# FILED
July 31, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF A

PPEALS OF TENN ESSEE AT KNOXVILLE ALLSTATE INSURANCE COMPANY, ) ) Plaintiff/Appellant, ) Knox Circuit No . 2-493-94 ) VS. ) Appeal No . 03A01-9710-CV- 00466 ) W. ZANE DANIEL, ) ) Defendant/Appellee. )
APPEAL FROM

THE CIRCUI T COURT OF KN OX COUNTY AT KNOXVILLE, TENNESSEE THE HONORABLE HAROLD WIMBERLY, JR ., JUDGE

W. ANDREW FOX Knoxville, Tennessee Attorney for Appellant

W. ZANE DA

NIEL DANI EL & OBE RMAN Knoxville, Tennessee Attorney for Appellee

AFFIRMED

ALAN E. HIGHERS, J.

CONCUR: W. FRANK CR

AWFORD, P.J., W.S . DAVID R. FA

RMER, J. Plaintiff/appellant, Allstate Insurance Company (“appellant”), appeals the judgment2

of the trial court awar

ding defendant/appellee, W. Zane D aniel (“appellee”), one- third of appellant’s subrogation funds. For rea sons stated hereinafter, we affirm the trial court’s judgment.

In April of 1991, appellee was retained to represent Lisa Robinson (“plainti ff”) in her automobile accident litigation. The accident occurred on Apri l 14 , 1991. Appellee was retained on the basis of a conting ency fee of o ne-third of the to tal recove ry. Eventua lly, appellee represented pl aintiff i n an action concerning this accident styled Robinson v. Heagey, et al

., Knox County Circui

t Court Docket No. 2-253-92. Appellant had an insurance policy with John H. and Winona Robinson which provided c overage, including
covera ge for medical payments for plai ntiff.
Pursuant to this contractual agreement, appellee gave forma l written notice of his representation of plaintiff to all interested par ties including, but not l imited to, the appellant. The letter forwarded to appell ant was dated April 23, 1991

.

A little over four m onths later in correspondenc e dated September 9, 1991, appellant not ified appelle e of the possib ility of a subrogat ion interest by sta ting:

As a claimant carrier, State Farm, has limits of liability greater than or equal to ours, we will be closing all covera ges un der this policy other than medical payments. On ce treatment is completed or our limits are exhausted, w e will be subrogating from the claimant ca rr ier for our expenditure under the medical payments coverage.
Suit was filed in the Knox C ounty Circuit Court

on April 10, 1992. (Id. ). S oon thereafter, appellant intervened in the suit. Appellant was represent ed in this intervention by Ron Cunningham, attorne y.
On May 26, 1992, appellee forw arded a letter to Cunningham which stated: Enclosed you will fin d the Orde r wherein yo u have intervened on behalf of Allst ate Insurance Company in the abov e-styled action. I will expect y

ou to be present at all dep osit ions, and your3 company

pay for the necessary costs i n pro ving the medical bills and ex

penses to est

ablish you r claim. Likewise, any and all costs shoul d be split e qua lly between your company and my client, which is nec essary in order to pursue this matter

for trial. I assume there will be no question s pertaining to this but

if there are, please notify me immediately and I will ask t he Court for an Order direc ting that your clie nt share in the expenses in pu rsuing this matter. Please n otify

me if there are any questions or otherwise I will assumethat any and all depositions, et cetera, will be shared equally between our

clients.
On July 29, 1992, attorney s for appellant wrote appell ee s ta ting that they would relay this information to appellant. They further stated that there was an anticipation that defendants in the initial matter w ould stipulate as

to medical bills and that a more definite reply would follow

.
Thereafter, on October 7 of that same year, attorneys representi ng a ppellant responded that appellant would not as sume costs and, once again, that appellant anticipated defendants stipulating to the amount of medical bills.
No further contact was made by appellant with appellee until the day of trial.

On December 11, 1992, pretrial depositions were taken of al l parties concerned. This involved four different indi viduals. Appellant

was cognizant of thes

e depositionsbut failed to appear to represent thei r interest.
One month later, the deposition of D r. John Soldano was taken, and, once again, appellant failed to h ave its attorney pre sent to represent its inter est. Thereafter, on January 25, 1993, Dr. James Davi d Johnson’s depo sition wastaken. Again, no one appeared on appellant’s behalf.

All costs oftaking the above depositi ons and proving the medica l bills and expenses which are the su bject of th is subrogation claim w ere borne by the origi nal plaintiff and appellee, her counsel, w ith appellant refusing to tak e part.4

On February 3, 1993, the matt e r was set for trial a nd an attorney for appellant appeared at the courthouse at approxi mately 8:45 a.m. Appellee then advised appellant’s attorney that he felt that appellant’s attorney should not participate in the trial inasmuch as he had virtually no k

nowledge of the case. Pri or to this time, no representative of appellant
was ever requested not to partici pate in the investigation and pr eparation of this matter for trial.
Contraryto appellant’s anticipati on, defendants in Robinson v. Heagey, et al did not stipulate to plainti ff Robinso n’s medical bills. Con sequently, medical pro of through the doctors was required in or der to prove Robinson’s inj uries and that the medical bills were related to the automobile accide nt.
App ellee investigated the case, prepared interrogatories and requests f or admissio n to the defendant, and answered the inte rrogatories of the defendant. I n short, appellee fully prepared the case for depos ition and trial.
Appellantperformed no work on the case at any time. In fact, the only appearance made by appellant’s counsel was on the morning of the trial wherein counsel appeared for approximately one hour be fore the case commenced.

At the co nclusion of the trial, judg ment was entered for plaintiff in the amount of $4,153.56, and appellant contacted appelle e and in formed him that they would be requesting the $4,153.56 allegedly due under their subrogation rights. The

appellee then withheld monies allegedly pay able to appellant un de r its subrogation inte rest upon the basis that he was ent itled to reas onable attorney’s fees and costs for his services in securing payment of appellant ’s subrogation claim.
Upon the conclusion of the case, appell ee tendered two-thirds of the above sum to appellantfor its subrogation interest and retained one-third for himself. Appellant f iled this action and stated that they would not pay attorney’s fees for the w ork performed and asked5

that plaintiff pay the full subrogation amount of $4,153.56.

This cause was heard before the Judge Wimberly in chambers, and he reviewed the statements of the parties and the different documents. Judge Wimberly was the sam e judge who hea rd the c

ase of Robinson v. Heagey, et al . In view of the fact that appellant had not performed any work or services, or advanced any expense in order to collect their subrogation claim, the court decided that appellee was entitled to one-third attorney’s fees for the work performed in col lecting this money. Case expense was not an issue raised at trial. Therefore, the tri al court did not consider the issue. This appeal ensued.

The issue presented by this case was conside red by the Tennessee Supreme Court in Trav elers Ins . Co. v. Williams , 541 S.W.2d 587 (Te nn.1976), and by this Court in Tennessee

Farmers Mut. Ins. Co. v. Pritchett , 54 Tenn.App. 410, 391 S.W .2d 671 (1964), and Motors Ins. Corp. v. Blakemore , 584 S.W.2d 204 (Ten n.App.1978). In Pritchett , this Court held that the insurer was ob ligated to pay its insured's attorney a fee for collecting
a subrogat ion claim . Specif ically, the Court found an implied contract to pay a reasonable attorney’s fee for recov ery of the su brogation c laim where the insurer acquiesced i n the action of the insur ed's attorney on its behalf. In Williams and Blakemore , the Supreme Court and this Court found that because the insurer notified th e insured's attorney prior to the performance of beneficial servi ces thatit would handle its own subrogation claim the attorney was not entitled to a fee.

The applicable legal pri nciple is recogniz ed in all of

the above cases. It is stated in Williams , as follows:

There are, of course, many situations in which the work

of an attorney proves useful to persons other than his own client

. The normal rule in such cases is that he must look only to his cl ient, with whom he has contracted, for his compensatio n , notwithstanding

the acceptance of benefits by others. But, an e xception to this rule is made w henever one person, ha vin g assumed the risks and expense of litigation, has succeeded in securing, augmenting, o r preserving prope rty or a fund of moneyin which other people are entitled to share in common. In that event, the expenses of the action are borne by each participant

according to his interest. The fairest and most e fficient means of distributing these c osts is thought to b e t o6 make them a ch arge upon the fun d itself . This devi ce, known as the 'fund doctrine,' was inv ented by courts of equity to prevent passive beneficiaries of the fund from be ing unj ustly enriched. It is, therefore, never applied against persons who have employed counsel on their own account to represent their interests. Thus, the right to employ counsel ofone's ow n choosing is preserv

ed. . . [v]aried fact situations are disclo sed by the reporte d cas es dealing with this pro ble m. We doubt the advisability of attem pting to devise a single 'rule' to govern all such cases, whatever

the facts might be. In stead, each case, with its peculiar facts must be decided by applying general, fundamental principles of contract law. . . [i]t follows that whether or not an attorney is entitled to collect from the ins urer a fee with respect to a subrogation claim depends upon whether an express or impli ed contract or a quasi contractual rela

tion exists between them. Travelers Ins. Co. v. Williams , 541 S.W.2d at 589-90 (citations omitted).
Implied contract s do that which the la w says ought to be done as a matter of right and justice. They are such as reason and justice dicta te, and which, therefore, the law presumes that every man undertakes to perform. Generally an im plied contra ct is one which is inferred from the conduct of the parties; it is not necessarily expressed in words. 7 Tenn.Juris., Contracts, § 98. “A contract implied in l aw is imposed by opera tion of law, without regard to the assent of the par ties, on grounds of reason and j ustice." Continental Motel Br okers, In c. v. Blankenship , 739 F.2d 226, 232 (6th Cir.1984) (citations omitted). Courts are directed to look to the conduct ofthe parties in light of all the circu mstances to determ ine whether

an implied contract exi sts. One Tennessee court has ex plained as follows: In Tennessee, any conduct from which a reasonable person in

the offeree's position would be ju st ified in inferring a promise in return for the requested act , amounts to an offer, and t ha t such a req uest might be implied wh en the facts and circumstances

are such that the person recei ving the benefit of such work or services kn ow, or rea sonably sh ould have known , t hat the person doing the w ork expected to be compensated.
Cumm ins

v. B rodie , 667 S.W.2d 759, 764 (Tenn.App.1983) (quoting In re Estate of Holding , 61 Tenn.App. 654, 663-64, 457 S.W.2d 545, 549 (1969)).7

As n oted supra , the principle recogni zed in Williams , Pritchett , and Blakemore

i s this: after notice to the insurer by the insured's attorney of his/h er represen tation, the attorney will be entitled to be compensated for services r endered the insurer until such ti me as the attorney is notified by the insurer that it w

ill be responsible for

asserting its claim for sub rog ation. See Boston, Bates, and Holt v. Tennessee Farmers Mutual Insurance Company

, 857 S.W.2d 32 (Tenn. 1993).

The conduct of the parties indicates that an implied contract did exist, that appellee was obligated to prov

ide his services

as an attorney, and that appel lant was obligated to pay for such services

.

In the pres ent ca se, appe llee adv ised appellant o

f his rep resenta

tion of pl aintiff. Thereafter, appellant’s response w as, at best, equivocal : “Once treatment is completed or
our limits are exhausted, w e will be subrogati ng from the claimant carrier for our expenditure under the medical payments co verage.” Although, no doubt, appellant planned to pursue its subrogati on interest, there is no i ndication from appellant as to how appellantplanned to go about securing payment of such interest. After appellant intervened in this matter, appellee asked appellant to be present at all depositions and to share in the costs of proving medi cal bills and expenses had by plaintiff. After medical bills
were not stipulated to by defendants, appellee set up depositions to prove medical bills and expenses incurred by plaintiff Robinson. Appellant failed to attend any

of the depositions
or to supply appellee wi

th funds to aid in proving the medical bills and ex penses. In fact, appellantfailed even minimally to involve itself in this matter until the morni ng of the trial. Under these circumstances, it is the opinion of this court thata reasonable person in appellee’s position would be justified in assuming that appellant wanted appellee to secure pa yment o f their subrogation interes t. Appellee, undoubtedly, co uld not safely abandon any portion of his client's cause of action.
Appellantcites this court to the Williams case mentioned above. This pr esent case, however, is disting uishable fro m Williams in that the insurer in Williams unequivocally8

stated t hat it woul d “handle its own subrogation.” As mentioned supra , appellant merely stated somewhat

equivocally that it would subrogate from the claimant’s carrier. However, appellantfailed to apprise appellee of who would handle its subrogation interest. This fact coupled with the fact that appellant failed even remotely to participate in any aspect of this matter is strong evidence that appellant knew or should hav e known that appellee expected to be compensated for his services.

Based on the evidence in the record and in light

of the foregoing, we think the trial
cou rt p roperly found an implied cont ractual relationship betw een appellee and appellant thereby awarding attorney’s fees to appellee. Accordingly, the judgment of the trial court is affirmed. Costs are taxed ag ainst appellant, for which execution may issue if n ecessary.

HIGHERS, J.
CONCUR:
CRAWFORD, P.J., W.S.

FARMER, J.