# FILED Jan. 13, 1997 Cecil Crowson, Jr. Appellate Court Clerk I N TH E C O U R T O FA PPEA LSO FTEN N ESSEE W E ST E RN SECT

I O N AT JACK SO N

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) M I CH AE L M O RAT, i ndi vi dually , ) She l by C ount y C

i r c ui t C

our t andM O RAT’ SI NSURANCE

AG E NCY, ) N

o. 25650 T. D

. I NC. , a Te nne s s e e C or por a t i on, )

) Pl a i ntif f s - A

pp e lla nt s , )

) v. ) C. A . N O . 02A 01- 9412- C

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- 00270 ) ST AT E FARM M UT UAL AUT O M O BI L E ) I NSURANCE

CO M PANY, ) ) D e f e nd a nt - A

pp e l l ee. )

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_ Fr om t he C i r c ui t C

our t of She l by C

ount y a t M

e m phi s , H o no r abl e W

y e t h C handl e r , Judge

E uge ne C

. G aeri g , M e m phi s , Te nne s s e e A ttor ne yf or Pl a i ntif f s - A pp e lla nt s . Fr e dP. W

ils o n, W I LS ON, M

c R AE, I VY, M

c TYI ER AND STR

AI N, M e m phi s , Te nne s s e e a nd A l an St r ai n, M

e m phi s , Te nne s s e e A t t or ne ys f or D

e f e nda nt - A

ppe l l e e .

OPI NI ON FI LED: AFFI RM E D AND RE

M ANDE D

FRANK

S, J .2

FARM E R, J . : ( C

onc ur s ) T O M L I N , SR . J . : ( C

onc ur s )

I n t hi s a c t i on f or m a l i c i ous pr os e c ut i on, t he Tr i a l J udge gr a nt e d t he de f e nda nt s um m a r y j udgm

e nt , a nd p l a i nt i f f s h a v e app eal e d .

Pl a i ntif f M

i c h a e l M

or a t is a nin s ur a nc e a g e nt w ith t he M or a t I ns ur a nc e A

ge nc y, I nc . , i n M e m phi s . The ge ne s i s of t hi s di s put e oc c ur r e d i n 1981, w he n pl a i nt i f f s s e nt a pol i c y c ha nge r e que s t f or m t o de f e nda nt t o c ha nge t he m ot or ve hi c l e i ns ur e d by de f e nda nt unde r t he a s s i gne d r i s k pl a n t hr ough t hi s a ge nc y f or t he i ns ur e d, J . W . W hi t t e n. W

hi t t e n w a s i n t he pr oc e s s of pur c ha s i ng a 1981 Ca di l l a c a nd pl a i nt i f f s , a f t e r e xpl or i ng t he pos s i bi l i t y of i ns ur a nc e f r om ot he r c om

pa ni e s , a gr e e d t o W hi t t e n’ s r e que s t t o a ppl y t o s ubs t i t ut e t he 1981 Ca di l l a c f or t he m ot or ve hi c l e on t he e xi s tinga s s i g ne dr i s kp o lic y . M i c h a e l M

or a t f ille dout the a ppl i c a t i on f or c ha nge , w hi c h W hi t t e n s i gne d. The pl a i nt i f f n o t e do nt he f or m t h a t i t w

a s a r e p l acem

e nt v e hi c l e andi n t he a ppl i c a t i on i n t he s pa c e f or ? c os t ne w

? , th e p l a i ntif f f i l l e d i n $25, 000. 00. I n a box on t he f or m , pl a i nt i f f not e d t ha t t he ve hi c l e ha d not be e n a l t e r e d. U pon de f e nda nt ’ s r e c e i pt of t he a ppl i c a t i on, t he c ha nge w a s pr oc e s s e d a nd t he 1981 Ca di l l a c be c a m e t he i ns ur e d ve hi c l e . Le s s t ha n t w

o m ont hs l a t e r t he ve hi c l e bur ne d a nd a c l a i m

w a s m a de t o de f e nda nt . U pon i nve s t i ga t i on of t he l os s , de f e nda nt de t e r m i ne d t ha t t he ve hi c l e ha d be e n3

s ub s t a ntia llya lte r e d , w hi c hinc r e a s e dits v a l ue too v e r $40, 000. 00. D

e f e nda nt ul t i m

a t e l y s e t t l e d w

i t h t he l os s pa ye e f or a n a m

ount i n e xc e s s of $24, 000. 00 a nd t he n br ought a n a c t i on a ga i ns t t he a ge nt a nd a ge nc y on t he t he or y t ha t h a dt he t r u e v a l u e o f t he v e hi c l e b eenr e pr e s e nt e d , de f e nda nt w

oul d not ha ve i ns ur e d t he ve hi c l e , be c a us e t he a s s i gne d r i s k pl a n doe s not r e qui r e a n i ns ur a nc e c om pa ny t o i ns ur e a m

ot or ve hi c l e f or m or e t ha n $25, 000. 00, a nd i t w a s de f e nda nt ’ s pol i c y not t o i ns ur e ve hi c l e s c os t i ng i n e xc e s s of t ha t a m

ount . The c a s e a g a i n s t p l a i ntif f s w e nt totr i a l w

itha r e s ul t i ng j udgm

e nt i n t he i r f a vor , w he r e upon t he y br ought t hi s a c t i on f or m a l i c i ous pr os e c ut i on. N um e r ous a nd e xha us t i ve de pos i t i ons w e r e t a ke n a l ong w

i t h e xhi bi t s f i l e d a nd de f e nda nt m ove d f or s um

m a r y j udgm e nt , w

hi c h t he Tr i a l J udge gr a nt e d on t he gr ound t ha t de f e nda nt ha d r e a s ona bl y r e l i e d on a dvi c e of c ouns e l . O n t ha t ba s i s , t he C our t c onc l ude d t he r e w a s ? pr oba bl e c a us e ? t of ile s uit a g a i n s t p l a i ntif f s he r e i n .

O na pp e a l, p l a i ntif f s in s i s t the r e a r e g e nui ne i s s u e s o f m

a t e r i a l f act ?

a s t o l a c k of pr oba bl e c a us e , m a l i ce, andadvi ce of coun s e l ? . W hi l e t he r e ar e m

or e t h a n 4, 000 pa ge s i n t he r e c or d be f or e us , w e do not f i nd a ny g e nui ne i s s u e as t oanym a t e r i a l f act as cont e m p l a t e di n R ul e s of C

i vi l Pr oc e dur e , R ul e 56. For pur pos e s of a s um m a r y j udgm

e nt , t he pl a i nt i f f s ’ de pos i t i on i s t o be t a ke n a s tr u e , a ndM

i c h a e l M

or a t te s tif i e dinp e r tine nt p a r t : Q. W e r e you a dvi s e d by H uf f m a n on A

ugus t 31, 1981 of t he va l ue of t he a ut om obi l e ?4 A. M y not a t i on s how

s t ha t he ga ve m

e a c os t of t he a ut om

obi l e . Q. W ha t di d he t e l l you? A. $49, 900. 00.

. . . Q. W e ll, th e ny oune xt c a lle dSt a t e Fa r m , is t h a t r i ght ? A. Th a t ’ s cor r ect . Q. W ho di d you c a l l a t St a t e Fa r m ? A. I cal l e dandas ke df or t he Te nne s s ee A s s i g ne d R i s k U nde r w r i t i ng D

e pa r t m e nt .

. . . Q. D i d you t e l l t hi s pe r s on you w e r e s pe a ki ng t o t he f i gur e H

uf f m a n ha d t ol d you of $49, 900. 00? A. I di d. Q. W ha t e xa c t l y di d you s a y? A. I e xpl a i ne d t o t he m a n t ha t I s poke t o t ha t t hi s m a nis - M

r . W hitte nis pur c h a s i ngthi s a ut om obi l e , a nd be c a us e of t he va l ue , I ne e de d t o know

w ha t t o do w

i t h t hi s pol i c y, w he t he r t he y w

oul d s ubs t i t ut e t he a ut om obi l e , or w ha t t he y w

oul d do w

i t h i t . Q. W ha t w e r e you t ol d? A. H e e xpl a i ne d t o m

e t ha t unde r t he i ns ur a bl e i nt e r e s t o f t he car unde r t he act u a l as f a r a s t he va l ue of t he a ut om obi l e , l e s s a ny c us t om e qui pm

e nt , t he y w

oul d pr ot e c t t he c a r f or no m

or e t ha n $25, 000. 00.

. . . Q. Ca n you e xpl a i n i t t o m e ? Ca n you e xpl a i n t o m e w ha t you a r e s a yi ng t o m e , c a n you e xpl a i n w ha t t he y t ol d you t he y w oul d i ns ur e i t f or ? A. The y s a i d t he y w oul d onl y i ns ur e i t up t o t he va l ue of t he a ut om obi l e , l e s s a ny c us t om e qui pm e nt f or a l i ke m

a ke a nd m

ode l of a 1981 Ca dilla c Se ville . Q. W a s t he $25, 000. 00 f i gur e i n t he r e s om e w he r e ?5 A. N o, s i r . The pol i c y - t he y w oul d not i ns ur e a ve hi c l e ove r $25, 000. 00 l e s s a ny c us t om e qui pm e nt .

. . . Q. So on A

ugus t 31 you di d not know t he c os t of t he c us t om

m odi f i c a t i ons on t hi s ve hi c l e ? A. N o, s i r . The onl y c os t I kne w w a s t he c os t o f t h a t car , o f w h a t t he deal e r s hi pw a s t r yi ngtos e ll tha t a ut om ob ile f or the c u s t o m e r at . Q. Tha t w

oul d be $49, 900. 00? A. Y e s , s i r . Q. But you kne w t ha t t he r e w

e r e c us t om m o di f i c a tion s ? A. I kne w

t he r e w

e r e c us t om

m odi f i c a t i ons on t he a ut o m ob ile . Y

e s , s i r .

. . . Q. D i d you know

W hi t t e n w

a s c om i ng i n on t he 4t h? A. N o , s i r . I di dn ’ t . Q. But he cam

e i n ? A. H e c a m e i n on t he 4t h. Q. W ha t di d he s a y, a nd w ha t di d you s a y on t he 4t h w he n he c a m

e i nt o your of f i c e ? A. H e c a m e i nt o m

y of f i c e , a nd I a dvi s e d hi m a t t ha t t i m

e w e ha ve got t o m

a ke s om

e c ha nge s on your a ut o pol i c y, a nd he s a i d ? t ha t ’ s w

hy I ’ m he r e ? .

. . . Q. D i d you c om

pl e t e a n a ppl i c a t i on on t he 4t h? A. I di d. Q. A nd di d W

hi t t e n s i gn i t ? A. I c om

pl e t e d a Te nne s s e e A ut om obi l e I ns ur a nc e Pl a n C ha nge Endor s e m

e nt f or m

, or Pol i c y C h a ng e R

e qu e s t , as t he ycal l i t . W e t ook dow

n t he pe r t i ne nt i nf or m a t i on on t he pol i c y. W

e c he c ke d of f t ha t t hi s w a s a6 r e p l acem

e nt v e hi c l e ont he p a r t i c ul a r p o l i c y num b e r , a n‘ 8 1 Ca dilla c Se ville . W e lis t e d t he l i e nhol de r , c ha nge of a ddr e s s f or hi m . H e s i gne d i t a nd I w i t ne s s e d hi s s i gna t ur e .

. . . Q. I s t hi s c ha nge f or m di f f e r e nt f r om

t he i nitia l p o lic ya pp lic a tion ? A. Y e s , s i r . It is . Q. Thi s f or m

ha s a s pa c e on i t f or ? c os t ne w

? , a nd w r i t t e n i n t he s pa c e i s $25, 000. 00. I s t ha t i n your w

r i t i ng? A. Y e s , it is . Q. W hy di d you put $25, 000. 00 i n t he ? c os t ne w

? bl a nk on t hi s c ha nge r e que s t f or m ? A. I put $25, 000. 00 be c a us e t hi s i s t he a m ount of w ha t t he c om

pa ny w oul d pr ot e c t up t o f or a n a ut om

obi l e l i ke t he m

a ke a nd m

ode l of a n ‘ 8 1 Ca dilla c Se ville , le s s a nyc u s t om e qui pm e nt .

. . . Q. D i d he [ unde r w

r i t e r ] t e l l you t o put $25, 000. 00 i n t hi s bl a nk? A. I put $25, 000. 00 s i r , t o pr ot e c t a nd l i m i t t he c us t om

e r f r om

c om i ng ba c k, a l s o, a nd b e i nga b l e toc l a i m hi ghe r if thi s thi ng s houl d be t ot a l e d out , a nd t he n i n a ddi t i on t oit, I ha dhi m

a l s os i gnthi s le tte r he r e s o t he r e w

oul d be no que s t i on a bout i t .

. . . Q. I s e e a box f or ? a l t e r e d , y e s or n o ? on t he pol i c y c ha nge r e que s t , a nd i s i t m a r ke d ? no ? . I s t ha t your m

a r k? A. Y e s , s i r . I m

a r ke dit. Q. W hy di d you m

a r k i t ?

no ? ? A. Be c a us e t he a ut om obi l e t ha t t he pol i c y i ns ur e s goe s ba c k t o a 1981 Ca di l l a c Se vi l l e , l e s s a ny c us t om

e qui pm

e nt . Q. W ha t do you unde r s t a nd t ha t ? a l t e r e d?

box t o m ean ? A. I t m

e a ns a ny a l t e r a t i ons done t o t he7 a ut om obi l e or c us t om

e qui pm

e nt . D e f e nda nt s ought a dvi c e of c ouns e l on br i ngi ng s ui t a ga i ns t pl a i nt i f f s a nd t he l a w f i r m e m pl oye d by de f e nda nt r e c om

m e nde d a nd ul t i m

a t e l y br ought t he a c t i on. The a t t or ne ys , i n r e a c hi ng t he i r c onc l us i on, ha d ot he r f a c t s t oc o n s i de r r e l a t i v e top l a i nt i f f s ’ h a ndl i n go f the m a t t e r . Pl a i nt i f f di d not i nf or m de f e nda nt of hi s c onve r s a t i on w i t h a n unde r w

r i t e r unt i l t he f ol l ow i ng s pr i ng, a nd de f e nda nt w a s una bl e t o ve r i f y a ny c onve r s a t i on w i t h i t s unde r w

r i t e r s t hr ough i t s i nve s t i ga t i on. Shor t l y a f t e r t he l os s , a n i nv e s tig a t or to okp l a i ntif f ’ s s t a t e m e nt, w he r e i np l a i ntif f w a s as ke d : Q. A

not he r t hi ng I w

a nt t o que s t i on you on t he a ppl i c a t i on I got a phot os t a t i c c opy of , you put on t he r e c os t i ng you $25, 000. 00 i n a c t ua l c os t w a s $42, 000. 00 s om e t hi ng. W

ha t w e r e t he r e a s ons f or doi ng t hi s on t he a ppl i c a t i ons i ns t e a d of put t i ng t he f ul l a m ount ? A. Becau s e M

r . W hi t t e nagr eedt h a t t hi s w a s t he pr i c e he w

a nt e d t o s how

unde r t he t e r m

s of t hi s pol i c y c ha nge r e que s t , a ny t i m e t ha t t he c us t om e r a c know

l e dge s t hi s , t hi s i s w ha t he ha s w a nt e d t o do. The Supr e m

e C our t i n Ro b e r t s v. F e de r a l E

x p r e s s C orp. , 892 S . W

. 2d 246 ( Te nn. 1992) , he l d t ha t t he r e a s ona bl e ne s s of t he de f e nda nt ’ s c onduc t i n br i ngi ng a n act i o n ?

s houl d be m

a de by a j ur y?

, a nd t he C

our t s a i d t ha t pr oba bl e c a us e i s t o be de t e r m i ne d ? s ol e l y f r om

a n obj e c t i ve e xa m i na t i on of t he s ur r oundi ng f a c t s a nd c i r c um s t a nc e s . ? Si nc e t he s ur r oundi ng f a c t s a nd c i r c um s t a nc e s i n t he c a s e be f or e us a r e not i n di s put e , t he i s s ue t hus be c om e s w he t he r ? r e a s ona bl e m

i nds c oul d di f f e r a s t o w he t he r pr oba bl e c a us e e xi s t e d f or br i ngi ng ? the a c t i o na g a i ns t pl a i nt i f f . Robe r t s ,8

I d. 249. W

e no t e at t he out s e t , t h a t w hi l e t he s a m

e g e ne r a l r ul e s a nd l i m

i t a t i ons a ppl y t o a n a c t i on f ounde d upon a c i vi l pr oc e e di ng, vi s - a - vi s c r i m i na l pr oc e e di ngs , t he r e c a n b e s i g ni f i cant di f f e r e nces :

But obvi ous l y l e s s i n t he w a y of gr ounds f or be l i e f w

i l l be r e qui r e d t o j us t i f y a r e a s ona bl e m a n i n br i ngi ng a c i vi l , r a t he r t ha n a c r i m i na l s ui t . Som

e t i m e s t hi s i s e xpr e s s e d by s a yi ng t ha t w a nt of pr oba bl e c a us e m us t be ?

v e r ycl ear l y pr ove n? or ? v e r yp a l a t a b l e ?

or t ha t ?

gr eat e r l a titude ?

m u s t b e al l o w

e dt h a ni na cr i m i n a l cas e . A pp a r e ntly , w

h a t is m

e a nt is m

e r e l yth a t the i ns t i ga t or ne e d not ha ve t he s a m e de gr e e of cer t a i nt yas t ot he f act s , or ev e nt he s a m e b e l i e f i n t he s oundne s s of hi s c a s e , a nd t ha t he i s j us t i f i e d i n br i ngi ng a c i vi l a c t i on w he n he r e a s ona bl y be l i e ve s t ha t he ha s a good c ha nc e of e s t a b lis hi ngit tothe s a tis f a c tiono f the c our t or t he j ur y. Pr os s e r and K

e e t on on T

or t s , 5t h Ed. §120, p. 893. O ur Supr e m

e C our t i s i n a c c or d w i t h t hi s vi e w

, ha vi ng e xpr e s s e d i n K auff m an v . A. H

. Robbi ns C

o. , 223 Te nn. 515, 448 S . W

. 2d 400 ( 1969) t ha t i n c i vi l a c t i ons t he p l a i ntif f h a s ?

a he a vy bur de n of pr oof ? ine s t a b lis hi ng m a l i c e a nd l a c k of pr oba bl e c a us e . P. 523.

I n m a l i c i ous pr os e c ut i on a c t i ons , a dvi c e of c oun s e l t ot he ef f ect t h a t t he r e i s a r eas o n a b l e cha nce of r ecov e r yo na cl a i m canes t a b l i s hpr ob a b l e cau s e . Se e Sul l i v an v . Y

oung , 678 S . W

. 2d 906 ( Te nn. A

pp. 1984) . I n t hi s c a s e , t he Tr i a l J udge c onc l ude d t ha t t he de f e nda nt ha d a c t e d r e a s ona bl y i n i t s i nve s t i ga t i on a nd i n obt a i ni ng t he a dvi c e of c ouns e l a s t o w he t he r i t s houl d a t t e m pt t o r e c ove r f r o m p l a i nt i f f . A

s w e ob s e r v e dear l i e r , w e ar e r e qui r e dt o t a ke the p l a i ntif f ’ s s t a t e m e nt s a b out the c a ll toa n unde r w r i t e r as t r u e , but t he r e w a s am p l e evi de nce at t he9

t i m e f or t he a t t or ne ys t o c onc l ude t ha t de f e nda nt ha d a r eas o n a b l e cha nce t or ecov e r i nt he pr i or act i o n .

W e c onc l ude on t hi s r e c or d t ha t r e a s ona bl e m i nds w oul d not di f f e r t ha t pr oba bl e c a us e e xi s t e d f or br i ngi ng t he a c t i o n .

Pl a i ntif f s a r gu e th a t ? di s c ove r y w

a s i m pr ope r l y w i t hhe l d by St a t e Fa r m ? , i nc l udi ng f a i l ur e t o a ns w e r i nt e r r oga t or i e s a nd pr oduc e doc um e nt s . The R

ul e s of C

i vi l Pr oc e dur e pr ovi de pr oc e dur e s t o c om pe l di s c ove r y. A t r i a l c our t s pe a ks t hr ough i t s m i nut e s a nd w

e f i nd no or de r i n t hi s r e c or d of t he Tr i a l C our t ’ s r e qui r i ng de f e nda nt t o c om pl y w i t h a ddi t i ona l di s c ove r y unde r t he R ul e s . Pa l m

e r v. Pa l m e r , 562 S . W

. 2d 833 ( Te nn. 1978) . A pa r t y w

i l l not be gr a nt e dr e l i e f w

he r e he h a s f a i l e dt ot a ke w h a t e v e r act i o n w a s r e a s ona bl y ne c e s s a r y t o pr e ve nt a n e r r or . T. R. A . P. R ul e 36( a ) . Fi na l l y, t he r e i s ye t a not he r c om pe l l i ng r e a s on t he j udgm

e nt s houl d be a f f i r m e d. The unde r l yi ng c a us e of t he cont r o v e r s i e s b e t w eent he s e p a r t i e s i s p l a i nt i f f ’ s o w n a c tion s . H

e f ille dintw

oa n s w e r s inthe a pp lic a tionf or i ns ur a nc e , know

n by hi m

a t t he t i m

e t o be f a l s e . N o pa r t y s houl d be a l l ow

e d t o pr of i t f r om hi s w r ongf ul c onduc t . The N or t h Ca r ol i na Supr e m e C our t ha s s a i d i t w e l l : I t i s a m

a xi m o f l a w

r eco g ni zedandes t a b l i s he d , t h a t ? no m a n s ha l l t a ke a dva nt a ge of hi s ow n w r ong; a nd t hi s m a xi m , w hi c h i s ba s e d on e l e m e nt a r y pr i nc i pl e s , i s f ul l y r e c ogni z e d i n c our t s of l a w

a nd e qui t y, a nd, i nde e d, a dm i t s of i l l us t r a t i on f r om e ve r y br a nc h of l e ga l pr oc e dur e . ? Br oom’ s Le gal M ax i m s , 10t h Ed. , 191. ? Thi s m a xi m e m bodi e d i n t he c om m on l a w , a nd c o n s titutinga ne s s e ntia l p a r t the r e o f , is s t a t e d i n t he t e xt books a nd r e por t e d c a s e s . I t ha s i t s10 f ounda t i on i n t he uni ve r s a l l a w a dm i ni s t e r e d i n a ll c i viliz e dla nd s , for w ithout its r e c o g nition a nd e nf or c e m

e nt by t he C

our t s , t he i r j udgm e nt s w oul d r i ght l y e xc i t e publ i c i ndi gna t i on. ? I nRe : Iv e s , 102 S . E. 2d 807, 811 ( N C. 1958) . For t he f or e goi ng r e a s ons , w e a f f i r m

t he j udgm

e nt of t he Tr i a l C

our t a nd r e m

a nd w i t h c os t s of t he a ppe a l a s s e s s e dt ot he app e l l a nt .

________________________ H e r s c he l P. Fr a nk s , J .

___________________________ D a vi dR. Fa r m

e r , J .

___________________________ H e w i t t P. To m

l i n , J r ., Sr . J .