Opinion ID: 1060432
Heading Depth: 3
Heading Rank: 3

Heading: dismissal of the vicarious liability claims

Text: PURSUANT TO RULE OF CIVIL PROCEDURE 12.02(6) Having determined that both an insurer and an insured may, under limited circumstances, be held vicariously liable for the tortious actions of an attorney hired by the insurer to defend an insured, we must now examine the plaintiff’s factual allegations contained in her complaint to determine whether she has stated a claim of vicarious liability against Allstate and McElwaney. The basis for the alleged liability of McElwaney and Allstate is found in two separate paragraphs in the complaint, which read as follows: 10) The Richardson Firm, thereupon, became the attorney of record in this McElwaney damage suit for the Defendant McElwaney, and has since been, at all times material, the agent of both the Defendant McElwaney and the Defendant Allstate for whose conduct the Defendants McElwaney and Allstate are liable under the doctrine of respondeat superior. .... 81) The Richardson Firm was at all times material hereto acting within the scope of its employment as agent of both the Defendants McElwaney and Allstate, and the said Defendants are therefore liable for the conduct of the Richardson Firm described above under the doctrine of respondeat superior. In no other place does the eighty-four paragraph complaint allege any relationship between the Richardson Firm and Allstate or McElwaney. Allegations Against Allstate With respect to the allegations against Allstate, the paragraphs cited above seem to allege that the employment relationship alone is the basis of Allstate’s alleged vicarious liability. Unlike the 8 (...continued) Neither logic nor reason permits a principal to escape liability for an act done through the medium of an agent which, if done by the principal, would have resulted in liability and, likewise, the agent cannot escape the consequences of an illegal and unauthorized invasion of the right of third persons mere ly upon the gro und that it acted for its princ ipal. Fidelity & De posit Co. v. Hamilton Nat’l Bank, 23 Tenn. App. 20, 28, 126 S.W .2d 359, 364 (1938). As such, nothing we have said in this opinion should be construed to relieve an attorney of direct liability for his or her own conduct mere ly beca use the a ttorney w as rep resenting ano ther pa rty. See also Howard v. Haven, 198 Tenn. 572, 582, 281 S.W.2d 480, 484-85 (1955) (“The authorities are abundant and need no citation to the effect that bo th the agent and his principal are liable for the wrongful act of the former when committed within the scope of the agent’s authority, or when ratified by the principal if the act is not within the scope of such authority.”); Allied Sound, Inc. v. Neely, 909 S.W.2d 815, 821 (Tenn. Ct. App. 1995) (“We note that ‘an agent cannot escape liability for tortious acts, including fraud or misrepresentation, against third persons simply because the agent was acting within the scope of the agency or at the direction of the employer.’” (quoting Brungard v. Caprice Records, Inc., 608 S.W .2d 585, 590 (Tenn. Ct. App. 1980 )). -10- allegations of the complaint in Trau-Med of America, Inc. v. Allstate Insurance Co., __ S.W.3d __ (Tenn. 2002), an opinion filed simultaneously with the opinion in this case, the complaint here contains no express allegation that Allstate directed or commanded the Richardson Firm to engage in its allegedly tortious actions. Moreover, the plaintiff does not allege that the Richardson Firm sought and obtained Allstate’s authorization for its actions. However, as we reaffirmed in White, “[a] complaint ‘need not contain in minute detail the facts that give rise to the claim,’ so long as the complaint does ‘contain allegations from which an inference may fairly be drawn that evidence on these material points will be introduced at trial.’” 33 S.W.3d at 725 (quoting Donaldson v. Donaldson, 557 S.W.2d 60, 61 (Tenn. 1977)). We believe that the other allegations of the complaint fairly raise an inference that the plaintiff intends to introduce proof that Allstate directed or knowingly authorized the Richardson Firm’s actions in this case. For example, paragraph six of the complaint alleges that Allstate originally hired a “highly competent and effective Memphis attorney” to represent its insured. Sometime after this attorney substantially completed discovery, Allstate is alleged in paragraph nine to have fired this attorney and hired the Richardson Firm in his stead. The Richardson Firm is then alleged to have initiated and pursued the discovery process anew with motives other than to obtain information relevant to the suit. Taken in a light most favorable to the plaintiff, the inference fairly drawn from these allegations is that the plaintiff intends to prove that Allstate, after discharging an attorney who was competently defending its interests, directed or knowingly authorized a new firm to engage in the alleged tortious conduct to induce the plaintiff to drop her claim. As we held above, an insurer cannot be held accountable for the actions of its attorney based merely upon the existence of the employment relationship alone; some exercise of actual control, whether it be through direction or knowing authorization, must be alleged before a complaint can be held to properly state such a claim. However, because Allstate may reasonably infer that the plaintiff intends to prove that Allstate directed or knowingly authorized the Richardson Firm to engage in its allegedly tortious conduct, we conclude that the complaint has stated a claim of vicarious liability against Allstate. Cf. White, 33 S.W.3d at 725. Allegations Against McElwaney With respect to the plaintiff’s allegations against McElwaney, however, we must hold that the complaint does not state a claim of vicarious liability. Again, the basis of purported liability against McElwaney is only the employment of the attorney by Allstate—a basis that, standing alone, is simply insufficient to support recovery of damages against the defendant. In addition, the complaint does not allege facts showing that McElwaney directed the Richardson Firm to engage in its allegedly tortious actions or that the Richardson Firm sought and obtained McElwaney’s knowing authorization for its course of conduct. Moreover, unlike our analysis of the complaint regarding Allstate’s purported liability, we -11- do not find that the complaint’s allegations fairly raise an inference that McElwaney in any way directed or knowingly authorized the actions of the Richardson Firm. To the contrary, the fair inference drawn from the plaintiff’s allegations is that McElwaney had no control or influence over the actions of the Richardson Firm. For example, the complaint alleges that McElwaney had no real financial stake in the determination of the original suit—the plaintiff alleges that she offered to settle the suit within McElwaney’s policy limits—and that he therefore possessed little motive to control or direct the representation to avoid an adverse judgment. Furthermore, the complaint alleges that Allstate, not McElwaney, had the power to employ and discharge counsel. As such, it appears that the only basis of liability as far as McElwaney is concerned is that of the attorney-client relationship. Accordingly, because the complaint does not allege facts showing that McElwaney directed, commanded, or knowingly authorized the Richardson Firm to engage in its allegedly tortious conduct—an essential element for vicarious liability in this context—we hold that the plaintiff has not stated a claim against McElwaney upon which she may be granted relief. Cf. Bell ex rel. Snyder v. Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A., 986 S.W.2d 550, 556 (Tenn. 1999) (dismissing complaint for failure to state a claim where the complaint did not allege facts supporting an essential element of the claim). We therefore dismiss the plaintiff’s claims of vicarious liability against McElwaney.