author: D. MICHAEL SWINEY, J„

text:
    Pamela K. GINN v. AMERICAN HERITAGE LIFE INSURANCE COMPANY, et al.
    Court of Appeals of Tennessee, Eastern Section, at Knoxville.
    Sept. 21, 2004 Session.
    Dec. 29, 2004.
    Order on Petition for Rehearing Jan. 24, 2005.
    Permission to Appeal Denied by Supreme Court Aug. 22, 2005.

      William S. Lockett, Jr., Knoxville, Tennessee, for the Appellants American Heritage Life Insurance Company and Daryle W. Gross.
    John W. Cleveland, Sweetwater, Tennessee, for the Appellee Pamela K. Ginn.
   D. MICHAEL SWINEY, J„

delivered the opinion of the court,

in which HERSCHEL P. FRANKS, P.J., and CHARLES D. SUSANO, JR., J., joined.

OPINION

Pamela K. Ginn (“Plaintiff”) purchased a $50,000 life insurance policy on her husband through American Heritage Life Insurance Company (“American Heritage”). When applying for the insurance, Plaintiff told the insurance salesman, Daryle Gross (“Gross”), that her husband was in “basic good health.” Plaintiffs husband died a few weeks after the life insurance went into effect. American Heritage denied Plaintiffs demand for the life insurance proceeds, claiming Plaintiff had materially misrepresented her husband’s health. Plaintiff sued American Heritage and Gross (“Defendants”). The jury found Defendants breached their contract with Plaintiff. The jury also found that the refusal to pay was done in bad faith, assessing a 25% bad faith penalty. The jury also concluded Defendants had violated the Tennessee Consumer Protection Act (“TCPA”) and assessed compensatory damages under the TCPA at $110,000, which was remitted by the Trial Court to $73,855.15. Pursuant to the TCPA, the Trial Court then trebled the damages and awarded attorney fees. When all was said and done, the amount of the judgment awarded to Plaintiff totaled $284,980.60. Both Plaintiff and Defendants appeal various aspects of the Trial Court’s Judgment. The Judgment of the Trial Court is reversed in part and affirmed in part, and judgment is entered in favor of Plaintiff in the total amount of $73,415.15.

Background

This lawsuit involves a claim for life insurance proceeds with the threshold issue being whether Plaintiff misrepresented her husband’s health when applying for the insurance. Plaintiff knew her husband, Mr. Tony Ginn, had been diagnosed with diverticulitis in 1991 before they were married in 1992. Her husband was prescribed antibiotics and the diverticulitis “cleared up and he was fine.” The diverticulitis flared up again in 1998. This time, Mr. Ginn, who was 5'6" and weighed 190 pounds, lost approximately 60 pounds. Mr. Ginn was treated by Dr. Kozawa who prescribed antibiotics and instructed Mr. Ginn to eat a lot of fiber. Unfortunately, the fiber seemed to make matters worse and, according to Plaintiff, her husband’s health went “downhill.” Mr. Ginn nevertheless continued to work at a paint and body shop and engage in recreational activities with his three children. Mr. Ginn eventually went to the emergency room when his symptoms did not improve. By that time, he was unable to keep food down and when he did, he had diarrhea. After being treated by various physicians, Mr. Ginn was instructed by Dr. McDonald to quit taking fiber. Mr. Ginn then started to improve and regained approximately 20 pounds. Mr. Ginn stopped taking antibiotics in January of 1999 and seemed to be feeling fine, although he continued to take five milligrams of diazepam every day for stomach spasms.

Plaintiff has a seventh grade education and was employed as a sewing machine operator at DCB Rothco (“DCB”). While employed at DCB, Plaintiff occasionally observed defendant Gross, an insurance salesman, come into the plant. February 24, 1999, was the day Plaintiff first spoke with Gross. According to Plaintiff, Gross “just walked up to my [sewing] machine and approached me” about purchasing insurance. Plaintiff asked Gross how much life insurance would cost, and he responded that it would be deducted from her payroll check and the combined cost for Plaintiff and her husband would be $9.47 per week. Gross quoted her the price after he asked Plaintiff if she and her husband were smokers, to which Plaintiff responded that they were. Gross then asked Plaintiff if she or her husband had AIDS, and Plaintiff said that they did not. Plaintiff testified that Gross then stated: “So, in other words, you’re in basic good health.” Plaintiff responded in the affirmative. Plaintiff claims Gross did not ask her any other questions, took no notes, and she never saw the application for life insurance. Gross did, however, set up his laptop computer on her sewing machine and was entering information during their conversation. Plaintiff claims Gross asked no other questions about her husband’s health. Plaintiff then signed what “looked like [an] Etch-a-Sketch type board, a little square box.” Plaintiff testified that Gross asked her to sign her husband’s application as well. The next day Gross brought her a folder with medical injury claim forms, but nothing related to life insurance. Plaintiff noticed premiums being withheld from her paycheck on March 9, 1999. Plaintiff received the life insurance policies issued through American Heritage on March 29, 1999. Mr. Ginn died the next day of a myocardial infarction.

Plaintiff received a letter dated August 11, 1999, from Claudia Osborne (“Osborne”) in the Claims Department for American Heritage. Osborne expressed her condolences to Plaintiff for the loss of her husband. Osborne then stated that had American Heritage been apprised of Mr. Ginn’s actual medical condition, it would have “postponed” issuing a policy until “a definite diagnosis had been made and it [was] determined we would have accepted that risk. Accordingly, we regret we will be unable to honor your request for benefit. A refund of all premiums paid to date will be sent to you under separate cover.”

Plaintiff filed this lawsuit in January of 2001 asserting claims based on breach of contract, bad faith refusal to pay the insurance proceeds, as well as violations of the Tennessee Consumer Protection Act, TenmCode Ann. § 47-18-101, et seg. Defendants denied any liability to Plaintiff, claiming Plaintiff had materially misrepresented the state of her husband’s health when she applied for the insurance.

A trial was held in September of 2003 and much of Plaintiff’s testimony on direct examination is set forth above. In addition to that testimony, Plaintiff also was asked about the medical questions on the insurance application. These questions ask whether the applicant has certain specific ailments or diseases. Plaintiff testified she never was asked any of these questions. She also testified that other than questions about AIDS and smoking, the only other medical question asked by Gross was whether she and her husband were in basic good health, to which Plaintiff responded in the affirmative. When asked about her husband’s health at the time the application for life insurance was completed, Plaintiff explained:

Q. Compared with the entire rest of the time that you had known Tony Ginn, what was the state of his health on February the 24th.
A. In good health.
Q. Was there anything remarkable about his health, physical condition, or treatment between then and the day that he died?
A. No.
Q. Did he go back for any additional treatment or examination?
A. He had a [colonoscopy ... on] the 22nd of March.... [After the colonosco-py] Dr. Gholson did come out and hand me some pictures of — I guess of his colon and said that everything looked fine.

Plaintiff went on to add that after the colonoscopy on March 22nd, her husband returned to work the next day. The following Monday he became sick, “hurting in his chest, throwing up.” Mr. Ginn went to work and called Plaintiff later that day telling her he still was feeling bad. Mr. Ginn died in his sleep that night. The Certificate of Death listed the cause of death as a myocardial infarction.

Plaintiff met with Gross at DCB on the Monday following her husband’s death. Gross provided Plaintiff with a form for a doctor to fill out and one for the beneficiary (i.e., Plaintiff) to fill out. Plaintiff stated Gross asked why her husband was taking diazepam and why she indicated he had been in good health. Plaintiff responded that “he was, as far as I was concerned.” Gross then stated that he thought Mr. Ginn was in good health based on what Plaintiff had said, and Plaintiff told him “he was, other than diverticulitis, [and] it’s not a life threatening disease. And [Gross] said, well, that wasn’t no big deal, he had it also.”

While receiving medical treatment in the past, Mr. Ginn had filled out a “Patient Information Sheet.” This document is undated but appears to be from a recent medical examination. Mr. Ginn was asked to list any chronic illnesses or conditions and he wrote: “Diverticulitis; High Blood Pressure; Adrenal Nodule 2.3 x 1.7 cm, Hidal Hernia (sic); and Hemerode Disease (sic).” Defendants, however, never asked Mr. Ginn for his medical information. Plaintiff admitted on cross-examination that her husband had discussed with his doctor the possibility of having a portion of his colon removed. The doctor informed Mr. Ginn that another colonoscopy would have to be performed before that procedure would be considered, and this in why the colonoscopy was performed in March of 1999 shortly before Mr. Ginn’s death. Plaintiff also testified on cross-examination that her husband would only go to the doctor when the pain was so bad he “couldn’t take it no longer.” Plaintiff then acknowledged that her husband was going to a doctor on a regular basis the last year of his life.

Gross testified that he would go to businesses and sell various forms of insurance. Shortly after arriving at DCB on February 24, 1999, a couple of employees informed him that Plaintiff was interested in purchasing life insurance. Gross then “went to the plant supervisor to seek authorization” to go onto the plant floor. Gross testified that the plant supervisor showed him who Plaintiff was because he had never met her before. Gross testified it was typical business practice when selling insurance on an employee’s spouse for the employee to sign for his or her spouse when the insurance was being sold in the workplace. According to Gross, American Heritage authorized him to sell insurance on the life of a spouse when the other spouse signed the application. Disputing Plaintiffs testimony, Gross stated that he asked Plaintiff the medical questions and all of the questions that appeared on the application, except for a few questions where no response was needed because they were not pertinent to life insurance policies. Gross earned a commission of “[a]round seven dollars” on the sale of the policy insuring Plaintiffs husband. Gross claimed he specifically asked Plaintiff about whether her husband had any chronic conditions and she responded that he did not. After Mr. Ginn died, Gross asked Plaintiff why she had not answered that question correctly, and Plaintiff responded that she thought her husband’s condition (i.e., diverticulitis) was not that important. Gross went on to state that had Plaintiff answered the question correctly, he still could have insured Mr. Ginn, but he would have had to go through a different insurance company that was “a lot more liberal.” Gross stated:

[I also sell insurance for] Colonial Life and Accident ... [and] if someone had some pertinent health problems, I would place it with them because they are a lot more liberal.
They don’t ask a lot of these questions that are on that application and so those policies automatically get approved and you have coverage....

Gross went on to add that he carried two laptop computers with him. One of the laptops contained only the application for Colonial. “Those that had health problems, I would have opened the Colonial computer and I would enroll them in that....” Gross stated that had Plaintiff correctly informed him of her husband’s health, he would have closed the laptop with the American Heritage application, and simply opened the one with the Colonial application. According to Gross, the premiums charged by the two companies were substantially the same. The American Heritage insurance application does not contain a question specifically asking if an applicant has diverticulitis, but one of the questions does inquire about whether the applicant is in good health or if the applicant has a chronic disease.

Pearl Harrison (“Harrison”) is the vice-president of claims for American Heritage. Harrison testified that whenever a death occurs within two year’s of the inception of a life insurance policy, the company requests medical records to determine whether or not the information received in the records is consistent with the information provided on the application. With regard to Mr. Ginn’s application, the underwriting department when reviewing Mr. Ginn’s medical records concluded, due to the significant number of medical problems he was having, that at the very least, American Heritage would have deferred issuing a policy until there was a final diagnosis. Harrison testified that when the company obtained Mr. Ginn’s medical records, they discovered:

This gentleman had hypertension, rectal bleeding, which was I believe bright red blood, as it was described. Severe abdominal pain. He was on multiple medications. Relatively high doses for a very long period of time.
He complained constantly, at one point he had back pain, he had a family history of his father died in his 50s of colorectal cancer. He had had colonos-copies. There were notes in the records indicating that ... the physicians were concerned about his negative findings, but his conditions [were] elusive. They couldn’t determine what his true diagnosis was.
And it went on to describe a 60 pound weight loss in a brief period of time. And the records appear to me to be ones where the physicians were unable to diagnose this condition, but found it significant enough to treat him frequently and to question what significant problems he had going on.

Mr. Neal Crawford (“Crawford”) also testified for American Heritage. Crawford is the vice-president in charge of underwriting and testified that when Mr. Ginn’s policy was issued, American Heritage authorized its agents to have a spouse sign for the other spouse when they were taking applications in the workplace. Crawford likewise testified that the claims department investigates claims when a death occurs within two years of the policy being issued.

After the testimony was completed, the jury was furnished with a verdict form containing various questions. With regard to the breach of contract claim, the jury found Plaintiff had not falsely represented her husband’s health, and went further and found that Plaintiff had not falsely represented her husband’s health with the intent to deceive the Defendants into issuing the policy. Accordingly, the jury concluded Defendants breached their contract with Plaintiff and awarded her the face value of the life insurance policy, i.e., $50,000. The jury also awarded pre-judgment interest at the rate of 10%. The jury further found Defendants acted in bad faith when refusing to pay Plaintiff, that the bad faith caused Plaintiff to incur additional expense, loss or injury, and that Plaintiff was entitled to recover from Defendants a bad faith penalty of 25%. As to Plaintiffs TCPA claims, the jury found Defendants employed deceptive or unfair practices and awarded Plaintiff compensatory damages under the TCPA in the amount of $110,000.

Plaintiff filed a post-trial motion seeking an award of attorney fees pursuant to the TCPA. Plaintiff also sought discretionary costs in the amount of $1,853.51 pursuant to the TCPA and Tenn. R. Civ. P. 54.04. Defendants filed a motion for a directed verdict or, in the alternative, a motion for a new trial or to alter or amend the judgment. The Trial Court resolved the post-trial issues by requiring Plaintiff to elect between her remedies, i.e., breach of contract and the bad faith penalty, or the remedies available under the TCPA. Plaintiff elected the TCPA. The Trial Court suggested a remittitur in the amount of compensatory damages awarded by the jury under the TCPA from $110,000 to $73,855.15, which Plaintiff accepted. The Trial Court did, however, treble the remitted compensatory damage award bringing the total award of compensatory damages to $221,565.45. The Trial Court then awarded Plaintiff $40,000 in attorney fees, $1,853.51 in discretionary costs, and $21,561.64 in pre-judgment interest. The total award to Plaintiff was $284,980.60.

Defendants appeal raising numerous issues. Although not stated exactly as such, Defendants claim: 1) the Trial Court erred by denying Defendants’ motion for directed verdict; 2) the Trial Court erred when it refused to set aside the jury’s verdict when Plaintiff made a material misrepresentation when applying for the life insurance; 3) the jury’s finding of a violation of the TCPA is not supported by the evidence; 4) the jury’s finding that Defendants acted in bad faith when denying the claim is not supported by the evidence; 5) the Trial Court’s jury instruction on misrepresentation was legally erroneous; and 6) the Trial Court erred in admitting certain evidence. Plaintiff raises three additional issues. First, Plaintiff claims the Trial Court erred when it suggested a remittitur in the amount of compensatory damages awarded by the jury pursuant to the TCPA. Second, Plaintiff claims the Trial Court erred when it required her to choose between the breach of contract remedies, including the bad faith penalty, or the remedies available under the TCPA. Finally, Plaintiff claims that pursuant to the TCPA, she was entitled to an award of all of her attorney fees and the Trial Court erred by only awarding a portion of those fees.

Discussion

We first address Defendants’ claims that the Trial Court erred in not directing a verdict in their favor on the breach of contract claim. As this Court recently explained in Stooksbury v. American Nat. Prop. and Cas. Co., 126 S.W.3d 505 (Tenn.Ct.App.2003):

In deciding whether a trial court was correct in granting or denying a motion for directed verdict, an appellate court cannot weigh the evidence.
Rather, it must take the strongest legitimate view of the evidence in favor of the plaintiff, indulging in all reasonable inferences in his favor, and disregarding any evidence to the contrary. The trial judge’s action [granting a motion for directed verdict] may be sustained only if there is no material evidence in the record that would support a verdict for the plaintiff, under any of the theories. that he has advanced.
Wharton Transport Corp. v. Bridges, 606 S.W.2d 521, 525 (Tenn.1980) (quoting Cecil v. Hardin, 575 S.W.2d 268, 271 (Tenn.1978)).
To resolve this issue, we must determine if the Trial Court was correct when it overruled Defendant’s motion for directed verdict, thereby implicitly concluding there was material evidence that would support a verdict for Plaintiff.

Stooksbury, 126 S.W.3d at 516.

With regard to the breach of contract claim, the jury was asked two closely related questions on this issue and found that Plaintiff had not falsely represented her husband’s medical condition when applying for insurance. Whether Plaintiff made a misrepresentation as to her husband’s health is the threshold question both at trial and in this appeal. What this Court first must determine is whether there was substantial and material evidence to support this aspect of the jury’s verdict. The term “substantial and material evidence” has been defined as “such relevant evidence as a reasonable mind might accept to support a rational conclusion and such as to furnish a reasonably sound basis for the action under consideration.” Papachristou v. Univ. of Tennessee, 29 S.W.3d 487, 490 (Tenn.Ct.App.2000) (quoting Clay Co. Manor, Inc. v. State, 849 S.W.2d 755, 759 (Tenn.1993)). This Court also has described it as requiring “something less than a preponderance of the evidence ... but more than a scintilla or glimmer.” Gluck v. Civil Serv. Comm’n, 15 S.W.3d 486, 490 (Tenn.Ct.App.1999) (quoting Wayne Co. v. Tennessee Solid Waste Disposal Control Bd., 756 S.W.2d 274, 280 (Tenn.Ct.App.1988)).

We believe there was a clear factual issue presented to the jury on whether Plaintiff materially misrepresented that her husband was in “basic good health.” As noted, this Court is not to weigh the evidence, and we cannot say that Mr. Ginn’s health at the relevant time was so bad that we must hold, as a matter of law, that there simply was no way Plaintiff could honestly and subjectively have believed her husband to be in “basic good health.” Plaintiff testified she believed her husband to be in basic good health at the time she applied for the insurance and why she believed this to be so. For example, while Plaintiff testified that her husband had lost approximately sixty pounds, he also had regained approximately twenty pounds after changing physicians. Further, there was proof that Plaintiffs husband continued all his activities, including his work, up until the day he died. Additionally, Plaintiffs testimony was directly contrary to Gross’ testimony concerning which of the questions contained in the application Gross actually asked of her. The jury was at liberty to believe or disbelieve that testimony, and it chose to credit Plaintiffs testimony.

It is American Heritage that made the determination to allow Plaintiff to furnish her spouse’s medical history for the insurance application and, in fact, sign her spouse’s name to the application. This being so, what is relevant on the issue of misrepresentation is not what knowledge Mr. Ginn had concerning his health, but rather what knowledge Plaintiff had concerning her husband’s health. Accordingly, we conclude that there was substantial and material evidence to support the jury’s verdict when it found that Plaintiff did not make any material misrepresentations concerning her husband’s health when applying for his life insurance.

We next address whether the Trial Court erred when it charged the jury on Defendants’ misrepresentation defense. The issue of whether a jury instruction was proper is a question of law and is reviewed de novo without a presumption of correctness. See Owens v. Methodist Health Care Systems, No. 02A019704-CV-00089, 1999 WL 360562, at *1, 1999 Term. App. LEXIS 359, at *4, *5 (Tenn. Ct.App. June 7, 1999). In Owens, we stated that “we consider the charge as a whole to determine whether prejudicial error has been committed. The charge will not be invalidated so long as it fairly defines the legal issues involved in the case and does not mislead the jury.” Owens, 1999 WL 360562, at *1, 1999 TennApp. LEXIS 359, at * 5 (quoting Hunter v. Burke, 958 S.W.2d 751, 756 (Tenn.Ct.App.1997)).

Defendants’ primary disagreement with the jury instruction given by the Trial Court is that it relied on language from Gatlin v. World Service Life Ins. Co., 616 S.W.2d 606 (Tenn.1981), as opposed to what Defendants believe to be the more factually analogous Broyles v. Ford Life Ins. Co., 694 S.W.2d 691 (Tenn.1980). In Gatlin, our Supreme Court distinguished its earlier opinion in Broyles by stating:

In this Court’s recent decision of Broyles v. Ford Life Insurance Co., 594 S.W.2d 691 (Tenn.1980), the Court was faced with a situation involving a term life insurance policy in which the insured had stated that he was in “good health.” In that case the insured had been under treatment for leukemia; the treatment caused him to experience blurred vision, headaches, stomach disorders, and rendered him unable to take some medication. He was undergoing frequent tests and although the treating physician would not say that he specifically told Broyles that he had “leukemia,” he testified that Broyles positively knew he had a medical problem. There was a concurrent finding by the trial court and the intermediate appellate court that Broyles did not know he had leukemia, but this Court found, as a matter of law, that he had misrepresented the state of his health, based upon the overwhelming evidence that he knew he had a serious medical problem. Another important distinction between the Broyles case and the present one is that in Broyles the application form contained a place for exceptions or limitations on the general statements of health where it was indicated that applicants should qualify the assertion of “good health,” if appropriate. Thus, it was much more evident in that case that the insurance carrier was relying on the fact of “good health” rather than the mere representation or opinion of such status.

Gatlin, 616 S.W.2d at 610-11.

We do not believe Broyles is applicable for two reasons. First, we have already concluded that Mr. Ginn’s health, unlike Mr. Broyles’ health, was not such that we are required to conclude, as a matter of law, that Plaintiff made a misrepresentation when she said Mr. Ginn was in “basic good health.” As already concluded by us, there was substantial and material evidence to support the jury’s verdict in finding that Plaintiff did not make any material misrepresentation concerning her husband’s health when applying for her husband’s life insurance. Second, in Broyles the application contained a “place for exceptions and limitations on the general statements of health....” Here, Plaintiff testified she never saw the application completed by Gross on his laptop computer, and that Gross never inquired further about her husband’s health other than asking if he smoked, had AIDS, or was in basic good health. When considering the Trial Court’s charge to the jury as a whole, we cannot conclude that the Trial Court committed reversible error when it relied more heavily on Gatlin than Broyles when charging the jury on the defense of misrepresentation given the facts as presented to the jury.

The claimed misrepresentation was the only defense relied upon by Defendants when denying Plaintiffs claim. Having affirmed the verdict and the resulting judgment that Plaintiff did not materially misrepresent her husband’s health, it necessarily follows that we will not disturb the jury’s finding that there was a breach of contract.

The statute upon which Plaintiff was awarded a 25% bad faith penalty is Tenn.Code Ann. § 56-7-105(a), which provides as follows:

The insurance companies of this state ... in all cases when a loss occurs and they refuse to pay the loss within sixty (60) days after a demand has been made by the holder of the policy or fidelity bond on which the loss occurred, shall be liable to pay the holder of the policy or fidelity bond, in addition to the loss and interest thereon, a sum not exceeding twenty-five percent (25%) on the liability for the loss; provided, that it is made to appear to the court or jury trying the case that the refusal to pay the loss was not in good faith, and that such failure to pay inflicted additional expense, loss, or injury including attorney fees upon the holder of the policy or fidelity bond; and provided further, that such additional liability, within the limit prescribed, shall, in the discretion of the court or jury trying the case, be measured by the additional expense, loss, and injury including attorney fees thus entailed.

Tenn.Code Ann. § 56-7-105(a) is penal in nature and must be strictly construed. See Stooksbury, 126 S.W.3d at 519 (citing Minton v. Tennessee Farmers Mut. Ins. Co., 832 S.W.2d 35, 38 (Tenn.Ct.App.1992)). In order to recover bad faith penalties under this statute, a plaintiff must prove: “(1) the policy of insurance must, by its terms, have become due and payable, (2) a formal demand for payment must have been made, (3) the insured must have waited 60 days after making demand before filing suit (unless there was a refusal to pay prior to the expiration of the 60 days), and (4) the refusal to pay must not have been in good faith.” Stooksbury, 126 S.W.3d at 519. The burden of proving that an insurance company acted in bad faith in refusing to pay a claim lies with Plaintiff herein. Id; see also Nelms v. Tennessee Farmers Mut. Ins. Co., 613 S.W.2d 481, 484 (Tenn.Ct.App.1978). In Sisk v. Valley Forge Ins. Co., 640 S.W.2d 844 (Tenn.Ct.App.1982), this Court explained that:

The bad faith penalty is not recoverable in every refusal of an insurance company to pay a loss. An insurance company is entitled to rely upon available defenses and refuse payment if there is substantial legal grounds that the policy does not afford coverage for the alleged loss. If an insurance company unsuccessfully asserts a defense and the defense was made in good faith, the statute does not permit the (sic) imposing of the bad faith penalty.

Sisk, 640 S.W.2d at 852 (emphasis in original)(quoting Nelms v. Tennessee Farmers Mutual Ins. Co., 613 S.W.2d 481, 484 (Tenn.Ct.App.1978)).

The jury’s verdict awarding a bad faith penalty can be set aside only if there is no material evidence to support it. Tenn. R.App. P. 13(d); Forrester v. Stockstill, 869 S.W.2d 328, 329 (Tenn.1994). However, the verdict cannot be based upon a “mere spark, glimmer, or scintilla of evidence.” See Stooksbury, 126 S.W.3d at 519 (quoting Sadek v. Nashville Recycling Co., 751 S.W.2d 428, 431 (Tenn.Ct.App.1988)). In our opinion, Defendants had substantial legal grounds supporting their position that Plaintiff materially misrepresented her husband to be in “basic good health” when applying for the life insurance. This is readily apparent given Mr. Ginn’s troubled medical history. Defendants simply unsuccessfully asserted the misrepresentation defense. We find no material evidence whatsoever to support the jury’s conclusion that this defense was asserted in bad faith. Accordingly, we reverse the judgment of the Trial Court insofar as it awards Plaintiff a bad faith penalty of 25%. See Stooksbury, 126 S.W.3d at 519 (reversing a 25% bad faith penalty after concluding the defendant had substantial legal grounds supporting its position that the plaintiffs’ insurance coverage had been cancelled prior to the date of loss). See also Sisk v. Valley Forge Ins. Co., 640 S.W.2d 844, 852 (Tenn.Ct.App.1982)(“There were substantial legal grounds, though not sustained, for the insurer to defend herein. Therefore, we believe the finding of bad faith must be overturned.”); Nelms v. Tennessee Farmers Mutual Ins. Co., 613 S.W.2d 481, 484 (Tenn.Ct.App.1978) (Reversing the jury’s award of a 25% bad faith penalty after concluding there were “valid reasons for the insurance company to question the loss. Further, we think the insurance company honestly and in good faith believed ... its policy was not liable for the loss. For the above reasons we think there is no material evidence to support a finding of bad faith and the invoking of the statutory penalty.”).

Defendants claim the Trial Court erred in not directing a verdict in their favor on Plaintiffs TCPA claims. They also raise the related issue of whether Plaintiff even stated an actionable claim under the TCPA. We will quote the Trial Court’s entire charge to the jury on this claim:

The plaintiff claims that defendant used the following unfair or deceptive acts or practices that violate the Tennessee Consumer Protection law: Tennessee Code Annotated 47-18-104(12). Representing that a consumer transaction confers or involves rights, remedies or obligations that it does not have or involve or which are prohibited by law; Tennessee Code Annotated 47-18-104(14). Causing confusion or misunderstanding with respect to the authority of a salesperson, representative or agent to negotiate the final terms of a consumer transaction; Tennessee Code Annotated 47-18-104(27). Engaging in any other act or practice which is deceptive to the consumer or to any other person.
If you find that the plaintiff has proven by a preponderance of the evidence that the defendant used any one or more of these acts or practices, then defendant has violated the Tennessee Consumer Protection Law.
The plaintiff is entitled to actual damages for any loss of money, property, or thing of value that was caused by the defendant’s use of the unfair or deceptive acts or practices.

As we noted in Stooksbury, the “stated purpose of the TCPA is to ‘protect consumers and legitimate business enterprises from those who engage in unfair or deceptive acts or practices in the conduct of any trade or commerce in part or wholly within this state.’” Stooksbury, 126 S.W.3d at 520 (quoting Tenn. Code Ann. § 47-18-102(2)). We also noted in Stooksbury that the TCPA applies to insurance companies. We stated:

The applicability of the TCPA to insurance companies was recently discussed by our Supreme Court in Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn.1998). In Myint, the plaintiffs brought suit after Allstate refused to pay on a claim due to the suspicious nature of the cause of two fires which ultimately resulted in substantial damage to the plaintiffs’ property. It was stipulated by the parties that both fires were set intentionally, but the plaintiffs steadfastly denied that they set the fires. Id. at 923. The main issue to be decided by the Supreme Court was whether the TCPA was applicable to insurance companies. The Court held that it was, concluding the legislature intended the TCPA to be complementary to other statutes regulating the insurance industry. After reaching this result, the Court then decided whether the denial of the plaintiffs’ insurance claim constituted a violation of the Act. The Court stated:
While the sale of a policy of insurance easily falls under this definition of “trade” and “commerce,” we conclude that Allstate’s conduct in handling the Myints’ insurance policy was neither unfair nor deceptive. The record reveals no evidence of an attempt by Allstate to violate the terms of the policy, deceive the Myints about the terms of the policy, or otherwise act unfairly. It is apparent that the denial of the Myints’ claim was Allstate’s reaction to circumstances which Allstate believed to be suspicious. Consequently, Allstate’s conduct does not fall within the purview of the Tennessee Consumer Protection Act, and the Myints are not entitled to the benefits of treble damages and attorney’s fees recoverable under the Act.

Stooksbury, 126 S.W.3d at 520 (quoting Myint, 970 S.W.2d at 926).

Here the jury was not asked to state what conduct by Defendants it believed to be unfair or deceptive. Instead, the jury simply was asked whether Defendants had engaged in deceptive or unfair acts in violation of the TCPA. In her brief on appeal, Plaintiff lists certain conduct which she believes supports the jury’s verdict on this claim. For example, Plaintiff claims Defendants violated the TCPA simply because they took the application for insurance “from piecework employees trying to make production at their workstations. ...” Plaintiff also claims the manner in which Gross took the application was a violation of the TCPA, such as when he failed to read Plaintiff the questions contained on the application. What Plaintiff overlooks is that she seeks the benefit of all this alleged conduct when she claims that she had a valid contract of insurance, successfully we might add.

Plaintiff also claims the Defendants’ denial of her claim violated the TCPA. Plaintiff claims, among other things, that the denial of her claim was unfair and deceptive because Mr. Ginn’s medical records were not reviewed by a physician or someone with medical training. We fail to see how this even remotely states a cause of action under the TCPA.

Plaintiffs husband had a valid life insurance contract, and Defendants have never questioned that with the sole exception being whether Plaintiff made material misrepresentations about her husband’s health. Today we reach the same ultimate conclusion reached by this Court in Stooks-bury and by our Supreme Court in Myint. We conclude there was no unfair or deceptive conduct by Defendants when the insurance contract was entered into; there was no unfair or deceptive conduct by Defendants when handling Plaintiffs claim; there was no evidence of an attempt by Defendants to violate the terms of the policy; and Defendants had substantial legal grounds to support their defense to Plaintiffs claim for benefits. After reviewing the entire record in this case, we conclude there is no substantial or material evidence upon which the jury could have concluded Defendants violated the TCPA. In short, Plaintiff got exactly what she bargained for — a $50,000 life insurance policy on her husband. The only reason American Heritage claimed Plaintiff was not entitled to the proceeds was its good faith belief, albeit mistaken, that Plaintiff materially misrepresented her husband’s health. Finding no substantial and material evidence anywhere in the record to support a verdict for Plaintiff pursuant to the TCPA, we reverse that portion of the Trial Court’s judgment. We likewise reverse the award of attorney fees pursuant to the TCPA. In light of this holding, we pretermit Plaintiffs claim that the Trial Court erred in forcing her to elect between remedies, and that it further erred by not awarding her all the attorney fees she requested.

Defendants’ final issue surrounds whether or not certain evidence should have been admitted. More specifically, Defendants claim the Trial Court improperly allowed Plaintiff to testify about the statements of Mr. Ginn’s physician following the March 22, 1999, colonoscopy wherein the physician told Plaintiff “everything looked fíne.” Defendants also claim the Trial Court improperly refused to allow them to impeach one of Plaintiffs witnesses via inconsistent statements contained in an affidavit. We review these evidentiary determinations under the abuse of discretion standard. Otis v. Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439, 442 (Tenn.1992) (holding “admissibility of evidence is within the sound discretion of the trial judge”).

Tenn. R.App. P. 36(b) provides that a “final judgment from which relief is available and otherwise appropriate shall not be set aside unless, considering the whole record, error involving a substantial right more probably than not affected the judgment or would result in prejudice to the judicial process.” This Court has reviewed all of the evidence in this case and the entire record. Even if Defendants are correct that these evidentiary rulings by the Trial Court were incorrect, we nevertheless conclude that such rulings did not involve a substantial right that more probably than not affected the jury’s verdict or the judgment as amended by this Court. Therefore, even if these rulings were incorrect, Defendants would not be entitled to a new trial.

After the jury rendered its verdict, the Trial Court required Plaintiff to choose between the remedies available under the breach of contract claim or the remedies available under the TCPA. Since we reversed the judgment insofar as it awarded any damages under the TCPA, we must necessarily reinstate the jury’s verdict awarding Plaintiff compensatory damages for breach of contract in the amount of $50,000, the policy value. Defendants do not challenge the award of prejudgment interest or discretionary costs, and we affirm those aspects of the judgment. The Judgment of the Trial Court is affirmed insofar as it awards Plaintiff $50,000 in compensatory damages, $21,561.64 in prejudgment interest, and $1,853.51 in discretionary costs, bringing the total judgment to $73,415.15.

Conclusion

The Judgment of the Trial Court is affirmed in part and reversed in part. Specifically, the Judgment of the Trial Court is modified so as to award Plaintiff $50,000 in compensatory damages, $21,561.64 in prejudgment interest, and $1,853.51 in discretionary costs for a total judgment of $73,415.15. This case is remanded to the Trial Court for collection of the costs below. Costs on appeal are assessed one-half against the Appellants American Heritage Life Insurance Company and Daryle W. Gross, and their surety, and one-half against the Appellee Pamela K. Ginn.

ORDER ON PETITION FOR REHEARING

Petitioner, Pamela K. Ginn, filed her Petition for Rehearing pursuant to Rule 39 of the Tennessee Rules of Appellate Procedure. All matters raised in the Petition were fully argued by the parties, considered by this Court, and sufficiently addressed in our Opinion. Therefore, we find the Petition is not well taken, and it is DENIED. Costs related to this Rule 39 Petition for Rehearing are taxed to Petitioner, Pamela K. Ginn.

      . One of Plaintiff's coworkers testified she overheard this conversation at the time the initial application for insurance was filled out, while Plaintiff’s testimony clearly was that it took place after her husband had died.

      . Defendants never have claimed the insurance was invalid because Plaintiff signed the application on her husband’s behalf.

      . Plaintiff apparently anticipated American Heritage was going to claim that Gross improperly allowed Plaintiff to sign the application on her husband’s behalf. At trial Plaintiff testified to an alleged conversation she had with Gross where he supposedly told Plaintiff to say her husband actually did sign the application. Assuming for present purposes only that Gross misrepresenting to Plaintiff that she had authority to sign the application on her husband’s behalf would or could be a violation of the TCPA, the facts in this case do not support such a claim and it should never have been an issue at trial. Both Gross and American Heritage unequivocally testified that Gross was authorized to have Plaintiff sign the application on her husband's behalf. More importantly, Defendants did not deny Plaintiff's claim on that basis and never made that argument either before or at trial.


source: Caselaw Access Project

author: SHARON G. LEE, J.,

license: Public Domain

text:
    David L. ELMORE v. Mary Rosanna ELMORE v. Jerry Ralph Monday, et al.
    Court of Appeals of Tennessee, at Knoxville.
    Dec. 6, 2004 Session.
    Dec. 29, 2004.
    Permission to Appeal Denied by Supreme Court June 20, 2005.
    Petitions to Rehear Denied Aug. 19 and 22, 2005.
    C. Douglas Fields, Crossville, Tennessee, for the Appellant, David L. Elmore.
    David Haines Rotroff, Chattanooga, Tennessee, for the Appellees, Jerry Ralph Monday, Brenda Joyce Monday, Melissa Renee Beaty, and David Dewayne Beaty.
   SHARON G. LEE, J.,

delivered the

opinion of the court,

in which CHARLES D. SUSANO, JR. and D. MICHAEL SWINEY, JJ„ joined.

OPINION

This case involves a post-divorce custody dispute between the natural father and maternal grandparents and aunt of three children. The issue presented is whether the trial court erred in awarding custody to the grandparents and aunt when it made no finding in its order that an award of custody to the father posed a risk of substantial harm to the children. We hold that the record does not support such a finding of substantial harm. We reverse the trial court’s award of custody, and, pursuant to the father’s constitutional right of privacy to rear and have custody of his children, we award the father custody. The case is remanded to the trial court to set appropriate visitation and child support obligation for the mother.

David L. Elmore (“Father”) and Mary Rosanna Elmore (“Mother”) were divorced by decree entered May 4, 2001. The decree of divorce awarded custody of the parents’ three minor children, Brendana M. Elmore (DOB January 29, 1992), Jonathan David Elmore (DOB February 15, 1994) and Emily Elizabeth Elmore (DOB December 18,1998) to Mother.

On September 4, 2002, Father filed a petition to change the children’s primary residential parent designation from Mother to himself. His petition alleged, among other things, that Mother “has abandoned her role and responsibility as a parent” and “has divided the [children] among her relatives, leaving the care of the minor daughters to her parents and the care of her minor son to her sister.”

Mother answered, denying that primary residential parenting responsibility should be changed from her to Father, and making a counter-claim for contempt against Father for failure to pay child support. On October 17, 2003, a petition to intervene was filed by Mother’s parents, Jerry Ralph Monday and Brenda Joyce Monday (“Grandparents”), and her sister, Melissa Renee Beaty (“Aunt”) and Aunt’s husband, David Dewayne Beaty.

The petition to intervene alleged that from January of 2001, the Grandparents “have had the exclusive and primary physical and residential care and custody of’ the two girls, and that the Beatys have had similar “custody” of Jonathan during that time period. The petition further alleged as follows:

That the Respondent, [Mother], from and after January of 2001, while the original custodian of said minor children, has abandoned her role and responsibility as the minor childrens’ parent and has allowed the children to live with her parents (the Mondays) and her sister (Beaty). That from and after January of 2001, [Mother] has exhibited a lack of interest relative to the nurturing and care of the parties’ three (3) minor children constituting a substantial and material change in the circumstances of the parties’ three (3) minor children justifying a permanent change in the residential care and custody of these children.

After hearing the case on November 5, 2003, the trial court entered an order awarding custody of Brendana and Emily to the Grandparents, and custody of Jonathan to Aunt and her husband. Father appeals, raising the issue of whether the trial court erred in failing to award him custody.

The trial court made no finding in its order of final judgment that a material change of circumstances had occurred since the decree of divorce. However, Mother has not appealed the trial court’s custody decision and is not a party to this appeal. None of the parties involved here argue that a change of circumstances did not occur.

This is in essence a custody dispute between the biological Father and the non-parent maternal relatives. The Supreme Court has provided guidance as to the proper procedure and analysis in situations such as this one on several occasions. See In Re Adoption of Female Child (Bond v. McKenzie), 896 S.W.2d 546 (Tenn.1995); Petrosky v. Keene, 898 S.W.2d 726 (Tenn.1995); In Re Askew, 993 S.W.2d 1 (Tenn.1999). The Court has consistently stressed that a natural parent has a constitutional privacy interest which includes the important and fundamental right to the care and custody of his or her children. Id.; see also Hawk v. Hawk, 855 S.W.2d 573 (Tenn.1993); Nale v. Robertson, 871 S.W.2d 674 (Tenn.1994).

In light of this constitutional right, the Bond Court set forth the following two-part analysis:

[I]n a contest between a parent and a non-parent, a parent cannot be deprived of the custody of a child unless there has been a finding, after notice required by due process, of substantial harm to the child. Only then may a court engage in a general “best interest of the child” evaluation in making a determination of custody.

In Re Adoption of Female Child (Bond v. McKenzie), 896 S.W.2d at 548.

Further, this Court has held that the required showing of risk of substantial harm to the children must be demonstrated by clear and convincing evidence. Ray v. Ray, 83 S.W.3d 726, 733-34 (Tenn.App.2001); Hall v. Bookout, 87 S.W.3d 80, 86 (Tenn.App.2002); Henderson v. Mabry, 838 S.W.2d 537, 540 (Tenn.App.1992).

As the Supreme Court discussed in Blair v. Badenhope, 77 S.W.3d 137 (Tenn.2002), the applicable analysis is somewhat different when a natural parent is seeking to modify a valid order granting custody to a non-parent. But in the present case, there is no prior decree granting custody to a non-parent, and so the Grandparents and Aunt were required to make a showing, by clear and convincing evidence, that granting custody to Father subjected the children to a risk of substantial harm.

In its written order, the trial court did not make a finding of substantial harm, nor did it find Father to be an unfit parent. The trial court’s order stated as follows in relevant part:

[U]pon the sworn testimony of the witnesses and parties, the exhibits, and the entire record, the Court is of the opinion that it is in the manifest best interest of the original parties’ three (3) children that their primary residential and physical custody be awarded to the Intervening petitioners.

At the close of the hearing, presented with the argument by Father’s counsel that the Grandparents and Aunt had faded to show a risk of substantial harm, the trial court stated the following:

I guess the good decision that was made was to allow the children to go live with the aunt and the grandparents. I think there’s some substantial risk of harm for the children to be moved from this environment. I think it’s in the best interest of the children for them to stay with the grandparents and the aunt.

It is a long-recognized rule that “a Court speaks only through its written judgments, duly entered upon its minutes. Therefore, no oral pronouncement is of any effect unless and until made a part of a written judgment duly entered.” Sparkle Laundry & Cleaners, Inc. v. Kelton, 595 S.W.2d 88, 93 (Tenn.App.1979) (internal quotations and brackets omitted). In this case, the trial court’s order made no reference to oral pronouncements from the bench. Furthermore, it is apparent from the trial court’s remark about “some substantial risk of harm” that it was likely made in an attempt to “shoehorn” what was clearly a best interests analysis to fit into a risk of substantial harm analysis. The comí made no factual findings, oral or written, in support of a conclusion of substantial harm.

Notwithstanding the lack of findings, the parties presented evidence and argument to the trial court that there was (according to Grandparents and Aunt) or was not (according to Father) proof supporting a conclusion of risk of substantial harm if custody was awarded to Father. We therefore review the record to determine if it supports the conclusion, by clear and convincing evidence, of risk of substantial harm.

The Grandmother testified as follows about her concerns with transferring custody to Father:

Q: Is there anything that you know about [Father] that presents itself or should be presented to this Court as to why these children should not be transferred to him in full residential custody?
A: I just don’t think he’s going to be capable of taking care of three children, working, because it is a full-time job. My husband is retired. I mean, you know, he takes them to school. He goes and picks them up. He baby-sits them when there’s no school, you know. And it’s going to be hard on [Father] to work a full-time job and take care of three kids, two kids that has boo-coos of homework every night.
Q: Have you ever been to [Father’s] house?
A: The one he’s in now?
Q: Yes.
A: No.
Q: Well, you allege in your petition that he just doesn’t have adequate physical accommodations.
A: I was going by what Michelle told me.
Q: So she’s been to his house?
A: Michelle, his daughter, yes.
Q: So you really don’t have any knowledge of what you’ve alleged in here yourself, right?
A: No.
Q: You’ve never looked at it?
A: Not the one he’s in now. No.
Q: Even though you say he’s not a fit or proper person, really what you just testified to is you just don’t think he’s up to doing everything that you feel is necessary to raise these children.
A: I don’t think it’s going to be an easy task for him. No.

Mother testified that prior to their divorce, Father was physically abusive to her in front of the children. Mother also admitted having been charged with assault, theft and drug possession, the first two charges also occurring before the divorce. Mother further testified that she suffered from a methamphetamine and marijuana addiction, and she freely admitted giving false answers on interrogatories propounded to her in this case. There is no other evidence in the record suggesting Father had been physically abusive; Father testified that Mother “put something like 11 stitches in me one time.”

The record is not entirely clear regarding how much visitation Father had with the children prior to February 2003. He testified that “I did as much as I possibly could,” and Grandmother and Aunt testified that his visitation was sporadic. However, the evidence presented which causes the most concern was Father’s testimony that from February 2003 until August 2003, he had no contact with his children. He testified that the reason for this absence was that he “was trying to catch” Mother, to find evidence supporting his petition for custody. During this time, Mother was living with Grandparents some of the time and with her fiancee at times. Father testified as follows regarding his ill-advised strategy:

It’s been like two and a half years now. I mean, and I’ve done everything to try and get evidence on [Mother] and that’s been real hard. And it came to a point where, you know, you said, you know, we’re going to have to do something. I mean, something stinks. And I ran out of ideas. I got desperate.
Jerry [Grandfather] over there, he’s a good grampa. I mean, I can’t say nothing bad about the man. I think a lot of Jerry. But when I quit coming around, they just seen me no longer as a threat and they quit keeping such a tight rein on [Mother]. And I knew in my heart if they thought that I wasn’t a threat that [Mother] would go back to her old ways, back into the partying and stuff, heavy, and it worked.

It is undisputed that Father fell behind on his child support payments. He testified without contradiction that he was unable to make them after he lost his job and had to file bankruptcy. Father is presently working at an $8.00 per hour job as a mechanic. He testified that since April 2003, roughly one-half of his paycheck has been garnished for child support, and that he received and accepted the garnishment notice without objection. The trial court found that Father’s failure to make the full amount of child support payments was not willful.

At the time of the hearing, Father lived in a two-bedroom trailer. He testified that he was prepared and able to move to a three-bedroom if he should receive custody of the children. Father lives in the same school district that the children are in presently, so they will not have to change schools.

We believe the record is clear that Father has exercised poor judgment, particularly in his tactical effort to try to gain custody in a paradoxical and misguided way. But we are of the opinion that the evidence presented does not rise to a showing, by clear and convincing evidence, that the children will be subjected to a risk of substantial harm by granting him custody. Therefore, his constitutional parental right to the care and custody of his natural children must prevail in this case.

For the aforementioned reasons, the judgment of the trial court granting the Grandparents and Aunt and her husband custody is reversed. Father is hereby designated as the primary residential parent of his three minor children. This matter is remanded to the trial court for such further proceedings as may be necessary consistent with this opinion, said further proceedings to include consideration of the issue of Mother’s child support obligation. Costs on appeal are assessed to the Appel-lees, Jerry Ralph Monday, Brenda Joyce Monday, Melissa Renee Beaty, and David Dewayne Beaty.


author: W. FRANK CRAWFORD, P.J., W.S.,

text:
    Clarence MUMFORD v. BOARD OF EDUCATION OF THE CITY OF MEMPHIS.
    Court of Appeals of Tennessee, Western Section, at Jackson.
    On-Briefs Aug. 24, 2004.
    Oct. 25, 2004.
    Permission to Appeal Denied by Supreme Court March 21, 2005.

      Leonard E. Van Eaton of Memphis, For Appellant, Clarence Mumford.
    Ernest G. Kelly of Memphis, For Appel-lee, Board of Education of the City of Memphis.
   OPINION

W. FRANK CRAWFORD, P.J., W.S.,

delivered the opinion of the court,

in which ALAN E. HIGHERS, J. and DAVID R. FARMER, J., joined.

Board of Education of the City of Memphis suspended tenured teacher and assistant principal without pay pending an investigation of child abuse by the Department of Children’s Services. After teacher was reinstated, he sought to recover lost wages under T.C.A. § 49-5-511. Trial court found that teacher was entitled to recover but that such recovery should be offset by wages earned during the period of suspension. We affirm as modified herein.

The facts of this case are undisputed and the parties filed a “Joint Stipulation of Facts” on December 16, 2003. At the time the circumstances of this case arose, Clarence Mumford (“Mumford,” “Plaintiff,” or “Appellant”) was employed as an Assistant Principal at Humes Junior High School in Memphis, Tennessee. On November 12, 1996, Mumford administered a paddling to one of his students. As a result of the paddling, the student allegedly suffered some bruising and the student’s parents complained to the General Sessions Court of Shelby County. Mumford was summoned as a defendant and, following a hearing, the charges were dismissed and he resumed his duties as Assistant Principal. The parents of the student continued to pursue the matter and filed a complaint with the Department of Children’s Services (“DCS”), alleging that Mumford was a perpetrator of child abuse. On April 15, 1997, the Board of Education of the City of Memphis (“Board,” “Defendant,” or “Ap-pellee”) received a letter from DCS, which reads, in relevant part, as follows:

In accordance with State rule 1240-7-9-.09, DCS is notifying you that Clarence Mumford has been identified as the alleged perpetrator of child abuse in an indicated report that DCS has investigated. DCS has notified Mr. Mumford of the report and of the right to a hearing on the allegations. This information is confidential; therefore, you may not release it to anyone else.
It is our understanding that Clarence Mumford is in a caretaker, supervisory instructional, or treatment role with your agency, which constitutes an emergency situation as described in DCS rules. You must take immediate action to ensure that Clarence Mumford has no access to or contact with any child in the care of your agency until further notice by DCS.
If your agency does not take immediate action as described abofye], DCS will take action to suspend, revoke, or deny your agency’s license, if licensed by DHS. If DHS does not license you[r] agency, it will pursue other action necessary pursuant to TCA 71-3-530 in order to protect the children in your organization’s care (including seeking injunctive relief).
DCS will notify you[r] agency in writing of the final decision on the case, whether that is by administrative hearing, court order, or waiver of due process rights by the alleged perpetrator.

On April 21, 1997, the Board, acting through its Personnel Division, relieved Mumford of his duties, without pay, while the matter was resolved between Mumford and DCS. Following notification of his suspension, Mumford contested the DCS ruling and was afforded a hearing before the Administrative Law Judge, who made a preliminary ruling that the claim of child abuse had not been proved. The Administrative Law Judge was overruled by DCS’ Deputy Commissioner on March 23, 1998. Mumford appealed to the Chancery Court of Shelby County. On November 17, 1998, the trial court entered its Findings of Fact and Conclusions of Law, which overruled the action of the DCS Deputy Commissioner and reinstated the findings of the Administrative Law Judge. During the pen-dency of these appeals, Mumford procured employment with the Tunica County, Mississippi Board of Education. This employment was at a lower rate of pay than Mumford’s salary with Memphis City Schools.

On February 12,1999, the Board offered to reinstate Mumford. At that time, Mumford chose to finish the school year at Tunica. Consequently, the parties agreed that Mumford would limit any claim for back wages to the period ending on February 12, 1999. When Mumford made demand for reimbursement for lost wages for the period of his suspension, the Board refused to pay. On August 13, 2002, Mumford filed a “Complaint to Recover Unpaid Wages.” On February 11, 2003, the Board filed its Answer, in which it admits that the Board suspended Mumford from his position without pay, but denies liability for back pay under T.C.A. § 49-5-511.

The parties’ respective positions are set out in this “Joint Stipulation of Facts” as follows:

10. The Plaintiff seeks back pay and benefits in full for the entire time of his relief of duties from the Memphis City Schools system. He contends that his right to back wages and benefits is controlled by T.C.A. § 49-5-511 ... and that this sum should not be diminished by offsetting his earnings at Tunica, Mississippi.... It is the contention of the Board of Education that it took no action against the Plaintiff other than action that was required of it by a state agency and that it should not be responsible for any losses resulting from the rejected charges brought by the parents and by the Department of Children’s Services. It is the further position of the Board that, if any damages were to be awarded, it would be entitled to offset the earnings in Tunica for that entire period. The Defendant further contends that T.C.A. § 49-5-511 is inapplicable to this situation in that there have been no proceedings under the tenure law and that this section does not apply under the pleadings and proof in this case. Defendant further contends that the current interpretation of T.C.A. § 49-5-511, if it were deemed applicable to this case, is subject to review and reconsideration and should be changed to allow such offset.
11. It is the contention of the Plaintiff that the Department of Children’s Services (DCS) acted pursuant to T.C.A § 71-3-530 ... which code section clearly provides that in the case of an agency not licensed by or subject to licensure through the DCS the department may proceed to bring an action in the chancery court to enjoin the person the department deems responsible for abuse from continuing to provide care for children. Plaintiff further contends that the Defendant is not licensed by the DCS and is not subject to licensure and removing Plaintiff from his position as assistant principal was not required by law and was a personnel management decision by Defendant.

This matter was heard on March 9, 2004. On April 2, 2004, a Final Judgment was entered, which reads, in pertinent part, as follows:

... [I]t appears to the Court that the Plaintiff, Clarence Mumford, is entitled to back wages for the 1997-98 school year in the amount of $16,145.82 and for the 1998-99 school year in the amount of $8,715.64 for a total judgment of $24,861.46.
The Court finds that, under the circumstances of this case, the Plaintiff is not entitled to his further claims for summer work, vacation days, retirement contributions, or social security contributions but that all such claims, to the extent applicable, are included in the amount of the judgment set forth above. The Court further finds that, pursuant to the common law principles and principles of equity, the Defendant is entitled to offset the wages earned by the Plaintiff for the same time period while the Plaintiff was employed by ... the Tuni-ca, Mississippi School and that under the circumstances of this case, TCA 49-5-511 does not require the denial of such common law offset. The amount of the judgment as set out herein reflects this offset.
Based on the foregoing, the Court enters Judgment in favor of the Plaintiff, Clarence Mumford, and against the Board of Education of the Memphis City Schools in the amount of $24,861.46....

Mumford appeals and raises two issues for review as stated in his brief:

I. Did the Chancellor err in ruling that although the Plaintiff is entitled to back wages for the 1997-98 and 1998-99 school [years] that T.C.A. § 49-5-511 does not deny the Defendant the right to off-set against Plaintiffs lost wages the amounts that Plaintiff earned during that time period as an employee of the Tunica Mississippi School Systems.
II. Did the Chancellor err in denying the Plaintiff recovery of income he would have earned during the applicable time period for career ladder payments for summer work in the school system, vacation days, retirement contributions, and social security contributions due from the Defendant.

The Board raises the following additional issue in its brief: Whether a tenured teacher or assistant principal, who is barred from his duties as the result of a directive of a state agency, is entitled to recover back pay upon reinstatement.

The resolution of the issues in this case rests first on the question of whether T.C.A. § 49-5-511 is applicable given the facts of this case and, if applicable, whether and to what extent Mumford is entitled to recover for lost wages during his suspension. Construction of a statute and application of the law to the facts is a question of law for the court. See Sanifill of TN. v. TN. Solid Waste Disposal, 907 S.W.2d 807, 810 (Tenn.1995). As such, our review of the trial court’s order is de novo upon the record with no presumption of correctness accompanying the trial court’s conclusions of law. See Tenn. RApp. P. 13(d); Waldron v. Delffs, 988 S.W.2d 182, 184 (Tenn.Ct.App.1998); Sims v. Stewart, 973 S.W.2d 597, 599-600 (Tenn.Ct.App.1998).

T.C.A. § 49-5-511 (2002), under which Mumford sued to recover lost wages for the period of his suspension, reads, in relevant part, as follows:

(3) A director of schools may suspend a teacher at any time that may seem necessary, pending investigation or final disposition of a case before the board or an appeal. If vindicated or reinstated, the teacher shall be paid the full salary for the period during which the teacher was suspended.

T.C.A. § 49 — 5—511(a)(3).

Applicability ofT.CA. § 4.9-5-511

The Board asserts that T.C.A. § 49-5-511 is not applicable to the case at bar because Mumford was not suspended “pending investigation or final disposition of the case before the Board.” Relying on the words “before the Board,” the Board reasons that it cannot be held hable for Mumford’s lost wages since the disposition of the ease against Mumford was not within the Board’s control, it being a party neither to the General Sessions nor to the DCS proceedings.

In the Joint Stipulation of Pacts, the Board concedes that it acquiesced to the demands of the DCS letter. Because he did not demand a hearing before the Board, as was his right under T.C.A. § 49-5-512, Mumford, too, acquiesced to the DCS letter. In its brief, the Board asserts that it had no choice but to suspend Mumford since the Board was “under a statutory restraint pursuant to T.C.A. § 71-3-530.” T.C.A. § 71-3-530 (1995) reads, in relevant part, as follows:

(2) If the department determines that abuse, neglect, or sexual abuse has occurred and the person or agency fails to take appropriate action to prevent future abuse, neglect, or sexual abuse, the department shall take such action as may be necessary to revoke, suspend, or deny the agency’s license. If the person or agency is not licensed or not subject to licensure, the department may proceed to bring an action in the chancery court of the county of the defendant’s residence or the county in which the abuse, neglect, or sexual abuse occurred to enjoin the person or agency or any individual found by the department to have been responsible for the abuse, neglect, or sexual abuse from continuing to provide care for children on a full-time or part-time basis.

T.C.A. § 7-3-530(2).

Nothing in T.C.A. § 71-3-530 indicates that DCS can mandate the Board to suspend one of its employees. Rather, T.C.A. § 71-3-530 indicates that DCS “may proceed to bring an action ... to enjoin the person or agency or any individual found by the department to have been responsible for the abuse ... from continuing to provide care for children.... ” Short of a court order, it was not imperative that the Board suspend Mumford in response to DCS’ April 15, 1997 letter. The Board, however, stipulates to the fact that it “compli[ed] with that letter pending the ultimate outcome of the department [DCS].” In its brief, the Board asserts that “[t]his case has arisen primarily because the pattern of reversals following [DCS’] initial determination consumed more than a year and a half to arrive at an ultimate solution.... ” Because it was under no legal obligation to suspend Mumford based solely on DCS’ letter, at any time during the pendency of the DCS investigation and appeals process, the Board could have reinstated Mumford or could have conducted its own investigation of the allegations against him. Thus, the timeliness and ultimate disposition of this case could have been “before the Board” had the Board so chosen. However, the Board opted to await the final outcome of the DCS case. The fact that the Board acquiesced to DCS should not remove the Board from liability under T.C.A. § 49-5-511 since this decision represents a choice by the Board and not a legal mandate.

Damages

Having found that T.C.A. § 49-5-511 is applicable to this case, we now turn to the issue of whether and to what extent Mumford should recover thereunder. T.C.A. § 49-5-511 clearly states that, “[i]f vindicated or reinstated, the teacher shall be paid the full salary for the period during which the teacher was suspended.” The Board contends that the trial court was correct in allowing an offset against Mumford’s salary of the amount he earned while working in Tunica County. We disagree. In Jones v. Brown, 727 S.W.2d 497 (Tenn.1987), our Supreme Court held that T.C.A. § 49 — 5—511 (a)(3) means that the reinstated teacher is entitled to full salary with no offset allowed. See also Bates v. Deal, 728 S.W.2d 326 (Tenn.1987).

The parties stipulate that Mumford’s total compensation for the 1997-98 school year was $55,331.00, and that Mumford’s salary for the 1998-99 academic year, up to February 12, 1999, was $34,597.00. In addition, Mumford asserts that he lost $5,420.00 in career ladder payments over the two summers of his suspension, and that he is entitled to recover for sick days, vacation days, lost contributions to his retirement fund, and social security benefits on his lost wages.

T.C.A. § 49-5-511 clearly limits recovery to “full back pay at the rate of a teacher’s salary,” Jones, 727 S.W.2d at 499, and there is no allowance for the recovery of benefits. Consequently, we find that Mumford is entitled to recover $55,331.00 for the 1997-1998 school year and $34,597.00 for the 1998-1999 school year. However, under the plain language of the statute, he is not entitled to recover for career ladder benefits, vacation days, sick days, retirement contribution, or social security contribution.

For the foregoing reasons, we modify the Judgment of the trial court to reflect an award of damages in favor of Mumford and against the Board in the amount of $89,928.00 and affirm the Judgment as modified. Costs of this appeal are assessed against the Appellee, Board of Education of the City of Memphis.

      . The term “teacher,” as used in this statute includes "teachers, supervisors, principals, director of schools and all other certificated personnel employed by any local board of education, for service in public, elementary and secondary schools in Tennessee....” T.C.A. § 49-5-501(10) (2002).

      . T.C.A. § 71-3-530 was repealed by Acts 2000, ch. 981 § 1, effective July 1, 2000. The DCS letter, which references this statute was written on April 15, 1997 and is set out supra.


author: COCHRAN, J., KELLER, P.J.,

text:
    Ex parte Patrick Gene THOMPSON, Applicant.
    No. AP-75248.
    Court of Criminal Appeals of Texas.
    Sept. 28, 2005.
    Kelly L. Gatewood, Huntsville, for Appellant.
    Jeri Yennek, D.A., Angleton, for State.
   OPINION

COCHRAN, J.,

delivered the opinion of the Court

in which PRICE, WOMACK, JOHNSON, KEASLER, HERVEY, and HOLCOMB, JJ„ joined.

We file and set this habeas corpus case to decide whether applicant’s previous first-degree-felony burglary conviction makes him ineligible for release on mandatory supervision for his 2002 second-degree-felony burglary conviction. We find that it does not, and, therefore, we grant relief.

I.

Applicant is currently serving a four-year sentence for a second-degree-felony burglary committed on October 10, 2002. Applicant alleges that the Texas Department of Criminal Justice, Correctional Institutions Division (TDCJ-CID) is wrongly denying him consideration for release on mandatory supervision under Section 508.149 of the Government Code on this present or holding offense due to his prior conviction for first-degree-felony burglary. TDCJ-CID states that applicant is “not eligible for mandatory supervision due to prior conviction of 1st Degree Burglary of a Habitation under Cause # 18,704 as set out in [Tex. Gov’t Code § 508.149(a) ].” The trial court agreed with TDCJ-CID’s position.

II.

The statute in effect when the holding offense is committed determines an inmate’s eligibility for release on mandatory supervision or parole. When applicant committed his holding offense on October 10, 2002, Section 508.149(a) was in effect and applicable to him. An inmate “may not be released to mandatory supervision if the inmate is serving a sentence for or has been previously convicted of’ an offense enumerated in Section 508.149(a). Applicant's holding conviction for burglary is not included in the list of offenses enumerated in Section 508.149(a). However, first-degree burglary, applicant’s prior conviction, is on that list.

The question presented here, left unanswered by this Court in Ex parte Mabry, is whether applicant’s prior 1987 conviction for burglary in the first-degree is an offense enumerated in Section 508.149(a). The first-degree-felony offense of burglary is included in the list of enumerated offenses provided in Section 508.149(a)(13). At first glance, as TDCJ-CID and the trial court have found, applicant is deemed ineligible for release on mandatory supervision because he has been previously convicted of an enumerated offense. But, in this case, a first glance is deceiving. Applicant’s previous conviction was for a November 7, 1987, burglary of a habitation with intent to commit theft. At that time, all burglaries of a habitation were first degree felonies, but only those punished under Penal Code Subsections 30.02(d)(2) (“any party to the offense is armed with explosives or a deadly weapon”), or (d)(3) (“any party to the offense injures or attempts to injure anyone in effecting entry or while in the building or in immediate flight from the building”), were ineligible for mandatory supervision. Appellant was not punished under 30.02(d)(2) or (3); as such, applicant was eligible for release on mandatory supervision at the time he committed the instant offense.

Furthermore, at the time applicant committed his holding offense in 2002, only those burglaries of a habitation which involved the intent to commit (or actual commission of) some felony other than theft were classified as first degree felonies. It is the 2002 list, not the 1987 list, that determines applicant’s eligibility for mandatory supervision. As we held in Ex parte Hall, “the prior conviction must be on the current list.”

As stated above, the mandatory supervision statute that applies to applicant’s holding offense provides: “An inmate may not be released to mandatory supervision if the inmate is serving a sentence for or has been previously convicted of ... a first degree felony under Section 30.02, Penal Code.” But the offense of burglary of a habitation with intent to commit theft is not included in the 2002 Section 508.149(a) list of offenses which render an inmate ineligible for release on mandatory supervision.

Thus, the following question arises: Does “a first degree felony under Section 30.02, Penal Code” on the list of prior convictions ineligible for release on mandatory supervision mean “first degree felony” at the time the prior conviction was committed in 1987 (applicant would be ineligible for release) or at the time he committed the present offense in 2002 (applicant would be eligible for release)? In Ex parte Mabry, we suggested it would be the latter. In that case, we concluded that because Mabry was convicted of his holding offense (a first-degree-felony burglary of a habitation with intent to commit theft) in 1990, the current version of Section 508.149 did not apply to him. And, because of the specific wording of the statute at the time of his offense, he was not barred from release on mandatory supervision by that law. But we also noted that “[e]ven if we apply the current version of the law, [Mabry] remains eligible for mandatory supervision because his burglary conviction was based on intent to commit theft, which is exempted.” We now make this alternative holding express.

Literally applying the words of Section 508.149(a) — “[a]n inmate may not be released to mandatory supervision if the inmate is serving a sentence for or has been previously convicted of ... a first degree felony under Section 30.02” — applicant would be ineligible for release on mandatory supervision based on criminal conduct which itself has never been classified as “mandatory supervision ineligible.” We agree with applicant that “[t]his result is absurd and is contrary to the legislative intent of closing the door of mandatory supervision on those offenders who had previously been convicted of a ‘violent offense which is ineligible for mandatory supervision’ since this class of offenders had always previously been eligible for mandatory supervision.”

As we explained in Ex parte Ervin, the legislature has, over time, demonstrated an interest in making inmates who have committed serious crimes in the past ineligible for mandatory supervision release. These “[l]egislative changes were intended ... to prevent those previously convicted of crimes ineligible for mandatory supervision from eligibility for any future conviction, regardless of the current offense.”

In Ervin, we held that the legislature could not have reasonably intended to make inmates convicted under the predecessor statute to the present sexual assault law eligible for mandatory supervision release, while making ineligible those convicted of the same conduct under the current statutory title. That is, a rape by any other statutory name is still a rape. Eligibility for release on mandatory supervision should be determined by the “essential characteristics” of the crime, not its statutory title. We therefore held that the Section 508.149(a) list includes the predecessors to the enumerated statutory offenses that currently make an inmate ineligible for mandatory supervision release. We looked beyond the title of the prior conviction to the criminal conduct itself and held that, although the explicitly titled offense of “sexual abuse of a child” was not on the current Section 508.149(a) list, the criminal conduct of sexually abusing a child was. Thus Ervin was ineligible for release on mandatory supervision because the criminal conduct of “sexual abuse of a child” is on the list of offenses which render an inmate ineligible for release on mandatory supervision. This holding implemented the legislative intent to prohibit those who have been previously convicted of offenses consisting of criminal conduct which makes them ineligible for release on mandatory supervision from eligibility for any subsequent felony crime. We must do the same thing in this case, but in reverse.

As in Ervin, we look to whether the essential characteristics (the criminal conduct, mental state, and accompanying circumstances) of the previous conviction, not the mere title, are on the current list. Whether that criminal conduct is on the list determines whether the offense is one that renders an inmate ineligible for release on mandatory supervision under Section 508.149(a). Although the titled offense of “first degree felony burglary” is on the Section 508.149(a) list, the criminal conduct of burglary of a habitation with the intent to commit theft is not. Therefore, under Ervin, applicant is eligible for mandatory release on his holding offense.

Applicant is entitled to relief. TDCJ-CID shall treat applicant as an inmate eligible for release on mandatory supervision. Copies of this opinion shall be sent to TDCJ-CID and the Board of Pardons and Paroles.

KELLER, P.J., filed a concurring opinion.

MEYERS, J., did not participate.

KELLER, P.J.,

concurring.

The question we confront today is whether a prior 1987 conviction for the offense of “burglary of a habitation with the intent to commit theft,” a first degree felony at that time, renders applicant ineligible for mandatory supervision on the new offense for which he is currently incarcerated. I agree with the Court that it does not, but I would analyze the issue a little differently.

A person’s eligibility for mandatory supervision is determined by the statute in effect at the time the inmate’s holding offense was committed. Because applicant’s holding offense was committed in 2002, then, the 2002 version of § 508.149(a) applies. That statute provides in relevant part: “An inmate may not be released to mandatory supervision if the inmate is serving a sentence for or has been previously convicted of ... a first degree felony under Section 30.02, Penal Code.”

We have already decided that for a prior conviction to render an inmate ineligible for mandatory supervision, the prior conviction must be on the current list of ineligible offense. The question here is: what is meant by “an offense on the current list?” More specifically, what does “a first degree felony under Section 30.02, Penal Code” refer to?

The answer to that question is found in Government Code § 311.027, which states: “Unless expressly provided otherwise, a reference to any portion of a statute or rule applies to all reenactments, revisions, or amendments of the statute or rule.” In addressing this provision, our sister court, the Texas Supreme Court, explained: “When one statute references another statute, one must look to the referenced statute to understand the referencing statute.... [W]hen the referenced statute is amended or revised, the referencing statute incorporates the amendments or revisions.” In accordance with this reasoning, the Supreme Court held that a reference in the juvenile determinate sentencing statute (Family Code § 53.045) to the murder statute (Penal Code § 19.02) applied to the version of the murder statute in existence when the offense was committed (for which the juvenile was being sentenced), which was November 1994. As a result, the post-September 1994 treatment of “sudden passion” applied to the juvenile sentencing proceeding.

So, the legislature has specifically prescribed how to treat one statute’s reference to another statute. The referencing statute is essentially “updated” by any changes to the referenced statute. Deciding which version of a reference statute applies is a simple matter of determining which version of the referencing statute applies.

Here, the 2002 version of the referencing statute (§ 508.149(a)) applies because applicant committed his holding offense in 2002. So the 2002 version of the referenced statute (Penal Code § 80.02) is the applicable statute. In 2002, burglary of a habitation with intent to commit theft was not a first degree felony; rather, it was a second degree felony. Consequently applicant’s offense is not on the list of ineligible offenses, and he is entitled to relief.

      . Ex parte Hall, 995 S.W.2d 151, 152 (Tex.Crim.App.1999).

      . Tex Gov’t Code § 508.149(a) (2002).

      . Id.

      . 137 S.W.3d 58 (Tex.Crim.App.2004).

      . Tex Gov’t Code § 508.149(a)(13) ("a first degree felony under Section 30.02, Penal Code”).

      . See Tex Penal Code § 30.02(d)(1973) (providing burglary is a "felony of the first degree if ... the premises are a habitation”).

      . See TexCode Crim. Proc. art. 42.18, § 8(c)(1987) {repealed); TexCode Crim. Proc. art. 42.12, § 3(g)(1987).

      . See Tex. Penal Code § 30.02(c) & (d)(2002) (stating that burglary is a "felony of the second degree if committed in a habitation” but a "felony of the first degree if ... (1) the premises are a habitation; and (2) any party to the offense entered the habitation with intent to commit a felony other than felony theft or committed or attempted to commit a felony other than felony theft”).

      . Ex parte Hall, 995 S.W.2d at 151 (noting that Section 508.149(a) specifies that inmates with prior convictions for certain offenses are ineligible for mandatory supervision; recognizing that the list of offenses has changed over time; stating that an inmate’s eligibility for mandatory supervision is determined by whether his prior conviction is on the list as it existed at the time he committed his current or holding offense rather than whether it was on the list at the time that the prior offense was committed).

      . 137 S.W.3d 58 (Tex.Crim.App.2004).

      . Mat 58-60.

      . Id.

      . Id. at 60.

      . See id.

      . Ex parte Ervin, - S.W.3d -, 2005 WL 767846, 2005 Tex.Crim.App. LEXIS 518 (Tex.Crim.App.2005).

      . Ervin, - S.W.3d at -, 2005 WL 767846, 2005 Tex.Crim.App. LEXIS 518 at *5.

      . Id. at 459, 2005 WL 767846, *6-*7.

      . Id. at 460, 2005 WL 767846, *7-*8.

      . See United States v. Cole, 418 F.3d 592, 597 (6th Cir.2005) (adopting an "essential characteristics” test to determine whether a prior offense is "similar to” those enumerated offenses that the sentencing guidelines state may not be counted as part of a defendant’s criminal history score; stating that the "essential characteristics” test "simply considers whether the underlying conduct of the offenses is nearly corresponding; resembling in many respects; somewhat alike; having a general likeness” regardless of the titles of the two offenses or their legal elements) (internal quotations omitted); see also United States v. Perez de Dios, 237 F.3d 1192, 1197-99 (10th Cir.2001) (setting out and applying "essential characteristics” test).

      . Id.

      . Id. at *7.

      . Mat *8.

      . By current, we mean the list at the time of the holding offense.

      . The classification committee has already determined that applicant does not have any other prior convictions which might bar his release on mandatory supervision.

      . Ex parte Hall, 995 S.W.2d 151, 152 (Tex.Crim.App.1999).

      . § 508.149(a)(13).

      . Hall, 995 S.W.2d at 152.

      . Tex.Gov’t Code § 311.027.

      . In re 959 S.W.2d 185, 186 (Tex.1998).

      . Id. at 185-86.

      . Id. at 186. Amendments effective September 1994 eliminated the offense of voluntary manslaughter and made "sudden passion” a punishment issue, on which the defendant carried the burden of proof, in a murder prosecution. See Id.