                IN THE COURT OF APPEALS OF TENNESSEE
                            AT MEMPHIS
                                February 23, 2010 Session

                          JOHN COOK, JR.
                                v.
                 PERMANENT GENERAL ASSURANCE CORP.

                   Appeal from the Circuit Court for Shelby County
                     No. CT-00676-08      Robert Childers, Judge


                 No. W2009-01352-COA-R3-CV - Filed April 21, 2010


This appeal involves the alleged breach of an insurance policy. The plaintiff insured had an
automobile insurance policy with the defendant insurance company. The insured paid his
insurance premium by check. He subsequently was involved in an automobile accident and
notified the insurance company of the accident. The check was later returned for insufficient
funds. The insurance company notified the insured that if he did not bring the premium
current by a date certain, his insurance policy would be cancelled. The insured gave the
insurance company a valid check for the premium, which was negotiated. The insurance
company later cancelled the policy, retroactive to a date prior to the insured’s automobile
accident. The insured sued the insurance company for breach of contract. After a bench trial,
the trial court held in favor of the plaintiff insured. The insurance company appeals. We
affirm.

  Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed

H OLLY M. K IRBY, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.

Gary M. Kellar, Brentwood, Tennessee, for the appellant Permanent General Assurance Corp.

Kevin A. Snider, Germantown, Tennessee, for the appellee, John Cook, Jr.
                                     MEMORANDUM OPINION 1

                                   F ACTS AND P ROCEEDINGS B ELOW

In October 2005, Plaintiff/Appellee John Cook, Jr. (“Cook”), took out an automobile
insurance policy with Defendant/Appellant Permanent General Assurance Corporation
(“Permanent General”).2 Cook defaulted on the first insurance premium, due on October 19,
2005. Over the next nine months, Cook developed a checkered payment history regarding his
Permanent General insurance premiums. At no time did he pay the required insurance
premium on the date the premium was due. On at least one occasion, the premium was paid
with a check that was later dishonored for insufficient funds.3

Each month in which Permanent General did not receive Cook’s insurance premium by the
due date, the company sent him a notice of intent to cancel the policy if payment were not
received by a specified date. On several occasions, Cook missed the cancellation deadline,
and Permanent General sent him a notice that the policy had been cancelled. Each notice of
cancellation informed Cook that his policy would be reinstated if he paid all premiums in
arrears and signed a statement verifying that no losses had occurred since the cancellation
date. On each occasion, the premiums were brought current and Cook signed the required
“no-loss” statement, so the policy was reinstated.

This pattern continued. Another premium was due on July 16, 2006, and Cook again
defaulted. He was sent a notice of intent to cancel on July 19, 2006, to be effective on July
30, 2006. Pursuant to the notice, a check (No. 7894) for $224.06, for payment of Cook’s
premium arrearage, was tendered to Permanent General, prior to July 30, 2006, so the policy
continued in force.




1
    Rule 10 of the Rules of the Court of Appeals states:

           This Court, with the concurrence of all judges participating in the case, may affirm, reverse
           or modify the actions of the trial court by memorandum opinion when a formal opinion
           would have no precedential value. When a case is decided by memorandum opinion it shall
           be designated “MEMORANDUM OPINION”, shall not be published, and shall not be cited
           or relied on for any reason in any unrelated case.
2
 The insurance arrangement included a premium finance agreement with Permanent General Assurance
Service Corporation, a wholly owned subsidiary of Appellee Permanent General Assurance Corporation.
For purposes of this Opinion, “Permanent General” shall be inclusive of both entities.
3
    The check to pay the premium for October 2005 was returned for insufficient funds.

                                                       -2-
On August 14, 2006, Cook was involved in an automobile accident. He timely notified his
insurance agent of the accident.

On August 18, 2006, Permanent General sent Cook a notice of intent to cancel, informing him
that the balance on his premium account as of August 15, 2006, was $213.39. The notice told
Cook to pay $213.39 4 or his insurance policy would be cancelled effective August 29, 2006.

On August 21, 2006, Permanent General learned that check No. 7894 proffered by Cook in
payment of the July 2006 premium had been returned for insufficient funds. Permanent
General asked the bank to process the check a second time, and it was returned NSF again.

On August 22, 2006, Permanent General sent Cook a notice informing him that check No.
7894 had been returned due to insufficient funds. The notice said that Cook had until
September 4, 2006 to pay a total of $467.59, plus completing a “no-loss” statement, in order
to reinstate the policy.

On August 24, 2006, Permanent General sent Cook a notice informing him that his policy was
cancelled effective August 7, 2006. The notice informed Cook that there was an unpaid
balance on his account in the amount of $112.57.

On the same date, August 24, 2006, Cook gave a check to Permanent General’s agent in the
amount of $213.39, the amount noted on the August 18 notice of intent to cancel. The check
was negotiated by Permanent General.

On September 25, 2006, Permanent General sent Cook a refund check in the amount of
$100.82.5 Permanent General maintained that Cook’s insurance policy remained cancelled
effective August 7, 2006, seven days prior to Cook’s August 14 automobile accident and,
consequently, the accident was not a covered loss.

On January 25, 2006, Cook filed a lawsuit against Permanent General in the General Sessions
Court for Shelby County, Tennessee. The General Sessions judgment was apparently
appealed de novo to the Circuit Court of Shelby County. See T.C.A. § 27-5-108 (2000 &
Supp. 2009).




4
The notice of intent to cancel indicated that if payment were received after August 25, 2006, the amount due
would be $224.06.
5
    Cook did not cash the refund check.

                                                   -3-
The circuit court conducted a bench trial on May 14, 2009. Although the testimony began in
the morning on that day, the transcript in the appellate record has only the testimony from the
afternoon.6 That afternoon, the trial court heard testimony from an adjuster for Permanent
General, Judy Mitchell, and from Permanent General’s Vice President of Underwriting and
Premium Finance, Allison Garrison. The witnesses testified about the events outlined above.
Garrison explained that the cancellation of Cook’s insurance policy was made retroactive to
August 7, 2006, because allegedly that was the date that Permanent General received from
Cook check No. 7894, which was ultimately dishonored. Garrison maintained that Cook’s
insurance coverage was cancelled appropriately, in accordance with the insurance policy and
pertinent financing agreements.

At the conclusion of the testimony, the trial judge asked counsel for Permanent General
several questions to clarify the testimony. The trial judge inquired why Cook’s policy was
cancelled retroactive to August 7, 2006, when this was not consistent with Permanent
General’s past practice; he responded that he could not answer that question. Permanent
General also acknowledged that there were no policy provisions requiring Cook to sign a no-
loss statement prior to reinstatement of the policy.

The trial court then issued an oral ruling from the bench. The trial court first recounted the
pertinent payments, notices, and transactions. The trial court noted that Exhibit 17 showed
that check No.7894 was received by Permanent General prior to the cancellation date, July
30, 2006, and was returned for insufficient funds on August 21, 2006. The trial court found
that Cook’s mother gave Permanent General a valid check for the full amount due, as per
Permanent General’s August 18, 2006 notice of intent to cancel, on August 24, 2006.7 Based
on these factual findings, the trial court concluded that Permanent General breached the
contract of insurance by failing to provide coverage for Cook’s August 14, 2006 automobile
accident. Cook was awarded a judgment for the amount of damage to his vehicle, $14,200.

A written order was entered by the trial court on May 22, 2009. Permanent General now
appeals.

                            I SSUE ON A PPEAL AND S TANDARD OF R EVIEW

On appeal, Permanent General contends that the trial court erred in finding that it breached
its contract of insurance with Cook. We review the trial court’s findings of fact de novo on


6
    At oral argument, the parties’ attorneys indicated that the court reporter did not appear in the morning.
7
 The trial judge inadvertently said August 24, 2009, but in context obviously intended to say August 24,
2006.

                                                       -4-
the record, presuming those findings to be correct unless the evidence preponderates
otherwise. Tenn. R. App. P. 13(d). Conclusions of law are reviewed de novo, with no such
presumption of correctness. See State v. Levandowski, 955 S.W.2d 603, 604 (Tenn. 1997).

                                           A NALYSIS

Permanent General argues on appeal that its cancellation of Cook’s insurance policy was done
pursuant to Tennessee’s Premium Finance Statute, Tennessee Code Annotated § 56-37-
110(b). Permanent General asserts that the statute provides that if an insured gives the finance
company a premium payment in the form of a check that is later dishonored, the company may
treat that as a request by the insured to cancel the policy. Permanent General also contends
that the cancellation was done in accordance with the premium finance agreement between
Cook and Permanent General, and also in accordance with Cook’s insurance policy. Citing
Tallent v. Tennessee Farmers Mutual Insurance Company, 785 S.W.2d 399 (Tenn. 1990),
Permanent General argues that Cook’s tender of check No.7894, referred to in Tallent as a
“worthless check,” did not constitute an effective premium payment that would continue
insurance coverage.

In response, Cook notes that the appellate record does not contain a complete transcript of the
trial; rather, the transcript is of only half of the testimony heard by the trial court. Moreover,
there is no statement of the evidence regarding the proceedings for which there is no
transcript. Without a complete record, Cook argues, the appellate court must presume that the
evidence supports the findings of the trial court.

In the event that the appellate court reaches Permanent General’s substantive argument, Cook
notes that the trial court’s oral ruling indicated that the retroactive effective date of the
cancellation was inconsistent with Permanent General’s past course of dealing with Cook.
Cook notes that the retroactive cancellation date, August 7, 2006, happened to be a date prior
to his August 14, 2006 automobile accident, and that this cancellation date was selected by
Permanent General after it received notice from Cook of the accident. This implies that the
cancellation date was selected to avoid coverage of Cook’s damage in the accident. He argues
that Permanent General’s actions were not in strict compliance with the termination provisions
in Cook’s insurance policy.

In this case, the trial court’s decision was premised on its factual findings regarding the
parties’ past course of dealing and the sequence of events leading up to the cancellation of
Cook’s policy. These factual findings were based not only on the exhibits entered into
evidence, but also on the testimony of the witnesses, including any evaluation of the
credibility of the witnesses.



                                               -5-
“The appellant bears the burden of showing that the evidence presented below preponderates
against the trial court’s judgment.” Mfrs. Consol. Serv., Inc. v. Rodell, 42 S.W.3d 846, 865
(Tenn. Ct. App. 2000). “The burden is likewise on the appellant to provide the Court with a
transcript of the evidence or a statement of the evidence from which this Court can determine
if the evidence . . . preponderate[s] for or against the findings of the trial court.” Willcutts v.
Willcutts, No. W2002-02636-COA-R3-CV, 2004 WL 404497, at *9 (Tenn. Ct. App. Mar. 4,
2004) (citing Coakley v. Daniels, 840 S.W.2d 367, 370 (Tenn. Ct. App. 1992)); see also Mfrs.
Consol., 42 S.W.3d at 865. “In the absence of a transcript or a statement of the evidence, a
presumption arises that the parties presented sufficient evidence to support the trial court’s
judgment.” Mfrs. Consol., 42 S.W.3d at 865. This presumption has been termed
“conclusive.” Coakley, 840 S.W.2d at 370; see also Scarbrough v. Scarbrough, 752 S.W.2d
94, 97 (Tenn. Ct. App. 1988) (“When the trial court hears the evidence, but the evidence is
not included in the record on appeal, it is presumed that the evidence supports the ruling of
the trial court.”). This rule also applies when there is a transcript or a statement of the
evidence that is incomplete. See Mfrs. Consol., 42 S.W.3d at 865; Coakley, 840 S.W.2d at
370.

In the instant case, Permanent General failed to provide this Court with a complete transcript
or a complete statement of the evidence heard by the trial court. Thus, we must presume that
the evidence presented below supported the ruling of the trial court. Scarbrough, 752 S.W.2d
at 97. Under these circumstances, we must conclude that Permanent General has failed to
meet its burden of showing that the evidence preponderates against the trial court’s judgment.

                                          C ONCLUSION

The decision of the trial court is affirmed. Costs of this appeal are to be taxed against
Appellant Permanent General Assurance Corporation, and its surety, for which execution may
issue, if necessary.




                                             ________________________________________
                                             HOLLY M. KIRBY, JUDGE




                                                -6-
