FILED

June 25, 1998

Cecil Crowson, Jr.

Appellate C ourt Clerk

 IN THE COURT OF APPEALS

AT KNOXVILLE

DENVER PAT HANKINS and wife, ) GREENE CIRCUIT

MICHELLE L. HANKINS, ) C. A. NO. 03A01-9710-CV-00468

 )

 Plaintiffs-Appellees )

 )

 )

 )

vs. ) HON. JOHN K. WILSON

 ) JUDGE

 )

 )

 )

ROBIN DWAYNE SEATON and PET )

INCORPORATED, ) REVERSED AND REMANDED

 ) 

 Defendants )

DANIEL D. COUGHLIN, Milligan & Coleman, Greenville, for the

Intervenor-Appellant, Tennessee Farmers Mutual Insurance Company.

ROGER A. WOOLSEY, Greenville, f or th e Plaintiffs-Appellees and

Third Party Defendant-Appellee.

O P I N I O N

McMurray, J.

This action was originally brought by the plaintiffs-appellees

t o recover damages for personal injuries and related expenses

incurred in a motor vehicle accident. The plaintiffs did not make

any claim for property damag es. Plaintiffs' property damage was
2

paid under their contract of insurance with the intervenor,

Tennessee Farmers Mutual Insurance Company (Tennessee Farmers).

Tennessee Farmers also paid plaintiffs' medical expenses in the

amount of $1,619.00. The plaintiffs executed a subrogation

agreement in favor of Tennessee Farmers. Tennessee Farmers' total

subrogation claim was for $4,720.00 , representing the medical

expenses and $3,101.00 paid for property damages.

Tennessee Farmers subsequen tly advised the plaintiffs an d

their attorney of the subrogation interest. On December 8, 1994,

a motion to amend th e complain t to include a claim for property

damages was made b y th e plaintiffs. No order allowing or disallowing the amendment was ever signed by the judge or entered by

the court. On February 17, 1997, the plaintiffs settled their

claims against the defendants extinguishing all claims against the

defendants including Tennessee Farmers' subrogation clai m s. On

March 31, 1997, Tennessee Farmers moved to intervene and asked the

court to set aside the order of settlement and allow them to assert

a cross-claim agai nst the plaintiffs and a third-party claim

against their attorney. The court allowed the int ervention and

a fter a h earing denied the motion to set aside the order of

compromise and settlement between the original plaintiffs a n d

d e fendan ts. The trial court dismissed the property damage claim

made by Tennessee Farmers on the grounds that the statute of
1

Insofar as we are able to determine, the court made no order prorating

expenses and attorney fees.

3

limitations barred the action since no amendment was ever made to

assert the claim. The court allowed a recovery of $1,619.00 (which

had been t endered by the plaintiffs to Tennessee Farmers) for

medical expense, however, Tennessee Farmers was required to share

p r o rata in the plaintiffs' expenses and attorney fees. 1

 From

this order Tennessee Farmers appeals. We reverse the action of the

trial court and remand for such other and further action as may be

required in conformity with this opinion.

Tennessee Farmers charges the court with error in dismissing

the intervening complaint and motion to set aside the settlement.

I t is further asserted that the court erred in reducing the

recovery for medical expenses on a pro rata basis.

W e will first examine the chronology of events relating to the

issues under consideration here. The accident which gave rise to

the origin al a ction occurred on May 17, 1993. This action was

filed on May 16, 1994, with no claim being made by the plaintiffs

against the original defen dants for property damages. By letter

dated November 3, 1994, the attorney for Tennessee Farmers advised

the plaintiffs' attorney of Tennessee Farmers' subrogation

interest. In the letter, Tennessee Farmers suggested that the
4

original complaint be amended to assert the property damage claim

i n the name of the plaintiff, Pat [Denv er] Hank ins. In the

a lternative, plaintiffs' attorney was advised that if he d id no t

wish to amend, Tennessee Farmers would inter vene . Tennessee

Farmers also offered to assist in trial preparation and with the

trial of the case as well. The letter f rom Tennessee Farmers'

attorney stated in part: "... Tennessee Farm Bureau has some

original ph oto graphs. ... When I get them I will show them to

you." He also noted that he had copies of some of the medic a l

b i lls. Tennessee Farmers included with the letter a pro pose d

motion to amend but not a proposed order allowing the amendment.

B y letter dated December 8, 1994, plaintiffs' attorney responded to

the letter from Tennessee Farmers' attorney. In h is letter,

plaintiffs' attorney advised that he had filed a motion to amend to

include property damages as requested. Additionally he requested

copies of "pictures, any statements or any matters concerning your

client ' s [ Tennessee Farmers'] investigation of this accident. I

would also appreciate copies of whatever medical records that you

have." He further asked that Tennessee Farmers pay one-half of the

related expenses. Tennessee Farmers did not respond to the

plaintiffs' lett er u ntil October 21, 1996. Tennessee Farmers'

reply through their present attorney, among other things, acknowledged that no response had been made to the letter of December 8,

1994. In the October 1996 letter, Tennessee Farmers agreed to pay
2

I n the letter dated October 21, 1996, the attorney fo r Tenness ee Farmers

stated that "... all attorneys' fees will be paid to you and I by our respective

clients out of their portion of the recovery only."

I n a follow- up letter dated November 12, 1996, the attorney for Tennessee

Farmer s adv ised the plaintiffs' attorney that "... my client will pay attorney's

fees only to our firm in the collection of the subrogation interests."

5

the expenses requested by the plaintiffs and to supply the photos

and medical bi lls re quested in December 1994. When Tennessee

Farmers did respond to the December, 1994, letter, it was expressly

made clear by Tennessee Farmers that no attorney fees would be paid

b y them. 2

 As previou sly noted, on February 17, 1997, the plaintiffs settled their claims against the defendants extinguishing all

claims against the defendants including Tennessee Farmers'

subrogation claims.

The subrogation agreement executed by the original plaintiff,

Denver Pat Hankins, in favor of Tennessee Farmers provided the

following:

... no settlement has been made by the undersigned

[Plaintiff] with any party, person, persons, property or

corporation against whom a claim may lie, and no release

has been given to anyone responsible for the lo ss, and

that no such settlement will be made nor relea se given by

the undersigned without the written consent o f s a i d

Company [Tennessee Farmers] ... . (Emphasis added).

Tennessee Farmers argues that when the settlement was made

with the defendants the plaintiffs violated the above provisions of
6

the subrogation agreement since the settlement was made without its

consent. The plaintiffs assert that since the statute of limitations [T.C.A. § 28-3-10] had expired for the property damage claim,

the claim was barred and Tennessee Farmers was not deprived of any

r i ght s under the subrogation agreement. The trial court agreed

with the argument advanced by the plaintiffs.

I t is incumbent upon us to examine applicable law to determine

whether the statute of limitations had, in fact, expired. There is

n o dispute concerning the length of the statute of limitations for

causes of action for damage to personal property — three years.

Likewise it is undisputed that at the time of the settlement, more

than three years had elapsed and no amendment asserting a claim for

property damage had been made. This does not end th e in quiry,

however. Rule 15.03, Tennessee Rules of Civil Procedure provides

as follows:

15.03 Relation Back of Amendments. Whenever the

claim or defense asserted in the amended pleadings arose

out of the conduct, transaction or occurrence set forth

o r at tempte d to be set forth in the original pleading,

the amendment relate s back to the date of the original

pleading. ... .

An amendment stating a claim for property damage and arising

from the same accident would not constitute a new cause of action

and tested under our appellate court decisions interpreting the
7

above rule may relate ba ck to the original filing date of the

complaint.

There are several methods of determining whether an

amendment raises a new cause of action or merely relates

back to the original pleading. See Gamble v. Hospital

Corp. of America , 676 S.W.2d 340 (Tenn. App. 1984).

Tennessee courts have generally followed the statutory

standard that the amendment m ust arise from the same

c onduct, transaction or occurrence as set forth in th e

ori ginal pleadings. Karash v. Pigott , 530 S.W.2d 775

(Tenn. 1975). Noti ce to the defendant is not expressly

required by the statutory standard for relation back but

the Tennessee Supreme Court has determined that notice is

the critical element involved in determining whether

a mendments to pleadings relate back. Floyd v. Rent rop ,

675 S.W.2d 165, 168 (Tenn. 1984).

Rainey Bros. Constr. Co. v. Memphis & Shelby County ,, 821 S.W.2d

938, 942 (Tenn. App. 1991).

In Karash v. Pigott , 530 S.W.2d 775 (Tenn. 1975) our Supreme

Court noted:

The time-honored "new cause of action" objection to

amendments has been substantially eroded by the New Rules

of Civil Procedure. Rule 15.03 has never been construed

b y our courts; however, its language is so clear and

unequivocal that i t is virtually self-construing. In

pertinent part it declares:

Whenever the claim or defense asserted in the

amended pleadings arose out of the conduct, transa c tion or occurrence set forth or attempted to b e

set forth in the ori ginal pleading , the amendment
3

The rule has been amended since Karash v. Pigott was decided, however, the

amendment does not affect the question under consideration here.

8

relates back to the date of the original pleading.

(Emphasis in original). 3

Id., at 777. 

The proposed amendment sought to add the following paragraph

to the original complaint:

10. A s a proximate result of the negligence of the

defendant as aforesaid, the plaintiff, Denver Pat

Hank ins, has sustained property damage to his 1 9 7 9

Pontiac F ire bird which was rendered a total loss. In

addition, he has incurred relat ed cos ts of towing,

storage and loss of use of the vehicle. The plaintiff's

property damage is in the app roxi mate amount of Five

Thousand and No/100 Dollars ($5,000.00).

Thus, from the undisputed facts in this case, it cannot be

said that the s tat ute of limitations extinguished Tennessee

Farmers' claim as a matter of law. We reverse the trial court's

jud gment that the statute of limitations barred the claim fo r

property damage.

We must next determine the relief to which Tennessee Farmers

i s e ntitl ed. In Aetna Casualty Ins. Co. v. Gilreath , 625 S.W.2d

269 (Te nn. 19 81), the court quoting with approval from Motors
9

Insurance Corporation v. Blakemore , 584 S.W.2d 2 04 ( Tenn. App.

1978) stated:

I n Motors Insurance Corporation v. Blakemore , 584

S.W.2d 204 (Tenn. App.1978), a collision insurance

carrier s u ed its insured Blakemore and his attorney

Garrison to recover its sub rogation interest in Blakemore's claim against a third party tort feasor. Blakemore had settled with the third party, entered an order

i n the pending suit that recited that all claims had been

com promi sed and settled, and dismissed the case. The

proceeds of the settlement were distributed by Garrison

and Blakemore without honoring the insurance company's

subrogation interest.

Judge Summers, writing for the Court of Appeals said:

"The consent judgment which was signed by Garrison on

behalf of Blakemore extinguished all claims against

Curtis and Cotton Belt. Garrison and Blakemore were both

aware that the plaintiff had expended money for the

r epair of Blakemore's automobile and was subrogate d t o

the claim of Blakemore to the extent of the sum it paid.

Blakemore and Garrison did nothing to protect the claim

of the subrogee....

Therefore, we rule that Blakemore and Garrison settled to

t h e detriment of Motors and should be held respons ibl e

for their actions. We do not think that Blakemore should

be entitled to collect twice for his property damage or

that Garrison should be absolved for his part in attempting to keep Motors from collecting the sum due it under

the subrogation agreement."

625 S.W.2d 269, 274.

W e ar e u nable to make a meaningful distinction between the

case under co nsider ation here and Blakemore . Therefore, it must

follow that the plaintiffs and their attorney, are liable to

Tennessee Farmers for the amount of the property damage payments
1 0

made to Hankins by Tennessee Farmers, less the pro rata share of

expenses which T enness ee Farmers agreed to pay. Since Tennessee

Farmers expressly advised the plaintiffs and their attorney that it

would pay no attorney's fees, attorney's fees are not includable in

the expenses which are to be prorated. Before attorney's fees can

b e collected, it must be shown that a contract, express or implied,

existed between the plaintiff and Tenn essee Farmers, whereby the

plaintiff's attorney would represent the interests of Tennessee

Farmers regarding its subrogation claim. See Boston, Bates & Holt

v . Tennessee Farmers Mutual Insurance Company , 857 S.W.2d 32 (Tenn.

1993) and Travelers Ins. Co. v. Williams , 541 S.W.2d 587 (Tenn.

1976). See also Tennessee Farmers Mut. Ins. Co. v. Pritchett , 54

Tenn. App. 410, 391 S.W.2d 671 (Tenn. App. 1964 ). No con tract,

express or implied, is established by the record in this case.

A s to the medical expenses, Tennessee Farm ers is likewise

entitled to recover $1,619.00, less pro rata expenses not including

attorney's fees.

W e reverse the judgment of the trial court and remand the case

for such other and further proceedings that may be necessary in

conformity with this opinion, including the amount of the prorated

expenses that should be deducted from the recovery by Te nne ssee

Farmers. Costs are assessed to the appellees.
1 1

 ________________________________

 Don T. McMurray, J.

CONCUR:

___________________________________

Houston M. Goddard, Presiding Judge

___________________________________

Charles D. Susano, Jr., Judge
 IN THE COURT OF APPEALS

AT KNOXVILLE

DENVER PAT HANKINS and wife, ) GREENE CIRCUIT

MICHELLE L. HANKINS, ) C. A. NO. 03A01-9710-CV-00468

 )

 Plaintiffs-Appellees )

 )

 )

 )

vs. ) HON. JOHN K. WILSON

 ) JUDGE

 )

 )

 )

ROBIN DWAYNE SEATON and PET )

INCORPORATED, ) REVERSED AND REMANDED

 ) 

 Defendants )

JUDGMENT

This appeal came on to be heard upon the record from the

Circuit Court of Green e County and briefs filed on behalf of the

respective parties. Upon consideration thereof, this Court is of

the opinion that there was reversible error in the trial court.

W e reverse the judgment of the trial court and remand the case

for such other and further proceedings that may be necessary in

conformity with this court's opinion, including the amount of the

prorated expenses that should be deducted from the recovery by

Tennessee Farmers. Costs are assessed to the appellees.

PER CURIAM