’s order was not an abuse of discretion.  Copy of opinion at https://www.tba.org/sites/default/files/jacksonj_060812.pdf.

Settlement Enforced Against Party Unrepresented at Judicial Settlement Conference

In PNC Multifamily Capital Institutional Fund XXVI Limited Partnership, et al. v. Carl Mabry, No. W2011-01679-COA-R3-CV (Tenn. Ct. App. November 26, 2012), the parties had participated in a judicial settlement conference where one of the parties was not represented by counsel.  The parties signed a written agreement which contemplated the execution of more formal settlement documents.  When the formal documents were presented, the party who was not represented at the time of the settlement conference refused to sign. On appeal, the Court of Appelas affirmed the trial court’s decision to enforce the settlement.  Copy of opinion at https://www.tba.org/sites/default/files/pnc_050412.pdf.

WORKERS COMPENSATION BENEFITS REVIEW

Workers Comp Benefits Review Process Must Be Exhausted Before any Lawsuit

In Lacey Chapman v. Davita, Inc.,No. M2011-02674-SC-R10-WC (Tenn. September 21, 2012),

an employee filed a request for assistance with the Tennessee Department of Labor after her workplace injury. After about six months of inaction by the Department, the employee filed a complaint for workers’ compensation benefits against her employer. On extraordinary appeal, the Supreme Court held that the trial court did not have subject matter jurisdiction because the employee did not exhaust the benefit review conference process required by Tenn. Code Ann. § 50-6-203 (2008).  Copy of opinion at http://www.tncourts.gov/sites/default/files/chapmanlaceyopn.pdf.

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* Marnie Huff is past Chair of the TBA Dispute Resolution Section.  She serves as an elected member of the Council of the ABA Section of Dispute Resolution and its Executive Committee, and chairs the Section’s Membership Committee.  She is also a new Co-Chair of the ABA Advanced Mediation and Advocacy Skills Institute.  Marnie is an independent mediator, arbitrator and workplace conflict management consultant in Nashville.  Her website is at www.MargaretHuffMediation.com