Court Opinion

ID: 9960534
Source: CourtListenerOpinion
Date Created: 2024-04-16 15:12:46.680282+00
Date Added: 2024-06-11T08:19:35.403433
License: Public Domain

04/16/2024
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                         April 2, 2024 Session

 TURNER CONSTRUCTION COMPANY V. AGCS MARINE INSURANCE
  COMPANY D/B/A ALLIANZ GLOBAL CORPORATE & SPECIALTY

                Appeal from the Chancery Court for Davidson County
                   No. 22-0256-II   Anne C. Martin, Chancellor

                            No. M2023-01178-COA-R3-CV

The cabinets delivered from a Turkish company for a Tennessee construction project did
not meet United States formaldehyde standards and could not be used as they were. The
construction management company filed an insurance claim. The insurance company
denied the claim and the construction management company sued. The trial court found
for the construction management company and the insurance company appealed. We have
determined that the trial court’s order was not final and, therefore, dismiss the appeal and
remand the matter for further consideration.

  Tenn. R. App. P. 3 Appeal as of Right; Appeal Dismissed and Case Remanded to
                                the Chancery Court

ANDY D. BENNETT, J., delivered the opinion of the Court, in which D. MICHAEL SWINEY,
C.J., and FRANK G. CLEMENT, JR., P.J., M.S., joined.

Parks Tedford Chastain and Hannah Jane Leifel, Nashville, Tennessee, for the appellant,
AGCS Marine Insurance Company.

Gregory Lee Cashion and William Lombard Fitts, Nashville, Tennessee, and David G.
Jordan and Jeffrey J. Vita, Trumbull, Connecticut, for the appellee, Turner Construction
Company.

                                        OPINION

                           FACTS AND PROCEDURAL HISTORY

       Turner Construction Company (“Turner”) was the construction manager on an
apartment/retail construction project. Turner ordered cabinets from a Turkish company,
and the cabinets were shipped to Charleston, South Carolina. Once at the Charleston port,
the cabinets were found to have formaldehyde levels that exceeded the Environmental
Protection Agency (“EPA”) regulations, and the EPA ordered them to be quarantined.
Turner was ordered to remove the back panels from the cabinets in order to correct the
EPA violation.

        AGCS Marine Insurance d/b/a Allianz Global Corporate and Specialty (“Allianz”)
issued an inland marine policy to Turner that was effective during the relevant time period,
and Turner filed a claim with Allianz for delays in retrieving the cabinets, replacement
costs, and business income losses. The policy insured against “all risk of direct physical
loss or damage to property.” Allianz denied the claim based upon its position that none of
the damages were covered.

       Turner filed this lawsuit on February 18, 2022, asserting causes of action for breach
of contract, breach of good faith and fair dealing, and breach of Tenn. Code Ann. § 56-7-
105 (concerning bad faith refusal to pay). Allianz filed a motion for summary judgment
asserting that excessive levels of formaldehyde did not fall within the insuring agreement.
The trial court denied the motion for summary judgment in an order entered on June 2,
2023, finding that there had been a “direct physical loss of or damage to” the cabinets. On
June 30, 2023, Allianz filed a motion for entry of final judgment pursuant to Tenn. R. Civ.
P. 54.02. On August 10, 2023, the trial court directed the entry of the final judgment “as to
the issue of whether the plaintiff suffered direct physical loss under the policy.” Allianz
appealed.

       On December 15, 2023, this Court ordered the parties to show cause why the appeal
should not be dismissed on the grounds that the order appealed did not dispose of an entire
claim or party and was thus not subject to certification as a final judgment under Rule
54.02. By order of January 4, 2024, which was reiterated on January 10, 2024, this Court
reserved judgment on the issue of Rule 54.02 certification and directed the parties to
address the issue in their briefs.

                                         ANALYSIS

      As a general rule, an appellate court has jurisdiction only over a final judgment.
Bayberry Assocs. v. Jones, 783 S.W.2d 553, 559 (Tenn. 1990); see also TENN. R. APP. P.3;
Laura T. Kidwell, It Is So Ordered: A Primer on Tennessee’s Final Judgment Rule, 60
TENN. B. J., Mar./Apr.2024 at 16, 17. Tennessee Rule of Civil Procedure 54.02(1),
however, provides:

       When more than one claim for relief is present in and action, . . . or when
       multiple parties are involved, the Court, whether at law or in equity, may
       direct the entry of a final judgment as to one or more but fewer than all of the
       claims or parties only upon an express determination that there is no just
       reason for delay and upon an express direction for the entry of judgment.

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Thus, Rule 54.02 “is an exception” to the final order requirement. Johnson v. Nunis, 383
S.W.3d 122, 130 (Tenn. Ct. App. 2012). The exception applies only if the order completely
resolves a claim or eliminates a party. Bayberry, 783 S.W.2d at 558. The determination of
whether the certified judgment meets these requirements presents a question of law, which
is reviewed de novo. See Ingram v. Wasson, 379 S.W.3d 227, 238 (Tenn. Ct. App. 2011).

        We conclude that the trial court only resolved one part of the breach of contract
claim. The insurance contract in question not only provides for coverage for “direct
physical loss of or damage to property,” but also contains exclusions to coverage. While
the trial court found that the coverage provision applied, it also found that Allianz did not
prove the exclusions for summary judgment purposes and “reserved the application of the
exclusions for trial.” Without a determination regarding the exclusions, liability on the
breach of contract claim cannot be established or rejected. Therefore, the claim was not
resolved, and the Rule 54.02 certification was inappropriate.

       Because we have determined that the order was not final, we have no jurisdiction to
hear the remaining issue.

                                       CONCLUSION

       This appeal is dismissed and the matter is remanded for further proceedings
consistent with this opinion. Costs are taxed to Appellee, Turner Construction Company,
for which execution may issue if necessary.

                                                  /s/ Andy D. Bennett
                                                  ANDY D. BENNETT, JUDGE

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