FILED

January 22, 1999

Cecil W. Crowson

Appellate Court Clerk

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

HELEN BELL, )

)

Plaintiff/Appellant, )

) Appeal No.

) 01-A-01-9802-CV-00079

VS. )

) Warren Circuit

) No. 8868

TENNESSEE FARMERS MUTUAL )

INSURANCE COMPANY, )

)

Defendant/Appellee. )

APPEALED FROM THE CIRCUIT COURT OF WARREN COUNTY

AT MCMINNVILLE, TENNESSEE

THE HONORABLE CHARLES D. HASTON, JUDGE

PETER J. STRIANSE

2100 First American Center

Nashville, TN 37238

AUBREY HARPER

114 N. College Street

McMinnville, TN 37110

Attorneys for Plaintiff/Appellant

STEVEN A. DIX

201 West Main Street, Ste. 201

Murfreesboro, TN 37130

Attorney for Defendant/Appellee

REVERSED AND REMANDED

BEN H. CANTRELL

PRESIDING JUDGE, M.S.

CONCUR:

KOCH, J.

CAIN, J.
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O P I N I O N

The owner of a homeowner’s insurance policy sued the defendant

insurance company to recover benefits allegedly due under the policy. The defendant

moved for summary judgment, which the trial court granted, based on the plaintiff’s

alleged failure to comply with the notice provisions in the policy, and on her best

interest plea of facilitation to commit arson. We reverse the trial court.

I.

Helen Bell’s McMinnville home was insured under a homeowners policy,

issued by Tennessee Farmers Mutual Insurance Company. On November 27, 1995,

the home was destroyed by fire. Within forty-eight hours, Ms. Bell’s fiancé Robert

Hennessee verbally notified insurance agent Jeff Flatt about the loss. Mr. Flatt

allegedly told Mr. Hennessee that the insurance company was already aware of the

fire, that company investigators were working with the fire marshall and local law

enforcement on an arson investigation, and that there was no time limit on the filing

of a claim. Ms. Bell submitted actual written notice of the fire to the insuror on

December 28, 1995.

 

Ms. Bell was indicted for arson on March 8, 1996. The insuror

subsequently refused to honor her claim under the homeowner’s policy, asserting that

she had caused the fire loss to her home. On November 26, 1996 she filed a

complaint in the Circuit Court of Warren County, asking that a jury of twelve be

allowed to determine whether the insurance company should be compelled to honor

its policy, to reimburse her for her loss, and to pay a 25% penalty for its alleged bad

faith. 

 As the civil case proceeded, so did negotiations in the criminal case.

Pursuant to those negotiations, Ms. Bell entered a best interest plea of guilty to the
1Ms. Bell does not contest the admissibility of the best intere st plea. A guilty plea is ordin arily

adm issible in a civil trial as a judic ial adm ission. Te nn. Cod e Ann. § 40-35-313(b)(1). A plea of nolo

contendere, however, is not. See Rule 410(2), Tenn. R. Evid. We do not express an opinion on

whether the best interest “Alford” plea would be admissible if a timely objection were made. (For a

discus sion of the “Alford” ple a see Part III below.)

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offense of facilitation to commit arson on January 29, 1997, and the criminal court

granted her judicial diversion. She was given three years probation, after which her

plea would be expunged from the record if she complied with the conditions of

probation.

The insurance company filed a Motion for Summary Judgment on the

ground that the plaintiff’s plea in the criminal case voided her policy. A memorandum

in support of the motion also recited that the insured had waited over thirty days

before notifying the company of the loss, and that she cleaned up the evidence in the

interim, thus hampering the defendant’s investigation.

On August 19, 1997, the trial court granted summary judgment to the

defendant, citing “. . . the failure of the insured to comply with the notice conditions

precedent to coverage, and for the Plaintiff’s admission of her role in the facilitation

of arson.” Ms. Bell subsequently filed a Motion to Alter or Amend the Judgment,

accompanied by the affidavit of Robert Hennessee, and the addendum to her best

interest plea of guilty.1 The addendum had been prepared contemporaneously with

the written plea, and had been signed by the defendant, her counsel, and the

prosecuting attorney. In it, Ms. Bell acknowledged that she was voluntarily entering

a plea of guilty because her best interests required it, but stated that she was unwilling

to admit participation in the acts constituting the crime. The Motion to Alter or Amend

was denied. This appeal followed. 

II. The Notice Requirement
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The terms of the insurance policy included the following instruction to

policyholders:

1. What to Do in Case of Loss

If a covered loss occurs, the insured person must:

(a) give us immediate written notice... 

...

(e) exhibit the damaged property to us or our

representative as often as may be

reasonably required;

As the appellee points out, policies requiring “immediate” or “prompt”

notice have generally been interpreted to mean that the notice must be given within

a reasonable time under the circumstances of the case. Allstate Insurance Co. v.

Wilson, 856 S.W.2d 706, 709 (Tenn. App. 1992). See also Melton v. Republic

Vanguard Insurance Co., 548 S.W.2d 313 (Tenn. App. 1976).

While under our prior cases failure to give the notice was an absolute

defense to an action on the policy, the Tennessee Supreme Court has now said that

we must consider whether the delay in giving notice resulted in prejudice to the

insurance company. Alcazar v. Hayes, ____ S.W.2d ____ (Tenn. 1998)(filed

December 21, 1998). The Court said that in all cases pending on appeal or tried in

the future the failure to give adequate notice put the burden on insureds to prove that

they acted in good faith and that the insuror was not prejudiced by the delay.

Thus, even if the thirty-one day delay in giving written notice in this case

were to be considered unreasonable, Ms. Bell could still avoid the failure-to-givenotice defense by showing that the delay did not prejudice the insurance company.

We, therefore, reverse the summary judgment granted to the insurance

company on the notice question. On remand the trial court should consider the

reasonableness of the notice, the good faith of Ms. Bell, and the prejudice to the

insurance company.
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III. The Best Interest Plea

In North Carolina v. Alford, 400 U.S. 25 (1970) the Supreme Court

affirmed the constitutionality of the so-called best interest plea. The Court noted that

an ordinary plea of guilty in a criminal case consists of both a waiver of trial and an

express admission of guilt. However in a best interest plea (now often called an Alford

plea) the defendant consents to submit to criminal penalties without trial, and without

admitting guilt. The State of Tennessee permits a trial judge to accept a best interest

plea, when the defendant enters such a plea voluntarily, with an understanding of its

nature and consequences, and when the court is satisfied that there is a factual basis

for the plea. See Dortch v. State, 705 S.W.2d 687 (Tenn. Crim. App. 1985). The

relevant portion of the addendum to Ms. Bell’s plea reads:

Although the Defendant does not contest the fact that a

fire was intentionally set at her home located at 3705

Yager Road, McMinnville, Tennessee on November 27,

1995 and that said fire forms the basis of the arson

charge contained in Count One of the indictment, the

Defendant is unwilling to admit participation in the acts

constituting the crime. Nevertheless, the Defendant

hereby represents to the Court that the best interest plea

of guilty herein is entered by the Defendant voluntarily,

knowingly and understandingly and further represents to

the Court that the Defendant’s interests require entry of

such a plea.

The defendant relied upon the following exclusion in the insurance policy

for the proposition that Ms. Bell had rendered herself ineligible to collect any benefits:

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 intent to 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.

The trial court ruled that Ms. Bell’s plea would bar her from any recovery under

the insurance contract as a matter of law. We believe that would be correct if the plea

had been of the type whereby the defendant admits guilt. However her best interest
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plea did not contain an admission of guilt, and it does not appear to us that Tenn.

Code Ann. § 40-35-313(b)(1) indicates a legislative intent to transform a best interest

plea into an admission of guilt for purposes of a civil action.

The insurance company argues that even if Ms. Bell did not admit

causing the fire, the addendum to her plea indicates guilty knowledge that would

likewise preclude recovery under the contract. We do not believe that the plea or its

addendum is sufficiently informative as to Ms. Bell’s role in the arson to support the

trial court’s conclusion. We therefore find that the trial court erred in granting

summary judgment to the defendant, or in the alternative, that it erred in refusing to

grant the appellant’s Motion to Alter or Amend the Judgment. 

IV.

The judgment of the trial court is reversed. Remand this cause to the

Circuit Court of Warren County for further proceedings consistent with this opinion.

Tax the costs of appeal to the appellee. 

________________________________

BEN H. CANTRELL, 

PRESIDING JUDGE, M.S.

CONCUR:

_____________________________

WILLIAM C. KOCH, JR., JUDGE

_____________________________

WILLIAM B. CAIN, JUDGE
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