Court Rules for Insured After Agent's Mistake

The Tennessee Supreme Court ruled today that an insurance company must provide vehicle liability insurance coverage to the insured as he requested from his insurance company’s agent but did not receive because of a mistake by the agent. Learn more from the Administrative Office of the Court about Allstate Insurance Company v. Diana Lynn Tarrant and read the dissenting opinion from Justice William Koch and Chief Justice Cornelia Clark.

TN Supreme Court reviews whether an insurer properly changed a policy from a commercial policy to a personal policy

ALLSTATE INSURANCE COMPANY v. DIANA LYNN TARRANT ET AL. (Tenn. March 26, 2012)

After an automobile accident between the insured’s van and a motorcycle, the insurer filed a declaratory judgment action to determine whether the van was covered under a commercial policy with a liability limit of $500,000 or a personal policy with liability limits of $100,000 per person and $300,000 per accident. The insurer alleged that before the accident the insured had instructed his insurance agent to transfer the van from the commercial policy to the personal policy. The insured denied this and alleged that he had instructed the agent to retain the van on the commercial policy.

The trial court ruled that because the insurer had sent the insured a letter and premium bills showing the change in coverage and the insured had paid the bills without objection, he had ratified the transfer and the van was covered under the personal policy. The Court of Appeals reversed.

We hold that the action of the insurance agent in transferring the van to the personal policy was not subject to ratification by the insured because the insurance agent was not acting in the insured’s stead or for his benefit when it made the transfer. We further hold that the insurer is estopped from denying coverage under the commercial policy. We affirm the judgment of the Court of Appeals, although on different grounds.

Opinion available at:
https://www.tba.org/sites/default/files/allstate_032612.pdf

Koch, dissenting opinion:
https://www.tba.org/sites/default/files/allstate_DIS_032612.pdf

Court reviews whether plaintiff's misrepresentations in his application for disability benefits increased an insurance company's risk of loss

ROY L. LAWHON, v. MOUNTAIN LIFE INSURANCE COMPANY (Tenn. Ct. App. November 21, 2011)

Plaintiff made claim for credit disability insurance coverage after he became disabled, and defendant insurance company denied benefits on the grounds of misrepresentations in the application for insurance, which he had executed. The Trial Court ruled in favor of plaintiff on the grounds that misrepresentations in the application did not increase the risk of loss. On appeal, we reverse the Trial Court's Judgment because the misrepresentations contained in the application for insurance increase defendant's risk of loss under the statute.

Full opinion is available at:
http://www.tba2.org/tba_files/TCA/2011/lawhonr_112111.pdf

TN Supreme Court reviews an uninsured motorist policy with limits lower than the statutory amount

RANDALL D. KISER v. IAN J. WOLFE ET AL. (Tenn. August 24, 2011)

The plaintiff, an employee of the insured, was injured while driving the insured's tow truck. He filed suit against the defendant and later sought to invoke the insured's uninsured motorist policy in an amount equal to the liability coverage for bodily injury. The insurer filed a motion for partial summary judgment, seeking to limit uninsured motorist coverage to the amount listed on the first page of the policy rather than the amount otherwise fixed by statute. The trial court denied the motion, but the Court of Appeals reversed.

We affirm the judgment of the Court of Appeals, holding that the insured was entitled to a partial summary judgment. When the insured signs an application indicating the selection of uninsured motorist coverage lower than the liability limits, but neglects to initial a provision designed to confirm the selection of coverage less than the standard provided by statute, the "in writing" requirement under Tennessee Code Annotated section 56-7-1201(a)(2) (2008) has been satisfied. The cause is remanded to the trial court for the entry of partial summary judgment and such other proceedings, as may be necessary.

Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/kiserr_082411.pdf

LEE concurring in part and dissenting in part:
http://www.tba2.org/tba_files/TSC/2011/kiserr_CON_082411.pdf

The Adams Law Firm Obtains Verdict for Family Accused of Arson by Allstate

In July 2005, Peter and Tracy Fagan awoke to smoke and flames in their Sevierville, Tennessee home.  They called 911 and tried to contain the fire with a fire extinguisher, but the home burned to the ground.  They lost everything they owned including their children's pets, clothing and toys; family photos; personal and business records; and an uninsured Corvette Stingray which was located in the basement.  The Fagans determined, and always contended, that the fire smoldered and ignited after Mrs. Fagan fell asleep while smoking on the first floor of the home before she retired to bed upstairs.

After the fire, Tracy Fagan, who was an Allstate insurance agent, filed a claim under her Allstate homeowner's policy for the insured contents of the home.  Instead of paying the claim, Allstate, within 48 hours of the fire, hired a fire origin expert and a private investigator and began an investigation of the Fagan family.  In 2006, Allstate denied the claim alleging that the Fagans intentionally set the fire for financial gain due their finances and marital problems.

In fact, at the time of the fire, the Fagans owned approximately $1 million worth of real properties and had near perfect credit.  All their mortgages were current and they had recently been approved for purchase of another rental property.

When the Fagans sued Allstate for payment of their claim, Allstate counter-sued them for bringing the claim and requested that the Fagans be ordered to reimburse Allstate for the company's $40,000 in expert and litigation costs plus its attorney's fees.

In late October 2010, after a 3 day trial in U.S. District Court for the Eastern District of Tennessee, a jury returned a verdict in favor of the Fagans.  The jury found that the Fagans did not set fire to their home and awarded them the full $193,778 due under their homeowner's policy.  The jury denied Allstate's counter suit against the Fagans.

The Fagans were represented by Adams Law Firm attorneys Meridith Bond and Bryan Capps.  The firm is proud to add the Fagans to the long list of clients we have helped in their exhausting fight against major insurance companies.

Court reviews a ruling about insurance coverage of a van involved in an accident.

ALLSTATE INSURANCE COMPANY, v. DIANA LYNN TARRANT, et al. (Tenn. Ct. App. October 21, 2010)

Plaintiff insurer brought this declaratory judgment action to determine which of the two policies issued to defendants insured and their corporation, covered a van which had been involved in an accident. Plaintiff named the insureds as defendants, as well as the third party who had filed a tort action against the insureds for personal injuries.

The Trial Court conducted an evidentiary hearing and ruled that the insureds had told the agency plaintiff to keep the van in dispute on the commercial policy, but it had transferred the van to the insureds' personal policy. The Court further ruled that a notice of the transfer was sent to the insureds by plaintiff, and plaintiff sent at least five bills to the insureds that reflected the van was then insured under the personal policy and not the commercial policy. The Court concluded that the insureds ratified the change and ruled that the van was insured under the insureds personal policy. On appeal, we reverse and dismiss the action.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/allstateins_102110.pdf

Court reviews dismissal of a wrongful death action in an insurance liability case.

MARY F. LAWSON v. BRAD LAWSON (Tenn. Ct. App. September 30, 2010)

Uninsured motorist carrier voluntarily tendered the limits of its liability coverage into the probate proceeding administering the decedent's estate and not in the wrongful death tort action. The trial court dismissed the carrier from this wrongful death tort action since it had tendered its limits of liability. We find the dismissal was in error since any voluntary tender of insurance proceeds for wrongful death should be made into the wrongful death tort case, and tendering the limits elsewhere is not grounds for dismissal.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2010/lawsonm_093010.pdf

Court Reviews Insurance Coverage in a Case Involving an Uninsured Motorist

FLOYD L. FLETCHER, ET AL. v. ASHLEY R. WHITE, ET AL. (Tenn. Ct. App. September 22, 2010)

Mr. Fletcher, who was injured in an automobile accident involving an uninsured motorist, sued the insurance company after it denied uninsured motorist benefits under his towing policy. Insurance company filed a motion for summary judgment claiming that the towing policy did not provide uninsured motorist coverage for Mr. Fletcher's accident because it involved a non-covered auto. After a hearing on the motion, the trial court granted summary judgment to the insurance company. Mr. and Mrs. Fletcher appeal. We affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/fletcherf_092210.pdf

Court Reviews Liability and a Directed Verdict Ruling in a Property Insurance Case

ENGLISH MOUNTAIN RETREAT, LLC, ET AL. v. SUSANNE CRUSENBERRY-GREGG, ET AL. (Tenn. Ct. App. September 21, 2010)

Plaintiffs purchased property insurance from defendants. The insured building was destroyed by a fire and plaintiffs received the full coverage limit. Nonetheless, plaintiffs sued defendants claiming that the building was under-insured and that they relied on the defendants' negligent advice. A jury trial occurred and after the close of plaintiffs' proof, defendants moved for a directed verdict on all issues. The trial court granted defendants' motion and dismissed plaintiffs' complaint. Plaintiffs appeal. We find that a directed verdict is inappropriate because plaintiffs presented sufficient facts for a jury to decide liability. Therefore, we reverse the trial court's order and remand for a full trial.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/englishmountain_092110.pdf

Court Reviews Summary Judgment Ruling in an Insurance Case Involving Misrepresentation

CECILIA OWENSBY, ET AL. v. STATE FARM FIRE AND CASUALTY COMPANY, ET AL. (Tenn. Ct. App. September 15, 2010)

Cecilia and Charles Owensby had a homeowners insurance policy issued by State Farm Fire and Casualty Company ("State Farm"). After their house burned down, the Owensbys filed a claim pursuant to the policy. State Farm eventually denied the claim, asserting that Cecilia Owensby had made four material misrepresentations when applying for the insurance and that each of these misrepresentations increased State Farm's risk of loss. The plaintiffs asserted that any inaccurate information contained on the application was the fault of the insurance agent who filled out the application on Cecilia Owensby's behalf. The plaintiffs sued both State Farm and Darius Miller ("Miller"), the insurance agent. State Farm and Miller filed a motion for summary judgment, which the Trial Court granted. The plaintiffs appeal the grant of summary judgment. We modify the judgment of the Trial Court and, as modified, affirm the grant of summary judgment to the defendants.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/owensbyc_091510.pdf

Court considers an issue of uninsured motorist coverage in an interlocutory appeal

RANDALL D. KISER v. IAN J. WOLFE & CONSUMERS INSURANCE COMPANY (Tenn. Ct. App. May 28, 2010)

This interlocutory appeal considers an issue of uninsured motorist coverage following an automobile accident in which Plaintiff Randall D. Kiser was permanently injured. The plaintiff was working within the scope of his employment, driving for a towing company, when his truck was struck by Defendant Ian J. Wolfe's vehicle. The defendant driver tendered his liability policy limits to the plaintiff and is not a party to this appeal. The employer towing company was insured by Defendant Consumers Insurance Company. In anticipation of arbitration for determination of damages and liability, the insurance company moved for partial summary judgment.

The trial court denied summary judgment but granted the insurance company permission for an interlocutory appeal to determine two issues, on which we hold:
(1) On a policy of vehicle insurance, the statutory requirement of Tenn. Code Ann. section 56-7-1201(a)(2) for a written rejection of uninsured/underinsured motorist benefits or written selection of uninsured/underinsured motorist benefits lower than liability limits is met when the insured signs an application containing a lower selection but neglects to initial a block provided for that purpose; and
(2) the insurer bears the burden of proof to show that the insured signed an insurance contract application containing a stated limit of uninsured/underinsured motorist coverage, but once that burden has been met, the insured must raise any issue that the insurer obtained the insured's signature unlawfully under Tenn. Code Ann. section 56-7-1201(a)(2).

We vacate the trial court's denial of the insurance company's Motion for Partial Summary Judgment and remand for reconsideration in light of this holding.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/kiserr_052810.pdf

TCA examines insurer liability for uninsured motorist after automobile crash.

ANDREA S. MARTIN v. PATRICIA L. WILLIAMS, ET AL. (Tenn. Ct. App. July 30, 2009)

The central issue in this case is which of two insurance companies is required to provide uninsured motorist coverage to the Plaintiff, who was injured in an automobile accident. The trial court granted summary judgment to the company through which Plaintiff had automobile insurance, finding that the company insuring the automobile in which Plaintiff was a passenger held the primary policy. We reverse and remand.

The full text of this opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/martina_073009.pdf

Court reviews whether motorist insurance covers an injury obtained during a party

COLIN MARTIN v. MARY KATRINA DOUGHTIE AND GRANGE MUTUAL CASUALTY INSURANCE COMPANY (Tenn. Ct. App. January 5, 2010)

Guest who was injured during a party at residence where alcohol was consumed brought negligence action against the host. The guest also sued his uninsured/underinsured motorist carrier seeking payment under the policy. The trial court granted the insurance carrier's motion for summary judgment finding that the policy did not extend coverage under the circumstances. The trial court subsequently granted the host's motion for summary judgment finding that she owed no duty of care to the guest at the time of the injury. The guest appeals the trial court's action with respect to both defendants. Finding no error, we affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/martinc_010510.pdf