IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

August 16, 2007 Session

UNION REALTY COMPANY, LTD. d/b/a NORTHGATE SHOPPING

CENTER v. FAMILY DOLLAR STORES OF TENNESSEE, INC., ET AL.

Direct Appeal from the Circuit Court for Shelby County

No. CT-004653-005 Robert L. Childers, Judge

No. W2006-01418-COA-R3-CV - Filed November 16, 2007

This dispute arises from a premises liability action filed against Plaintiff property owner Union

Realty Company. The trial court determined that Defendant Travelers Property Casualty Company

had an obligation to insure Union Realty as a named insured under a public liability contract of

insurance issued to Defendant Family Dollar store. Family Dollar and Travelers appeal; we affirm

in part, vacate in part, and reverse in part.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in part;

Reversed in part; Vacated in part; and Remanded

DAVID R.FARMER,J., delivered the opinion of the court, in which W.FRANK CRAWFORD,P.J.,W.S.,

and HOLLY M. KIRBY, J., joined.

S. Newton Anderson, Gayle Boyden Lakey and Kimberly Nicole Galloway, Memphis, Tennessee,

for the appellant, Family Dollar Stores of Tennessee, Inc.

Bradley E. Trammell and Jay Ebelhar, Memphis, Tennessee, for the appellant, Travelers Insurance

Company.

Richard Glassman and Tameka Turner-Perry, Memphis, Tennessee, for the appellee, Union Realty

Company, Ltd., d/b/a Northgate Shopping Center.

OPINION

In February 1998, Jo A. Parker (Ms. Parker) died as a result of a criminal assault

committed in the premises occupied by Defendant Family Dollar Stores of Tennessee, Inc.

(“FDS”) in the Northgate Shopping Center, which is owned by Plaintiff Union Realty Company,

Ltd. (“Union Realty”) in Memphis. Ms. Parker was an employee of FDS at the time of the

assault, and all claims against FDS arising from her death were settled pursuant to workers

compensation insurance. A lawsuit seeking damages for injuries sustained by Ms. Parker (“the
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Parker lawsuit”) subsequently was filed against Union Reality in the Circuit Court for Shelby

County. Plaintiffs in the Parker lawsuit alleged Union Reality knew or should have know of

criminal activity in the area, that the attack on Ms. Parker was foreseeable, that Union Reality

disregarded the known dangers of criminal activity, and that Union Realty failed to provide

security measures at the shopping center. 

In August 2000, Union Realty commenced the present action against FDS and its

insurance carrier, Travelers Property Casualty Company of America (“Travelers”) seeking to

enforce a provision for public liability insurance in its lease with FDS. In its complaint, Union

Reality alleged the Parker lawsuit arose from incidents occurring wholly in the premises

occupied by FDS; that FDS was obligated pursuant to its lease with Union Reality to provide

public liability insurance naming Union Realty as an additional insured; that Travelers was

FDS’s insurer and that, pursuant to the contract for insurance, Union Realty was named as an

additional insured; and that Travelers had refused its demand for insurance coverage. Union

Realty asserted, “[b]y failing and refusing to defend Union Realty in the personal injury lawsuit,

Travelers is in breach of contract. Pleading in the alternative, Plaintiff would show that

Defendant, FDS, is in breach of contract for failing to procure adequate insurance as was

required by the lease.” Union Realty sought an order requiring Travelers to assume its defense in

the Parker lawsuit; damages, including attorney’s fees, arising from Travelers’ refusal to defend;

pre-judgment interest; post-judgment interest; other appropriate general relief; and costs. In its

answer, Travelers denied that Union Realty was entitled to relief and asserted, in the alternative,

that if Union Realty was entitled to insurance coverage, coverage was limited to $500,000

pursuant to the policy of insurance and the lease between Union Realty and FDS. FDS answered

and denied that Union Realty was entitled to insurance coverage under the terms of the lease

where the Parker lawsuit did not describe a loss occurring in premises occupied by FDS, but

sought damages for acts arising solely out of Union Realty’s acts or omissions. In July 2005, the

trial court entered an order permitting Union Realty to amend its complaint against Travelers to

assert a bad-faith denial claim pursuant to Tennessee Code Annotated § 56-7-105. The trial court

denied Union Realty’s motion to amend its complaint against FDS to add allegations of

inducement to breach the contract of insurance. 

Following cross motions for summary judgment, the trial court heard the matter in

August 2005. At the August hearing, the trial court stated:

But it appears to me that there is an obligation, and it looks like – it sounds like to

me that Family Dollar has complied with the terms of the lease and has acquired

this insurance policy of $500,000. . . . It seems to me that Travelers has a duty to

defend here. 

Travelers subsequently assumed the defense of Union Realty and funded the full settlement in the

Parker lawsuit. On September 22, 2005, however, Travelers notified Union Realty that it was

reserving its rights under the policy and would not waive any right to appeal the trial court’s

order. 
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In November 2005 and January 2006, Union Realty filed revised motions for summary

judgment against FDS. In its motions, Union Realty asserted the case was a breach of contract

action involving the lease agreement and the contract of insurance; that the actions giving rise to

the Parker lawsuit did not occur in the common area of the shopping center but in the premises

occupied by FDS; that Travelers has fully funded and settled the underlying Parker lawsuit; that

FDS was required to obtain public liability insurance for coverage in the amount of $500,000

pursuant to its lease; that FDS had purchased an insurance policy with a $250,000 “self-retention

provision” and had refused to pay the first $250,000 required under the provision; and that “[t]he

policy procured by FDS through Travelers is applicable to the loss made the subject of the

underlying tort claim, therefore, FDS has a duty to defend and/or indemnify Union Reality by

an[d] through the required insurance coverage which was obtained from Travelers.” On January

31, 2006, FDS moved to dismiss the action as moot. In its motion, FDS asserted, “Plaintiff’s

lawsuit against it for breach of contract for failure to procure adequate insurance as required by

the lease agreement between them is moot because there is no longer an existing controversy

between them” where Travelers had fully funded the settlement of the Parker lawsuit and

reimbursed Union Realty for all expenses. 

Following a hearing in February 2006, in May 2006 the trial court granted Union Realty’s

motion for summary judgment as to FDS and Travelers, and denied FDS’s motion to dismiss. 

The trial court incorporated by reference the transcript of the proceedings into its order. The trial

court also dismissed with prejudice Union Realty’s bad faith claim against Travelers. Travelers’

and FDS filed timely notices of appeal to this Court. Following our granting of FDS’s motions

to enlarge time and to reset oral argument, oral argument was heard by this Court in August

2007. We affirm the trial court’s order denying FDS’s motion to dismiss. The trial court’s

award of summary judgment to Union Realty, insofar as it may be perceived as a determination

that FDS would have been in breach of the lease had the policy of insurance not provided

coverage to Union Realty in the Parker lawsuit, is reversed. To the extent that the trial court’s

order may be perceived as a declaratory judgment that FDS breached the lease by procuring a

contract of insurance that included a deductible in the amount of $250,000, the judgment is

vacated. 

Issues Presented

The issues presented for our review, as we perceive them, are:

(1) Whether the trial court erred by denying FDS’s motion to dismiss Union

Realty’s motion for summary judgment for mootness.

(2) Whether the trial court erred in awarding summary judgment to Union

Realty upon determining the lease between Union Realty and FDS

required FDS to obtain insurance coverage against the claims asserted in

the Parker lawsuit, and that the insurance procured by FDS fulfilled this

obligation. 
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Analysis

We first turn to FDS’s assertion that the trial court erred in denying its motion to dismiss

for mootness. FDS asserts that, when Union Realty renewed its motion for summary judgment in

November 2005 and January 2006, the issues asserted were moot where Travelers had fully

funded the settlement in the Parker lawsuit and reimbursed Union Realty for all expenses. It

further asserts that the question of whether FDS breached the lease by failing to procure

insurance as obligated by the lease was not properly before the court where Union Realty’s action

was not brought as a declaratory judgment action to construe the parties’ obligations under the

lease. Additionally, FDS contends that Union Realty has no standing to allege that FDS had

failed to reimburse Travelers in the amount of its deductible in the amount of $250,000 under the

contract of insurance. 

We begin by observing that whether FDS has properly reimbursed Travelers for the

amount of its deductible is not properly before this Court where it was not an issue in controversy

in the proceedings below. Travelers is a party to this action and has not filed a cross-claim

against FDS. Rather, Travelers’ position is that it will seek either recovery of amounts paid to

Union Realty or payment of the deductible by FDS pending our determinations on appeal.

We next turn to whether the issues in controversy between Union Realty and FDS were

rendered moot by Travelers’ settlement of the Parker lawsuit and reimbursement of expenses to

Union Realty. It is well settled that in order to invoke the jurisdiction of the courts, there must be

a genuine and live controversy between the parties which necessitates adjudication of present

rights by the court. Dockery v. Dockery, 559 S.W.2d 952, 954 (Tenn. Ct. App. 1977). This

controversy must remain live throughout the course of litigation, including the appeal process. 

Id. A moot case is one in which the court determines it is no longer necessary as a means to

provide the relief to which a party is entitled. Ford Consumer Fin. Co. v. Clay, 984 S.W.2d 615,

617 (Tenn. Ct. App. 1999). In the absence of exceptional circumstances justifying an exception

to the mootness doctrine, if a cause of action loses its character as a live controversy, it will be

dismissed as moot. Id. at 955; McIntyre v. Traughber, 884 S.W.2d 134, 137 (Tenn. Ct. App.

1994). 

In its brief to this Court, FDS asserts the settlement by Travelers fully mooted the issues

of whether Travelers was in breach of contract when it refused to provide insurance coverage and

of whether FDS was in breach of the lease agreement by failing to provide adequate insurance

coverage under the lease. FDS asserts “there is no document in the record to suggest that

Travelers made this payment to and on behalf of Plaintiff with any type of reservation or

contingency.” Contrary to this assertion, however, as noted above, the record contains a

reservations of rights letter sent by Travelers to Union Realty in September 2005. Travelers has

maintained that, although it fully funded the settlement in the Parker lawsuit, in “the absence of

an express order of the trial court finding coverage under the Lease Agreement [it] reserved its

right to seek reimbursement from Union Realty in the event of a final order ultimately finding

Family Dollar has no obligation to provide coverage under the Lease Agreement.” Additionally,
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although Union Realty did not file this action as a declaratory judgment action, we note that the

pivotal issue in this case was whether FDS and Travelers had an obligation to defend Union

Realty under the lease agreement and contract of insurance. Further, although the trial court

stated from the bench that it believed Travelers had a duty to defend under the terms of the lease

and the insurance contract, it had entered no order to that effect when Union Realty filed its

renewed motion. Despite its settlement of the Parker lawsuit, Travelers’ reservation of rights

kept this controversy alive. We affirm the trial court’s denial of FDS’ motion to dismiss.

We next turn to the determinative issue of whether the insurance provision in the lease

agreement between FDS and Union Realty required FDS to obtain insurance coverage to defend

Union Realty in the Parker lawsuit. This issue requires us to construe the terms of the lease

agreement between the parties. The interpretation of a contract is a matter of law that we review

de novo on the record with no presumption of correctness for the determination of the trial court. 

Barnes v. Barnes, 193 S.W.3d 495, 498 (Tenn. 2006). The “cardinal rule” of contract

construction is to ascertain the intent of the parties and to effectuate that intent consistent with

applicable legal principles. Frizzell Constr. Co. v. Gatlinburg, L.L.C., 9 S.W.3d 79, 85 (Tenn.

1999). When the language of the contract is plain and unambiguous, courts determine the

intentions of the parties from the four corners of the contract, interpreting and enforcing it as

written. Int'l Flight Ctr. v. City of Murfreesboro, 45 S.W.3d 565, 570 (Tenn. Ct. App. 2000).

The lease executed between FDS and Union Realty in December 1983 contains

reciprocal, complementary provisions relating to public liability insurance. Paragraph 11(b) of

the lease provides:

Tenant shall maintain insurance against public liability for personal injury or

death or damage to property occurring in the demised premises arising out of the

use and occupancy thereof by Tenant. Such insurance shall be a single limit

policy of $500,000 for personal injury or death and property damage and

Landlords shall be named as an additional insured under the policy (except for

structural alterations, new construction or demolition operations performed by

Landlords).

Paragraph 11(c) provides:

Landlords shall maintain insurance against public liability for personal injury or

death or damage to property arising out of the acts or omissions of Landlords or

arising out of the use of the common areas (including without limitation, parking

areas, sidewalks, ramps and service areas) in the shopping center. Such insurance

shall be with single limit of $500,000 for personal injury or death and for property

damage, and Tenant shall be named as an additional insured under the policy. 
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Thus, the lease required each party to obtain insurance against liability to the public, and to name

the other as an additional insured. FDS was required to insure against damages arising from the

use and occupancy of its premises; Union Realty was required to obtain insurance against

liability for its acts or omissions resulting in damages arising out of the use of the common areas. 

Although the parties debate the construction of the term “use and occupancy,” the lease

clearly anticipates that each party would obtain insurance against liability to the public arising

from its own acts or omissions within the areas under its control. Unlike Anderson v. Bennett,

834 S.W.2d 320 (Tenn. Ct. App. 1992), where we were required to determine whether the

shooting of a child from an automobile constituted “use” of the automobile for the purposes of

insurance coverage, this case does not require an interpretation of whether the criminal act

undisputedly committed within the FDS premises constitutes an act arising from the use or

occupancy of the premises. Rather, it is undisputed that the Parker lawsuit alleged damages

arising from the acts or omissions of Union Realty in the common areas under the control of

Union Realty. It was, in short, a premises liability action asserting negligence on the part of

Union Reality for failing to take proper security measures not within the FDS premises, but in the

common areas of the shopping center. 

In the trial court, Union Realty asserted that a primary element of its defense in the Parker

lawsuit would be causation. At the August 2005 hearing of this matter, counsel for Union Realty

asserted,

[b]ut if we tried the case, if Family Dollar was found to be the cause in fact, then

we’ve triggered everything we need to trigger and we would be entitled to our

defense cost because they still had not come forward to indemnify or hold us

harmless as to defense costs. 

The lease, however, did not require FDS to insure Union Realty against an action for liability

arising from Union Realty’s alleged negligence with respect to security steps in the common

areas of the shopping center. 

We disagree with the premise of Union Realty’s argument that, if the policy of insurance

issued by Travelers was not applicable to the claims asserted in the Parker lawsuit, then FDS was

in breach for failing to obtain adequate insurance. The basis for this argument, as asserted in

Union Realty’s brief to this Court, is that “Ms. Parker’s death was unrelated to any portion of

Northgate Shopping Center’s common areas.” We respectfully suggest that this was the

determinative question raised in the Parker lawsuit. 

We therefore reverse summary judgment in favor of Union Realty, and hold FDS did not

breach the lease by failing to obtain insurance as required by the lease where the lease did not

require FDS to obtain insurance coverage against a premises liability action brought against

Union Realty for damages allegedly sustained as a result of Union Realty’s acts or omissions in

the common areas. To the extent that the trial court’s judgment can be perceived as a
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determination that FDS breached the lease where the contract of insurance included a $250,000

deductible, we vacate that determination. 

Holding

We affirm the trial court’s denial of FDS’s motion to dismiss for mootness. In light of

the foregoing, summary judgment in favor of Union Realty is reversed insofar as it is predicated

on a determination that the lease agreement required FDS to obtain insurance coverage

applicable to a premises liability action alleging only the negligence of Union Realty in or around

the common areas. To the extent to which the trial court’s order is predicated on a determination

that FDS breached the lease where the policy of insurance included a $250,000 deductible, the

judgment is vacated. Costs of this appeal are taxed to the Appellee, Union Realty Company,

Ltd., d/b/a Northgate Shopping Center.

___________________________________ 

DAVID R. FARMER, JUDGE