# FILED

July 23, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON

TENNESSEE FARMERS MUTU AL ) INSURANCE COMPANY, ) ) Plaintiff/Appella

nt, ) Gibson Circuit No. 7405

) v. ) ) Appeal No. 02A01-9711-CV-00284 MATTIE BRADFORD, NOLAN ) BRADFORD and wife,

JACKIE ) BRADFORD, ) ) Defendants/App

ellees. )

APPEAL FROM THE CIRCUIT COURT OF GIBSON COUNTY

AT TRENTON, TENNESSEE THE HONORABLE DICK JERMAN, JR., JUDGE

For the Plaintiff/Appellant : For the Defendants/Appellees : Charles L. Trotter, Jr. Bill R. Barron Huntingdon, Tennessee J. Mark Johnson Trenton, Tennessee James Belew Webb Milan, Tennessee

AFFIRMED

HOLLY KIRBY LILL

ARD, J.

CONCUR: W. FRANK CRAWFORD, P. J., W.S. DAVID R. FARMER, J

.OPINION

This is a declar atory judgment action br ought by an insurance company under a homeowner’s policy against the insured, as well as her son and her daughter-in-law. The insured’s house was damaged by fire. The insur

ance company co

ntended that the f

ire was intentiona

lly set. The insurance company alleged that the insured faile

d to cooperate

with the investigation by declining to direct her son and daughter-in-law to submit to an examination u nder oath, and also contended that the son and daughter-in-law were required to submit to examination under oath. The insurance company filed a motion for leave to file a third-party complaint against the sonand daughter-in-law. The trial court denied the insurance company’s motion for leave to fi le a third party c omplaint, granteda motion to dismiss in favor of the son and daughter-in law, and granted the insured’s motion for summary judgme

nt. We affirm. Tennessee Farmers Mutual Insurance Com pany (“Tennessee Farmers”) issued Defendant/Appellee

Mattie Bradford (“Mattie”) a homeowner’s policy providing coverage for her home, located at 72 Trenton Highway, in Bradford, Tennessee . Th e policy period extended from December 12, 1995, to December 12, 1996. The policy provided: PERILS WE INSURE AG AINST We cover direct los s t o pro perty insured under the Dwelling, Other Structure and Personal Property Coverage caused by: 1. Fire or Lightening * * * EXCLUSIONS: We do not cover loss resulting directly or indirectly from: . . . . 8. Any action, other

than accidental

, committed by at t

he directi on of any insured person resulting in

a loss or with the intent to cause a loss. We do not cover such l oss for you or any insured person

. * * * Our Right To Recover Payment After making payment un derthis Policy, we will have the right to recover to the extent of our

payment from anyone held responsible . . . . (emphasis in original). On August 19, 1996, the

home was damaged

by fire. At the time

of the fir e, Mattie was temporarily

residing in a retirement home in Trenton, Tennessee, and had planned to return home. On December 14, 1989, prior to the fire loss, Mattie executed a durable power of attorney ap pointing h er son, Defendant/Appellee Nolan Bradford (“Nolan”) as her attorney in fac t. On Mattie’s behalf, after t

he fire, Nolan su

bmi tted a proof of loss state ment and a “perso

nal property inventory” list to Tennessee Farmers. Mattie also provided Tennessee Farme

rs with a supplemental2

proof of loss. After a

request from Ten

nessee Farmers,

Mattie submitted to

an examination under oath, pursuant

to the terms of her homeowner’s policy. On September 10, 1996, Tennessee Farmers took recorded interviews from Nolan and his

wife, Defendant/Appellee Jackie Bradford (“Jackie”). Tennessee Farmers demanded that Nolan and Jackie also submit to an examination under oath. On November

11, 1996, Nolan ar

rived for the exa

min ation but Jackie did not. Tennessee Farmers refused to examine Nolan under oath in his wife’s absence. On March 4, 1997, Tennessee Farmers filed a declaratory judgment action against

Mattie, Nolan, and Jackie seeking a determination of the righ ts and oblig ations of the parties under the policy. Tennessee Farmers alleged that the fire was intentionally set and that “one or more of the defendants had o

pportunity to set the

fires and motive to

do so.” Tennessee Farmers asserted that Nolan, by submitting forms to Tennessee Farmers on behalf of Mattie, and Jackie, by entering the premises and obtaining personal property of Mattie’s, ac ted as a gents on Mattie’s behalf. As Mattie’s agents, Tennessee Farmers contended that No lan and Jackie

had a duty under th

e policy to cooperate with Tennessee Farmers’ investigation of the fire and th at they breached this duty by failing to submit to examination under oath. Tennessee Farmers further alleged that Mattie breached the duty of good faith and fair dealing by refusing to instruc t Nolan and Jackie to submi t to examination under oath. On March 10, 1997, Nolan and Jackie filed a motion to dismiss pursuant to Rule 12 of the Tennessee Rules of Civil Procedure, assertingthat they were not named insureds under the policy issued to Mattie and that the policy required only an insured to submit to examination under oath. On April 28, 1997, Mattie filed an answer to the complaint for declaratory judgment and a counterclaim

seeking damages

for Tennessee Fa

rmers’ refusal

to pay for the loss, including a 25% penalty for Tennessee Farmers bad faith refusal to pay the claim pursuant to Tennessee Code Annotated§ 56-7-105(a). Mattie also filed a motion to dism

iss, arguing that th

e policy require

d only that she submit to an examination under oath, which she had done, and that consequently she was entitled to be compensated for her loss under the policy. On June 12, 1997, Mattie filed two motions for summary judgment, a

long with an affida

vit, asserting that

she had complied w

ith th e terms of the policy and that she had n o duty to instru ct Nolan and Jackie to submit to examinations under oath. Mattie also argued that she was entitled to summar y judgme nt on her counter claim against Tennessee Farme

rs.3

On June 25, 1997, Nolan and Jackie filed a motion for a protective order to prevent Tennessee Farme rs from inquiring in to their alleged ma

rital problems and

financial condit

ion in order to prove a motive for destro ying Mattie ’s home. Tennesse e Farmers filed a

n answer to Mattie’s counterclaim, a motion to amend the complaint for declaratory judgment, and a motion for permission to file a supplemental pleading. In its motion to amendits complaint, Tennessee Farmers set forth amend ed langua ge to a policy exclusion which was in effect at the time of the fire. The amended exclusion provides: “Any action other than accidental, committed by or at the direction of any insured person re

sulting in a loss

or with the intent to ca

use a loss. We do no

t cover such a loss for you or any insured person.” Tennessee Farmers supplemental complaint alleges that the proof of loss statement submitted by Mattie was “pretextual” and designed to prevent Tennessee Farmers from investigating Nola

n and Jackie’s a

lleged role in

the fire. On July 14, 1997, Nolan and Jackie signed affidavits stating that the statements in their recorded interviews given to Tennessee Farmers

were tru e and co rrect. Subsequently, Tennessee Farmers filed a motion for summary judgment asserting that the

y were entitled to

a judgment on all issu

es. In its motion for summary judgment, Tennessee Farmers described the statements given by Nolan and Jackie. Tennessee Farmers alleged that both Jackie and Nolan had a key to Mattie’s house, that Jackie had incurred substantial cre dit card debt in the pa st which was discha

rged in bankruptcy, that Nolan had utilized the power of attorney executed by Mattie to change some of her certificates of deposit to his nam e, and that Jackie

admitted being in

Mattie’s home at 2: 00 p.m. on the day of the fire. Tennessee Farmers asserted that the fire was reported by an unknown person at 2:36 p.m. after Ja

ckie left, and tha

t evidence indica

ted clearly that t

he fire was delib

erately set. In its motion, Tennessee Farmers did not allegethat Mattie partic ipated in setting fi

re to her home. Rather, Tennessee Farmers alleged that she had a duty under the policy to “require” her son anddaughter-in-law to submit to examination under oath by Tennessee Farmers, and that her refusal to do so precluded her from recovering for her loss under the policy. On Ju ly 21, 1997, the trial court conducted a hearing regarding the numerous pending motions. In an order filed September 3, 1997, the trial court granted Nolan and Jackie ’s motion to dismiss for failure to sta

te a claim. Having

dismissed the case

as to Nolan andJackie, the trial court deemed moot their

motions relating to discovery. The trial court also granted Tennessee Farmers permission to file a supplemental pleading and amend the complaint for declar atory judg ment.4

Finally, the trial court

found that it was premature to hear Mattie’s motion to dismiss and motion for summary judgment, as well as Tennessee Farmers’ motion for summary judgment; th

ese were held in abeyance. On October 2, 1997, Tennessee Farmers filed a motion for leave of cou

rt to file a third pa

rty complaint against Nolan and Jackie, alleging t h at the fire “was set by, or with the connivance, acquiescence

and consent, of either

or both . . . Nolan . . . and . . . Jackie who alone or together had the motive and opportun

ity to do so.” Tenne

ssee Farmers re

newed it s allegation that Nolan and Jackie were agents of Mattie and owed Tennessee Farmers a duty of cooperation under the policy. The trial court conducted a second hearing on October 6, 1997. Although the record doe s not contain

this order, the trial court filed an order on October 14, 1997. Tennessee Farmers then filed an Application for Extraordinary Appeal to this Court under Rule 10 of the Tennessee Rules of Appellate Procedure asserting that the October 14, 1997, order was not a final order because it had not been entere

d in accordance

to Rule 58 of the Tennesse

e Rules of Civil

Procedure. This Court grantedTennessee Farmers’ Rule 10 motion, finding that thetria l court’s order was defective because it did not contain the signature of Tennessee Farmers’ counsel and a certificate

of service

as required by Rule 58 of the Tennessee Rules of Civil Procedure. This Court also found that the October 14, 1997, ord er was not a final order because it did not contain the “magic language” required by Rule 54.02 of the

Tennessee Rules o

f CivilProcedure, which requires “that there be an expressdetermination that there is no just reason for delay and that there be an express directionfor entry of a final judgment.” See Tenn. R. Civ. P. 54.02. On January 20, 1998, Tennessee Farmers filed a motion for entry of a final judgment. On March6, 1998, the trial court entered two orders. In the first order, the trial court, pursuant to

Rule 54.02 of the Tennessee Rules of Civil Procedure, finalized the interlocutory rulings of the July 21, 1997, and October 6, 19

97, hearings,

i.e. the orders entered on

September 3, 1997, and the October 14, 1997. In its second order, the trial court held that Mattie was entitle

d to a judgment as a

matter of law. The trial co

urt also denied Tennesse

e Farmers motion fo

r leave to file a t

hird party complaint against Nolan and

Jackie. From this or

der, Tennessee

Farmers now appe

als. On appeal, Tennessee Farmers argues that the trial co urt erred (1) in granting summary judgmentin favor of Mattie; (2) in granting a motion to dismiss in favor of Nolan and Jackie; and5

(3) in denying Tennessee Farmers’ motion to amend its answer and file a third party co mplain t against Nolan and Jackie. A motion for summary judgment should be granted when the movant demonstrates that there

are no genuine issues of materia l fact and that the

moving party is

entitled to a judgment as a matter of law. Tenn. R. Civ. P. 56.04. The party mov ing forsummary judgment bears the burden of demonstrating that no genuine issue of material fact exists. Bai n v. Wells , 936 S.W.2d 618, 622 (Tenn. 1997). On a motion for summary judgment, the court must take the strongest legitimate view of the evidence in favo r of the nonmoving party, allow all reasonable inferences in favor of that party, and discard all countervailing evidence. Id. In Byrd v. Hall , 847 S.W.2d 208 (Tenn. 1993), our Supreme Court stated:

Once it is shown by the moving party that there is no genuine issue of ma te rial fact, the nonmoving party must then demonstrate, by affidavits or discovery materials, that there is a genuine, material fact dispute to warrant a trial. In this regard, Rule 56.05 [now Rule 56.06] provid es that the nonmoving party cannot simply rely

upon his pleadings but must set forth specific facts showing that there

is a genuine issue of ma

terial fact for

trial. Id. at 211 (citations omitted) (emphasis in original). Summary judgment is only appropriate when the facts and the legal conclusions drawn from the facts reasonably permit only one conclusion. Carvell v. Bottom s , 900 S.W.2d 23, 26 (Tenn. 1995). Since only questions of law are involved, there is no presumption of correctness regarding

a trial court's grant of summary judgment. Bain , 936 S.W.2d at 622. Therefore, our review of the trial court’s grant of

summary judgment is de novo on the record before this Court. Warren v. Estate of Kirk , 954 S.W.2d 722, 723 (Tenn. 1997). Tennessee Farmers argues t hat the trial cour

t erred in granting summary judgment in favor of Mattie and argue

s that its motion for summary judgment should have been granted. It contends that Mattie failed to c

ooperate with

its investigation by re

fusing to direct No

lan and Jackie to s

ubmit to examination under oath, in breach of her duty of good faith and cooperation under the policy

. Tennessee Farmers asserts t hat there is a

genuin e issue of material fact as to whether Nolan and Jackie were ac

ting as Mattie’s ag

ents. The language in an insurance policy should be given its usua l, common, and ordinary meaning. Harrell v. Minnesota M ut. Life Ins. Co. , 937 S.W.2d 809, 814 (Tenn. 1996); see also Tata v. Nichols , 848 S.W.2d 649, 650 (Tenn. 1993); Northland Ins. Co. v. Stat e Farm Mut. Auto6

Ins. Co. , 916 S.W.2d 924, 928 (Tenn . App. 199 5). Ambiguous language in the policy will be construedagainst the insurer and in favor of the insured. Harrell , 937 S.W.2d at 814. The policy provides: What To Do In Case

of Loss If a covered loss occurs, the insured person must: . . . . (c) make a list of all da

maged or destroye

d property, showin

g in detail quantitie

s, costs, actual cash value and amount of loss claimed; (d) send to us , within

60 days after loss, the above list and a proof of loss signed and sworn to by the insured person

. . . . (f) subm it t o examinations under oath by a person named by us and sign the transcript of the examinations; . . . . (emphasis in original). The policy requires only the insured to submit to examination under oath. There is no provision in the policy requiring a

n agent or interme

diary of the insur

ed to submit to examination under oath. As to Mattie, the policy contains no provision indicating a duty to direct a third person, agent or otherwise, to submit to examination under oath. The policy also pr

ovides: EXCLUSIONS: We do not cover loss resulting directly or indirectly from: . . . . 8. An action by or at the direction of an insured person committed with the intentto cause a loss. This exclusion does not apply to loss sustained by an insured person who does not participate in such action nor have knowledge of such action. * * * Concealment Or Fraud This entire policy is void as to th e insured , if an insured person has intentionally co ncealedo r misrepresente d any material fa

ct or circumstanc

es relating to this insurance, or acted fraudu lently or made fa

lse statements relat

ing to this insurance. * * * Section I is amended by deleting Exclusion 8 in EXCLUSIONS and replacing it with Exclusion 8 below: 8. Any action, other than accidental, committed by or at the direction of any insured person resulting in a loss or with the in

te nt to cause a loss. We do not cover such loss for you or any insured person

. (emphasis in original). In its motion for summar y judgment, T ennessee Farme rs argued that Ma

ttie failed to cooperate w ith the investigatio

n by refusing to dir

ect Nolan and Jac

kie to submit to exami

natio n under oath. In response

to Mattie’s motion for summary judgment, Tennessee Farmers asserted that “[a] reasonable

trier of fact co

uld conclude [tha

t] Mattie Bradfor

d, although she did n

ot personally set the fire, is covering up for her son and his wife who were acting on her behalf in this claim as her agents.” Tennessee Farmers alleged no facts indicating that Mattie either directed, participated or hadknowledge of any

plan to set fire to t

he property. Ten

nessee Farmers a

lleges t hat Mat tie7

“concealed

or misrepresented [a] material fact or circumstances relating to [the] insurance . . . .” as stated in the policy, but asserts no facts in support of its allegation. Put simply, the gist of Tennessee Farmers’ allegation against Mattie is th at she refused to “direct” Nolan

and Jackie to submi

t to examination under oath. In its brief before this Court, Tennessee Farmers asserts that a genuine issue of material fact exists as to whether Nolan and Jackie acted

as Mattie’s “age

nts, intermediari

es or as individual

s in setting the fire and submitting the claim to the insurancecompany . . . .” However, in the pleadings before the trial court, the only asserti on supported by an allegation of fact is the contention that Mattie refused to direct Nolan and Jackie to submit to examination under oath. As noted above, the policy does not state that the in sured has a duty to

“direct” any thi

rd party, agent o

r not, to submit to examination under oath. We find that no such duty is im

plied in the policy.

Accordingly, as t

o Mattie’s claim against Tennessee Farmers, no genuine issue of material fact exists. The trial court’s decision to

deny Tennessee Farmers’ motion as to Mattie and grant Mattie’smotion for summary judgment is affirmed. Second, Tennessee Farmers argues that the trial court erred in granting Nolan and Jackie’s motio n to dismiss for failure to state a claim. In Pursell v. First Americ an National Bank , 937 S.W.2d 838, 840 (Tenn. 1996), the Supreme Court addressed the standard applied by a court in ruling on a motion to dismiss pu rsuant to Rule 12.02(6) of the Tennessee Rules of Civil Procedure: A motion to dismiss for failure to state a claim upon which relief can be grantedtests the sufficie

ncy of the complai

nt. The basis for the motion is that the allegations contained in the complaint, considered alone and taken as true, are insufficient

to state a claim as a mat ter of l aw. The motion admi ts the truth of all relevant and material alle

gations, but asserts that such facts do not constitute a ca use o f actio n. In resolving the issues in this appeal, we are required to construe the complaint liberally in the plaintiff's favor

and take the allegations of the complaint as true. See also Engenius Entertainment, Inc. v. Herenton , 971 S.W.2d 12, 17 (Tenn. App. 1997). In their motion to dismiss, Nolan and Jackie argue that they are not insureds under the policy andthat the policy does not require them to submit to examination under oath. Tennessee Farmers argues t hat Nolan an d Jackie are interested parties in this declaratory judgment action under TennesseeCode Annotate d § 29-14-107 because “they handled Mattie Bradford’s affairs.” Tennessee Farmers argues that Nolan was Mattie’s fiduciarybecause he held her power of attorney andsigned a sworn sta

tement of loss

on her behalf and is subject to the policy. Tennessee Farmers8

reiterates its allegations tha t Nolan and Jackie

were involved in s

etti ng the fire, noting th

at Jackie went to Mattie’s home just before the fire was reported and that both Nolan and Jackie had motive and opportunity to set the fire. Tennessee Code A

nnotated § 29-14- 103 provides: Any person interested under a . . . written co ntract, or other writings constituting a contract, or w hoserights, status, or other legal relations are affected by a . . . contract . . . may have determine d any question of c onstruction or val

idity arising under the instrument, statute, ordinance, contract, or franchise and obta in a declaration of rights, status or other legal relations thereunder. Tenn. Code Ann. § 29

-14-103 (1980). T

herefore, in

this declaratory judgment action, the issueis to determine the rig

hts and obligati

on s of the parties under the insurance policy. In this case, the policy at issue def

ines “insured” a

s follows: “Insured person” means: (a) you ; (b) your spouse or

the relatives of either residing in your household; and (c) any other person under the age of 21 residing in your

care or the care of a resident relative. (emphasis

in original). It is u

ndisputed that Nola

n and Jackie

did not reside with Mattie. The policy contains no provision making a fiduciary or agent an “insured” unde r the policy. Consequently, Nolan andJackie are not “insureds” under the policy and have no rights or duties under the policy. The provisions of the policy do not require them to submit to examination under oath. Tennessee Farmers appears to assert a subrogation c laim aga inst Nolan and Jackie. The polic y states: “After making payment under this Policy, we will have the right to recover to th e extent of our payment from anyo

ne held responsi

b le. The insured person will do whatever i s req uiredto transfer this right to us .” (emphasis in or iginal). Thus, unde

r the policy, Tenn

esse e Farmers has the right to re cover from a par

ty who is held responsible for a loss only “[ a ] fter making payment under this policy . . . .” (emphasis supplied). Tennessee case law also indicates that the subrogation claim arises only after payment is made unde r the policy. In Wimberly v. American Casualty Company , 584 S.W.2d 200, 203 (Tenn. 1979), the Court held that an insu rer’s right to subrogation arises when the insured is “made whole.” See also Mullins v. Parkey , 874 S.W.2d 12, 14-15 (Tenn. App. 1992) . In this case, Te nness ee Farmers has not paid Mattie for the loss. Consequently, at this point, Tennessee Farmers may not assert a subro gation claim against Nolan and Jackie. Finally, Tennessee Farmers argues that the trial court erred in denying its motion for leave t o file a third party complaint against Nolan and Jackie. Tennessee Farmers allege d that, i f9

Tennessee Farmers is found liable to Mattie, it is entitled to rec over from Nolan a

nd Jackie. Rule 14.02 of the Tennessee Rules of Civil Procedure allows a plaintiff to bring in a third party when a counterclaim

is asserted against the plaintiff. See Tenn. R. Civ. P. 14.02. Rule 14.01 governs both plaintiff and defendant th

ird party practic

e and provides, in

part: “[t]he third-party plaintiff need not obtain leave to make the service if the third-party c omplaint is f iled not later than 10 days after service of the third-party plaintiff's original answer. Otherw ise the third-party p

laintiff must obtain leave on motion upon notice to all parties to the action.” Tenn. R. Civ. P. 14.01. We have noted that this language is identi

c al to the federal impleader rule. Velsical Chem. Co. v. Rowe , 543 S.W.2d 337, 338 (Tenn. 1976). Under the federal impleader rule, whether to permit a third-party complaint is within the sound discretion of the trial court; therefore, we apply anabuse of discretion standard to the trial court’s decision to deny a motion to file a third party complaint. See Highlands Ins. Co.

v. Lewis Rail Service Co. , 10 F.3d 1247, 1251 (7th Cir. 1993); Dean v. Barber , 951 F.2d 1210, 1215 (11th Cir. 1992). In this case, Tenne

ssee Farmers’ r

eluctance to pay

Mattie with

o ut an adjudication

of its rights against Nolan and Jackie is understandable. Once the claim is p aid to Mattie, Tennessee Farmers may suspect that Nolan could access the insurance proceeds by u tilizing the power of attorney executed by Mattie. There is factual basis for the assertion that the fire was deliberately set and that Nolan and Jackie had

both motive and opportunity to set the fire. However, given the procedural posture of this case, we cannot conclude that the trial court erred in its rulings. There are no facts indicating that Mattie participated in setting the fire or had knowledge of the alleged

plan by Nolan andJackie to set the f

ire. The only alle

gation against Mat

tie stems from her

refusal to “dire

ct” Nolan and Jackie

to submit to examination under oath; however, the policy does not require Mattie to do so. Thus, Mattie is entitled under the policy to be compensated for her loss. Until Mattie is paid, Tennessee Farme

rs’ claim against Nolan and Jackie does not arise. Therefore, we cannot say that the trial c o urt abused its discretion in denying Tennessee Farmers’ motion for leave to file a third party complaint against Nolan and Jackie. In sum, we find that Mattie has no duty under the policy to “direct” Nolan and Jacki e to submit to examination unde

r oath. Therefo

re, no genuine iss

ue of material fa

ct exists as to Mattie’s claim for payment under the policy, and the decision of the trial court to deny Tennessee Farme rs’ motion for

summary judgment a

nd grant summary ju

dgment in favor of

Mattie is affirmed. Nolan10

andJackie are not “

insureds” under

the policy and thus h

ave no duty under t

he policy to

submit to examination under oath. Since Mattie has not yet b

een compensate

d under the policy

for her loss, Tennessee Farmers has no subrogation claim against Nolan and Jackie, and the trial court’s denial of TennesseeFarmers’ motion for leave to file a third party complaint against Nolan and Jackie is affirmed. This ruling does not preclude Tenne ssee F armers from asse rting a claim in a se

parate action against Nolan and Jackie once Mattie has been compensated under the policy for her loss. Th e decisio n of the trial court is affirmed. Costs on appeal are taxed to the Appellant, for which execution may issue if necessary.

HOLLY KIRBY LILLARD, J. CONCUR:

W. FRANK CRAW

FORD, P. J., W.

S.

DAVID R. FARMER, J.