IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
January 8, 2008 Session
LISA DAWN GREEN ET AL. v. VICKI RENEE JOHNSON ET AL.
Appeal by permission from the Court of Appeals, Eastern Section
Circuit Court for Knox County
No. 2-601-02 Harold Wimberly, Judge
No. E2006-02666-SC-R11-CV - Filed March 13, 2008
We granted permission to appeal in this case to determine whether an uninsured motorist carrier may
reduce amounts owed under an uninsured motorist provision by the amount of settlement proceeds
an insured receives from a non-motorist defendant. Because the uninsured motorist statutes, codified
at Tennessee Code Annotated sections 56-7-1201 to -1206, unambiguously allow an uninsured
motorist carrier to limit its liability by “the sum of the limits collectible under all liability and/or
primary uninsured motorist insurance polices, bonds, and securities applicable to the bodily injury
or death of the insured,” Tenn. Code Ann. § 56-7-1201(d), and to receive an offset or credit for “the
total amount of damages collected by the insured from all parties alleged to be liable for the bodily
injury or death of the insured,” id. §1206(i), we conclude that the uninsured motorist carrier in this
case is entitled to an offset for the monies the insured received from the non-motorist defendants.
Accordingly, we affirm the decisions of the trial court and Court of Appeals.
Tenn. R. App. P. 11; Judgment of the Court of Appeals Affirmed
CORNELIA A. CLARK , J., delivered the opinion of the court, in which WILLIAM M. BARKER, C.J., and
JANICE M. HOLDER , GARY R. WADE, and WILLIAM C. KOCH , JR., JJ., joined.
Annie S. Duncan and C. Edward Daniel, Knoxville, Tennessee, for the appellants, Lisa Dawn Green,
Ronald Keith Green, Dustin Dillard Green, Hunter Green, and Kyra Green.
Dallas T. Reynolds, Knoxville, Tennessee, for the appellee, State Farm Mutual Automobile
Insurance Company.1
1
State Farm Mutual Automobile Insurance Company is the only defendant participating in this appeal.
OPINION
Factual and Procedural History
The material facts of this case are not in dispute. Just after 3:00 a.m. on September 28, 2002,
Lisa Green (“Mrs. Green”) was struck by an automobile while walking in a marked crosswalk at the
intersection of Cumberland Avenue and Nineteenth Street in Knoxville.2 Vicki Johnson, the
eighteen-year-old driver of the vehicle, was intoxicated when she ran a red light and struck Mrs.
Green. Tabatha3 Connor, a passenger and co-owner of the vehicle, was also intoxicated. Both Ms.
Johnson and Ms. Connor had previously been drinking at The Pub, a local tavern near the scene of
the accident.
Seeking compensation for their injuries, on October 9, 2002, Mrs. Green, her husband, and
their minor children filed suit against: Ms. Johnson; Tabatha Connor and Carroll Blankenship, the
alleged owners of the vehicle; KJC of Knoxville, Inc., d/b/a The Pub; and Chad Matthew Corcoran
and Stuart Jason Myers, employees at The Pub who sold Ms. Johnson and Ms. Connor alcohol. The
Greens alleged that, under the doctrines of negligence, agency, and comparative fault and pursuant
to the Dram Shop statutes, Tenn. Code Ann. §§ 57-10-101, -102 (2004), The Pub, its employees,
Vicki Johnson, Tabatha Connor, and Carroll Blankenship were all liable for their injuries.
On May 27, 2005, an Order of Default Judgment was entered against Ms. Johnson and Ms.
Connor.4 Included in the Order was the trial court’s determination that Mrs. Green was entitled to
compensatory damages in the amount of $3,650,000.00 and punitive damages in the amount of
$1,000,000.00. Additionally, the trial court determined that Ms. Johnson and Ms. Connor were 65%
at fault and The Pub, Mr. Corcoran, and Mr. Myers were 35% at fault.5 Finally, the trial court noted
that The Pub and its employees had entered into a settlement with the Greens (“the Settlement”)6 and
2
In her complaint, M rs. Green, a City of Knoxville police officer, asserts that she was on-duty at the time of
the accident. There is, however, no further reference to her work status in the record and no information pertaining to
a workers’ compensation claim.
3
Ms. Connor’s first name is spelled “Tabitha” and “Tabatha” in the pleadings. W e will use “Tabatha” since
that is the spelling found in the complaint and in the Order of Default Judgment against Ms. Connor.
4
It is unclear from the record on appeal how the claims against Carroll Blankenship, the alleged co-owner of
the vehicle, were resolved.
5
This allocation of fault was applicable only to the compensatory damage award.
6
Although the Order did not set forth the Settlement amount, the parties agree that the amount was equal to or
greater than $50,000.00.
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that all matters pertaining to uninsured motorist benefits and whether Ms. Johnson and Ms. Connor
were uninsured were reserved for a later hearing.7
At the time of the accident, the Greens carried an insurance policy (“the Policy”) with State
Farm Mutual Automobile Insurance Company (“State Farm”). The Policy included uninsured motor
vehicle coverage, the limits of liability being $50,000.00 per person, $100,000.00 per accident.8 The
Policy covered the “compensatory damages for bodily injury an insured is legally entitled to collect
from the owner or driver of an uninsured motor vehicle.” The Policy also stated that “[i]f the limits
of liability under this [policy] are the minimum limits required by law, . . . any amount payable under
this section shall be reduced by any amount paid or payable to or for the insured: (a) by or for any
person or organization who is or may be held legally liable for the bodily injury . . . sustained by the
insured.” (emphases added).
Pursuant to the Policy, on August 28, 2006, State Farm filed a motion for summary judgment
on the grounds that it had been relieved of all liability under the terms of the Policy.9 Although
conceding that neither Ms. Johnson nor Ms. Connor had automobile insurance at the time of the
accident and, as such, that the Policy was applicable, State Farm asserted that: (1) its “total
exposure” under the Policy was $50,000.00; (2) the Greens’ settlement proceeds from other sources
were equal to or greater than $50,000.00; and (3) pursuant to the uninsured motorists statutes, it was
entitled to offset, or reduce its coverage amount by, any amounts the Greens collected from all other
liable parties. State Farm argued that, because the $50,000.00 limit of liability due under the Policy
should be offset by the $50,000.00 or more the Greens received from the Settlement, it was relieved
of all obligations under the Policy and therefore was entitled to summary judgment as a matter of
law.
The trial court agreed and granted State Farm’s motion for summary judgment. The Greens
appealed, arguing that, pursuant to Tennessee Code Annotated sections 56-7-1202(a)10 and -120511
7
During the course of discovery, it was determined that neither Ms. Johnson nor Ms. Connor had automobile
insurance coverage.
8
Because Mrs. Green was the only member under the Green family policy involved in the accident, State Farm’s
limit of liability in this case is $50,000.00.
9
Although State Farm was not a named party in the original complaint, pursuant to Tennessee Code Annotated
section 56-7-1206(a) (2000), “[a]ny insured intending to rely on the coverage required by [Tennessee Code Annotated
sections 56-7-1201 to -1206] shall, if any action is instituted against the owner and operator of an uninsured motor
vehicle, serve a copy of the process upon the insurance company issuing the policy in the manner prescribed by law, as
though such insurance company were a party defendant. Such company shall thereafter have the right to file pleadings
and take other action allowable by law in the name of the owner and operator of the uninsured motor vehicle or in its own
name . . . .”
10
Tennessee Code Annotated section 56-7-1202(a) states: “‘uninsured motor vehicle’ means a motor vehicle
whose ownership, maintenance, or use has resulted in the bodily injury, death, or damage to property of an insured, and
for which the sum of the limits of liability available to the insured under all valid and collectible insurance policies,
(continued...)
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(2000) and Sherer v. Linginfelter, 29 S.W.3d 451 (Tenn. 2000), State Farm “has subrogation or set
off [sic] rights only as to payments made on behalf of an uninsured/underinsured motorist.”
(emphasis added). Because the Settlement was to compensate them for non-motorists’ liabilities,
the Greens argued that State Farm could not reduce its liability under the Policy. The Court of
Appeals, however, found the Greens’ reliance on Sherer misplaced and their interpretation of
Tennessee Code Annotated section 56-7-1205 unpersuasive. Instead, the Court of Appeals held that
prior appellate decisions discussing the uninsured motorist statutes clearly allow State Farm to
reduce the amount owed under the Policy by the amounts the Greens received from the Settlement.
We granted the Greens’ application for permission to appeal to determine whether an
uninsured motorist carrier may reduce its liability under an uninsured motorist provision of an
automobile insurance policy by the amount of settlement proceeds received by the insured from a
non-motorist defendant, who is alleged to share responsibility for the bodily injury of the insured.
Standard of Review
The trial court’s grant of summary judgment, predicated on its interpretation of the uninsured
motorist statutes, Tenn. Code Ann. §§ 56-7-1201 to -1206, is purely a question of law. Cumulus
Broad., Inc. v. Shim, 226 S.W.3d 366, 373 (Tenn. 2007); Mooney v. Sneed, 30 S.W.3d 304, 306
(Tenn. 2000). Accordingly, our review is de novo, and no presumption of correctness attaches to
the lower courts’ judgments. Cumulus Broad., 226 S.W.3d at 373. A grant of summary judgment,
however, is appropriate when there is no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04.
Analysis
In their appeal to this Court, the Greens contend that no offset should be allowed in this case
because the Settlement proceeds are from non-motorist defendants. They argue that it would be
contrary to the intent of the legislature to allow an uninsured motorist carrier to receive an offset for
amounts received from parties other than “owners or operators of uninsured motor vehicles.” Tenn.
Code Ann. § 56-7-1201(a). To support their argument, the Greens cite to Sherer v. Linginfelter, 29
S.W.3d 451 and Tennessee Code Annotated section 56-7-1205.
Sherer v. Linginfelter
10
(...continued)
bonds, and securities applicable to the bodily injury, death, or damage to property is less than the applicable limits of
uninsured motorist coverage provided to the insured under the policy against which the claim is made.”
11
Tennessee Code Annotated section 56-7-1205, in pertinent part, states: “[n]othing contained in this part shall
be construed as requiring the forms of coverage provided pursuant to this part, whether alone or in combination with
similar coverage afforded under other automobile liability policies, to afford limits in excess of those that would be
afforded had the insured thereunder been involved in an accident with a motorist who was insured under a policy of
liability insurance . . . . Such forms of coverage may include such terms, exclusions, limitations, conditions, and offsets,
which are designed to avoid duplication of insurance and other benefits.”
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The Greens first cite to this Court’s holding in Sherer that the uninsured motorist coverage
provisions are for “the protection of persons insured thereunder who are legally entitled to recover
compensatory damages from owners or operators of uninsured motor vehicles because of bodily
injury.” Sherer, 90 S.W.3d at 454 (citing Tenn. Code Ann. § 56-7-1201(a)) (emphasis added). As
the Greens reason, because the amounts they received from the Settlement are not from owners or
operators of uninsured motor vehicles, it would be contrary to the intent of the General Assembly
to allow State Farm to offset its liability by those amounts. We disagree.
In Sherer, this Court held, pursuant to Tennessee Code Annotated sections 56-7-1201(a) and
-1204 (2000), that an uninsured motorist carrier’s subrogation rights are limited to only those injuries
for which the provider made payment to the insured. 29 S.W.3d at 454. More specifically, the
Greens argue that the Sherer Court did not allow the uninsured motorist carrier to limit its liability
by the amounts the insured received from a non-motorist tortfeasor. Id. However, the Greens’
reliance on Sherer is misplaced. First, Sherer dealt with an insurer’s subrogation rights pursuant to
Tennessee Code Annotated section 56-7-1204.12 Id. The instant case does not involve subrogation;
therefore, section 1204 is not applicable. Second, Sherer dealt with damages recoverable in a
products liability action for “enhanced injuries.”13 Id. at 453. Such injuries are not at issue in the
instant case. For these reasons, Sherer is not helpful to our resolution of this case.
Instead, we find this Court’s holding in Poper ex rel. Poper v. Rollins, 90 S.W.3d 682 (Tenn.
2002), to be dispositive. In Poper, a motorist died from injuries she sustained in a multi-vehicle
accident. The decedent’s husband filed wrongful death actions against the drivers of the vehicles
involved and a products liability suit against the manufacturer of the decedent’s automobile, General
Motors Corporation (“GM”). Similar to the facts in the case presently before this Court, the
decedent’s husband entered into settlement agreements with several defendants. Specifically, the
husband received $130,000.00 from all but one of the drivers involved in the accident and
$400,000.00 from GM, a non-motorist defendant. The remaining defendant, who had a liability
limit of $10,000.00 under his automobile insurance policy, offered to settle through his insurer for
the full policy amount. Rejecting the offer, decedent’s husband filed suit against his wife’s
uninsured motorist carrier arguing that it “was liable for the amount by which its limits on uninsured
motorist liability ($100,000.00) exceeded the limits of liability under [the defendant’s] insurance
policy ($10,000.00).” Id. at 683. The uninsured motorist carrier, however, denied liability arguing
that it had no further obligation under the policy because the amounts the decedent’s husband
received from the settlements ($530,000.00) exceeded the limits of liability under the policy
($100,000.00). The trial court and Court of Appeals agreed with the uninsured motorist carrier and
12
Tennessee Code Annotated section 56-7-1204 is titled “Payment by insuror - Subrogation.” Thus, this
section’s application is limited to instances where an insuror has made “payment to any person under the coverage
required by [the uninsured motorist statutes].” Id.
13
In Sherer, “enhanced injuries” were characterized as “injuries that were actually and proximately caused by
[a] defective product.” 29 S.W .3d at 455 n.1. Additionally, although discussing the application of comparative fault
principles, the Sherer Court explained that these principles applied when “the defective product did not cause or
contribute to the underlying accident but did cause ‘enhanced injuries.’” Id. at 455.
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held that, pursuant to Tennessee Code Annotated section 56-7-1201(d) (2000), “the total settlement
recovery received by [decedent’s husband] could be used to offset [the uninsured motorist carrier’s]
liability under the uninsured motorist policy.” Id. at 684 (emphasis omitted).
On appeal, this Court held that the uninsured motorist statutes unambiguously allow “an
uninsured motorist insurance carrier to limit its liability by offsetting ‘all liability and/or primary
uninsured motorist insurance polices, bonds, and securities applicable to the bodily injury or death
of the insured.’” Id. at 685 (quoting Tenn. Code Ann. § 56-7-1201(d)) (emphasis in original).
Moreover, this Court held that the system of comparative fault, as adopted in McIntyre v. Balentine,
833 S.W.2d 52 (Tenn. 1992), did not affect the unambiguous language of these statutes. Id. at 687;
see Erwin v. Rose, 980 S.W.2d 203, 207 (Tenn. Ct. App. 1998) (stating that “[w]hile McIntryre v.
Balentine did abolish joint liability, we do not think it changed the statutes that govern uninsured-
underinsured motorist insurance or the private contract policy provisions that have been consistently
construed to give the insurance company the credit it seeks”).
When dealing with statutory construction, this Court is “‘to ascertain and give effect to’ the
legislative purpose without unduly restricting or expanding a statute’s coverage beyond its intended
scope.” Poper, 90 S.W.3d at 684 (citing Mooney, 30 S.W.3d at 306). It is not for this Court to
question the wisdom of a statutory scheme, but instead, to construe and apply the law as written.
Carson Creek Vacation Resorts, Inc. v. Dept. of Revenue, 865 S.W.2d 1, 2 (Tenn. 1993). We
determine legislative intent by applying “the natural and ordinary meaning of the language” without
forcing or conjuring an interpretation that expands or limits its application. Id. Moreover, this Court
“presume[s] that the legislature says in a statute what it means and means in a statute what it says
there.” Gleaves v. Checker Cab Transit Corp., 15 S.W.3d 799, 803 (Tenn. 2000) (quoting BellSouth
Telecomms., Inc. v. Greer, 972 S.W.2d 663, 673 (Tenn Ct. App. 1997)).
The language of the uninsured motorist statutes was unambiguous at the time Poper was
decided, and it is unambiguous now. The General Assembly has made no distinction between
motorist and non-motorist tortfeasors in determining what offsets uninsured motorist carriers are
entitled to receive. Contrary to the Greens’ argument that there should be a distinction between
monies received from “owners and operators of uninsured motorist vehicles” as compared to non-
motorist tortfeasors, subsection 56-7-1201(d) specifically entitles uninsured motorist carriers to limit
their liability by “the sum of the limits collectible under all liability and/or primary uninsured
motorist insurance policies, bonds, and securities applicable to the bodily injury or death of the
insured.” Tenn. Code Ann. § 56-7-1201(d) (emphasis added). Therefore, applying the plain
meaning of section 56-7-1201(d) to this case, State Farm clearly and unambiguously is allowed to
offset any amounts the Greens received from the Settlement against the amounts owed under the
Policy. And, because the Greens’ settlement proceeds were equal to or greater than State Farm’s
limit of liability under the Policy, State Farm has no remaining liability. Accordingly, the trial court
and Court of Appeals correctly granted State Farms’ motion for summary judgment.
Although our holding in Poper was predicated on our finding that the uninsured motorist
statutes are unambiguous, any doubt as to the intended meaning of the statutes was removed by the
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General Assembly subsequent to its release. In 1999, the legislature amended the uninsured motorist
statutes by adding several subsections to section 56-7-1206. Act of June 17, 1999, 1999 Tenn. Pub.
Acts ch. 506, § 1. Included in these subsections is the following language:
The uninsured motorist insurance carrier shall be entitled to credit for the total
amount of damages collected by the insured from all parties alleged to be liable for
the bodily injury or death of the insured whether obtained by settlement or judgment
and whether characterized as compensatory or punitive damages.
Tenn. Code Ann. § 56-7-1206(i) (2000) (emphasis added). While this Court has never previously
addressed the intent or stated purpose of this subsection, in our view, the language is clear and
unambiguous.14 Uninsured motorist coverage providers are entitled to a “credit15 for the total amount
of damages collected by the insured from all parties alleged to be liable . . . .” Id. (emphasis added).
In adding this language, the legislature reiterated that there is to be no distinction between motorist
and non-motorist tortfeasors in determining what credits uninsured motorist carriers are entitled to
receive. Again, contrary to the Greens’ argument that there should be a distinction between monies
received from owners and operators of uninsured motorist vehicles as compared to non-motorist
tortfeasors, subsection (i) specifically entitles uninsured motorist carriers to offset the amounts due
under the uninsured motor vehicle policy provisions by “the total amount of damages collected by
the insured from all parties alleged to be liable.” Id. (emphases added). Moreover, this subsection
explicitly states that “the total amount” leading to a credit includes monies from settlements or
judgments, whether characterized as compensatory or punitive. Id. Therefore, applying the plain
meaning of section 56-7-1206(i) to this case, even in the absence of subsection 56-7-1201(d), State
Farm clearly and unambiguously is allowed to offset any amounts the Greens received from the
Settlement against the amounts owed under the Policy.
Tennessee Code Annotated section 56-7-1205 (2000)
14
In Poper, this Court recognized that the General Assembly had amended the uninsured motorist statutes by
incorporating the language codified at section 56-7-1206(i). 90 S.W .3d at 685 n.2. However, we did not rely on the
amended language there because the amendment did not take effect until after the commencement of the case.
15
Although the question before this Court is whether State Farm is entitled to “offsets” rather than “credits,”
these words, in the context of uninsured motorist statutes, are interchangeable. See Erwin, 980 S.W .2d at 207 (holding
that the adoption of comparative fault did not change the statutes governing uninsured-underinsured motorist policy
provisions “that have been consistently construed to give [insurance companies] the credit [they] seek[]”); see also Am.
Universal Ins. Co. v. DelGreco, 530 A.2d 171, 173 (Conn. 1987) (finding, in discussion of an uninsured motor coverage
provider’s entitlement to two setoffs, that “[t]he parties stipulated that the [uninsured motorist carrier] is entitled to a
credit [in the first instance]”); Shatzer v. Globe Am. Cas. Co., 639 N.W .2d 1, 4-5 (Iowa 2001) (stating, in discussion of
cases where credits and reductions had been granted to the uninsured motorist coverage provider, that “[i]n each case,
we permitted [an] offset of benefits”); Vassiliu v. Daimler Chrysler Corp., 839 A.2d 863, 866 (N.J. 2004) (holding,
where determining whether uninsured motorist carriers are entitled to a credit for settlement amounts received by an
insured from a non-motorist tortfeasor, that uninsured motorist policies “include provisions concerning whether
[uninsured motorist] carriers are entitled to credits or setoffs for settlements”).
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Next, without addressing either Tennessee Code Annotated sections 56-7-1201(d) or -
1206(i), the Greens argue that allowing State Farm to offset the Settlement amounts against the
amounts owed under the Policy is contrary to Tennessee Code Annotated section 56-7-1205, which
provides:
Nothing contained in this part shall be construed as requiring the forms of
coverage provided pursuant to this part, whether alone or in combination with similar
coverage afforded under other automobile liability policies, to afford limits in excess
of those that would be afforded had the insured thereunder been involved in an
accident with a motorist who was insured under a policy of liability insurance with
the minimum limits described in [section] 55-12-107, or the uninsured motorist
liability limits of the insured’s policy if such limits are higher than the limits
described in [section] 55-12-107. Such forms of coverage may include such terms,
exclusions, limitations, conditions, and offsets, which are designed to avoid
duplication of insurance and other benefits.
Tenn. Code Ann. § 56-7-1205 (emphasis added).
The Greens assert that the plain language of this section allows an uninsured motorist carrier
to include offset provisions in its policies only to prevent an insured from receiving a duplication of
payments with respect to owners and operators of uninsured motor vehicles. That is, the Greens
surmise that the legislature’s intent to allow offsets “to avoid duplication” is limited to the narrow
circumstance in which an insured: (1) is injured or suffers property damage as a result of an accident
with an uninsured motor vehicle; (2) is nonetheless able to recover monies from the owner and/or
operator of the uninsured motor vehicle; and (3) then attempts to recover the maximum limits of
liability from the uninsured motorist carrier pursuant to the terms of the uninsured motorist policy.
Applying the Greens’ interpretation of section 56-7-1205 to the facts in this case, State Farm would
only be able to offset monies the Greens received from Ms. Johnson and Ms. Connor. This
interpretation of the statute, however, is not in accordance with well-established case law.
In Terry v. Aetna Casualty & Surety Co., 510 S.W.2d 509, 513 (Tenn. 1974), we addressed
the legislative purpose of section 56-7-1205, originally enacted as Tennessee Code Annotated section
56-1152 (1967), as follows:
Under our research there appears [sic] to be two theories in regard to offset
provisions in policies containing uninsured motorist coverage based on the legislative
intent in the enactment of uninsured motorist statutes. The first theory is based on
a finding the legislative purpose of such statutes is to provide full coverage up to the
policy limits so long as payments under the uninsured motorist coverage, plus any
payments received from other sources, do not exceed insured’s actual damage. This
is termed broad coverage and any offsets in the policies inhibiting such full coverage
are held void. The second theory is based on a finding the legislative purpose of such
statutes is to provide insured a recovery only up to the statutory minimum required
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without regard to insured’s actual damages, unless such be less than the statutory
minimum. This is termed limited coverage and under such, by virtue of set-off [sic]
provisions in a policy, an insured’s statutory minimum coverage can be reduced by
amounts received from other sources.
Taking these two theories into consideration and comparing the language of section 56-7-1205 with
that of uninsured motorist statutes adopted by other states, this Court determined that enactment of
this section “denote[d] a legislative purpose to provide less than broad coverage.”16 Id. Accordingly,
this Court held:
[B]y the enactment of [Tennessee Code Annotated section 56-7-1205] as a section
of our uninsured motorist statutes, it is the legislative purpose to provide an insured
motorist a right of recovery under the uninsured motorist provisions of his policy
only up to the statutory required minimum ([Tennessee Code Annotated section 56-
12-107 (2000), originally section 56-1148 (1967)]), and provisions in such policies,
approved by the Commissioner of Insurance, operating to reduce such coverage
where other coverage or benefits are available to the insured arising from accident
causing the loss, are valid if such provisions do not operate to deny payments to an
insured of less than the statutory minimum.
Id. at 513-14.
The following year, this Court again addressed section 56-7-1205 in State Automobile
Mutual Insurance Co. v. Cummings, 519 S.W.2d 773 (Tenn. 1975). In Cummings, we stated that
“[w]hile we do not applaud either the draftsmanship or the existence of [Tennessee Code Annotated
section 56-7-1205], we must give it the effect that its reasonable construction demands.” Id. at 775.
Accordingly, we held that “section [56-7-1205] must be construed as authorizing policy provisions
that may validly limit the recovery of a tort victim insured by uninsured motorist coverage to a
maximum collection of [the minimum statutory limit] (or the policy limits) from all insurance or
other benefits available to [the insured].” Id.
Although this Court has addressed section 56-7-1205 several times since Cummings, see
Hudson v. Hudson Municipal Contractors, Inc., 898 S.W.2d 187 (Tenn. 1995); Tata v. Nichols, 848
S.W.2d 649 (Tenn. 1993); Rogers v. Tennessee Farmers Mutual Insurance Co., 620 S.W.2d 476,
482-83 (Tenn. 1981) (Brock, J., dissenting), the discussion of the section in each case was limited
to issues not presently before this Court. The Court of Appeals, however, has addressed a factual
scenario similar to the one in the present case, and found, consistent with this Court’s holdings in
Terry and Cummings, that:
16
The effect of the General Assembly’s decision to provide “less than broad coverage” allows uninsured
motorist carriers to avoid paying benefits under coverage for which an insured has paid premiums, as long as the insured
can collect those benefits elsewhere-even though this practice can leave the insured far less than “whole.”
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[Tennessee Code Annotated section] 56-7-1205 [] permits the insuror, by contract,
to offset its liability to the insured by whatever amount of money from whatever
source the insured may receive it, if the money from the outside source would be a
duplication of the amount agreed to be paid by the insuror.
Erwin, 980 S.W.2d at 209 (quoting Thompson v. Parker, 606 S.W.2d 538, 540 (Tenn. Ct. App.
1980)) (emphasis added).17
Although the language of section 56-7-1205 has been slightly altered18 since our holdings in
Terry and Cummings, the legislative purpose of this section has not changed. Each of these cases
makes clear that the legislature’s intent is to allow uninsured motorist carriers to limit their liability
when an insured is able to collect monies elsewhere, no matter the source. Moreover, taking into
consideration amendments to this section, and other sections of the uninsured motorist statutes, see
Tenn. Code Ann. §§ 56-7-1201(d), -1206(i), our findings in Terry and Cummings have been
reaffirmed by the actions of the General Assembly. For this reason, we do not agree with the
Greens’ argument that section 56-7-1205 prevents State Farm from providing in the Policy a
provision allowing it to offset its liability by the amounts the Greens received from the Settlement.
Rather, in light of our legislature’s intent, the monies the Greens received in the Settlement from the
non-motorist defendants, which arose out of an accident caused by an uninsured motor vehicle, are
“duplicative” of the monies owed by State Farm under the Policy, and therefore, are subject to setoff.
Conclusion
Tennessee Code Annotated section 56-7-1201(d) unambiguously allows an uninsured
motorist carrier to limit its liability by “the sum of the limits collectible under all liability and/or
primary uninsured motorist insurance polices, bonds, and securities applicable to the bodily injury
or death of the insured.” Tennessee Code Annotated section 56-7-1206(i) clearly allows for an offset
or credit for “the total amount of damages” received by the insured from “all parties alleged to be
liable.” Therefore, pursuant to the uninsured motorist statutes, Tennessee Code Annotated sections
17
In Erwin, the insured, who had a $100,000.00 limit of liability under her parents’ uninsured motorist policy,
was killed when a police officer lost control of his vehicle during a high speed chase and hit the insured’s car head on.
The driver of the vehicle being pursued by the police had a $25,000.00 limit of liability automobile policy. The insured’s
parents collected $25,000.00 from the defendant driver and an additional $130,000.00 from the county in which the
police officer was employed. The insured’s parents brought suit against their uninsured motorist carrier arguing that they
were entitled to receive $75,000.00 from the carrier, this amount being equal to their limit of liability ($100,000.00) less
the amount received from the underinsured defendant driver ($25,000.00). Both the trial court and Court of Appeals
disagreed with the insured’s parents, however, and instead found that the uninsured motorist carrier could offset its
liability by the total amounts received from the defendant driver and the county. 980 S.W .2d at 207.
18
In 1974, the General Assembly added language to section 56-7-1205 to clarify that an insured had uninsured
motorist coverage for both uninsured and underinsured motorists. Compare Tenn. Code Ann. § 56-7-1205 (1968), with
Tenn. Code Ann. § 56-7-1205 (2000) (which includes the additional clause “or the uninsured motorist liability limits of
the insured’s policy if such limits are higher than the limits described in section 55-12-107”).
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56-7-1201 to -1206, State Farm is entitled to a credit or offset equal to the Greens’ Settlement
proceeds. Because the Settlement proceeds are equal to or greater than State Farm’s limit of liability
under the Policy, State Farm’s liability in this case is extinguished. Therefore, we affirm the trial
court and Court of Appeals’ grants of summary judgment to State Farm. Costs of this appeal are
assessed to the Greens, and their surety, for which execution may issue if necessary.
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CORNELIA A. CLARK, JUSTICE
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