Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—MDTenn: Tennessee Statute Bars Automobile Owners’ Tennessee Consumer Protection Act Claims Against Insurance Company Over Refusal to Pay Claim, (Jan 10, 2013)

By Tobias J. Gillett, J.D., LLM.

A husband and wife could not bring Tennessee Consumer Protection Act (TCPA) claims against an automobile insurance company over its refusal to pay their insurance claim because a 2011 Tennessee statute barred their claims, the federal district court in Nashville has ruled (Davidoff v. Progressive Hawaii Insurance Company, January 9, 2013, Sharp, K.).

According to their complaint, in April 2011, the automobile owners’ Toyota Tundra was stolen from a parking garage. Progressive Hawaii Insurance Company refused their insurance claim on the ground that the owners had stolen their own vehicle, allegedly without any basis for believing that they had done so.

The automobile owners filed suit, alleging breach of contract and violations of the TCPA. Progressive filed a partial motion to dismiss with respect to the TCPA claims and to the owners’ request for punitive damages.

The court granted Progressive’s motion to dismiss, finding that a Tennessee statute barred the owners’ TCPA claims. In 2011, the Tennessee legislature enacted Tenn. Code Ann. § 56-8-113, which provided that “title 50 and this title shall provide the sole and exclusive statutory remedies and sanctions available to” a person “for alleged breach of, or for alleged unfair or deceptive practices in connection with, a contract of insurance.” This statute had effectively overruled the Tennessee Supreme Court’s 1998 decision in Myint v. Allstate Ins. Co., 970 S.W.2d 920, which had found that “the mere existence of comprehensive insurance regulations does not prevent the Consumer Protection Act from also applying to the acts or practices of an insurance company.”

Faced with this statutory bar, the owners argued that exceptions to the statute would permit their suit to proceed. The court disagreed, noting that the owners had not identified the specific exception that applied, and finding that none of the exceptions listed in the statute, which included common law causes of action; declaratory, injunctive, and equitable relief; and causes of action, rights to relief, and sanctions available under the Tennessee code titles applicable to workers compensation and insurance, would suit their purposes. A claim under the TCPA would not fit into any of the identified categories, in the court’s view.

Therefore, the court dismissed their TCPA claim and associated requests for attorney’s fees, treble damages, and punitive damages under the TCPA. The court also dismissed a request for punitive damages in connection with the breach of contract claim.

The case is No. 3:12-00965.

Shawn P. Sirgo (Sirgo & Associates, PC) for Alexander Davidoff. John Thomas Feeney, III (Feeney & Murray, PLLC) for Progressive Hawaii Insurance Company.

Cases: ConsumerProtection TennesseeNews