Tips on Collecting Late Payments

If you’re in business, chances are that you are having issues with slow or no paying customers. This is unfortunate because it creates waste of time, effort, and money from your business. The good news is that there are steps and best practices to help with this problem.

Preventive Maintenance:

  • Credit check: If the check is less than stellar, then get the money up front.
  • Get references: Not only get them, but check them!
  • Bill on time: Bill on time and at the same time each month. If you don’t bill on time, the perception is that you don’t care if you get paid or not.
  • Clear expectations: Have clear expectations of cost and payments and discuss these up front with your clients. These should be discussed in the first meeting. If there are warning signs, you should see them here.
  • Formalize an agreement: The initial discussions from the first meeting should be formalized in writing. This should list the services to be performed along with the specific dollar amount. It should list the terms of payment, including the payment you expect in advance.

What to do when you have late payments:

  • If your business does end up in a situation where the bill is past due, businesses should send collection letters at 30 days, 60 days, and 90 days past due. If all fails after 90 days, it is time to get legal help.
  • Use late payment fees: While it’s difficult to collect late payment fees, it is definitely a tool to get attention. These fees need to be meaningful enough to grab that attention and they should also be spelled out in the initial agreement.
  • Arbitration agreement: You should strongly consider an arbitration clause in your agreement. The advantages are to both parties in that it is typically less expensive to resolve and much quicker than compared to taking the court route.
  • Breach of the agreement: If your customer doesn’t pay, then they should be in breach of contract. This means that your obligation to perform may be waived pending your contract terms (so draft carefully). I.E. No warranty claims are going to be considered on a contract that is in default.
  • Golden Rule: Remember to treat people as you would want to be treated even if they do owe you money. Stay calm and professional and use the law to your advantage. It is best to distance yourself from the collection process if all possible. If a client calls you to complain, this separation allows you to maintain a different image in the mind of the client giving you a better opportunity at negotiating with the client.

Will Cartwright

email: will@cartwrightlawllc.com

phone: 615.473.1006

http://www.cartwrightlawllc.com

Tips on Employee Handbooks

Employee handbooks are also referred to as policy manuals or employee booklets. Employers like handbooks to spell out expectations of the employees and to use it as a tool to cover their assets in the event of a lawsuit. Employees typically view manuals as job security as it relates to a belief that they will be treated fairly. When an employment dispute arises, often the focus of the dispute turns on the binding nature of the handbook as well as the content.

What to Include in your Handbook:

Welcome: There should be a welcome letter from the Owner(s) and/or President. This letter should spell out a brief history of the company, what’s important to the company, and goals the company may have.

Mission Statement:  The mission statement should spell out commitments from the company to the employees, commitments to the customers, and  the overall objectives relating to these commitments.

Expectations: This is an important section as this will spell out the company’s position on matters relating to employment. This is the section that should spell out the drug policy, social media policy, probation period, right to inspect clauses, conflict of interest clauses, firearm policy, dress code, discipline policies and so on Having all these issues spelled out can help give employees piece of mind that they will be treated fairly.

 Compensation and Benefits: This section deals with pay structures, pay periods, insurance, paid holidays, vacation pay, sick pay, bereavement pay, overtime pay… Be careful with this section. For example, although no Tennessee law requires private sector employers to provide employees withvacation pay, if promised, they may be legally bound to provide it. Employers are free to provide their own system for vacation accrual and these must be stated clearly. If the policy is intended for the employee to work the entire period for vacation to accrue, it should state that employees will Not be entitled to pro rata payment for partial performance. Ambiguity will likely be construed against the employer. Tennessee Code 50-2-103, states that the final wages of an employee who quits or is discharged shall include any vacation pay or other compensatory time that is owned to the employee by virtue of company policy or labor agreement. State policy clearly and follow consistently. A violation could result in a Class B Misdemeanor, punishable by fine up to $1000 for each violation.

Federal Policies: The Family Medical Leave Act requires employers of certain size must provide employees with up to 12 weeks unpaid leave during any 12 month period for the birth or care of a child, to care for an immediate family member with a serious health condition, or if the employee has a serious health condition. Equal employment and non-discrimination policies have to be followed to comply with the U.S, Department of Labor standards. Worker’s compensation policies should be listed so that employees are informed of their work place injury rights.

It’s important to remember that Tennessee is an employment at will state. Many employment at will employees work under an oral agreement. In those situations, the handbook may be the only source of contractual terms. In order to prove a breach of contract case in Tennessee, the plaintiff must prove an enforceable contract existed between the parties. Because of this there are certain disclaimers that all employee handbooks must contain.

  • Not a contract: Point out that the handbook is just a handbook and is not a contract, express or implied. The handbook does not guarantee employment for any specific length of time. Either the Company or the employee can end the relationship at any time, with or without notice. Furthermore, it should be noted that the policies in the handbook may be subject to change as the Company deems appropriate.
  • Handbook trumps previous policy documents: The handbook should be clear that it is the authority on company policies. ” This employee handbook supersedes and replaces all previous policies and procedures including, but not limited to, all memoranda or written policies which may have been issued on the subjects covered in the handbook.”
  • Employee acknowledgement page: In order to protect your business and as proof that your employees have been made aware of company policies, it is important to include an acknowledgment page. The acknowledgement page should state that the employee understands it is their responsibility to read and follow the policies. The acknowledgement page should be printed and signed by the employee and detachable from the handbook for the employer’s files.

For more information on employee handbooks, please contact Will Cartwright with Cartwright Law. Ask about the small business package.

Phone: 615-473-1006

Email: will@cartwrightlawllc.com

http://www.cartwrightlawllc.com

COBRA Overview

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most group health plans to provide a temporary continuation of group health coverage that otherwise might be terminated.

COBRA requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain events. Those events include the death of a covered employee, termination or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, divorce or legal separation from a covered employee, a covered employee’s becoming entitled to Medicare, and a child’s loss of dependent status.

Employers may require individuals who elect the continuation coverage to pay the Full cost of the coverage, plus a 2 percent administration charge. COBRA generally applies to all group health plans maintained by private sector employers (with at least 20 employees) or by state and local governments. COBRA doesn’t apply to plans by the Federal Government or by churches or church related organizations. Under COBRA, a group health plan is any arrangement that an employer establishes or maintains to provide employees or their families with medical care, whether it is provided through insurance, by a health maintenance organization, or otherwise. Medical care typically covered by a group health plan for this purpose includes: Inpatient and outpatient hospital care, physician care, surgery and other major medical benefits, prescription drugs, dental and vision care.

Federal COBRA applies to companies with 20 or more full time employees. If your employer has less than 20 full time employees, then the Tennessee continuation state law applies. Tennessee code 56-7-2312 provides that an employee or member whose insurance under the group policy has been terminated for any reason, except discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy, and under any group policy providing similar benefits that it replaces for at least 3 months immediately prior to termination plus 3 additional months upon payment in advance to the employer of the full group premium for this continuation of coverage.

COBRA requires that employers give notice to the terminated employees. There have been many cases litigating this issue and many have had bad results to the employers.

For more info, please call Cartwright Law LLC, 615.473.1006.

Will Cartwright

http://www.cartwrightlawllc.com

 

Employee Get Overtime Pay?

Here’s a challenging legal situation you could encounter. Employee argues that he worked 17 hours on labor day weekend, 4 hours on Mother’s Day, 2 hours on Father’s Day, 23 hours on a certain Friday and Saturday completing a mandatory inventory. Employee testified that he was required to perform the early morning server maintenance and respond to a trouble call during his vacation time. In sum, Employee claimed that he was entitled to overtime pay for approximately 210 hours of work for a total award of $6,486. If all of this time could be substantiated at true, is Employee entitled to his overtime money?

It’s obvious that the plaintiff here is an IT worker. Employer first tries to argue that the Employee’s position is not subject to overtime pay requirements set forth in the Fair Labor Standards Act. However, Employer lost that battle with the Court finding that this particular job is not exempt from overtime pay. That discussion is for another day. Where the Court focuses on here is whether the employee actually worked more than 40 hours in any given week. Employer presented testimony from its Senior Administrative Manager, and she testified that she never required Employee to work over forty hours in a workweek. Employee never testified or presented evidence regarding the total cumulative number of hours that was worked in any week. Employee did testify that he worked more than eight hour days on some days, and he proved that he worked on certain holidays and weekends. However, he failed to demonstrate that he also worked a regular work schedule of five eight-hour workdays in addition to those instances. Because employee could not prove he worked more than 40 hours in a given week, he was NOT entitled to his overtime pay.

In summary, to recover for overtime wages under the Fair Labor Standards Act (FLSA), Plaintiffs must allege that management employed the worker for a work week longer than forty hours. The extra hours in a given day or holidays or weekends does not necessarily make a difference.

Cite: Taylor v The Del-Nat Tire Corporation, Tenn. Crt. of App. No W2010-01426-COA-R3-CV, 6/13/2011

Will Cartwright / http://www.cartwrightlawllc.com

Progressive Discipline

Progressive discipline (also referred to as performance improvement plans or get well plans) is a process for dealing with job related behavior or performance that does not meet the already communicated expectations. The purpose is to assist the employee to understand there is a performance problem and give an opportunity to improve.

From the employer’s standpoint, it is the best way to protect against wrongful termination lawsuits. It allows the employer to ensure that any employee fired because of poor performance was treated fairly and in accordance to company’s policies.

Verbal Reprimand: When deficiency is discovered, it should be brought to the employees attention immediately. Be sure to give the solutions to problem and ask the employee if they understand. Make notes of this conversation of what was said and when. Keep this in the employees personnel file to revert back to if further issues were to occur.

Written Warning: If the problem persists after the verbal warning, the next step is to issue a written warning. The written warning should make mention of the prior verbal reprimand. This should describe the who, what, when, and where as to the issue. It should also describe what the standard should be. Lastly, it should state the next step if the problem continues. This can be suspension, final written notice, or probation status. Remember the primary purpose is to correct the behavior. The choice here should be what you feel would best accomplish the goal of correcting the behavior. Consistency is the key. Inconsistency is what causes company’s the most trouble. Someone will come up with a legal reason of why you treated someone else different. Progressive discipline must be followed consistently given similar situations.

Suspension: The question of how long and should it be with pay usually arises here. As for the length of the suspension, there is no right or wrong. It is the consistency that remains the most important. The pay question depends on whether the suspension is for investigative purposes of guilt. If so, you may want to pay using the adage of innocent until proven guilty. Suspension can also be a direct tool, skipping the verbal and written, if there is a direct violation of zero tolerance. This zero tolerance can include illegal activities, clear and present threat to another employee, investigative purposes of determining fault, and any major incident causing serious loss to the company. Consistency is the key.

Final Notice/Probation: If performance does not improve, then issue the final written notice which can include a probationary period. The notice should reference exhibits of the previous warnings (attach copies), indicate specific areas in which the employee must improve, and specify the time period within which the corrections must be made.

Questions:

Before termination, ask if there is a contractual relationship between the company and employee and whether the discipline is in anyway related to a workers comp. issue. If no, then it is good to proceed. If yes, you can still survive a challenge to a termination, but you must be able to prove the circumstances surrounding the particular case to justify your actions.

What if the employee refuses to sign the written notice, final notice, of termination? It’s no less valid if they refuse to sign. The date of issue should be put on the notice and that the employee refused to sign.

Advantages of Progressive Discipline done right:

  • Help keep companies out of legal trouble
  • It will help avoid the consequences of allowing workplace problems to continue to go unchecked
  • Help managers achieve higher and more productive performance out of the employees
  • Avoid expensive replacement costs
  • Ensures consistency and fairness in dealing with employee problems
  • Enhances communications between managers and employees
  • Installs the groundwork for fair and legally defensible employment termination for those who cannot or will not improve

For more information on what steps to follow when disciplining an employee or for other employee related issues, call Cartwright Law LLC at 615.473.1006.

http://www.cartwrightlawllc.com

Slip and Fall Case in Tennessee

Most people are familiar with slip and fall law suits. For business owners, it’s a serious topic because it could easily happen to them. A Tennessee McDonalds recently had a case brought against them.

After Mrs. Willis placed her order, she walked to the drink station to prepare two large drinks for her and her husband. While walking away from the drink station with two large drinks in her hands, she slipped and fell spilling the two drinks and causing severe damage to one of her knees. She claimed that she had stepped on a sharp object, which she believed to be a piece of ice, causing her to slip and fall. Suit was filed against the restaurant alleging negligence in the design,construction, and maintenance of the facility. It was alleged that the transition from a nonskid surface to a tiled surface amounted to a trap and that employees were negligent in permitting a foreign object, namely ice, to collect and remain on the floor. Plaintiffs sought $500,000 in compensatory damages for Mrs. Willis’s injuries and $100,000 in compensatory damages for Mr. Willis’s loss of consortium.

Slip and fall cases usually come down to the plaintiff having to prove that the condition resulting in the injury was caused by the defendant owner or agent or if the condition was created by someone else, that the owner or agent had actual or constructive notice that the condition existed prior to the accident. Here, the Defendant responded by denying wrongdoing arguing that Plaintiffs could not identify the cause of her fall and that she could not establish that Defendant created the dangerous condition that caused the fall or that Defendant had any knowledge, either actual or constructive, of the dangerous condition prior to the fall. The court agreed with Defendant and granted judgment in McDonald’s favor. The Plaintiff was unable to prove that McDonald’s caused or had notice of anything that could’ve caused the slip and fall.

Steps a business owner can take to minimize risk of the slip and fall suit?

  • Have a policy to routinely check premises for potential hazards.
  • Have a policy that if employees hear of a potential hazard, it gets dealt with immediately.
  • Make sure lighting and visibility is good.
  • Have warning signs, if necessary, for areas that could pose risk.
  • Install cameras for those areas of high traffic.

Cameras are a great tool to see if maybe the injured party was a factor in their own slip and fall. Tennessee is a “comparative fault” state, meaning that the property owner may argue that the Plaintiff is partially (or fully) responsible for the accident that led to the injuries. The injured Plaintiff could potentially have their recovery reduced proportionately to their own fault.

Cartwright Law LLC

http://www.cartwrightlawllc.com

Case cite: Hilda Willis v. McDonald’s Restaurants of Tennessee, Inc    No. e2015-00615-COA-R3-CV-filed-December 23, 2015

 

What can be done if your competition is stealing your employees?

It’s a small world we live in especially when it comes to the industry we work in. My guess would be that you know who your competition is and probably the names of certain individuals who work for the competition. It’s not uncommon for employees to jump from job to job while staying in the same industry. What happens when competition actively recruits your employees? What happens if your own employees actively recruit from within to move to the competition while still working for you? Is there a remedy?

The answer is, possibly. In a recent Court of Appeals case in Tennessee, some of these issues were addressed. The background is that the competition (Defendant Company) actively recruited a long time manager of the Plaintiff Company. The basis of the lawsuit is that Plaintiff Company alleges that one of the Defendant Company’s employees, recruiter, contacted one of the Defendant’s employees about the possibility of working for Defendant Company if it opened a branch in Nashville. Plaintiff Company asserts that their employee was a manager and long-term employee of their Nashville office and was one of its top producing salesmen. According to Plaintiff Company, their employee breached his fiduciary obligations to Plaintiff Company by orchestrating and engaging in the solicitation and recruitment of several Plaintiff Company’s employees on behalf of Defendant Company while he was still employed by Plaintiff Company, causing Plaintiff Company to suffer damages. Plaintiff Company asserts that Defendant Company’s employees assisted, encouraged, induced, and instructed Plaintiff Company employee in his recruitment and solicitation efforts.

Breach of Fiduciary Duty and/or Duty of Loyalty

The parties agree that Plaintiff Company’s employee as well as the employees he allegedly solicited to leave Plaintiff Company were all employees at will and were not subject to non-compete agreements. The law in Tennessee, however, is that all employees owe their employer a duty of loyalty, regardless of whether they are at-will employees or have employment contracts:

During the employment relationship, an employee has a fiduciary duty of loyalty to the employer. The employee must act solely for the benefit of the employer in matters within the scope of his employment. The employee must not engage in conduct that is adverse to the employer’s interests.

An employee who solicits his or her coworkers to leave their jobs to work for a competitor while the soliciting employee is still being paid by the employer is in violation of his or her fiduciary duty and duty of loyalty. With regard to damages, an employee who breaches his or her duty of loyalty may be required to return to his or her employer any compensation he or she received while engaging in conduct adverse to his or her employer‟s interests. Moreover, the employee may have to “disgorge any profit or benefit he [or she] received as a result of his [or her] disloyal activities.”

Aiding and Abetting Breach of Fiduciary Duty/Duty of Loyalty

Another remedy would to consider whether Plaintiff Company can proceed on it a claim against Plaintiff Employee and Defendant Company for aiding and abetting Plaintiff Employee in breaching his fiduciary duty/duty of loyalty. Tennessee recognizes a “common law civil liability theory of aiding and abetting,” which requires Plaintiff Company to prove that Defendant Company and Plaintiff Employee “knew that Plaintiff Employee’s conduct constituted a breach of duty, and that [the Defendant/s] gave substantial assistance or encouragement to [him] in [his] acts.”

Civil Conspiracy

A civil conspiracy is defined as:

“a combination of two or more persons who, each having the intent and knowledge of the other’s intent, accomplish by concert an unlawful purpose, or accomplish a lawful purpose by unlawful means, which results in damage to the plaintiff.”

Summary:

To sum it up, there are remedies. However, the burdens aren’t necessarily easy to prove. In the case at hand, it was remanded back to the trial court to address these issues. This is a situation that happens all too often and for the most part, goes unchecked. As an employer, it is important to know what your remedies are if you get in this situation. There are other remedies that are beyond the scope of this article.

Will Cartwright

Cartwright Law, LLC

www.cartwrightlawllc.com

Citations:

Ram Tool & Supply Company v. HD Supply Construction, No. M2013-02264-COA-R3-CV (Tenn. Ct. App. July 21, 2016)

FTA Enters., Inc. v. Pomeroy Computer Res., Inc., E2000-01246-COA-R3-CV, 2001 WL 185210, at *4 (Tenn. Ct. App. Feb. 12, 2001); ProductiveMD, LLC v. 4UMD, LLC, 821 F. Supp. 2d 955, 964 (M.D. Tenn. 2011).

 

Non-Work Related Injury

Should an employer make accommodations for a non-work related injury? This is an interesting question and one that all employers will likely face at some point.

I’ll start with saying that there is nothing that saysyou can’t accommodate a personal injury. However, there are some potential liability in doing so. Most liability on the employers side is going to be triggered by fault.  Tennessee law has been clear that an employer takes an employee “as is” and assumes the responsibility of having a pre-existing condition aggravated by a work related injury. What this means is that if you let an employee come in and work with some sort of an injury and that injury gets worse because of the work he/she was performing, that injury could now become a workers compensation case. Except in the most obvious, simple and routine cases, a claimant must establish by expert medical evidence the causal relationship between the claimed injury and the employment activity. An employee does not suffer a compensable injury where the work activity aggravates the pre-existing condition merely by increasing the pain. However, if the work injury advances the severity of the pre-existing condition, or if, as a result of the pre-existing condition, the employee suffers a new, distinct injury other than increased pain, then the work injury is compensable.

Best practices:

  • Don’t allow it. Especially if the worker is doing some kind of manual labor. Use common since if the worker stumped his toe and sits behind a computer all day.
  • Get a release with no restrictions from the employee’s personal doctor. Depending on the severity of the injury, have the doctor also sign a job description of the employee’s duties signifying that the doctor has reviewed the employee’s day to day responsibilities.

Remember that if you do allow it once, you have set a precedence. This becomes a whole other territory of having to explain why one worker can and one worker can’t.

Will Cartwright

Cartwright Law LLC                         http://www.cartwrightlawllc.com

Citations: Cloyd v Hartco Flooring274 S.W. 3d 638, 643 (Tenn. 2008), Trosper v Armstrong Wood Prods 273 S.W. 3d 598, 607 (Tenn. 2008),   Excel Polymers, LLC v Broyles 302 S.W. 3d 268, 274 (Tenn. 2009)

 

When is Employer Liable for Employee Travel Accidents or Injuries?

This question has become more and more important as today’s work environment becomes increasingly mobile. This mobility lends to a less structured work place. There are an increasingly higher number of people working from home and with more flexible schedules than ever before. This increased freedom makes it more difficult to define when travels are for company business. The simple answer is that if the travel is at the direction or under control of the employer, then the employer can be held liable. Unfortunately, most situations are not so simple.

In Tennessee, a compensable worker’s compensation injury must “arise primarily out of and occur in the course and scope of employment.” An injury is deemed to arise primarily out of and in the course and scope of employment “only if it has been shown by a preponderance of the evidence that the employment contributed more than fifty percent (50%) in causing the injury, considering all causes.” Tenn. Code Ann. 50- 6-102 (B) (14). An injury occurs in the course of employment if it takes place while the employee was performing a duty he or she was employed to perform. Fink v. Caudle, 856 S. W. 2d 952 (Tenn. Workers’ Comp. Panel 1993). The course of employment requirement focuses on the time, place, and circumstances of the injury. Saylor v Lakeway Trucking Inc, 181 S.W. 3d 314 (Tenn. 2005).

Is an Employer Responsible for Injury While Driving To and From Work?

Generally, injuries sustained by an employee while traveling to or from work are not considered within the course of employment unless they occur on the employer’s premises. This has become known as the going and coming rule, but with most rules, there comes exceptions.

Special Errand Rule: An employee may be compensated for an off-premises injury “while performing some special act, assignment or mission at the direction of the employer. If the travel is under the direction of the employer, then the employer can be held liable for an accident or injury that may occur. However, this liability may go away if the employee goes on a “frolic” not under the direction of the employer. This “frolic” can be described as travel that is not under the direction of the employer or off route or possibly a route that wasn’t the intent of the employer.

Tools with Travel Reimbursement: The Tennessee Supreme Court has also recognized an employee’s “need to carry his own carpentry tools in his truck, combined with a provision for travel reimbursement in the employment contract,” as sufficient to remove a case from the general rule of the “going and coming cases.” Smith v Royal Globe Ins. Co. 551 S.W. 2d 679 (Tenn. 1997). With this exception, there is an extra requirement where the journey itself is a substantial part of the services for which the worker was employed and compensated.

Traveling Employee: Another exception concerns the “traveling employee.” This is generally applied to employees who travel extensively to further the employer’s business, such as a traveling salesman. The travel is an integral part of the job and differs from an ordinary commuter’s travel, thereby exposing the traveling employee to greater risks. Howard v Cornerstone Med. Assoc., 54 S.W. 3d 238, 240 (Tenn. 2001). However, the drive to and from work still doesn’t cover the traveling employee if the employee is not compensated for that mileage or time.

Vehicles Owned by Employer: Where transportation is furnished by an employer as an incident of the employment, injuries suffered by an employee while going to or returning from work in the vehicle furnished by the employer and under the employer’s control arise out of and are within the course of the employment. Norwood v Tellico River Lumber Co., 244 S.W. 490,491 (Tenn. 1922). In the Norwood case from 1922, a worker died while riding an employer furnished horse to work. The holding was that the death was by reason of an accident arising out of and in the course of his employment. Id. This has been good Tennessee law ever since.

 

Take Aways

If you, as the employer, are paying for travel, whether it is time or mileage, chances are the company will be on the hook for liability for those travels. If your employee is traveling for company business or under the direction of the company, then the company is likely on the hook here as well. Best practice is to have clear cut policies in your employee handbook to address when the employee is “on the clock” when it comes to their travels. If you are furnishing vehicles to employees or paying for travels in their personal vehicles, it would be a good idea to run annual motor vehicle reports on those employees. Have them sign a consent form before you do so. If a person has a bad driving history, it’s not a good idea to have this person traveling for your business. This could lead to potential punitive damages if something does happen.

Know Your Contract!

We sign contracts all the time. As consumers, we are agreeing to terms that we typically don’t even bother to read. Unfortunately, ignorance of the law or of your contract terms doesn’t make for a good defense. There is a beauty in contract law. The contract terms can be of your advantage or not. The beauty is you have the option to agree to those terms or not.  Below is an interesting case involving an insurance company denying coverage based on contract wording.

A family goes out of town on vacation and the family asks a close friend to watch over the house and to take care of the family dogs while they’re away. The friend decided to take the family’s car to run a short errand since his car was inoperable at that time. This short errand ended up in a fatality accident killing 3 people. The friend did survive with serious injuries. The friend gets sued for what we can only imagine is a lot of money. The family’s insurance company, which holds the liability policy on the automobile of the car the friend was driving, wants to deny any coverage to this claim. The liability policy at issue specifically defines a “Covered Person” as “you or any family member for the maintenance or use of any auto,” and “any person using your covered auto with your permission and within the scope of your permission.” The facts given here is that the friend never had permission to drive the family car. The case even gets into whether there was implied permission or even inference of implied permission. The friend has never driven the family car before. In fact, the family let the tag expired showing that there was no intent on any driving that vehicle any time soon.

 

In construing contracts, the words expressing the parties’ intentions should be given their usual and ordinary meaning. In this case, the litigation came down to a few words in the contract, “with your permission and within the scope of your permission.” The Court held in favor of the insurance company finding that since there was no permission for the friend to drive the car. The insurance company would not held liable for any claim involving the fatality accident. The moral of the story is that words do matter at least in terms of contracts. Do your best to take the time to read the fine print to things you sign or agree to. The plainest of language can make all the difference. For those important documents such as major purchases, long term commitments, and important business dealings; if you don’t understand, don’t sign. The better practice is to consult with attorney to get a clear understanding as to what you’re agreeing to.

Will Cartwright

Cartwright Law LLC                                    http://www.cartwrightlawllc.com

Citation: Tennessee Farmers Mutual Insurance Co. v Dunlap, No. E2015-00413-COA-R3