                 IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                                  December 7, 2004 Session

    ROBERT STEVEN JOHNSON v. TENNESSEE FARMERS MUTUAL
                   INSURANCE COMPANY

                        Appeal from the Circuit Court for Knox County
                          No. 1-106-98    Dale C. Workman, Judge


                   No. E2004-00250-COA-R3-CV - FILED MARCH 9, 2005


The issue for jury resolution was whether Tennessee Farmers Mutual Insurance Company refused
in bad faith to settle a damage suit against Johnson by Moore within his policy limits of $25,000, and
exposed him to a final judgment of nearly $200,000.00. Johnson’s defense entirely focused on his
asserted non-liability, not withstanding that Moore’s medical expenses exceeded $75,000, and his
injuries were serious and permanently disabling, thus reasonably indicating that if Johnson was
found to be negligent, the percentage of his fault necessarily would have to be minimal in light of
his insurance limits. An unidentified van forced Johnson to crash head-on into Moore, and the jury
allocated 50% of Moore’s damages to Johnson and 50% to the van. After this allocation was
affirmed on appeal, Johnson sued Tennessee Farmers Mutual Insurance Company, claiming that
Moore’s claim could have been settled for his policy limits. Tennessee Farmers Mutual Insurance
Company presents a host of issues, beginning with the refusal of the court to direct a verdict, and
continuing with complaints of the trial judge commenting on the evidence and refusing corrective
jury instructions. The judgment is reversed for the latter two reasons.

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

WILLIAM H. INMAN , SR. J., delivered the opinion of the court, HERSCHEL P. FRANKS, P.J., filed a
separate opinion concurring in part, dissenting in part, and SHARON G. LEE, J., filed a dissenting
opinion.

John T. Johnson, Jr., Knoxville, Tennessee, and Michael R. Campbell, Chattanooga, Tennessee, for
appellant, Tennessee Farmers Mutual Insurance Company.

Bryan L. Capps and Sidney Gilreath, Knoxville, Tennessee, for appellee, Robert Steven Johnson.

                                             OPINION

      A jury determined that Tennessee Farmers Mutual Insurance Company [hereinafter
“Tennessee Farmers”] acted in bad faith in failing to settle a lawsuit against the plaintiff filed by
Christopher Moore. The policy issued by Tennessee Farmers provided liability coverage of $25,000
for the plaintiff, far less than the verdict in favor of Moore.

       Tennessee Farmers appeals, insisting that its motion for a directed verdict should have been
granted, or, in the alternative, that it should be granted a new trial because of the cumulative effect
of numerous errors committed by the trial judge in commenting upon the evidence and refusing to
give appropriate jury instructions.

        We have determined that the trial judge’s comments on the evidence require a new trial. We
have also determined that the refusal of the trial judge to instruct the jury per the several requests,
even when considered in isolation, require a new trial. The cumulative influence of these errors, as
hereafter explained, substantially impaired Tennessee Farmers’ right to a fair trial.

        We are frank to say that the issue of whether the motion of Tennessee Farmers for a directed
verdict should have been granted is not simplistic of resolution, but we have concluded that for the
reasons hereafter recited the motion was properly denied.

                                              Overview

        This litigation arises from an automobile accident which occurred October 25, 1994, in Knox
County, involving a vehicle driven by the plaintiff Robert Steven Johnson [hereinafter “Johnson”],
a vehicle driven by Christopher Moore [hereinafter “Moore”], and a white van driven by an unknown
[hereinafter “John Doe”] motorist. Both Moore and Johnson were insured under liability policies
issued by Tennessee Farmers with minimum limits of liability coverage ($25,000/$50,000) and equal
limits of uninsured motorist coverage. Moore filed suit against Johnson and John Doe for his
personal injuries. Tennessee Farmers was served as uninsured motorist carrier with respect to
Moore’s action against John Doe. Johnson filed suit against John Doe. Tennessee Farmers was
served with process as uninsured motorist carrier with respect to Moore’s action against John Doe.

        The actions of both Moore and Johnson against John Doe were settled by Tennessee Farmers
paying its uninsured motorist coverage policy limits, under each policy, to each policyholder. The
suit by Moore against Johnson resulted in a jury verdict allocating 50% fault to John Doe and 50%
to Johnson which resulted in a judgment in favor of Moore against Johnson for $193,750,
substantially in excess of Johnson’s liability coverage of $25,000.

      The lawsuit at Bar was filed against Tennessee Farmers by Johnson alleging that Tennessee
Farmers was guilty of bad faith in refusing to settle his case within policy limits.

        Tennessee Farmers filed its Answer asserting that it had properly investigated the facts of the
accident, and concluded that (1) Johnson was guilty of no negligence in connection with the
underlying accident, and (2) that it had retained competent counsel to represent and defend Johnson
in the underlying action brought against him by Moore, and (3) had relied upon the advice of the
attorney in determining to try the underlying action believing that a jury would not find Johnson


                                                 -2-
guilty of any negligence. The jury found that the failure of Tennessee Farmers to settle the case
against Johnson evidenced bad faith, and returned a verdict for the excess.

                                       Standard of Review

        Tennessee’s traditional standard for reviewing the evidentiary foundation of a jury’s verdict
is codified in Tenn. R. App. P. 13(d). The rule provides that “[f]indings of fact by a jury in a civil
action shall be set aside only if there is no material evidence to support the verdict.” Appellate
courts employing this standard may not review the evidence de novo. Alexander v. Armentrout, 24
S.W.3d at 271. Nor may they weigh the proof to determine where the preponderance of the evidence
lies. Reynolds v. Ozark Motor Lines, Inc., 887 S.W.2d 822, 823 (Tenn. 1994); Overstreet v.
Shoney”s, Inc., 4 S.W.3d 694, 718 (Tenn. Ct. App. 1999). Rather, appellate courts must (1) take
the strongest legitimate view of the evidence that favors the verdict, (2) assume the truth of all
evidence that supports the verdict, and (3) allow all reasonable inferences to sustain the verdict.
Barnes v. Goodyear Tire & Rubber Co., 48 S.W.3d 698, 704 (Tenn. 2000); Dickey v. McCord, 63
S.W.3d 714, 719 (Tenn. Ct. App. 2001). If the record contains any material evidence to support the
verdict, the judgment based on the verdict must be affirmed. Crabtree Masonry Co. v. C & R
Constr., Inc., 575 S.W.2d 4, 5 (Tenn. 1978); Moss v. Sankey, 54 S.W.3d 296, 298-99 (Tenn. Ct.
App. 2001).

                                             The Issues

I.     Whether the Court erred in failing to grant Tennessee Farmers’ motions for directed verdict.

II.    Whether the Court erred in failing to correctly charge the jury regarding bad faith in
       accordance with Tennessee Farmers’ request to instruct number 4, 6, and 14.

III.   Whether the Court erred in repeatedly allowing plaintiff to introduce evidence relating to the
       timing of payments by Tennessee Farmers of uninsured motorist coverage benefits to
       Christopher Moore and Robert Johnson.

IV.    Whether the Trial Court erred in failing to charge the jury in accordance with Tennessee
       Farmers’ request to instruct number 12 that Tennessee Farmers had no duty to make
       uninsured motorist coverage payments to Christopher Moore and Robert Johnson.

V.     Whether the Court erred in failing to charge Tennessee Farmers’ request to instruct number
       15 on the validity of the uninsured motorist coverage offset provision in the Moore policy.

VI.    Whether the Court erred by commenting upon the evidence during the testimony of witness
       Zane Daniel and by stating that Tennessee Farmers’ policy issued to Christopher Moore did
       not contain an uninsured motorist coverage offset provision which would prevent Moore
       from recovering uninsured motorist coverage after payment of Robert Johnson’s liability
       coverage.


                                                 -3-
VII.    Whether the Court erred in failing to charge Tennessee Farmers’ request to instruct number
        1 that George Buxton was an independent contractor in his relationship with Tennessee
        Farmers.

VIII.   Whether the Court erred by commenting upon the evidence during the testimony of witness
        Zane Daniel and in stating that attorney George Buxton represented Tennessee Farmers in
        the underlying action brought by Christopher Moore against Robert Johnson.

IX.     Whether the Court erred by denying Tennessee Farmers’ Motion for Mistrial based upon the
        Court’s erroneous comments upon the evidence, including rulings regarding the uninsured
        motorist offset provision in the Moore policy and regarding Buxton’s representation of
        Tennessee Farmers.

                                                 I.

       We first consider if the record reveals any “material evidence to support the verdict.” Rule
13(d) Tenn. R. App. P.

        Johnson was driving his small 1982 Mazda RX7 southbound on Highway 33, in Knox
County, a four-lane divided highway where the accident occurred. Moore was traveling northbound
on a section which was straight with vision unobstructed.

        Johnson and Moore were each in the left inside lane of travel. There was a white van in the
right southbound lane near Johnson’s vehicle. As Johnson started to pass the white van it swerved
suddenly into his lane, and Johnson swerved to the left, across the balance of his lane of travel,
across the four foot median, and into the oncoming lane of travel where he collided head-on with
Moore. Both Moore and Johnson were seriously injured.

       The investigating officer confirmed the existence of the white van and included in the
accident report the actual lane measurements at the scene. He did not indicate that either Johnson
or Moore did anything wrong.

        At the time of the accident, adjuster Dennis Ray Hinkle [hereinafter “Hinkle”] was a field
claims representative for Tennessee Farmers assigned to investigate the accident. He had been an
adjuster with Tennessee Farmers for eighteen years. He confirmed Johnson’s coverage, obtained the
accident report, took a statement from Johnson, and contacted eyewitnesses which included Tina
Marie Miracle, Vickie Linderman and Ray Hall who confirmed that the white van existed; Johnson
stated he had been following the van in the right land and just before the collision had decided to
pass the van; that the van swerved into Johnson’s lane; that there was no contact between Johnson
and the van; and that the impact occurred in Moore’s lane. Hinkle took no photographs of the scene
and made no measurements. On November 8, 1994, fourteen days after the collision, based on this
investigation, he wrote a claims summary stating “we will be denying liability as the accident is due
to the unknown van setting the entire event into motion.”


                                                -4-
       Shortly after the accident, attorney Zane Daniel [hereinafter “Daniel”] was retained to
represent Moore. He wrote to Hinkle on December 21, 1994, enclosing copies of Moore’s medical
expenses to date and requesting medical payments coverage be extended to Moore. On December
23, 1994, Hinkle wrote to Daniel again stating that Johnson was not legally responsible for the
accident.

        On October 17, 1995, Daniel filed suit in Knox County Circuit Court on behalf of Moore
against Johnson and against John Doe I and John Doe II as the unknown driver and unknown owner
of the white van.

         In 1995, Johnson retained attorney A.C. Myers [hereinafter “Myers”] for the specific purpose
of filing suit against Tennessee Farmers to collect uninsured motorist [hereinafter “UM”] benefits.
Tennessee Farmers retained attorney Dennis Jarvis [hereinafter “Jarvis”] to defend the uninsured
actions filed by Johnson and Moore. Tennessee Farmers hired George Buxton [hereinafter
“Buxton”] to represent Johnson in the Moore v. Johnson case. Jarvis filed answers on behalf of
Tennessee Farmers in the Moore and Johnson UM claims denying that the white van ever existed.
On January 29, 1996, Buxton filed an answer on behalf of Johnson in the same tribunal alleging that
the sole cause of the collision was the white van. Jarvis had all the information received by
Tennessee Farmers and the information normally provided to attorneys, including the witness
statements, at the time he denied the existence of the white van in Tennessee Farmers’s answer.
Hinkle received copies of all the answers.

        Buxton conducted his own investigation. He reviewed the accident report, visited the
accident scene, reviewed the statements of Johnson and the three witnesses, took photographs, and
met with Johnson five times. In May 1996, Buxton received and forwarded to Tennessee Farmers
an offer by Daniel recommending settlement of Moore’s claim against Johnson for policy limits.

         On August 12, 1996, the discovery depositions of Moore and Johnson were taken by Daniel,
Buxton and Jarvis. During the depositions, all counsel learned that Johnson’s car was five feet wide;
that Johnson did not see Moore’s vehicle before impact; that Johnson stated he had just changed into
the left lane before the accident while witnesses confirmed that he had been in the left inside lane
all along; that his car went 3-5 feet into oncoming lane of Moore; and that Johnson’s vehicle was at
a 30 degree angle to Moore’s vehicle at impact. They also learned in Johnson’s deposition that at
the time Johnson began his evasive maneuver into Moore’s path, the white van was 2-3 feet in
Johnson’s lane and at most halfway. Buxton summarized the depositions and sent the summaries
to Hinkle.

        After the depositions, Jarvis reported to Tennessee Farmers that in his opinion the proximate
cause of the accident was the John Does white van. He reported that Moore’s injuries were
extensive and that Moore’s medical bills at the time of the depositions were $66,412.35. He reported
that Johnson’s medical bills were $31,988. He opined that “[i]n lieu (sic) of the real and significant
injuries Moore sustained and the amount of medical bills incurred, this may well be a case which it



                                                 -5-
would be economically expedient to go ahead and pay our UM coverage and get out of this case
without incurring additional expense.”

         On October 21, 1996, nearly two years after the collision, Tennessee Farmers paid Johnson
his UM limits of $25,000, which settled Johnson’s action against John Doe, leaving the Moore’s
claim against Johnson and John Doe. Thereafter, attorney Myers wrote Buxton requesting that
Johnson’s liability coverage limits of $25,000 be paid to settle Moore’s claim against Johnson.
Initially Johnson and Myers did not want Tennessee Farmers to settle Moore’s claim because they
wanted to resolve the Johnson UM claim before anything was done on the liability claim of Moore.
Ultimately, Myers demanded Tennessee Farmers pay Johnson’s liability limits to Moore because he
was concerned about an excess judgment, owing to the comparative fault doctrine.

         Buxton enquired of Daniel if he would accept Moore’s UM limits and execute a release as
to Johnson, because Tennessee Farmers would not want to pay Moore his own UM unless it resulted
in a complete resolution of Moore v. Johnson and Doe. Jarvis testified that Moore’s UM claim was
not settled at the same time as Johnson’s uninsured motorist claim was settled because Moore’s case
was set for trial at a later date. In any event, the remaining claims of Moore did not settle in 1996,
and the Moore v. Johnson and Doe case was set for trial February 24, 1997.

        During the weeks leading up to trial, there were demands by Myers to settle the claim and
offers to accept limits by Daniel. On January 23, 1997, Buxton wrote Tennessee Farmers sending
a copy of Myers’ letter requesting settlement of the claim against Johnson and stating that Johnson
was not guilty of any fault. Buxton recommended that no offer of settlement be made, but stated that
he could not guarantee that no fault would be assessed against Johnson.

       On February 6, 1997, Daniel wrote Buxton describing Moore’s injuries and indicating that
he would recommend to Moore that he accept Johnson’s policy limits if Tennessee Farmers would
also pay Moore his $25,000 UM limits.

         Buxton and Jarvis conferred on January 28, 1997 about settlement strategy. At the time,
Moore still had pending claims against both Tennessee Farmers (Doe) and Johnson. When Jarvis
and Buxton discussed settlement, neither of them knew that if Tennessee Farmers paid Moore the
liability limits of the Johnson policy, Moore would not be entitled to receive his own UM limits
under his Tennessee Farmers auto policy. Before the trial of the case of Moore vs. Johnson,
Tennessee Farmers agreed to pay Moore his uninsured motorist policy limits of $25,000. A few days
before trial, Johnson met with Buxton and inquired about comparative fault. Buxton confirmed to
Johnson that a small amount of fault, even 10 percent, would exceed his limits. Tennessee Farmers
ultimately made no offer to pay Johnson’s liability limits to Moore, and the Moore v. Johnson case
went to trial on February 24, 1997.

        At the trial, the state trooper on whom Tennessee Farmers based its initial decision to deny
Moore’s claim against Johnson, did not testify, and the accident report was not filed. The pertinent
facts of the investigation were stipulated including the weather conditions and that the lanes were


                                                 -6-
twelve feet wide with a four foot dividing median. There were no medical deposition. Moore’s
medical expenses were stipulated to be $75,000 and his injuries were not contested. Buxton allowed
Daniel to read a summary of Moore’s extensive injuries which included a fractured skull and
resulting damage to the frontal lobes of his brain; a crushed right eye; broken nose; broken jaws,
chipped teeth, upper lip ground off, fingers of his left hand partially ground off, scars on his face,
shoulders, hands; a broken back, and loss of hearing in his right ear. He had memory problems,
difficulty speaking, vision problems, difficulty playing guitar which he enjoyed and lost sense of
smell and taste.

         After all proof, Buxton moved for a directed verdict as to Johnson arguing that there was no
proof of any negligence by Johnson. The motion was denied and the case went to the jury. The jury
initially deadlocked 11 to l. Buxton discussed the deadlock with Johnson and advised Johnson that
he had the right to insist on a unanimous verdict which would result in a a mistrial. Buxton advised
Johnson to accept the majority verdict, and Johnson agreed. During the discussions, Buxton told
Johnson that accepting the majority verdict was a “serious” or “high stakes” gamble.

        After the one hold out juror was excused, the jury announced that they found Johnson at fault,
and after further deliberation, announced their verdict that John Doe was 50 percent at fault and
Johnson was 50 percent at fault. The jury awarded Moore $387,500 which resulted in a judgment
against Johnson for $193,750. After the judgement, Tennessee Farmers paid Johnson’s policy limits
of $25,000 to Moore.

         Hinkle testified that he maintained authority from 1994 through the end of the trial to settle
the claim against Johnson. He also had complete authority to settle the uninsured motorist claims
of Moore and Johnson. He confirmed that Johnson had “no say” in whether or not Tennessee
Farmers settled the case against him. He communicated openly with Buxton about whether or not
to settle the various claims all the way up until the time of the underlying trial. He had authorized
the settlement of the Moore and Johnson UM claims. Despite Tennessee Farmers’s insistence that
the van was at fault, Hinkle had no explanation for not paying the UM limits to Johnson promptly.
When he received the letter from Myers demanding that Tennessee Farmers pay Johnson’s liability
limits to Moore, his only discussion with Buxton concerned the fact that they received the letter and
none of the facts had changed.

        Hinkle employed Buxton and put great weight on his opinion, but conceded that he need not
follow Buxton blindly. Buxton had no authority to settle any claim without Tennessee Farmers’
approval, but he was authorized to communicate with Daniel regarding Tennessee Farmers’
settlement position. He testified that after Buxton was hired, it was not a possibility under the
circumstances that Daniel could contact Tennessee Farmers directly to discuss settlement of the
claims.

        Hinkle knew that he had an obligation as an insurance adjuster for Tennessee Farmers to fully
investigate and evaluate all of the facts surrounding a case before making a decision about the merits
of the claim. He agreed that a proper evaluation of the Moore and Johnson cases would have


                                                 -7-
required him to review Buxton’s investigation and Buxton’s recap of depositions. He received the
deposition summaries, but he never read them line by line, and if he read them at all he read them
hurriedly.

       Hinkle based his original denial on his initial investigation, but realized from the beginning
that any award by the jury would be substantial and in excess of Johnson’s policy limits. He
conceded that if he had considered all of the facts that had been developed in the case, it should have
caused him some concern that fault would be assessed against Johnson.

        Hinkle testified that the multiple claim files were separated in order to avoid internal
conflicts. He did not discuss the cases jointly with Buxton and Jarvis, and denied that the UM claims
had any bearing on the decision on whether to pay the liability claim of Moore. He also denied that
he told Buxton that Tennessee Farmers could not or would not pay all three claims. But when
questioned about the significance of the UM claims versus the liability claim of Moore, he confirmed
his belief that Johnson could not have received his own UM benefits and then have his liability paid
out on his behalf: “you can’t pay the liability portion on behalf of them and then pay his UM. That’s
the same instance - - it just doesn’t work. He is either at fault or he’s not.”

       Hinkle knew that of the three claims only Johnson had any personal assets at stake. He
understood comparative fault prior to the underlying trial, and he acknowledged Buxton’s advice that
there was no guarantee that they would be able to hold Johnson’s fault at zero. He knew the jury
would be required to consider comparative fault, and he knew the monetary damages would be huge.

        He then confirmed that prior to the underlying trial, he knew Tennessee Farmers had two
options which would have avoided any possibility of a verdict against Johnson and a bad faith claim.
He believed that under the policies Tennessee Farmers could have paid Johnson’s liability to Moore
and neither Moore or Johnson would have been entitled to UM benefits. He also knew that he could
pay Johnson’s $25,000 liability limits to Moore thereby eliminating Moore’s right to collect his own
UM and pay Johnson his own $25,000 UM limits and thus with the same $50,000 he ultimately
spent on the UM claims, meet his obligations to both insureds. This action would have released
Johnson and prevented the underlying trial. He believed these options to be true, and neither was
seen in hindsight. He never discussed these options with Buxton.

       Hinkle then conceded that the way he chose to pay the payments under the Moore and
Johnson policies (two UM payments instead of one UM payment and one liability payment)
guaranteed that there was going to be a trial where Johnson’s fault would be compared with the
van. At that trial, Hinkle knew that Johnson would have to be adjudged to have little or no fault to
confine the verdict to policy limits.

        Daniel testified that he had been a trial attorney since 1965. He testified that he thought
Johnson was at fault from his first review of the case because Johnson traveled out of his lane across
a four foot median and hit Moore in his lane with no contact between the white van and Johnson’s
vehicle. He conducted an investigation that included scene review, witness contact, photographs of


                                                 -8-
the scenes, review of the accident report, measurement of the lanes and median and review of the
sight distance had by Johnson. He put little emphasis on the accident report because it was
inadmissible, and the officer did not witness the accident. He confirmed that Johnson could see at
least 500 yards or one quarter mile straight ahead toward the oncoming Moore vehicle. In addition
to these facts he thought it significant from depositions that Johnson’s car was narrow at five feet
wide. On the issue of whether Johnson was paying attention prior to the collision, Daniel found that
(1) Johnson, unlike the eyewitnesses, placed himself in the left lane of travel leading up to the
collision, and (2) that Johnson somehow could recall the specific rock group and song playing at the
time of the collision.

       Based on these facts, Daniel made specific allegations of negligence against Johnson in the
Moore v. Johnson and John Doe I & II Complaint. He received the Answer from Tennessee
Farmers and Jarvis in response to Moore’s UM claim in which Tennessee Farmers inexplicably
denied existence of the van fourteen months after collision.

        After the case was filed and Buxton was hired, Daniel did not feel it appropriate to discuss
settlement directly with Hinkle, and the offers he made to settle the liability claim against Johnson
for policy limits were all communicated through Buxton. He understood Buxton had authority to
negotiate the case on behalf of Tennessee Farmers, and he communicated with Buxton about settling
Moore’s claims both by phone and by letter. He testified that he repeatedly offered to settle the
claim against Johnson for policy limits and that he did not make the offer conditional on Tennessee
Farmers’ payment to Moore of both his UM and Johnson’s liability coverage. Shortly before trial,
he called Buxton to explain his position in detail as to why Johnson could be found at fault and
reiterated that even 10 percent fault on Johnson with a $250,000 verdict would jeopardize Johnson
personally.

         Buxton testified that in his judgment, Moore and Daniel were only raising two issues to place
fault on Johnson: (1) a discrepancy concerning which lane Johnson had been in at a particular point
in time and (2) Johnson’s recollection of the music on the radio at the time of the accident. Buxton
testified that neither issue had any merit based upon his experience, but he realized that a finding of
near-zero fault on the part of Johnson would be required to stay within policy limits.

        The jury did not agree. The split was 11-1, but Buxton did not know whether that was 11
for Johnson or against him. He explained to Johnson the options, recommended taking the majority
verdict, but acknowledged that “there was a gamble” in doing that.

        Knoxville attorney Thomas Scott [hereinafter “Scott”] testified as an expert witness on behalf
of the plaintiff. Scott testified that he was familiar with the standard duties that insurance companies
owe their policyholders. He saw nothing wrong with Hinkle’s initial denial of Moore’s claim against
Johnson, but, in his opinion, after depositions had been taken, there was information available to
Tennessee Farmers which should have put it on notice that there was significant exposure for an
excess judgment, that they should have settled the case, and that the failure to do so was bad faith.



                                                  -9-
       Scott disagreed with Tennessee Farmers’s assessment of zero fault and also believed the
evaluation process was not complete because Hinkle ignored pertinent facts which should have put
him on notice that it was a likely case for an excess verdict. As such, Scott opined that there was
inadequate evaluation of comparative fault on the part of Tennessee Farmers. He testified that there
was no evidence in the Tennessee Farmers’ claim file that they ever considered comparative fault
or what would happen if they were wrong about absolute zero fault on Johnson.

        He also believed that the relationship between Buxton, Tennessee Farmers and Johnson
allowed Tennessee Farmers to give credence to the advice of Buxton but with the caveat that it
cannot blindly accept his advice when the lawyer never discusses the possibility of comparative fault.
Scott also explained that within the relationship, very little credence should have been given to
Johnson’s opinion about his own fault because he knew nothing about how he could become liable
under the law and facts.

        Scott testified that Tennessee Farmers had a duty to act in good faith with Johnson and not
to gamble with his rights. In doing so, Tennessee Farmers had a duty to consider how much
exposure there was to Tennessee Farmers as opposed to exposure to Johnson if the assessment of
fault was wrong. According to Scott, good faith required Hinkle not only to be faithful to Johnson
and exercise diligence, which required re-evaluation of Moore’s liability claim after the depositions
and in light of the failed directed verdict given the massive injuries and pending huge verdict. Scott
thought the failed directed verdict motion in the underlying trial was a critical juncture, and
Tennessee Farmers should have had a line of communications with Buxton during trial.

       Phillip A. Fleissner [hereinafter “Fleissner”], an attorney from Chattanooga, testified as an
expert witness for Tennessee Farmers. After reviewing all relevant material, Fleissner believed that
Tennessee Farmers’s initial denial of the claim was appropriate.

         Fleissner believed that Tennessee Farmers had a duty independent of Buxton to investigate
and evaluate the Moore v. Johnson claim and that duty was continual from beginning to the end of
a case. During that continuum, he agreed that as an insurance company, you do not “turn your mind
off.” He agreed that any fundamental investigation includes consideration of accident scene
characteristics such as sight distance, point of impact, and lane measurements. He agreed that it was
most important in his evaluation to see if Buxton and Tennessee Farmers had looked at the pertinent
fact of the accident. He testified that McIntyre v. Ballentine, 833 S.W.2d 53 (Tenn. 1992), did not
change Tennessee Farmers’ duty of good faith, but it changed “some of the principles of negligence
that have to be analyzed and applied when you’re evaluating whether a case is one of liability or not,
and if it is, how much damages might be given.”

        He agreed that Hinkle should have reviewed the deposition summaries and/or the entire
context of Buxton’s communications, but he saw nothing in Buxton’s reports to Tennessee Farmers
that should have alerted them that continued denial of the claim was improper. Fleissner testified
that where an insurance company hires competent counsel for the policyholder, the company should
follow the attorney’s advice and professional judgment. Fleissner saw nothing in the file which


                                                -10-
indicated that Tennessee Farmers should have seen something incorrect or deficient in Buxton’s
opinion.

        Fleissner agreed that $387,500 was a foreseeable verdict given the severity of the injuries to
Moore. He also agreed that any fault assessed against Johnson would necessarily be near-zero in
order to avoid an excess, and that as the amount of money awarded by the jury increased, any
percentage of fault on Johnson must decrease exponentially, considering the $25,000 policy limits.

       Fleissner agreed with Hinkle that under the Moore and Johnson policies, if Tennessee
Farmers had paid Johnson’s liability limits to Moore that Moore would not have been entitled to
receive his own UM limits.

        Fleissner found no evidence that Tennessee Farmers placed its financial interest ahead of
Johnson, and saw no evidence of any motive on Tennessee Farmers’ part in denying the claim other
than a good faith belief that Johnson was not guilty of any fault and the Tennessee Farmers acted in
good faith.

                                              Analysis
                                                I.

       In Tennessee, an insurer is liable in excess of policy limits when it acts in bad faith. A
leading case dealing with the issue is Southern Fire & Cas. Co. v. Norris, 250 S.W.2d 785 (Tenn.
Ct. App. 1952), in which the principle is succinctly described.

               The insured surrenders to the insurer the right to investigate and
               compromise or contest claims knowing that, in event of a claim, the
               insurer will have its own interests to consider. But an insured also
               has a right to assume that his interest will not be abandoned merely
               because the insurer faces the prospect of a full loss under the policy.
               The relation is one of trust calling for reciprocity of action. The
               insured owes the duty of exercising good faith and diligence in
               protecting the interest of its insured.

       The principle was further elaborated in State Auto Ins. Co. v. Rowland, 427 S.W.2d 30
(Tenn. 1968):

               An insurer having exclusive control over the investigation and
               settlement of a claim may be held liable by the insured for an amount
               in excess of the policy limits if, as a result of bad faith, it fails to
               effect settlement within the policy limits; and this may be true even
               through the injured party did not make an offer of settlement within
               the policy limits. However, in order to prevail in such a case, the



                                                -11-
               insured must prove that the failure to settle within policy limits is
               “fraudulent or in bad faith”.
                                             % % % % %

               . . . (1) That good faith required the Company to investigate the claim
               to such an extent that it would be in position to exercise an honest
               judgment as to whether the claim should be settled; (2) That the
               material question was not what the actual facts were but what facts
               relative to the accident and injuries to Davis were known to the
               insurer and its agents ‘which they should have considered in deciding
               whether it should or should not settle an action brought against the
               insurer as the reasonable thing to be done’; (3) That a mere mistake
               of judgment would not constitute bad faith; (4) That while the right
               of the insurer to control negotiations for settlement must be
               subordinated to the purpose of the contract to indemnify the insured
               to the limit of the policy, there must be bad faith which resulting
               injury to the policy holder before a cause of action accrues; (5) That
               if the insurer dealt fairly with the insured and acted honestly and
               according to its best judgment it would not be liable; (6) That it owed
               its insured no duty to settle merely because a settlement could be
               made within the limits of the policy.

         Tennessee Farmers premised its motion for directed verdict on the basis that Johnson’s only
argument of bad faith was that: (1) in hindsight, given the facts in Moore v. Johnson, the case should
have been settled, and (2) it held an honest belief that Johnson would be found zero at fault. The
trial judge found both arguments to be without merit and denied the motions.

        Johnson argues that the denial of the directed verdict motions was proper because he clearly
proved through direct and circumstantial evidence: (1) that Tennessee Farmers had an affirmative
duty to deal with Johnson in good faith and place his financial interest at least equal to Tennessee
Farmers’ own interests; (2) that the standard of care in the insurance industry for discharging that
duty required Tennessee Farmers, not Buxton, to honestly, continually and diligently evaluate all of
the evidence that would be presented against Johnson at trial including damages; and (3) that
Tennessee Farmers fell below the standard of care and breached that duty by, (a) failing to diligently
and continuously investigate and re-evaluate all the facts of the accident and damage exposure while
blindly relying on advice of counsel, and (b) by failing to place Johnson’s interest at least equal to
Tennessee Farmers’ when deciding how to settle the liability suit against him within the context of
Johnson’s and Moore’s competing uninsured motorist claims and policy.

       There is no liability in Tennessee upon an insurer for judgment in excess of the policy limits
except in case of bad faith. Tennessee Farmers Mutual Insurance Company v. Hammond, 290
S.W. 2d 860 (Tenn. Ct. App. 1956). We are not aware of any reported cases which provides a



                                                -12-
concise definition of bad faith. Most of the cases which deal with the subject of bad faith give
guidance as to what is not bad faith.

         The appellant argues correctly that negligence alone is not sufficient to render an insurer
liable for an excess verdict. Southern Fire & Casualty Co. v. Norris, supra. A refusal to negotiate
is insufficient evidence of bad faith where there was an honest belief on the part of the insurer that
the insured’s act was not the proximate cause of the accident, and that all liability could be avoided
on that basis. State Auto Ins. Co. of Columbus, Ohio v. Rowland, supra. An insurance company
is not guilty of bad faith when it relies upon the advice and counsel of claim agents, adjusters and
eminent lawyers, based upon facts revealed by careful investigation and careful examination of
witnesses, and has reached the opinion that there is no liability. Perry v. United States Fidelity &
Guaranty Company, 359 S.W.2d 1, 22 (Tenn. Ct. App. 1962).

       Our Supreme Court has held that it is not bad faith to refuse to negotiate when there was an
honest belief that the insured’s act was not the proximate cause of the accident and that all liability
could be avoided on that basis. Alford v. National Emblem Ins. Co., 469 S.W.2d 375, 378 (Tenn.
1971.

         It is clear that the attorney employed by Tennessee Farmers to defend Johnson - George
Buxton - was of the opinion that Johnson was not guilty of any negligence and that he would prevail
at trial. He, of course, stopped short of a guarantee. It is equally clear that Tennessee Farmers
believed that Johnson was not guilty of any negligence and that he not only could - but that he would
- prevail at trial. Both were mistaken, as it developed.

        Johnson testified that every piece of information he ever gave to Buxton and Tennessee
Farmers was that he was not at fault. The investigating state trooper prepared an official accident
report, and in the section of the report covering contributing factors, the officer checked “none” for
Johnson.

        Tina Marie Miracle was an eyewitness to the accident, and she gave a statement that the
driver of the white van was the sole cause of the accident. Vickie Linderman also witnessed the
accident, and she gave a statement that had she been in the same position as Johnson when the van
moved suddenly to its left, she did not know of any action she could have taken to avoid the
accident.

        There was another witness listed on the police report by the name of Michael Ray Hall who
did not actually see the events prior to the accident, but he did hear someone say at the scene that
white van changed lanes and forced the sport car driver (Johnson) over. There was no witness who
challenged the essential elements of Johnson’s version of the accident, and accordingly, the state
trooper reasonably assigned no fault to Johnson.

       Johnson also employed his uncle, attorney A.C. Myers, to pursue his uninsured motorist
claim against John Doe. Before taking of discovery depositions, Mr. Buxton reported to Tennessee


                                                 -13-
Farmers that Johnson and Myers did not want Tennessee Farmers to settle Moore’s claim against
Johnson. Discovery depositions were taken in August 1996. Johnson heard nothing at the
deposition which indicated he was at fault, and his attorney George Buxton, still believed that 100
percent of the fault was on the white van, and so advised Tennessee Farmers.

        We also note the testimony of attorney Dennis Jarvis who was retained by Tennessee Farmers
to represent it with respect to the uninsured motorist actions filed by Moore and Johnson.
Consequently, Mr. Jarvis’ position in the lawsuit was completely opposed to the position of Johnson
and George Buxton. If Mr. Jarvis was to be successful in defending the uninsured motorist claims
filed by Johnson and Moore, he would have to establish fault on the part of Johnson. As we noted,
in the initial answer he filed on behalf of Tennessee Farmers, Mr. Jarvis denied that there was any
unknown vehicle involved in the accident, and he denied that John Doe was at fault. But, after
taking discovery deposition, Mr. Jarvis was of the opinion that the proximate cause of the accident
was the John Doe white van, and this opinion was reported to Tennessee Farmers. Mr. Jarvis
recommended to Tennessee Farmers that it pay Johnson his $25,000 in UM coverage. This was
done, and later Tennessee Farmers also paid Moore his UM coverage limits before trial.

         Before trial, Johnson’s attorney A.C. Myers, wrote to Buxton requesting that Johnson’s
liability coverage limits of $25,000 be paid to settle Moore’s claim. Although initially Johnson and
Myers indicated they did not want Tennessee Farmers to settle Moore’s claim, they planned to
collect Johnson’s UM coverage limits and then call upon Tennessee Farmers to settle Moore’s claim
against Johnson. Upon receipt of the letter, Buxton advised Tennessee Farmers that, in his opinion,
Johnson had no liability and recommended that no settlement offer be made to Moore. Specifically,
Buxton stated:

               However, my professional opinion as to an evaluation of this case,
               indicates that Mr. Johnson had no liability in the causation of this
               accident and should be adjudicated to have zero fault. Where there
               is no guarantee for that result, I would recommend against any offer
               of settlement to the Plaintiffs based on the lack of liability of our
               insured. In all events, please give me a call.

This was the last written communication and advice from Buxton to Tennessee Farmers.

        At the time of trial, Hinkle was District Claims Manager for Tennessee Farmers, and he had
the authority to settle the claim against Johnson. However, it was his opinion that Johnson was
guilty of no fault, and never received any information which indicated Johnson was at fault, or that
Johnson had overreacted, or that there were any material discrepancies between the testimony of
Johnson and the witnesses.

       Tennessee Farmers argues that it had a good faith belief that Johnson was not negligent based
upon its own investigation, the conclusion of the state trooper, the testimony and firm opinion of
Johnson that he was not at fault, the testimony of independent eyewitnesses, the opinion of an


                                               -14-
experienced competent attorney chosen to defend Tennessee Farmers with respect to the uninsured
motorist claims, and most importantly, the opinion of the competent experienced attorney who
defended Johnson.1

         Tennessee Farmers argues that there is no evidence that it placed its financial interest ahead
of Johnson, and by making the voluntary uninsured motorist payments to Moore and Johnson before
trial, Tennessee Farmers ended up paying three (3) times as much as it would have paid based upon
the actual jury verdict.

        The expert testimony of Thomas Scott, who testified on behalf of Johnson, was simply a
20/20 hindsight look at the evidence, which is what this Court does. As heretofore stated, he testified
that there was information available to Tennessee Farmers which should have put it on notice that
there was significant exposure for an excess judgment. Scott further testified that there was
inadequate evaluation of comparative fault and that the evaluation process did not seem to be
complete, because Tennessee Farmers ignored facts which should have put them on notice that it was
a likely case for an excess verdict. It is clear that Scott simply disagreed with the fault assessments
of the state trooper, the eyewitnesses, Hinkle, Buxton, Jarvis, and Johnson.

        The appellant cites the prophetic words of Judge Avery in the case of Perry v. United State
Fidelity & Guaranty Company, supra, where he stated:

                  There is, as we see it, no way to find the defendant in this case guilty
                  of bad faith, when they have advice and counsel of claim agents,
                  adjusters and eminent lawyers, based upon facts revealed by careful
                  investigation, careful examination of witnesses under the right of
                  discovery of evidence, and have reached an opinion that there is no
                  liability on the part of the carrier of insurance, such as was Mr. Perry
                  in this case, unless we are just simply going to say that whenever the
                  judgment in such case exceeds the amount of the maximum liability
                  carried, the insurance carrier will be liable for it. If we reach that
                  state in our cases, then the insurance companies need not place any
                  amount whatever as a maximum liability in their contracts.

        The appellee argues that Hinkle admitted that he based his initial denial of Johnson’s liability
on his limited, early investigation, and that he merely scanned the discovery depositions which
would give him pause to re-think his opinion. Hinkle and Buxton were aware that any award to
Moore would - almost certainly - be in greatly excess of Johnson’s limits. Hinkle agreed that if he
had carefully considered all of the developed facts he would have been concerned as to whether any
fault would be assessed against Johnson. Consequently, the appellee argues that Hinkle could not



         1
           Indeed, so firm was the opinion of Buxton that when the jury hung 11-1, he agreed, as did Johnson, to accept
a majority verdict. There is, as to Johnson, an extraordinary irony implicit here.

                                                        -15-
honestly have believed that Johnson had zero fault - he was driving a small sports car, he did not
collide with the van, and he veered precipitously to his left needlessly.

        While the issue of whether a directed verdict for the defendant should have been granted is
close, we think there was “material evidence to support the verdict.” Rule 13d, Tenn. R. App. P.
We have “commented on the evidence addressed at the first trial”, of necessity, somewhat in
derogation of the pronouncement of this Court in Goings v. Active Cas. & Surety Co., 491 S.W.2d
847 (Tenn. Ct. App 1972) that if this Court is to reverse and remand for a new trial, it should not
comment on the evidence adduced at the first trial. But the appellant presented the issue of material
evidence squarely leaving us with no choice but to comment at length on the evidence principally
favorable to the appellee.

                                                 II.

      We next consider the refusal of the trial judge to charge the following special requests
propounded by the appellant:

       A.      Mere negligence on the part of an insurance company in failing to settle a
               claim against its insured is not sufficient to impose liability against the
               insurance company. Before an insurance company can be held liable for
               failing to compromise or settle a claim, the refusal to settle within the policy
               limit must be fraudulent or in bad faith.

       B.      Bad faith embraces more than bad judgment or negligence and it imports a
               dishonest purpose, moral obliquity, conscious wrongdoing, breach of a
               known duty through some ulterior motive or ill will partaking of the nature
               of fraud, and it embraces an actual intent to mislead or deceive another.

       C.      Bad faith on the part of an insurer is a frivolous or unfounded refusal to pay
               the proceeds of the insurance policy, Such conduct imports a dishonest
               purpose and means a breach of the duty of good faith and fair dealing through
               some motive of self-interest or ill will. Mere negligence or bad judgment is
               not bad faith.

       D.      . . . [T]hat Tennessee Farmers did not have any duty to settle or pay the
               uninsured motorist claims of either Christopher Moore or Robert Johnson
               unless or until they obtained a judgment against John Doe.

Request A.

       This is a correct statement of applicable law. Southern Fire & Casualty Co. v. Norris,
supra. We have reviewed the instructions carefully, the essential boiler-plate language of which



                                                -16-
does not encompass this obviously applicable principle to the facts of this case. This special request
should have been charged.

Request B.

         Tennessee law is clear on the point that negligence or mistaken judgment is not bad faith,
which was not defined by the trial judge. Southern Fire & Casualty Co. v. Norris, supra, makes
it clear that bad faith cannot be equated to negligence, because it is more egregious conduct than
negligence and requires a certain definiteness of purpose. The charge did not explain the quantum
or essence of conduct which amounts to bad faith; the trial judge merely gave the jury three examples
of bad faith. This special request is definitive of the level of conduct required to be proved in order
to onerate an insurer with bad faith, and the jury should have been instructed accordingly. Carruba
v. Transit Cas. Co., 443 F3d 260 (Sixth Cir. 1971).

Request C.

      What we have said in B, applies with equal force to this requested instruction. See, Black’s
Law Dictionary, Sixth Edition.

Request D.

        This is a correct statement of applicable law. See, Tenn. Code Ann. § 56-7-1201(a). The
presentation of prejudicial and irrelevant testimony precipitated this request, which will be discussed
hereafter.

        Instead, the trial court instructed the jury that bad faith was:

                . . . failure to investigate a claim to such an extent that it would be in
                a position to exercise honest judgment as to whether a claim would
                be settled, or two, failure to fairly consider the facts relative to the
                accident and a claimant’s injuries known to it whether they are the
                actual facts or not and deciding whether the insured should or should
                not settle, or three, failure of the insured with the right to control the
                litigation and settlement to fairly consider the rights and interest of
                the insured as compared to the interest of the insurance company.

       This is the charge as it appears in the transcript. If delivered in that fashion, it was
undoubtedly confusing. But the main error in the charge was not instructing the jury concerning the
essence of conduct which constitutes bad faith.

        The rule in this jurisdiction is that the trial judge should instruct the jury upon every issue of
fact and theory of the case raised by the pleadings and supported by the proof, and should give every
special request which correctly states the law, is supported by the evidence, and is not included in


                                                  -17-
the general charge. Spellmeyer v. Tennessee Farmers Mut. Ins. Co., 879 S.W.2d 843, 846 (Tenn.
Ct. App. 1993). Where the issues are close, as here, correct jury instructions are particularly
important. Hutcheson v. Teeter, 687 S.W.2d 286, 287 (Tenn. 1985). It was imperative that the jury
understand the meaning of bad faith; these special requests were couched in clear, understandable,
and reasonable language and the refusal of the trial judge to give them prejudiced the adjudicable
rights of the defendant. See, Underwood v. Waterslides of Mid-America, 823 S.W.2d 171 (Tenn.
Ct. App. 1991).

                                                 III.

        Tennessee Farmers, as stated, insured the Moore and Johnson vehicles, and also provided
UM coverage for both. This UM coverage was paid to both before trial. Johnson was allowed, over
objection, to present evidence as to the timing of these UM payments. This was prejudicial error.
He was allowed to testify that Tennessee Farmers did not pay his UM policy limits before he filed
suit, and plaintiff’s counsel was allowed to cross-examine Hinkle with respect to this issue. This
testimony served only to obfuscate the issue and prejudice the jury. It had no relevancy whatever
on the issue of bad faith.

       The trial judge also allowed testimony regarding timing of the payment to Moore of his UM
coverage, the purpose of which seems clear. It suggested a pattern of delay on the part of Tennessee
Farmers in the payment of the UM claims of Moore and Johnson as evidence of its alleged bad faith
in handling the liability claim against Johnson.

        We agree with the appellant that it was error for the court to allow Johnson to suggest there
was something improper about the timing of the UM benefits. Tennessee Farmers had no obligation
to pay the UM claims until there was legal determination of fault, because the policy provides that
“We will pay only compensatory damages which a covered person is legally entitled to recover from
the owner or operator of an uninsured motor vehicle because of . . . .” The applicable statute so
provides, Tenn. Code Ann. § 56-7-1201(a).

        Any delay in the payment of the UM claims of Johnson was not relevant to the issue of
whether Tennessee Farmers was guilty of bad faith in the handling of the Johnson liability claim.
Relevant evidence is defined in Rule 401 of the Tennessee Rules of Evidence as “evidence having
any tendency to make the existence of any fact that is of consequence to the determination of the
action more probable or less probable than it would be without the evidence.” The timing of the
payment of the UM claims of Moore and Johnson had no relevance to the issue of whether
Tennessee Farmers exercised good faith in the handling of the liability claim of Moore against
Johnson. The trial judge finally concluded, when the opinion of the expert witness Scott was sought,
that the prejudicial impact of the evidence outweighed its probative value, but we agree that this
determination by the court was too late to correct the damage created by the evidence which had been
introduced as described by Johnson’s counsel “throughout the trial.” The trial judge refused
Tennessee Farmers’ special request for a jury instruction which would have, at least in part, rectified
the error.


                                                 -18-
                                                  IV.

       The Moore policy contained an offset provision, as follows:

               Our limit of liability for this Uninsured Motorist Coverage shall be
               reduced by the sum of the limits payable under all liability and/or
               primary uninsured motorist insurance policies . . . applicable to the
               bodily injury. . . of the covered person.

               Damages payable under this coverage to or for covered person shall
               be reduced by :

                       1.      The amount paid under the Liability..
                               Coverages of . . . any other automobile
                               insurance policy;

       The appellant submitted the following special request:

               Members of the jury, there has been conflicting testimony about a
               provision in the Moore policy under his uninsured motorist coverage
               which would have eliminated that uninsured motorist coverage by
               reason of the payment of Robert Johnson’s liability coverage. I
               instruct you that the offset provision in question is valid. Had
               Tennessee Farmers first paid to Christopher Moore Robert Johnson’s
               liability coverage limit of $25,000, then Mr. Moore could not have
               recovered his uninsured motorist coverage, which was also $25,000.

        This was a correct statement of the law. Tenn. Code Ann. § 56-7-1201(d); Poper v. Rollins,
90 S.W.3d 682, 687 (Tenn. 2002); Erwin v. Rose, 980 S.W.2d 203, 209 (Tenn. Ct. App. 1992). This
instruction was applicable to the plaintiff’s theory and the evidence allowed over objection by
Tennessee Farmers relating to the timing of Tennessee Farmers’ payment of UM coverage benefits
to Moore and Johnson. The instruction was inexplicably refused.

        Tennessee Farmers contended that it did not place its financial interest ahead of the financial
interest of Johnson, because it had paid both Moore and Johnson under the UM coverage of their
respective policies when it was not obligated to do so. Tennessee Farmers argued that it believed
that Johnson was not at fault, and that its payment to Moore and Johnson under their UM coverage
was consistent with this belief.

       This special request would have corrected the trial judge’s error in stating to the jury that the
Moore policy did not contain an offset provision which would prevent Moore from recovering UM
coverage after payment of Johnson’s liability coverage. The failure to give this special request



                                                 -19-
compounded the court’s error in commenting on the evidence and is reversible error. Underwood
v. Waterslides of Mid-America, 823 S.W.2d 171, 178 (Tenn. Ct. App. 1991).

                                                 V.

         The appellant argues that the trial judge commented upon the evidence which clearly cannot
be done in this jurisdiction as a matter of constitutional principle. The comment was made after the
trial judge allowed Johnson to introduce evidence relating to the timing of the payment of UM
coverage to both Moore and Johnson as relevant to the issue of bad faith. A witness for Johnson,
Attorney Daniel, was asked if he was aware of the offset provision (heretofore discussed) in Moore’s
(his client’s) policy. Daniel’s response was “I don’t see how that could be.” The trial judge, after
some colloquy, then said, in the presence of the jury:

        “I hold that’s not what the policy provides. Let’s move on.”

The trial judge then repeated “I hold that’s not what the policy provides.” In this he was probably
misled by attorney Daniel’s testimony.

        The matter at issue was the offset provision in the Tennessee Farmers’ policy issued to
Moore, which was clearly relevant to the appellants’ contention that it was not financially motivated
in refusing to pay Johnson’s liability coverage to Moore and instead could have saved itself $25,000
by making such a payment following which the offset provision in Moore’s policy would have
eliminated his right to UM coverage.

         There is a strong policy in Tennessee against a trial judge making statements in the presence
of the jury on questions of fact. Marress v. Carolina Direct Furniture, Inc., 785 S.W.2d 121, 129
(Tenn. Ct. App. 1989). “The constitutional guarantee of a trial by jury requires the judge to be
extremely careful not to express an opinion on any fact to be passed on by the jury.” McKay v.
Mitchell, 463 S.W.2d 710, 721 (Tenn. Ct. App. 1970); McBride v. Allen, 720 S.W.2d 459, 462
(Tenn. Ct. App. 1979). “Slight indications of opinion on the part of the judge can have a powerful
impact upon the minds of the jury.” Kanbi v. Sousa, 26 S.W.3d 495, 498 (Tenn. Ct. App. 2000).
A trial judge should do nothing to prejudice the rights of the parties. State, ex rel Comm’r v.
William, 828 S.W.2d 397, 403 (Tenn. Ct. App. 1991). Here the trial judge commented on the
evidence which was the content of the Tennessee Farmers’ policy issued to Moore, and clearly
misstated the law. Tenn. Code Ann. § 56-7-1201(d); Poper v. Rollins, 90 S.W.3d 682, 687 (Tenn.
2002). This error was prejudicial. As we held in Kanbi:

               Our judicial system charges the jury with the duty of deciding the
               facts of the case under the supervision of the judge, while the
               province of the judge is to “lay down the rules of law governing the
               parties without bias and without interference in finding the facts.”
               McBride v. Allen, 720 S.W.2d 459, 463 (Tenn. Ct. App. 1979). This
               separation of functions is mandated by the Tennessee Constitution,


                                                -20-
              which states in Article VI, Section 9 that “[t]he Judges shall not
              charge juries with respect to matters of fact, but may state the
              testimony and declare the law.”

              Though a judge is permitted to question a witness, even very slight
              indications of opinion on the part of the judge can have a powerful
              impact upon the minds of the jury. McBride v. Allen, 720 S.W.2d
              459 (Tenn. Ct. App. 1979). Thus, in order to protect the jury’s fact-
              finding role, judges must be very careful about expressing or
              intimating any opinion on any fact at issue Graham v. McReynolds,
              90 Tenn. 673, 18 S.W.272 (1891). Improper comments from a judge
              can, and sometimes do, result in reversal of a judgment. State v.
              Suttles, 767 S.W.2d 403 (Tenn. 1989); Cleckner v. Dale, 719 S.W.2d
              535 (Tenn. Ct. App. 1986). The comments of the trial judge could be
              construed as an indication that she had reservations about Ms.
              Sousa’s credibility.

              However, not every comment by a judge that can be deemed improper
              requires reversal. The standard for this court to follow when dealing
              with allegations of error below are found in the Rules of Appellate
              Procedure. Rule 36(b) reads “A final judgment from which relief is
              available and otherwise appropriate shall not be set aside unless,
              considering the whole record, error involving a substantial right more
              probably than not affected the judgment or would result in prejudice
              to the judicial process.”

              Whether an error should be considered harmless or prejudicial
              depends in part on how closely balanced the evidence is. If it is very
              close, then an improper comment by a judge can more easily affect
              the judgment by tipping the scales in favor of one party or the other.
              See State v. Suttles, 767 S.W.2d 403, 404 (Tenn. 1989).

              We have read the entire trial transcript in this case, and we note that
              the comments objected to did not involve central factual questions.
              More importantly, we find that the evidence presented of Ms. Sousa’s
              fault was overwhelming, while there was no evidence of any fault on
              the part of Ms. Kanbi or of any other party, but merely speculation.
              Under such circumstances, it is highly unlikely that the comments of
              the trial judge could have affect the jury’s verdict. We accordingly
              affirm that verdict, and the judgment of the trial court.

       The evidence in the case at Bar was “clearly balanced”; in fact, were we not forbidden to
weigh the evidence, it would be difficult to consent to the judgment. For this reason the case is


                                               -21-
decidedly dissimilar to Kanbi, supra. The evidence was not overwhelmingly favorable to the
appellee, and the trial judge’s comments cannot be said to be harmless.

                                                VI.

        Another issue is whether the trial judge erred in further commenting upon the evidence, and
in informing the jury in the underlying action of Moore v. Johnson that attorney Buxton represented
Tennessee Farmers Mutual Insurance Company.

       The comment occurred during the testimony of attorney Daniel, who represented Moore.

               Q:     Did George Buxton, in those conversations that you had with
                      him, represent to you during the discussions about settling
                      that he was speaking for Tennessee Farmers?

               MR. JOHNSON:           I object to --

               MR. CAPPS:             Goes to state of mind.

               THE COURT:             Overruled. Whatever statement he made about this or who
                                      he’s representing.

               THE WITNESS:           He did.

               Q:     Without telling me anything about - without telling me
                      anything about this conversation where Moore and the parents
                      were present, what, it any - what, if any, words - what, if any,
                      words in those conversations did he use that represented to
                      you that he was speaking on behalf of Tennessee Farmers?

               MR. JOHNSON:           Objection, Your Honor.        He’s asking Mr.
                                      Daniel --

               THE COURT:             Ask him about any statements he made about
                                      representing Tennessee Farmers. Mr. Daniel,
                                      by the letter is it clear he was hired by
                                      Tennessee Farmers?

               THE WITNESS:           I just always took it every thing he did was
                                      with Tennessee Farmers --




                                                -22-
               THE COURT:             So, no specific statements in addition to that.
                                      Everybody knew he was hired by Tennessee
                                      Farmers, right?

               THE WITNESS:           What do you mean, Your Honor?

               THE COURT:             Everybody knew that Tennessee Farmers hired
                                      him --

               THE WITNESS:           Oh, yeah, they --

               THE COURT:             Okay. Well, ask him about his specific
                                      conversation.
                                           % % % % %

               Q:      What do you recall about those conversations that led you to
                       believe he was representing – that he was representing
                       Tennessee--

               THE COURT:             Everybody knew he was representing
                                      Tennessee Farmers. What’s the question
                                      about what you want to ask him specifically.

        The appellant argues that this error was egregious because the trial judge not only commented
on the evidence, but misstated Buxton’s position. We agree. The prejudice clearly appears, because
here the trial judge told the jury that Buxton was the attorney for Tennessee Farmers, clearly
suggesting that he was not looking after the interest of Johnson.

        It has long been settled in Tennessee that an attorney hired by an insurance carrier to
represent a policyholder is the attorney for the policyholder. Blaylock and Brown Construction,
Inc. v. AIU Ins. Co., 796 S.W.2d 146, 155 (Tenn. Ct. App. 1990); Formal Ethics Opinion 85-F-100
(9/30/85). The Supreme Court In re Petition of Youngblood, 895 S.W.2d 322 (Tenn. 1995) held:

               The employment of an attorney by an insurer to represent the insured
               does not create the relationship of attorney-client between the insurer
               and the attorney, nor does that employment necessarily impose upon
               the attorney any duty or loyalty to the insurer which impairs the
               attorney-client relationship between the attorney and the insured or
               impedes the performance of legal services for the insured by the
               attorney.

The Supreme Court further held:



                                                -23-
               The obligation to defend the insured under a contract of insurance
               obviously contemplates representation by counsel who can exercise
               professional judgment and devote complete loyalty to the insured
               regardless of the circumstances.

895 S.W.2d at 328. We hold that George Buxton was not counsel for the insurance carrier, but that
he was counsel for and represented the policyholder/insured. See, Givens v. Mullikin, 75 S.W.3d
383 (Tenn. 2000).

       The appellant submitted a special request to correct the clear error, but the request was
refused. Rather, the trial judge stated “I exactly meant to say that” — meaning that George Buxton
represented Tennessee Farmers when he did not. He represented Johnson.

       The judgment is vacated and reversed and the case is remanded for a new trial. Costs are
assessed to the appellee.


                                                     ___________________________________
                                                     WILLIAM H. INMAN, SENIOR JUDGE




                                              -24-
