In a matter of first impression the Tennessee Supreme Court held on April 26, 2021 that Tennessee law, as it currently stands, does not permit a general contractor to privately file a cause of action against an insurance company for failing to include the contractor as a payee on an insurance proceeds check to an insured.
There is a Tennessee statute directly on point – Tenn. Code Ann. section 56-7-111, but this statute does not give a private right cause of action. Instead, the statute creates a criminal penalty (Class C misdemeanor) for failing to issue a check.
The case is Affordable Construction Services, Inc. v. Auto-Owners Insurance Company, et al., (Tenn. Apr. 26, 2021).
General contractors will be disappointed by this ruling, without question. If you have questions about contracting and construction law and litigation, please reach out to us by EMAILING HERE.