Cook's Roofing, Inc. v. Hartford Underwriters Insurance Company

07/20/2020

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

Assigned on Briefs April 15, 2020

COOK’S ROOFING, INC. v. HARTFORD UNDERWRITERS INSURANCE

COMPANY

Appeal from the Chancery Court for Shelby County

No. CH-07-1140-3 JoeDae L. Jenkins, Chancellor

___________________________________

No. W2019-00271-COA-R3-CV

___________________________________

This appeal involves retrospective insurance premiums for an assigned risk workers’

compensation insurance policy. The insured employer is a roofing contractor. The

insurance company conducted a retrospective premium audit and determined that the

roofing contractor owed retrospective premiums based on the fact that its primary

subcontractor was uninsured during a portion of the policy period. The roofing contractor

refused to pay the increased premium, so the insurance company canceled the insurance

policy. The roofing contractor filed this lawsuit against the insurance company, alleging

negligence, promissory estoppel, and violation of the Tennessee Consumer Protection Act.

The insurance company filed a counterclaim for the unpaid balance owed for the premiums

under the policy. The insurance company filed a motion for summary judgment on all

claims asserted by the roofing contractor and on its own counterclaim. The trial court

granted the motion for summary judgment, dismissed the claims asserted by the roofing

company, and entered judgment in favor of the insurance company and against the roofing

contractor for $66,212 plus prejudgment interest. However, the trial court denied the

insurance company’s subsequent motion to enforce the judgment against the two

individuals who operated the roofing company and served as the sole officers and

shareholders of the corporation. Both parties raise issues on appeal. For the following

reasons, we affirm the decision of the chancery court in part, we reverse in part, and we

remand for further proceedings consistent with this opinion.

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

in Part, Reversed in Part and Remanded

CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which D. MICHAEL

SWINEY, C.J., and FRANK G. CLEMENT, JR., P.J., M.S., joined.

Everett B. Gibson, Memphis, Tennessee, for the appellant, Cook’s Roofing, Inc.

Ben M. Rose, Brentwood, Tennessee, for the appellee, Hartford Underwriters Insurance

Company.

OPINION

I. FACTS & PROCEDURAL HISTORY

Mike Cook was employed by a Memphis roofing company for three years before he

and his wife, Rebecca, decided to go into business for themselves in 2003. The Cooks

initially operated their roofing business as a sole proprietorship known as Cook’s Roofing.

Rebecca served as the company bookkeeper, while Mike worked as the “estimator,”

meeting with customers, collecting payments, and inspecting job sites. However, all of the

actual construction work was performed by subcontractors. The sole subcontractor for

their roof construction work was Mr. Augustine Chaidez. Mr. Chaidez had enough

employees that Cook’s Roofing could have crews working on two jobs simultaneously.

Pursuant to Tennessee’s Workers’ Compensation Law, the Cooks were required to

maintain workers’ compensation insurance. See Tenn. Code Ann. § 50-6-101, et seq. In

Tennessee, employers are permitted to purchase workers’ compensation insurance either

in the voluntary market or in the residual assigned risk market. See Am. Zurich Ins. Co. v.

MVT Servs., Inc., No. M2011-01266-COA-R3-CV, 2012 WL 3064650, at *2 n.6 (Tenn.

Ct. App. July 27, 2012). “An assigned risk plan is insurance approved by the

Commissioner of Commerce and Insurance as insurance ‘of last resort,’ available when an

employer is unable to obtain coverage in the voluntary market.” Id.

The Cooks purchased an assigned risk workers’ compensation insurance policy

through the Tennessee Workers’ Compensation Insurance Plan (“TWCIP”). See Tenn.

Code Ann. § 56-5-114(c)(1) (directing the commissioner to “implement a plan . . . for the

equitable apportionment among insurers of applicants for workers’ compensation

insurance who are in good faith entitled to such insurance, but who are unable to procure

it through ordinary methods”). The policy provided that the insurance premium would be

calculated by the use of retrospective rating. As we explained in American Zurich,

This method of insurance premium calculation bases the premium on the

total payroll of covered employees during the policy period. It is typically

used where the exact composition of the employer’s workforce is subject to

substantial variation, or where the insured’s risk is difficult to measure at the

beginning of the policy period. See Lee R. Russ & Thomas F. Segalla, 5

Couch on Ins.3d § 69:15 (2008). Under the retrospective rating method, the

employer deposits an estimated premium with the insurance company at the

beginning of the policy period. Shortly after the policy period expires, the

-2-

insurance company conducts a routine retrospective premium audit, looking

back at the workers who were actually on the insured’s payroll during the

policy period, utilizing records provided by the insured employer related to

employee payroll and classification. The actual insurance premium due for

the immediate past policy period is then determined based on the results of

the audit. Depending on the audit result, the insured employer may either

receive a refund on the premium paid or be required to pay additional

premiums to the insurance company.1

2012 WL 3064650, at *2.

Mike and Rebecca Cook admittedly knew from the outset that their company might

have to pay additional insurance premiums for their workers’ compensation insurance

coverage if their subcontractor had no coverage of his own for subcontractor employees.

The Cooks learned at the beginning of their contractor-subcontractor relationship with Mr.

Chaidez that he had no workers’ compensation insurance. Because of the possibility that

they would be charged additional insurance premiums related to the employees of Mr.

Chaidez, the Cooks deducted money from their payments to Mr. Chaidez and retained it

for potential insurance premiums. In April 2004, Mr. Chaidez asked the Cooks to

discontinue that practice. After consulting with an insurance agency, the Cooks drafted a

“letter agreement” that they believed would protect them from liability for their

subcontractor’s employees. At the same time, they stopped deducting money from their

payments to Mr. Chaidez related to the potential premium assessments. However, when

their insurance company conducted an audit, the Cooks were informed that the letter

agreement was not acceptable. Their insurer assessed an additional retrospective premium

of around $30,000. Going forward, the Cooks required Mr. Chaidez to have his own

workers’ compensation insurance on his employees.

Mr. Chaidez applied for an assigned risk workers’ compensation insurance policy

utilizing Chenault Insurance Agency. Through the TWCIP, the plan administrator assigned

policies to one of several member companies in the assigned risk pool for Tennessee. The

insurance company that was assigned to issue the Chaidez policy was Hartford

Underwriters Insurance Company.

The Cooks reluctantly paid the additional $30,000 premium assessed by their

insurer. However, when the time came to renew their policy, they sought out a different

insurance agency because of their dissatisfaction with the advice they were given. Around

this time, the Cooks also decided to incorporate their business as Cook’s Roofing, Inc.

1

A retrospective rating provision “is a standard provision in workers’ compensation

insurance policies.” Am. Zurich Ins. Co., 2012 WL 3064650, at *11. Such provisions reflect “the

reality that any number of employees may be hired or terminated while the policy is in effect, thus

increasing or decreasing the amount of risk to which the insurer is exposed.” Id.

-3-

Around June 2005, Cook’s Roofing submitted an application for an assigned risk policy

using a different insurance agency. They calculated and paid an estimated annual premium

of around $4,000.2 The Cooks were listed as the sole officers of the corporation.

Coincidentally, the plan administrator randomly assigned Hartford to issue the Cook’s

Roofing policy as well. Hartford issued the one-year policy effective from June 2, 2005,

to June 2, 2006. The policy contained a standard premium adjustment clause providing

that the initial premium paid by Cook’s Roofing upon submission of its application was

simply an estimate.

On September 9, 2005, Cook’s Roofing requested and obtained a certificate of

insurance from Chenault Insurance Agency, indicating that its subcontractor, Mr. Chaidez,

had been issued a worker’s compensation insurance policy of his own. In reliance on the

certificate, Cook’s Roofing continued to do business with Mr. Chaidez as its sole

subcontractor. The Cooks believed that they were “fully protected from assessment of

future audit premiums” once they obtained the certificate of insurance regarding the

Chaidez policy. However, the certificate stated:

THIS CERTIFICATE IS ISSUED AS MATTER OF INFORMATION

ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE

HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR

ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

....

INSURED

Chaidez, Augustine

....

THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN

ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY

PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,

TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT

WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR

MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES

DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,

EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. . . .

....

CERTIFICATE HOLDER

Cook’s Roofing . . . .

....

CANCELLATION

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE

2

“The estimate is determined by the insured, and the insured submits the estimate to the insurance

company for approval based on estimated payroll amounts and classification codes.” Am. Zurich, 2012 WL

3064650, at *2 n.8.

-4-

CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE

ISSUING INSURER WILL ENDEAVOR TO MAIL 10 DAYS WRITTEN

NOTICE TO THE CERTIFICATE HOLDER NAMED . . . BUT FAILURE

TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY

KIND UPON THE INSURED, ITS AGENTS, OR REPRESENTATIVES.

The policy binder provided that a copy of all certificates of insurance issued for the policy

must be automatically sent to Hartford.3 However, Chenault Insurance Agency did not

send Hartford a copy of the certificate of insurance it issued to Cook’s Roofing.

Three months after the certificate of insurance was issued by Chenault Insurance

Agency, Hartford cancelled the Chaidez workers’ compensation insurance policy on

January 3, 2006, due to nonpayment of premium. Hartford issued notice of the cancellation

to Mr. Chaidez, but it did not send a copy to the certificate holder, Cook’s Roofing, because

it had never received a copy of the certificate of insurance informing it that Cook’s Roofing

was a certificate holder. For purposes of summary judgment in this case, it was undisputed

that Hartford did not notify Chenault Insurance Agency about the cancellation of the

Chaidez policy either.4

In April 2006, Hartford requested that Cook’s Roofing provide it with information

regarding its subcontractors. In response, Mrs. Cook contacted Chenault Insurance Agency

and requested another certificate of insurance for the Chaidez policy. Chenault’s employee

checked its internal filing system and did not see any notices of cancellation, so she issued

the certificate of insurance to Cook’s Roofing despite the fact that the Chaidez policy had

been cancelled in January 2006. Mrs. Cook then faxed the April 12, 2006 certificate of

insurance to Hartford as requested. Again, however, Chenault Insurance Agency did not

send a copy of the certificate of insurance it issued for the Chaidez policy to Hartford.

3

According to Hartford’s corporate designee, the TWCIP and related manuals required that

insurance agents or producers send copies of certificates of insurance to the insurance carrier due to the fact

that there is no relationship between the insurance companies and the insurance agents or producers in this

context. The TWCIP expressly provides that insurance agents are not considered to be appointed agents of

the insurer carriers. The corporate designee explained that when the insurance carrier receives a copy of a

certificate of insurance, it will then list the certificate holder in an automated system so that the certificate

holder will receive any subsequent notices of cancellation. Chenault Insurance Agency admittedly does

not send copies of certificates of insurance to any carriers but claims that most agencies “just don’t do that”

in practice. Instead, Chenault Insurance Agency takes responsibility for notifying certificate holders about

cancellations if it receives a copy of a notice of cancellation from a carrier.

4

Hartford’s corporate designee testified that it is Hartford’s standard practice to send a copy of

notices of cancellation to the producing agent, and she had no reason to believe that such notice would not

have been sent to Chenault Insurance Agency in this case. However, she said the process is “all mechanical”

and completed by a distribution center in another state, so she did not have a separate copy of the producer’s

copy in the underwriting file. Chenault Insurance Agency claimed that it never received a copy of the

notice of cancellation. For purposes of summary judgment, Hartford admitted that it did not send a copy

of the notice of cancellation of the Chaidez policy to Chenault Insurance Agency.

-5-

According to Mrs. Cook, Hartford did not inform her at this time that the Chaidez policy

had been cancelled.5 As such, Cook’s Roofing continued to do business with Mr. Chaidez

unaware of the fact that he was uninsured.

The Cook’s Roofing policy expired on June 2, 2006, and Hartford proceeded with

its retrospective premium audit to determine the actual premium owed by Cook’s Roofing

for the 2005-2006 policy period. Hartford initially determined that Cook’s Roofing owed

no additional premium and in fact was entitled to a small refund. However, on August 22,

2006, Hartford issued a “premium adjustment notice” based on a revised audit, indicating

that Cook’s Roofing owed $33,583 in retrospective premium for the 2005-2006 policy

period due to the additional risk from the fact that Mr. Chaidez was an uninsured

subcontractor for the latter half of the policy period. Specifically, Cook’s Roofing had

continued to use Mr. Chaidez to perform its roofing work after the cancellation of his own

policy on January 3, 2006, and through the date of expiration of the Cook’s Roofing policy

on June 2, 2006.6

Because the Cook’s Roofing policy had been renewed for an additional one-year

period, which was still in effect, Hartford calculated additional premium owed for the

existing policy period as well based on the currently uninsured status of the primary

subcontractor for Cook’s Roofing. Hartford utilized the payroll figures from its 2005-2006

policy period audit to calculate that an additional premium of $35,674 was owed for the

existing 2006-2007 policy. As such, on August 30, 2006, Hartford sent Cook’s Roofing a

premium bill for $66,212 owed toward the two policy periods (after applying some small

credits toward the balance for 2005-2006).

Cook’s Roofing disputed that it owed any additional premium and refused to pay it.

Because they had obtained the certificates of insurance regarding the Chaidez policy, the

Cooks believed that they were “fully protected from assessment of future audit premiums.”

The 2006-2007 Cook’s Roofing policy was cancelled by Hartford for nonpayment of

premium, effective November 10, 2006. The TWCIP expressly provided that an employer

5

Internal documentation maintained by Hartford states that its representative called Mrs. Cook on

April 12, 2006, and spoke with her to request information about the subcontractors currently used by Cook’s

Roofing. According to the documentation, Mrs. Cook stated that they were only using Mr. Chaidez, and

the representative informed her that Mr. Chaidez’s policy had been cancelled. In response, according to

the handwritten note, Mrs. Cook insisted that they had a current certificate of insurance for Mr. Chaidez

and would fax it to Hartford. However, Mrs. Cook submitted an affidavit denying that she ever spoke with

the representative by phone. She claimed that Hartford simply requested an updated certificate of insurance

for their subcontractor and that she provided it by fax, and she was never told, at that time, that the Chaidez

policy had been cancelled. Because this case was resolved via motion for summary judgment, we will view

the facts in the light most favorable to Cook’s Roofing with respect to this issue.

6

According to the testimony of Hartford’s corporate designee, when the Chaidez policy was

cancelled, the Cook’s Roofing policy became “liable” for injuries that occurred after the cancellation date

because there was no insurance for any of the employees of the uninsured subcontractor. As a result,

Hartford assessed additional premium to Cook’s Roofing.

-6-

with an outstanding unpaid insurance premium on a previous policy issued under the plan

was ineligible for future coverage under the plan. Hartford notified the plan administrator

of the unpaid invoice, and Cook’s Roofing could not obtain replacement coverage from a

different insurance company in the pool thereafter.

On June 12, 2007, Cook’s Roofing filed this lawsuit against Mr. Chaidez, Chenault

Insurance Agency, Inc., and St. Paul Travelers ob/o The Hartford Insurance a/k/a Hartford

Underwriters Insurance Company (“Hartford”).7 Cook’s Roofing asserted claims for

breach of contract, negligence, promissory estoppel, and violation of the Tennessee

Consumer Protection Act (“TCPA”). Cook’s Roofing sought compensatory and punitive

damages in addition to a declaration that it did not owe anything to Hartford.

In 2008, Hartford filed an answer and a counterclaim seeking to recover the unpaid

balance owed for the two policy periods in addition to pre- and post-judgment interest. The

case languished in the trial court for years. Counsel for Cook’s Roofing withdrew in 2008,

and its claims against Chenault Insurance Agency were dismissed for lack of prosecution

in 2010. Hartford filed a motion for default judgment on its counterclaim against Cook’s

Roofing, which led Cook’s Roofing to finally file an answer to the counterclaim in June

2010. Cook’s Roofing retained new counsel and filed a motion to set aside the dismissal

of its claims against Chenault, which the trial court granted. However, Cook’s Roofing

would eventually voluntarily dismiss its claims against Chenault Insurance Agency and

Mr. Chaidez.

Five years into the litigation, in 2012, Cook’s Roofing was permitted to file an

amended complaint. The amended complaint omitted the claim for the breach of contract

but continued to assert claims for negligence, promissory estoppel, and violation of the

TCPA. The amended complaint alleged that Hartford was negligent in failing to give

notice of its cancellation of the Chaidez policy in January 2006 and in failing to inform

Cook’s Roofing about the cancellation of the Chaidez policy when Hartford received the

invalid certificate of insurance from Mrs. Cook in April 2006. Cook’s Roofing argued that

Hartford’s actions essentially forced it out of business. It sought compensatory damages

including lost profits, in addition to punitive damages, treble damages, and attorney’s fees.

Hartford filed an amended answer. Hartford asserted that Cook’s Roofing, Inc., had

been administratively dissolved by the Secretary of State and that it may be necessary to

add its individual owners or shareholders as parties to the litigation. In response, Cook’s

Roofing represented that its corporate status had been reinstated.

7

According to Hartford, the “real party in interest” among the referenced entities is Hartford

Underwriters Insurance Company. Travelers Insurance served as a third-party administrator for Hartford

and had some involvement with this case as the servicing insurer with respect to this assigned risk policy.

However, for clarity, we will simply refer to “Hartford” throughout this opinion.

-7-

A scheduling order provided that the deadline for depositions of fact witnesses was

June 30, 2014. On July 31, 2014, Cook’s Roofing filed a motion for leave to file a second

amended complaint and to modify the scheduling order. Cook’s Roofing sought to add an

additional count to its complaint for intentional interference with prospective business

relationships. The motion to amend was not set for a hearing for another two years. In

2016, Hartford filed a response in opposition to the motion to amend, citing undue delay

and unfair prejudice. Hartford noted that the case had been pending for nearly a decade.

It also asserted that the proposed amendment was futile because Hartford had not acted

with improper motive or means, and the statute of limitations had run in any event. After

a hearing, the trial court entered an order on May 24, 2016, denying the motion to amend

without elaboration.8

On October 5, 2018, Hartford filed a motion for summary judgment seeking

dismissal of the claims asserted by Cook’s Roofing and also seeking a judgment for

$66,212 on its own counterclaim for breach of contract. Hartford asserted that Cook’s

Roofing was solely responsible for confirming the insured status of its subcontractor before

continuing to do business with him. Hartford argued that it acted in accordance with the

requirements of the TWCIP and had no duty to notify Cook’s Roofing about the

cancellation of the policy held by Mr. Chaidez. Thus, Hartford asserted that Cook’s

Roofing could not prove the elements of its claims for negligence or violation of the TCPA.

As for the promissory estoppel claim, Hartford argued that it made no promise to Cook’s

Roofing regarding the Chaidez policy, as the incorrect certificate of insurance was issued

by Chenault Insurance Agency, not Hartford. Hartford argued that in the context of

assigned risk policies, an insurance agent or producer is an agent of the insured who is

applying for insurance and not an agent of the insurance company that is ultimately

assigned to issue the assigned risk policy. In any event, Hartford argued that it was

unreasonable for Cook’s Roofing to rely on the certificates of insurance. Alternatively,

Hartford contended that dismissal of the claims asserted by Cook’s Roofing was

appropriate because Cook’s Roofing failed to exhaust its administrative remedies before

the Tennessee Department of Commerce and Insurance.

On its counterclaim for breach of the insurance policy, Hartford sought a judgment

for $66,212 in unpaid premium. Hartford attached numerous documents to its motion,

including the Tennessee Workers’ Compensation Insurance Plan, relevant policy

applications, binders, policy terms, certificates of insurance, audit documents, premium

bills, and the Chaidez policy cancellation notice. Hartford also submitted deposition

testimony from its corporate designee, Mike Cook, Rebecca Cook, David Chenault of

Chenault Insurance Agency, and the employee of Chenault Insurance Agency who issued

the second certificate of insurance on the cancelled policy.

8

Initially, Chancellor Kenny W. Armstrong had presided over the proceedings. The order denying

the motion to amend was entered by Chancellor James R. Newsom, III.

-8-

Cook’s Roofing filed a response. Regarding exhaustion of administrative remedies,

Cook’s Roofing argued that no statute mandated an administrative appeal under the

circumstances, and therefore the common law rule would apply and give the court

discretion as to whether the case should be dismissed. As for its negligence claim, Cook’s

Roofing insisted that its claim was “unrelated to contractual duties” and that Hartford was

“especially careless” in failing to notify Chenault Insurance Agency of the cancellation of

the Chaidez policy. Regarding the subsequently issued certificate of insurance, Cook’s

Roofing asserted that Chenault Insurance Agency was the agent of Hartford for the purpose

of issuing certificates of insurance. It also argued that Hartford had an obligation to “alert”

certificate holders such as Cook’s Roofing that the April 2006 certificate of insurance was

invalid. Cook’s Roofing argued that Hartford caused it “to be misled into believing that

there was no insurance premium financial risk attaching to its doing business with Mr.

Chaidez.” According to Cook’s Roofing, Hartford’s actions “were the sole cause of

[Cook’s Roofing] falling into the trap” of the $30,000 retrospective audit premium. As

such, Cook’s Roofing asserted that Hartford’s counterclaim should be denied on unjust

enrichment grounds. Cook’s Roofing also disputed the amount that it would owe for the

cancelled 2006-2007 policy. It pointed out that there was no post-cancellation audit for

the partial policy term and suggested that the amount claimed by Hartford was based on

the original estimate for a twelve-month policy. Cook’s Roofing claimed that the actual

amount owed was therefore unknown. In support of its response, Cook’s Roofing

submitted numerous documents, including policy terms, premium bills, letters, the

certificate of insurance, affidavits of Mike and Rebecca Cook, and deposition testimony

from Mr. Chenault and representatives of Hartford.

After a hearing, the trial court entered a thirteen-page order granting summary

judgment to Hartford, entering judgment on its counterclaim and dismissing all claims

asserted by Cook’s Roofing.9 The court made lengthy findings of fact and conclusions of

law. It summarized the case as a dispute over premiums owed to Hartford for a workers’

compensation insurance policy issued to Cook’s Roofing under the TWCIP. It described

the policy at issue and its premium adjustment clause, which provided that the initial

premium was only an estimate and not necessarily the amount that would be owed after an

audit was conducted at the end of the term. The court found that Cook’s Roofing agreed

to pay the premium based on all employees or other persons engaged in work that could

make Hartford liable under the policy, including Mr. Chaidez.

The trial court found that Mr. Chaidez had also obtained his policy through the

TWCIP, with the assistance of Chenault Insurance Agency, an insurance producer assisting

Tennessee businesses in securing workers’ compensation insurance under the plan. The

trial court found that Chenault Insurance Agency was acting as the legal agent of Mr.

Chaidez, not as the agent of Hartford. The trial court noted that the Chaidez policy and the

Cook’s Roofing policy were both coincidentally randomly assigned to Hartford but that

9

By this time, Chancellor JoeDae L. Jenkins was presiding over the case.

-9-

they were completely separate contracts, and there was no relationship between Hartford

and Cook’s Roofing with respect to the Chaidez policy. The trial court found that Hartford

cancelled the Chaidez policy effective January 3, 2006, for nonpayment of premium. The

trial court acknowledged that evidence was presented suggesting that Chenault Insurance

Agency may not have received a copy of the cancellation notice from Hartford on the

Chaidez policy; however, there was no dispute that Mr. Chaidez received a cancellation

notice. As such, the trial court found that the Chaidez policy was effectively cancelled

pursuant to Tennessee law and the TWCIP.

The trial court found that Mrs. Cook provided a certificate of insurance to Hartford

that incorrectly stated that the Chaidez policy was still in effect. However, the court found

that the certificate of insurance was faulty and not indicative of actual insurance coverage.

The court found that Mrs. Cook could have verified the policy with Hartford, but instead

she merely relied on the certificate of insurance issued by Chenault Insurance Agency. The

court noted that Chenault Insurance Agency did not contact Hartford either. The trial court

found that the faulty certificate of insurance could not relieve Cook’s Roofing of its

obligation to confirm the insured status of its subcontractor and prevent Hartford from

being exposed to risk under the policy when the subcontractor was uninsured. The faulty

certificate of insurance could not alter Hartford’s rights and obligations under the policy.

Thus, the trial court found that Mr. Chaidez’s failure to maintain workers’ compensation

insurance while working for Cook’s Roofing resulted in additional risk exposure to

Hartford under the Cook’s Roofing workers’ compensation policy.

The trial court found that Hartford conducted a standard retrospective premium

audit on the 2005-2006 policy, and because Mr. Chaidez had worked for Cook’s Roofing

from January to June 2006 without insurance coverage, additional premium accrued on the

Cook’s Roofing policy to account for the additional risk occasioned by his employment.

The trial court found that the audit indicated that Cook’s Roofing owed $30,583 for the

2005-2006 premium, which Cook’s Roofing refused to pay, leading to cancellation of the

2006-2007 policy. It found that Cook’s Roofing also owed $35,674 in premium for the

2006-2007 policy period at the time of cancellation. The court found that Cook’s Roofing

owed a total of $66,212.10

The trial court found that the damages allegedly suffered by Cook’s Roofing

originated with its failure to satisfy its own obligation to verify Mr. Chaidez’s insurance

status while he worked as its subcontractor. It found that Cook’s Roofing presented

inadequate argument in response to the motion for summary judgment regarding the

elements of its claims for negligence, violation of the TCPA, and promissory estoppel, and

10

The trial court’s written order states that a total of $66,212 was owed, with the two policy

premiums equaling $30,583 and $35,674. The trial court apparently interposed the last two numbers of the

premium for 2005-2006, stating that it was $30,583 rather than $30,538 as reflected on Hartford’s bill. The

numbers utilized by the trial court would not add up to $66,212.

- 10 -

therefore, it had waived or conceded those issues. More specifically, the trial court found

that Cook’s Roofing failed to clearly articulate and establish any legal duty in tort owed by

Hartford, the breach of which caused an injury. It found no unfair or deceptive practice,

for purposes of the TCPA claim, where the plain language of the certificate of insurance

alerted the certificate holder that the certificate was issued as a matter of information only

and conferred no rights on the certificate holder. The court found that reliance on the

certificate, in the face of those warnings, was not reasonable. According to the trial court,

Cook’s Roofing simply failed to raise any disputed material facts as to its claims.

Consequently, the trial court dismissed the claims asserted by Cook’s Roofing and entered

summary judgment in favor of Hartford on its counterclaim for $66,212.11

Cook’s Roofing prematurely filed a notice of appeal even though Hartford’s request

for prejudgment interest had not yet been resolved. Hartford filed a motion to dismiss the

appeal for lack of a final order. This Court entered an order directing the appellant to obtain

entry of a final judgment in the trial court.

Before the trial court, in addition to filing a motion for prejudgment interest,

Hartford also filed a motion to enforce the judgment against the Cooks individually.

According to the motion, Hartford had sought to execute on the judgment and learned

through post-judgment discovery that Cook’s Roofing had no assets. Hartford asserted

that the Cooks were the alter egos of the corporation and that they used the corporate form

as a sham to perpetuate a fraud. Hartford claimed that the Cooks had ignored corporate

formalities, operated the corporation from their home, and taken the only company assets

for personal use after they closed the business. Thus, Hartford asked the trial court to pierce

the corporate veil and allow it to execute the judgment against Mr. and Mrs. Cook.

Hartford attached to its motion the post-judgment deposition testimony of Mrs. Cook in

addition to a memorandum of law.

Cook’s Roofing opposed any award of prejudgment interest. It also filed a brief in

opposition to Hartford’s motion to enforce the judgment against the Cooks individually.

Cook’s Roofing argued that the individual defendants must be afforded “full due process

rights” in an action to pierce the corporate veil and could not be “added to a judgment” in

the absence of a jury trial, if demanded. In response, Hartford maintained that it was

appropriate to pierce the corporate veil in post-judgment proceedings because the

corporation and the individuals are treated as a single entity.

The trial court entered an order awarding prejudgment interest to Hartford, although

for a shorter period than Hartford requested, and at a rate of only one percent. The trial

11

The trial court’s order states, “Cook’s Roofing did not dispute the premium owed through

administrative proceedings with the Tennessee Department of Commerce and Insurance, as a contested

case under the Tennessee Uniform Administrative Procedures Act.” It did not otherwise address the parties’

arguments regarding exhaustion of administrative remedies.

- 11 -

court denied Hartford’s motion to enforce the judgment against the Cooks individually.

The trial court noted that the Cooks, individually, had not been given an opportunity to

defend against the alter ego theory, as there were no pleadings giving notice of the same,

no discovery, and no hearing on the matter. Hartford filed a motion to alter or amend and

suggested that the trial court could hold an evidentiary hearing as to whether to pierce the

corporate veil. However, the trial court denied the motion.

II. ISSUES PRESENTED

Cook’s Roofing presents the following issues, which we have slightly reworded, for

review on appeal:

1. Whether the trial court erred in denying the motion for leave to amend the complaint

filed by Cook’s Roofing;

2. Whether the trial court erred in granting summary judgment in favor of Hartford on

the claims asserted in the amended complaint filed by Cook’s Roofing; and

3. Whether the trial court erred in granting summary judgment in favor of Hartford on

its counterclaim for $66,212.

In its posture as appellee, Hartford raises the following additional issues for review:

1. Whether the trial court erred in only partially granting the motion for prejudgment

interest; and

2. Whether the trial court erred in denying Hartford’s motion to enforce the judgment

against the individual shareholders of Cook’s Roofing, Inc.

For the following reasons, we affirm the judgment of the chancery court in part, we reverse

in part, and we remand for further proceedings consistent with this opinion.

III. DISCUSSION

A. Exhaustion of Administrative Remedies

Although neither party designated it as an issue on appeal, Hartford suggests in a

footnote in its brief that the case alternatively should have been dismissed for failure to

exhaust administrative remedies. We will address the issue to the extent that its resolution

could impact subject matter jurisdiction.

In Tennessee, “when exhaustion of administrative remedies is required by statute,

the failure to do so will deprive the court of subject matter jurisdiction.” Chattanooga-

Hamilton Cty. Hosp. Auth. v. UnitedHealthcare Plan of the River Valley, Inc., 475 S.W.3d

746, 758 (Tenn. 2015) (citing Pickard v. Tenn. Water Quality Control Bd., 424 S.W.3d

511, 523 (Tenn. 2013)). However, “unless the statute providing for an administrative

- 12 -

remedy requires exhaustion ‘by its plain words,’ an administrative appeal is not

mandatory.” Ready Mix, USA, LLC v. Jefferson Cty., 380 S.W.3d 52, 63 (Tenn. 2012)

(quoting Thomas v. State Bd. of Equalization, 940 S.W.2d 563, 566 (Tenn. 1997)). “‘[A]

statute does not require exhaustion when the language providing for an appeal to an

administrative agency is worded permissively.’” Chattanooga-Hamilton Cty. Hosp. Auth.,

475 S.W.3d at 758 (quoting Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 839 (Tenn.

2008)). In the absence of a statutory mandate, the exhaustion of administrative remedies

doctrine “is a matter of judicial discretion.” Ready Mix, 380 S.W.3d at 64.

“The Tennessee legislature has provided detailed rules for contesting workers’

compensation insurance premiums.” Riverport Ins. Co. v. Countrywide Payroll & HR

Sols., Inc., No. 3:15-CV-00297, 2017 WL 4274707, at *2 (E.D. Tenn. Sept. 26, 2017).

Tennessee Code Annotated section 56-5-114(c)(1) directed the Commissioner of

Commerce and Insurance to implement a residual market plan and “provide a method

whereby applicants for insurance, insured, and insurers may have a hearing on grievances

and the right of appeal to the commissioner.” Accordingly, Tennessee Code Annotated

section 56-5-109 (formerly designated -309) provides a method whereby aggrieved persons

“may” submit written requests for review to insurers and then “may” appeal to the

Commissioner. It provides:

AGGRIEVED PERSONS. Every insurer and rate service organization shall

provide within this state reasonable means whereby any person aggrieved by

the application of its rating system may be heard on written request to review

the manner in which the rating system has been applied in connection with

the insurance afforded.12 If the insurer fails to grant or reject the request

within thirty (30) days, the applicant may proceed in the same manner as if

the application had been rejected. Any party affected by the action of the

insurer on the request may, within thirty (30) days after written notice of the

action, appeal to the commissioner who, after a hearing held upon not less

than ten (10) days’ written notice to the appellant and to the insurer, may

affirm, modify, or reverse the action.

Tenn. Code Ann. § 56-5-109(b). The Department of Commerce and Insurance

promulgated administrative rules to implement this law. See Tenn. Comp. R. & Regs.

0780-01-82-.01, et seq. (“The purpose of this Chapter is to: (1) Set forth requirements for

12

Because of the limited issue before us on appeal, we will assume for the sake of argument that

Cook’s Roofing was a person “aggrieved by the application of [the] rating system” within the meaning of

the statute but express no opinion as to that issue. See Tenn. Code Ann. § 56-5-109(b). “Rating System”

is defined as “the systematic process of determining workers’ compensation premium based upon rules

published in the applicable manuals, workers’ compensation statutes, and the insurer’s rate pages.” Tenn.

Comp. R. & Regs. 0780-01-82-.04(11). But see Nat’l Council on Comp. Ins. v. Gaddis, 786 S.W.2d 240,

242 (Tenn. Ct. App. 1989) (considering an argument that an appeal did not involve a rate dispute within

the meaning of the statute).

- 13 -

insurers and rate service organizations in providing a process whereby insureds of workers’

compensation policies may request a review of the application of the insurer’s or rate

service organization’s rating system to the insured’s coverage in this state[.]”) Finally, the

TWCIP provided, “Persons aggrieved by the action of a TWCIP Servicing Carrier or Direct

Assignment Carrier shall have the same right to appeal under TCA 56-5-309(b). A person

so aggrieved may request the Plan Administrator to review the decision or actions of the

insurer by filing a formal dispute.”

Federal courts have concluded that the administrative remedy provided in this

context is not mandatory. In Valley Mechanical, Inc. v. BB & T Insurance Services, Inc.,

No. 1:13-CV-378, 2014 WL 2871475, at *7 (E.D. Tenn. June 24, 2014), the district court

reasoned:

Ultimately, the Court cannot conclude § 56-5-309 [now -109]

contains a hard-and-fast requirement that parties exhaust administrative

remedies before filing suit. Although Defendants are correct that the statute

and related regulations set up a system for the administrative resolution of

workers’ compensation premium disputes, Defendants point to no case

holding that § 56-5-309 requires a party exhaust administrative remedies

before filing suit. Furthermore, the statute does not by its plain words make

exhaustion mandatory. See Ready Mix, 380 S.W.3d at 63-64. Rather, the

statute provides that a party “may” avail itself of that process and “may”

appeal to the Commissioner. These words do not indicate that exhausting

such procedures is a condition precedent to filing suit. That the statute

requires insurers to set up a dispute resolution process does not render it the

sole avenue for relief. Accordingly, because § 56-5-309 does not require

exhaustion by its plain words, the Court cannot conclude Valley was required

to exhaust its administrative remedies in Tennessee before suing in relation

to its Tennessee workers.

See also Riverport, 2017 WL 4274707, at *3-4 (noting that when exhaustion of

administrative remedies is not mandatory it is a matter of judicial discretion but deciding

to require the parties to exhaust administrative remedies in disputes regarding assigned risk

policies and the TWCIP); Virginia Sur. Co., Inc. v. McMurry Constr. Co., Inc., No. 07-

2802, 2008 WL 11322113, at *6 (W.D. Tenn. Sept. 23, 2008) (concluding that exhaustion

was left to the court’s discretion because Tennessee Code Annotated section 56-5-309

“nowhere mandates administrative exhaustion and uses permissive language in its

description of the steps to be taken in the process of administrative review”).

Here, Hartford argued in its motion for summary judgment that dismissal was

appropriate for failure to exhaust administrative remedies. In its summary judgment order,

the trial court simply noted that “Cook’s Roofing did not dispute the premium owed

through administrative proceedings with the Tennessee Department of Commerce and

- 14 -

Insurance[.]” The trial court apparently concluded that such an appeal was not mandatory.

Given the permissive language utilized in the relevant statutes, we agree. Therefore, the

trial court did not lack subject matter jurisdiction to consider this dispute.

B. Motion to Amend

The first issue raised by Cook’s Roofing is whether the trial court abused its

discretion in denying its motion to file a second amended complaint. To briefly review the

timeline, the original complaint was filed in 2007, and Cook’s Roofing was permitted to

file its first amended complaint in 2012, to which Hartford filed an amended answer. In

2014, Cook’s Roofing moved for leave to file a second amended complaint to add a claim

for intentional interference with prospective business relationships. This proposed claim

would be based not only on Hartford’s failures to provide notice of cancellation of the

Chaidez policy but also on Hartford’s subsequent decision to notify the TWCIP plan

administrator, after cancellation of the Cook’s Roofing policy, that Cook’s Roofing refused

to pay its outstanding premium balance, rendering it ineligible for future coverage. Cook’s

Roofing alleged that this action improperly caused the TWCIP administrator to “refuse to

do business” with Cook’s Roofing and resulted in substantial lost profits. Cook’s Roofing

sought modification of the existing scheduling order due to the new issues raised by the

proposed amendment, noting that the case was not yet set for trial. The motion to amend

was not heard until 2016. Hartford opposed the motion on the basis of undue delay and

undue prejudice and also asserted that the proposed amendment was futile. After a hearing,

the trial court denied the motion to amend, simply stating that it was not well taken.

“Under the Tennessee Rules of Civil Procedure, a party may amend its pleadings

once as a matter of course before a responsive pleading is served.” Abdur’Rahman v.

Parker, 558 S.W.3d 606, 620 (Tenn. 2018) (citing Tenn. R. Civ. P. 15.01). When a

responsive pleading has already been filed by the opposing party, “the party seeking to

amend must obtain written consent of the adverse party or leave of court, ‘and leave shall

be freely given when justice so requires.’” Id. (quoting Tenn. R. Civ. P. 15.01). “‘Trial

courts have broad authority to decide motions to amend pleadings and will not be reversed

absent an abuse of discretion.’” Id. (quoting Pratcher v. Methodist Healthcare Memphis

Hosps., 407 S.W.3d 727, 741 (Tenn. 2013)). Thus, appellate courts “will uphold the trial

court’s denial of a motion to amend ‘so long as reasonable minds can disagree as to the

propriety of the decision made.’” Brown v. Mapco Exp., Inc., 393 S.W.3d 696, 701 (Tenn.

Ct. App. 2012) (quoting Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)).

Numerous factors should be considered to guide a trial court’s discretionary

decision regarding whether to allow an amendment of the pleadings, including “‘undue

delay in filing the amendment, lack of notice to the opposing party, bad faith by the moving

party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the

opposing party, and the futility of the amendment.’” Blackwell v. Sky High Sports

Nashville Operations, LLC, 523 S.W.3d 624, 656 (Tenn. Ct. App. 2017) (quoting Gardiner

- 15 -

v. Word, 731 S.W.2d 889, 891-92 (Tenn. 1987)). “‘When a motion to amend is denied, the

trial court should give a reasoned explanation for its action.’” Bowman v. Benouttas, 519

S.W.3d 586, 602 (Tenn. Ct. App. 2016) (quoting Kincaid v. SouthTrust Bank, 221 S.W.3d

32, 42 (Tenn. Ct. App. 2006)). Without such information, this Court cannot discern the

reason behind the trial court’s denial in order to determine whether the decision constituted

an abuse of discretion. Ferrell v. Miller, No. M2013-00856-COA-R3-CV, 2013 WL

6228153, at *7 (Tenn. Ct. App. Nov. 27, 2013) (citing Quinn-Glover v. Regional Med. Ctr.

at Memphis, No. W2011-00100-COA-R3-CV, 2012 WL 120209, at *11 (Tenn. Ct. App.

Jan. 17, 2012)).

In the absence of any explanation for the denial, this Court will “remand for

consideration of the request . . . and for express findings.” Ferrell, 2013 WL 6228153, at

*7; see, e.g., Bellanti v. City of Memphis, No. W2011-01917-COA-R3-CV, 2012 WL

1974220, at *1 (Tenn. Ct. App. June 4, 2012) (“Because the trial court’s order denying the

City’s motion to amend fails to explain the basis for its denial, we are constrained to remand

the case to the trial court for entry of a reasoned explanation of its actions[.]”)

Given that the trial court failed to offer any reason for its denial of the motion to

amend, we are likewise constrained to reverse and remand for the trial court to reconsider

the motion to amend. In the event that it is denied, the trial court must give a reasoned

explanation for its decision. See id.

C. Dismissal of the Claims Asserted by Cook’s Roofing

The next issue raised by Cook’s Roofing is whether the trial court erred in granting

summary judgment to Hartford on the claims asserted by Cook’s Roofing in its amended

complaint. Appellate courts review a trial court’s decision on a motion for summary

judgment de novo with no presumption of correctness. Kershaw v. Levy, 583 S.W.3d 544,

547 (Tenn. 2019) (citing Beard v. Branson, 528 S.W.3d 487, 494-95 (Tenn. 2017)).

Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there

is no genuine issue as to any material fact and that the moving party is entitled to a judgment

as a matter of law.” Tenn. R. Civ. P. 56.04. On appeal, “we make a fresh determination

about whether the requirements of Rule 56 have been met.” TWB Architects, Inc. v.

Braxton, LLC, 578 S.W.3d 879, 887 (Tenn. 2019) (citing Rye v. Women’s Care Ctr. of

Memphis, 477 S.W.3d 235, 250 (Tenn. 2015)).

The claims set forth in the amended complaint included negligence, promissory

estoppel, and violation of the TCPA. As previously noted, the trial court found that Cook’s

Roofing waived or conceded these claims due to its failure to present sufficient argument

regarding the elements of the claims in response to the motion for summary judgment.

However, the trial court went on to make some conclusions regarding the three claims and

explain why the elements were not shown to exist in this case.

- 16 -

On appeal, the argument presented by Cook’s Roofing is again lacking. In the

section of its brief addressing this issue, the single citation to legal authority provided by

Cook’s Roofing is a one-sentence standard of review for a motion for summary judgment.

It does not cite any authority regarding negligence, promissory estoppel, or violation of the

TCPA, or for that matter, even mention the latter two claims. Instead, Cook’s Roofing

simply argues that the trial court “ignored important material evidence in the record.” It

quotes excerpts from the evidence it presented but fails to establish how this evidence

would establish or even relate to any of the claims it asserted in its amended complaint.

From what we can discern from the argument, Cook’s Roofing is attempting to demonstrate

that some facts are in dispute. However, for purposes of summary judgment, a disputed

fact is only deemed material “if its resolution is necessary to determine the substantive

claim.” Himmelfarb v. Allain, 380 S.W.3d 35, 38 (Tenn. 2012) (citing Mills v. CSX

Transp., Inc., 300 S.W.3d 627, 632 (Tenn. 2009)). Cook’s Roofing makes no attempt to

demonstrate how the facts it claims are disputed would relate to any of the various claims

alleged in the amended complaint, such as negligence, promissory estoppel, or violation of

the TCPA.

Aside from its discussion of various facts, the only isolated reference to

“negligence” is in the following final paragraph of the section:

Hartford had a duty to avoid issuing the certificate of insurance needed by its

insured carelessly in a maneuver that would mislead members of the public

including Cook’s Roofing. Cook’s Roofing requested the Chaidez

certificates as a member of the public, not as a Hartford policy holder.

Hartford’s negligence resulted in Cook’s Roofing being led into the trap of

large audit premiums by reasonable reliance upon the certificates authorized

by Hartford.

(emphasis added). Hartford did not issue the certificate of insurance; Chenault Insurance

Agency did. Yet Cook’s Roofing includes no argument or citation to authority regarding

any agency relationship or negligence claim. As Hartford noted in its brief on appeal,

Cook’s Roofing failed to provide “any legal analysis” with respect to this second issue. On

that basis, Hartford asked this Court to deem this issue waived.

“It is not the role of the courts, trial or appellate, to research or construct a litigant’s

case or arguments for him or her, and where a party fails to develop an argument in support

of his or her contention or merely constructs a skeletal argument, the issue is waived.”

Sneed v. Bd. of Prof’l Responsibility of Supreme Court, 301 S.W.3d 603, 615 (Tenn. 2010).

Because Cook’s Roofing did not construct any argument or cite any authority in its

principal brief to show that the trial court erred in granting summary judgment on its claims

for negligence, promissory estoppel, or violation of the TCPA, the second issue it raised

- 17 -

on appeal is waived.13

D. Hartford’s Counterclaim

The final issue raised by Cook’s Roofing is whether the trial court erred in awarding

a judgment for $66,212 to Hartford on its counterclaim for breach of contract. Again,

Cook’s Roofing cites no authority in support of this issue. However, it does not appear to

dispute the substantive merits of the breach of contract claim that served as the basis for

the counterclaim. Instead, Cook’s Roofing disputes the amount of the judgment awarded.14

It argues that “the trial court committed large error by accepting for summary judgment

purposes Hartford’s claim to an entitlement to a $66,21[2] recovery for unpaid

premiums[.]” Cook’s Roofing basically challenges the amount of the award on two

grounds. First, it argues that the sum of $35,674 sought by Hartford for the 2006-2007

policy period was impermissibly based on the policy premium estimate for that period

rather than a post-cancellation audit. Second, Cook’s Roofing argues that even if the

premium estimate figure is used for the 2006-2007 policy, that amount should be prorated

based on a shortened policy period of only five months prior to cancellation.

On August 30, 2006, Hartford sent a “premium bill” to Cook’s Roofing for a total

of $66,212. The bill reflects that Cook’s Roofing owed $30,538 toward the “revised audit”

for the 2005-2006 policy and $35,674 toward the existing 2006-2007 policy, which was to

be effective from June 2, 2006, to June 2, 2007. Cook’s Roofing was paying its premium

for the 2006-2007 renewed policy by installments or a “pay plan.” The bill showed a

breakdown of the charges owed for the 2006-2007 policy premium:

INSTALLMENT DUE DATE 09/02/06 $569.00

ENDORSEMENT EFFECTIVE DATE 06/02/06 $16,478.00

ENDORSEMENT EFFECTIVE DATE 07/02/06 $4,799.00

ENDORSEMENT EFFECTIVE DATE 08/02/06 $4,799.00

ENDORSEMENT EFFECTIVE DATE 09/02/06 $4,230.00

ENDORSEMENT EFFECTIVE DATE 10/02/06 $4,799.00

------------

13

Cook’s Roofing attempted to develop some arguments regarding its claims in its reply brief.

“Reply briefs, however, are generally not a vehicle to correct deficiencies in initial briefs.” Augustin v.

Bradley Cty. Sheriff's Office, 598 S.W.3d 220, 227 (Tenn. Ct. App. 2019). “A reply brief is a response to

the arguments of the appellee.” Owens v. Owens, 241 S.W.3d 478, 499 (Tenn. Ct. App. 2007). “Because

an appellee may not respond to a reply brief, it would be fundamentally unfair to allow the appellant to

assert additional arguments in the reply brief.” Meersman v. Regions Morgan Keegan Tr., No. M2017-

02043-COA-R3-CV, 2018 WL 4896660, at *3 n.7 (Tenn. Ct. App. Oct. 9, 2018) perm. app. denied (Tenn.

Feb. 20, 2019).

14

Cook’s Roofing does suggest that the counterclaim should have been denied “on unjust

enrichment grounds,” but it does not cite any authority in support of this issue. Therefore, we deem the

argument waived. See Sneed, 301 S.W.3d at 615.

- 18 -

SUB-TOTAL $35,674.00

When Cook’s Roofing failed to pay the bill, the 2006-2007 policy was cancelled effective

November 10, 2006.

The corporate designee for Hartford explained the premium calculation during her

deposition. She testified that after the revised audit premium was added to the 2005-2006

policy, the payroll amounts determined from that audit were applied to the existing

renewed policy for 2006-2007 as well. She said it is typical after a worker’s compensation

policy audit to add any additional payroll from the prior period to the renewed existing

policy. She pointed out that Cook’s Roofing was on an installment plan and that the

premium bill listed the amounts due. She clarified that the amount listed was not past due

but the amount currently owed. The bill listed a due date of “9/26/06.” When asked if the

sum of $35,674 was the amount owed for the entire period, she said it appeared to be the

amount “for the installments up through 10/2/06.” She noted that the policy was cancelled

effective November 10, 2006. When asked again about the calculation of the sum of

$35,674 shown as due toward the 2006-2007 policy period, she said,

[W]hat I believe happened was, the payroll that was picked up from Chaidez

on the 2005 to 2006 policy was then applied to the 2006 to 2007. That’s

done in a lump sum, and then it’s the total -- that would be the total estimated

premium at that time until that policy runs out -- until the policy expires. So

whatever is due and owing for those installments is just divided by how many

installments there are.

(emphasis added).

Hartford’s counterclaim described “a premium audit” conducted after expiration of

the policy period, which revealed that Cook’s Roofing owed $30,538 toward the 2005-

2006 policy premium. It alleged that the same audit revealed that Cook’s Roofing owed

over $30,000 for the renewed 2006-2007 policy. The counterclaim alleges, “To date, these

outstanding premium amounts are due and owing.” Hartford sought summary judgment

on its breach of contract claim for $66,212. In its statement of undisputed facts, Hartford

included the following statement: “At the time [of] its cancellation, Cook’s Roofing also

owed $35,674.00, on the 2006-2007 Cook’s Policy, which Cook’s Roofing has not paid.”

(emphasis added) Thus, it is apparent that Hartford was seeking to recover the precise

amount it billed Cook’s Roofing before it cancelled the renewed policy for 2006-2007.

The trial court awarded a judgment on the counterclaim for $66,212, the exact amount

listed on the premium bill. There is simply nothing in the record to suggest that Hartford

ever conducted a post-cancellation audit to determine the actual payroll and other

information for the policy period and calculate whether the actual liability of Cook’s

Roofing was more or less than the estimated premium.

- 19 -

The insurance policy included the following terms regarding calculation of the

premium:

E. Final Premium

The premium shown on the Information Page, schedules, and endorsements

is an estimate. The final premium will be determined after this policy ends

by using the actual, not the estimated, premium basis and the proper

classifications and rates that lawfully apply to the business and work covered

by this policy. If the final premium is more than the premium you paid to us,

you must pay us the balance. If it is less, we will refund the balance to you.

The final premium will not be less than the highest minimum premium for

the classifications covered by this policy.

If this policy is canceled, final premium will be determined in the following

way unless our manuals provide otherwise:

1. If we cancel, final premium will be calculated pro rata based on the time

this policy was in force. Final premium will not be less than the pro rata

share of the minimum premium.

2. If you cancel, final premium will be more than pro rata; it will be based on

the time this policy was in force, and increased by our short-rate cancellation

table and procedure. Final premium will not be less than the minimum

premium.

F. Records

You will keep records of information needed to compute premium. You will

provide us with copies of those records when we ask for them.

G. Audit

You will let us examine and audit all your records that relate to this policy.

These records include ledgers, journals, registers, vouchers, contracts, tax

reports, payroll and disbursement records, and programs for storing and

retrieving data. We may conduct the audits during regular business hours

during the policy period and within three years after the policy period ends.

Information developed by audit will be used to determine final premium.

In response to the motion for summary judgment, Cook’s Roofing disputed the amount

owed for the 2006-2007 policy term as uncertain because there was no post-cancellation

audit for the shortened policy term. According to Cook’s Roofing, the amount sought by

Hartford was based on the estimate for the twelve-month policy, which was to be adjusted

by an audit at the end of the policy period. Thereafter, Hartford submitted an affidavit of

its corporate representative stating:

[D]espite my deposition testimony regarding the amount of premiums

- 20 -

Cook’s Roofing owes to Hartford under the relevant policies, it appears from

reviewing the Plaintiff’s response that it is confused regarding this issue. It

should not be. To be clear, Cook’s Roofing currently owes $66,212.00 in

premium, Hartford having credited any and all amounts that Cook’s Roofing

may have paid towards its premium obligation.

However, the affidavit did not state whether a post-cancellation audit was completed or

attempted.15 Before the trial court, Hartford’s counsel simply suggested that the argument

by Cook’s Roofing about the lack of a final audit “reflects its profound ignorance with how

these assigned risk plans are administered.”

The trial court made lengthy findings in its order but did not mention anything about

the lack of a post-cancellation audit for the 2006-2007 policy. It simply stated:

43. Travelers proceeded to conduct its standard retrospective premium audit

on the Cook’s Policy for the 2005-2006 Cook’s Policy Period. Because the

Chaidez Policy had been effectively cancelled on January 3, 2006, Mr.

Chaidez continued to work for Cook’s Roofing without his own workers

compensation insurance.

44. However, because the Chaidez Policy had been effectively cancelled on

January 3, 2006, and Mr. Chaidez continued to work for Cook’s Roofing

without his own workers compensation insurance, this caused additional

premium to accrue on the Cook’s Policy to account for the additional risk

occasioned by Mr. Chaidez employment during the 2005-2006 Cook’s

Policy Period.

45. During the physical audit, Cook’s Roofing failed to produce sufficient

documents supporting its position with regard to Mr. Chaidez. As a result,

the auditor made a reasonable premium calculation based on the documents

produced. Having failed to comply with its obligations during the audit

process, Cook’s Roofing cannot raise this issue again in this proceeding.

46. The final results of the audit indicated that — at that time — Cook’s

15

We note that “[b]oth the insurance company and the insured employer have responsibilities in

the required retrospective premium audit.” Am. Zurich Ins. Co., 2012 WL 3064650, at *11. If a dispute

arises, “the burden is on the insured employer to establish that its workers should be excluded from premium

consideration.” Id.

Notably, the corporate representative for Hartford testified that after the Chaidez policy was

cancelled on January 3, 2006, Hartford conducted a post-cancellation audit of the Chaidez policy in

February 2006, which included the initial policy period and also a shortened policy period for the second

term up to the date of cancellation. We note that other cases involving similar policies have also discussed

post-cancellation audits. See, e.g., Cont’l Cas. Co. v. Theraco, Inc., 437 S.W.3d 841, 845 (Tenn. Ct. App.

2014); Am. Zurich Ins. Co., 2012 WL 3064650, at *6; Liberty Mut. Ins. Co. v. Friendship Home Health

Agency, LLC, No. M2007-02787-COA-R3-CV, 2009 WL 736659, at *1 (Tenn. Ct. App. Mar. 19, 2009);

CNA (Cont'l Cas.) v. King, No. M2004-02911-COA-R3-CV, 2006 WL 2792159, at *2 (Tenn. Ct. App.

Sept. 28, 2006).

- 21 -

Roofing owed additional premium in the amount of $30,5[38].00 for the

2005-2006 Cook’s Policy Period.

47. Cook’s Roofing refused to pay the additional premium assessed, and the

Cook’s Policy was therefore cancelled during the 2006-2007 Cook’s Policy

Period in accordance with the terms of the Cook’s Policy, Tennessee law,

and the TWCIP.

48. At the time of the Cook’s Policy’s cancellation, Cook’s Roofing also

owed $35,674.00 in premium for the 2006-2007 Cook’s Policy Period for a

total premium owed in the amount of $66,212.00 on the Cook’s Policy.

Viewing the evidence in the light most favorable to Cook’s Roofing, we conclude that

genuine issues of material fact remain as to whether Hartford should have conducted a

post-cancellation audit of the 2006-2007 policy and whether its alleged failure to do so

now impacts its claim for recovery of the unpaid estimated premium that was owed at the

time of cancellation.

We note, however, that in response to the motion for summary judgment, Cook’s

Roofing limited its dispute to the amount owed for the 2006-2007 policy period. Cook’s

Roofing did not demonstrate that any genuine issue of material fact existed with respect to

the amount it owed for the 2005-2006 policy period. As such, we affirm the trial court’s

judgment in favor of Hartford on its counterclaim for the sum of $30,538 for the 2005-

2006 policy period. We reverse the judgment for $35,674 allegedly owed for the 2006-

2007 policy period and remand for further proceedings regarding that issue.

E. Prejudgment Interest

We now consider the issues raised on appeal by Hartford. First, Hartford argues

that the trial court erred in limiting its award of prejudgment interest to a shorter period

than Hartford requested and at a rate of only one percent.

Because we have reversed the portion of the award attributable to the 2006-2007

policy period premium, we also reverse the award of prejudgment interest for that portion

of the original award. However, we will consider Hartford’s arguments as they relate to

interest on the 2005-2006 premium.

When Hartford filed its motion for prejudgment interest in 2019, it pointed out that

it had been without the benefit of the premium since it sent the bill in 2006. However,

Hartford limited its request for prejudgment interest to the period since it had completed

its discovery on June 15, 2012. Hartford claimed that after that date, it was waiting on

Cook’s Roofing to take depositions. Thus, Hartford sought a total interest award of

$43,119 on the judgment of $66,212. In opposition, Cook’s Roofing argued that

prejudgment interest was inappropriate due to the uncertainty regarding the lack of a post-

cancellation audit for the 2006-2007 policy period.

- 22 -

The trial court granted Hartford’s motion for prejudgment interest in part. The trial

court found that an award of prejudgment interest would compensate Hartford for the loss

of premium funds to which it was entitled. It found that the amount owed was certain and

that Hartford sent the premium bill to Cook’s Roofing demanding payment in 2006. It

found that Hartford was without the use of the funds until judgment was entered in 2018.

The trial court acknowledged Hartford’s argument regarding “the lengthy time in which

the case has been pending.” However, the trial court found that “a number of factors”

contributed to the length of the litigation, and the court noted that it did not attribute the

lack of prosecution “wholly” to the inaction of Cook’s Roofing. The trial court stated that

it had considered “the entirety of the circumstances” and found it equitable to award

prejudgment interest for a period spanning from September 16, 2016, to the date of

judgment on December 18, 2018. The trial court set the rate of prejudgment interest at one

percent. Hartford did not offer any argument or evidence to support a specific rate of

interest on its claim, but it argues on appeal that the trial court should have awarded interest

at the “market rate” of six percent and for the full period requested by Hartford.

Pursuant to Tennessee Code Annotated section 47-14-123, unless otherwise

provided, prejudgment interest “may be awarded by courts or juries in accordance with the

principles of equity at any rate not in excess of a maximum effective rate of ten percent

(10%) per annum.” Trial courts are vested with considerable discretion when determining

whether prejudgment interest is warranted, but the decision “is not immunized from

challenge on appeal.” E Sols. for Buildings, LLC v. Knestrick Contractor, Inc., No.

M2018-02028-COA-R3-CV, 2019 WL 5607473, at *12 (Tenn. Ct. App. Oct. 30, 2019)

perm. app. denied (Tenn. Mar. 26, 2020). “‘[A]ppellate deference is not synonymous with

rubber stamping a trial court’s decision.’” Id. (quoting Scholz v. S.B. Int'l, Inc., 40 S.W.3d

78, 82 (Tenn. Ct. App. 2000)). We must review “whether the trial court has based its

decision on applicable legal principles and whether the decision is consistent with the

evidence.” Scholz, 40 S.W.3d at 82-83 (citing Myint v. Allstate Ins. Co., 970 S.W.2d 920,

927 (Tenn. 1998); Overstreet v. Shoney’s, Inc., 4 S.W.3d 694, 709 (Tenn. Ct. App. 1999)).

“The trial court’s discretion ‘extends not only to awarding of prejudgment interest but also

to the amount of interest allowed and the time over which it shall be calculated.’” Mabey

v. Maggas, No. M2006-02689-COA-R3-CV, 2007 WL 2713726, at *10 (Tenn. Ct. App.

Sept. 18, 2007) (quoting AHCI, Inc. v. Lamar Adver. of Tenn., Inc., No. 03A01-9301-CH-

00010, 1994 WL 25848, at *4 (Tenn. Ct. App. E.S. Jan. 26, 1994), aff'd, 898 S.W.2d 191

(Tenn. 1995)); see also Premier Imaging/Med. Sys., Inc. v. Coffey Family Med. Clinic,

P.C., No. E2017-02186-COA-R3-CV, 2018 WL 3361067, at *8 (Tenn. Ct. App. July 10,

2018) (explaining that the trial court’s choice of a particular rate, subject to the statutory

limit, was a discretionary matter for the trial court).

According to the Tennessee Supreme Court,

Several principles guide trial courts in exercising their discretion to

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award or deny prejudgment interest. Foremost are the principles of equity.

Tenn. Code Ann. § 47-14-123. Simply stated, the court must decide whether

the award of prejudgment interest is fair, given the particular circumstances

of the case. In reaching an equitable decision, a court must keep in mind that

the purpose of awarding the interest is to fully compensate a plaintiff for the

loss of the use of funds to which he or she was legally entitled, not to penalize

a defendant for wrongdoing. Mitchell v. Mitchell, 876 S.W.2d 830, 832

(Tenn. 1994); Otis [v. Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439, 446

(Tenn. 1992))].

Myint, 970 S.W.2d at 927.

Over the years, “the Tennessee Supreme Court has shifted the balance to favor

awarding prejudgment interest whenever doing so will more fully compensate plaintiffs

for the loss of use of their funds.” Scholz, 40 S.W.3d at 83. In almost all cases, fairness

will “require that a successful plaintiff be fully compensated by the defendant for all losses

caused by the defendant, including the loss of use of money the plaintiff should have

received.” Id. “That is not to say that trial courts must grant prejudgment interest in

absolutely every case.” Id. Some equitable factors for the court’s consideration include:

“(1) promptness in the commencement of a claim, (2) unreasonable delay of the

proceedings by either party, (3) abusive litigation practices by either party, (4) the certainty

of the existence of an underlying obligation, (4) the certainty of the amount in dispute, and

(5) prior compensation for the lost time value of the plaintiff’s money.” Poole v. Union

Planters Bank, N.A., 337 S.W.3d 771, 791 (Tenn. Ct. App. 2010).

Here, the trial court’s stated reason for awarding but limiting the amount of

prejudgment interest was that “a number of factors” contributed to the lengthy delay in this

case and that it was not wholly attributable to Cook’s Roofing. The trial court did not

explain the significance of the starting date of September 16, 2016, and from our review of

the record, we cannot discern why the trial court chose that particular date. The order

simply states, “The date of September 16, 2016 is selected as the beginning date to

commence the calculation of interest as being equitable to the Plaintiff [Cook’s Roofing]

considering the entirety of the circumstances.” On appeal, Cook’s Roofing references

“successive vacancies in the office of Chancellor” that lasted until mid-2016. Chancellor

JoeDae Jenkins, who ultimately granted summary judgment and awarded prejudgment

interest, was elected in August 2016. Thus, when he began presiding over the case, it had

been pending since 2007. Hartford had admittedly completed its discovery in 2012, and

yet Hartford did not file its motion for summary judgment until October 2018, eleven years

after the case was filed. Once the motion was finally filed, the trial court entered an order

granting the motion only two months later.

The trial court is entitled to weigh the equities in determining the appropriate

amount of prejudgment interest. Varner Const. Co. v. Marrs, No. W2000-01029-COA-

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R3-CV, 2002 WL 818234, at *14 (Tenn. Ct. App. Apr. 18, 2002) (concluding that the trial

court did not abuse its discretion in declining to award interest for the entire duration of the

litigation when its “extraordinary” length supported limiting the award). “Our courts have

recognized that the trial courts can consider the unusual duration of litigation as a factor in

reducing prejudgment interest.” Harrison v. Laursen, 128 S.W.3d 204, 210 (Tenn. Ct.

App. 2003). The court “can deny prejudgment interest when both parties are responsible

for delays.” Id.

“Others cases have awarded prejudgment interest even in the face of delays,

especially where the delay was not wholly attributable to the plaintiff’s conduct.” Foster-

Henderson v. Memphis Health Ctr., Inc., 479 S.W.3d 214, 228 (Tenn. Ct. App. 2015). See,

e.g., Gen. Const. Contractors Ass’n, Inc. v. Greater St. Thomas Baptist Church, 107

S.W.3d 513, 526 (Tenn. Ct. App. 2002) (affirming an award during a two-year delay

attributable to the trial court, noting that “it may seem unjust to Appellant that the meter

continued to run on the accrual of interest during the time that the trial court held the case

under advisement, [but] it could be viewed as equally unjust to the Appellee to discount

this time in computing the total amount of damages due”).

Considering the long duration of this litigation and the fact that both parties and the

trial court were to some degree responsible for the delay, we cannot say that the trial court

abused its discretion in deciding to award prejudgment interest but limit the award to a

period of two years and at a rate of only one percent. See MSK Constr., Inc. v. Mayse

Constr. Co., No. E2014-00139-COA-R3-CV, 2014 WL 4826655, at *7 (Tenn. Ct. App.

Sept. 30, 2014) (“[T]he court’s decision to award prejudgment interest at a statutory rate

of 1 percent was wholly within the court’s discretion.”) “If a discretionary decision is

within a range of acceptable alternatives, we will not substitute our judgment for that of

the trial court simply because we may have chosen a different alternative.” 3L Commc’ns

L.L.C. v. Merola, No. M2012-02163-COA-R3-CV, 2013 WL 4803532, at *9 (Tenn. Ct.

App. Sept. 6, 2013) (citing White v. Vanderbilt Univ., 21 S.W.3d 215, 223 (Tenn. Ct. App.

1999)). We therefore affirm the award of prejudgment interest on the portion of the

judgment attributable to the 2005-2006 policy premium.

F. Piercing the Corporate Veil

The final issue raised by Hartford on appeal is whether the trial court erred in

denying its motion to enforce the judgment against the Cooks individually. To briefly

review the relevant timeline, the trial court entered summary judgment against Cook’s

Roofing in 2018, and Cook’s Roofing prematurely filed a notice of appeal before the trial

court resolved the issue of prejudgment interest. This Court entered an order directing the

appellant to obtain a final judgment. Before the outstanding issue of prejudgment interest

was resolved, Hartford also filed a motion to enforce the judgment against the Cooks

individually. According to the motion, Hartford had sought to execute on the judgment

and learned through post-judgment discovery that Cook’s Roofing had no assets. Hartford

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asserted that Mike and Rebecca Cook were the alter egos of Cook’s Roofing and that they

used the corporate form as a sham to perpetuate a fraud. Hartford claimed that they simply

closed the business and took the only corporate asset, a company vehicle, for their own

personal use. Hartford also asserted that the Cooks ignored corporate formalities and

operated the business from their home. Thus, Hartford asked the trial court to consider the

factors relevant to piercing the corporate veil and enter an order allowing it to execute the

judgment against the Cooks individually. Hartford submitted post-judgment deposition

testimony in support of its motion.

Cook’s Roofing filed a responsive brief in which it referenced the due process rights

of the individual “target defendants.” Cook’s Roofing argued that individuals could not

simply be added to a judgment without giving them “their day in court to defend their

rights.” Hartford filed an additional reply, claiming that it was appropriate to consider

whether to pierce the corporate veil in a post-judgment proceeding.16

After a hearing, the trial court denied the motion. The trial court found that the

Cooks had not been given an opportunity to defend on the alter ego theory, as there were

no pleadings giving notice of the same, no discovery, and no hearing on those issues.

Hartford filed a motion to alter or amend and indicated that it was “certainly agreeable” to

having an evidentiary hearing on the alter ego issue. However, the trial court denied the

motion.

It is not uncommon to encounter uncertainty as to the appropriate procedure for

pursuing a claim to pierce the corporate veil. Larry E. Parrish, P.C. v. Strong, No. M2017-

02451-COA-R3-CV, 2018 WL 6843402, at *14 (Tenn. Ct. App. Dec. 28, 2018) perm. app.

denied (Tenn. July 25, 2019) (McBrayer, J., dissenting). “‘[N]either state nor federal

procedure is uniform in how veil-piercing cases are adjudicated.’” Id. (quoting Sam F.

Halabi, Veil-Piercing's Procedure, 67 Rutgers U. L. Rev. 1001, 1006 (2015)). In various

jurisdictions, “‘[v]eil-piercing claims run the gamut from free-standing causes of action . .

. to affirmative defenses to . . . equitable remedies enforced at the end of litigation.’” Id.

(quoting Halabi, 67 Rutgers U. L. Rev. at 1016).

In Tennessee, the claim has been pursued in various ways. For instance, in Boles v.

National Development Co., 175 S.W.3d 226, 231-32 (Tenn. Ct. App. 2005), the plaintiffs

filed suit against a corporation and later amended their complaint to add its alleged alter

ego, Clyde Engle. In that particular case, because of the complexity of the issues, the trial

was bifurcated into two hearings. Id. at 232. The first phase was limited to the plaintiffs’

claim for damages against the corporation. Id. After they were awarded a judgment for

compensatory damages against the corporation, the second phase of the trial was limited

to the plaintiffs’ claim that Clyde Engle was the alter ego of the corporation and thus

16

The reply filed by Hartford states that the Cooks also filed a separate response individually,

asserting their due process rights. However, it does not appear to be in the record on appeal.

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personally liable for the damages assessed against the corporation. Id. Following an

evidentiary hearing, the trial court pierced the corporate veil and held Engle personally

liable for the judgment. Id. at 236. As Boles illustrates, “it is common for a plaintiff to

bring suit against a closely held corporation and a sole shareholder individually in the same

action, and to obtain judgments against both defendants.” Oceanics Sch., Inc. v. Operation

Sea Cruise, Inc., No. 03A01-9904-CV-00153, 1999 WL 1059678, at *3 (Tenn. Ct. App.

Nov. 19, 1999).

In some cases, however, the veil-piercing issue has been pursued in a separate

action. For example, in Oceanics, 1999 WL 1059678, at *2, a foreign judgment was

domesticated in Tennessee, but upon execution, no assets of the corporation were found.

A year after the domestication, the plaintiff filed a motion to amend the complaint to add

an individual as an additional party-defendant. Id. According to plaintiff’s counsel,

plaintiff had no reason to suspect another defendant when suit was originally filed, and it

was not until post-judgment discovery that they learned facts about the individual’s

involvement that supported the alter ego theory. Id. at *3. Still, the trial court denied the

request to amend the complaint because the judgment in the domestication proceeding had

already become final. Id. at *4. This Court affirmed, emphasizing that the motion to amend

the complaint came “long after the judgment was final.” Id. We explained that “if [the

plaintiff] now wishes to proceed against [the individual] in an attempt to pierce the

corporate veil, a separate action must be commenced by filing a separate complaint against

[the individual] on that claim.” Id. at *2. The plaintiff did just that. The plaintiff filed a

separate action against the alleged alter ego of the corporation, seeking to pierce the

corporate veil and enforce the corporate judgment against the individual. See Oceanics

Sch., Inc. v. Barbour, 112 S.W.3d 135, 137 (Tenn. Ct. App. 2003) (“Oceanics II”). In that

separate case, the trial court found that the individual was in fact the alter ego of the

corporation and allowed the plaintiff to pierce the corporate veil. This Court affirmed. Id.

More recently, in Larry E. Parrish, P.C. v. Strong, No. M2017-02451-COA-R3-

CV, 2018 WL 6843402 (Tenn. Ct. App. Dec. 28, 2018) perm. app. denied (Tenn. July 25,

2019), this Court examined the actions taken in Boles and Oceanics. In the Parrish case,

the litigation was already bifurcated into two phases for the consideration of compensatory

and punitive damages. Id. at *2. After a jury awarded the plaintiff compensatory damages

during phase one, but before the second phase of trial was set, the plaintiff filed a motion

to hold an individual personally liable for the damages assessed against the corporate

defendant. Id. at *2-3. The trial court denied the motion, noting the procedural posture of

the case and that the compensatory damage phase had already been completed. Id. at *11.

The trial court noted that the plaintiff would still have available to her a post-judgment

remedy of suing the individual in a separate action to pierce the corporate veil. Id. at *12.

The trial court acknowledged that this course “might not be the most efficient judicial use

of resources” but reasoned that it was “the most responsible” given that there were no

pleadings alleging alter ego theories but only a motion to substitute the individual as a

party. Id. On appeal, this Court held that the trial court erred “in failing to hold a hearing

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on the issue of piercing the corporate veil.” Id. at *1. We considered the trial court’s due

process concerns to be “misplaced,” explaining that “it comports with due process for a

court to exercise jurisdiction over an individual who is an alter ego of a corporation subject

to the personal jurisdiction of the court.” Id. at *12. We also noted that only the

compensatory damage phase of the bifurcated proceeding had been completed when the

motion was filed. Id. at *13. Thus, we explained that the court could have employed a

procedure similar to that used in Boles, where the plaintiff had amended the complaint to

add the alleged alter ego and the court held a second hearing to determine whether to pierce

the corporate veil. Id. As such, we vacated the trial court’s decision and remanded for a

hearing and determination in accordance with the applicable factors for piercing the

corporate veil. Id.

Judge Neal McBrayer dissented from the majority opinion in Parrish, concluding

that the timing of the motion regarding piercing the corporate veil weighed in favor of its

denial. Id. at *14. He noted that when the motion was filed, the liability and compensatory

damages phase had concluded, and therefore, the introduction of the new question of

personal liability served to delay matters and created “a host of other issues.” Id. (By the

time the veil question was adjudicated, twelve months had expired since the jurors were

first summoned for jury service, and the trial court determined that it did not have

jurisdiction to re-empanel the same jury.) Id. at *3. Judge McBrayer believed that the trial

court “took the best course” by proceeding with the punitive damage phase and leaving the

plaintiff to file a separate suit against the individual. Id. at *14.

Considering all of these opinions, we return to the facts of the case before us. The

trial court was apparently bothered by the same type of due process concerns that motivated

the trial court to deny the motion without a hearing in Parrish. Indeed, in the case at bar,

when the trial court considered the post-judgment motion to enforce the judgment against

the Cooks individually, the only remaining issue was prejudgment interest. The trial court

had disposed of all claims by way of summary judgment. At that time, no motions or

pleadings had been filed seeking to add the Cooks as parties individually. However, our

consideration of the issues on appeal has led to a different procedural posture that requires

a remand for reconsideration of various issues. We have determined that it is necessary for

the trial court to reconsider the motion to amend the complaint in order to give a reasoned

explanation for its decision, and we have reversed the entry of summary judgment on

Hartford’s counterclaim as it relates to the 2006-2007 policy period. Both of those issues

will require further proceedings on remand. In light of this development, we conclude that

the trial court should also consider the issue of piercing the corporate veil on remand. As

we said in Parrish, because the proceedings are still ongoing, the trial court can employ a

procedure like that utilized in Boles, permitting amendment of the pleadings to add alleged

alter egos and holding a separate evidentiary hearing to determine whether to pierce the

corporate veil. Id. at *13. We therefore reverse the trial court’s denial of the motion to

enforce the judgment against the Cooks individually and remand for additional proceedings

on that issue.

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IV. CONCLUSION

For the aforementioned reasons, we affirm the decision of the chancery court in part,

we reverse in part, and we remand for further proceedings consistent with this opinion.

Costs of this appeal are taxed equally to the appellant, Cook’s Roofing Inc., and to the

appellee, Hartford Underwriters Insurance Company, for which execution may issue if

necessary.

_________________________________

CARMA DENNIS MCGEE, JUDGE

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