Rebuttable Presumption under Tenn. Code Ann. Sec. 56-7-135(a)

Except as indicated, all indented material is copied directly from the court’s opinion.

Decisions of the Tennessee Supreme Court

Opinions of the Tennessee Court of Appeals

Vanquish Worldwide, LLC v. Sentinel Insurance Company, Ltd, No. E2020-01650-COA-R3-CV (Tenn. Ct. App. Jan. 12, 2022).

It is true that “the reasonableness of a plaintiff’s reliance on an alleged misrepresentation . . . is generally a question of fact inappropriate for summary judgment.” Annaco, Inc. v. Corbin, No. 02A01-9804-CH-00111, 1998 WL 929637, at *4 (Tenn. Ct. App. Dec. 31, 1998) (citing City State Bank v. Dean Witter Reynolds, Inc., 948 S.W.2d 729, 737 (Tenn. Ct. App. 1996)). However, in cases involving policies of insurance, Tennessee Code Annotated § 56-7-135 provides, in relevant part:

The signature of an applicant for or party to an insurance contract on an application, amendment, or other document stating the type, amount, or terms and conditions of coverage, shall create a rebuttable presumption that . . . the person signing such document has read, understands, and accepts the contents of such document.

Tenn. Code Ann. § 56-7-135(a). This statutory provision renders the question of the reasonableness of Vanquish’s reliance a question of law. See, e.g., Gautreaux v. Internal Med. Educ. Found., Inc., 336 S.W.3d 526, 531 (Tenn. 2011) (“The construction of a statute and its application to the facts of a case are questions of law[.]”) Therefore, unless rebutted, the presumption that Vanquish’s representative read, understood, and accepted the contents of the insurance policy necessarily means that Vanquish’s reliance on any later statements that conflicted with the terms of the policies is not reasonable.

Tennessee Code Annotated section 56-7-135 is a burden-shifting statute. Parveen v. ACG S. Ins. Agency, LLC, 613 S.W.3d 113, 121 (Tenn. 2020); accord Harris v. Nationwide Mut. Fire Ins. Co., 92 F. Supp. 3d 736, 746 (M.D. Tenn. 2015), aff’d, 832 F.3d 593 (6th Cir. 2016). Therefore, Vanquish must produce countervailing proof, because “[t]he presumption alone is sufficient to meet [Appellee’s] burden of production of the fact presumed.” Neil P. Cohen et al., Tennessee Law of Evidence § 3.01[2][b] (6th ed. 2011). On appeal, Vanquish does not assert that it successfully rebutted the statutory presumptions. Indeed, from our review of the record, we conclude that Vanquish did not, in fact, rebut the statutory presumptions. The unrebutted presumption of section 56-7- 135(a) renders Vanquish’s reliance on statements that conflict with its insurance policies unreasonable, thus negating a necessary element of negligent misrepresentation.