Opinion Instructs on Fees for a Wrongful Denial

By Sarah Byrne, staff attorney, Nashville

This past summer, the Appeals Board affirmed a denial of attorney’s fees on an alleged wrongful denial. It’s a cautionary tale about what can perish between expedited and compensation hearings, as “the lack of the expedited hearing transcript in the record on appeal prove[d] fatal.”

In Ruggieri v. Amazon.com, LLC, the trial court decided after a compensation hearing that June Ruggieri hadn’t proven Amazon denied her claim wrongfully “at this hearing and on this record.”

At her expedited hearing, though, Ruggieri had proven she would likely prevail at trial against Amazon’s notice defense. But the trial court properly delayed awarding her attorney’s fees in its interlocutory order, because as the Board has often pointed out, litigation evolves.

Indeed, Amazon had abandoned its notice defense by the compensation hearing. At trial, its counsel announced, “[We’re] not stipulating notice, but we’re not putting [up] a defense against it [either].”

Like dropping the rope in tug of war, Amazon’s apathy appeared like acquiescence. Except it wasn’t. Ruggieri still needed to prove Amazon denied her claim wrongfully to receive attorney’s fees under section 50-6-226(d)(1)(B).

Importantly, the trial court had excused written notice in its interlocutory ruling because testimony showed Amazon had received verbal notice instead. But without that testimony at the compensation hearing, the denial didn’t appear “wrongful,” meaning “erroneous, incorrect, or otherwise inconsistent with the law or facts” when denied.

“[When] the denial decision was made,” explained the Board about the record on appeal, “the only information available to [Amazon] was that the incident occurred more than fifteen days prior to [Ruggieri’s] written notice.”

Essentially, evidence at the compensation hearing suggested only that she gave late written notice, which seemingly supported Amazon’s denial, and crucially, failed to prove it was wrongful.

Also, the expedited hearing transcript was not in the technical record or exhibits, even though the trial court had cautioned the parties before trial to “testify again just like you are starting all over.”

“It is clear from the record,” wrote the Board, “that the trial court discussed the expedited hearing transcript with both parties, and [Ruggieri] was not only…aware but also agreed that it would not be included in the technical record. Moreover, it was not made an exhibit at trial.”

Additionally, the Board cited from Citadel Investments, inc. v. White Fox, Inc. to explain that the trial court couldn’t have simply taken judicial notice of Ruggieri’s previous testimony. Prior sworn testimony must be offered as evidence, objected to if appropriate, and then deemed admissible.

Neither does a document become part of the technical record just because it’s filed with the court clerk.

Ultimately, the lack of an expedited hearing transcript was the death knell for Ruggieri’s claim to attorney’s fees for the wrongful denial.

“[T]estimony from the expedited hearing,” the Board concluded, “that is not part of the technical record at trial, not reiterated during testimony at trial, and not part of the record on appeal will not be considered for purposes of our review.”

Ruggieri couldn’t rely on the trial court’s interlocutory ruling, either, for three reasons, according to the Board.

First, the standards of proof differ between expedited and compensation hearings. In its interlocutory ruling, the trial court hadn’t used a preponderance of the evidence standard, as required at a compensation hearing, to find Ruggieri had a reasonable excuse for neglecting written notice.

Second, “the trial court did not conclude at the expedited hearing,” wrote the Board, “and we did not address in the scope of the first appeal, whether [Amazon’s] decision to deny the claim was wrongful at the time the decision was made.”

Third, findings of fact and conclusions of law from an expedited hearing aren’t binding at a compensation hearing given the disparate standards of proof.

In sum, “[t]he parties to an appeal have the responsibility to ensure a complete record on appeal[,]” and “the trial court did not abuse its discretion by declining to award attorneys’ fees under these circumstances.”

A reliable takeaway concerning attorneys’ fees on a wrongful denial: “ensure a complete record on appeal,” and “testify again just like you are starting all over.”