### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON Septem ber 19, 200 2 Session SHERI M. ENGLISH, ET AL 

### . v. CHRIS PRETTI, ET AL 

### . Direct Appeal from the Circuit Court for Shelby County No. 89929 T.D. John R. McCarroll, Jr., Judge

No. W2001-01657-COA-R3-CV - Filed October 24, 2002

The tria l court a warded summary judgmen t to the Plaintiffs’ u

ninsured motorist insurance carrier, finding that the carrier’s liability was offset by

the workers’ compensation award which the Plaintiff receiv ed for he

r injurie s. We aff

irm. Tenn. R. App.P. 3 Appeal as of Right ; Judgme nt of the Cir

cuit Cour

t Affirme d; and Remanded

D AV ID R. F ARMER , J., delivered the opinion of the court, in whichW. F RANK C RAWFORD , P.J., W.S., and H OLLY K. L ILLARD , J., joined. Joseph M. Sparkman, Southaven, Mississippi, for the appella nts, Sheri M. English and husband, David W. English.

Ro be rt M. Fa rg ar so n, Me mp hi s, Te nn es se e, fo r t he ap pe ll ee , A ll st at e In su ra nc e C om pa ny.
OPINION

The relevant facts in this case are undisputed. In S eptember of 1996, Sheri English was walking across a

lawn in a residential neighborhood of Memphis when a utility trailer disconnected from a motor vehicle operated by Chris Pretti. The trailer

was owned by

Glen Caldwell, a passenger in the motor vehicle. The trailer struck Ms. English, causing serious and permanent injuries. At the time of the injury, Ms. Eng lish was in the course and scope of her e mploy ment with T

rinity Health Care Services. She received worke rs’ compensation benefits of $106,675.92 for her injuries.

In September of 1997, Sheri English and her husband, David English, filed a complaint for negligence

against Chri s Pretti an d Glen Caldwell. Mr. English asserted an additional cause of action for loss o f consor

tium. Notic e was als o se rved on A llstate Insurance Co. (“Allstate”), the Engl ish es’ uninsured motorist carrier. Trinity Health Care Services intervened, alleg ing it was entitled to a subrogation lien under the Tennessee Worker s’ Compensation Statute. Dispu tes betweenthe Eng lishes an d Chris Pre tti, Glen Ca

ldwell and Trinity Hea

lth Care Services have been-2-

settled and are

not before

this Court. Allstate denied liability under the policy and was awarded summary judgmen t in the court below. The Englishes now appeal the award of summary judgme

nt to Allstate.
Issues Presented

The iss ue as presented by the Englishes for review by this Court is whether the trial cou r t erred b y a warding summary judgmen t to Allstat

e. We res tate the i ssues as: (1) Did the trial court err in determining that under the contra ct for insurance Allstate’s liability to Ms. English was offset by the worker s’ compe

nsation a mounts she received?
(2) Did the trial cou

rt err in determin ing that liability to Mr. Englishfor his loss of consortium damages was offset b y the worke rs’ comp ensation

award to Ms. English? Standard of Review

Our review of an award of summary

judgment is de novo , with no pr

esumption

of corr ectness accorded to the judgment of the trial court. Carvell v. B otto ms , 900 S.W.2d 23, 26 (Tenn. 1995). Summary judgment is appropriate where there is no g enuine issue regarding material facts relevant to a claim, and the moving party is entitled to a judgment as a matter of law. T enn. R. Civ. P. 56.04. In determining whether to award summary judgment, the court must view the evidence in the light most favora ble to the nonmoving

party , drawin g all re asonable infere nces in f avor of t hat part y. Staples v. CBL& Assoc. , 15 S.W.3d 83, 89 (Tenn. 2000). When a party make s a properly suppor ted motion for summary judgment, the burden sh ifts to the nonmoving party to e stablish the existence of disputed mater ial fac ts. Id. Summary judgmen t should be

awarde d only

when a r easonab le person could reach

only one conclusi on based

on the fa cts and in ferenc es draw n from tho se fact s. Id. Offset of Liability for Ms. English’s Injuries

The parties do not dispute that the Englishes’ uninsured motorist coverage with Allstate wa s limited to $100,000 for bodily injury to one person and $300 ,00 0 for all p ersons in one acc ident. T he li mita tion s sect ion o f the E nglis hes’ i nsura nce po licy wit h All state provi des th at cov erage amounts wi ll be offs et by recove ry receiv ed from o ther enu

merated sources . The section state s: Limitations of Liability 2. Da ma ge s p aya bl e w il l b e r ed uc ed by: a) all amounts paid by or on beha lf of the own er or operator of the uninsured auto , incl uding a n underin sured au

to or any

one else-3- responsi b le. This includes all sums paid under the bodily injury li ab il it y co ve ra ge of

th is or an y ot he r a ut o p ol ic y. b) all amounts paid or paya ble under any

workers compensation law, disability benefits law, or similar law, Automobile Medical Pa ym ents, or any similar medical payments cove rage under

this or an y ot her auto po li cy. If the accide

nt arises from the u se o f an uninsured motor vehicle, we aren’t

obli gated t o make any payment u nder t his co verage until the limits of

liability for all li ability

protect i on in effe ct and applica ble at the time of the ac cident h ave been exhausted by payment of judgments or settlements.

Allstate submits that the language of the policy provides that Allstate’s liability would be offset by a ny a mount paid

by w orkers’ compensation which, in this case, was greater than the policy maximum of $100,000 for a single injury . Such provisions limiting or reducing liability where other benefit s are av ailable a

re perm issible pur suant to Te

nn. Code A

nn. § 56-7 -1205, wh

ich rea ds:

Minimum

policy limits not increased. –- Nothing contained in th i s part shall be construedas requiring the formsof cover age pr ovided pu rsuant to this part, whether alone or in comb ination with similar c overag e affor ded unde r other a utomobile liability policies, to afford limits in excess of thos e that woul d be afforded had the insure d thereunder been involved in an accident with a motorist who wa s insured under a policy of liability in surance

with the min

imum l i mits described in §55-12- 107, or the uninsure d motorist liability limits of the insured’s policy if such limits are higher than the limits desc

ribed in §55-12 -107. Such forms of coverage may incl u de such terms, e

xclusions, l

imitations, co nditions, and o ffsets, which are designed to avoid duplication of insurance and other benefits. Tenn. Code Ann. § 56-7-1205 (2000)(emphasis added). Ms. English argues that the statute should be read in such a way

as to avoid duplication of damages, and that the offset provision accordingly

should apply to the amount of actua l damage s, rather than the amo unt of coverage. She contends that the code provision should be interpreted br oa dl y, and that such a broad coverage theory

would fulfill the legislative intent that aninsured be fully compensated f

or her injuries before an offset would occ ur.
When interpreting a legislative provision, this Court’s primary objective is to effectuate the purpose of the legislature. Lipscomb v. Doe , 32 S.W.3d 840, 844 (Tenn. 2000). Insofar as possible, the intent of the legislature should be determined by the natural and

ordinary meaning of the words used, and not

by a construction thatis forced or which limits or extends the meaning. Id. Likewise, the Court must

seek to ascertain the intended scope, neither e xtending nor restricting that intended by the leg isla ture. State v. Morrow , 75 S .W.3 d 919, 921(T enn. 2 002) ( citi ng State v. Sliger, 846 S.W.2d 262, 263 (Tenn. 1993)). Our interpretation must not render any part of a leg islat ive act “inoperative, superfluous, void or insignificant.” Id. (quot ing Tidwell v. Collins , 522 S.W.2d 674,-4-

676-77 (Tenn. 1975)). Rather, we seek to give effec t to the legislature’s over-arching purpose. Me r rimack Mut. Fire Ins. Co. v. Batts , 59 S .W.3 d 142, 151 (T enn. C t. App . 2001 ). In so d oing,
we must interpret the statute involved reason ably, b earing in mind its objective, the harm it seeks to avoid, and the purp oses it seeks to promote. Voss v . Shelter Mut

. Ins. Co. , 958 S.W.2d 342, 345 (Tenn. Ct. App. 1997).

The cou rt s of this state have interpreted the legislative intent of Tenn. Code A nn. § 56-7-1205 section as providing less than broad coverag e. Terr y v. Aetna Cas. & Sur. Co. , 510 S.W.2d 509 (Tenn. 1974); Shambely v. W alls , 600 S.W.2d 247 (Tenn. Ct. App. 1980). We have also held that policy provi sion s whic h redu ce cove rage where other coverage or bene fits are available are valid as long as they

do not den

y pa yme nt s to the insured of less than the minimum required by statute. Terry , 510 S.W.2d at 513; Mathis v. Stacey , 606 S.W.2d 290 (Tenn. Ct. App. 1980). This Court has had recent occasion to revisit policies containing identica l offset provisions in Green v. United States Automobile Ass’n , No. E2000-02713-COA-R3-CV, 2001 Tenn . App. L EXIS 603 (Ten

n. Ct. App. Aug. 16, 2001 ) (no pe rm. app. filed ) and Akin v. Thompson , No. M2001-00851-COA-R3- CV, 2 002 Tenn. App. LEXIS 494 (Tenn. Ct. App. July 12, 2002)( perm. app. pe

nding ). In

both cases, we reiterated our interpretation of the statute as permitting clauses which provide that an insurer’s liability pursuant to an uninsured motorist provision may be offs et by

other be nefits received, including workers’ c ompensation benefits.

The Englishe s argue

that the n arrow in

terpre ta tion of t he uninsured motorist statutes as promulgated

in Terry has been abrogated by subsequent amendme nts to the statutes, which reflect
a legislative intent that the provisions be interpreted broadly . We agree with this contention insofar
as it is applicable to much of the statutory sche me. In Alcazarv. Hayes , the supreme court addressed the issue of whether an insured could recover under the terms of his uninsured motorist policy whe n he fa il ed to co mp ly with the not ice provisions of that policy. Alcazar v. Hayes , 982 S.W.2d 845 (Tenn. 1998). Utilizing a broad coverage a pproach, the court he

ld that the policy could be e nforced despite untimely notice wher e the carrier had not been pre judiced by the dela

y. Id. at 853.

The Alcazar court addressed three rationales in its re-e xamination of the con s istently held
common law approach that notice is a condi tion p recedent to recovery under an insurance policy regar dless of prejudice to the carrier. Id. at 849-850. The court addressed the adhesive na ture of contracts for insurance , the publ ic policy g oals of compensating tort victims, and “the inequity of the in surer r eceivi ng a windfall due to a technicality .” Id. at 850. Noting that “stare decisis is not

. . . a universal inexorable command,” the court rejected the traditional common law approach and joined th e m aj or it y of

ju ri sd ic ti on s i n h ol di ng th at re co ve ry u nd er th e p ol ic y w as possibl e despite delayed notice wh

ere the insuranc e carr

ier had n ot been pr

ejudice d by

th e dela y. Id. at 852-853 (quoting City of Memphis v. Overton , 392 S.W.2d 98, 100 (Tenn. 1965)(quo ting Burn et v. Coronado Oil & Gas Co. , 285 U.S. 393 (1932))).

In Albin v. City of Memphis , this Court addressed the issue of whether an insurer can, by express terms in

the insurance policy , exclude uninsured/underinsured coverage for self- insured and government-owned

vehicles. Albin v. City of Memphis , Shelby Law # 24, 1988 Tenn. App . LEX IS-5-

537 (Tenn. Ct. A pp. Aug. 24, 1988)(no perm. app. filed ). Upon examination of the 1982 amendme nts to the Unin sured Mot

orist Act , we held

that the la nguag e utilized in the ame nded stat ute indicatedthat the legislatu re no long er inten ded to all ow an insu rer toexclude c overag e for ac cidents involving uninsured/underinsured motorists by limiting the def inition of an uninsuredmotor veh

icle in its policy. Id. at *6. In Albin , we noted that the defendant insurance ca rrier relied for support upon Terry for

the propo sition that

the uninsu

red motor ist provisi ons should b e narro wly construed. Id. We rejected this contention, holding that in enacting the 1982 amendments the legislature “took
a signific ant step to ward join ing the majority

of the sta

tes i n providing

broad un insured m

otorist coverage.” Id. at *5 (citing, Cf
. Terry v. Aetna Cas. & Sur. Co. , 510 S.W.2d 509, 513 (Tenn. 1974)). Notwithstanding this trend, we areunable to extend the

rationa le embrac ing bro ad cov erage as found in Albin and Alcazarto the issue of whether the offset languag e as found in Tenn. Code Ann. § 56-7-1205 should be construed to prevent duplication of damage s rather thancov era ge. In Terry , the supreme court specifically addressed the question of whether the word “duplication” as used in then Tenn. Code Ann. § 56-1152 (currently Tenn. Code Ann. § 56 -7-1205)refer red to d uplication of damages or coverag e. Terry , 510 S.W.2d at 509. In so doing, the court sou ght t o reconc ile its decision in State Farm Mutual Aut omobile Insurance Co. v. Barnette , 485 S.W.2d 545 (Tenn. 1 972) with i

ts earlie r holding in Shoffner v. State Farm Mutual Automobile Insurance Co. , 494 S.W.2d 756 (Tenn. 1972). Id. The court noted,
[u]nder a r evie w of these cases th ere ar ises a pos sibility

of confl ict when t

hese decisions are app lied to a d iffere nt set of f acts. The solution to this problem requires that we come to grips with the legislative purpose contained in T.C.A. § 56-1152, as a section of our uninsured motorist statute. Terry , 510 S.W.2d at 513. The Terry court discussed two approaches to offset provisions contained in uninsure d motorist

policies. Id. Under the first theory , which the court recognized as being the broadcovera

ge app roach e mbrace d by

a majorit y of jurisdi ctions, uninsured motorist statutes were interpreted

to provide

for full covera ge up to the polic y lim

its so long as the pay

ments did not exceed the actual damages

. Id. The second theory provides for limited coverage, under w hich set-off provisions in a policy opera te to reduce coverage

by amounts received

from other sources. Id. The court noted that although the first approach is the majority approac

h in jurisdictions having similar uninsured motorist statutes, the Tennessee statute is distinguished by the provisions of Tenn. Code Ann. § 56-7-1205. Id. The court ac cordingly held that the enactment of Tenn. Code Ann. § 56-7- 1205 reflected a legislative purpose to p rovi de an insured motorist a right of recovery under the uninsured motorist provisions of his policy only up to the statutory require d minimum . . . and pr

ovisions in

such polic ies . . . ope

rating to reduce coverage

where other covera ge or b enefits a

re avai lable to

the insuredarising from accident causing the loss, are val

id if such provision s do not ope

rate to deny pay ments to the insured of less tha

n the statu

tory minimum.-6-

Terry v. Aetna Cas. & Sur. Co. , 510 S.W.2d 509, 513-14 (1974).

The Englishes contend that in light of legislative amendmen ts to the un insured m

otorist statutes, recent judicial opinions, and the inferences to be drawn from applica tion of the made-whole doctrine to subrog ati on rights, the holding of the Supreme Court in Terry no longe r refle cts Tennessee public pol

icy . The publ

ic policy of this state is “ found in

its constitution, statutes, judicial decisions and applicable rules of common law.” Alcazar , 982 S .W.2 d at 85 1 (quo ting State ex re l. Swann v. Pack , 527 S.W.2d 99 ( Te nn. 1975) ). It is primar

ily t he funct ion of the legisla ture to determine public policy. Id. However, the judiciary may make public policy

determinations in the absence of constitutional or legislative directives. Id. In Terry , the Supreme Court interpreted the code as enacted by

the legislature as permitting insurance carrie rs to include provisions that provide for the offs et cover

ages in their uninsured motorist provisions. In Hudson v. Hudson Municipal Contractors

, Inc. , the c ourt reiterated the holding of Terry as applied to workers’ compensation benefit s, stating, “it is cl ear that an in sured pa

rty ’s righ t to reco ver unde

r an unins ured moto

rist p ol icy that contains a setoff provision . . . may be reduced by

the amount that the insured has collected, or could collect, under theW orkers’ Compensation Law.” Hudson v. Hud son Mun. Contractors

, Inc. , 898 S.W.2d 187, 189 (Tenn. 1995). Although the Hudson Court did not addres s the issue of whether this interpret ation c ontinues to reflect public policy in lig ht of legislative enactme nts since Terry , the holding of Terry clearly remains t he law of this state. We a

dditionall y notethat the legislatu

re has ha d nearly thirty ye ars to re

visethe statut

e in ligh t of the su preme court’s holding in Terry , and has declined to do so. In the absence of a legislative directive, the holding of the supreme court is controlling precedent which ma y not be disturbed by this Court. The judgment of the trial court accordingly is affirmed on this issue. Mr. English’s Loss of Cons ortium Claim

The Englishes contend that the trial court erred

in award ing summa

ry judgmen t to Allstat

e agains tDavid

English for his loss of consortium. They argue that Mr. English’s cause of action is
a separate and distinct claim for which h e is entitl ed to compensation. As we understand the Englishe s’ argument, they submit that since Mr. English has a distinct and separate cause of action, his injuries are independently compensable under the policy of insurance, notwithstanding any offset resulting from workers’ compensation benefits to Ms. English. Since worke rs’ compensation benefit s to Ms. Eng lish do not c omp e nsate Mr. English for his loss of consortium, those damages should be covered by

the uninsured motorist coverage.

Allstate contends that Mr. English’s claim arises out o f Ms. E nglis h’s in jurie s. Ci ting Green , supra , Allstate argues that the $100,000 per injury policy limitation provides the maximum amount of liability for all damag es which derive as a consequence of the one phy sical inju

ry . Allstate

further
a rgues that the contractual language of the policy re

lieves it of liability for any amount pai d b y worker s’ compensa

tion for th at bodily

injur y. Since the worke rs’ compensation award was over $100,00, Allstate submits that its liability has been completely offset.

The “L imits of L iability ” sectio n of the A

llstate po licy

provides :-7-

1. The coverage limit shown on the declara tions page for: a) “each p erson” is the maximum that we will pay for damages arising out of bodily injury for one person in any

one motor vehicle accident, including all damages sustained by anyone else as a result of

that bodily injury

. In gener al, contr acts of in surance

are con strued by

the cour ts according to the gener

al rules of contract construction. Tennesse e Farmers Mut. Ins. Co. v . Witt , 857 S.W.2d 26, 30-32 (Tenn. 1993). When call ed upon to interpre t a contrac t, courts seek to ascertain the intent of the parties throu gh the natural and ordinary meaning of the words em ploy ed. Guiliano v. Cleo, Inc. , 995 S.W.2d 88, 95 (Tenn. 1999). The courts of this state recognize, however, that contracts of insurance
are not generally

negotiated contracts in the traditional sense. Alcazar v. Hayes , 982 S.W.2d 845, 850 (Tenn. 1 998). The

y a re in reality contra

cts of adhesion, the provisions of which are determined by the insurer. Id. at 851. Thus we resolve any ambiguity in a

contract of insurance in favor of the insured. Id.

The provision

in the Allstate policy of insuranc e noted above clearly is not ambiguous. The $100,000 per injury cove rage is themaximum liability Allstate contracted to incur as the result of any one bodily injury , including damages sustained by anyone e lse as a r es ul t o f t ha t b od il y in ju ry. While Mr. Eng lish has a

separa te and distinct cause

of actio n again st the tort

feasor s in this ca se, his injuries are not covered under the policy of insurance where

the ma xim um cov erage has been offset by the work

ers’ co mpensatio n benefi ts rece ived by Ms. Engl

ish. As note

d above, th e offs et provision in the insuranc e policy offsets coverage, not actual damages. The policy limits for injuries arising from the o ne injur y to Ms. English have been offset by the workers’ compensation award, notwithstanding Mr. English’ s separa te cause of actio n for lossof consor tium. The judgment of the trial court accordingly

is affirmed.
Conclusion

Allstate’s liability to Ms. English under the uninsured motorist provision in the contract of insurance has been offset by the workers’ compensation benefits whichMs. Engl

ish rece ived. L oss of consortium damages suffered by M r. English as a r

esult of in juries to M s. Englis h are sub ject to the contractual limitation of $100,000 per bodily injury . Allstate’s liability for loss of consortium damage s, therefore, likewise is offset by the worker s’ compe

nsation a ward to Ms

. English. In light of the foregoing, the judgme nt of the trial court awardingsummary judgme nt to Allstate is affirmed. Costs of this ap

peal ar e taxed to th

e Appella nts, Sheri M. Englis h and husb and, Dav id W. English, and their surety, f

or which execution may issue if necessary
.

__________________________________ DAVID R. FARMER, JUDGE