Tennessee Tort Reform – Maximum appeal bond reduced to $25,000,000.00

The Tennessee tort reform legislation of 2011 reduced the maximum amount of an appeal bond required of the appellant when the case is appealed after plaintiff obtains a judgment under “any legal theory”.  The new legislation repealed the old T.C.A. § 27-1-224 and replaced it with the following:

(a) If a plaintiff in a civil action obtains a judgment under any legal theory, the amount of the appeal bond necessary to stay execution during the course of all appeals or discretionary reviews of that judgment by any appellate court shall not exceed the lesser of twenty-five million dollars ($25,000,000) or one hundred twenty-five percent (125%) of the judgment amount.

(b) For purposes of determining the amount of the required bond, the court shall not include punitive or exemplary damages in the judgment amount.

(c) Notwithstanding subsections (a) and (b), if a party proves by a preponderance of the evidence that an appellant is dissipating assets outside the ordinary course of business to avoid payment of a judgment, a court may enter orders that are necessary to protect the appellee and establish the bond amount, which may include any punitive or exemplary damages.

(d) If the appellant establishes by clear and convincing evidence at a post judgment hearing that the cost of the bond and the obligation resulting from the surety's payment of the bond in an amount authorized by this section will render the appellant insolvent, the court shall establish a security in an amount, and other terms and conditions it deems proper, that would allow the appeal of the judgment to proceed, without resulting in the appellant's insolvency. This subsection (d) should be narrowly construed.

(e) If this section is found to be in conflict with any rules prescribed by the supreme court, this section shall apply notwithstanding § 16-3-406.

This new statute reduces the maximum appeal bond amount from $75,000,000.00 to $25...

Construction Defect Case - Date of substantial completion for the statute of repose

A recent decision by the Tennessee Court of Appeals in The Counts Co. v. Praters, Inc., E2011-01624-COA-R3-CV, 392 S.W.3d 80 (filed June 22, 2012) discussed the Statute of Repose for construction defect cases.  This opinion can be found at http://www.tsc.state.tn.us/sites/default/files/countscoopn.pdf.  In this case, a contractor, Praters, Inc., installed hardwood flooring at the request of the plaintiff.  A certificate of occupancy was issued on May 15, 2006.  Praters Inc. completed this work and issued a warranty on May 28, 2006.  The hardwood flooring started to show warping soon after the flooring was installed  Approximately one year after the installation (in April or May of 2007) Praters, Inc. resurfaced the floor to try to correct the condition.  Praters, Inc. continued to provide additional advice about the flooring from 2007 through 2010.  This included the assertion by Praters, Inc. that the floor problem would correct itself once the moisture problem was resolved.  Apparently the problem did not resolve.

A lawsuit was not filed against Praters, Inc. until March 21, 2011, almost five years after the installation.  As a result, the issue before the Court was whether the four year Statute of Repose found T.C.A. § 28-3-202 barred this construction defect claim.  The Statute of Repose in T.C.A. § 28-3-202 provides:

All actions to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency, or for injury to the person or for wrongful death arising out of any such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such an improvement within four (4) years after substantial completion of such an improvement.

(emphasis added).  The key dispute between the parties was when the four years, referred to in this statute, begins to run (i.e. the date of substantial completion).  The Appellate Court agreed with the trial court decision and decided the floor installation was “substantially complete” by, at the latest, May 28, 2006.  The fact resurfacing of the floor was completed approximately one year after the installation did not extend the Statute of Repose.  Further, the fact there were continued attempts to correct the floor for several years following the installation also did not extend the Statute of Repose.  The court found that the date of the discovery of the defect and the fact ongoing repairs occurred do not change the date of “substantial completion."

The term "substantial completion" is a defined...

Tennessee Tort Reform- Can caps on damages be disclosed to the jury?

One question that is important in the 2011 Tennessee tort reform legislation is whether the caps on noneconomic damages can be revealed to the jury at trial.  Obviously if the jury is aware of the caps that apply to noneconomic damages and the injuries are truly catastrophic, the jury may enhance the economic damages to try to compensate the plaintiff because they know the caps will limit the noneconomic damages recovery.

T.C.A. § 29-39-102(g) answers this question clearly.  It states:

(g) The limitation on the amount of noneconomic damages imposed by subdivision (a)(2) and subsections (b)-(e) shall not be disclosed to the jury, but shall be applied by the court to any award of noneconomic damages.

As a result, the $750,000.00 and $1,000,000.00 caps on noneconomic damages in T.C.A. § 29-39-102 will not be revealed to the jury.  This does not necessarily mean that these caps will not be known by some juries based on the personal knowledge of certain jurors about the Tennessee tort reform legislation.  However, it is likely most juries will not be aware of these caps.  Overall, the fact this information will not be disclosed to the jury at trial will likely help to reduce damages in catastrophic cases because the jury will not be able to shift noneconomic damages to economic damages to compensate for the caps.

Tennessee Tort Reform- Caps on damages

The "Tennessee Civil Justice Act of 2011" is one of the most important actions of the Tennessee Legislature in recent history.  This Act, also referred to as the “Tennessee Tort Reform Bill”, took effect on October 1, 2011 and applies to "all liability actions for injuries, deaths, and losses covered by this act which accrue on or after such date."  Here is a link to the bill that was actually signed into law: http://www.tn.gov/sos/acts/107/pub/pc0510.pdf.  This law fundamentally changed many aspects of tort law in Tennessee. 

To this point there are no substantive decisions interpreting this tort reform bill because it only applies to injuries or events that occur on or after October 1, 2011.  Obviously, even if an injury occurred on October 2, 2011, it will take some time for a lawsuit to be filed, a substantive motion to be decided, an appeal to occur, and for the Tennessee Court of Appeals to issue a decision.  In fact, it will probably take another six months to a year before we will see any real court interpretation of the Tennessee Civil Justice Act of 2011.  Interestingly, the tort reform bill has already been amended at least one time.  On June 12, 2012 Governor Bill Haslam signed an amendment of certain portions of T.C.A. § 29-39-102 and T.C.A. § 29-39-104.  This bill can be found here: http://www.tn.gov/sos/acts/107/pub/pc0902.pdf.

Regardless, it is important to take time to note the important aspects of the tort reform bill because it will certainly have an impact on Tennessee cases in the future.

Section 10 of the bill created T.C.A. § 29-39-102.  This is a long statute which has many nuances, however, for now we will briefly discuss one of the key portions which are the caps that now apply to civil actions filed in Tennessee.  Section (a) provides as follows:

(a) In a civil action, each injured plaintiff may be awarded:

(1) Compensation for economic damages suffered by each injured plaintiff; and

(2) Compensation for any noneconomic damages suffered by each injured plaintiff not to exceed seven hundred fifty thousand dollars ($750,000) for all...

Welcome to my Blog

I am Jason A. Lee, a Tennessee Attorney who practices mainly in civil litigation defense including insurance defense and the defense of companies and individuals who have been sued.  I am a member at my law firm, Brewer, Krause, Brooks, Chastain & Burrow, PLLC.  The purpose of this blog is to provide updates to the reader about various defense oriented developments in the law.  It is designed to mainly address Tennessee specific issues however significant issues that develop outside of Tennessee will also be addressed.  There simply are not enough websites or blogs that focus on defense litigation issues. This blog is designed to help provide employers, corporations, insurance companies and individuals with information to assist in preventing lawsuits, to assess risks and to know how to move forward once a lawsuit is filed. 

I plan to provide commentary and updates in a timely fashion for issues that are pertinent to the defense side of litigation.  I look forward to input, comments, and questions from readers of the blog so I can attempt to provide helpful information by specific request.  This blog will be a process in learning for me and hopefully for the reader.