Category Archives: Tort Reform

Sixth Circuit Finds Tennessee’s Caps on Punitive Damages Unconstitutional and Upholds $3,000,000 Punitive Damage Award Against Insurance Company

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Tamarin Lindenberg had to sue Jackson National Life Co. to recover $350,000 she was owed as the primary beneficiary of a life insurance policy on her ex-husband, Thomas, after he died in 2013. There were contingent beneficiaries listed, to his “surviving children equally”, but there appeared to be no question but that Tamarin was entitled to receive the proceeds of the policy as the primary beneficiary. A district court jury awarded her the $350,000, plus $87,500 (25%) in bad faith damages, and $3,000,000 in punitive damages. The jury found that Jackson Life’s refusal to pay was “either intentional, reckless, malicious, or fraudulent.”

Jackson Life argued that the district court must apply T.C.A. § 29-39-104 and reduce the punitive damages to twice the amount of the compensatory damages. The plaintiff challenged the constitutionality of the cap. The Tennessee Supreme Court declined to answer the certified questions, and the district court reduced the punitive damages to $700,000, rejecting plaintiff’s constitutional challenge.

However, the Sixth Circuit took up the challenge in Lindenberg v. Jackson Nat’l Life Ins. Co., 2018 U.S. App. LEXIS 36097 (12/21/18), and found the caps to be unconstitutional:

“Upon our assessment of Tennessee law, we find that the punitive damages bar set forth in § 29-39-104 violates the individual right to a trial by jury set forth in the Tennessee Constitution. The Declaration of Rights in the Tennessee Constitution provides that “the right of trial by jury shall remain inviolate . . . .” Tenn. Const. art. I, § 6. This broad language does not guarantee the right to a jury trial in every case. “Rather, it guarantees the right to trial by jury as it existed at common law under the laws and constitution of North Carolina at the time of the adoption of the Tennessee Constitution of 1796.” Young v. City of LaFollette, 479 S.W.3d 785, 793 (Tenn. 2015) (internal quotation marks, alteration, and citation omitted). “Among the essentials of the right to trial by jury is the right guaranteed to every litigant in jury cases to have the facts involved tried and determined by twelve jurors.” State v. Bobo, 814 S.W.2d 353, 356 (Tenn. 1991).”

Keeping in mind that Tennessee law appears to limit recovery against insurance companies who are guilty of acting in bad faith to 25% plus attorney’s fees, T.C.A. § 56-7-105(a), the Sixth Circuit also held that the district court properly refused to dismiss plaintiff’s punitive damages claim for breach of contract. The Court concluded that the statutory remedy for bad faith was not the exclusive extracontractual remedy for an insurer’s bad faith refusal to pay on a policy. The defendant’s motion for judgment, as a matter of law, on the plaintiff’s statutory bad faith claim was properly denied because Jackson Life’s refusal to pay had no apparent basis under the law. The Court found that clear and convincing evidence demonstrated that the defendant’s refusal to pay and its pursuit of litigation with the plaintiff was at least reckless:

“In this case, the jury faced the question of whether Defendant’s breach of contract involved egregious conduct. As previously discussed, reasonable minds could find that Defendant’s uncertainty defense was merely a post hoc explanation for its refusal to pay on the Policy. Based on the following evidence, reasonable minds could go further, finding that clear and convincing evidence demonstrated that Defendant’s refusal to pay was at least reckless.”

Lindenberg is significant, not only for declaring Tennessee’s punitive damages caps to be unconstitutional, but also for illustrating how an insured, who is mistreated by an insurance company, can eventually obtain justice, after years of litigation and appeals.

Does the Woodmere School Bus Driver’s Conviction of Felonies Lift the Caps on Noneconomic Damages?

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Now that former Durham Transportation school bus driver Johnthony Walker has been found guilty of six counts of criminally negligent homicide by a Hamilton County jury, the question arises as to whether the felony convictions lift Tennessee’s caps on noneconomic damages for victims of his negligence.  Walker was driving 37 children from Woodmere Elementary School when the wreck occurred on a winding Chattanooga road on November 21, 2016.  Six children were killed.

Walker was also was convicted of 11 counts of reckless aggravated assault and seven counts of assault, and found guilty of reckless endangerment, reckless driving and using his phone.

Tennessee law limits noneconomic damages to a maximum of $750,000 in most cases, under a law passed by the Republican dominated legislature and signed by Governor Haslam in 2011. Economic damages not capped, however. Economic damages include loss of earnings. So for the children killed in the school bus crash, damage awards would appeared to be limited to $750,000 plus a projection of the child’s future earnings potential, reduced to present cash value.  However, there is an exception, where the defendant’s negligent act or omission is considered to be a criminal act that results in the conviction of a felony.

TCA § 29-39-102(h) provides that:

“The limitation on the amount of noneconomic damages imposed by subdivision (a)(2) and subsections (b)-(e) shall not apply to personal injury and wrongful death actions:

 (4)  If the defendant’s act or omission results in the defendant being convicted of a felony under the laws of this state, another state, or under federal law, and that act or omission caused the damages or injuries.”

So, at least as to Walker, the $750,000 cap no longer applies.  But what about his employer and other defendants who have been sued by the families of the victims?  Do the caps still apply?

TCA § 29-39-102(j) states that:

“The liability of a defendant for noneconomic damages whose liability is alleged to be vicarious shall be determined separately from that of any alleged agent, employee or representative.”

Tennessee’s appellate courts have yet to rule on whether the exemptions from the caps apply to defendants other than the person convicted of the felony. However, it would seem, that at a minimum, the company that employed the felon should be held fully responsible for his actions and misdeeds, as they selected and hired him and were responsible for training and supervising him.  The meaning of subsection (j) has not yet been interpreted by the Tennessee Supreme Court, but it does not appear to explicitly excuse an employer from full liability for all noneconomic damages caused by its employee found guilty of a felony.

Florida Supreme Court Holds Caps on Noneconomic Damages in Medical Malpractice Cases to be Invalid

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Complications from carpal tunnel surgery left the plaintiff severely injured. She suffered horrible injuries as a result of what was supposed to be routine surgery for carpel tunnel syndrome, including several weeks in a drug induced coma.  After trial, her noneconomic damages were capped by provisions of Florida law, which provided that the noneconomic damages award could not exceed $500,000 per claimant in medical malpractice cases, unless the malpractice caused a permanent vegetative state or death, or if the negligence caused a catastrophic injury and a manifest injustice would occur unless increased damages were awarded, and then damages could be awarded up to $1 million. Other provisions limited damages to $750,000 and $1.5 million, respectively, when the injury resulted from the negligence of nonpractitioners. As a result, the trial court reduced a jury verdict of over $4,000,000 to about $2,000,000.

On June 8, 2017, in North Broward Hospital v. Kalitan, SC15-1858, the Florida Supreme Court held that the caps on personal injury noneconomic damages in medical negligence actions violated the Equal Protection Clause of the Florida Constitution, and declared the caps invalid, relying on the Court’s earlier decision in Estate of McCall v. United States, 134 So. 3d 894 (Fla. 2014), which held that a cap on wrongful death noneconomic damages also violated the Equal Protection Clause of the Florida Constitution.

The Georgia Supreme Court declared similar caps on noneconomic damages in medical malpractice cases invalid in 2010 in Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 286 Ga. 731.

In 2011, the Tennessee legislature imposed a cap of $750,000 on noneconomic damages in all personal injury and death cases, but the Tennessee Supreme Court has yet to rule on the caps. Let’s hope the Tennessee justices show the same courage as those in Florida and Georgia and do what is right for the severely injured.

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