Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-02125/USCOURTS-ca8-14-02125-0/pdf.json

Parties Involved:
Orande Anderson
Not Party
Diamond S. Express, Inc.
Not Party
John Doe
Not Party
M. C. Mauney
Not Party
Christie McHone
Appellant
State Farm Mutual Automobile Insurance Company
Appellee
Thomas A. Young
Not Party

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-2125

___________________________

Christie McHone

lllllllllllllllllllll Plaintiff – Appellant

Orande Anderson

lllllllllllllllllllll Plaintiff

v.

State Farm Mutual Automobile Insurance Company

lllllllllllllllllllll Defendant – Appellee

Diamond S. Express, Inc.; John Doe, 1-3; M. C. Mauney, Individually and in His 

Capacity as Sole Shareholder, Officer and Director of Diamond S. Express, Inc.; 

Thomas A. Young, as Special Administrator For the Estate of Jessie D. Whirley, 

Deceased

lllllllllllllllllllll Defendants

____________

Appeal from United States District Court

for the Eastern District of Arkansas – Jonesboro

____________

Submitted: March 12, 2015

Filed: May 8, 2015

[Published]

____________

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-2-

Before MURPHY and SHEPHERD, Circuit Judges, and HARPOOL,1 District 

Judge.

____________

HARPOOL, District Judge.

Appellant, Christine McHone brought an action against State Farm Mutual 

Automobile Insurance Co. (“State Farm”) to recover uninsured motorist benefits 

pursuant to her personal policy of insurance issued by State Farm. State Farm 

moved for summary judgment on the basis that McHone was not entitled to 

uninsured motorist benefits under Tennessee law and the terms of her policy. 

McHone filed a counter-motion for summary judgment. The district court 2

granted State Farm’s motion for summary judgment and denied McHone’s 

counter-motion. We affirm.

I.

On December 15, 2008, a collision occurred between McHone and Jessie 

Whirley on Interstate 40 in West Memphis, Arkansas.3

 McHone was driving a 

2000 Pontiac Grand Prix when she was struck by a tractor trailer driven by Whirley 

and owned by Diamond S. Express, Inc. McHone, a Tennessee resident, was 

 1The Honorable Douglas Harpool, United States District Judge for the 

Western District of Missouri, sitting by designation.

2

The Honorable James M. Moody, United States District Judge for the Eastern 

District of Arkansas.

3

The material facts are largely undisputed and the issues raised in the 

summary judgment motions, and now on appeal, are based on the parties differing 

interpretations of the law. Nonetheless, the Court reviews the facts in a light most 

favorable to McHone. Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th 

Cir. 2005).

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insured by State Farm. McHone’s policy included coverage for uninsured motor 

vehicles with bodily injury limits of $100,000 for each person. The trucking 

company defendants were insured by Gramercy Insurance Company, with liability 

limits of $1,000,000. Both policies were in effect at the time of the collision.

As a result of the collision, McHone suffered bodily injuries, including back 

related injuries, and sustained medical bills exceeding $400,000. McHone also 

claims her treating physicians estimate future medical care that will exceed an 

additional $400,000. Consequently, McHone’s alleged damages exceed $800,000.

After the collision, McHone filed suit against Whirley, Diamond Express and 

its owner, M.C. Mauney.4

 The matter was scheduled for trial in February 2013. 

However, prior to trial, Gramercy Insurance Company was placed into 

Rehabilitation by an agreed upon order of the District Court of Travis County, 

Texas. The Texas court’s order, in part, appointed a rehabilitator and issued an 

automatic stay with respect to actions against any insured of Defendant for which 

Defendant was liable under a policy of insurance or was obligated to defend. The 

stay was ordered to continue for 90 days after the date of the order, or such further 

time as ordered by the court. As a result of the Texas court’s order, McHone’s 

lawsuit was stayed and the trial date was continued. 

On March 4, 2013, McHone’s counsel submitted a letter to State Farm 

outlining the problems with Gramercy and demanding $100,000 uninsured motorist 

benefits under McHone’s State Farm policy. On March 14, 2013, State Farm 

denied McHone’s claim and took the position that no coverage existed. At about 

the same time, McHone began negotiating with Gramercy’s receivership estate’s 

third party claims administrator. As a result of those negotiations, McHone agreed 

 4

McHone’s claims against Defendants Diamond Express Inc., Mauney and 

Young (special administrator for the estate of Jessie D. Whirley, deceased) were 

subsequently dismissed with prejudice on December 10, 2014.

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to settle her claims against Whirley, Diamond Express, and Young for $300,000. 

McHone argues the settlement was made in order to avoid the claim process with the 

applicable State Guarantee Fund and that the settlement was not based on available 

insurance.

In August 2013, Gramercy was liquidated and McHone informed State Farm 

of the settlement it reached with the receiver. State Farm again refused to pay 

uninsured motorist benefits under McHone’s policy. 

McHone’s State Farm policy states (in part):

If the Uninsured Motor Vehicle Coverage limits provided by this policy 

are greater than the minimum limits required by law, then such limits 

will be reduced by an amount equal to the sum of the limits of all 

liability insurance and liability bonds that apply to the accident are 

collectible to the insured.

Nonduplication: 

We will not pay under Uninsured Motor Vehicle Coverage any 

damages:

1. that have already been paid to or for the insured; 

a. by or on behalf of any person or organization who is or 

may be held legally liable for:

i. bodily injury to the insured; or

ii. property damage,

whether such damages are characterized as compensatory or punitive 

damages.

Joint Appendix at 170.

On May 21, 2013, McHone filed an Amended Complaint adding State Farm 

as a party and seeking to recover $100,000 in uninsured benefits, together with 

statutory penalties, interest and attorneys’ fees and litigation costs. State Farm 

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moved for summary judgment asserting McHone was not entitled to uninsured 

motorist benefits under Tennessee law and the terms of her policy. McHone filed a 

cross-motion for summary judgment asserting she was entitled to the uninsured 

motorist benefits. 

The District Court granted State Farm’s motion, finding State Farm was 

entitled to a credit of $300,000 based upon McHone’s settlement with Gramercy’s 

receivership, which exceeds the $100,000 uninsured motorist policy limits of her 

insurance policy. The District Court stated it was unnecessary to determine when 

Gramercy became insolvent for purposes of the insurance policy because State Farm 

is entitled to a credit for the settlement proceeds McHone received regardless of the 

date of insolvency.

II.

We review the district court’s grant of summary judgment de novo. 

Anderson v. Durham D & M, L.L.C., 606 F.3d 513, 518 (8th Cir. 2010). Summary 

judgment is proper if, viewing the record in the light most favorable to the 

non-moving party, there is no genuine dispute as to any material fact and the moving 

party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. 

v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). At issue 

is whether McHone is entitled to recover uninsured motorist benefits in the amount 

of $100,000 from State Farm pursuant to her insurance policy.

On appeal, McHone disputes the definition of the policy limits as defined by 

the district court. McHone argues the State Farm policy’s reference to “the 

minimum limits required by the law” actually refers to the legal requirement of

interstate carriers to have a minimum of $1,000,000 insurance coverage. 

Therefore, McHone’s position is the $300,000 she received from the receiver falls

short of the applicable minimum limits required by law.

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In defining the policy limits, the district court relied on Green v. Johnson, 249 

S.W.3d 313, 320 (Tenn. 2008).

5

 In doing so, the district court held State Farm is 

entitled to a credit for the $300,000 settlement McHone received from the Gramercy 

receivership; and therefore, McHone is not entitled to recover the $100,000 

uninsured benefits under her policy. We agree. The Tennessee Supreme Court 

has held an insurer is entitled 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. at 314. 

The relevant Tennessee statutes state: 

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).

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 § 55–12–107, or the uninsured motorist 

liability limits of the insured's policy if such limits are higher than the 

limits described in § 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.

 5

It is undisputed that McHone was a Tennessee resident and that Tennessee 

law applies to the provisions of her insurance policy with State Farm.

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Tenn. Code Ann. § 56–7–1205. 

The language of McHone’s State Farm policy states State Farm is not liable 

under its Uninsured Motor Vehicle Coverage for “any damages that have already 

been paid to or for the insured; by or on behalf of any person or organization who is 

or may be held legally liable for: bodily injury to the insured.” Here, we agree State 

Farm is entitled to a credit of $300,000 for the money McHone received from her 

settlement with Gramercy’s receivership. McHone’s argument that the credit is not 

applicable because the payment was made by the receivership rather than by 

Gramercy itself is unpersuasive and supported by neither the policy language nor 

Tennessee law. Id. Therefore, McHone is not entitled to recover under her 

uninsured motorist policy.

The district court found it was unnecessary to determine when Gramercy 

became insolvent. We agree. Under the facts presented, State Farm is entitled to a 

credit for the settlement proceeds McHone received regardless of the date of 

Gramercy’s insolvency.

Accordingly, we affirm the district court’s judgment in favor of State Farm.

______________________________

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