Opinion ID: 1587175
Heading Depth: 1
Heading Rank: 8

Heading: Tennessee Consumer Protection Act and Bad Faith

Text: Tennessee Farmers next argues that the Court of Appeals erred in concluding that the TCPA may apply in this case. Tennessee Farmers contends that the provisions of the TCPA do not apply to insurance companies in the handling of claims and that the complaint filed by plaintiff Gaston failed to state a claim under this statutory scheme. Gaston argues that actions taken by insurance companies in the handling of claims fall within the purview of the TCPA. The Tennessee Consumer Protection Act provides as follows: Any person who suffers an ascertainable loss of money or property, real, personal, or mixed, or any other article, commodity, or thing of value wherever situated, as a result of the use or employment by another person of an unfair or deceptive act or practice declared to be unlawful by this part, may bring an action individually to recover actual damages. Tenn.Code Ann. § 47-18-109(a)(1) (2001). The main purpose of the Act is to protect consumers, and it must be liberally construed to affect that purpose. See Tenn.Code Ann. § 47-18-102 (2001); ATS Southeast, Inc. v. Carrier Corp., 18 S.W.3d 626, 627 (Tenn.2000). In addition, causes of action arising from the TCPA may be cumulative with other statutory remedies. Tenn.Code Ann. § 47-18-112 (2000); Myint v. Allstate Ins. Co., 970 S.W.2d 920, 926 (Tenn.1998). In Myint , an insured argued that his insurance company had engaged in an unfair or deceptive act or practice in violation of the TCPA where the insurer had refused to pay a claim under the terms of the policy. The insurer argued that the Act never applies to insurance companies and that the insured's only action was through the statutory bad faith provisions. Myint, 970 S.W.2d at 925. We concluded, however, that the TCPA may provide a cause of action for an insurer's unfair or deceptive acts and practices, and that the language of Tennessee Code Annotated section 47-18-104(b)(27) (Supp.2003), which prohibits [e]ngaging in any other act or practice which is deceptive to the consumer or to any other person[,] includes insurance companies. Myint, 970 S.W.2d at 926. Moreover, we emphasized that the insurance industry was not explicitly excluded from coverage under the TCPA. Id.; see Tenn.Code Ann. § 47-18-111 (2001). Applying these principles, we conclude that Peggy Gaston may pursue a cause of action under the TCPA. The evidence at trial revealed that the Gastons had several meetings with David Brown, a Tennessee Farmers' claims adjuster, regarding Peggy Gaston's claim and that the Gastons sent Brown a copy of the letter they wrote to CNL, i.e., the other motorist's insurance carrier. Neither Brown nor anyone else at Tennessee Farmers notified or informed Gaston, who was not represented by counsel, that her effort to settle with CNL would prohibit her from collecting under her own policy. In our view, a jury could reasonably conclude that Tennessee Farmers' conduct was unfair or deceptive under the TCPA. Accordingly, the trial court erred in granting a directed verdict on this issue. Similarly, Peggy Gaston also sued for damages for bad faith under Tennessee Code Annotated section 56-7-105 (2000), which provides for a 25 percent penalty against an insurance company, in addition to the loss and interest, where the refusal to pay an insurance claim within 60 days is not in good faith. The language of this statute expressly applies to insurance companies and provides that a jury decide whether the evidence demonstrates bad faith on the part of the insurer. We believe that a reasonable jury could conclude that Tennessee Farmers' conduct in this case constituted bad faith in connection with its refusal to pay Gaston's claim. The trial court therefore erred in granting a directed verdict and refusing to allow the jury to decide this issue.