                 IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                                 February 16, 2005 Session

 RANDY E. RICE, PERSONAL REPRESENTATIVE OF THE ESTATE OF
      JAMES NEIL RICE v. ANDREW JOHNSON BANK, ET AL.

                      Appeal from the Circuit Court for Greene County
                          No. 03CV737      John K. Wilson, Judge



                 No. E2004-01469-COA-R3-CV - FILED MARCH 29, 2005


James Neil Rice (“Mr. Rice”) applied to Mountain Life Insurance Company (“Mountain Life”) for
a credit life insurance policy to cover the principal amount of a loan made to him by Andrew
Johnson Bank (“the Bank”). When Mr. Rice died, Randy E. Rice, Personal Representative of the
Estate of James Neil Rice (“Plaintiff”), made demand upon Mountain Life and the Bank to tender
the policy proceeds to satisfy the loan. When Mountain Life and the Bank refused this demand,
Plaintiff filed suit. Both Mountain Life and the Bank filed motions for summary judgment. The
Trial Court granted the motions for summary judgment holding, inter alia, that no contract of
insurance existed because Mr. Rice’s application never was approved or accepted by Mountain Life
and, therefore, no insurance policy was issued to Mr. Rice. Plaintiff appeals the grant of summary
judgment. We vacate and remand.


      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated;
                                      Case Remanded


D. MICHAEL SWINEY , J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and
SHARON G. LEE, J., joined.

Bryan B. Martin and Thomas C. McKee, Johnson City, Tennessee, for the Appellant, Randy E. Rice,
as personal representative of the Estate of James Neil Rice.

Thomas L. Kilday, Greeneville, Tennessee, for the Appellee, Andrew Johnson Bank.

Lewis S. Howard, Jr. and Heather Gunn Anderson, Knoxville, Tennessee, for the Appellee,
Mountain Life Insurance Company.
                                             OPINION


                                            Background

              On October 15, 2001, Mr. Rice obtained a loan from the Bank. At that time, Mr. Rice
completed an application for Group Creditor-Debtor Insurance (“the Application”) to insure the
principal amount of the loan. The Application stated, in pertinent part:

       I understand that this Application is subject to approval. If it is approved, the
       Application will become a part of the certificate to which it is attached.

       Upon acceptance of the insurance and within 30 days of the incurred indebtedness,
       the Insurer shall cause a certificate of insurance to be delivered to you. If the
       insurance is not approved, any premium paid will be refunded. However, if a valid
       claim arises before action has been taken, insurance will not be denied for lack of
       insurability.

Mr. Rice paid the premium to obtain the insurance. The Bank submitted the application to Mountain
Life and retained a portion of the premium paid by Mr. Rice pursuant to its agreement with Mountain
Life.

                The Bank received a letter from Mountain Life dated February 14, 2002, which
acknowledged receipt of Mr. Rice’s application and stated that “before coverage on the applicant can
be accepted, the underwriting department will need to review his medical records. This will cause
a delay in the processing of this application.”

                By letter dated March 1, 2002, Mountain Life advised the Bank that it could not
“accept coverage on the application sent for [Mr. Rice]...” as it had determined that Mr. Rice was
not eligible due to his medical history. Mountain Life enclosed its portion of the premium along
with the letter and requested that the Bank apply it and the Bank’s portion of the premium back to
the loan. Mountain Life’s letter also requested the Bank to notify Mr. Rice and to forward an
enclosed copy of the letter to Mr. Rice. A notation at the end of the letter states: “CC: James N. Rice
. . . .”

               An employee of the Bank, Debbie Shelton, placed a telephone call to Mr. Rice on
March 6, 2002, and left a message on Mr. Rice’s answering machine requesting a return call. Mr.
Rice did not return the call.

                Mr. Rice died in August of 2002. Plaintiff in his capacity as personal representative
of the Estate of James Neil Rice made a formal demand to Mountain Life and the Bank requesting
tender of the proceeds of the policy to satisfy Mr. Rice’s loan. Both Mountain Life and the Bank
refused this demand. Plaintiff then sued Mountain Life and the Bank claiming, among other things,


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that Mountain Life and the Bank breached their contract of insurance with Mr. Rice by wrongfully
rejecting coverage, that Mr. Rice never was given notice of cancellation and that the premium he
paid was not fully refunded, that Mr. Rice never was informed that his insurance was not in effect,
and that Mountain Life and the Bank should be estopped from denying that coverage was in place.
Plaintiff’s complaint also included, among other things, a claim that Mountain Life and the Bank
violated the Tennessee Consumer Protection Act.

                Both Mountain Life and the Bank filed motions for summary judgment claiming, in
part, that there never was a contract of insurance between Mountain Life and Mr. Rice. Plaintiff
served requests for admissions upon both Mountain Life and the Bank. In its response to Plaintiff’s
request for admissions, Mountain Life admitted it did not provide any actual notice to Mr. Rice that
it would not accept coverage of Mr. Rice’s loan. However, when Mountain Life was asked to admit
that it “did not send a copy of the letter from Mountain Life Insurance Company dated March 1,
2002, to James Neil Rice . . . that indicated that Mountain Life Insurance Company would not accept
coverage of James Neil Rice’s October 15, 2001, loan”, Mountain Life denied this assertion. In its
response to Plaintiff’s request for admissions, the Bank admitted it did not provide written notice
to Mr. Rice that Mountain Life had denied coverage of the loan, but stated it assumed that Mountain
Life had given Mr. Rice notice pursuant to their previously established custom and practice. The
Bank also admitted it did not forward to Mr. Rice a copy of Mountain Life’s March 1, 2002 letter
denying coverage.

              Both Mountain Life and the Bank filed affidavits in support of their motions for
summary judgment. Debbie Shelton, a loan processor for the Bank, filed an affidavit stating, among
other things:

       Upon receiving from the insurance company the premium refund check of $1,152.45
       this amount was immediately credited to Mr. Rice’s account. Thereafter, and after
       it came to our attention that this credited amount represented only 60% of the total
       premium amount, the balance of the premium amount of $768.30 was also credited
       to Mr. Rice’s account together with interest that had accrued on the account from the
       time of receiving notice of the insurance company’s rejection of the application until
       the credit was applied.

                 The Trial Court entered an order on May 10, 2004, granting summary judgment to
both Mountain Life and the Bank holding “inter alia, the application for credit life insurance of
James Neil Rice was never approved or accepted by Mountain Life Insurance Company, no
certificate of insurance was delivered to him and no policy of insurance at any time issued . . . .”

               Plaintiff appeals to this Court.




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                                            Discussion

               While Plaintiff raises several issues on appeal, the dispositive issue is whether the
Trial Court erred in granting summary judgment.

              In Blair v. West Town Mall, our Supreme Court recently reiterated the standards
applicable when appellate courts are reviewing a motion for summary judgment. Blair v. West Town
Mall, 130 S.W.3d 761 (Tenn. 2004). In Blair, the Court stated:

               The standards governing an appellate court’s review of a motion for summary
       judgment are well settled. Since our inquiry involves purely a question of law, no
       presumption of correctness attaches to the lower court’s judgment, and our task is
       confined to reviewing the record to determine whether the requirements of Tennessee
       Rule of Civil Procedure 56 have been met. See Staples v. CBL & Assoc., Inc., 15
       S.W.3d 83, 88 (Tenn. 2000); Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn. 1997);
       Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn. 1991).
       Tennessee Rule of Civil Procedure 56.04 provides that summary judgment is
       appropriate where: 1) there is no genuine issue with regard to the material facts
       relevant to the claim or defense contained in the motion, and 2) the moving party is
       entitled to a judgment as a matter of law on the undisputed facts. Staples, 15 S.W.3d
       at 88.

                                              ***

               When the party seeking summary judgment makes a properly
               supported motion, the burden shifts to the nonmoving party to set
               forth specific facts establishing the existence of disputed, material
               facts which must be resolved by the trier of fact.

                       To properly support its motion, the moving party must either
               affirmatively negate an essential element of the non-moving party’s
               claim or conclusively establish an affirmative defense. If the moving
               party fails to negate a claimed basis for the suit, the non-moving
               party’s burden to produce evidence establishing the existence of a
               genuine issue for trial is not triggered and the motion for summary
               judgment must fail. If the moving party successfully negates a
               claimed basis for the action, the non-moving party may not simply
               rest upon the pleadings, but must offer proof to establish the existence
               of the essential elements of the claim.

Blair, 130 S.W.3d at 763, 767 (quoting Staples, 15 S.W. 3d at 88-89 (citations omitted)).




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              Our Supreme Court has also provided instruction regarding assessing the evidence
when dealing with a motion for summary judgment stating:

              The standards governing the assessment of evidence in the summary
       judgment context are also well established. Courts must view the evidence in the
       light most favorable to the nonmoving party and must also draw all reasonable
       inferences in the nonmoving party’s favor. See Robinson v. Omer, 952 S.W.2d at
       426; Byrd v. Hall, 847 S.W.2d at 210-11. Courts should grant a summary judgment
       only when both the facts and the inferences to be drawn from the facts permit a
       reasonable person to reach only one conclusion. See McCall v. Wilder, 913 S.W.2d
       150, 153 (Tenn. 1995); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995).

Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 89 (Tenn. 2000).

               Tenn. Code Ann. § 56-7-909 provides, in pertinent part:

       If a debtor has paid a premium or an identifiable charge for credit life insurance to
       the creditor and such insurance is declined by the insurer or otherwise does not
       become effective, the insurer or creditor shall immediately give written notice to such
       debtor and shall promptly arrange for refund or credit to the debtor of any premium
       or identifiable charge paid by the debtor for such insurance plus interest and fees
       charged thereon.

Tenn. Code Ann. § 56-7-909 (a) (2000).

                Under Tenn. Code Ann. § 56-7-909 (a), either Mountain Life, or the Bank, was
required to immediately give written notice to Mr. Rice that the insurance had been declined and to
promptly arrange for a refund or credit to Mr. Rice of the premium paid and any applicable interest
or fees. The Application completed by Mr. Rice provides, in pertinent part, that “if a valid claim
arises before action has been taken, insurance will not be denied for lack of insurability.” Thus, in
order for Mountain Life and the Bank to prevail at the summary judgment stage, it was incumbent
upon them to show they had taken action and given Mr. Rice written notice of the denial of coverage
before his death. Otherwise, under the terms of the Application itself, coverage could not be denied
for lack of insurability.

                A thorough review of the record reveals that a genuine issue of material fact exists
as to whether Mountain Life or the Bank ever provided Mr. Rice with written notice of the denial
of insurance. Mountain Life argues that its refusal to admit that it “did not send a copy of the letter
from Mountain Life Insurance Company dated March 1, 2002, to James Neil Rice . . . that indicated
that Mountain Life Insurance Company would not accept coverage of James Neil Rice’s October 15,
2001, loan” means that it did send such a letter. However, an unsworn denial is not the same as an
affirmative statement that Mountain Life did send such a letter to Mr. Rice regarding the denial of
coverage. We believe a fair reading of Mountain Life’s refusal to admit that it “did not send a copy


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of the letter. . . to James Neil Rice. . .” to be only that it takes the position that it did so by enclosing
a copy of that letter with the original to the Bank with instructions to the Bank to send the copy of
the letter on to Mr. Rice. Such a denial, under the facts of this case, is not equivalent to an
affirmative statement that written notice was sent by Mountain Life to Mr. Rice. Mountain Life has
made no such affirmative statement that it did send the required written notice directly to Mr. Rice,
and the Bank affirmatively stated that it did not provide Mr. Rice with written notice and did not
forward a copy of Mountain Life’s letter to Mr. Rice.

                Viewing the evidence in the light most favorable to Plaintiff, the nonmoving party,
and drawing all reasonable inferences in Plaintiff’s favor, as we must, we find there is a genuine
issue at this summary judgment stage with regard to the material fact of whether Mountain Life or
the Bank provided Mr. Rice with written notice of the denial of coverage before the claim arose upon
his death. This being so, the defendants neither negated an essential element of Plaintiff’s claim nor
conclusively established an affirmative defense. Therefore, summary judgment was not proper, and
we vacate the summary judgment in its entirety.

                                               Conclusion

                The judgment of the Trial Court is vacated, and this cause is remanded to the Trial
Court for such further proceedings as are necessary consistent with this Opinion and for collection
of the costs below. The costs on appeal are assessed equally against the Appellees, Andrew Johnson
Bank and Mountain Life Insurance Company.




                                                          ___________________________________
                                                          D. MICHAEL SWINEY, JUDGE




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