Gene Griffin v. Troy Mendius And State Farm Insurance ( 1999 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
May 2006 Session
GENE GRIFFIN v. TROY MENDIUS and STATE FARM INSURANCE
COMPANY
An Appeal from the Circuit Court for Shelby County
No. CT-001397-03 D'Army Bailey, Circuit Judge
No. W2005-01542-COA-R3-CV - Filed August 2, 2006
This appeal involves Rule 11 sanctions. The plaintiff was injured in an automobile accident. The
plaintiff filed a lawsuit against the other driver for his damages arising out of the accident.
Believing the other driver to be uninsured, the plaintiff served the complaint on his own automobile
insurance carrier pursuant to the uninsured motorist statute. Subsequently, the plaintiff was informed
that the other driver was not uninsured as originally believed. The plaintiff nevertheless proceeded
with the litigation under his uninsured motorist theory. After the plaintiff’s claim was dismissed,
the insurance company sought Rule 11 sanctions. The trial court awarded the insurance company
its attorney’s fees, costs, and expenses incurred after the date the plaintiff was notified that the other
driver was insured. The plaintiff now appeals, arguing that the trial court erred by granting the Rule
11 sanctions. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed
HOLLY M. KIRBY , J., delivered the opinion of the Court, in which ALAN E. HIGHERS, J., and DAVID
R. FARMER , J., joined.
Curtis D. Johnson, Memphis, Tennessee, for Plaintiff/Appellant Gene Griffin.
Robert L. Moore and Dawn D. Carson, Memphis, Tennessee, for Defendant Troy Mendius and
Defendant/Appellee State Farm Insurance Company.
OPINION
On October 14, 1999, Plaintiff/Appellant Gene Griffin (“Plaintiff”) was injured in an
automobile accident with Defendant Troy Mendius (“Mendius”). At the time of the accident,
Plaintiff maintained an automobile insurance policy issued by Defendant/Appellee State Farm
Insurance Company (“State Farm”), which included uninsured motorist coverage. Unbeknownst to
Plaintiff at the time, State Farm also insured the other driver, Mendius.
At some point which is unclear in the record, Plaintiff apparently filed a lawsuit arising out
of the accident against State Farm but not against Mendius. This was nonsuited on March 18, 2002.
On March 12, 2003, Plaintiff filed a second personal injury lawsuit, this time against Mendius, in
the Shelby County Circuit Court, seeking damages resulting from the October 1999 automobile
accident. Apparently believing Mendius to be uninsured, Plaintiff caused a copy of the complaint
to be served on his own uninsured motorist carrier, State Farm, pursuant to Tennessee’s uninsured
motorist statute, Tennessee Code Annotated section 56-7-1201, et seq.
State Farm filed an answer to the complaint on April 30, 2004. In the answer, State Farm
acknowledged that, at the time of the accident, Plaintiff was insured by State Farm. Although
Plaintiff’s automobile insurance policy included uninsured motorist coverage, State Farm denied that
uninsured motorist coverage was applicable to this case. State Farm denied any negligence on the
part of Mendius in causing the accident and denied that Plaintiff suffered any damages as a result
of the accident. As an affirmative defense, State Farm contended that Plaintiff failed to file suit
against Mendius within the applicable statute of limitations and did not obtain service of process on
Mendius prior to voluntarily dismissing the lawsuit against State Farm in March 2002.
After filing its answer, State Farm filed a motion to dismiss. The record does not contain a
copy of this motion. However, on June 16, 2004, the trial court entered an order denying State
Farm’s motion to dismiss. In denying State Farm’s motion, the trial court found that (1) a civil
warrant was filed against Mendius in the earlier nonsuited litigation, and (2) since State Farm was
served with process in the subsequent litigation, the matter would proceed and State Farm could
defend the suit “in the name of the uninsured motorist or in its own name.”
The trial for this matter was originally set for February 7, 2005, but was later continued until
February 15, 2005. On February 7, State Farm filed a motion for Rule 11 sanctions against Plaintiff
and Plaintiff’s counsel, Memphis attorney Curtis Johnson (“Johnson”), seeking attorney’s fees, costs,
and expenses for “repeated acts of misconduct” in violation of Rule 11 of the Tennessee Rules of
Civil Procedure. Among other grounds, State Farm asserted that Mendius was never served with
either the original complaint against State Farm or the second complaint which named Mendius as
a defendant. State Farm’s motion stated that, at the time of the automobile accident, Mendius was
insured by State Farm with liability coverage at least equal to Plaintiff’s uninsured motorist limits.
State Farm contended that neither Plaintiff nor attorney Johnson sought to determine the amount of
liability coverage available to Mendius. State Farm maintained that its attorney had provided to
attorney Johnson affidavits, from both Mendius and State Farm, confirming Mendius’ insurance
coverage with State Farm. Despite receiving this information, Plaintiff proceeded with the litigation
against State Farm pursuant to the uninsured motorist statute.
After the February 15, 2005 trial, the trial court entered an order dismissing Plaintiff’s suit.
This dismissal is not at issue in this appeal.
On April 29, 2005, counsel for State Farm, Robert Moore (“Moore”), filed an affidavit
reiterating the allegations in the motion for Rule 11 sanctions. Moore stated that, because attorney
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Johnson on behalf of Plaintiff failed to take appropriate action, State Farm incurred attorney’s fees,
costs, and expenses totaling $6,650.50. Moore’s affidavit specified that $3,514.00 in fees and
expenses were incurred after Plaintiff and attorney Johnson were furnished affidavits certifying
Mendius’ automobile liability insurance coverage.
On May 13, 2005, the trial court entered an order granting State Farm’s motion for Rule 11
sanctions. The order explained:
Rule 11 sanctions are appropriate as a result of Plaintiff’s counsel being provided
proper notice that [Mendius] was insured in an amount over and above the uninsured
motorist amounts available and that [Mendius] had not been served with process.
Upon Plaintiff’s counsel being notified of all of the above, he continued to advocate
this cause of action to trial; it is therefore, ordered, adjudged and decreed that Rule
11 sanctions are appropriate and shall be granted upon submission of affidavit of
attorney’s fees and expenses by counsel for State Farm.
On May 27, 2005, the trial court entered an order approving attorney’s fees in the amount of
$3,514.00 pursuant to the order granting Rule 11 sanctions. This second order stated that attorney
Johnson did not appear at the hearing set on the issue of attorney’s fees, and that the amount of the
award included attorney’s fees, costs, and expenses incurred after attorney Johnson went ahead with
the litigation under the uninsured motorist theory despite having been provided affidavits certifying
Mendius’ liability insurance coverage. Consequently, the trial court awarded a judgment in favor
of State Farm for attorney’s fees, costs and expenses against both Plaintiff and attorney Johnson.
One month later, on June 27, 2005, attorney Johnson filed a motion on behalf of the Plaintiff
to alter or amend the judgment and to supplement the record, asserting three grounds for amending
the May 13, 2005 and May 27, 2005 orders. Attorney Johnson argued first that the May 27, 2005
order erroneously imposed sanctions on him, because the previous order did not impose such a
sanction. Second, the motion to alter or amend asserted that the record in the cause was incomplete,
in that the trial court considered items at the hearing on Rule 11 sanctions which were not in the
record. Finally, attorney Johnson argued on behalf of the Plaintiff that the trial court erred in
granting sanctions against any party in the first place.
The trial court permitted attorney Johnson to file an affidavit to supplement the record.
Attorney Johnson’s affidavit explained his decision to proceed with the litigation as an uninsured
motorist claim. Attorney Johnson acknowledged that, in December 2004, he received State Farm’s
affidavit stating that it insured Mendius. However, attorney Johnson explained, he was never
provided with a copy of the policy, despite the fact that he requested it a day before the February
trial. Attorney Johnson also asserted that his client, the Plaintiff, told him prior to trial that Mendius
had informed Plaintiff that he was not insured. Attorney Johnson also asserted that the Tennessee
Department of Safety had told Plaintiff that there was no proof of insurance on file for Mendius for
this accident. Submitted along with Johnson’s affidavit was a March 14, 2005 affidavit from the
Keeper of Records for the Tennessee Department of Safety, stating, “[A]ccording to our records at
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this time, an owner/operator report has not been filed on behalf of [Mendius] with respect to the
accident of October 14, 1999 in Shelby County, Tennessee.”
After considering this information, the trial court entered an order denying Plaintiff’s motion
to alter or amend. Plaintiff now appeals.1
On appeal, Plaintiff and attorney Johnson raise three issues for our review: (1) whether the
trial court erred in granting State Farm’s motion for Rule 11 sanctions; (2) whether State Farm’s
failure to mitigate rendered the award of sanctions inappropriate; and, (3) whether the trial court
erred in assessing Rule 11 sanctions against attorney Johnson individually.
The standard of review for an award of sanctions under Rule 11 of the Tennessee Rules of
Civil Procedure is high indeed. A trial court’s award of Rule 11 sanctions is subject to appellate
review under an abuse of discretion standard. Krug v. Krug, 838 S.W.2d 197, 205 (Tenn. Ct. App.
1992). This deferential standard is attributable to the fact-intensive examination required for the trial
court to determine whether a violation of Rule 11 has occurred. Id. Essentially, under the abuse of
discretion standard, this Court would overturn the trial court’s award of sanctions only if its ruling
had no basis in law or fact, and is therefore arbitrary, illogical, or unconscionable. Hooker v.
Sundquist, 107 S.W.3d 532, 535 (Tenn. Ct. App. 2002).
Rule 11 of the Tennessee Rules of Civil Procedure explains the import of an attorney’s
signature on a document presented to a trial court:
By presenting to the court (whether by signing, filing, submitting, or later advocating)
a pleading, written motion, or other paper, an attorney . . . is certifying that to the best
of the person’s knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances,—
***
(3) the allegations and other factual contentions have evidentiary support or, if
specifically so identified, are likely to have evidentiary support after a reasonable
opportunity for further investigation or discovery; . . . .
1
The notice of appeal indicates that it was filed on June 27, 2005. Notably, the copy of the notice of appeal in
the record before this Court does not contain a stamp with the date of filing on it. Instead, the notice of appeal contains
only a hand-written “Filed 6/27/05” in the top right corner of the document. The notation does not include the initials
of the clerk’s office employee who accepted the notice. Plaintiff did not file the appeal bond for costs until August 30,
2005. Plaintiff’s appellate brief claims that the notice of appeal was filed on June 27, 2005. Although State Farm’s
appellate brief states that the appeal was filed on August 30, 2005, State Farm has not raised any question as to the
timeliness of the appeal or the validity of the handwritten filing date on the notice of appeal. Although the handwritten
notation on the notice of appeal is irregular, we have before us no other indication that the notation is not authentic. Cf.
McPeak v. Specialty Surgical Instrum entation, Inc., Slip Copy, 2005 W L 1792205 (Tenn. W orkers Comp. Panel July
29, 2005) (declaring, “Nothing in our jurisprudence requires the use of date stamping machines in the marking of
documents, nor is the use of pen and ink prohibited.”).
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Tenn. R. Civ. P. 11.02(3). If the information in the filings proves to be inaccurate or misleading,
Rule 11.03 gives the trial court the discretionary authority to issue sanctions against the attorney,
once the trial court determines that sanctions are appropriate or necessary to punish or deter the
infraction. The Tennessee Supreme Court has explained that the test to be applied in determining
whether an attorney’s conduct is sanctionable is one of objective reasonableness under all of the
circumstances. Andrews v. Bible, 812 S.W.2d 284, 288 (Tenn. 1991). Under this test, the court
focuses on the information available to attorney at the time of certification; the trial court measures
the reasonableness of the conduct without the benefit of hindsight. Id. The sanctions available for
a violation of Rule 11 are intended to deter abuse of the litigation process. Tenn. R. Civ. P. 11.03(2).
Among the sanctions available to the trial court under Rule 11 is the payment to the movant “of
some or all of the reasonable attorneys’ fees and other expenses incurred as a direct result of the
violation.” Tenn. R. Civ. P. 11.03(2).
On appeal, Plaintiff and attorney Johnson assert that the trial court erred in awarding
sanctions to State Farm. Plaintiff argues that there was an evidentiary basis for the factual contention
that Mendius was uninsured. Plaintiff contends that Tennessee’s financial responsibility law
established a rebuttable presumption that Mendius was uninsured, and, consequently, Plaintiff’s
choice to proceed with the litigation under an uninsured motorist theory was objectively reasonable.
See T.C.A. § 56-7-1201(g).
Under the circumstances of this case, however, any rebuttable presumption that Mendius was
uninsured was clearly rebutted. Attorney Johnson’s affidavit filed in support of Plaintiff’s motion
to alter or amend the judgment in this case admits that he received notice from State Farm in
December 2004 that Mendius was insured. The trial of this matter occurred on February 15, 2005.
Plaintiff and attorney Johnson had ample opportunity to cure the inaccurate pleadings, but chose
instead to proceed with the trial under the legal theory that Mendius was uninsured. Based on the
totality of the evidence before the trial court, we cannot conclude that the court erred in its implicit
finding that Johnson’s choice to proceed to trial was unreasonable and improper based on the
information available to him well in advance of trial.
Next, Plaintiff argues that State Farm’s failure to disclose to Plaintiff the fact that it also
insured Mendius constituted a failure to mitigate its damages. Plaintiff asserts that this failure to
mitigate should preclude State Farm from obtaining any award of sanctions. We disagree. Failure
to mitigate damages is one of many factors for the trial court to consider in fashioning a reasonable
sanction to deter inappropriate conduct. In Thomas v. Capital Security Services, Incorporated, the
Fifth Circuit Court of Appeals discussed the relevance of the duty to mitigate in light of a motion
for Rule 11 sanctions:
The “reasonableness”’ finding necessarily embraces an inquiry by the court as to the
extent to which the nonviolating party’s expenses and fees could have been avoided
or were self-imposed. A party seeking Rule 11 costs and attorney’s fees has a duty
to mitigate those expenses, by correlating his response, in hours and funds expended,
to the merit of the claims. If a litigant fails to do so, the district court may exercise
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its discretion and either reduce the award accordingly, or in some instances, decline
to award any expenses.
836 F.2d 866, 879 (5th Cir. 1988) (citations omitted). In a similar vein, the Tenth Circuit Court of
Appeals, in White v. General Motors Corporation, Incorporated, 908 F.2d 675, 684 (10th Cir.
1990), explained that the trial court must independently analyze the reasonableness of the fees
requested in a motion for sanctions. This analysis necessarily includes considering whether the
injured party has mitigated their damages. Id. (declaring, “The injured party has a duty to mitigate
costs by not overstaffing, overresearching or overdiscovering clearly meritless claims.”).
In the instant case, Plaintiff and attorney Johnson are in a poor position to argue that the
award of sanctions should be remedied because State Farm did not mitigate its damages. The trial
court held a hearing to determine the amount of sanctions to award, and attorney Johnson failed to
even show up at the hearing. At the conclusion of this hearing, the trial court determined that a
reasonable award would include State Farm’s attorney’s fees, costs, and expenses incurred after
Plaintiff and attorney Johnson received the affidavits certifying Mendius’ insured status. We find
no abuse of the trial court’s discretion.
The third and final argument made by attorney Johnson, presumably on behalf of Plaintiff,
is that the trial court erred by assessing sanctions against attorney Johnson individually. Plaintiff
argues that because the May 13, 2005 order granting State Farm’s motion for Rule 11 sanctions did
not specify whether the sanction was against Plaintiff or attorney Johnson, or both, and the May 27,
2005 order subsequently assessed the sanctions against both Plaintiff and attorney Johnson, the
subsequent order “imposed a new obligation individually without due process as to [attorney
Johnson’s] defenses in regard to sanctions.”
Here, State Farm’s February 7, 2005 motion for Rule 11 sanctions requested sanctions
against both Plaintiff and attorney Johnson. The trial court’s May 13, 2005 order granting State
Farm’s motion for sanctions clearly indicated that attorney Johnson was culpable for continuing to
advocate a meritless cause to trial. Without question, attorney Johnson was on notice that his actions
were the cause of the award of sanctions and that the amount would be determined at a later hearing.
The later hearing was held and attorney Johnson did not attend.
Rule 11.03 of the Tennessee Rules of Civil Procedure provides that the trial court may
“impose an appropriate sanction upon the attorneys, law firms, or parties that have violated
subdivision 11.02 or are responsible for the violation.” Under all of these circumstances, the trial
court was clearly within its authority to impose the award of sanctions against both Plaintiff and
attorney Johnson. We find no error in the trial court’s award of sanctions against attorney Johnson.
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The decision of the trial court is affirmed. The costs of this appeal are assessed against
Attorney Curtis D. Johnson, for which execution may issue, if necessary.
___________________________________
HOLLY M. KIRBY, JUDGE
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