1 Ten n. R. Ct. App . 10 states:

Th is Co urt, with the c onc urren ce of a ll judge s partic ipating in the cas e, may affirm, rev erse o r mo dify the act ions of t

he t ria l cou rt by

memorandum opini on whena for mal opi nion woul d h ave no preceden tial

value. When a case is decided by memo randum opinion it shallbe design ate d “MEMORANDU M OPIN IO N,” shall not be published, and shall not be cited or relied on for any reason i n any un relat ed case. 

### IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE October 4, 2004 Se ssion MARGIE MARIE LYNN, ET AL 

### . v. EXPEDITERS EXPRESS, INC., ET AL 

### .

Appeal from the Circuit Court for Davidson County No. 98C-2258 Carol Soloman, Judge

No. M2003-01777-COA-R3-CV - Filed F ebruary 25, 2005

Plaintiff sued h er empl oyer for mi srepre senta tion relat ing to healt h ins urance covera ge and sought to recover amounts incurred by her husba

nd for med ical bills. The trial court found for plaintiff awarding her treble and punitive damages. We reve rse the trial court’s finding of treble and punitive damages and affirm the trial court ’s award of a refund to plaintiff for a mounts contributed as premiums. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part and Reversed in Part

P AT RICIA J. C OTT RELL , J., delivered the opinion of the court, in which W IL LI AM C. K OCH , J R ., P.J., M.S., and W IL LI AM B. C AIN , J., joined.
Mathew R. Zenne

r, Nashville, Ten

nessee, for the a

ppellant s, Expedite

rs Express , Inc ., et al.
Paul T. Hou sch, Nashville, Te nnessee , for the

appelle es, Marg

ie Marie Ly nn, et al.
MEMORAN

DUM OP INION 1

InNovember of 1997, Margie and Johnny L ynn were working for Expediters Express, Inc. (“Expediters”) as a husband/wife truck driving team. During that time, John Tulles, president and
owner of Expediters, notified his employeesof the possibility that health insurance mig ht be offered to employees of Expediters on a group basis. Margie L ynn completed an a

pplication for

insurance-2-

naming her husband as a dependent. I t was anticipated that the employees would pay a pa rt of the premium. While the purpose of the deductions are disputed, Expediters withhe ld a premium deduction fr om three of Ms. Ly nn’s weekly pa

ychec ks. For the weeks ending November 28 and December

5, 1997, a premium deduction of Forty -Five Dollars and fivecents ($45.05) each week
was wi th he ld fr om Ms . Lyn n’ s c he ck s. In h er we ek ly p ayr oll ch eck for December 19, 1997, a premiumdeduction of One Hun dred thirty-F ive Dollars and fifteen cents ($135.15) was made for three weeks of

insuranc e premiu

ms. The tot

al wit hheld for insurance purposes from Ms. Ly nn’s payche cks was Two Hundred Twenty -Five Dollars and twenty

-five cents ($225.25). According

to Ms. Ly

nn, she had

been told by M r. Tulles that the in surance

covera ge woul d go into effe ct on Dec ember 10 , 1997. While the Ly nns were aware of a problem with Johnny Ly nn’s health, accord

ing to Ms. Ly

nn, they did not see

k medica l help until

the insur ance we nt into eff ect. In late Decembe

r, Johnny L

ynn beg an to seek medical help and was diagnosed with throat cancer. Mr. Ly nn incurred medical bills beginning in Dece mber of 1997.
There is no dispute that the insurance company declined to provide group coverag e for Expediter s’ employ

ees. Ms. Ly

nn acknowledged that she was told that in order to be covered, she needed to receive either an insurance card or notice of acceptance from

the insurer. She admits that she received no indication from any insuranc e carrier that her application had be en accepted. Mr. Tulles testifie d that he never tol d his employees that insuranc e coverage had been secured, only

that Expediters was applying

for it. According to Mr. Tulles, the insurance pre mium deductions were made from employee s payrolls beca use the carrier required advance premiums to accompa ny the applica tions. Ms. Ly

nn, on the other hand, testified that she was told by Mr. Tulles that the policy would be in effect on December 10, 1997. In reliance on this repr esentation, Ms. Ly

nn testified that her husband incurred medical bills believ ing th ey had insur

ance. T he bulk of

the medic al bills introduced

were incurred in March

of 1998, w

hile a few appear to have bee n incurred in December of 1997. A judg ment was obtained by Per ry Community

Hospital against Ms. Ly nn for Four Thousand, One Hundred Eight Dollars ($4,108) for medic al bills allegedly inc urred by he

r husband.

Ms. Ly nn apparently le ft Expediters’ employ in early 1998, and the record does not clea rly show that Ms. Ly

nn was employed with Expediters when ma ny of the bills were inc

urred. Ms. Ly

nn did not testify on this issue, but the 1998 W-2 for Ms. L ynn, made an exhibit below, showed a total
s alary for 1998 o f Two Hun

dred Six Doll ars ($20 6). Mr. Tu lles’s te stimony

on this subj e ct wa s sketchy and unce rtain. I t appears from the

record that Ms

. Ly

nn was not employed by

Expediters except for perhaps one to two weeks in 1998.
This lawsuit was initiated by Marg ie an d Johnny Ly

nn against Expediters and Mr. Tulles alleging convers ion of the

premiums w

ithheld fr

om pay checks, f

raud and negligent misrepresentation, promissory fraud, br each of contract and

a violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq.-3-

Prior to the trial, the marriage of Margie and Johnny L ynn was annulled since

Johnny Ly nn was still married

to another woman. At the non-jury trial, plaintiff’s counsel non-suited Mr. Ly nn’s claims, leaving Ms. Ly

nn as the sole plaintiff.
The trial cou

rt found E

xpediters a

nd Mr. Tull e s bo th liable and assessed damages under several theories. First, the trial court found the premiums of $225 had been converted

by d efenda nts, resulting ina treble damage awar d of $675.00 and prejudgment interest of $135.00. Second, based
ona finding

of frau d and misr

eprese ntation, the court t

rebled t he amount

of the judgmen t entered agains tMs. Ly

nnon behalf of Perry

Community Hospital ($4,108.00) and awarde d her $12,624.45. Finally , the court awarded Ms. Ly nn $4,108 as punitive damages based upon the fraud a nd misrepresentation. Expediters and Mr. Tulles concede that it is appropriate to award Ms. Lyn n the amount of premiumswithheld plus prejudgment interest. It is err or, they contend, to trebl e that amo unt. Expediters and Mr. Tulles argue that sincethere wa s no false statemen t by them and n

o reasonable reliance by M s. Ly

nn, the co urt erre d in findin

g them lia

ble for fraud a nd misrepresenta

tion with accompany

ing punitive d

amage s. Lastly , Mr. Tulles argues that since he was acti ng in his c apacity of pr es id en t o f E xp ed it er s, he ha s n o i nd iv id ua l l ia bi li ty.
A NAL YSIS
We begin w

ith the issu

e of whe

ther Ms. L

ynn justifiab ly r

elie d upon the alleged misrepresent ation be cause we believe this issue is dispositive of the fraud and misreprese ntation claims. It iswell established that in order to prevail on a claim of neg ligent misrepresentation, the plaintiff must establish thatthere was justifiable reliance on the false representation. Staggs v. S ells , 86 S.W.3d 219, 223 (Tenn. Ct. App. 2002). In order to prevail on a c l aim of fraudule nt misrepresentation, the plain tiff must li

kewi se prove that he or she reasonably relied on the misrepresentation. Allied Sound, In c. v. Nee ly , 58 S.W.3d 119, 122 (Tenn. Ct. App. 2001). Based uponthe unique facts of this case, we find that Ms. L ynn is not able to prove that she incurre d these bills for her husba

nd in relia

nce on a ny r eprese ntation by Mr. Tulle s or Expedit

ers. First, the cause of the m edical bills was n ot any repres entation

by d efenda nts, but ra ther it
was problems with Mr. Ly nn’s health. In other words, the me dical expenses arising from the cancer treatment would have been incurred whether or not Ms. Ly nn had insurance. Ms. Ly nn does not contend that medical treatment would not have been sought in the absence of insurance, but only that it was delaye d until the presumed effective date o f the cov erage. Therefor e, the bills were not incurred because of defendants’ re p resentations. Second, although Mr. Tulles told her that the insurance would bec ome eff ective D ecembe

r 10, 1997 , Ms. Ly

nn also testified that she was told that she needed

to receive some indication of acceptance from the insurance company that admittedly she did not receive. Third, Ms. Ly

nn testifi ed that sh e was told and belie ved that t he insura nce woul d remain

in effect only as long a s the premiums were paid. It is not contes ted that Ms. Ly nn’s premium2 The recor d makes pass ing ref erenc e to apay ment

of On e Thous and Dol lar s ( $1,0 00) by def enda nt s un der s ome sort of s ett lemen t ag reemen t t hat apparen tl y was repudi ated. The appel lant s do not appeal the tri al court’s fail ure to give them a ny cred it for this am ount. -4- contribu tions, at best, covere d a peri od fro m Decem ber 10 , 1997 (the d ate sh e says cove rage was to start) throu gh the five (5) weeks she paid the premium, until January 14, 1998. No premiums were deducted in 1998. The med i cal bills introduced at trial show that the majority of the medical services w ere not provided during December and January . This further undermines Ms. Ly nn’s reliance contention. As for the Perry Community Hospitaljudgment, it is not possible to tell who incu rred t he charges underly

ing that judgment or when the charg es were incurred. There was no testimony introduc ed reg arding

when the

expenses u

nderly ing the Pe

rry Community Hospital judgment were incurred or

wh at th ey w er e f

or . B as ed up on th e t es ti mo ny, we have been una ble to
reconc ile the amounts of the judgment with other evidence in the rec ord. Fourth, it is doubtful that Ms. Ly nn even worked for

Expediters during the 1998 period when many of the medical bills were incurred.
Since we find Ms . Ly

nn did not ju stifiably

rely on Mr. Tulles’ alleged representa tions about the existence of insurance, we reverse the tr ial court’s finding that defendants are liable for fraud and misrepresentation

and the award of damage s related to those claims. Since the punitive damages are based upon the trial court’s findings of fraud and misrepre sentation, the award of punitive damages is reversed as we ll.
The remaining issue is Expedite rs’ liabi lity

for treble damages for c onversion. We share the trial court’s

frustra tion with th e compan

y’ s behavior. Althoug

h defend ants do not

dispute th at Ms. Ly nnis owed the premiums, they ha ve not refunded Ms. Ly

nn this amount. Expediters represented to the court in its answer that “this defendant will tender the full amount of the funds ar ising from the pay roll dedu ctions into

the registry

of this co urt for p ay

ment to the

plaintiff Margie Ly nn.” This
was not done. There is no dispute thatthe amount withheld from Ms. Ly nn is due. While we agree with the award of prejudgment interest, we are unable to find support for the trial court’s award of treble damages. Furthermore, we find no basis for holding Mr. Tulles personally liable since he was actingon behalf of Expediters. Therefore , we aff irm the award of Two Hundred Twenty -Five Dollars ( $225) plus

prejudg ment inter

est aga inst Expedite

rs. 2
The judgment of the trial court as to the awards for fraud and misrepresentation and punitive damages is reversed. The award f or treble damage s for con

version a nd the judg

ment ag ainst

John Tulles individua

lly i s revers ed. The j udgmen t awardi ng $225 p lus pre-

judgmen t interes t is affirmed. Costs of the ap

peal ar e taxed eq ually to the appellants, Expediters Express et al., and the appellee, Margie Marie L

ynn.

____________________________________ PATRICIA J. COTTREL L, JUDGE