Connie Givens v. Ed Mullikin, Admin. ad litem for Larry McElwaney

IN THE SUPREME COURT OF TENNESSEE
AT JACKSON
November 13, 2001 Session Heard at Memphis
CONNIE JEAN GIVENS v. ED MULLIKIN, ADMINISTRATOR
AD LITEM OF THE ESTATE OF LARRY MCELWANEY, ET AL.
Appeal by Permission from the Court of Appeals, Western Section
Circuit Court for Shelby County
No. 95241 T.D. Hon. John R. McCarroll, Jr., Judge
No. W1999-01783-SC-R11-CV - Filed March 25, 2002
The principal issue in this case is whether an insurance carrier and an insured may be held
vicariously liable for the alleged tortious actions of an attorney hired to defend the insured. The trial
court held that the plaintiff’s complaint stated a claim of vicarious liability against the defendant
insured and his insurance carrier for abuse of process, inducement to breach express and implied
contracts of confidentiality, inducement to breach a confidential relationship, and invasion of
privacy. The Court of Appeals affirmed the trial court’s ruling with respect to the vicarious liability
issue, though it dismissed the claims for inducement to breach a confidential relationship and
invasion of privacy. The defendants then appealed to this Court, and we now hold that an insurer
and an insured may be held vicariously liable for the tortious acts or omissions of an attorney hired
to defend the insured, if the attorney’s tortious actions were directed, commanded, or knowingly
authorized by the insurer or by the insured. We further hold that the complaint in this case states a
claim of vicarious liability against the insurer alone for abuse of process. The judgment of the Court
of Appeals is affirmed in part and reversed in part.
Tenn. R. App. P. 11 Application for Permission to Appeal; Judgment of the Court of
Appeals Affirmed in Part, Reversed in Part; Case Remanded
WILLIAM M. BARKER, J., delivered the opinion of the court, in which FRANK F. DROWOTA , III, C.J.,
and E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and JANICE M. HOLDER, JJ., joined.
Nathan W. Kellum, Memphis, Tennessee, for the appellant, Ed Mullikin, administrator ad litem of
the estate of Larry McElwaney.
Leo Bearman, Jr., Robert M. Glover, and Launice P. Sills, Memphis, Tennessee, for the appellant,
Allstate Insurance Company.
William H. Fisher, III, Memphis, Tennessee, for the appellee, Connie Jean Givens.
OPINION
FACTUAL BACKGROUND
We granted permission to appeal in this case to review whether the trial court should have
granted a motion to dismiss a complaint under Tennessee Rule of Civil Procedure 12.02(6) for the
failure to state a claim upon which relief may be granted. The plaintiff, Ms. Connie Jean Givens,
has alleged that an attorney hired by Allstate Insurance Company to defend one of its insureds
committed several torts within the context of that representation, thereby rendering Allstate and its
insured vicariously liable for the attorney’s actions. Because a motion to dismiss under Rule
12.02(6) admits the truth of all of the relevant and material averments contained in the complaint,
see, e.g., Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn. 1997), we “must construe the
complaint in favor of the plaintiff, accept the allegations of fact as true, and deny the motion unless
it appears that the plaintiff can establish no facts supporting the claim that would warrant relief,” see,
e.g., Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn. 1999).
As alleged in the plaintiff’s complaint, the underlying facts of this case arose out of a 1988
traffic accident involving the plaintiff and the defendant, Larry McElwaney.1 After the plaintiff filed
suit against McElwaney to recover damages, his insurance carrier, Allstate Insurance Company, hired
Mr. Hal Nichols, “a highly competent and effective Memphis attorney,” to represent McElwaney.
Sometime after Mr. Nichols substantially completed discovery in the case, including deposing the
plaintiff, submitting interrogatories, and obtaining the plaintiff’s medical records, Allstate fired Mr.
Nichols and employed the Richardson Law Firm to represent McElwaney.
According to the plaintiff, as soon as Allstate hired the Richardson Firm, the Firm began the
discovery process anew to harass her, to cause her to suffer unnecessary expense, and to “weaken
[her] resolve to pursue the suit to the extent that she [would] abandon it.” The Richardson Firm is
first alleged, as an agent of Allstate and McElwaney, to have submitted an excessive number of
interrogatories, totaling about 237 questions and subparts, even though it already possessed much
of the information requested by the interrogatories. Although the plaintiff asserts that she objected
to the initial submission of interrogatories by the Richardson Firm, she relates that the trial court
overruled her objection.
The plaintiff also alleges that the Richardson Firm deposed her for a second time, subjecting
her to “intense questioning about every aspect of her social, educational, employment, and medical
history.” Lasting about eight hours, this second deposition is alleged to have inquired as to whether
the plaintiff “had been sleeping with the Defendant McElwaney,” and as to “every ailment with
which [she] has ever been beset, no matter how trivial.” The plaintiff was also called upon to furnish
1
Mr. M cElwane y passed aw ay during the course of this litigation, and Mr. Ed Mullikin, as administrator ad
litem of the estate, was substituted as the party defendant. Any references to Mr. McE lwaney, of course, include Mr.
Mullikin as the proper p arty appellant in this Court.
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the names of every doctor, dentist, and other healthcare professional who treated her for these
ailments.
Further, the Richardson Firm is alleged to have issued more than seventy discovery
subpoenas to various records custodians. Despite knowing that many of these records possessed no
relevance to the issues in the plaintiff’s suit, the Richardson Firm is alleged to have sent subpoenas
to (1) “every custodian for every healthcare professional who was suspected . . . to have rendered
treatment to the plaintiff at any time during her life,” including her psychologist, her
obstetrician/gynecologist, and others; (2) every “hospital in Memphis and Chattanooga (where the
plaintiff once lived), even though in many instances[,] the Richardson Firm had no reason to believe
that the Plaintiff had received treatment there”; (3) every employer for whom the plaintiff has ever
worked; (4) every automobile repair agency to which the plaintiff’s automobile has ever been taken;
and (5) every insurance company that has written a policy of insurance for the plaintiff.
In no case, however, did the Richardson Firm actually depose a records custodian. Instead,
all but six of the discovery subpoenas stated that the custodian could send a copy of the plaintiff’s
“entire file” to the Richardson Firm “in lieu of personal appearance.” The Richardson Firm also
notified the plaintiff’s attorney that depositions of records custodians would not be taken unless the
plaintiff objected. After receiving this notice, the plaintiff’s attorney wrote letters to these custodians
directing them not to comply with the subpoenas.
The plaintiff then moved to quash a group of four specific subpoenas under Rule of Civil
Procedure 45.07,2 with each subpoena being representative of a greater class. The trial court granted
the plaintiff’s motion and quashed the subpoenas, finding that the plaintiff’s failure to object was not
the equivalent of an “agreement” as contemplated by Rule 45.07. The Court also ruled that the
plaintiff had not waived her right to complain of the subpoenas by failing to object to each
individually. However, following the court’s ruling, the Richardson Firm is alleged to have
continued to issue similar subpoenas, for both discovery and trial purposes, to various records
custodians.
On June 12, 1998, the plaintiff filed a separate action alleging (1) that the Richardson Firm’s
discovery practices constituted an abuse of process, and (2) that its practice of obtaining her medical
records through use of the defective subpoenas invaded her right to privacy and induced the medical
practitioners to breach their confidential relationships with her. The plaintiff also alleged that the
Richardson Firm induced her treating physician to breach express and implied contracts of
confidentiality with her by privately speaking with him outside a deposition. However, the plaintiff
did not sue the Richardson Firm directly, but she instead sued McElwaney and Allstate, alleging that
each was vicariously liable for the tortious actions of the Richardson Firm.
2
Rule o f Civil Procedure 45.07 provides that “[e]very subp oena issued and se rved under any part of this R ule
45 for testimony, books, pap ers, do cuments, or tangible things m ust com mand the witness to appe ar at a trial, hearing,
or deposition unless otherwise provided by statute or by agreement of all parties.”
-3-
Both McElwaney and Allstate filed motions to dismiss the complaint pursuant to Rule of
Civil Procedure 12.02(6) for failure to state a claim upon which relief can be granted. Each
defendant alleged that they could not be held vicariously liable for the actions of the Richardson
Firm as alleged, but that even if they could, the complaint did not allege sufficient facts to grant the
plaintiff relief on any claim. The trial court held a hearing on the motion, and on October 9, 1998,
it denied the motions to dismiss.
McElwaney and Allstate then requested permission from the trial court to seek interlocutory
appeal, which the court granted under all three grounds listed in Tennessee Rule of Appellate
Procedure 9(a). On January 26, 2000, the Court of Appeals granted interlocutory appeal on these
grounds, and it later affirmed the trial court’s holding that the defendants could be held vicariously
liable for the actions of the Richardson Firm. The intermediate court also found that the complaint
stated causes of action for abuse of process and inducement to breach contracts of confidentiality.
However, it dismissed the plaintiff’s claims for invasion of privacy and inducement to breach a
confidential relationship.
We then granted McElwaney and Allstate permission to appeal on the issues of whether they
may be held vicariously liable for the Richardson Firm’s actions and whether the complaint properly
alleges claims for abuse of process and inducement to breach express and implied contracts of
confidentiality. The plaintiff, as appellee, has also raised the issues of whether the Court of Appeals
properly dismissed her claims for invasion of privacy and for inducement to breach a confidential
relationship.
For the reasons given herein, we hold that an insurer and an insured may be held vicariously
liable for the tortious acts or omissions of an attorney hired to defend the insured, if the attorney’s
tortious actions were directed, commanded, or knowingly authorized by the insurer or by the insured.
We further hold that the complaint in this case states a claim of vicarious liability against Allstate,
but not against McElwaney, for abuse of process. The remaining claims against Allstate, and all of
the claims against McElwaney, are dismissed. The judgment of the Court of Appeals is affirmed in
part and reversed in part.
I. ALLEGATIONS OF VICARIOUS LIABILITY
The two threshold issues in this case are (1) whether Allstate, as the insurance company that
hired the Richardson Firm to defend McElwaney, may be held vicariously liable for that firm’s
alleged tortious conduct, and (2) whether McElwaney, as the insured and the sole client of the
attorney, may also be held vicariously liable for the firm’s alleged tortious actions. Because the
relationship of each defendant to the Richardson Firm differs in several aspects, we take the time to
examine each relationship individually and discuss the possible bases, if any, for imposing vicarious
liability in this context.
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A. RELATIONSHIP OF THE INSURER TO COUNSEL
HIRED TO DEFEND AN INSURED
Addressing the claims against Allstate first, the plaintiff asserts that Allstate is liable for the
actions of its attorney hired to defend an insured because that attorney acts as a general agent for the
insurer. On the other hand, Allstate argues that it cannot be held vicariously liable for the actions
of an attorney hired to defend an insured, because such an attorney is properly characterized as an
independent contractor, rather than an employee, of the insurance company. We agree that Allstate’s
characterization of the relationship in this regard is generally the more accurate of the two, but we
disagree that an attorney’s status as an independent contractor invariably forecloses the possibility
that the insurer can be held vicariously liable for the tortious actions of that attorney.
In the typical situation in which an insurer hires an attorney to defend an insured, the
relationship of the insurer and its attorney is precisely that of principal to independent contractor.
For example, the attorney is engaged in the distinct occupation of practicing law, and this occupation
is one in which the attorney possesses special skill and expertise. Moreover, the attorney generally
supplies his or her place of work and tools; the attorney is employed and paid only for the cases of
individual insureds; and he or she alone, consistent with ethical obligations to ensure competence
and diligence in the representation, determines the time to be devoted to each case. Finally, and
obviously, the practice of law is not, nor could it be, part of the regular business of an insurer. Cf.
Youngblood v. Wall, 815 S.W.2d 512, 517 (Tenn. Ct. App. 1991) (listing similar factors to
determine whether an employment relationship enjoys the status of principal-independent
contractor).
Moreover, an insurer in Tennessee clearly possesses no right to control the methods or means
chosen by an attorney to defend the insured. Cf. Galloway v. Memphis Drum Serv., 822 S.W.2d
584, 586 (Tenn. 1991) (stating that the most important factor to consider in determining whether one
is an independent contractor is whether the principal has the right to control or direct the time, place,
methods and means by which work is being done). As we stated in In re Youngblood, 895 S.W.2d
322, 328 (Tenn. 1995), the insurer “cannot control the details of the attorney’s performance, dictate
the strategy or tactics employed, or limit the attorney’s professional discretion with regard to the
representation [of the insured].” See also Tenn. Bd. of Prof’l Responsibility, Formal Op. 88-F-113
(Aug. 2, 1988) (stating that this principle is “a basic and elementary element of the client-attorney
relationship”). In addition, we also affirmed without reservation that “[a]ny policy, arrangement or
device which effectively limits, by design or operation, the attorney’s professional judgment on
behalf of or loyalty to the client is prohibited by the Code, and, undoubtedly, would not be consistent
with public policy.” Youngblood, 895 S.W.2d at 328. Therefore, because the insurer lacks this
important right of control, an attorney hired by an insurer to defend an insured must be considered,
at least initially, to enjoy the status of an independent contractor.3
3
Indeed, in Youngblood, we even characterized an attorney hired to defend an insured as “an independent
contractor engaged by the insurer.” 895 S.W.2d at 328.
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However, while the rule is that a principal is not generally liable for the tortious actions of
an independent contractor, see, e.g., Hutchison v. Teeter, 687 S.W.2d 286, 687 (Tenn. 1985); Carr
by Carr v. Carr, 726 S.W.2d 932, 933 (Tenn. Ct. App. 1986), this rule is subject to many exceptions,
and our finding that an attorney in this context should generally be regarded as an independent
contractor does not, ipso facto, relieve the insurer of all liability from the attorney’s acts or
omissions. Chief among the some twenty-four exceptions to this general rule listed in the
Restatement (Second) of Torts is that contained in section 410, which provides that when an
independent contractor acts pursuant to the orders or directions of the employer, then the employer
“is subject to the same liability . . . as though the act or omission were that of the employer himself.”
Several states have also recognized that when a principal directs or orders an independent contractor
to act or fail to act, the principal cannot later assert the agent’s status as an independent contractor
as a defense to liability.4
We are aware of no Tennessee case previously recognizing this principle, but it is certainly
consistent with our general common law of agency, which holds that when one directs, orders, or
knowingly authorizes another to perform an act, then the principal is liable for the harm proximately
caused by those acts. See White v. Revco Disc. Drug Ctrs., Inc., 33 S.W.3d 713, 723 (Tenn. 2000);
Kinnard v. Rock City Constr. Co., 39 Tenn. App. 547, 551, 286 S.W.2d 352, 354 (1955). Indeed,
liability for the directed or authorized acts of an agent may follow irrespective of whether other
separate agency relationships also exist. See White, 33 S.W.3d at 723 (stating that a principal may
be held liable for an agent’s tortious act, “even if that act occurs outside of the scope of the agency,
if the act was commanded or directed by the principal”). Because a principal’s right to control an
agent, in some cases, is “not necessarily as important as the principal’s exercise of actual control
over the agent,” id. (emphasis added), we must recognize that a principal can be held liable for the
harm caused by the directed or knowingly authorized acts of an agent, even if that agent would
otherwise be considered an independent contractor in the absence of any such direction or
authorization.
Consequently, although an insurer clearly lacks the right to control an attorney retained to
defend an insured, we simply cannot ignore the practical reality that the insurer may seek to exercise
actual control over its retained attorneys in this context.5 While this practical reality raises
4
See, e.g., Green v. H&R Block, Inc., 735 A.2d 10 39, 1051 (Md. 19 99) (“W e reaffirm the rule that a principal
is not liable for any physical injury caused by the negligent conduct of his agent, who is not a servant, during the
performance of the principa l’s business, unless the act was done in the manner authorized or directed by the principal,
or the result was one authorized or intended by the principal.” (emphasis add ed)); Baldasarre v. Butler, 625 A.2d 458,
465 (N.J. 199 3) (stating that “the p rincipa l is [generally] not vicariously liable for the torts of the independent contractor
if the principal did not direct or participate in them” (emphasis added)).
5
We expressly recognized this fact in Youngblood when we stated that “the insurance company’s obligation
to defend an action brought by a third person against the insured [often] contemplates that the company will take charge
of the defense, including the supervision of the litigation.” 895 S.W.2d at 329-30. Moreover, the various aspects of
actual control exercised by the insurer over the litigation can usually be seen in the insurance contract itself, which,
among other things, typically reserves for the insurer the right to select defense counsel, to guide the litigation of the
(continued...)
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significant potential for conflicts of interest, it does not become invidious until the attempted control
seeks, either directly or indirectly, to affect the attorney’s independent professional judgment, to
interfere with the attorney’s unqualified duty of loyalty to the insured, or to present “a reasonable
possibility of advancing an interest that would differ from that of the insured.” See Tenn. Bd. of
Prof’l Responsibility, Formal Op. 00-F-145 (Sept. 8, 2000). To be clear, our recognition of the
control exercised by insurers in this context does not condone this practice, especially when it works
to favor the interests of the insurer over that of the insured; rather, we acknowledge this aspect of
the relationship only because it would be imprudent for this Court to hold that attorneys are
independent contractors vis-à-vis insurers, but then to ignore the practical realities of that
relationship when it causes injury.
Accordingly, we hold that an insurer can be held vicariously liable for the acts or omissions
of an attorney hired to represent an insured when those acts or omissions were directed, commanded,
or knowingly authorized by the insurer. This having been said, we suspect that cases in which an
insurer may be held liable under an agency theory will be rare indeed. We do not hold today that an
insurer may be held vicariously liable for the acts or omissions of its hired attorney based merely
upon the existence of the employment relationship alone. Nor do we hold that an insurer may be
held liable for any acts or omissions resulting solely from the exercise of that attorney’s independent
professional judgment, and in all cases, a plaintiff must show that the attorney’s tortious actions were
taken partly at the insurer’s direction or with its knowing authorization. Nevertheless, when the
insurer does undertake to exercise actual control over the actions of the insured’s attorney, then it
may be held vicariously liable for any harm to a plaintiff proximately caused thereby.
B. RELATIONSHIP OF THE INSURED TO
COUNSEL HIRED BY AN INSURER
The issue of whether the insured may be held vicariously liable for the tortious acts of his or
her hired attorney also presents an issue of first impression in this state. In this case, McElwaney
argues, similarly to Allstate, that the retained attorney stands in the role of an independent contractor
vis-à-vis the insured, and that as such, the insured cannot be held vicariously liable for the tortious
actions of that attorney. McElwaney further argues that, practically speaking, an insured has no right
of control in this context because the insurance contract itself typically delegates many aspects of
control to the insurer.
5
(...continued)
claim, to control decisions regarding settlement of the claim, and perhaps most importantly, to deny coverage based on
the non-coop eration of the insured . See Tenn. Bd. of Prof’l Responsibility, Formal Op. 00-F-145 (Sept. 8, 2000); Formal
Op. 99-F -143 (June 14, 1 999 ); see also 44 A m. Jur. 2d Insurance § 1393 (1982) (noting how the typical insurance
contract gives the insurer control over the action).
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Following our decision in Youngblood, no doubt can exist that the insured is the sole client
of an attorney hired by an insurer pursuant to its contractual duty to defend, see 895 S.W.2d at 328,6
and in the typical attorney-client relationship, the client maintains a significant right to control the
objectives of the representation. Indeed, Ethical Consideration 7-7 states that the client retains
“exclusive authority” to direct all areas of the representation that affect the merits of the cause or
substantially prejudice his or her rights. See also Zagorski v. State, 983 S.W.2d 654, 658 (Tenn.
1998) (“Generally, the client has exclusive authority to make decisions about his or her case, which
are binding upon the lawyer if made within the framework of the law.”).
Despite the wide range of authority and right of control possessed by the client, however, the
client does not have a general authority to control “the time, place, methods and means” of the
representation. Importantly, Ethical Consideration 7-7 allocates to the attorney the authority to
determine the specific means of achieving these objectives, and this authority is not generally subject
to the control of the client. Therefore, although the line separating the sphere of client control from
that of the attorney’s can never be marked with the precision of a bright-line rule, there can be no
question that the attorney retains substantial independent authority regarding the day-to-day aspects
of the representation.
Moreover, in the unique context of insurance defense, whatever right of control the client
would otherwise possess over the “time, place, methods and means” of the representation is often
practically superseded by the insurance contract itself, which typically delegates much of this right
of control to the insurer. Given that the insurer usually retains the right to select counsel, to guide
the course of litigation, and to compel the cooperation of the insured, the insured generally has little
practical authority to control the actions of his or her attorney. As the California Court of Appeals
has recognized in one of the leading cases in this area,
The assured is not in a position to exercise effective control over the lawsuit or to
further his own interests by independent action, even when those interests appear in
serious jeopardy. The assured may face the possibility of substantial loss[,] which
can be forestalled only by action of the carrier. Thus the assured may find himself
and his goods in the position of a passenger on a voyage to an unknown destination
on a vessel under the exclusive management of the crew.
Merritt v. Reserve Ins. Co., 110 Cal. Rptr. 511, 519 (Cal. Ct. App. 1973). Therefore, because the
client does not generally possess the right to control the “the time, place, methods and means” by
which the representation is accomplished, or often even possess any right to control the objectives
6
See also Tenn. Bd. of Prof’l Responsibility, Formal Op. 00-F-145 (Sept. 8, 2000) (citing Formal Op. 99-F-143
(June 14, 1999 ) and Formal Op . 85-F-100 (Sept. 30, 1985 )).
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of the representation in the insurance context, an attorney retained by an insurer must be deemed to
be an independent contractor vis-à-vis the client insured.7
However, as we recognized above, the attorney’s status as an independent contractor does
not vindicate the client insured in the face of all claims of vicarious liability, because a principal can
be held liable for the harm caused by the directed acts of an agent, despite whether that agent would
otherwise be considered an independent contractor in the absence of such directions. Accordingly,
for the reasons stated above, we hold that a client insured can also be held vicariously liable for the
acts or omissions of his or her attorney when those acts or omissions were directed, commanded, or
knowingly authorized by that client.
The Court of Appeals in this case held that because the law presumes an attorney to act with
the authority of the client, then the client must be vicariously liable for the tortious actions of that
attorney. We respectfully disagree. While the presumption regarding the apparent authority of an
attorney was accurately stated by the intermediate court, its use below effectively grounds vicarious
liability in tort solely on the basis of the attorney-client relationship. We conclude that this approach
is too broad because it exposes the client to tort liability for virtually every action taken by the
attorney during the representation, irrespective of whether the client actually directed or knowingly
authorized those actions. As the Texas Court of Appeals has recognized,
Unless a client is implicated in some way other than merely being represented by the
attorney alleged to have committed the [tortious] conduct, the client cannot be liable
for the attorney’s conduct. A contrary holding would in effect obligate clients to
monitor the actions taken by their attorneys when their attorneys are representing
them, and require the clients to seize the helm of their representation at the slightest
hint of [tortious] conduct. Most clients cannot possibly monitor their attorneys to the
degree that would be required to meet such an obligation, and most, clearly, are not
qualified for such monitoring, anyway.
Bradt v. West, 892 S.W.2d 56, 76-77 (Tex. App. 1994). We agree with this assessment, and because
the basis of liability adopted by the intermediate court does not properly consider the general
independent contractor status of the attorney or the unique circumstances surrounding the insurance
contract itself, we decline to adopt a similar theory to impose vicarious tort liability on a client for
the actions of an attorney.8
7
Importantly, because of the insured’s status as the attorney’s client, the insured retains the ultimate authority
to reject any directions given by the insurer to the attorney that affect the merits of the case or that affect any of the
insured ’s substantial rights. See Tenn. Bd. of Prof’l Responsibility, Formal Op. 00-F-145 (Sept. 8, 2000). Ho wever,
any such action tak en by the client insu red will typically be at the risk o f the insurer either issuing a reservatio n of rights
unde r the po licy or declining to participate further in the defense or indem nification of the lawsuit. See id.
8
The attorney, however, is always liable for his or her own torts, irrespective of whether the attorney’s actions
were taken within the scope of the representation or at the behest of ano ther. As the Court of Appeals noted long ago,
(continued...)
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C. DISMISSAL OF THE VICARIOUS LIABILITY CLAIMS
PURSUANT TO RULE OF CIVIL PROCEDURE 12.02(6)
Having determined that both an insurer and an insured may, under limited circumstances, be
held vicariously liable for the tortious actions of an attorney hired by the insurer to defend an insured,
we must now examine the plaintiff’s factual allegations contained in her complaint to determine
whether she has stated a claim of vicarious liability against Allstate and McElwaney. The basis for
the alleged liability of McElwaney and Allstate is found in two separate paragraphs in the complaint,
which read as follows:
10) The Richardson Firm, thereupon, became the attorney of record in this
McElwaney damage suit for the Defendant McElwaney, and has since been, at all
times material, the agent of both the Defendant McElwaney and the Defendant
Allstate for whose conduct the Defendants McElwaney and Allstate are liable under
the doctrine of respondeat superior.
....
81) The Richardson Firm was at all times material hereto acting within the scope
of its employment as agent of both the Defendants McElwaney and Allstate, and the
said Defendants are therefore liable for the conduct of the Richardson Firm described
above under the doctrine of respondeat superior.
In no other place does the eighty-four paragraph complaint allege any relationship between the
Richardson Firm and Allstate or McElwaney.
Allegations Against Allstate
With respect to the allegations against Allstate, the paragraphs cited above seem to allege that
the employment relationship alone is the basis of Allstate’s alleged vicarious liability. Unlike the
8
(...continued)
Neither logic nor reason permits a principal to escape liability for an act done through the medium of
an agent which, if done by the principal, would have resulted in liability and, likewise, the agent
cannot escape the consequences of an illegal and unauthorized invasion of the right of third persons
mere ly upon the gro und that it acted for its princ ipal.
Fidelity & De posit Co. v. Hamilton Nat’l Bank, 23 Tenn. App. 20, 28, 126 S.W .2d 359, 364 (1938). As such, nothing
we have said in this opinion should be construed to relieve an attorney of direct liability for his or her own conduct
mere ly beca use the a ttorney w as rep resenting ano ther pa rty. See also Howard v. Haven, 198 Tenn. 572, 582, 281 S.W.2d
480, 484-85 (1955) (“The authorities are abundant and need no citation to the effect that bo th the agent and his principal
are liable for the wrongful act of the former when committed within the scope of the agent’s authority, or when ratified
by the principal if the act is not within the scope of such authority.”); Allied Sound, Inc. v. Neely, 909 S.W.2d 815, 821
(Tenn. Ct. App. 1995) (“We note that ‘an agent cannot escape liability for tortious acts, including fraud or
misrepresentation, against third persons simply because the agent was acting within the scope of the agency or at the
direction of the employer.’” (quoting Brungard v. Caprice Records, Inc., 608 S.W .2d 585, 590 (Tenn. Ct. App. 1980 )).
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allegations of the complaint in Trau-Med of America, Inc. v. Allstate Insurance Co., __ S.W.3d __
(Tenn. 2002), an opinion filed simultaneously with the opinion in this case, the complaint here
contains no express allegation that Allstate directed or commanded the Richardson Firm to engage
in its allegedly tortious actions. Moreover, the plaintiff does not allege that the Richardson Firm
sought and obtained Allstate’s authorization for its actions.
However, as we reaffirmed in White, “[a] complaint ‘need not contain in minute detail the
facts that give rise to the claim,’ so long as the complaint does ‘contain allegations from which an
inference may fairly be drawn that evidence on these material points will be introduced at trial.’”
33 S.W.3d at 725 (quoting Donaldson v. Donaldson, 557 S.W.2d 60, 61 (Tenn. 1977)). We believe
that the other allegations of the complaint fairly raise an inference that the plaintiff intends to
introduce proof that Allstate directed or knowingly authorized the Richardson Firm’s actions in this
case.
For example, paragraph six of the complaint alleges that Allstate originally hired a “highly
competent and effective Memphis attorney” to represent its insured. Sometime after this attorney
substantially completed discovery, Allstate is alleged in paragraph nine to have fired this attorney
and hired the Richardson Firm in his stead. The Richardson Firm is then alleged to have initiated
and pursued the discovery process anew with motives other than to obtain information relevant to
the suit. Taken in a light most favorable to the plaintiff, the inference fairly drawn from these
allegations is that the plaintiff intends to prove that Allstate, after discharging an attorney who was
competently defending its interests, directed or knowingly authorized a new firm to engage in the
alleged tortious conduct to induce the plaintiff to drop her claim.
As we held above, an insurer cannot be held accountable for the actions of its attorney based
merely upon the existence of the employment relationship alone; some exercise of actual control,
whether it be through direction or knowing authorization, must be alleged before a complaint can
be held to properly state such a claim. However, because Allstate may reasonably infer that the
plaintiff intends to prove that Allstate directed or knowingly authorized the Richardson Firm to
engage in its allegedly tortious conduct, we conclude that the complaint has stated a claim of
vicarious liability against Allstate. Cf. White, 33 S.W.3d at 725.
Allegations Against McElwaney
With respect to the plaintiff’s allegations against McElwaney, however, we must hold that
the complaint does not state a claim of vicarious liability. Again, the basis of purported liability
against McElwaney is only the employment of the attorney by Allstate—a basis that, standing alone,
is simply insufficient to support recovery of damages against the defendant. In addition, the
complaint does not allege facts showing that McElwaney directed the Richardson Firm to engage
in its allegedly tortious actions or that the Richardson Firm sought and obtained McElwaney’s
knowing authorization for its course of conduct.
Moreover, unlike our analysis of the complaint regarding Allstate’s purported liability, we
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do not find that the complaint’s allegations fairly raise an inference that McElwaney in any way
directed or knowingly authorized the actions of the Richardson Firm. To the contrary, the fair
inference drawn from the plaintiff’s allegations is that McElwaney had no control or influence over
the actions of the Richardson Firm. For example, the complaint alleges that McElwaney had no real
financial stake in the determination of the original suit—the plaintiff alleges that she offered to settle
the suit within McElwaney’s policy limits—and that he therefore possessed little motive to control
or direct the representation to avoid an adverse judgment. Furthermore, the complaint alleges that
Allstate, not McElwaney, had the power to employ and discharge counsel. As such, it appears that
the only basis of liability as far as McElwaney is concerned is that of the attorney-client relationship.
Accordingly, because the complaint does not allege facts showing that McElwaney directed,
commanded, or knowingly authorized the Richardson Firm to engage in its allegedly tortious
conduct—an essential element for vicarious liability in this context—we hold that the plaintiff has
not stated a claim against McElwaney upon which she may be granted relief. Cf. Bell ex rel. Snyder
v. Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A., 986 S.W.2d 550, 556 (Tenn. 1999)
(dismissing complaint for failure to state a claim where the complaint did not allege facts supporting
an essential element of the claim). We therefore dismiss the plaintiff’s claims of vicarious liability
against McElwaney.
II. ALLEGATIONS OF SUBSTANTIVE LIABILITY
Having determined that the complaint alleges a proper basis to hold Allstate vicariously liable
for the actions of the Richardson Firm, we must now determine whether the complaint alleges
sufficient facts that, if proven, would constitute tortious conduct by the Richardson Firm. The
plaintiff has alleged four separate causes of action, including abuse of process, inducement to breach
express and implied contracts of confidentiality, inducement to breach a confidential relationship,
and invasion of privacy. The trial court found that the complaint sufficiently stated a claim for relief
under all four theories, but the Court of Appeals dismissed the claims for inducement to breach a
confidential relationship and for invasion of privacy.
Before this Court, Allstate has appealed the ruling of the intermediate court with respect to
the claims of abuse of process and of inducement to breach express and implied contracts of
confidentiality. The plaintiff has also questioned whether the Court of Appeals properly dismissed
her claims of inducement to breach a confidential relationship and invasion of privacy.
Consequently, all four of the plaintiff’s original claims are now before this Court, and we discuss
each of them individually below.
A. ABUSE OF PROCESS
The plaintiff first asserts that the allegedly abusive actions of the Richardson Firm in
conducting discovery constituted an abuse of process, a tort for which we have long recognized a
remedy. See Priest v. Union Agency, 174 Tenn. 304, 125 S.W.2d 142 (1939). As this Court has
acknowledged, “‘the gist of the tort is not commencing an action or causing process to issue without
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justification, but misusing, or misapplying process justified in itself for an end other than that which
it was designed to accomplish.’” Bell ex rel. Snyder, 986 S.W.2d at 555 (quoting W. Page Keeton
et al., Prosser and Keeton on the Law of Torts § 121, at 897 (5th ed. 1984)). To this end, a plaintiff
must establish by evidence two elements to recover for abuse of process: “‘(1) the existence of an
ulterior motive; and (2) an act in the use of process other than such as would be proper in the regular
prosecution of the charge.’” Id. (quoting Priest, 174 Tenn. at 307, 125 S.W.2d at 143); see also
Donaldson, 557 S.W.2d at 62.
The test as to whether process has been abused is “whether the process has been used to
accomplish some end which is without the regular purview of the process, or which compels the
party against whom it is used to do some collateral thing which he could not legally and regularly
be compelled to do.” Priest, 174 Tenn. at 307, 125 S.W.2d at 143-44. In its most basic sense,
therefore, an action for abuse of process is intended to prevent parties from using litigation to pursue
objectives other than those claimed in the suit, such as using a court’s process as a weapon “to
compel [another party] to pay a different debt or to take some action or refrain from it.” Restatement
(Second) of Torts § 682 cmt. b (1977). It is the use of process to obtain this “collateral goal”—a
result that the process itself was not intended to obtain—that is the very heart of this tort. The
essential question to be answered concerning the present claim, therefore, is whether the use of
process to discourage the other party from continuing the litigation is a sufficiently “collateral goal”
to give rise to tort liability.
Ordinarily, the lawful use of a court’s process does not give rise to an abuse of process claim,
and no claim of abuse will be heard if process is used for its lawful purpose, even though it is
accompanied with an incidental spiteful motive or awareness that the use of process will result in
increased burdens and expenses to the other party. Id. However, a different case is presented when
the primary purpose of using the court’s process is for spite or other ulterior motive. For example,
in Nienstedt v. Wetzel, 651 P.2d 876, 882 (Ariz. Ct. App. 1982), the Arizona Court of Appeals held
that while “there is no liability when the defendant has done nothing more than legitimately utilize
the process for its authorized purposes, even though with bad intentions,” an action for abuse of
process may lie where “the ulterior or collateral purpose involved [is] to expose the injured party to
excessive attorney’s fees and legal expenses.” In this respect, the court held that an action for abuse
of process is proper where the plaintiff can establish that such was the primary motive for the
discovery tactics and where the plaintiff can show that the “use of various legal processes was not
for [the] legitimate or reasonably justifiable purposes of advancing [the party’s] interests in the
ongoing litigation.” Id. Importantly, the Nienstedt Court was clear that mere awareness of the
additional costs and burdens would not warrant liability; instead, the court stated that “[l]iability
should result only when the sense of awareness progresses to a sense of purpose . . . .” Id.
Other courts have also recognized that a primary desire to harass and cause unnecessary
expense to the other party in litigation is a sufficient ulterior motive to constitute an abuse of process.
The New York Court of Appeals, for example, found that a claim for abuse of process was stated
when a complaint alleged that defendants used regularly issued subpoenas to harass and inflict
economic injury upon the plaintiffs. See Board of Educ. v. Farmingdale Classroom Teachers’ Ass’n,
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Inc., 343 N.E.2d 278, 283 (N.Y. 1975). Noting that “when a party abuses process[,] his tortious
conduct injures not only the intended target but offends the spirit of the legal procedure itself,” id.
at 281, the court further stated that
[w]hile it is true that public policy mandates free access to the courts for redress of
wrongs and our adversarial system cannot function without zealous advocacy, it is
also true that legal procedure must be utilized in a manner consonant with the
purpose for which that procedure was designed. Where process is manipulated to
achieve some collateral advantage, whether it be denominated extortion, blackmail
or retribution, the tort of abuse of process will be available to the injured party.
Id. at 283 (citations omitted). Moreover, in Vallance v. Brewbaker, 411 N.W.2d 808, 646 (Mich.
Ct. App. 1987), the Michigan Court of Appeals recognized in dicta that allegations of the use of
discovery “in a manner consistent with the rules of procedure, but for the improper purpose of
imposing an added burden and expense on the opposing party in an effort to conclude the litigation
on favorable terms,” can form the basis of a valid abuse of process claim.
Broadly speaking, the aim of the civil discovery process is “to bring out the facts prior to trial
so the parties will be better equipped to decide what is actually at issue,” see, e.g., Ingram v. Phillips,
684 S.W.2d 954, 958 (Tenn. Ct. App. 1984), not to wear the mettle of the opposing party to reach
a favorable termination of the cause unrelated to its merits. When the civil discovery procedures are
used with the specific and malicious intent to weaken the resolve of the other party, then one may
rightfully claim that the procedures are being used “to accomplish some end which is without the
regular purview of the process.” Accordingly, we adopt the test first announced in Nienstedt and
hold that abuse of process in the civil discovery context may lie when (1) the party who employs the
process of a court specifically and primarily intends to increase the burden and expense of litigation
to the other side; and (2) the use of that process cannot otherwise be said to be for the “legitimate
or reasonably justifiable purposes of advancing [the party’s] interests in the ongoing litigation.”
In this case, we conclude that the plaintiff’s complaint states a claim for abuse of process in
the Richardson Firm’s use of discovery subpoenas, depositions, and interrogatories. The plaintiff
has in fact alleged the ulterior motive for the practices of the Richardson Firm in paragraph seventy-
four of her complaint, which states that the Richardson Firm used the discovery process “for the
improper purposes of (1) harassing the Plaintiff; and (2) causing the Plaintiff to incur unnecessary
expense to defend against its discovery schemes; [and] (3) weakening the Plaintiff’s resolve to
pursue the suit to the extent that she will abandon it.” Cf. Nienstedt, 651 P.2d at 882. Taken as true,
these allegations certainly support the first element of the tort, i.e., the existence of an ulterior
motive.
Regarding the second element of the tort, an act “in the use of process other than such as
would be proper in the regular prosecution of the charge,” we find that the complaint alleges facts
showing that the Richardson Firm issued process without any reasonably justifiable purpose of
advancing its legitimate interests in the ongoing litigation. For example, the complaint alleges that
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the Richardson Firm issued more than 230 interrogatories and subjected her to an eight-hour
deposition, even though much of the information requested in the interrogatories and deposition was
either already in the defendant’s possession, not relevant to the issues in litigation, or otherwise not
reasonably calculated to lead to discoverable information. The plaintiff has also alleged that the
Richardson Firm issued more than seventy discovery subpoenas for medical and other records to
obtain embarrassing information not related to the issues in the case and to obtain confidential and
privileged information about the plaintiff from the plaintiff’s psychologist. Taking these allegations
as true, we find that the complaint has sufficiently alleged a use of process for purposes other than
would be proper “in the regular prosecution of the charge.”
In response, Allstate advances two primary arguments. First, it argues that the Richardson
Firm used the interrogatories and subpoenas solely for their lawful and intended purpose of gathering
information relating to the merits of the case. This may in fact be so, but the intention of the
Richardson Firm is a question of fact not properly decided in a motion to dismiss under Rule
12.02(6). In deciding whether to grant a motion to dismiss, this Court does not look to the perceived
strength of the plaintiff’s proof. See, e.g., White, 33 S.W.3d at 718. Rather, we look only to the
allegations contained in the plaintiff’s complaint, and we find here that the complaint sufficiently
alleges that the Richardson Firm primarily sought to increase the burden and expense of litigation
to the plaintiff.
Second, Allstate argues that before a claim for abuse of process can be stated, the complaint
must allege that the Richardson Firm took some action after it issued the subpoenas which shows
an improper use of process. We disagree. Although some cases contain language that initially
appears to support Allstate’s position, see Bell ex rel. Snyder, 986 S.W.2d at 555, we believe that
Allstate has read these cases too broadly. Instead, the additional use requirement only demands that
a plaintiff show some additional abuse of process after the original processes of the court, i.e., the
complaint, summons, and responsive pleadings, have been issued. In fact, the additional use
requirement must be so limited because it is this requirement alone that distinguishes this tort from
that of malicious prosecution, which arises solely upon the filing of a complaint without probable
cause. See Roberts v. Federal Express Corp., 842 S.W.2d 246, 247-48 (Tenn. 1992).
Once a suit has been filed and other processes have been unjustifiably issued, a plaintiff is
not then also required to show some further misuse of that process to state a claim for relief. As the
New Mexico Supreme Court has recognized,
While a subsequent act may suffice to prove an abuse of process which was
appropriate when issued, it is not an essential element. The initial use of process
itself may constitute the required overt act under the facts. . . . We thus are in
agreement with the court in Mills [County State Bank v. Roure, 291 N.W.2d 1, 5
(Iowa 1980)], when it wrote:
The existence of this cause of action recognizes that even in
meritorious cases the legal process may be abused. That abuse
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involves using the process to secure a purpose for which it was not
intended. We can see no reason why there must be subsequent
activity to support the cause of action. Such activity may be very
probative in determining the intent to abuse; however, there need not
be such a subsequent action to commit the tort. To rule otherwise
would protect the tortfeasor when the abuse is most effective—where
the issuance of the process alone is sufficient to accomplish the
collateral purpose.
Richardson v. Rutherford, 787 P.2d 414, 421 (N.M. 1990) (citations omitted) (emphasis added). We
conclude, therefore, that the plaintiff has adequately alleged facts supporting both elements of a
claim for tortious abuse of process.
Plaintiff’s Waiver of Her Abuse of Process Claim
The Court of Appeals held that the plaintiff waived her right to complain of abuse of process
in this case by failing to object to the questions posed by the interrogatories and by failing to object
to questions in her second deposition. To be certain, this issue is clearly present, along with an issue
as to whether the plaintiff acted appropriately to mitigate her own damages. Nothing we have said
today operates to relieve parties of any responsibility to preserve rights or to take reasonable steps
to mitigate their own damages from such abuses. Cf. Southeastern Greyhound Lines, Inc. v. Groves,
175 Tenn. 584, 594, 136 S.W.2d 512, 516 (1940) (“[I]t is [a plaintiff’s] duty to see that as little
injury follows the act as possible, and if by ordinary care a particular injury may be avoided, [the
plaintiff] cannot hold the wrongdoer responsible.”); Ceramic Tile Distribs., Inc. v. Western Express,
Inc., 40 S.W.3d 56, 59 (Tenn. Ct. App. 2000).9
However, despite the possibility that the plaintiff may have waived any right to complain of
abuse of process or that she may have failed to take reasonable steps to mitigate her claimed
damages, we are hesitant to dismiss her complaint based upon the potential existence of a factual
affirmative defense. In Anthony v. Tidwell, 560 S.W.2d 908, 909 (Tenn. 1977), we held that a
“complaint is subject to dismissal under rule 12.02(6) for failure to state a claim if an affirmative
defense clearly and unequivocally appears on the face of the complaint.” We also noted that “[i]t
is not necessary for the defendant to submit evidence in support of his motion when the facts on
which he relies to defeat plaintiff’s claim are admitted by the plaintiff in his complaint.” Therefore,
when the affirmative defense involves only an issue of law, such as whether the statute of limitations
has run, see Tidwell, 560 S.W.2d at 909; Dukes v. Noe, 856 S.W.2d 403, 404 & n.1 (Tenn. Ct. App.
1993), application of this standard is certainly appropriate.
Nevertheless, when the affirmative defense relates primarily to an issue of fact, different
concerns may often counsel against deciding the merits of the affirmative defense in a motion to
9
Indeed, we note that in the pre-trial discovery context, one metho d of m itigating these types o f damages is
to seek a protection order from the court pursuant to Rule of Civil Procedure 26.03.
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dismiss. First, the liberal pleading requirements of Rule of Civil Procedure 8.01 require a plaintiff
only to set forth “a short and plain statement of the claim showing that the pleader is entitled to
relief.” See White, 33 S.W.3d at 718. As one commentator has noted, the very purpose of Rule 8.01
is defeated if a plaintiff must plead facts not strictly related to the prima facie claim solely “to
anticipate matters that may be set up as affirmative defenses.” See Rhynette Northcross Hurd, The
Propriety of Permitting Affirmative Defenses to be Raised by Motions to Dismiss, 20 Univ. Mem.
L. Rev. 411, 415 (1990). Second, and more importantly, a court resolving a factual dispute only
upon the complaint’s allegations may not fully consider whether other evidence exists that defeats
or mitigates the apparent defense. Consequently, an injustice may occur if a court dismisses a
complaint on a factual affirmative defense merely because no rebuttal of that defense appears within
the complaint’s allegations. Id.
Accordingly, we conclude that the more appropriate course of action in this case is to permit
the suit to continue so that the validity of these factual affirmative defenses may be tested by actual
proof and not merely upon the potentially incomplete allegations of the complaint. Again, we are
not concerned with whether the plaintiff will ultimately prevail in her action, and we seek only to
determine whether her allegations, if proven, would establish a prima facie case of liability. See
White, 33 S.W.3d at 718. We hold that they would and that the resolution of any factual affirmative
defenses should be made by the trial court only upon complete consideration of all the surrounding
facts and circumstances.
B. INDUCEMENT TO BREACH EXPRESS AND IMPLIED
CONTRACTS OF CONFIDENTIALITY
The plaintiff next alleges that her physician was bound by express and implied contracts to
keep her medical information confidential and that the Richardson Firm, in its efforts to obtain this
information, induced him to breach these contracts of confidentiality. More specifically, the plaintiff
alleges that the Richardson Firm is liable for inducement to breach contracts of confidentiality by
requesting medical records through the use of defective subpoenas and by initiating private
conversations with her physician and other health care providers outside a formal deposition.
Tennessee recognizes both a statutory and common law action for inducement to breach a
contract, see Tenn. Code Ann. § 47-50-109 (2001); Polk & Sullivan, Inc. v. United Cities Gas Co.,
783 S.W.2d 538, 543 (Tenn. 1989), and both forms of the action protect “contracts implied in fact,
as well as formal, expressed contracts,” Mefford v. City of Dupontonia, 49 Tenn. App. 349, 355, 354
S.W.2d 823, 826 (1961). Importantly, the elements for both forms of the action are identical, except
that a plaintiff asserting a common law action may recover punitive damages, instead of the treble
damages mandated by the statute. See Buddy Lee Attractions, Inc. v. William Morris Agency, Inc.,
13 S.W.3d 343, 360-61 (Tenn. Ct. App. 1999). In order to recover on a theory of inducement to
breach a contract, a plaintiff must allege and prove seven elements: (1) that a legal contract existed;
(2) that the defendant was aware of the contract; (3) that the defendant intended to induce a breach
of that contract; (4) that the defendant acted with malice; (5) that a breach of the contract occurred;
(6) that the breach was a proximate result of the defendant’s conduct; and (7) that the breach injured
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the plaintiff. See Quality Auto Parts Co. v. Bluff City Buick Co., 876 S.W.2d 818, 822 (Tenn.
1994); Baker v. Hooper, 50 S.W.3d 463, 468 (Tenn. Ct. App. 2001).
Inducement to Breach an Express Contract of Confidentiality
As to her allegations of inducement to breach an express contract of confidentiality, the
plaintiff alleges that an express contract of confidentiality was created when the plaintiff’s physician
required her to execute a written waiver of confidentiality before sending her medical records to her
own attorney. The parties raise substantial issues of Allstate’s awareness of this alleged contract and
of its intent to induce its breach. Our review of the complaint, however, raises an even more
fundamental issue: whether the allegations of the complaint plead an express contract of
confidentiality or merely a physician’s gratuitous promise of confidentiality.
As claimed in the complaint, the alleged express contract of confidentiality was not part of
the original contract of treatment for compensation. Rather, the physician requested the written
authorization that forms the basis of this alleged contract only after the plaintiff had been treated and
later retained counsel. As such, an issue arises whether this alleged agreement is a new agreement
or merely an addition or modification of the existing treatment contract between the plaintiff and her
physician. Drawing the inference in favor of the plaintiff, as the law requires us to do when
reviewing a motion to dismiss, see McClenahan v. Cooley, 806 S.W.2d 767, 769 (Tenn. 1991), we
will presume that this new agreement is merely a modification of the earlier contract.
The law in Tennessee is clear that the “modification of an existing agreement which imposes
new obligations on one of the parties is unenforceable for lack of consideration unless it also
imposes a new obligation on the other party.” Dunlop Tire & Rubber Corp. v. Service Merch. Co.,
667 S.W.2d 754, 759 (Tenn. Ct. App. 1983); see also Boyd v. McCarty, 142 Tenn. 670, 676, 222
S.W. 528, 530-31 (1920). Indeed, “[p]erforming what was already promised in the original contract
is not consideration to support a second contract.” Dunlop Tire & Rubber Corp., 667 S.W.2d at 759
(citing American Fruit Growers, Inc. v. Hawkinson, 21 Tenn. App. 127, 134, 106 S.W.2d 564, 568
(1937)). As such, to state a claim showing the existence of an enforceable contract in this regard,
the complaint must allege facts showing that the plaintiff offered additional consideration to support
the physician’s new and express promise to keep her records confidential.
However, upon our review of the complaint in this case, we do not find any facts alleging that
this promise of confidentiality was supported by additional consideration, nor do we find that the
facts as alleged lead to a reasonable inference that the promise was supported by consideration. For
example, the complaint does not allege that the plaintiff, in exchange for this new express promise
of confidentiality, agreed to undertake additional obligations for the benefit of her physician or that
she agreed to forbear from doing anything that she previously had a lawful right to do. See Brown
Oil Co. v. Johnson, 689 S.W.2d 149, 151 (Tenn. 1985) (“It is well-settled that consideration exists
when the promisee does something that it is under no legal obligation to do or refrains from doing
something which it has a legal right to do.”). Moreover, the complaint does not allege, nor are we
able to infer, that the parties originally intended for the express promise of confidentiality to be part
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of the original contract of treatment for compensation, but that it was omitted from any express
contract by some oversight. Cf. Wright v. Fischer, 24 Tenn. App. 650, 658, 148 S.W.2d 49, 53
(1940).
Although the Court of Appeals held that the plaintiff sufficiently pleaded the existence of an
express contract, we respectfully disagree. We are required to “liberally construe the complaint in
favor of the plaintiff when considering a motion to dismiss for failure to state a claim,” see, e.g.,
White, 33 S.W.3d at 718 (citation omitted), but we are not permitted to “create a claim that the
pleader does not spell out in his complaint,” Donaldson, 557 S.W.2d at 62; see also Rampy v. ICI
Acrylics, Inc., 898 S.W.2d 196, 198 (Tenn. Ct. App. 1994) (“It is inappropriate for the court to create
a claim where none exists.”). As such, the mere legal conclusion that a contract exists will not be
sufficient to withstand a motion to dismiss, unless factual allegations support that conclusion directly
or by necessary inference. See White, 33 S.W.3d at 718 (stating that “allegations of pure legal
conclusions will not sustain a complaint”). Accordingly, because the complaint does not allege facts
showing the existence of an enforceable express contract supported by adequate and sufficient
consideration, we hold that the plaintiff has not stated a claim against Allstate for inducement to
breach an express contract of confidentiality.
Inducement to Breach an Implied Contract of Confidentiality
As to the plaintiff’s allegations of inducement to breach an implied contract of
confidentiality, her complaint alleges that such a contract was created when she agreed to pay money
in return for medical treatment. She further alleges that this implied contract arose from the specific
understanding and actions of the parties that her medical information would remain confidential.
Accordingly, we must examine the complaint’s allegations to determine whether facts have been
sufficiently plead to support the various elements of this tort.
a. The Existence of an Implied Contract of Confidentiality
A contract implied in fact is one that “arise[s] under circumstances which show mutual intent
or assent to contract.” Angus v. City of Jackson, 968 S.W.2d 804, 808 (Tenn. Ct. App. 1997). Such
a contract or agreement “may result as a legal inference from the facts and circumstances of the
case,” Paschall’s, Inc. v. Dozier, 219 Tenn. 45, 53, 407 S.W.2d 150, 154 (1966), but to be
enforceable, the implied contract must nevertheless be supported by mutual assent, consideration,
and lawful purpose. See Johnson v. Central Nat’l Ins. Co., 210 Tenn. 24, 34-35, 356 S.W.2d 277,
281 (1962) (recognizing that an implied contract “must result from a meeting of the minds of the
parties in mutual assent to the terms, [and] must be based upon a sufficient consideration, free from
fraud or undue influence, not against public policy and sufficiently definite to be enforced”); Lay v.
Fairfield Dev., 929 S.W.2d 352, 356 (Tenn. Ct. App. 1996) (same).
Although we have yet to decide a case where an implied contract of confidentiality arose
between a physician and a patient, we have recognized that such a possibility exists when a patient
compensates a physician in return for medical treatment. See Quarles v. Sutherland, 215 Tenn. 651,
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657, 389 S.W.2d 249, 252 (1965). Since our decision in Quarles, however, the General Assembly
has enacted several statutes that expressly require a physician and others to keep a patient’s medical
records and identifying information confidential. See Tenn. Code Ann. §§ 63-2-101(b)(1) (1997);
68-11-1502 (2001); 68-11-1503 (2001). Through the enactment of these statutes, patients and
physicians now clearly expect that the physician will keep the patient’s information confidential, and
this expectation arises at the time that the patient seeks treatment. As one of the leading cases
recognizing implied covenants of confidentiality in this context has acknowledged,
Any time a doctor undertakes the treatment of a patient, and the consensual
relationship of physician and patient is established, two jural obligations (of
significance here) are simultaneously assumed by the doctor. Doctor and patient
enter into a simple contract, the patient hoping that he will be cured and the doctor
optimistically assuming that he will be compensated. As an implied condition of that
contract, this Court is of the opinion that the doctor warrants that any confidential
information gained through the relationship will not be released without the patient’s
permission. . . . Consequently, when a doctor breaches his duty of secrecy, he is in
violation of part of his obligations under the contract.
Hammonds v. Aetna Cas. & Sur. Co., 243 F. Supp. 793, 801 (N.D. Ohio 1965). As such, we now
expressly hold that an implied covenant of confidentiality can arise from the original contract of
treatment for payment, and we find that the plaintiff’s complaint here has adequately alleged the
existence of an implied covenant of confidentiality.
b. Breach of Implied Covenant of Confidentiality Based Upon
the Physician’s Response to Subpoenas
Having found the existence of an implied covenant of confidentiality, we must next examine
whether the complaint has alleged a breach of this implied covenant. Initially, it is clear that
whatever the terms of this implied covenant of confidentiality may be, a physician cannot withhold
such information in the face of a subpoena or other request cloaked with the authority of the court.
Undoubtedly, any such contract would be contrary to public policy as expressed in the rules
governing pre-trial discovery and in the relevant medical confidentiality statutes.10
Nevertheless, the plaintiff would have us declare that a physician does have a duty to keep
a patient’s information confidential in the face of a technically defective subpoena. We agree that
the subpoenas issued by the Richardson Firm without the plaintiff’s agreement did not strictly
comply with the requirements of Rule of Civil Procedure 45.07. However, we do not agree that a
physician is under a duty to discover technical defects in a subpoena, or to submit a subpoena for
10
See Tenn. Code Ann. § 63-2-101(b)(1) (1997); Tenn. Code Ann. § 68-11-304(a)(1) (2001); Tenn. Code
Ann. § 68-11-1505 (2001). These statutes, of course, do nothing to change the common law of Tennessee, which does
not recognize the existence of a testimonial privilege between a physician and patient. See Quarles, 215 Tenn. at 657,
389 S.W.2d at 252.
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legal review and evaluation, before releasing a patient’s medical records. Instead, the law can only
require a physician responding to such request to act in good faith and with a subjective belief as to
the validity of that request. Consequently, unless a plaintiff can show that a physician acted in bad
faith or with actual knowledge of the subpoena’s invalidity, no breach of an implied covenant of
confidentiality can occur in this context.11
Using this standard as our guide, we find that the plaintiff has not alleged sufficient facts
showing that her physician actually breached his implied covenant of confidentiality by releasing
records pursuant to a technically defective subpoena. For example, we find no allegation that the
physician acted in bad faith in sending the plaintiff’s medical records to the Richardson Firm or that
he was actually aware that the subpoenas did not meet the technical requirements of the law.
Without these averments, therefore, we must hold that the plaintiff has not stated a claim that the
Richardson Firm, in requesting medical records through subpoena, induced her physician to breach
his implied covenant of confidentiality.
c. Breach of Implied Covenant of Confidentiality Based upon the Physician’s
Private Conversations with Opposing Counsel
A much different case is presented, however, with respect to whether the physician breached
his implied covenant of confidentiality by informally speaking to members of the Richardson Firm
about the plaintiff’s medical information. While the understanding of the parties giving rise to the
implied covenant of confidentiality permits a physician to disclose information pursuant to subpoena
or court order, this understanding does not include permission to divulge this information informally
without the patient’s consent.12 Therefore, absent circumstances giving rise to a duty to warn
identifiable third persons against foreseeable risks emanating from a patient’s illness, see Bradshaw
v. Daniel, 854 S.W.2d 865, 872 (Tenn. 1993), we hold that a physician breaches his or her implied
covenant of confidentiality by divulging medical information, without the patient’s consent, through
informal conversations with others. Accordingly, we find that the complaint in this case alleges
sufficient facts showing that the physician breached his implied covenant of confidentiality by
informally speaking to the Richardson Firm about the plaintiff’s condition without her consent.13
11
This is not to say that a party is without any recourse against a technically defective subpoena seeking
medical records or that parties are fre e to obtain d iscoverable inform ation b y any me ans possible without regard to proper
processes or procedures. Rather, we conclude that the authority given to trial courts by the R ules of C ivil Pro cedure to
regulate the discovery process is adequate to deal with such technical deficiencies in the me thod of discovery. See Tenn.
R. Civ. P. 26.03; 37.01(4).
12
The physician’s statutory duty of confidentiality is subject to several limited exceptions, see Tenn. Code
Ann. §§ 63-2-101(b)(1); 68-11-1503, but no exception permits disclosure of medical information in private conversations
without the patient’s consent. As such, we are not inclined to find that patients or physicians typically expect that the
physician’s imp lied co venant of confidentiality contains an “info rmal interview” exception.
13
Allstate argues tha t Alessio v. Crook, 633 S.W.2d 770, 780 (Tenn. Ct. App. 1982), permits informal
interviews of physicians without the patient’s consent, and as such, attorneys cannot be guilty of inducing a breach of
(continued...)
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d. Damages Resulting from the Physician’s Private Conversations
with Opposing Counsel
Having found sufficient allegations concerning the existence and breach of an implied
contract of confidentiality, and presuming, but not deciding, that facts are pled showing the elements
of knowledge, intent, and malice, we must examine whether the plaintiff has alleged facts showing
that she has suffered damage from this breach. The plaintiff claims that as a result of these informal
conversations between the Richardson Firm and her physician, she has suffered a “strategic loss” in
the litigation. More specifically, she alleges that the Richardson Firm “was free to explore Dr.
Holcomb’s thoughts with impunity until he revealed something favorable to them, which could then
be inquired about in a deposition unencumbered with a lot of unfavorable testimony.” No other
allegations of injury arising out of these informal conversations are present.14
No case in Tennessee has previously recognized that, as a matter of law, a party may claim
injury based on a “strategic loss” in pre-trial litigation, and we decline to recognize such a possibility
here. Quite simply, if the plaintiff was concerned that testimony unfavorable to the defendant was
not adequately disclosed in the deposition of her physician, then her remedy was to prepare an
examination of the physician herself, thereby ensuring a complete record for trial. Because the
complaint alleges no legally cognizable injury resulting from these informal conversations with the
plaintiff’s physician, we must find that she has not stated a claim that the Richardson Firm, by
initiating informal and private conversations with her physician, induced him to breach his implied
covenant of confidentiality.
C. INDUCEMENT TO BREACH A CONFIDENTIAL RELATIONSHIP
The plaintiff next alleges that the Richardson Firm, by obtaining her medical information
with defective subpoenas and through private conversations with her physician, induced him to
breach his confidential relationship with her. Because confidential relationships in Tennessee can
assume a variety of forms, a unifying principle connecting all such relationships is difficult to
establish. Nevertheless, prior cases make it clear that a confidential relationship is not one merely
exhibiting mutual trust and confidence. Rather, the relationship is more accurately described as one
13
(...continued)
an implied covenant of confidentiality by merely requesting such an interview. We d isagree. Although Alessio does
contain dicta to support Allstate’s argument, that case was decided prior to the enactment of Tennessee Code Annotated
section 63-2-101 and the Patient’s Privacy Protection Act. After the enactment of these statutes, patients and physicians
now generally expect that the phys ician will keep the patient’s med ical inform ation confidential, sub ject to a duty to
disclose impo sed b y law. Co nsequently, any stateme nts in Alessio that permit counsel to informally interview a physician
without the patient’s consent no longer accurately reflec t the law in this area.
14
The plaintiff does allege elsewhere that she suffered “great embarrassment, anger and stress over the
knowledge that the details of her most intimate revelations to all of her many healthcare professionals have been made
pub lic by the conduct of the Richardson Firm.” However, these claims precede her allegations that the Richardson Firm
induced a breach of her physician’s implied covenant of confidentiality by initiating private conversations, and they seem
to relate only to her claim s of inducement based upon the defective subpo enas.
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in which “‘confidence is placed by one in the other and the recipient of that confidence is the
dominant personality, with ability, because of that confidence, to influence and exercise dominion
and control over the weaker or dominated party.’” Mitchell v. Smith, 779 S.W.2d 384, 389 (Tenn.
Ct. App. 1989) (quoting Iacometti v. Frassinelli, 494 S.W.2d 496, 499 (Tenn. Ct. App. 1973)).
This Court has long recognized that an abuse or breach of a confidential relationship to gain
a benefit or advantage will give rise to an action for damages. See Leake v. Gray, Shillinglaw & Co.,
189 Tenn. 574, 592, 226 S.W.2d 298, 305 (1949). As we stated in Turner v. Leathers, 191 Tenn.
292, 298, 232 S.W.2d 269, 271 (1950),
Whenever two persons stand in such a relation that, while it continues, confidence
is necessarily reposed by one, and the influence which naturally grows out of that
confidence is possessed by the other, and this confidence is abused, or the influence
is exerted to obtain an advantage at the expense of the confiding party, the person so
availing himself of his position will not be permitted to retain the advantage,
although the transaction could not have been impeached if no confidential relation
had existed.
(internal quotations omitted). To be clear, then, a plaintiff may recover damages from an abuse or
breach of a confidential relationship only by showing that (1) the defendant was in a position to
influence or control the plaintiff; (2) the defendant used the confidences given to him or her to obtain
some benefit from, or advantage over, the plaintiff; and (3) the plaintiff, as the dominated party in
the relationship, suffered some detriment at the hands of the defendant. See Mahunda v. Thomas,
55 Tenn. App. 470, 478, 402 S.W.2d 485, 489 (1965) (citing Peoples Bank v. Baxter, 41 Tenn. App.
710, 720-21, 298 S.W.2d 732, 737 (1956)); see also Kelly v. Allen, 558 S.W.2d 845, 848 (Tenn.
1977) (stating that “there must be a showing that there were present the elements of dominion and
control by the stronger over the weaker”).
In reviewing the complaint in this case, we find that the plaintiff has not stated a claim for
inducement to breach a confidential relationship. While the physician-patient relationship can
constitute such a relationship, see Shadrick v. Coker, 963 S.W.2d 726, 735-36 (Tenn. 1998); Turner,
191 Tenn. at 298, 232 S.W.2d at 271, the plaintiff has not alleged that her physician used the trust
or confidences given to him either to obtain an advantage over her or to extract some benefit from
her. Clearly, a physician’s revealing of confidences is not tantamount to a tortious breach of a
confidential relationship—at least as that tort has been previously recognized in this state—unless
that physician also uses the confidences given to him or her to obtain some benefit from, or
advantage over, the patient.15 Because the complaint here does not allege that the Richardson Firm
induced her physician to obtain any benefit or advantage for himself, we must therefore find that the
15
W e acknowledge that the plaintiff has alleged that the Richardson Firm obtained an advantage by inducing
her physician to reveal information. However, because the plaintiff does not have a confidential relationship with the
Richardson Firm, the complaint must allege that the Richardson Firm induced the plaintiff’s physician to obtain an
advantage or be nefit for himself b y abusing the confidence placed in him by the p laintiff. See Mitchell, 779 S.W.2d at
389 .
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complaint fails to state a claim for inducement to abuse or breach a confidential relationship. We
affirm the judgment of the Court of Appeals on this issue.
D. INVASION OF PRIVACY
Finally, the plaintiff asserts that the Court of Appeals erred in dismissing her invasion of
privacy claims. The complaint alleges that the Richardson Firm invaded her common law right of
privacy by obtaining her medical information with defective subpoenas and that it invaded her right
of privacy under the Patient’s Privacy Protection Act, Tenn. Code Ann. §§ 68-11-1501 to -1505
(2001), by having informal conversations with her physician without her consent. We address each
of these claims separately.
Common Law Invasion of Privacy
With the exception of an action for false light invasion of privacy, see West v. Media Gen.
Convergence, Inc., 53 S.W.3d 640 (Tenn. 2001), this Court has never expressly recognized that a
cause of action exists for an invasion of privacy, though we have assumed that Tennessee law
recognizes such an action in at least two cases, see Martin v. Senators, Inc., 220 Tenn. 465, 418
S.W.2d 660 (1967); Langford v. Vanderbilt Univ., 199 Tenn. 389, 287 S.W.2d 32 (1956). The Court
of Appeals, on the other hand, has recognized that an unreasonable intrusion upon the seclusion of
another is actionable in this state and that the scope of this tort is parallel to that contained in section
652B of the Restatement (Second) of Torts. See Roberts v. Essex Microtel Assocs., II, L.P., 46
S.W.3d 205, 211 (Tenn. Ct. App. 2001). Although we reach no decision as to whether the other
forms of invasion of privacy listed in the Restatement (Second) of Torts are actionable—the
plaintiff’s complaint does not raise issues related to commercial appropriation or unreasonable
publicity—we agree with the Court of Appeals that a plaintiff may recover damages in Tennessee
for an unreasonable intrusion into his or her private affairs.
As the Roberts Court held, “‘One who intentionally intrudes, physically or otherwise, upon
the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the
other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person.’”
See id. at 211-12 (quoting Restatement (Second) of Torts § 652B). No especial publicity needs to
be given to the plaintiff or to the plaintiff’s affairs, and a cause of action may be stated where the
plaintiff shows an intentional, and objectively offensive, interference with his or her interest in
solitude or seclusion. See Restatement (Second) of Torts § 652B cmt. a. Further, as comment c to
section 652B provides,
The defendant is subject to liability under the rule stated in this Section only when
he has intruded into a private place, or has otherwise invaded a private seclusion that
the plaintiff has thrown about his person or affairs. Thus there is no liability for the
examination of a public record concerning the plaintiff, or of documents that the
plaintiff is required to keep and make available for public inspection.
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The essential question to be answered with respect to this issue, then, is whether the
complaint has pled facts showing that the Richardson Firm “invaded a private seclusion that the
plaintiff has thrown about [her] person or affairs.” Because a plaintiff cannot seek damages for
intrusion into seclusion when he or she is required to make the allegedly private information
available for public inspection, a plaintiff must allege and prove the following essential elements:
(1) that the information sought by the opposing party was not properly discoverable or was otherwise
subject to some form of privilege; (2) that the opposing party knew that the information was not
discoverable or was subject to privilege, but nevertheless proceeded to obtain that information; (3)
that the obtaining of such information would be highly offensive to a reasonable person; and (4) that
injury was suffered from the invasion of privacy.
The plaintiff here alleges none of these elements in her complaint, and she concedes that the
substance of her medical information became discoverable, and subject to public disclosure, as soon
as she filed a complaint seeking damages for physical injuries. However, no successful claim for
invasion of privacy can rest only upon the technical defects in the process used to obtain that
information, and a plaintiff must aver and prove that the defendant tried to obtain information that
it knew was non-discoverable or subject to privilege. Therefore, because the plaintiff concedes that
her medical information here was discoverable, we must hold that the plaintiff has failed to state a
claim for common law invasion of privacy by intrusion into seclusion.
Privacy Rights under the Patient’s Privacy Protection Act
The plaintiff also alleges that the Richardson Firm violated her privacy rights under the
Patient’s Privacy Protection Act by having informal conversations with her physician outside a
deposition. The Patient’s Privacy Protection Act recognizes that all patients entering and receiving
care at a licensed health care facility have “the expectation of and right to privacy for care received
at such facility.” See Tenn. Code Ann. § 68-11-1503. To this end, section 68-11-1503 prohibits the
divulging of a patient’s “name and address and other identifying information,” subject to four
express exceptions. However, disclosing a patient’s identifying information in response to a
subpoena does not violate the Act. See Tenn. Code Ann. § 68-11-1505.16
Upon review of the plaintiff’s allegations, we conclude that the plaintiff has not stated a
claim against Allstate under the Patient’s Privacy Protection Act. The plain language of the Act
provides a cause of action only for the divulging of protected information, not for the requesting or
the obtaining of such information. By restricting the statute’s application only to those who divulge
a patient’s identifying information, the General Assembly did not create a statutory action for the
inducement to divulge identifying information. Therefore, because we will not construe statutory
language to unduly expand it beyond its plain and obvious import, see Limbaugh v. Coffee Med.
16
To the extent that the plaintiff’s claims under this Act are for the divulging of non-identifying medical
information, they may not fall within the scope of these statutes. See Tenn. Co de A nn. § 6 8-11 -150 3 (prohib iting only
the divulging o f a patient’s “name and address and other identifying information”). Nevertheless, because her claims
under the Act fail on other grounds, we need not comment further on this issue. W e also find it unnecessary to add ress
whether a technically defective subpoena falls within the statutory exception contained in section 68-11-1505.
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Ctr., 59 S.W.3d 73, 83 (Tenn. 2001), we hold that the statutory action established by section 68-11-
1504 is available only against those persons who (1) have a statutory duty to keep identifying
information confidential, and (2) actually divulge that information to parties not falling within a
statutory exception. Accordingly, because the plaintiff here has not brought suit directly against her
physician or other healthcare providers for divulging her identifying information, we must affirm the
judgment of the Court of Appeals that the complaint does not state a claim for an invasion of privacy
under the Patient’s Privacy Protection Act.
CONCLUSION
In summary, we hold that neither an insurer nor an insured may be held vicariously liable for
the tortious acts or omissions of an attorney hired to defend the insured, unless the attorney’s alleged
tortious actions were directed, commanded, or knowingly authorized by the insurer or the insured.
We further hold that the complaint in this case states a claim of vicarious liability against Allstate
Insurance Company for abuse of process, and we remand this claim to the Shelby County Circuit
Court for further proceedings consistent with this opinion. However, the plaintiff’s remaining claims
against appellant Allstate Insurance Company, and all of her claims against appellant Larry
McElwaney, are dismissed pursuant to Rule of Civil Procedure 12.02(6). The judgment of the Court
of Appeals is affirmed in part and reversed in part.
Costs of this appeal are to be divided equally among the appellant, Allstate Insurance
Company, and the appellee, Ms. Connie Jean Givens.
_______________________________________
WILLIAM M. BARKER, JUSTICE
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