case number seventeen dash six zero three four and k seventeen dash six zero seven nine tamarin lindenberg at all versus jackson national life insurance company argument not to exceed fifteen minutes per side mr you ma it please the court will perry the memphis bar half of defendant appellant jackson national life insurance company from a few minutes before my time starts just lay out what i believe will be the order of operations here as the court is aware th state of tennessee has intervened in this action and would incur current we would you like to reserve and yes ron i would like to reserve two minutes for rebuttal the state has intervened in this action and subject to national and the state would like to allocate ten of their shared fifteen minutes to jackson national and the remaining five to the state i believe the order will be the jackson national will go plaintiff's counsel will go back to nashville have the opportunity to re donna this case comes to this court following a convoluted procedural history that included a jury trial and certified questions to the tennessee supreme court but the three issues before this court are straightforward first the district court erred when it dismissed jackson nationals in a pleader complaint and simultaneously granted the relief that the complaint requested by telling jetson national who to pay and then subsequently instructed the jury that the complaint had been dismissed because there were no adverse claims to the policy proceeds it is undisputed that the waivers that resolved those adverse claims were not executed until six months after jackson national filed i complaint when did you first argue to the district court that it could not rely on lifers in ruling on the action to dismiss yes your honor so it we argued in our motion that the use of the way versed was inappropriate you will note in the trial court record and i'll cite you to the trial transcript to the trial transcript it's e c f number one eighty two and you can start a page id number twenty nine twenty eight jackson nationals trial counsel told the court that it could not consent to the jury instruction there because it did not want to give away its right to challenge the dismissal and the district reliance on the waivers there and you can see you think that preserves your right to that the district court cannot rely on why you first in ruling on the motion to dismiss that's correct your honor you are you have to understand and of course the court understands that until the district court dismissed jets and nationals in a plea or complaint we did not know that the district court would rely on the waivers as the basis for that dismissal and that the same order that dismisses the jackson nationals in a pleader complaint also orders jackson national to pay the policy proceeds to the plaintive which of course the district court could not have had authority to do if the inner put a complain had been dismissed my confused or is it only reversible error if the parties didn't have the opportunity to present her materials and you had that opportunity isn't that correct well your honor i think i will respond to that in two ways so first if the dismissal had been under rule fifty six rather than rule twelve that would be correct so the jackson national should have had the opportunity to submit rebuttal evidence to the extrinsic evidence the waivers on which the district court relied because this was a pleading stage dismissal what was at issue was the pleading sufficiency of jackson nationals in a plea to complaint and because the in a plea to complaint pleaded adverse claims to the policy proceeds it was the enter pleader statute of course that twenty eight u s c section thirteen thirty five require that jack's national actually be threatened of course by adverse claims and it was that's why the district court couldn't dismiss the inner pleader until after the waivers of the minor children had been executed and that did not take place until six months after jackson national filed it in a complaint so in dismissing the inner player complained and relying on the drafting that's correct your honor wasn't there considerable to lie in providing us there was your honor but there was delay because the plaintive never told us who she wanted to waive the claims the plaintiff first submitted a claim for the policy proceeds in february of two thousand and thirteen jackson national wrote her in march and said there are three options we can pay you we can pay your minor children or we can enter plea the funds she never told us which one she wanted to do and she asked us it is under speeded on at least three separate occasions not to enter plead the funds she cannot now cite that delay which she occasioned as evidence of bad faith you are also want to move to the fact that the district court and even allowing the plaintiff to pursue punitive damages disregarded this court two thousand and twelve precedent and how company versus evanston insurance company this court held and published that tennessee's bad faith statute quote precludes punitive damages because it supplies the exclusive extra contractual remedy for an alleged failure for alleged bad faith failure to pay on a policy right but this is a diversity case and so  what do we do when we have a we have a binding published pinioned no question about that and whether or not the district court was required that it doesn't much matter right now because what we need to decide is whether or not did not take into account tennessee supreme court precedent and meant versus all state now mitt has been legislatively reversed it was legislatively reversed before heil and even the district court in this case recognized that the facts at issue in me and also in riyadh were not the same as the facts at issue here in both meant and in riyadh not only was a breach of contract claim that issue but also claims under the tennessee consumer protection act similarly in monte versus nationwide but the point which the plaintiff cites in our principle brief the claims that issue or to is the consumer protection act negligent infliction of emotional distress and a breach of contract so the principle that can be derived from those cases is that when but wasn't that effective holding in that there's nothing in the bad faith statute that limits an insured remedies to those provided in the bad faith statute that's didn't riyad didn't the tennessee court of appeal say you know six circuit you ignored the middle line of cases and so let let let tennessee clear up what you did in error and in a diversity case it's to say law we're looking to correct if we're wrong why does it make any if we inserted something in error that the tennessee courts have since said you were incorrect six circuit and it's the tennessee court that governs this correct that is not correct here on i see that my time has run out but i would like to respond to your question so first of all this court can depart from its own precedent only when there is a clear indication from the tennessee courts that it should do something else there is no precedent from the tennessee supreme court there there's riyad and it relies on m conduct at issue here and as the riyadh court of appeals itself recognized punitive damages generally are not available in breach of contract cases only when there is also conduct that is reckless or otherwise meet the standard for punitive damages held if riyad and meant to govern prefer to thousand and eleven claims then they cannot in fact encapsulate the plaintiff's claims which were not filed until two thousand and thirteen so so in fact the timing of riyadh and wasn't the to see court of appeals on two thousand and thirteen that is correct your honor so then it did follow it followed hile but it relied on meant and meant was an one thousand nine hundred eight case i believe and it was legislatively reversed in two thousand and eleven and so there is some authority to the effect that mitt continues to govern pre two thousand and eleven claims the plaintiffs claims were started in two thousand and thirteen and so even if you credit that position your honor plaintiff claims would not fall under correct so i have two questions for you one do you think i'd like to ask about the ten c intermediate court system so the argument is that we can overrule our president on the basis of one intermediate appellate court decision in tennessee what i'd like to know is is that binding in tennessee in the  separate districts such that one court can ignore another it absolutely operates in separate sections so there's a western section a middle section and an eastern section of the western sections said heil is wrong and the eastern section said heigho is right the eastern section would be free to disregard the western section so one court cannot speak for the whole that is correct and it's also correct this court's own precedents recognize that even if that were not the case the decision of an intermediate state court in a diversity case would be persuasive authority only so even if riyad could somehow speak for the entire state which it can't well we have this hampton decision that seems to suggest otherwise of course a h a unified court system but weak that mean hampton is pretty strong for the proposition that the court of appeal can speak for the state it can and hansen also i believe relied on the district district court certified this case one to the tennessee supreme court only certified the constitutional question and the tennessee supreme court sent it back saying we're not going to answer just the constitutional question but if  sent us both questions the availability of punitive and the constitutional question we would likely take that what's your position you haven't asked us to certify what's your position on whether we are we have not that we don't think the court needs to reach the questions of whether the caps are constitutional because we don't believe that in the case on these facts particularly under hile punitive damages are available as a matter of law the conduct of rape if we stick to our precedent i think that's true to allow the state high court to opine on that question if the court should reach it we have the right to choose to look to the tennessee court of appeals correct that is correct john thank you thank you my name is molly glover and i'm with the firm of birch porter in johnson in memphis and we represent the aptly your honors as a preliminary matter i want to speak to one of the last issues that you addressed to mr perry because i believe he misspoke to see a court of appeal system is a unified system and i wish i had a cite that i could give you some support for that and will happily provide it later but each of korea each of our grand visions are bailing by a decision of a court of appeal sitting in that grand grand  vision so you know that it's just clarify if the western division we decided the case and then the eastern division would be bound by whatever the western division said until the tennessee supreme court overruled it is unlike in the federal courts where the sixth circuit can disagree with the seventh circuit it very much like that yes ok i'm going to the state that question too since i've gotten two different answers thank likewise correctly concluded under tennessee law that this lindenberg was intitled to recover both bad faith damages and common law breach of contract damages including punitive damages and finally that the  distinction that is because heil did not address common law breach of contract that is correct and that is what bitcoin is here that is and then finally your honor is that the district court correctly declined to disturb the jury's verdict when it found there was sufficient evidence to support the jury verdict on miss lindenberg cross appeal we've asserted that the district court erred when it reduced the jury's punitive damages claim to that of two times the compensatory damages award in accordance with t c a twenty nine thirty nine one zero four which was the legislative cap imposed imposed by the tennessee legislature we have  d the court to strike down twenty nine thirty nine one zero four on constitutional grounds thus the intervention of the state on that issue would be a pretty extraordinary thing for a federal court to do to strike a state statute under state constitutional law without hearing from the state court it's a unique challenge we have your honor but we have that is an issue that we've raised and it was presented to the t supreme court and it bounced that issue back to the trial judge and he made his ruling so that this is why we present it to your honor's today yet so do you think given that they sent it back and said if you send us the antecedent question because they can't and certainly we don't object to that and think that would be reasonable and do you think the emceed question is already answered in tennessee law the a to see that question being whether it's whether punitive damages it's certainly clear that the trial court the trial court shall reduced the punitive damages award to two times that of the compensatory award or five hundred thousand dollars grants if you look at the or i think that that would give a lot of us doing this type of work lots of relief if that is considered advisory and we could return to the day when our trial judge acting as a juror claims that a parade of horribles happened when the district court dismissed its cut counter complaint for inner pleader in dismissing the defendant's action the district court correctly applied the standard of twenty two u s c thirteen thirty five filed five months after the deadline in the defendant's own policy for it to pay the proceeds to pay the death benefit and as our trial court noted these are the facts that defend policy at issue at the time it was issued in two thousand and two when she was then the wife of thomas lane and burke it pled that the surviving children were named in the policy as the contingent beneficiaries that they're after ms lindenberg mr linden burr were divorced and executed a marital dissolution agreement that thomas lindenberg died on january twenty second two thousand and thirteen and that the death daughter of mr linden from a prior marriage is the only biological daughter of the deceit and those were the facts that defendant claimed created the basis for its inability to pay the death benefit of no mention of the minor children only to say as to williams well they there was a reference to the minor children in as much as contingent beneficiaries were surviving children so nothing specifically raised about a concern about the minor children having not been provided for policy of insurance that was supposed to have been healed by mr lindeberg according to the m t a the first is she raised by the defendant is that the district court erred in considering the waivers of the minor children and miss lindon bar on a twelve b sixteen hundred and as your honors have noted that was not raised at the district court level and we believe has not been preserved but any of it that argument and their claim both claiming entitle me to a specific pool of money or property having a value greater than five hundred dollars there were no facts at the time the court considered the plaintiff's motion to dismiss the interplay direction that the court could have relied on to have found that their work any adverse climates and when the court was making its initial threshold determination as to whether it had subject matter jurisdiction under the interplay or statute that was a crucial determination whether there were in fact any adverse claima it's important to note the timing of those waivers and how all that happened rather than respond to the motion to dismiss the plaintiff the defendant was granted a stay in responding and then jointly moved with the plaintive to have guardians ad litum appointed who would then weigh the rights of the minor children all that happened while the motion to dismiss was pending the trial court appointed guardian ad litum under federal law civil procedure seventeen c not the tennessee guardianship act that the defendants later argue they had been appointed under but the two guardians ad litum that the court appointed were the same family friends that the plaintiff had asked pre claims and joined in the motion to dismiss with the plaintiff when all of that had been done only then did the defendant respond to the motion to dismiss arguing at that time that the waivers of the guardian item or insufficient that they had not met the requisites of the tennessee guardianship at which the trial court later said never implied appoint them guardians under the terms the guardianship pact only under seventeen c they never decision as to whether or not there was subject matter jurisdiction under the inner pleader act there were in fact no adverse clemens the district court properly found that no real reasonable fear of exposure to double the ability or conflicting claims was possible even if we assume that the court improperly considered the waivers which we don't agree that it did but if they if we assume that the waivers were necessary to the ultimate determination as to whether the court had subject matter jurisdiction under the inner plate or statute in its order that document thirty two in the record dismissing the defendant's complaint for found that the miracle dissolution agreement was not in the us under tennessee the tennessee supreme court decision of ballard's vs bowers that it was clear that marital dissolution agreement or divorce cannot revoke a beneficiary designation and that was a important point in the law that in health counsel for the defendant had failed to recognize at the time he was evaluating the playing therefore an independent ground the court the trial court found that the defendant had no real or reasonable fear of exposure to double liability in the court reached that conclusion without consideration of the waivers valley we would point out that the dismissal was immaterial to the outcome of the trial had the court not dismissed the inner pleader complaint there was no guarantee that the defendant would have been discharged from the litigation in a pleader statute itself law has stated interpret ing that statute it makes clear that the stakeholder made to be discharged where there are no adverse claimants unless the stake holder may be independently liable to the plaintiffs which of course was a situation here defendant also wrongfully assumes that in denying this lindbergh's motion to dismiss the inner played in or played or action that would have somehow equated to a finding a good day that it had acted in good faith in its failure to pay her the jury heard all the reasons the defendant gave her not timely paying her it heard all the reason the defendant gave for not timely filing an inner plater action and they rejected them and didn't feel that any of those had actually motivated the decision that the defendant made not to pay her the jury charge that defendant complains about in that the jury was actually told that the court had dismissed the inner pleader action also told the jury this that complaint that waivers had been obtained from guardian sideline him for the minor children the date those waivers had been  obtained so it was clearly within the understanding of the jury that the interplay to complain had been dismissed but that also waivers had been obtained so we believe that that was a neutral touring charge and certainly didn't affect the outcome of the case defendant has not been able to establish that the dismissal of the inner player was improper or that it affected the outcome next the district court properly interpreted t c a fifty six seven one hundred five in finding that the plane could recover statutory bad faith damages as well as common law a punitive damages on her breach of contract claim as the court correctly concluded the statutory failure to timely pay damages are distinct and different from punitive damages fifty six seven one zero five a says is up to a twenty percent penalty against an about two minutes thank you just last night like to address your question first about the unification of the state trial court system and i want to be clear here if there are competing decisions from the western district of the tennessee court of appeals of western division the eastern division trial courts in the western division must follow the decision of the tennessee court of appeals from that division of the state there but what i'm asking is if a question first reaches the western division of the first case court the state of pine on a particular question and it says the will of and then the same question arises in the eastern division the you can division say well i might be persuaded by the western division or does it say i am bound thirty five and whether there were adverse claimants that judge strange was mentioning to the plaintiff's counsel your honor it is clear that there were adverse claimants because the waivers were necessary in order to allow the district court to dismiss the inner pleader and if it instruction to the jury the district court identifies two reasons that it dismissed jackson nationals and a polluter first it says that the marital dissolution agreement at issue did not revoke miss lindenberg status as a primary beneficiary second it says that there were no adverse claims because the minor children had waived any claim to the policy proceeds and how would those instructions have changed if the court had granted summary judgment instead of  that the case if your inner pain played or klein only made a klein for williams's the adult daughter and did not in fact allege a contradictory klein on the basis of the children i'm glad you mentioned that judge strange so let me say first dissolution agreement that created the minor children's constructive interest in the policy proceeds was ambiguous that marital dissolution agreement spoke of a jackson national policy but it did not say which policy it did not identify a policy number and tennessee supreme court precedent under a whole versus hoed holt it's clear that when a divorce decree or marital dissolution agreement requires a policy holder to maintain a certain amount of coverage for policy benefits and fails to do that those beneficiaries have a constructive interest in any other policy hild by that policy holder and  party was required to do then that goes away that's correct and it is undisputed here that mr linden berg did not maintain the policy that the marital dissolution agreement required him to maintain for the benefit of the minor children and that is why they had an interest in the policy proceed that issue here and that is why despite having dismissed jackson nationals enter pleader the district court had to rely on the waiver of the minor children's claims in order to find that there was no adversity i also want to know j your earlier question that jackson national and its judgment as a matter of law plainly stated in a footnote that the procedural dismissal of jackson nationals in a plea to complaint was improper because it relied on the waivers at issue all right thank you thank you judge  may have placed the court joe whalen on behalf of the state of tennessee the state is asking this court to uphold the district court's ruling on the constitutionality of the damage cap plan of constitutional challenge addresses a fundamental question which is whether the jury can what remedies are available under the law certainly the legislature has the power to establish legal remedies but what plaintiff is arguing is that the jury also has this power plant of claims that if a jury is allowed to make a finding on damages the legislature cannot place a limit on how much you can rock recover that's really no different than saying that the jury can define a legal remedy the damage cap represents a policy decision by the legislature on the amount of punitive damages that someone can recover under the law it effectively says that there is no remedy above a set amount but plaintiff argues the jury can change that remedy that the jury can award more damages the law provides and that's simply not the case argument is that it infringes on the right to a trial by jury correct well the jury does not the the ability to decide what remedy the law provides and what damage that does that says how many how much damage is someone can recover so the jury makes a finding it does not allow it does not  ability to award more damages in the law provides doesn't that depend on what the historical tradition is in the state regarding who assistance punitive damages well there is an underlying question of whether somebody can recover under a particular cause of action to see whether the right to a trial by jury even applies and here there's a question about that because planet has only shown that in eight hundred forty is when he could first recover punitive damages in tennessee that was the earliest case that she could cite to and i would add there's an underlying question because here plaintiff is raising a breach of contract case and that's what she was awarded damages for and i think justice o'connor of the u s supreme court said that basically until i think maybe in the one nine hundred fifty s or so it was when you could first to cover punitive damages for breach of contract plaintiff's argument simply does not reflect the law in tennessee but it play out a notice that the b argument did not include a reference to carruthers versus tillman which is a north carolina seven hundred ninety seven case from the north carolina supreme court that explains the availability of exemplary damages  it would appear that there is some history between when tennessee was a part of north carolina in north carolina itself and in early tennessee cases that suggests that it is the province of the jury to determine exemplary damages if that is the state of the law of the historical law doesn't that become a right of a jury trial why i don't think there have not been a tennessee case law and where it derives from north carolina a little we see it derived from north carolina when tennessee was a part of north carolina because it was it was preliminary to the tennessee constitution i'm not familiar with that decision your honor i apologize but even if it is considered a finding of fact with intent to see it still would not be a violation of the right to trial by jury and as this court to consider that because the jury would still be allowed to assess punitive damages it's just so they are taken that right is not taken away from them it's just those punitive are capped at a certain amount by the trial court correct because the jury does not get to award more law provides and there's a number of reasons why the statute is constitutional there is also not economic cap'n tennessee and that statute is also constitutional for the reasons i've said other punitive damages are special and distinct from not economic damages and that was discussed a lot by the district court in this case in tennessee the courts have said that there is no underline statutory or constitutional right to punitive damages and that's because punitive damages are a windfall to the plaint they are not intended as compensation their purpose is to punish the defendant the plaintiff has no constitutional right to puta damages so she can't claim that her rights but denied by the damage cap the tennessee supreme court and you relate that to to the the tennessee constitutional right to trial by jury correct and isn't that the klein yes that and i know that there is some question federal constitution but that case also says but the states can do with their constitution as they deem appropriate so you think that even if there is a history of cases when tennessee was a part of north carolina and when tennessee then was initiating its own constitution that suggested that at that point exemplary or punitive damages were a province of the jury what is your grounds for saying that that would not change your argument since the tennessee constitution was drafted at the time that that was what was done by juries there's a two part argument there's a two part explain ation of that the first is that the right to a jury trial doesn't even apply if there was no remedy at that time but the second question looks to what the actually was no remedy for a common law breach of contract for punitive damages but is saying there that there was that he has been the case caruthers brothers but it which says there was a right to that juries did exemplary damages in seventeen late seven hundred ninety so i know you haven't read that case but let's take that as a given that it was available as of an available remedy in seven hundred ninety i think the question now is whether the legislature can put a cap on the amount that the jury  and the second part of the analysis is that if the right to a jury trial does apply there's a question about the scope of the right and what the right actually encompasses and the state's position here is that even if there is a right to a jury trial it doesn't include the ability for the jury to award more damage civil trial yes and the plaintiff makes a number of arguments about how tennessee is distinguished by the language of its constitution she refers to the word inviolate and basically saying that change is you know the analysis i don't think inviolate does not define what is protected by the constitutional right it simply means that the right should not change over time and here no one states the question that's that's where we're all struggling this is a morass of historical stuff there's no question constitutional limits so are we right back to when the tennessee constitution was drafted and what was the understanding of the right of the trial by jury i think even when the constitution was drafted there was an understanding that the legislature could define what remedies are available under the law within the constitution so in then if i can find cases or if your opposing counsel provides cases that shows that that was the understanding at law at that time when the tennessee constitution was drafted wouldn't that challenge the ability to put a cap i do not believe so i think even at that time there was a recognition of the legislature could even a limited a remedy so if you can eliminate  remedy it certainly means you could also place a limit on a remedy that is available eliminate a statutory remedy but she cannot eliminate a common law i disagree with that point there's plenty of case law that says you abrogate the common law change the common law eliminate common law remedies and other what the tennessee legislature eliminate compensatory damages but we're just not doing that story damages for breach of contract if you can bring you know you have something qualifies for a specific performance great but otherwise it's very different i think that my present different constitutional arguments than what we're dealing with here but i think the problem is why why would that be any different if both were resided i n the jury's parag a two of when the tennessee constitution was drafted but again i think the legislature has control over what remedies and whether you eliminate completely compensatory damages i think six isn't the tenth the criminal jury trial provision but there is a another provision might forget what it is that very clearly deals with jury trial right criminal jury trial right an a lot of work on early criminal jury so i'm pretty sure that's true and if what the jury did is always what the jury did then that would be unconstitutional too great i just don't think there's a situation where that can't be right it can't be right that the tennessee law giving judges the power to sentence criminal defendants is unconstitutional i would think so all right thank you very much