W ohl f ahr t s i ns ur anc e c ar r i er was G ene r al Acci dent s I ns ur anc e Co mp any at t he t i me this ac t i on was 1

c o m m e n c e d . It sub se q u e n tly w a s re n a m e d C G U In su ra n c e C o m p a n y.



### IN THE COURT OF APP EALS OF TENNESS EE

AT JAC KSON Ja nua ry 23, 200 4 S es sio n
JAME S WO HLFAHRT , ET AL 

### . v. ARLEN E SC AV UZ Z O

Direc t Appeal from the Circ uit Court for McN airy County No. 4771 Jon Ke rry Blackwood , Judge

No. W2002-02641-C OA-R3-C V - F iled March 16, 2004

Plaintiffs’ insurer a

ppeals a war d of bene fits to Pl aintiffs u n d er Plaintiffs’ uninsured/under insured mot or ist po lic y . We a ff

ir m.

Te nn. R . A pp. P . 3 App e al a s o f Rig ht ; J udgm e ntof t he Ci r c uitCo ur t A ffirm e d; and Rem anded

D AVI D R. F ARMER , J ., delivere d the opinion of the court, in which A L AN E. H I G H ERS , J . and H O LLY M. K I RBY , J ., joined.

J o h nT h o m a s F e e n e y, N a s h v i l l e , T e n n e s s e e , f o r t h e a p p e l l an t , C G U In s u r an c e C o mp an y. Donald Cappa

rella an d C ar s on W. (Bill) Be ck, Na shville, Tennessee , for the a ppellees, James Woh lf arh t and Joni Wo hlf

ahr t.
OP IN ION
This is a dispute betwee n Plaintiffs James Wohlfahrt and Joni Wohlfahrt (“Wohlfahr ts”) and t h e i r u n i n s u r e d

/u n d e r i n s u r e d

m o t o r i s ti n s u r an c e c ar

r i e r , C G U In s u r an c e C o mp an y ( “ C G U ” )

. In

1 J anuar y 2000, Wohlfahrts filed a complaint ag ainst Arlene Scavuzzo (Ms. Scavuzzo) , seeking damag es ar ising fr om an au t o m o b ile acc ident which occ urre d in J anuar y 1999. They

also serve d pr oc e ss o n th e ir

ins ur anc e c arr ie r, CG U, purs ua nt t o T e nn e s s e e Cod e Anno tate d § 56 -7 -1 20 6( a ). Ms. Scavuzzo admit ted fa

ult prior to trial, and the issue of damag es was tried by a jury on Marc h 5, 2002. The jury awa rded Wohlfahr

ts damag es of $195,495.37.
Af te r f a ile d atte mpt s at me diatio n b e tw e e n Wo hlf ahr ts a nd CG U, in Jun e 20 02 , Wo hlf ahr ts moved for e ntry

of judg ment ag ainst CGU. In their motion, they soug ht to hold C GU liable f or the-2-

amount of the judg ment in excess of Ms. Scavuzzo’s $50,000 li ability policy , plus post- judgment interest of te n perc ent. In Aug ust 2002, the trial court e ntere d jud gm en t for Wohlfahrts in the
amoun t o f $ 1 4 5 , 4 9 5

. 3 7 , p lu s p o s t- ju d g me n t inte r e s t o f te n p e r c e n t. CG U f il e d a ti me ly n o tic e of appea l to this Court.
ISSU ES P RE SEN TED
CG U r a ise s th e fo llo wi ngiss ue s f or re vie w b y

thi s Co ur t: (1 ) Whe the r p la int if

fs have pr ov e n th e e xiste nc e of un ins ur e d mo tor ist
c ov e ra g e a

pp lic a ble to t his a c c ide nt. (2 ) I f p ro ve n, did

the tr ia l c ourt

pr op e rl y a pp ly the off set s for wo rk e rs ’
c omp e ns a tio n b e ne fi ts?
Woh lf ahr ts p re se nt t

hr e e a dd iti on a l is su e s: (1 ) Whe the r C GUI ns ur anc e wa ive d the ri g ht to d e ny c ov e ra g e be c a

us e it f a ile d to ra ise the iss ue in t he tr ia l c ourt

. (2) I f this court fi n d s t h e is sue of CGU Insuranc e’s c overa g e wa s not wa ive d , w h e t h e r

t h e f i l i n g i nc o u rto f

t h e W o h l f

ah rt s’ unin s u r e d /u n d e r in s u r e d p o li c y with CGU along with the underinsure d driver’ s (Ms. Scavuzzo) $50,000 liability policy established CGU’s liability for the judg ment ag ainst Ms. Scavuzz o. (3) Whether t he trial court proper ly ref used to awa

rd CGU insuranc e an offse t f o r w o r k e r s ’ c o mp e n s a ti o nb e n e f it s , w h e r e th e o n ly

e v id e n ce on the qu e sti on

of Mr . Wo hlf

ahr t’ s e lig ib il it y

fo r b e ne fi ts w a s h is
a f f i d av i te x p r e s s l y r e f

u t i n g an y s u c hl i a

b i l i t y. (4) Whether the Wohlfahrts ar e entitled to damag es for a fri volous
a pp e a l, whe re CG U Ins ur anc e fa ile d to f ile a tr ans c ri pt t o s up po rt

its fa c tua l a sse rt ion s o n a

pp e a l.
Sta nda rd of Re v ie w
To the e xten t the se iss ue s inv olv e qu e sti on s of fa c t, our re vie w o f t he tr ia l c ourt ' s r

uli ngis de novo with a pre sumption of corre ctness. Te nn. R. App. P. 13(d); Sullivan v. Sullivan , 107 S.W .3d 507, 509 (Tenn. Ct. App. 2002). We may not reve rse the tr ial court' s fac tual finding s unless they are co n t ra ry to the preponde ranc e of the evidenc e. Id

. a t 5 1 0

. Wi th r e s p e c t t o th e c o u rt' s le g al
c on c lus ion s, ho we ve r, our r e vie w i s de novo with no presumption of corr ectne ss. Id.CG U r ef er s t h i s Cour t t o i t s a n s we r , pu r por t ed t o be i n t he suppl eme n t al r ec or d. T h e s u ppl eme n t al r ec or d, 2 h o w e v e r, inc lud e s o n ly t h e trial c o u rt’s o rd e r o n C G U ’s cr o ss-c la im a g a ins t M s. S c a v u z z o
. -3- CGU’S Coverage U

nder the Policy of Insuran ce
CGU c o n te n d s to th is Co u rt t h a t W o h lf

ah rts h av e n o t p r o v e nth e e xis te n c e o f u n in s u r ed motorist covera g e applica ble to this accide nt, and it argues to this Court that it aff ords no cove rag e. Wohlfahrts assert CGU did not ra ise the issue of cover ag e in the t rial court, and there fore may not raise it for

the first time befor e this Court. A p ar t y may not raise a

n issue for the f

irst time upon
a pp e a l. Cantrell v. W

alker DieCasting, Inc. , 121 S.W .3d 391, 396 (Tenn. Ct. App. 2003). F urther, th e a p p e ll an t b e a

r s th e p r im ar

y b u r d e n to e n s u r e th a t a p r o p e r r e c o r d is p r e p ar e d on appea l. See McD onald v. Onoh , 772 S.W .2d 913, 914 (Tenn. Ct. App.1989).
There is nothing in the re cord be fore us indicating that CGU denied c o v er ag e in the trial court. Moreove r, i n its brief to the trial cour t in opposit ion to W ohlfahrts’ motion for e ntry of 2 jud g me nt, CG U d id n ot d e ny or a dd re ss t he iss ue of

c ov e ra g e , b ut a dd

re sse d o nly

the amou nt o f i ts liability . CGU stated in the brie f, “[t] he cour t has d en i ed De fenda

nt Arlene Scavuzzo’s post -trial mot ion s, and

the c a se is no w be fo re the c ourt fo r c a lc ulatio n o f t he amou nt o f t he ve rd ic t pr op e rl y pay able by

CGU under its uninsured motorist cove rag e.” Upo n r e v ie w o f th e r e c o r d , w h ic h in c lu d e s Wo h lf ah rts ’ p o li c y o f in s u r an c e , w e f ind that CGU did not deny

cover ag e under

the policy

in the trial court. CGU simply addre ssed the issue of the amou nt o f l ia bil ity , a sse rt ing it s lia

bil ity sh ou ld b e of

fs e t by wo rk e rs ’ c omp e ns a tio n b e ne fi ts. CGU ac cording ly

has wa ived the issue of c overa g e. Of fs e t of Li ab ili ty of Wo rke rs’

Compe nsa tio n Be ne

fi ts CGU contends that, a ssuming co v er age under the policy of insuranc e, the tria l court er red by not properly

applying a

n offse t for wor

kers’ compensation benefits. CGU asser ts, “ the Plaintiff did not pursue worke rs’ c ompensation benef its fr om his employ er. H oweve r, his failure to pursue benef its does not prevent a

pplication of the wor

kers’ compensa t i o n o ffse t for injuries occ urring within the course a

nd scope of

employ ment.”
Amounts due to an insured unde r an uninsure d/underinsure d motorist poli cy may be off set by worke rs’ c ompensat i o n b en ef its. Terry v. Ae tna Casualt y &Surety Co. , 510 S.W .2d 509, 513 (Tenn. 1974) . Moreove r, such an offset is allowed for workers’ compensation benef it amounts for which the insure d was e ligible but did not pursue. Dwight v

. Tennessee Farmers Mut. Ins. Co. , 701 S.W .2d 621, 622 (Tenn. Ct. App.1985). However , CGU cites us to no evidenc e that Mr. Wohlfahrt
was e ntitled to workers’ c ompensation bene fits and that he f ailed to pursue benef

its for which he was elig ible.

I n its brief to this Court, C GU submits, “ [ t ] h e i s s u e presented to the c ourt in the instant hear ing is a

deter mination as to the ex tent of workers’ compensation benefits proper ly pay able to Mr.-4-

Woh lf ahrt as a res ult

of the inj ur ie s su sta ine d in

the a c c ide nt. ” Th e thr e sh old iss ue , h ow e ve r, is wh e the r M r. Woh lf

ahr t w a s e nti tle d to any wo rk e rs ’ co mpe ns a tio n b e ne fi ts s uc h th a t CG U’ s li a bil ity
wo uld be of fs e t by tho se be ne fi ts. Assuming, arguendo , that the injuries t o Mr. Wohlfahrt occ urre d during the cour se and sc ope of his employ

ment, there is no evidenc e in the record to establish Mr. Wohlfahrt would have been
e nti tle d to wo rk e rs ’ c omp e ns a tio n be ne fi ts. Th e on ly e vid e nc e in the re c or d p e rt a ini ngto w or ke rs ’ compensation is Mr. W ohlfahrt’ s uncontradic ted af fidavit that a) at the time of the acc ident, he wa s not actingwithin the scope of e mploy ment; b) as a part owner of Care Safety , L L C, he is ex cluded fr om t he wo rk e rs ’ c omp e ns a tio n ins uranc e po lic y of Care Sa fe ty ; c ) h e did

no t make a

wo rk e rs ’ compensation claim and was not pa id any compensation for injuries sustained in t he accident; d) he does not have any compensation due or pa y able f rom any source , including w orker s’ compensation or di sability for injuries resulting from the acc ident. We additionally note that the Te nnessee Code pr ov ide s th a t of

fi c e rs of a c or po ratio n may ele ct to be e xemp t f ro m op e ratio n o f t

he Wor ke rs ’ Com pe ns a tio n L aw. Te nn. Co de Ann. § 5 0- 6- 10 4 ( 19 99 ). Thus , th e c a se no w b e fo re us is distinguishable f

rom the circum stance s in Dwight , w he re the ins ur e d w a s e nti tle d to wo rk e rs ’ compensation benefits but failed to pursue them. I n the pre sent ca se, the undisputed evide nce in the
re c or d is that the re are no wo rk e rs ’ c omp e ns a tio n be ne fi ts pr op e rl y pa y a ble to Mr . Wo hlf

ahr t. T his iss ue is w ith out me ri t.
Friv olo us Ap pe al
Wohlfahrts seek a

n awa rd of damag es for

a fr ivolous appeal pursua n t t o T en n essee Code Anno tate d § 27 -1 -1 22 . T he Cod e pr ov ide s: When it appear s to any

revie wing court that the a ppeal f rom any court of r ecor d was frivolous or taken solely for de lay , the cour t may , either upon motion of a pa rty or of its own moti on, awa

rd just damag es ag ainst the appe llant, w h i ch m ay include, but need not be li mited to, costs, interest on the j udg ment, and expenses incur red by the
a pp e lle e a s a

re su lt o f t

he a pp e a l. Tenn. Code Ann. § 27-1-122( 2000). Courts c onstrue this sec tion of the Code strictly in a n eff ort not to discourag e legitimate appe als. Davis v. Gulf Ins. Group , 546 S.W .2d 583, 586 (Tenn. 1977) . A frivolous appe al i s one “de void of merit” a nd which ca

nnot rea sonably

succe ed. Id. I t is one completely

“lac king in justiciable issues.” Id.

I n its appeal to this Court, CGU has failed to raise a m eritorious i ssue based on the re cord. CG U c ite s to the s up pl eme nt a l r e c or d to a sse rt it d e nie d c ov e ra g e in i ts a ns we r i n th e tr ia l c ourt

. CG U’ s ans we r, ho we ve r, is n ot i n th e su pp le me nta l r e c or d b e fo re thi s Co urt. Th ere si mply is nothing in the r ecor d to support CGU’s contention to this Court that it denied cove rag e in the trial court. Upon r eview of

the re cord, w e fi n d that CGU argued only that it was entitled to offset the
am o u n to f

i t s l i a b i l i t y.-5-

We also find that CGU fails to cite to any evidenc e which w ould support its assertion that it is e nti tle d to an o ff

se t ba se d o n w or

ke rs ’ c omp e ns a tio n b e ne fi ts f or wh ic h M r. Woh lf

ahr t is
e lig ibl e . C GU pro vid e s n o e vid e nc e wh a tso e ve r t o s up po rt the pr op os iti on

that Mr . Wo hlf

ahr t is
e nti tle d to wo rk e rs ’ c omp e ns a tio n b e ne fi ts. CG U n ot o nly fa ils to dis pute Mr . Wo hlf ahr t’ s a ff ida vit t h at h e i s n o t el i gi b l e fo r wo rk er s ’ co mp en s at i o n b en ef i t s , b u t fa i l s ev en t o ad dre s s o r a ckn o wl ed ge the af fidavit in its brief or re ply brief to this Court.
We d isa g re e , mo re ov e r, wi th C GU ’s c on te nti on in i ts r e ply

br ie f t o th is C ou

r t t h a t W o hlf ahr ts have “ attempt[ed] to avoid application of the offse ts by sug g esting no proof of

an off set provision
e xists

. . . .” I n th e ir

br ie f t o th is C ourt , Wo hlf ahr ts a c kn ow le dg e the of

fs e t pr ov isi on

e xists

. Moreove r, W ohlfahrts state, “[t] here is no question that CGU pled i ts right to setoff as an a ffirmative de fe ns e .” Woh lf

ahr ts c or re c tly no te , ho we ve r, that CG U fa ils to c ite to any e vid e nc e in the a pp e llate rec ord in support of its claim for a n offse t. Addi t i o n al ly , upon revie w of the r ecor d, we have deter mined that there is no such evidenc e.
We acc ording ly

awa rd Wohlfahrts damag es fo r a frivolous appeal pursua nt to Tennessee Cod e Anno tate d § 27 -1 -1 22 . We awa rd dama g e s in

the amou nt e qu a l to e xpe ns e s a

nd re a so na ble attorney ’s fe es incurr ed by this appeal. We re mand to the trial cou rt fo r a de termination of such damag es.
Conc lusi on
I n light of the fore g oing, the judgme nt of the trial cour t is affirmed. A dditionally , we g rant Woh lf ahr ts’ re qu e st fo r dama g e s fo r a fr ivo lou s a pp e a l. We re mand

fo r a de te rm inatio n o f d ama g e s. Cos t of thi s a pp e a l are ta xed

to t he Ap pe lla

nt/ Unname d Pa

rt y , CGU Ins ur anc e Co mp any , and its
s u r e t y, f o r w h i c he x e c u t i o nm ay i s s u e i f n e c e s s a r y.

___________________________________ DAVI D R. FARMER, J UDGE