In a declaratory judgment action, Tennessee Farmers Mutual Insurance Company sought to establish that an automobile insurance policy issued to mechanic John Arthur Simmons did not cover an accident he was involved in while driving a truck belonging to Jeremy Shipley. The insurance company argued for summary judgment, claiming a business purpose exclusion applied since Simmons was road testing the vehicle at the time of the accident. Simmons countered with an affidavit stating he was running personal errands. The trial court denied the summary judgment, citing a genuine issue of material fact regarding Simmons' intent. During the trial, Simmons testified to running personal errands but did not clarify discrepancies in his statements. After the trial, the insurance company renewed its motion for a directed verdict, which the court denied, leading to a jury finding in favor of Simmons regarding coverage. On appeal, the insurance company contended that the trial court erred by not applying the cancellation rule. The appellate court agreed, stating that had the rule been applied, no genuine issue would remain for the jury concerning the mechanic's business purpose at the time of the accident. Consequently, the appellate court vacated the trial court's judgment and remanded the case for further proceedings.
On March 16, 2018, Farmers Insurance conducted an examination under oath (EUO) of Simmons following a lawsuit by the Millers regarding an accident involving Shipley’s truck. During the EUO, Simmons stated he had driven the truck three or four times prior to the accident and was test-driving it at Mr. Shipley's request to check for issues before hauling a trailer. Simmons' wife corroborated this by saying he was test-driving it after working on it. On May 30, 2018, Farmers filed a Complaint for Declaratory Judgment in the Circuit Court for Loudon County, claiming the insurance policy issued to Simmons did not cover the accident due to a business purpose exclusion. Farmers argued Simmons was using the truck in connection with his vehicle repair business as indicated by his statements during the EUO. In contrast, Simmons denied he was road testing the truck, asserting he was running personal errands with permission from Shipley.
On September 20, 2018, Farmers moved for summary judgment, arguing that the facts showed Simmons’ use of the truck fell under the automobile business exclusion, thereby negating coverage. Farmers contended that, under Tennessee law, Simmons’ possession of the truck for repairs precluded coverage, irrespective of his stated purpose during the accident. On January 8, 2019, Simmons opposed the motion, asserting a genuine issue of material fact existed regarding his purpose, supported by an affidavit claiming he was driving to soccer practice with Shipley’s permission. Farmers replied, invoking the 'sham affidavit' doctrine, arguing that the court should disregard Simmons' contradictory statements made after the EUO as they lacked an explanation for the discrepancies. Farmers maintained that without these later statements, there was no genuine issue of material fact regarding Simmons' purpose for using the truck at the time of the accident, warranting judgment in their favor.
On March 6, 2019, the trial court denied Farmers' motion for summary judgment, citing genuine issues of material fact regarding the examination under oath (EUO) and witness credibility. The jury trial commenced on March 9, 2020. Before evidence was presented, Farmers' counsel objected to Simmons blaming his insurance agent for providing incorrect coverage advice, arguing it was an unpleaded defense. The trial court upheld this objection. During the trial, Farmers called witnesses Shipley and Simmons, while Simmons did not present any witnesses. Shipley testified about his relationship with Simmons and the circumstances surrounding his diesel truck's repairs, including his concern over the truck's oil pressure. He confirmed that he did not discuss Simmons using the truck for personal errands before the accident. Simmons, asserting that Shipley was a repeat customer, claimed Shipley had given him permission to use the truck for personal errands, stating that the repairs were minimal and did not require a test drive. He detailed his use of the truck on several occasions leading up to the accident. Additionally, Simmons disclosed that he had never held a commercial insurance policy and believed Farmers' policy provided full coverage for driving others' vehicles. Despite objections from Farmers’ counsel, the court permitted Simmons to testify that his insurance agent had not informed him about the need for a commercial policy and that he relied on the agent for insurance decisions.
Simmons testified about his previous sworn testimony during the Examination Under Oath (EUO), stating he did not mention 'personal errands' because he was not asked by Farmers' counsel. He confirmed that he answered affirmatively when asked if he was 'test driving [the truck] or road testing it on June 2nd,' acknowledging that Shipley wanted him to check for additional issues with the vehicle. Simmons felt he was being led by the attorneys and responded ambiguously when asked if he had lied during the EUO. Farmers' counsel highlighted inconsistencies by reading an excerpt from Simmons’ deposition regarding the purpose of driving the truck.
Farmers moved for a directed verdict, reiterating points from its summary judgment motion, but the trial court denied this, citing credibility issues related to discrepancies in testimonies. The jury ultimately found that the automobile business exclusion did not preclude coverage for the accident, leading to a judgment on March 20, 2020, that required Farmers to provide coverage for Simmons.
Farmers then filed a motion for judgment notwithstanding the verdict or for a new trial, arguing three points: (1) the trial court erred by not applying the cancellation rule, allowing Simmons to contradict his prior testimony; (2) the jury's verdict was against the weight of the evidence; and (3) the trial court improperly allowed evidence concerning the insurance agent's potential fault when it had not been raised as a defense. Simmons countered, asserting the trial court had already ruled on the cancellation rule and that his testimony supported the jury's verdict, while also claiming Farmers opened the door for evidence regarding the insurance agent during cross-examination.
On May 18, 2020, the trial court denied Farmers' motion, concluding that Simmons' trial testimony suggested he was not test driving the vehicle at the time of the accident, providing sufficient evidence to negate the cancellation rule. The court also found that the evidence weighed in favor of the jury's decision and ruled that Simmons’ counsel was entitled to question him about the insurance agent due to Farmers' prior inquiries about commercial policies. Farmers subsequently appealed, raising three issues regarding the trial court's decisions on the cancellation rule and the motions for directed verdict and judgment notwithstanding the verdict.
The document addresses the following key issues:
1. **Jury Verdict and Evidence Weight**: It questions whether the evidence preponderates against the jury's verdict regarding Simmons' use of a truck at the accident, which may fall under an automobile business exclusion.
2. **Counsel Withdrawal**: Simmons' counsel was permitted to withdraw, allowing him to proceed pro se in the appeal.
3. **Introduction of Evidence**: It examines whether the trial court erred by allowing Simmons to present evidence suggesting fault by an insurance agent, despite Simmons not pleading comparative fault as an affirmative defense.
4. **Standard of Review**: The document outlines the standard of review for a judgment notwithstanding the verdict, equating it to that used for directed verdicts. It emphasizes that appellate courts must view evidence favorably for the non-moving party and cannot weigh the evidence or assess witness credibility. A directed verdict is only appropriate when reasonable minds could only reach one conclusion.
5. **Material Evidence Definition**: Material evidence is defined as that which is essential to the controversy and can determine the case's outcome. The appellate review of jury verdicts centers on whether material evidence supports the verdict, regardless of the weight of evidence.
6. **Impact of Material Evidence**: If material evidence supports the jury's findings, a directed verdict for the opposing party would be improper, as reasonable minds could differ based on the evidence presented.
7. **Summary Judgment Denial**: The document notes that a trial court's denial of a summary judgment based on genuine material fact issues is not subject to review if a subsequent trial results in a judgment on the merits.
The analysis will further explore the cancellation rule's applicability in this case.
In the case of Alex Lyon, Son Sales Managers, Auctioneers, Inc. v. Boles, the trial court approved the jury’s verdict and determined that the cancellation rule, which nullifies contradictory witness statements, did not apply at the summary judgment stage. Farmers contended that the trial court should have granted a directed verdict based on Simmons' conflicting statements regarding the purpose of driving Shipley’s truck during the accident. Farmers argued that the remaining evidence indicated Simmons was road testing the truck, activating the insurance policy's automobile business exclusion.
The cancellation rule stipulates that contradictory statements on the same fact negate each other as evidence. However, the court noted that a witness's contradictory testimony is not automatically disregarded if explanations for the inconsistencies exist and if part of the testimony is corroborated by other evidence. In this case, Simmons provided conflicting accounts—stating in his affidavit and at trial that he was running personal errands while previously swearing during an examination under oath (EUO) that he was road testing the truck. The court found Simmons' statements to be both contradictory and mutually exclusive, leading to the conclusion that the jury should assess the weight and truth of the evidence presented.
Simmons initially claimed during his Examination Under Oath (EUO) that he was test driving Shipley’s truck to verify repairs, without mentioning personal errands. Ten months later, he submitted an affidavit asserting he had fully repaired the vehicle and altered his statement at trial, claiming he was running personal errands at the time of the accident. These conflicting accounts were deemed irreconcilable. The trial court failed to apply the cancellation rule to Simmons' testimony, which would have indicated that he was using the truck for business purposes, as Shipley testified he only authorized the truck's use for repairs. Shipley stated he did not permit Simmons to run personal errands with the truck, emphasizing concerns about its drivable condition. Given this context and Simmons' earlier assertion that he was only instructed to check for additional issues, the evidence supports that Simmons was indeed test driving the truck. Therefore, the trial court should have ruled that Farmers' insurance policy excludes coverage for the accident under its business purpose exclusion. The judgment from the Loudon County Circuit Court is vacated, and the case is remanded for a verdict in favor of Tennessee Farmers Mutual Insurance Company, with costs of the appeal assessed to Simmons.
