# FILED
January 22, 1999 Cecil W. Crowson Appellate Cou rt Clerk 

### IN THE COURT OF APPEALS OF TENN ESSEE

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 CIRC UIT 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 REMAND ED

BEN H. CANTRELL PRESIDING JUDGE, M.S. CONCUR: KOCH, J. CAIN, J.- 2 - 

## O P I N I O N

The owner of a homeowner’s insura nce p olicy sued the defendant insurance company to recover benefits allegedly due

under the policy. The defendant moved for summary judgment, whic h the trial court granted, based on the plaintiff’s alleged failure t o comply with the notice provisions in the policy, and on her best interest plea of facilitation t o commit arson. We reverse the trial court.

I.

Helen Bell’s McMinnvill e home was insured u nder a ho meowners policy, issued by Tennessee Farmers Mutual Insurance Company. On Nov ember 27, 1995, the home was destroyed by fire. Within forty-e ig ht hours, Ms. Bell’s fiancé Robert Hennessee verbally notified i nsurance agent Jeff Flatt about the loss . Mr. Flatt allegedlytold Mr. Hennessee that the insu rance company was already aw

are of the fire, that company investigators were worki ng with the fire marshal l and local law enforcement on an arson investigatio n, and that there was no time limit on the filing of a claim. Ms. Bell submitted act ual written notice of the fire to the insuror on December 28, 1995.

Ms. Bell was indicted for ars on on March 8, 1996. The insuror subsequently refused to honor her claim under the homeowner’s policy, asserting

that she had caused the f ir e loss to her home. On Nov ember 26, 1996 she filed a complaintin the Circuit Co ur t of Wa rren County, asking that a jury of twelv

e be allowed to determine whether the i nsurance company should be compel led to honor its policy, to reimburse her for her los s, and to pay a 25% penalty for its allegedbad faith.

As the civil case proceeded, so did negotiations in the criminal ca se . Pursu ant to t hose negotiations, Ms. Bel l entered a best interest pl ea of guilty to the1 Ms. Bell does not contest t he admissibil ity of the best

intere st ple a. A g uilty plea is ordin arily adm issib le 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, i s no t. Se e Rule 410(2), Tenn. R. Evid. We do not express an opinion o n whetherthe best i nterest “ Alford” pl ea would be admissibl e if a ti mely objecti on we re made. (For a discus sion of the “Alford” ple a see P art III below.) - 3 - offense of facilitation to commit arson on January 29, 1997, a nd the criminal court granted her

judicial diversi on. She was given three years probation, after w hich her plea would be expunged from th e recor d if she complied with the c onditions of probation.

The insur an ce company filed a Motion for Summar y Judgment on the ground that the plaintiff’s plea in the crimi nal case vo ided her p olicy. A memorandum in support of the motion also recited that the insu red had waite d over thir ty days before notifying the company of the l oss, and that she cleaned up the evidence in the interim, thus hampering the defendant’s investigation.

On August 19, 1997, the trial court granted s ummary ju dgment to the defendant, citing “. . . the failure ofthe insured to comply w ith the notice conditions precedentto coverage, and for the Pl aintiff’s admission of her role i n the facilitation of arson.” Ms. Bell subs equently filed a Motion t o Alter or Am end the Judgment, accompanied by the aff idavi t o f Robert Hennessee, and the addendum to her best interest plea of gu ilty. 1 The addendum had been prepared contemporaneously with the written p lea, and h ad been signed by the defendant, her counsel, and the prosecuting attorney. In it, Ms. Bell acknowledged that she was voluntaril

y entering
a plea of guilty because her best interests requir

ed it, but stated that she w as unwilling to admit participation in the acts constituting the crime. The Motion to Alter or Amend was denied. This appeal follow ed.

II. The Notice Requirement- 4 - The terms of the insurance p olicy included the following i nstruction to policyholders: 1. What to Do in Case of Loss If a covered loss occurs, the insur ed person must: (a) give us immediate wr itten notice...

... (e) exhibit the damaged property to us or our represen tative as o ften as may be reasonably required;

As the appellee points out, polic ies requiring “i mmediate” or “prompt” notice have generally

been interpreted to

mean that the notice must be given within
a reasonable time under the cir cumstances of the case. All state Insur

ance Co. v. Wilson , 856 S.W.2d 706, 709 (Tenn. App. 1992). See also Melton v. Republ ic Vanguard Insurance Co. , 548 S.W.2d 313 (Te nn. App. 1976).

Wh ile under our prior cases fail ure to give the notice was an abs olut e defense to an action on the policy, the Tennessee Supreme Court has now said that
we must consider whether th e delay in givin g notice res u lted in prejudice to the insurance company. Alcazar v. H ayes , ____ S.W.2d ____ (Tenn. 1998)(filed December 21, 1998). The Court said that in all cases pend ing on appeal or tried in the future the failure to give adequate notice put the burden on insureds to prove that they acte d in good f aith and that the insuror was not preju diced by th e delay.

Thus, even if the thirty-one day delay in giving written notice in this case
were to be considered unreasonable, Ms. Bell could s ti ll avoid the failure-to-givenotice defense by showing that the delay did not prej udice the insuranc e compan y.

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

on the notice question. On remand the trial court should consi der th e reasonableness of the notice, the good faith of Ms. Bell, and the prejudice to the insuranc e compan y.- 5 - 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 note d that
an ordinary plea of guilty in a cr iminal case co nsists 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 consentsto submit to criminal penalties without trial, and without admitting guilt. TheState 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 forthe plea. See Dortch v. Stat e , 70 5 S.W.2d 687 (Tenn. Crim. App. 1985). The relevant portion of the addendum to Ms. Bell’s plea reads:

Although t h e Defendant does not contest the fact that a fire was intentionally

set at her home located at 370 5 Yager Ro ad, McMinnville, Tennes see on November 27, 1995 and tha t said fire forms the basis of the ar son charge contained in Count One of the indictment, the Defendant is unwilling to admit participation in the acts constitutingthe crime. Neverthele ss, th e Def endant hereby represents to the Court thatthe best interest plea of guilty herein is entered by the Defendant volunt ar ily , knowingly

and understandingly and further represents to the Co urt that t he Defen dant’s in terests re quire ent ry o f such a plea.

The defend ant relied upon the followi ng exclusion in the i nsuran ce polic y forthe proposition that Ms. Bell had rendered herself ineligible to collect any benefits:

We do not cover

loss resulting direc

tly or ind irectly from:

. . . 8. An action by or at the dire ct ion of an insured person committed with the intent to cause a loss. This exclusion does not apply to loss sustainedby an insured person who does not partic ipate in such action nor have know ledge of such action.

The trial court ruled that Ms. Bel l’s plea would bar her from any recovery unde r the insurance contract as a matt er of law. We believe that would be correct if the plea had been of the type whereby the defendant admits guilt. However her bestinterest- 6 -

plea did not contain an admission of g uilt, and it does not appear to us that Tenn. Code Ann. § 40-35-313(b)(1) i ndicates a legislative intent to transform a best interest plea into an admission of guilt for purposes of a civil ac tion.

The insurance company argues that even if Ms. Bell did not admit causi ng the fire, the addendum to her plea ind icates guilty know ledge tha t woul d likewise preclude recovery under the contract. We do not believe that the plea or its addendum is sufficiently informative as to Ms. Bel l’s role in the arson to support the t rial court’s conclusion. We therefo re find that the trial court erred in grantin g 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 Judg ment.

IV.

The judgment of the trial court is reversed. Remand this cause to the Circuit Court of Warren County for further proceedi ngs c onsistent with this opi nion. Tax the costs of appeal to the appell ee.

________________________________ BEN H. CANTRELL, PRESIDING JUDGE, M.S.

CONCUR:

_____________________________ WILLIAM C. KOCH, JR., JUDGE

_____________________________ WILLIAM B. CAIN, JUDGE- 7 -