# 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.
ROGERA. 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 bythe plaintiffs-appellees t o recover damages for personal injuries and related expenses incurred in a motor vehicle accident. The plaintiffs did not make anyclaim for propertydamag es. Plaintiffs' property damage was2

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 subrogationclaim 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 March31, 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 of1 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 the4

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 wishto 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' attorneystated 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 motionto amend but not a proposed order allowing the amendment. B yletter 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 payone-half of the related expenses. Tennessee Farmers did not respond to the plaintiffs' lett er u ntil October 21, 1996. Tennessee Farmers' replythrough 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 pay2 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 attorneyfees would be paid b ythem. 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 anyparty, person, persons, property or corporationagainst whoma claim maylie, and no release has been given to anyone responsible for the lo ss, and that no such settlement will be made nor release given by the undersigned without the written consent of s a i d Company [Tennessee Farmers] ... . (Emphasis added).

Tennessee Farmers argues that when the settlement was made withthe defendants the plaintiffs violated the above provisions of6

the subrogation agreement since the settlement was made without itsconsent. 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 propertydamage 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 claimor 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 the7

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 inth e ori ginal pleadings. Karash v. Pigott , 530 S.W.2d 775 (Tenn. 1975). Noti ce to the defendant is not expressly required bythe 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). RaineyBros. 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 your 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 tionor occurrence set forth or attempted to b e set forth in the ori ginal pleading , the amendment3 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 propertydamage 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 Motors9

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 compromi 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. Garrisonand 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 claimof 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 followthat the plaintiffs and their attorney, are liable to Tennessee Farmers for the amount of the property damage payments1 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 conformitywith 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., JudgeIN 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