text:
    Jimmy HEAROD, Jr. and Nikki Hearod, Plaintiffs-Respondents, v. Margie BAGGS, Defendant-Appellant.
    No. 26703.
    Missouri Court of Appeals, Southern District, Division Two.
    Aug. 23, 2005.

      Corey M. Swischer, Nevada, MO, for Appellant.
    James V. Nichols, Lamar, MO, for Respondents.
   JEFFREY W. BATES, Chief Judge.

Plaintiffs Jimmy and Nikki Hearod (“the Hearods”) brought an ejectment action against defendant Margie Baggs (“Margie”). In Margie’s answer, she asserted the affirmative defense of adverse possession. The Hearods filed a motion for summary judgment, which the trial court granted. Margie contends summary judgment was inappropriate because genuine issues of material fact exist that require a trial to resolve. We agree. The judgment of the trial court is reversed, and the case is remanded.

I. Facts and Procedural History

In February 2004, the Hearods filed a petition for ejectment against Margie. The petition alleged that: (1) the Hearods were the fee simple owners of a tract of land identified by its legal description; (2) Margie resided in a mobile home located upon this real estate; (3) she had refused the Hearods’ demand to remove the mobile home from the premises; and (4) the Hearods were sustaining $10.00 per day in damages due to Margie’s unlawful possession of the real estate. In due course, Margie filed an answer admitting that she resided in a mobile home on the real estate. All other allegations in the petition were denied. The answer also contained a counterclaim alleging that Margie had acquired ownership by adverse possession of a lot, 100 feet by 75 feet in dimension, on which her mobile home was located. Margie asked the trial court to enter a judgment quieting title to this lot to her.

In June 2004, the Hearods filed a motion for summary judgment. The motion alleged that the Hearods were entitled to summary judgment because “[tjhere is no genuine issue of material fact in that [Margie] has admitted that her entry upon and use of the land was permissive; [Margie] has never paid real estate taxes on the property and [Margie] has affirmatively represented to the Barton County Assessor that she does not own the real estate.” A five-paragraph statement of “uncontro-verted material facts” was attached to the motion:

1. [Margie] placed her mobile home upon the real estate when Vernon Baggs and Relia Baggs, [Margie’s] son and daughter in law, were owners of the property and with the knowledge and consent of Vernon and Relia Baggs. (See Deposition page 8, lines 17-25)
2. That [Margie] remained upon the real estate with the consent of the record owners until on or about October 13, 2003. (See Deposition page 11, lines 17-25)
3. That [Margie] has never paid the real estate taxes on the real estate. (See Deposition page 10, lines 5-10)
4. That [Margie’s] assessment sheet submitted by [Margie] to the Barton County Assessor affirmatively states that [Margie] does not own or claim to own the real estate, but that Relia Baggs is the owner of the real estate. (See Deposition page 11 and Deposition Exhibit 1)
5. That [Margie] admitted in her deposition that she did not own the real estate. (See Deposition page 11, lines 6-7)

Copies of Margie’s deposition and her deposition exhibits were attached to the Hearods’ motion.

In Margie’s response, she asserted that summary judgment could not be granted because there was a genuine issue of material fact as to whether the Hearods’ predecessors in interest actually had title to the lot where Margie resided in her mobile home. The response included a list of the following “controverted material facts” upon which Margie relied in opposing the motion for summary judgment:

1. At the time [Margie] placed her trailer on the real estate in question, her son, Vernon Baggs, had led [Margie] to believe that he had purchased the real estate in question for [Margie] using proceeds from the sale of [Margie’s] farm and real estate in Kansas. (See page 7 beginning at line 5 to line 16 on page 8).
2. Vernon Baggs led [Margie] to believe that he was renting the property in question from his Mother, [Margie], and that he in fact needed her permission to stay on the property. In lieu of monthly rent, there was an agreement that Vernon Baggs would pay all real estate taxes on the property. (See page 9, line 19 to line 25)[.]
3.[Margie] had no knowledge that any other person, excluding herself, had a claim of right to the title to the property in question until her son, Vernon Bagg’s [sic] death, when her other children went to review the real estate records to determine whether their brother owned any real estate. Only then did [Margie] and her family learn that [Margie] did not have any ownership interest in the property in question according to the real estate records. (See page 15 line 2 to 24).

Margie’s response was further supported by five affidavits obtained from members of her family. Margie’s deposition testimony and the five affidavits established, for the purpose of opposing the motion for summary judgment, the facts set out below.

Margie’s husband died in 1983. Upon his death, Margie became the sole owner of a farm in Barton County, Missouri (“Farm No. 1”). Her son, Vernon, lived in a trailer house on Farm No. 1 with his mother’s permission. Margie was not sophisticated in real estate or business matters, and she relied on Vernon to handle such matters for her. In 1986, Margie decided she wanted to sell Farm No. 1 and move to Kansas. Vernon helped Margie sell the farm, and he kept the proceeds from the sale himself. The ostensible purpose for doing so was to keep the money in a lockbox in his home so it would be safe. Vernon then helped his mother purchase a farm in Reno County, Kansas (“Farm No. 2”), using the proceeds from the sale of Farm No. 1. Farm No. 2 had a house on it. Vernon moved into the house. Margie bought a mobile home and placed it on the property to use as her residence.

In 1987, Margie wanted to return to Barton County, Missouri. Farm No. 2 was sold, and the proceeds of the sale were used to purchase another farm in Barton County, Missouri (“Farm No. 3”). Vernon told Margie that she owned Farm No. 3. Margie agreed to let Vernon live in a house on Farm No. 3 if he would pay the real estate taxes on the house and land in lieu of rent. Margie would be responsible only for the personal property taxes and utilities for her trailer house, which she purchased and moved onto Farm No. 3 to use as her residence. Vernon told members of his family that “everything belonged to mom” and explained their arrangement concerning Vernon’s obligation to pay the real estate taxes instead of rent. Pursuant to that arrangement, Vernon did pay the real estate taxes on Farm No. 3 each year when they were due. Margie paid her utilities and personal property taxes. Margie resided in her mobile home on Farm No. 3, in the belief that she owned the entire farm, for the next 13 years. She lived in the trailer alone, and she kept the surrounding lot mowed.

At some point not disclosed by the record, Vernon was mortally injured in a house fire. He died of his injuries on March 1, 2001. About one week before Vernon died, Margie attempted to transfer title of all property to which she had added Vernon’s name back into Margie’s name alone to avoid probate. The day before Vernon died, Margie discovered that Farm No. 3 had been titled in the names of Vernon and Relia. The farm had never been titled in Margie’s name at any time.

After Vernon died, Margie continued to live in her mobile home on Farm No. 3. In October 2003, Rella’s attorney sent Margie a notice that she had to vacate the premises within approximately 30 days because Farm No. 3 had been sold. Margie, who was 82 years old, refused to do so. In February 2004, the Hearods filed their ejectment action, which led to the trial court’s disposition of the matter by summary judgment. The trial court decided that “[Margie] as a matter of law cannot establish title by adverse possession in that [Margie’s] entry upon and use of the property was permissive.” This appeal followed.

II. Standard of Review

In determining whether the trial court properly granted summary judgment, we employ a de novo standard of review. City of Springfield v. Gee, 149 S.W.3d 609, 612 (Mo.App.2004). Therefore, we do not defer to the trial court’s order granting summary judgment. Murphy v. Jackson Nat’l Life Ins. Co., 83 S.W.3d 663, 665 (Mo.App.2002). Instead, we use the same criteria the trial court should have employed in initially deciding whether to grant summary judgment. Stormer v. Richfield Hospitality Services, Inc., 60 S.W.3d 10, 12 (Mo.App.2001). “The propriety of summary judgment is purely an issue of law.” ITT Commercial Finance Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We view the record in the light most favorable to the party against whom judgment was entered, and we accord that party the benefit of all inferences which may reasonably be drawn from the record. Id.

III. Discussion and Decision

Rule 74.04 distinguishes between motions for summary judgment filed by a “claimant” and by a “defending party.” Rule 74.04(a), (b); ITT, 854 S.W.2d at 380. In deciding a movant’s entitlement to judgment as a matter of law, it makes a significant difference whether the movant is a claimant or a defending party. ITT, 854 S.W.2d at 381. A “claimant” is defined as “a party seeking to recover upon a claim.... ” Rule 74.04(a); see ITT, 854 S.W.2d at 380. Here, the Hearods were claimants because they were seeking to eject Margie from real estate the Hearods allegedly had a right to possess. Margie denied that the Hearods owned the property, and she also asserted the affirmative defense of adverse possession against them. Accordingly, the Hearods had to meet the following requirements in order to be entitled to judgment as a matter of law:

A claimant must establish that there is no genuine dispute as to those material facts upon which the claimant would have had the burden of persuasion at trial. Additionally, where the defendant has raised affirmative defenses, the claimant’s right to judgment depends as much on the non-viability of the affirmative defenses as it does on the viability of the claimant’s claim. A claimant moving for summary judgment in the face of affirmative defenses must also establish that each affirmative defense fails as a matter of law. However, as to each defense, the claimant need only establish that any one of the facts necessary to support the defense cannot be established.

Stormer, 60 S.W.3d at 12 (citations omitted). The trial court erred in granting summary judgment because the Hearods failed to meet either of the foregoing requirements.

First, the Hearods’ motion for summary judgment failed to establish as a matter of law that they were entitled to ejectment. A plaintiff is entitled to recover in an ejectment action by showing: (1) the defendant possessed the claimed premises at the commencement of the action; and (2) the plaintiff had the right of possession thereof. Jansen v. Pobst, 922 S.W.2d 43, 47-48 (Mo.App.1996); § 524.080. A prima facie case for ejectment can be established — via admissions in the pleadings, interrogatories, an affidavit or other competent evidence — by showing: (1) proof of title in the plaintiff; and (2) defendant’s retention of possession of said property under no valid right after a demand for surrender has been made. See Gal v. Bishop, 674 S.W.2d 680, 682-83 (Mo.App.1984). In this case, the Hearods alleged in their petition that they were the fee simple owners of the land where Margie’s mobile home was located. She denied that allegation. The record before us contains nothing that proves the Hearods held title to the land upon which Margie’s mobile home was located. Therefore, the Hearods failed to prove, as a matter of law, their right to possession of the real estate described in their petition.

Second, there is a genuine issue of material fact involving Margie’s affirmative defense. In order for Margie to establish that she acquired title by adverse possession to the lot on which her mobile home was located, Margie had the burden of proving that her possession of the lot was: “(1) hostile, that is, under claim of right; (2) actual; (3) open and notorious; (4) exclusive; and (5) continuous, over the statutory period.” City of South Greenfield v. Cagle, 591 S.W.2d 156, 159 (Mo. App.1979). The statutory period for acquiring title by adverse possession is 10 years. § 516.010. When the Hearods moved for summary judgment, they challenged only Margie’s ability to prove the first element: hostile possession. The Hearods alleged that Margie’s possession was permissive. In Margie’s response, she asserted that there was a genuine factual dispute as to whether her possession of the lot was hostile or permissive. We agree.

A genuine issue exists when the record contains competent materials that show “two plausible, but contradictory, accounts of the essential facts.” ITT, 854 5.W.2d at 382; Deer Run Property Owners Ass’n v. Bedell, 52 S.W.3d 14, 17 (Mo. App.2001). The five facts upon which the Hearods relied in their motion do not establish, as a matter of law, that Margie’s possession was permissive.

Paragraphs 1 and 2 of the Hearods’ motion for summary judgment asserted that Margie had placed her mobile home upon the real estate owned by Vernon and Relia and remained there with their knowledge and consent until October 2003. In Margie’s deposition, she admitted these statements were true. Nevertheless, that does not render Margie’s possession of the lot permissive as a matter of law.

In State ex rel. Edie v. Shain, 348 Mo. 119, 152 S.W.2d 174 (1941), our Supreme Court held that the requirement of hostile possession is satisfied if a person intentionally occupies real estate in the mistaken belief that he owns it:

The principle, as stated in all of our prior decisions, may be reduced to this: If the possessor occupies the land in question intending to occupy that particular piece as his own, his occupancy is adverse. It is not necessary that he intend to take away from the true owner something which he knows belongs to another, or even that he be indifferent as to the facts of the legal title. It is the intent to possess, and not the intent to take irrespective of his right, which governs. Possession is a legal concept. It involves two things: A present or, in the case of constructive possession, a past ability to control the thing possessed plus an intent to exclude others from such control. Or, in the language sometimes used in the cases, to exercise dominion over the object possessed. One may have such an intent in the case of property actually belonging to another, because he intentionally wants to take it away from the owner. But he may also have this intent because he is mistaken as to the facts of legal ownership.

Id. at 176-77. In Margie’s deposition, she gave the following testimony:

Q. Who owned the real estate when you put [the mobile home] there?
A. At the time I thought I did. My son [Vernon] had told me it was mine, but I did not know until my son died that he had only his name and his wife’s on it.

Margie also presented the trial court with affidavits from five family members verifying that Vernon had told them the farm belonged to Margie.

We are required to view the record in a light most favorable to Margie, the non-moving party. So viewed, the record would support a finding by the trier of fact that Margie moved her mobile home onto the lot on Farm No. 3 in the mistaken belief that she owned the property and that her ownership interest was accurately reflected on the deed to the property. That being the case, the issue of hostility was for the jury to decide. See Barton v. Pauly, 350 S.W.2d 748, 751-52 (Mo.1961).

Paragraph 8 of the Hearods’ motion for summary judgment asserted that Margie did not pay real estate taxes on Farm No. 3. Again, Margie conceded this was true in her deposition, but she explained that “[w]hen we moved on that place my son [Vernon] asked me if he could pay the taxes, the real estate taxes, that would be their rent, you know. Every year instead of paying rent by the month they would pay the taxes on the real estate and that’s what we agreed to.” Payment of taxes is not conclusive on the issue of whether a person has acquired ownership of property by adverse possession. Brown v. Evans, 182 S.W.2d 580, 583 (Mo.1944); Kohler v. Bolinger, 70 S.W.3d 616, 618 n. 1 (Mo.App.2002). This principle of law is particularly apropos here because Margie’s testimony would support an inference by the trier of fact that Vernon and Relia agreed to pay the real estate taxes to prevent Margie from discovering how the real estate was actually titled.

Paragraphs 4 and 5 of the Hearods’ motion for summary judgment asserted that Margie did not claim to own the real estate when she filled out her 2004 Barton County tax assessment form. In this form, Margie stated that: (1) she did not claim to own any real property; and (2) Relia owned the real estate where Margie’s trailer was located. We do not find these statements sufficient to support a summary judgment against Margie. Viewed most favorably to Margie, the record would support a finding by the trier of fact that Margie was in hostile, actual, open and notorious, exclusive and continuous possession of the lot on which her trailer was located from 1987 through 1997. Once that 10-year time period expired, she would have been vested with title to the lot. Lancaster v. Neff, 75 S.W.3d 767, 772 (Mo.App.2002); Kohler, 70 S.W.3d at 619. At most, the contrary statements in the assessment form constitute an evidentiary admission, which is not binding on Margie. See, e.g., Peace v. Peace, 31 S.W.3d 467, 471 (Mo.App.2000); Hammer v. Waterhouse, 895 S.W.2d 95, 101 (Mo.App.1995). The tax form was not filed until January 2004. At that point, Relia had claimed ownership of Farm No. 3 and sold the property. The affidavits from Margie’s family members stated that Margie was an 82-year-old woman who was unsophisticated in business and real estate matters. It is reasonable to infer that Margie may not have understood the difference between titular ownership and ownership by adverse possession. In any event, it is undisputed that Margie refused Rella’s October 2003 demand to vacate the premises. Thereafter, Margie resisted the efforts of the Hearods to eject her from the property. Regardless of what Margie stated in the tax assessment form, her actions support the inference that her possession of the lot was hostile, rather than permissive.

In conclusion, the issue of whether Margie’s possession of the lot was hostile or permissive presents a question of intent. See Brinner v. Huckaba, 957 S.W.2d 491, 495 (Mo.App.1997). “It has been consistently held that cases in which the underlying issue is one of motivation, intent, or some other subjective fact are particularly inappropriate for summary judgment.” Ganaway v. Shelter Mut. Ins. Co., 795 S.W.2d 554, 562 (Mo.App.1990). So it is here. The record demonstrates that there is a genuine issue of material fact as to Margie’s intent. Accordingly, the. trial court erred in granting the Hearods’ motion for summary judgment. See Crowe v. Horizon Homes, Inc., 116 S.W.3d 618, 622 (Mo.App.2003). Margie’s point on appeal is granted. The trial court’s judgment is reversed, and the case is remanded.

GARRISON and BARNEY, JJ., Concur.

      . Since other members of the Baggs family are involved in the relevant events, we refer to the defendant as "Margie.” We refer to her son, Vernon Baggs, as "Vernon.” We refer to Vernon’s wife, Relia Baggs, as "Rel-ia.” We use these persons' given names for purposes of clarity; no disrespect is intended.

      . The tract of land described in the Hearods' petition was approximately 75 acres in size. The lot was located on this land, which the Hearods allegedly purchased from Relia.

      . In August 2004, the trial court granted a partial summary judgment disposing of all issues except the Hearods' request for damages. In November 2004, the Hearods filed a voluntary dismissal of this aspect of their ejectment claim, which made the trial court’s August judgment final for purposes of appeal.

      . All references to rules are to the Missouri Court Rules (2005).

      . All references to statutes are to RSMo (2000).

      . This principle of law has been repeatedly reaffirmed. See, e.g., Boeckmann v. Fitzpatrick, 491 S.W.2d 524, 527 (Mo. 1973); Hedgpeth v. Maddux, 366 S.W.2d 314, 316-17 (Mo. 1963); Barton v. Pauly, 350 S.W.2d 748, 751-52 (Mo. 1961); Mooney v. Canter, 311 S.W.2d 1, 4-5 (Mo.1958); Peterson v. Harpst, 247 S.W.2d 663, 666-67 (Mo. 1952).


source: Caselaw Access Project

author: DAVID R. FARMER, J.,

license: Public Domain

text:
    Clay MANLEY v. THE AUTOMOBILE INSURANCE COMPANY OF HARTFORD, CONNECTICUT.
    Court of Appeals of Tennessee, at Nashville.
    March 3, 2005 Session.
    April 22, 2005.

      Arthur E. McClellan, Gallatin, Tennessee, for the appellant, The Automobile Insurance Company of Hartford, Connecticut.
    John R. Jacobson and William D. Martin, Nashville, Tennessee, and Taylor A. Cates, Memphis, Tennessee, for the appel-lee, Clay Manley.
   OPINION

DAVID R. FARMER, J.,

delivered the opinion of the court,

in which ALAN E. HIGHERS, J. and HOLLY M. KIRBY, J., joined.

This appeal arises from a claim for homeowner’s insurance benefits. In 1998, a tornado damaged a home in East Nashville. The owner of the home held an insurance policy that provided coverage for guaranteed replacement cost above the policy limit, once repairs had been completed. After the insurer had paid the owner the actual cash value of the damage, the owner sold the home to the plaintiff for $80,000. Along with the sale, the owner assigned to the plaintiff the rights to any claims or proceeds under the insurance policy. The plaintiff, without making any repairs, began a process of attempting to collect supplemental proceeds under the policy. After the insurer failed to respond to the plaintiffs demand for an appraisal, the plaintiff submitted two sworn statements in proof of loss, claiming a total of $405,072.93 in replacement costs. The insurer rejected the plaintiffs proofs of loss, and this suit followed. Following a jury trial, the trial court entered judgment in favor of the plaintiff for $405,072.93, in addition to $35,000 in damages for bad faith. Because we find that the judgment entered by the trial court was the product of an inconsistent jury verdict, we vacate and remand.

I. Facts and Procedural BackgROund

On April 16, 1998, a tornado passed through Nashville, Tennessee damaging a home owned by Robert and Mary Faye Holt (collectively the “Holts”), located at 1715 Eastland Avenue in East Nashville. The Holts maintained a homeowners’ insurance policy (the “Policy”) for their residence (the “Property”) with the Appellant, The Automobile Insurance Company of Hartford, Connecticut (“Hartford”). Although the Policy provided a coverage limit of $93,000 for the “dwelling,” the Policy also contained a “Home Replacement Cost Guarantee” endorsement, which allowed the insured to recover the full amount required to repair or replace the loss, once repairs were completed.

Soon after the tornado struck, the Holts retained a public insurance adjuster, Phil Breeden & Associates (“Breeden”), to assist them in the preparation and presentation of their claim to Hartford. By letter dated April 27, 1998, Breeden notified Hartford that the Holts had retained Bree-den and requested that Hartford direct further correspondence directly to him. Included with the letter was a “Notice of Loss,” accompanied by a “Public Adjusters Notice and Loss Payable Endorsement.” On July 23, 1998, in what represented the actual cash value payment of the Holts’ loss, Hartford issued two checks to the Holts. One check in the amount of $15,149.59 represented the personal property loss, and a check in the amount of $34,544.07 represented the damage to the dwelling. Hartford did not obtain a full release under the policy as a condition for these payments. Although Hartford issued a $34,544.07 check for the depreciated value of the property damage, Breeden stated in his testimony that he and Hartford negotiated replacement costs of $40,946.40. In its letter which accompanied the actual cash value payment to the Holts, Hartford stated that depreciation was recoverable upon completion of repairs and presentation of receipts. Besides replacing windows and covering the damaged roof with a tarp, the Holts never made any substantial repairs to the Property.

During the summer of 1998, the Appel-lee, Clay Manley (“Mr. Manley”), approached Mr. Holt and spoke with him about representing the Holts with their insurance claim on the Property. At the time, Mr. Manley was a principal in Ho-warth, Keys & Manley, Inc. (“HKM”), a firm of public insurance adjusters. Mr. Holt informed Mr. Manley that the Holts were not interested in his services because the Holts had retained Breeden to assist them with their claim. At some point thereafter, the Holts contacted a real estate agent about selling the Property. Mr. Manley then expressed interest in purchasing the Property, and Mr. Holt quoted him a selling price of $60,000. After reviewing the Policy and discovering that it provided guaranteed replacement cost coverage, Mr. Manley offered Mr. Holt $80,000 for the Property. On August 12, 1998, Mr. Manley and the Holts entered into an “as is” contract for the sale of the Property with a purchase price of $80,000. In a separate document (the “Assignment”) executed along with the sale, the Holts assigned to Manley their rights and interests to any claims or proceeds under the Policy. Closing took place on August 28,1998, and the Holts conveyed the Property by warranty deed to Mr. Manley.

Shortly after he purchased the Property, Mr. Manley enlisted HKM to represent him in making a supplemental claim on the Policy. By letter dated September 1, 1998 and an attached “appraisal notice,” HKM notified Hartford that Mr. Manley was “invokfing] the appraisal provision of the policy.” In the September 1, 1998 letter, HKM also made the following request:

Your insured has requested that I immediately ask you to issue payment for the amount, which you have offered them on this loss, which represents the undisputed portion of the claim. Please forward payment directly to your insured immediately, inasmuch as they need the funds to continue to mitigate their damages and to pay for some of the numerous expenses they have incurred since the date of the loss.

This letter marks the first correspondence between Mr. Manley and Hartford related to the Property. Prior to this point in time, the parties had not communicated regarding the Property, and, consequently, there had been no disputes regarding any amount of loss. Hartford apparently neither acknowledged Mr. Manley’s demand to invoke the “appraisal provision” of the Policy, nor did it “issue payment for the amount, ... which represented] the undisputed portion of the claim.”

Having received no response from Hartford, on October 6, 1998, HKM submitted two Sworn Statements in Proof of Loss (“Proof(s) of Loss”) to Hartford, one for physical property damage and another for loss of rental use. In the Proof of Loss for the “Dwelling and APS only,” Mr. Manley attested that the Property had sustained damage in the amount of $383,472.93. Attached to the Proof of Loss for the Property, HKM included an itemized, room-by-room estimate of the damage, prepared by an adjuster who did not work for HKM. In the Proof of Loss submitted for loss of rental use, Mr. Manley claimed the loss of the fair rental value of the Property for one year in the estimated amount of $21,600. Interestingly, on October 6, 1998, in addition to submitting the two Proofs of Loss, Mr. Manley entered into an agreement that granted HKM an option to purchase the Property for the sum of ten ($10) dollars. However, just prior to the trial in this case, on April 21, 2003, Mr. Manley sold the Property to Michael L. Lajoie for $110,000. Throughout the time he owned the Property during the course of this dispute, Mr. Manley never made repairs to the Property.

On December 3, 1998, Hartford notified Mr. Manley in writing that it was rejecting both Proofs of Loss because they failed to comply with the terms and conditions of the Policy, in as much as the Proofs of Loss were not sworn to by the named insureds, i.e. the Holts. Hartford further asserted that it had “fully compromised and settled” the claim by paying the Holts the sum of $34,644.07. Additionally, the letter noted that Mr. Manley had misstated the amount of coverage under the Policy, and Mr. Manley was not the owner of the Property on the date of the loss in question.

On December 3, 1998, the same day that Hartford rejected Mr. Manley’s Proofs of Loss, Hartford mailed, by certified mail with return receipt requested, a letter addressed to the Holts at their former address, 1715 Eastland Avenue. In this letter, Hartford invited the Holts to file a supplemental claim and return the attached blank Proof of Loss in accordance with the terms and conditions of the Policy. On March 3, 1999, after the Holts had not returned a completed Proof of Loss, Hartford mailed another letter, also by certified mail with return receipt requested, addressed to the Holts at the 1715 Eastland Avenue address. In this second letter, Hartford informed the Holts that they had failed to comply with the conditions provided under the Policy for filing a supplemental claim, and, therefore, Hartford was taking the position that “any and all supplemental claims you may have had ... are herein denied.” The record reflects signed return receipts for both of these letters, however, neither of the signatures are legible, and the printed name below the signatures appears to read “P. Potter.”

After voluntarily dismissing the initial action brought in chancery court, Mr. Manley filed a second complaint against Hartford in Davidson County Circuit Court on March 1, 2000. In his complaint, Mr. Manley sought to enforce the arbitration and appraisal provision of the policy and averred that Hartford’s refusal to participate in the appraisal process was in bad faith. Hartford subsequently filed its answer denying that it owed any obligation to Mr. Manley under the Policy. After the trial court denied Mr. Manley’s motion for partial summary judgment, Mr. Manley filed his Rule 56.05 Motion For Entry of Findings. On December 17, 2002, the trial court entered an order granting in part Mr. Manley’s motion. In that order, which purportedly narrowed the issues for trial, the trial court entered the following findings:

1. Defendant did not settle this claim upon its payment to the original insureds, Mr. and Mrs. Robert Holt;
2. The amount set forth in Plaintiffs Proofs of Loss ($405, 072.93) is determined to be an accurate estimate of the amount of lossf;]
3.The primary issues remaining in this case are (1) whether Mr. Manley is the proper party to bring a supplemental claim against the policy at issue in this case ...; and (2) if Mr. Manley is determined to be the proper party, the timing of the payment [Hartford] must make to Mr. Manley.

Subsequently, Hartford filed a motion to alter or amend, asserting that the foregoing order was totally erroneous in that it set forth findings that were never discussed. By agreed order entered February 24, 2003, a jury trial was set for June 16, 2003, and the issues raised in Hartford’s motion to alter or amend were to be resolved by mutual agreement. However, if counsel for the parties were unable to resolve the dispute, the agreed order provided that each would submit opposing briefs on the disputed issues prior to the pre-trial conference, set for June 5, 2003, and the matter would be resolved by the trial court at the pre-trial conference.

At the pre-trial conference, counsel for Hartford stated to the trial court that the issues raised in its motion to alter or amend, including the issue of damages, had not been resolved. The trial court, however, refused to entertain argument on these issues and ordered that the amount of damages was set at $405,072.93. Just prior to trial, Hartford filed several motions, all of which were denied by the trial court as being untimely filed.

Following a two day jury trial, the jury returned its “Jury Verdict Form,” which responded to a set of special interrogatories as follows:

QUESTION 1: Was the Automobile Insurance Company required to pay Clay Manley’s supplemental claim?
Yes _X_ No__
If your answer to Question 1 is “No,” then you have found for the Automobile Insurance Company and you should sign this form on the last page and return it to the court. If your answer to Question 1 is ‘Yes,” then please answer Question 2.
QUESTION 2: Was the Automobile Insurance Company required to pay Clay Manley the amount set forth in the proof of loss before the repairs were made to the property or were they allowed to wait until after the repairs had been completed to pay the cost of repairs?
_Required to pay BEFORE repairs were made to property
X Required to pay only AFTER the repairs were completed
If your answer to Question 2 is “Before,” then you should skip directly to Question 4. If your answer to Question 2 is “After,” please answer Question 3.
QUESTION 3: Did the Automobile Insurance Company waive any right it may have had to require Mr. Manley to make repairs to the property before it paid the claim?

Yes _ No X

If your answer to Question 3 is “No, then you have found for the Automobile Insurance Company, and you should sign this form, on the last page and return it to the court, (emphasis added). If your answer to Question 3 is ‘Yes,” please answer Question 4.
QUESTION 4: Did the Automobile Insurance Company engage in unfair or deceptive acts or practices toward Clay
Manley by refusing to pay for the cost of repairs?
Yes J£_ No_
If your answer to Question 4 is “No,” then please skip directly to Question 7. If your answer to Question 4 is ‘Yes,” then please answer Question 5. QUESTION 5: Did Clay Manley suffer damages as a result of the Automobile Insurance Company’s unfair or deceptive acts or practices?
Yes _ No X
If your answer to Question 5 is “No,” then skip directly to Question 7. If your answer to Question 5 is ‘Yes,” then please answer Question 6.
QUESTION 6: What amount, if any, is Clay Manley entitled to recover from the Automobile Insurance Company as damages resulting from the Automobile Insurance Company’s unfair or deceptive acts or practices?
ANSWER: $_
Please answer Question 7.
QUESTION 7: Was the Automobile Insurance Company’s failure to pay Clay Manley for his loss done in bad faith?
Yes X No _
If your answer to Question 7 is “No,” you should sign this form on the last page and return it to the court. If your answer to Question 7 is ‘Yes,” then please answer Question 8.
QUESTION 8: Did the Automobile Insurance Company’s failure to pay cause additional expense, loss, or injury, including attorney fees upon Clay Manley?
Yes _X_ No _
If your answer to Question 8 is “No,” then you should sign this form on the last page and return it to the court. If your answer to Question 8 is “Yes,” then please answer Question 9.
QUESTION 9: What amount, if any, is Clay Manley entitled to recover from the Automobile Insurance Company as damages for their bad-faith refusal to pay the amount of Mr. Manley’s loss? This amount cannot exceed 25% of the amount of loss, which is $101,268.23.

ANSWER: $ 35,000.00

On July 2, 2008, the trial court entered an order awarding Mr. Manley $405,072.93 in damages for Hartford’s breach of contract and $35,000 in damages for bad faith. Subsequently, the trial court awarded Mr. Manley $185,558.56 in prejudgment interest and $2,918.75 in discretionary costs. Hartford filed a motion for new trial on July 31, 2003 and an amended motion for new trial on September 17, 2003. The trial court denied both motions, and Hartford timely filed its notice of appeal.

II. Issues

On appeal, Hartford raises twelve issues:

(1) Whether the trial court erred in not entering a judgment in favor of [Hartford];
(2) Whether the trial court erred in entering a judgment against [Hartford] for statutory bad faith;
(3) Whether the trial court erred in determining general damages as a matter of law and entering a judgment thereon;
(4) Whether the trial court’s misconduct during the trial demands a new trial;
(5) Whether the trial court erred in not hearing and not granting [Hartford’s] Rule 56 motion for summary judgment;
(6) Whether the trial court erred in denying [Hartford’s] motion for a dismissal at the conclusion of Manley’s case in chief and at the end of the trial;
(7) Whether the trial court erred in granting Manley’s motion to dismiss [Hartford’s] counter complaint;
(8) Whether the trial court erred in not permitting [Hartford] to amend its affirmative defenses;
(9) Whether the trial court erred in not permitting [Hartford] to use party depositions, party interrogatories and photographs in its case in chief;
(10) Whether the trial court erred in ruling Phil Breeden was not an indispensable party and/or in failing to dismiss;
(11) Whether the trial court erred in ruling, as a matter of law, that no settlement/accord and satisfaction took place and in failing to charge that defense; and
(12) Whether the trial court erred in instructing the jury.

III. Discussion

At the outset of its argument that the trial court erred in not entering judgment in its favor, Hartford contests the validity of the Assignment between the Holts and Mr. Manley. In this case, the Policy contained an anti-assignment clause, which prohibited the assignment of the Policy without the consent of Hartford. Hartford essentially concedes that, despite an anti-assignment provision, Tennessee law allows for an insured to assign the cause of action or proceeds payable under an insurance policy, where the underlying loss that gives rise to the insurer’s liability has previously occurred. See Ford v. Robertson, 739 S.W.2d 3, 5 (Tenn.Ct.App.1987). However, Hartford argues that, although the proceeds of the contract may be assignable, the contractual duties and conditions between the insurer, Hartford, and the named insureds, the Holts, are not assignable. Hartford contends that, despite the Assignment, the duty of the insured to meet the conditions for coverage continued. Thus, in this case, Hartford argues that, because the Holts failed to file a supplemental claim or comply with the conditions for further payment, such as completing repairs, Hartford was not under a duty to pay either the Holts or Mr. Manley.

We believe it is fairly well-settled that, in Tennessee, an insured may assign an insurance policy after a loss has occurred, despite an anti-assignment clause purportedly prohibiting assignments without the consent of the insurer. Zaharias v. Vassis, 789 S.W.2d 906, 910 (Tenn.Ct. App.1989); Ford, 739 S.W.2d at 5; Metro. Life Ins. Co. v. Brown, 25 Tenn.App. 514, 160 S.W.2d 434, 437-38 (1941). However, the assignee of the policy “stands in the shoes” of the assignor and receives nothing more than what the assignor held. See Zaharias, 789 S.W.2d at 910-11. Although, in this case, the Assignment was valid, Mr. Manley was still bound to meet the conditions for coverage that existed under the Policy.

Turning now to the judgment entered on the jury verdict, it is necessary to detail some of the events that transpired while the jury was deliberating. During its deliberations, the jury twice announced that it was deadlocked, apparently as a result of “Question 3” of the verdict form. Over Hartford’s objection and request for a mistrial, the trial court instructed the jury to proceed with the rest of the special interrogatories and return to “Question 3” later. Accordingly, the record reflects that the jury proceeded to answer the remaining questions, which involved Mr. Manley’s Tennessee Consumer Protection Act and bad faith claims. In looking at the verdict form, the instruction which follows “Question 3” clearly states that a “No” answer should lead to a finding for Hartford. The instruction further provides that, if the jury answered “No” to “Question 3,” then it should sign the form and return it to the court without answering the remaining questions. Here, the jury answered “No” to “Question 3.” However, guided by the trial court’s instructions, the jury proceeded to answer the remaining questions and, in doing so, we believe, reached an inconsistent verdict. Illustrative of its confusion, upon reading its verdict in open court and after answering “No” to “Question 3,” the jury foreperson asked the trial court, “do I continue,” to which the trial court responded, ‘Tes.”

In the case of Concrete Spaces, Inc. v. Sender, 2 S.W.3d 901 (Tenn.1999), the Tennessee Supreme Court restated the law regarding defective verdicts:

Tennessee law is well-established that litigants are entitled to have their rights settled by a consistent and intelligible verdict and that verdicts that are inconsistent and irreconcilable cannot stand. See Milliken v. Smith, 218 Tenn. 665, 668, 405 S.W.2d 475, 476 (1966); Alabama Highway Express, Inc. v. Luster, 51 Tenn.App. 691, 696, 371 S.W.2d 182, 183 (1963); Penley v. Glover, 30 Tenn. App. 289, 292, 205 S.W.2d 757, 759 (1947). Where a judgment is based upon inconsistent findings by a jury it is the duty of the appellate court to reverse and remand the case for a new trial. [See Mclnturff v. White, 565 S.W.2d 478, 482]; Berry v. Foster, 199 Tenn. 352, 356, 287 S.W.2d 16, 18 (1955); Penley, 30 Tenn.App. at 292, 205 S.W.2d at 759.
A new trial is also warranted when verdict forms are composed in such a faulty fashion that they do not address each of the plaintiffs’ theories of recovery and do not allow the jury to adequately respond to each claim. Well-settled law requires courts to construe the terms of a verdict in a manner that upholds the jury’s findings, if it is able to do so. See Briscoe v. Allison, 200 Tenn. 115, 125-26, 290 S.W.2d 864, 868 (1956). Even if a verdict is defective in form, it is to be enforced if it sufficiently defines an issue in such a way as to enable the court to intelligently articulate a judgment. See Areata Graphics Co. v. Heidelberg Harris, Inc., 874 S.W.2d 15, 22, 27 (Tenn.App.1998).

Id. at 911.

After reviewing the verdict in this case, we can see no way that the trial court could have intelligently articulated a judgment therefrom. Although Question “2” involves the interpretation of the insurance policy and is, therefore, a question of law, State ex rel. Pope v. U.S. Fire Ins. Co., 145 S.W.3d 529, 538 (Tenn.2004), we believe that the jury correctly decided Question “2” in favor of Hartford. The insurance policy at issue here provides a “Home Replacement Cost Guarantee,” but the Policy is clear that the insurer is not under a duty to pay until after repairs have been completed. In this case, it is undisputed that Mr. Manley never made the first repair, and the jury reflected this finding in its verdict. Additionally, in answering “No” to Question “3,” the jury found that Hartford had not waived any right it may have had to require Mr. Manley to make repairs before it paid the claim. This finding is supported by the record as well, as there is nothing in the record to suggest otherwise. Therefore, we believe that, at the point the jury answered “No” to “Question 3,” its job was finished. However, because the jury was instructed to complete the remaining interrogatories, it reached an internally inconsistent result. In the remainder of its verdict, the jury found that Hartford had engaged in unfair or deceptive practices by refusing to pay for the cost of repairs, but Mr. Manley had suffered no damages as a result. Finally, the jury found that, despite its finding that Hartford was not obligated to pay until after Mr. Manley had completed repairs, Hartford’s failure to pay was done in bad faith. The jury then awarded Mr. Manley $35,000 in bad faith damages. Here, the jury’s findings — that Hartford was, on one hand, not required to pay the loss but, at the same time, acting in bad faith in failing to pay — are irreconcilable.

We do not believe that, in rendering a judgment for Mr. Manley, the trial court intended to ignore the jury’s findings with regard to its answer to “Question 3.” Rather, from a review of the record, it is apparent that there was considerable confusion among all parties throughout the course of this trial, which led to the inconsistent verdict. As such, we are of the opinion that the verdict from which the trial court entered its judgment was fatally defective, and the trial court’s judgment rendered thereupon is likewise invalid. Accordingly, we vacate the judgment of the trial court and remand this matter for a new trial.

In view of the foregoing conclusion, it would generally be unnecessary for us to address the remaining issues presented by Hartford, as they would be pretermitted. However, we feel it is important to address the issue of damages in this case in order to clarify this issue for purposes of remand. As previously mentioned, during the pre-trial conference, the trial court ruled that Hartford would not be allowed to contest the amount of damages at trial. Although it is certainly not clear from the record exactly how the trial court arrived at this determination, we will nevertheless make an attempt to interpret the proceedings below.

In his complaint, Mr. Manley never actually sought general damages, but rather sought to enforce the appraisal provision of the Policy. In October of 2000, he filed a motion for summary judgment, which was denied on November 12, 2002. Two days later, Mr. Manley filed a motion that sought the entry of undisputed facts, and a hearing on this motion for the entry of findings was scheduled to be heard on December 6, 2002. Exactly what took place on December 6, 2002 is not clear, as there is no transcript and the record reflects that the attorneys for the respective parties have conflicting accounts as to what was determined in that “hearing.” Regardless, on December 17, 2002, the trial court entered an order, which, among other things, established that “[t]he amount set forth in [Mr. Manley’s] Proofs of Loss ($405,072.93) [was] determined to be an accurate estimate of the amount of loss.” Following the entry of this order, Hartford filed a motion to alter or amend the order, arguing that the order was completely erroneous and set forth findings that had never been discussed. Hartford’s motion was heard on February 7, 2003, and by an agreed order entered February 24, 2003, it was established that, among other things:

the issues raised in [Hartford’s] Motion to Alter and Amend shall be discussed by the parties in an effort to resolve the disputes. However, in the event the disputes cannot be resolved by the mutual agreement of the parties, [the parties shall submit briefs to the Court on all unresolved issues before the pre-trial conference]. All matters not otherwise resolved by agreement shall be resolved and determined by the Court at the Pre Trial Conference which is scheduled for the 5th day of June, 2003.

When counsel for the parties appeared at the pre-trial conference, it was clear that the parties had not reached any agreement that settled the amount of damages. Notwithstanding Hartford’s position, the trial court ruled that the amount of damages set forth in its December 17, 2002, order was the law of the case, and damages were no longer at issue for purposes of the trial. At the pre-trial conference, counsel for Hartford and the trial court had the following exchange regarding the issue of damages:

THE COURT: .... So, it looks like from that order the issues are pretty clear. Do you have any — do you want to respond to that?
ATTORNEY: Well, damages is one of the issues. The damages was never resolved and has not been resolved.
THE COURT: Not the — the amount is clear, it’s just if the damages are owed, if that amount is owed.
ATTORNEY: No, ma’am, I disagree with that.
THE COURT: You can disagree all day long, that’s what the order says. ATTORNEY: You’re ordering—
THE COURT: That the jury will determine if they’re entitled to anything, and at what value, is it before or after repair — do they have to repair it to get it. But the amount is not in dispute. It’s just are those the damages?
ATTORNEY: That’s my point, Your Honor, the amount is in dispute.
THE COURT: Well then, we’ll grant you an appeal at the end, but my judgment stands....

In his brief to this Court, Mr. Manley cites to Bard’s Apparel Mfg., Inc. v. Bituminous Fire & Marine Ins. Co., 849 F.2d 245, 249 (6th Cir.1988) for the proposition that, by refusing to participate in the appraisal process throughout the course of this litigation, Hartford has waived its right to contest the amount of the alleged loss. Bard’s Apparel and the other cases cited by Mr. Manley are clearly distinguishable from this case for a number of reasons. In Bard’s Apparel, the insurer and the insured had spent months in open negotiations over the adjustment of the loss. Bard’s Apparel, 849 F.2d at 249. It was only after the insured gave notice of its intention to file suit that the insurer attempted to invoke the appraisal process. Id. In the policy at issue in Bard’s Apparel, an appraisal was a condition precedent to filing suit. Id. (emphasis added). The Court of Appeals for the Sixth Circuit agreed with the district court and concluded that, under the circumstances, the insurance company “not only waived its right to an appraisal as a condition precedent to suit, but also waited an unreasonable length of time to the prejudice of Bard’s before demanding an appraisal.” Id. (emphasis added). In the present case, the facts are completely reverse to those in Bard’s Apparel. Here, the insured sought to invoke the appraisal provision at the outset of his involvement with the insurer, long before there was any dispute or disagreement over the amount of a loss. Moreover, the appraisal provision under the Policy in this case does not operate as a condition precedent to suit. Therefore, we conclude that Bard’s Apparel and the other cases cited by Mr. Manley are not applicable to the facts of this case.

After a thorough review of the record, we believe that the trial court erroneously set damages as a matter of law in the amount estimated in Mr. Manley’s Proofs of Loss. The record reflects that Hartford contested the trial court’s rulings on this matter, but, for some reason not wholly apparent from the record, Hartford’s pleas were to no avail. The issue of damages in this case is a disputed, factual issue that is material to the ultimate outcome of the case. Accordingly, we conclude that it was error for the trial court to summarily determine that the amount of damages was not in dispute.

Finally, we wish to address the trial court’s ex parte communication with the jury. Because of the trial court’s order setting damages, there was little evidence of damages presented at trial. The jury was instructed that the amount of damages had been set pursuant to the trial court’s December 17, 2002 order. Evidently, this establishment of damages concerned the jury. During its deliberations, the jury specifically asked the trial court to change its ruling, and the trial court and the jury discussed the issue of damages outside the presence of the parties or their attorneys. During the deliberations, the trial court stated for the record the following ex parte communication, which took place between the trial court and the jury:

The jury asked me if the damage award is set in stone. And I said, Yes, it was. And they said, Could you change it? I said, I’m the only person that can change it. Anything is a possibility. Just resolve this case and then leave that to us. So, I wanted you to know that I said that, which is really strange.
They came back-and said they were hopelessly deadlocked....

Certainly, ex parte communication between the trial court and the jury is not favored. Holt v. Parton, No. E2000-02695-COA-R3-CV, 2001 WL 987230, at *8 (Tenn.Ct.App. Aug. 29, 2001) (no perm, app. filed). As the Holt court explained, however, every ex parte communication between the trial judge and the jury is not reversible error. Id. at *8 (citing Spencer v. A-1 Crane Serv., 880 S.W.2d 938, 941 (Tenn.1994)). However, “reversal is required where a timely complaining party shows specific prejudice or where, owing to the nature of the ex parte communication, the reviewing court is unable to determine whether the action was actually harmless.” Id. (emphasis in original) (quoting Spencer, 880 S.W.2d at 941). In this case, we cannot make a determination from the record whether the jury was influenced by the trial court’s response to its question regarding changing the amount of damages. Therefore, we are unable “to determine whether the action was actually harmless.” Spencer, 880 S.W.2d at 942. Thus, taken in combination with the confusing nature of the verdict form and the trial court’s instructions to complete the interrogatories despite a finding that Hartford was not required to pay Mr. Manley, we conclude that the ex parte communications constitute reversible error.

IV. Conclusion

For the foregoing reasons, we vacate the judgment of the trial court and remand this matter for further proceedings consistent with this opinion. Costs of this appeal are taxed to the Appellee, Clay Manley, for which execution may issue if necessary.

      . In a letter attached to the Policy, the Holts' local insurance agent explained the "Home Replacement Cost Guarantee” as follows:
      You have chosen to insure your home for its full replacement costs. You're covered if your home is completely destroyed by any covered loss (even if the cost to rebuild is greater than the amount of Coverage A shown on your policy). For more information and your obligations, please refer to this endorsement in your policy.
      In summary, the Home Replacement Cost Guarantee provided that Hartford would pay no more than the actual cash value of the damage, which represents the depreciated value of the property, until actual repair or replacement was complete. Once repair was complete, Hartford would pay no more than the smaller of the following: (1) the replacement cost, without deduction for depreciation of all or part of the dwelling with the same type of construction and like kind and quality materials at the same location; or (2) the amount actually and necessarily spent to repair or replace the damaged building.

      . The "Public Adjusters Notice” served to notify Hartford that Breeden was representing the Holts and requested Hartford to direct all correspondence to Breeden, rather than the Holts. The "Loss Payable Endorsement” directed Hartford to include Breeden's name on all payments issued in conjunction with the claim.

      . The "appraisal provision" of the Policy provides as follows:
      If you and we fail to agree on the amount of loss, either one can demand that the amount of loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, you or we can ask a judge of a court of record in the state where the residence premises is located to select an umpire. The appraisers shall then set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon shall be the amount of loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any ed two of the three shall set the amount of loss. Each appraiser shall be paid by the party selecting the appraiser. Other expenses of the appraisal and the compensation of the umpire shall be paid equally by you and us.

      . It appears from the record that counsel for Hartford sent three motions by Federal Express overnight delivery on June 12, 2003. However, the motions were not delivered and filed until the day of trial, June 16, 2003, after the trial had begun. Therefore, the motions were not before the court when counsel attempted to argue the motions immediately prior to trial.

      . Counsel for Hartford insists that, although argument on Mr. Manley’s motion was scheduled for December 6, 2002, the argument did not occur. Rather, when the case was called, the trial judge asked both attorneys to retire to her chambers. At that point, counsel for Hartford contends that the trial judge and the attorneys merely discussed the future handling of the case, and there was no argument or ruling on Mr. Manley’s motion for entry of findings.

      . Although the trial court’s order eliminated damages as a contested issue, on two separate occasions during trial, witnesses testified indirectly that the replacement cost for the Property would fall in the range of approximately $30,000 to $41,000.


author: HERSCHEL PICKENS FRANKS, P.J.,

text:
    Jerry BIGGS v. REINSMAN EQUESTRIAN PRODUCTS, INC.
    Court of Appeals of Tennessee, Eastern Section, at Knoxville.
    Sept. 22, 2004 Session.
    Dec. 22, 2004.
    Permission to Appeal Denied by Supreme Court June 27, 2005.

      Michael A. Anderson, Chattanooga, Tennessee, for Appeñant.
    Charles D. Lawson, Chattanooga, Tennessee, for Appellee.
   OPINION

HERSCHEL PICKENS FRANKS, P.J.,

delivered the opinion of the court,

in which D. MICHAEL SWINEY, J., and SHARON G. LEE, J., joined.

Plaintiff sued for breach of employment contract. The Trial Court found a breach and awarded damages. On appeal we hold the employer had just cause to terminate, and reverse Judgment.

In this breach of contract action, the Trial Court determined that defendant breached plaintiffs employment contract by terminating plaintiffs employment without cause, and entered judgment for $45,000.00 for plaintiff.

Defendant has appealed, insisting there was just cause to terminate plaintiffs employment.

The evidence before this Chancellor established that Biggs owned his own custom saddle and leather working shop in Florida for about 20 years. He is a skilled craftsman, having been schooled in the leather working crafts in his youth by his father, and had one employee in his shop. Biggs had known Glen Taylor, one of the owners of Reinsman Equestrian Products, for several years. Taylor was impressed with Biggs’ quality and craftsmanship with leather. In 1998 Taylor approached Biggs about coming to work for Reinsman and starting up and running a leather-works factory, a new product line which was an area of expansion for the company. Biggs was not interested initially, but continued discussions with Taylor about the idea. Biggs had no experience in factory and production work or in managing a factory and advised the defendant owners that he did not think he was right for the job.

However, Biggs was offered the position at an annual salary of $45,000.00, and defendant asked him to write up an agreement for them to consider.

Biggs prepared an agreement in letter form, which states in pertinent part:

This agreement is for a term of five years, starting from three to six months from the date of this agreement. If the employer terminates the employee before the five year term the employer agrees to pay the employee the sum of one years salary to compensate him for the default of the agreement. The employee also agrees to a five-year agreement, if the employee leaves the employment of the employer before the five year agreement is fulfilled he agrees to pay the employer the sum of one years salary to compensate the employer for default of this agreement.

The owners reviewed and accepted the terms of Biggs’ letter of agreement, and he relocated to Cleveland, Tennessee, and began working for Reinsman in August of 1998. The initial duties involved designing a line of leather products to be manufactured and offered for sale, setting up equipment and fixtures in the factory, and training and supervising of new employees. This process took 4-6 months, and production commenced in the Spring of 1999.

The employer had no problem with the product development and design. During his tenure Biggs designed approximately 50-75 new products for the defendant. However, the employer concluded that his performance as manager was deficient, and reached the point where termination of the employment relationship was justified. Taylor testified that Biggs encountered problems with employee absenteeism and retention, meeting production goals, quality control, and training, as well as problems with Biggs’ performance of administrative duties, numerous errors and omissions in necessary paperwork and record keeping that cost the company time and efficiency, failure to adequately train and supervise the employees, and not maintaining the production equipment properly. Taylor further testified that Biggs performance showed no improvement despite frequent, and in depth counseling from his superiors for these deficiencies, all of which resulted in his failure to attain standards sought by defendant. Oh September 26, 2000, the company terminated Biggs’ employment.

After hearing the evidence, the Chancellor entered judgment for the plaintiff and held that in the circumstance of an employment contract with a definite term the employee may be discharged before the end of the term for cause which she defined as:

something inconsistent with the relationship of master/servant or incompatible with the due and faithful performance of his duties. Some cases have held dishonesty, unfaithfulness to the employer’s interest, or anything which indicates an unfitness for service for which the employee was engaged. It must injure the master’s business or reputation, although proof of actual damages is not necessary.
Here there’s no showing that the employee was dishonest or unfaithful or did anything proactively adverse to the employer’s interest, so that the Court is entering judgment in favor of the plaintiff.

Since this case was tried without a jury, we review the case de novo upon the record, with a presumption of the correctness of the findings of fact by the Trial Court, unless the evidence preponderates against the findings. However, we review questions of law de novo with no presumption of correctness. Tenn. R.App. P., 13(d).

“Whether good cause exists to terminate an employment contract is a determination made on a case-by-case basis, and exists where the discharge is ‘objectively reasonable.’ ” Video Catalog Channel, Inc., v. Blackwelder, 1997 WL 581120 (Tenn.Ct.App.). When cause is required for discharging an employee, the employer has the burden of proving the existence of good cause. Phillips v. Morrill Electric, Inc., 1999 WL 771511 (Tenn.Ct.App.)

The failure to faithfully perform express or implied duties gives the employer the right to terminate the employment contract for cause, prior to the expiration of its terms without incurring liability. Jackson v. The Texas Company, 10 Tenn. App. 235 (Tenn.Ct.App.1929).

Inattention to duty is sufficient cause for discharge, since it is incumbent upon the employee to reasonably perform to advance and develop the employer’s business. Wyatt v. Brown, 42 S.W. 478, 481 (Tenn.Ch.App.1897). In general, any act which tends to injure the employer’s business, interests, or reputation will justify termination of an employment agreement, and actual loss need not be proven. Curtis v. Reeves, 736 S.W.2d 108, 112 (Tenn.Ct.App.1987). As a general rule, acts which are sufficient to be good cause for dismissal of a manager are quantitatively and qualitatively distinct from those required to terminate an employee possessing less responsibility and discretion. See Thomas v. Bourdette, 45 Or.App. 195, 608 P.2d 178 (1980).

The Trial Court’s reasoning in the instant case carries an implication that because there was no intent or malice or malfeasance on plaintiffs part, that the employer failed to show just cause for terminating the employment. The standard does not require an element of intent to show just cause. Sub-performance that compromises the employer’s interest or impedes the company’s progress will justify the termination for cause. See Booth v. Fred’s Inc., 2003 WL 21998410; Wyatt v. Brown, 42 S.W. 478 (Tenn.Ch.App.1897).

In Lawrence v. Rawlins, 2001 WL 76266 this Court was faced with interpreting “for cause” termination in the context of the statute providing for the grievance procedure for employees of Tennessee educational institutions. The statute itself did not define the term, so this Court looked to opinions construing the term in the private employment context, observing that “[t]he types of ‘cause’ that warrant an employee’s termination include an employee’s inattention to his or her duty to look after the employer’s best interests or performance of an action inconsistent with the employer-employee relationship.” Id. at *5. Plaintiff points out that Lawrence deals with a statute governing state employment situations and therefore should not be applicable to the instant case, but there is nothing in the opinion that would distinguish the principles therein from application to the facts of this case. The Court in Lawrence rejected the defendant’s argument attempting to limit the scope of “for cause” termination to acts of serious misconduct, intentional wrongdoing, and other intolerable behaviors, concluding that the concept is much broader:

We have concluded that an employee has been terminated for cause if the employee’s termination stems from a job-related ground. A job-related ground includes any act that is inconsistent with the continued existence of the employer-employee relationship. Thus, an employee has been terminated for cause if the termination stems from the employee’s failure to follow a supervisor’s directions, poor job performance, or failure in the execution of assigned duties.

Id. at *5.

In this case, the evidence establishes that plaintiffs job performance was deficient across several areas, and a consistent pattern of errors and poor management did not advance the company’s interest. Moreover, the evidence established that plaintiff was unable to improve even though he received frequent, detailed counseling from senior management.

In this regard, plaintiff sincerely argues that defendant did not hire him for his management skills or expertise, and since there was “not a concern” regarding the leather working Biggs was hired to perform, and did in fact perform, defendant was precluded as a matter of law from establishing that Briggs was terminated for cause. Plaintiffs testimony undercuts this premise. Plaintiff acknowledged that he knew that his job responsibilities included overseeing the lines that he had created, and that his duties would include supervising production after the product was developed. He admitted that he knew that he would have the additional responsibility of training employees to do the work promptly and avoid employee turnover, and that his duties included ordering raw materials, maintaining the equipment, and preparing work orders and assisting with other work.

With hindsight, it is obvious that plaintiff is skilled as a craftsman, but not as a production line manager. The law pertaining to discharge for cause does not provide for a mismatch of employee skills to the requirements of the job as a defense to termination for unsatisfactory performance. Contrary to the Trial Court’s conclusion, plaintiffs inability to perform the duties required by his position, was conduct adverse to the employer’s interest, regardless of his intention or reason for the deficiency.

We conclude the Trial Court erred in finding that defendant terminated plaintiff without just cause, because the Trial Court applied the wrong standard.

The Judgment of the Trial Court is reversed and the cause remanded. The cost of the appeal is assessed to Jerry Biggs.