Swafford v. Forestry Mutual Insurance

Citations: 68 F. Supp. 3d 796; 2014 U.S. Dist. LEXIS 158837; 2014 WL 5812579Docket: Case No. 1:14-CV-00093

Court: District Court, E.D. Tennessee; November 9, 2014; Federal District Court

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Defendant Forestry Mutual Insurance Company filed a motion for summary judgment, arguing that it had no duty to defend Plaintiff Danny Swafford in a lawsuit initiated by Albert Wayne Capshaw for injuries allegedly sustained while working as an independent contractor for Swafford Farms. The insurance policy in question, which covered Swafford Farms from July 23, 2011, to July 23, 2012, included a provision for the insurer to defend the insured in covered claims. Swafford sought declaratory judgment asserting that the insurer was obligated to defend against the Capshaw Complaint. The Court evaluated the case under the standard for summary judgment, which requires the movant to demonstrate the absence of a genuine dispute over material facts. It concluded that the Capshaw Complaint did not present a claim covered by the policy, thus granting the Defendant's motion for summary judgment and deeming the Plaintiff's request for oral argument moot.

Under Tennessee law, an insurer's duty to defend is based on the allegations in the underlying complaint, as established in multiple cases. The duty is triggered if any allegation suggests a potential basis for recovery that falls within the coverage of the policy. Even a single covered allegation necessitates a defense, regardless of other excluded claims. Conversely, if the complaint clearly does not state facts that could potentially fall within the policy's coverage, no duty to defend exists. Ambiguities in the allegations will be resolved in favor of the insured. 

In this case, the insurance policy covers both workers’ compensation and employer liability claims. However, the Capshaw Complaint does not seek workers’ compensation benefits, leading to the critical question of whether it falls under the employer liability coverage. The policy specifies coverage for injuries to “employees,” while the Capshaw Complaint identifies Capshaw as an independent contractor. Consequently, since the policy does not cover independent contractors, the insurer has no duty to defend. The plaintiff contends that the term "employee" is ambiguous and seeks to introduce extrinsic evidence to classify Capshaw as an employee, while the defendant maintains that the term is not ambiguous and asserts that the complaint's classification precludes any duty to defend.

Plaintiff's argument based on Dempster Bros. is rejected due to significant differences in the legal context. In Dempster Bros., the insurer had a duty to defend if the underlying plaintiff was deemed an independent contractor, as the complaint's language was ambiguous. In contrast, the Capshaw Complaint explicitly identifies Capshaw as an “independent contractor,” which is a distinct classification from “employee.” Legal precedents confirm that "employee" and "independent contractor" are mutually exclusive terms. Consequently, the Court finds no ambiguity in either the Policy or the Capshaw Complaint, negating the need for extrinsic evidence. According to Tennessee law, if the allegations do not present a claim covered by the policy, there is no duty to defend. Therefore, the Court grants Defendant's motion for summary judgment, denies Plaintiff's request for oral argument, and directs the closure of the case. The continued relevance of Dempster Bros. is also questioned in light of more recent Tennessee Supreme Court rulings emphasizing that the duty to defend is determined solely by the complaint's allegations. Overall, the Plaintiff's argument does not hold, even if Dempster Bros. were viewed favorably.