Robbie Butler Thomas v. D.W. Pointer, Individually and d/b/a Pointer Insurance Agency, Inc., and Market Finders Insurance Corporation

Citation: Not availableDocket: W2011-01595-COA-R3-CV

Court: Court of Appeals of Tennessee; June 29, 2012; Tennessee; State Appellate Court

Original Court Document: View Document

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The case involves Robbie Butler Thomas, a Missouri resident, who sought a homeowner's insurance policy for a non-residential property in Memphis, Tennessee, through insurance agent D.W. Pointer. Pointer, who had a longstanding relationship with Thomas’s family, contacted Market Finders Insurance Corporation to obtain the policy, which was underwritten by Lloyd’s of London. Thomas paid Pointer a total of $594 for the premiums, expecting the payments to be forwarded to Market Finders. However, Pointer failed to remit these payments, leading to the policy's cancellation due to nonpayment.

The cancellation notices were sent to the insured property, Pointer, and Thomas's mortgage company, but not to Thomas's Missouri residence, leaving her unaware of the cancellation. A fire occurred after the cancellation, resulting in a denied claim, prompting Thomas to sue Market Finders. The trial court granted summary judgment for Market Finders, which Thomas appealed. The appeals court partially reversed the trial court's decision, indicating that Market Finders did not sufficiently disprove Thomas's claim regarding the apparent authority of the insurance agent. The judgment was reversed in part, affirmed in part, and the case was remanded for further proceedings.

On July 30, 2003, Market Finders canceled Thomas's insurance policy due to nonpayment. Following a fire at her Memphis home on January 10, 2004, Thomas discovered that her premium payment to Pointer’s Insurance had not been forwarded to Market Finders, resulting in her claim being denied. On July 21, 2005, she filed a lawsuit against Market Finders and Pointer, alleging fraudulent misrepresentation, fraudulent suppression, breach of contract, negligent supervision and hiring, conspiracy to defraud, and conversion. Thomas claimed Pointer acted as an agent for Market Finders, asserting that both Pointer and Market Finders engaged in fraudulent conduct. Thomas sought compensatory and punitive damages.

During discovery, Thomas testified about her family's long-standing relationship with Pointer, believing he represented Market Finders based on their interactions. Market Finders president James Ryan clarified that Pointer was a producer for the company but not an agent, stating Pointer was responsible for premium payments and that the company did not communicate directly with customers. Ryan explained that all policies ordered by Pointer, including Thomas's, were canceled for nonpayment. Notices of cancellation were sent to Pointer, the mortgage company, and Thomas’s insured address. In August 2010, Market Finders filed for summary judgment, which was granted by the trial court on June 10, 2011.

Market Finders' cancellation of Thomas’s insurance policy was deemed appropriate by the trial court, which found that Market Finders adhered to the policy's cancellation provisions due to nonpayment. The court confirmed that both Thomas and her agent, Mr. D.W. Pointer, received proper notice of the cancellation as required by the policy, which specified that notice should be sent to the insured address. The court also ruled that Mr. Pointer was not an agent or employee of Market Finders, which precluded liability under the doctrine of respondeat superior. The trial court's order was finalized under Rule 54.02 of the Tennessee Rules of Civil Procedure, and Thomas subsequently appealed.

On appeal, Thomas contends that the trial court improperly granted summary judgment, arguing that there are disputed material facts regarding Pointer's apparent authority as Market Finders' agent. Market Finders counters with two primary issues: whether it complied with the Tennessee Department of Insurance regulations and policy provisions for cancellation, and whether the trial court correctly found that Pointer was not an agent of Market Finders. 

The appellate review of summary judgment is conducted de novo, with no presumption of correctness regarding the trial court’s decision. The court must determine if the requirements of Rule 56 of the Tennessee Rules of Civil Procedure were met, which allows summary judgment only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. The burden of proof initially lies with the moving party to demonstrate the absence of genuine issues, after which the burden shifts to the non-moving party to establish such issues. The Hannan standard applies since the case was filed before July 1, 2011, requiring the moving party to conclusively negate an essential element of the non-moving party's claim or establish an affirmative defense. All evidence must be viewed favorably toward the non-moving party, and summary judgment is warranted only when the facts lead to a single reasonable conclusion.

The trial court granted summary judgment in favor of Market Finders, dismissing all claims by Thomas against them with prejudice, but did not explicitly address Thomas's claim of apparent authority regarding Pointer's actions as an agent. Market Finders contended that the summary judgment standard required Thomas to make a prima facie showing of her claims, referencing Byrd v. Hall and Celotex Corp. v. Catrett. However, the current standard, as established in Hannan v. Altell Publishing, places the burden on the defendant to disprove essential elements of the plaintiff's claim. Thus, for Market Finders to succeed in their motion, they needed to affirmatively negate an essential element of Thomas's claim about Pointer's authority.

On appeal, Thomas argued that summary judgment was inappropriate because Pointer acted with apparent authority on behalf of Market Finders. She claimed that her belief in Pointer's agency was supported by Pointer's actions, which Market Finders was aware of, including collecting premiums and providing an insurance policy. Thomas's position was that if Market Finders acquiesced to Pointer's actions, they should be held liable for Pointer's failure to send a cancellation notice.

Thomas asserts that Pointer was aware of her correct mailing address and failed to update it on the policy or contact her after receiving the cancellation notice. She contends that because Market Finders accepted Pointer's apparent authority, his actions should be attributed to them. Market Finders, however, claims Pointer was an independent contractor and cites their agreement with him, which specifies he was not an agent. This stance does not address Thomas's appeal regarding apparent authority. 

The law of agency indicates that a principal can be held liable for an agent's actions under two types of authority: actual and apparent. Apparent authority arises when a third party reasonably believes an agent has the authority to act on the principal's behalf, based on the principal's representations. A principal may be estopped from denying liability for an agent's actions if they have created an appearance of authority. 

Market Finders' argument that Pointer lacked actual authority does not negate Thomas's claim based on apparent authority, as the latter applies in the absence of actual authority. The court finds no evidence that Market Finders disproved Thomas's assertion regarding Pointer's apparent authority. Market Finders attempts to introduce two of its own issues: compliance with cancellation regulations and Pointer's non-agency status, but these do not directly counter Thomas's claim. The trial court had previously ruled that Market Finders correctly canceled Thomas’s policy and that Pointer was not an actual agent, which raises questions about their liability under respondeat superior.

Thomas did not appeal the trial court's rulings in favor of Market Finders, leading to an assumption that Market Finders also does not intend to appeal. Market Finders argues it is entitled to summary judgment regardless of Pointer’s apparent authority, asserting that Pointer's actions fell outside the scope of employment, thus negating liability under the doctrine of respondeat superior. However, the trial court determined that Pointer was not an agent of Market Finders, which was the basis for its conclusion of non-liability, contradicting Market Finders' claims regarding the lack of injury allegations from Thomas.

Market Finders contends compliance with the Tennessee Department of Insurance regulations and the insurance policy's cancellation provisions, claiming proper notification of cancellation was sent to the insured address. Thomas argues that Market Finders should be responsible for Pointer's actions under the theory of apparent authority, contending that Pointer had the authority to accept premium payments and that Pointer's misrepresentation of Thomas’s address impacts liability. Market Finders' defense, based on compliance with policy provisions, does not negate Thomas's claims regarding Pointer’s apparent authority.

The appellate court affirms the trial court's finding that Pointer did not have actual authority and that Market Finders complied with cancellation notice provisions, but it reverses the summary judgment on the claims based on Pointer's apparent authority. The decision is partially reversed and partially affirmed, remanding for further proceedings, with costs taxed to Market Finders Insurance Corporation.