Attorney’s Fees Cannot Be Awarded as Punitive Damages Under Tennessee Law When Not Provided For in Contract or Statute

A new Tennessee Court of Appeals decision, Samuel Bridgefourth, Jr. v. Santander Consumer USA, Inc., No. W2013-02468-COA-R3-CV, 2014 WL 3563470 (Tenn. Ct. App. 2014), dealt with a situation involving repossession of the plaintiff’s car by a finance company.  The plaintiff then paid the balance due on the loan.  He then received the title in the mail but never received the vehicle back.  As a result, the plaintiff sued the defendant Santander Consumer USA, Inc. alleging breach of contract, conversion, trespass to chattels, fraud, misrepresentations and violation of the Tennessee Consumer Protection Act. 

Ultimately, the case went to trial.  The trial court awarded Mr. Bridgefourth $6,000.00 in compensatory damages for conversion of the car and “special damages in the amount of $13,348.00 for attorney’s fees necessary to compensate Plaintiff for his losses as a result of Defendant’s actions.”  The plaintiff then asked the court to clarify its order and the trial court changed the $13,348.00 award from “special damages” to “punitive damages”.  As a result, the defendant Santander appealed, arguing that it was not appropriate to award attorneys’ fees in this case.

The Tennessee Court of Appeals noted the rule in Tennessee is that “litigants must pay their own attorney’s fees unless there is a statute or contractual provision providing otherwise.”  Bridgefourth at 2 (citing State v. Brown & Williamson Tobacco Corp., 18 S.W.3.d 186, 194 (Tenn. 2000)).  The Tennessee Court of Appeals next addressed whether the trial court could award attorney’s fees as “punitive damages” as was done in this case.  The Court noted:

The purpose of punitive damages is not to compensate the plaintiff but to punish the wrongdoer and to deter others from committing similar wrongs in the future. Attorney's fees are not punitive in nature. 

Is a Manufacturer or Seller’s Compliance with Statutes and Administrative Regulations a Defense in a Tennessee Product Liability Cause of Action?

Analysis:  A manufacturer or seller’s compliance with federal or state statutes and regulations can have a significant impact on a product liability cause of action.  Compliance with statutes and regulations pertaining to the product can provide a rebuttable presumption that the product is not in an unreasonably dangerous condition for the matter specifically covered in the statute or regulation.  This is limited to situations where the statute or regulation pertains to the “design, inspection, testing, manufacture, labeling, warning or instructions for use of a product.”  T.C.A. § 29-28-104(a) provides as follows:

(a) Compliance by a manufacturer or seller with any federal or state statute or administrative regulation existing at the time a product was manufactured and prescribing standards for design, inspection, testing, manufacture, labeling, warning or instructions for use of a product, shall raise a rebuttable presumption that the product is not in an unreasonably dangerous condition in regard to matters covered by these standards.

An amendment to this statute that took effect October 1, 2011 provided additional protections to manufacturers or sellers that comply with product specific statutes and regulations.  A manufacturer or seller (other than the manufacturer of a drug or device) is not liable for exemplary or punitive damages if:

(1) The product alleged to have caused the harm was designed, manufactured, packaged, labeled, sold, or represented in relevant and material respects in accordance with the terms of approval, license or similar determination of a government agency; or

(2) The product was in compliance with a statute of the state or the United States, or a standard, rule, regulation, order, or other action of a government agency pursuant to statutory authority, when such statute or agency action is relevant to the event or risk allegedly causing the harm and the product was in compliance at the time the product left the control of the manufacturer or seller.

(See T.C.A. § 29-28-104(b)).  This exemption from exemplary or punitive damages...

What is an Additur and When can it be Applied to Change a Jury Verdict in Tennessee?

Analysis:  Judges in Tennessee are often called the “thirteenth juror” because they have the ability to modify a jury’s verdict.  One such way they can change a jury verdict is under T.C.A. § 20-10-101 which provides for an “additur” which simply means the judge can add an amount to the damages that are awarded by a jury.  Specifically, T.C.A. § 20-10-101(a)(1) provides as follows:

(a)(1) In cases where, in the opinion of the trial judge, a jury verdict is not adequate to compensate the plaintiff or plaintiffs in compensatory damages or punitive damages, the trial judge may suggest an additur in such amount or amounts as the trial judge deems proper to the compensatory or punitive damages awarded by the jury, or both such classes of damages.

As a result, if the trial judge considers the jury verdict to be inadequate to compensate the plaintiff, then the judge can suggest an amount to add to the compensatory or punitive damages awarded by the jury.  If this occurs, the defendant has the option to simply accept the additur and then it is considered to be the verdict of the court.  Specifically, T.C.A. § 20-10-101(a)(2) provides as follows:

(2) If the additur is accepted by the defense, it shall then be ordered by the trial judge and become the verdict, and if not accepted, the trial judge shall grant the plaintiff's motion for a new trial because of the inadequacy of the verdict upon proper motion being made by the plaintiff.

If the defendant does not accept the additur, then the trial judge is required to grant the plaintiff’s motion for a new trial and the new trial can then proceed.  The defendant also has the option to appeal the judge’s additur to the Tennessee Court of Appeals.  Specifically, T.C.A. § 20-10-101(b)(1) provides as follows:

(b)(1) In all jury trials had in civil actions, after the verdict has been rendered and on motion for a new trial, when...

Assisted Living Facility – Recent Tennessee Supreme Court decision discusses liability for failure to provide adequate staff by an assisted living facility.

Analysis:  The Tennessee Supreme Court recently decided a case pertaining to the liability of an assisted living facility's management company for failing to provide appropriate staff to the facility (Celebration Way facility).  Wilson v. Americare Systems, Inc., No. M2011-00240-SC-R11-CV, 2013 WL 658078 (Tenn. 2013).  At trial the jury found the management company (Americare Systems, Inc.) of an assisted living facility was negligent, causing the death of a resident, based on the fact it understaffed the facility.  Wilson at 1.  The resident of the facility, Mable Farrar, died from a perforated colon.  The testimony at trial showed that the assisted living facility failed to follow Ms. Farrar’s physician’s order to administer medicine for constipation.  Wilson at 1.  As a result of this failure to provide the prescribed medicine, Ms. Farrar became significantly constipated and her doctor therefore ordered the assisted living facility to give her three to four enemas a day.  Wilson at 1.  The assisted living facility only gave Ms. Farrar one enema on the first day after the order, none on the second day and one on the third day.  On the third day, after she received the enema, her colon perforated and she died.  Wilson at 1, 2.  The testimony at trial established she should not have been provided an enema by the facility nurse based on her physical status at that time.

Testimony at trial showed there were only two licensed nurses that worked at this facility.  Wilson at 7.  One of the nurses testified she was "always on call, twenty-four hours a day".  Wilson at 7.  The two licensed nurses had to cover a lot of shifts and were not paid overtime compensation because they were salaried employees.  Wilson at 7.  The nurses that worked at the facility as well as the regional operations director for the assisted living facility management company testified there were staffing problems at the facility.  There were numerous complaints from the staff at the facility requesting additional staffing in order to be able to provide adequate care for the residents.  Wilson at 6-8.  Despite these complaints, no additional staffing was provided to the facility.  Wilson at 7, 8

Tennessee Consumer Protection Act – The Tennessee Consumer Protection Act was amended to prevent punitive damages under the Act (after an award of treble damages).

The Tennessee tort reform bill of 2011 added a provision in the Tennessee Consumer Protection Act that explicitly prevents an award for punitive or exemplary damages beyond the treble damages found in the Act (T.C.A. § 47-18-101 – T.C.A. § 47-18-130).  This change went into effect with the adoption of Public Chapter No. 510 and applies to all actions that accrue on or after October 1, 2011.

T.C.A. § 47-18-109 (a)(3) now provides as follows:

(3) If the court finds that the use or employment of the unfair or deceptive act or practice was a willful or knowing violation of this part, the court may award three (3) times the actual damages sustained and may provide such other relief as it considers necessary and proper, except that the court may not award exemplary or punitive damages for the same unfair or deceptive practice.

(emphasis added and shows language added to statute).  The change made by Public Chapter No. 510 was the legislature added the last phrase in T.C.A. § 47-18-109(a)(3) providing "except that the court may not award exemplary or punitive damages for the same unfair or deceptive practice."  This addition to the statute expressly confirmed that exemplary or punitive damages could not be assessed for violation of the Tennessee Consumer Protect Act when treble damages are assessed under T.C.A. § 47-18-109(a)(3). 

Public Chapter No. 510 also added T.C.A. § 47-18-109(g) which provides that "no class action lawsuit may be brought to recover damages for an unfair or deceptive act or practice declared to be unlawful by this part."  As a result, this new addition to the Tennessee Consumer Protection Act bars any civil class action lawsuits under the Tennessee Consumer Protection Act.

Tennessee Product Liability Actions – The 2011 Tennessee tort reform bill changed product liability actions against sellers in Tennessee.

Brief Summary:  The new statutory language adopted in Tennessee for product liability actions found in the Tennessee tort reform bill of 2011 changed the circumstances where a seller can be found liable for selling a defective product.  This statute made it more difficult for a plaintiff to recover damages against a seller of a defective product in a product liability action.

Analysis:  The Tennessee tort reform bill of 2011 completely replaced the old T.C.A. § 29-28-106 with new statutory language that is more favorable to sellers in product liability actions.  This statute governs when a product liability action can be maintained against a seller, other than the manufacturer, in Tennessee.  The new T.C.A. § 29-28-106 provides as follows:

No product liability action, as defined in § 29-28-102, shall be commenced or maintained against any seller, other than the manufacturer, unless:

(1) The seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the alleged harm for which recovery of damages is sought;

(2) Altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought;

(3) The seller gave an express warranty as defined by title 47, chapter 2;

(4) The manufacturer or distributor of the product or part in question is not subject to service of process in this state and the long-arm statutes of Tennessee do not serve as the basis for obtaining service of process; or

(5) The manufacturer has been judicially declared insolvent.

It went into effect in Tennessee with the adoption of Public Chapter No. 510 and it applies to all actions that accrue on or after October 1, 2011.  This statute changed the circumstances when a seller...

Tennessee Tort Reform - When can punitive damages be awarded in Tennessee under T.C.A. § 29-39-104?

Brief Summary:  Under the Tennessee tort reform bill of 2011, the legislature provided specific requirements for the assessment of punitive damages in Tennessee.  Many of these requirements were present in pre-existing case law but some of them are new.  The main impact of this statute, T.C.A. § 29-39-104, is it codified case law requirements for punitive damage awards.

Analysis:  The Tennessee tort reform bill of 2011 provided a new statute that provided specific rules for when punitive damages can be assessed in civil actions in Tennessee.  T.C.A. § 29-39-104 outlines the requirements for a punitive damages award under Tennessee law.  This statute is only in effect for causes of actions that accrue on or after October 1, 2011.  T.C.A. § 29-39-104(a)(1) provides as follows: 

(a) In a civil action in which punitive damages are sought:

(1) Punitive damages may only be awarded if the claimant proves by clear and convincing evidence that the defendant against whom punitive damages are sought acted maliciously, intentionally, fraudulently or recklessly;

This statute is broad because it is intended to apply to all civil actions where punitive damages are assessed.  This opening section of the statute sets out the first threshold identifying when punitive damages can be assessed.  The jury or judge must find that the defendant acted "maliciously, intentionally, fraudulently, or recklessly."  Further, this must be proved by “clear and convincing evidence”.  The Tennessee Supreme Court held in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901 (Tenn. 1992) in footnote #3 that "clear and convincing evidence means evidence in which there is no serious or substantial doubt about the correctness of the conclusions drawn from the evidence."

T.C.A. § 29-39-104(a)(2) provides more requirements for a punitive damages award.  This se...

Tennessee Tort Reform – Exceptions to the punitive damages cap found in T.C.A. § 29-39-104

Brief Summary:  The Tennessee tort reform bill of 2011 added a punitive damages cap in T.C.A. § 29-39-104.  This cap has four exceptions.  These four exceptions are: (1) the defendant’s act is intentional; (2) the defendant intentionally concealed or falsified evidence; (3) the defendant was under the influence of drugs or alcohol; (4) the defendant was convicted of a felony (for the act that caused the injury).

Analysis:  I previously discussed the punitive damages cap found in T.C.A. § 29-39-104 that went into effect for all actions that accrue on or after October 1, 2011.  See punitive damages blog post.  This punitive damages cap also has specific exceptions found in the statute.  These exceptions operate to remove the cap put in place in this statute providing that punitive damages awards can not exceed two times the total amount of compensatory damages award or $500,000.00, whichever is greater.  Specifically, T.C.A. § 29-39-104(a)(7) provides: 

(7) The limitation on the amount of punitive damages imposed by subdivision (a)(5) shall not apply to actions brought for damages or an injury:

(A) If the defendant had a specific intent to inflict serious physical injury, and the defendant's intentional conduct did, in fact, injure the plaintiff;

(B) If the defendant intentionally falsified, destroyed or concealed records containing material evidence with the purpose of wrongfully evading liability in the case at issue; provided, however, that this subsection (a) does not apply to the good faith withholding of records pursuant to privileges and other laws applicable to discovery, nor does it apply to the management of records in the normal course of business or in compliance with the defendant's document retention policy or state or federal regulations; or

(C) If the defendant was under the influence of alcohol, drugs or any other intoxicant or stimulant, resulting in the defendant's judgment being substantially impaired, and causing the injuries or death. For purposes of this subsection (a), a defendant shall not be deemed to be under the influence of drugs or any other intoxicant or stimulant, if the defendant was using lawfully prescribed drugs administered in accordance with a prescription or over-the-counter drugs in accordance with the written instructions of the manufacturer;

(D) If the defendant's act or omission results in the defendant being convicted of a felony under the laws of this state, another state, or u...

Tennessee Tort Reform – Punitive damage cap under T.C.A. § 29-39-104, State Farm v. Campbell and Flax v. DaimlerChrysler

The Tennessee tort reform bill passed in 2011 includes a new statute, T.C.A. § 29-39-104, that provides a punitive damages cap for Tennessee civil lawsuits.  It also provides for some exceptions to the punitive damages cap (this will be addressed in a later blog post).  This statute applies to "all liability actions for injuries, deaths, and losses covered by this act which accrue on or after” October 1, 2011.  The entire Tennessee tort reform bill can be found here: http://www.tn.gov/sos/acts/107/pub/pc0510.pdf. 

T.C.A. § 29-39-104 made many changes and clarifications to punitive damage law in Tennessee.  Today I will address the caps to punitive damage awards that were added.  T.C.A. § 29-39-104(a)(5) provides the following:

(5) Punitive or exemplary damages shall not exceed an amount equal to the greater of:

(A) Two (2) times the total amount of compensatory damages awarded; or

(B) Five hundred thousand dollars ($500,000);

As a result, there is a now a cap on punitive damages so the maximum punitive damages award can not exceed two times the total amount of compensatory damages award or $500,000.00, whichever is greater.  This cap provides much greater certainty for potential punitive damage awards under Tennessee law.  It provides defendants with a greater ability to assess the “worst case scenario” in a case and therefore make more informed decisions about whether to take a case to trial.

Prior to this change in the statute, there was guidance from the United States Supreme Court on the maximum amount of punitive damages that could be awarded.  The well known United Supreme Court case of State Farm v. Campbell, 123 S. Ct. 1513 (2003) discussed the upper limits of punitive damages awards that are allowed under the Due Process Clause of the United States Constitution.  The United States Supreme Court discussed various factors that are pertinent to determine the appropriate size of a punitive damages award when compared to the amount of compensatory damages.  The Court stated: