IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

September 15, 2020 Session

ALVIN LEWIS v. STATE FARM

Appeal from the Circuit Court for Tipton County

No. 6601 Joe H. Walker, III, Judge

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No. W2019-01493-COA-R3-CV

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Appellant was injured in an automobile accident, and a jury found that an unknown 

motorist was 100% at fault and awarded damages in favor of Appellant. Thereafter, the 

trial court denied Appellant prejudgment interest on its finding that Appellant’s uninsured 

automobile insurance policy with Appellee State Farm Mutual Automobile Insurance 

Company precludes an award of prejudgment interest. We conclude that the policy 

language “all damages” is sufficiently broad to include prejudgment interest. However, 

because the award of prejudgment interest is an equitable consideration within the 

discretion of the trial court, we decline to address Appellant’s issue concerning whether 

prejudgment interest is necessary and equitable in this case. This question is remanded to 

the trial court. Vacated and remanded.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Vacated and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which J. STEVEN 

STAFFORD, P.J., W.S., and CARMA DENNIS MCGEE, J., joined.

Glenn Keith Vines, Jr., Memphis, Tennessee, for the appellant, Alvin Lewis.

Melanie M. Stewart, Memphis, Tennessee, for the appellee, State Farm Mutual 

Automobile Insurance Company.

11/05/2020
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OPINION

I. Background

On July 19, 2008, Appellant Alvin Lewis was seriously injured in a car accident 

involving Appellant and an unknown driver. A witness to the accident, George Parker, 

corroborated that an unknown motorist caused the accident and left the scene. The 

vehicle Appellant was driving was owned by his brother and was insured by Nationwide 

Insurance, with uninsured motorist coverage limits of $50,000.00. Appellant was also 

personally insured by Appellee State Farm Mutual Automobile Insurance Company 

(“State Farm”), with uninsured motorist coverage of $500,000.00 per accident. 

On July 17, 2009, Appellant filed suit against unknown motorist John Doe and 

served Nationwide and State Farm pursuant to Tennessee Code Annotated section 56-7-

1206.1 Appellant agreed to settle with Nationwide for the policy limits of $50,000.00. 

On July 1, 2011, State Farm filed an offer of judgment, wherein it offered Appellant 

$25,000.00 plus costs. The parties entered mediation, where State Farm withdrew its 

initial offer and offered $5,000.00.

Appellant’s case was tried to a jury on March 6 and 7, 2019. The jury found that 

the unknown motorist was 100% at fault for Appellant’s accident and entered judgment 

in favor of Appellant for $275,000.00. The trial court entered judgment on the jury 

verdict on March 7, 2019. 

 

1 The statute provides, in relevant part:

a) Any insured intending to rely on the [uninsured motorist] coverage required by this 

part 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 the insurance company were a 

party defendant. The 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; provided, that nothing in this subsection 

(a) shall prevent the owner or operator from employing counsel of the owner’s own 

choice; and provided, further, that the evidence of service upon the insurance carrier 

shall not be made a part of the record.

b) If the owner or operator of any motor vehicle that causes bodily injury or property 

damage to a person insured under this part is unknown and if the insured satisfies all 

of the requirements of § 56-7-1201(e), should suit be instituted, the insured shall 

issue a John Doe warrant against the unknown owner or operator in order to come 

within the coverage of the owner’s uninsured motorist policy. If the uninsured 

motorist’s identity and whereabouts are discovered during the pendency of the 

proceeding, subsection (e) shall govern the proper course of action following the 

discovery.
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As discussed in further detail below, on April 8, 2019, Appellant filed a post-trial 

motion for prejudgment interest. In addition to the State Farm insurance policy, 

Appellant relied on Tennessee Code Annotated section 47-14-123 in support of his claim 

for prejudgment interest. By order of July 26, 2019, the trial court denied Appellant’s 

motion, and he appeals.

II. Issues

Appellant raises two issues for review as stated in his brief:

1. Whether State Farm’s automobile insurance contract with Appellant 

pertaining to underinsured motorist coverage excludes prejudgment 

interest?

2. Whether an award of prejudgment interest is equitable under the facts 

and circumstances of this case and if so, the amount that should be 

awarded?

III. Standard of Review

The foremost principle that guides the court to award or deny prejudgment interest 

is the principle of equity. Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998) 

superseded by statute in part as recognized in Lindenberg v. Jackson Nat. Life Ins. Co., 

912 F.3d 348 (6th Cir. 2018). In arriving at an equitable decision, a court must keep in 

mind that the purpose of awarding prejudgment interest is to fully compensate a plaintiff 

for the loss of the use of funds to which the plaintiff was legally entitled. Myint, 970 

S.W.2d at 927. As such, “[a]n award of prejudgment interest is within the sound 

discretion of the trial court and the decision will not be disturbed by an appellate court

unless the record reveals a manifest and palpable abuse of discretion.” Id. (citing

Spencer v. A–1 Crane Service, Inc., 880 S.W.2d 938, 944 (Tenn. 1994); Otis v. 

Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439, 446 (Tenn. 1992)). An abuse of 

discretion occurs when the trial court causes an injustice by applying an incorrect legal 

standard, reaches an illogical result, resolves the case on a clearly erroneous assessment 

of the evidence, or relies on reasoning that causes an injustice. Wright ex rel. Wright v. 

Wright, 337 S.W.3d 166, 176 (Tenn. 2011); Henderson v. SAIA, Inc., 318 S.W.3d 328, 

335 (Tenn. 2010). 

The instant appeal involves an award of damages under Appellant’s State Farm 

uninsured motorist policy. To the extent our review requires an interpretation of that 

policy, the Tennessee Supreme Court has explained:

This Court has previously recognized that “[a]n insurance policy is a 

contract of adhesion drafted by the insurer.” Alcazar [v. Hayes], 982 

S.W.2d [845,] 851 [(Tenn. 1998)] (citing Bill Brown Const. v. Glens Falls 
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Ins., 818 S.W.2d 1, 12 (Tenn.1991)). As such, insurance contracts do not 

contain terms which are the result of mutual negotiation and concession but 

instead contain terms fixed by the insurer and to which the insured must 

adhere if the insured desires insurance coverage. Alcazar, 982 S.W.2d at 

851-52 (citing Brandt v. Mutual Ben. Health & Acc. Ass’n, 30 Tenn. App. 

14, 202 S.W.2d 827 (1947)). Given these realities, we construe provisions 

in an insurance policy against the insurer and in favor of the insured so as 

to provide coverage. Id. Like any other contract, however, this Court has a 

duty to enforce insurance contracts “according to their plain terms. Further, 

the language used must be taken and understood in its plain, ordinary and 

popular sense. The courts, of course, are precluded from creating a new 

contract for the parties.” Alcazar, 982 S.W.2d at 848-49 (quoting Bob 

Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 

580 (Tenn.1975)).

Griffin v. Shelter Mut. Ins. Co., 18 S.W.3d 195, 199-200 (Tenn. 2000).

IV. Analysis

We begin our analysis with a review of the relevant portions of Appellant’s State 

Farm policy. Concerning uninsured motorist coverage, the policy provides, “The limit 

shown under ‘Each Person’ is the most we will pay for all damages resulting from bodily 

injury to any one insured in any one accident . . . .” Although the subject policy contains 

an “Exclusions” provision, “prejudgment interest” is not listed as a specific exclusion. 

Rather, the exclusions provision provides:

Exclusions:

There is no coverage:

1. For an insured who, without our person or organization who 

may be liable for the bodily injury or property damage;

2. For property damage caused when your car or a newly acquired 

car is struck by a motor vehicle owned by you or any resident 

relative which is not insured for liability coverage;

3. For an insured who sustains bodily injury while occupying a 

motor vehicle owned by that insured if it is not your car or a 

newly acquired car.

4. For an insured whose bodily injury results from the discharge of 

a firearm;

5. To the extent it benefits:

a) Any workers’ compensation or disability benefits insurance 

company;
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b) A self-insurer under any workers’ compensation law, 

disability benefits law, or similar law; or

c) Any government or any of its political subdivisions or 

agencies;

d) Any property insurer;

6. For any insured who sustains bodily injury as a pedestrian if 

other collectible uninsured motor vehicle coverage has limits 

greater than the limits of uninsured motor vehicle coverage of 

this policy;

7. For punitive or exemplary damages;

8. For any order of restitution issued by a court in a criminal 

proceeding or equitable action; or

9. For the first $200 of property damage resulting from any one 

accident.

In its order denying Appellant’s motion for prejudgment interest, the trial court 

held, in part, that, “The State Farm policy of Uninsured Motor Vehicle Coverage does not

provide for the payment of prejudgment interest . . . .” In so holding, the trial court 

appears to focus on the fact that the subject policy does not specifically mention

prejudgment interest. However, as set out above, the policy does not specifically exclude 

prejudgment interest. Exclusionary clauses are not to be construed broadly in favor of 

the insurer, nor are they to be construed so narrowly as to defeat their purpose. Midland 

Ins. Co. v. Home Indemnity Co., 619 S.W.2d 387, 389 (Tenn. Ct. App. 1981). Because 

the policy at issue here contains a list of specific exclusions that does not include 

prejudgment interest, we must presume that the policy exclusions are restricted to the 

enumerated items. City of Knoxville v. Brown, 260 S.W.2d 264, 268 (Tenn. 1953). 

Accordingly, the omission of prejudgment interest from the list of specific exclusions 

precludes us from expanding the list of exclusions to include prejudgment interest. 

Furthermore, the fact that the policy does not specifically state that State Farm will 

pay prejudgment interest is not fatal to the award of same. Although, in its order, the trial 

court states that the policy “does not provide for the payment of ‘all damages,’” this 

finding is incorrect. As set out above, in the policy limit section, the policy states that, 

“The limit shown under ‘Each Person’ is the most we will pay for all damages resulting 

from bodily injury to any one insured in any one accident . . . .” (Emphasis added). 

Therefore, by its plain language, the policy provides for the payment of “all damages.” 

The question, then, is whether the term “all damages” is sufficiently broad to include 

prejudgment interest. For this answer, we begin with Tennessee Code Annotated section 

47-14-123, which provides:

Prejudgment interest, i.e., interest as an element of, or in the nature of, 

damages, as permitted by the statutory and common laws of the state as of 

April 1, 1979, may be awarded by courts or juries in accordance with the 
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principles of equity at any rate not in excess of a maximum effective rate of 

ten percent (10%) per annum; provided, that with respect to contracts 

subject to § 47-14-103, the maximum effective rates of prejudgment 

interest so awarded shall be the same as set by that section for the particular 

category of transaction involved. In addition, contracts may expressly 

provide for the imposition of the same or a different rate of interest to be 

paid after breach or default within the limits set by § 47-14-103.

(Emphasis added). In Malone v. Maddox, No. E2002-01403-COA-R3-CV, 2003 WL 

465668, *5 (Tenn. Ct. App. Feb. 25, 2003), this Court explained:

Contrary to the policyholder’s assertion, there is no ambiguity in the 

policy pertaining to the issue of prejudgment interest. The UM coverage 

extends to “all damages.” (Emphasis added). As we have previously noted, 

prejudgment interest, by the language of the applicable statute, is “an 

element of, or in the nature of, damages.” Tenn. Code Ann. § 47-14-123. In 

the instant case, the UM carrier contracted to pay “all damages.” 

Prejudgment interest is an element of damages. Therefore, prejudgment 

interest is covered by the language of the policy pertaining to that which 

can be recovered under the UM coverage.

We reject the policyholder’s argument that the language “all 

damages” does not include prejudgment interest. We also reject the 

policyholder’s argument that the reference to prejudgment interest in the 

damages section of the liability feature of the policy in some way means 

that prejudgment interest is not a part of “all damages” under the UM 

coverage. Under the liability feature of the policy, prejudgment interest is a 

part of the covered damages because the policy says it is. Under the UM 

coverage, it is a part of the covered damages because “all damages” means 

just that, all damages, and, by statute, prejudgment interest is an element of 

the injured party’s damages.

Relying on the Malone case, in Thurman v. Harkins, No. W2004-01023-COA-R3-CV, 

2005 WL 1215959, *5 (Tenn. Ct. App. May 23, 2005), we likewise held:

As this Court previously noted, pre-judgment interest is “an element of, or 

in the nature of, damages.” Tenn. Code Ann. § 47-14-123 (2001); Malone, 

2003 Tenn. App. LEXIS 147, at *16, 2003 WL 465668. Because the policy 

on its face limits the amount Great River is required to pay for “all 

damages” in the event the uninsured/underinsured motorist coverage is 

triggered and pre-judgment interest is an element of damages, pre-judgment 

interest is encompassed by the limiting language of the policy. See Malone, 

2003 Tenn. App. LEXIS 147, at *16, 2003 WL 465668.
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Under the foregoing authority, we conclude that the trial court erred in holding that the 

subject policy precludes an award of prejudgment interest. However, our conclusion that 

“all damages,” as used in the policy, includes prejudgment interest does not, ipso facto, 

mean that Appellant is entitled to that interest. 

As discussed by the Tennessee Supreme Court in Myint, 

Several principles guide trial courts in exercising their discretion to award 

or deny prejudgment interest. Foremost are the principles of equity. Tenn.

Code Ann. § 47-14-123. Simply stated, the court must decide whether the 

award of prejudgment interest is fair, given the particular circumstances of 

the case. In reaching an equitable decision, a court must keep in mind that 

the purpose of awarding the interest is to fully compensate a plaintiff for 

the loss of the use of funds to which he or she was legally entitled, not to 

penalize a defendant for wrongdoing. Mitchell v. Mitchell, 876 S.W.2d 

830, 832 [(Tenn. 1994)].

Myint, 970 S.W.2d at 927. The Myint Court went on to explain that, in exercising its 

discretion, the court is not necessarily limited by the question of whether the damages are 

certain, to-wit:

[W]e find that if the existence or amount of an obligation is certain, this 

fact will help support an award of prejudgment interest as a matter of 

equity. After all, the more clear the fact that the plaintiff is entitled to 

compensatory damages, the more clear the fact that the plaintiff is also 

entitled to prejudgment interest as part of the compensatory damages. The 

converse, however, is not necessarily true. The uncertainty of either the 

existence or amount of an obligation does not mandate a denial of 

prejudgment interest, and a trial court’s grant of such interest is not 

automatically an abuse of discretion, provided the decision was otherwise 

equitable. The certainty of the plaintiff’s claim is but one of many 

nondispositive facts to consider when deciding whether prejudgment 

interest is, as a matter of law, equitable under the circumstances.

Id. at 928. Although uncertainty as to the amount of a plaintiff’s claim is not fatal to an 

award of prejudgment interest, this Court has held that a trial court did not err when it 

“‘capped’ the amount of damages, including prejudgment interest, pursuant to the limit 

stated in the policy.” Thurman, 2005 WL 1215959 at *6. Within the policy limits, 

however, the trial court is vested with considerable discretion concerning whether an 

award of prejudgment interest is necessary to fully compensate a plaintiff. This inquiry, 

which is grounded in equity and rests on the specific facts of each case, falls squarely

within the trial court’s purview. As such, we decline to address Appellant’s second issue 
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concerning whether an award of prejudgment interest is equitable under the facts and 

circumstances of this case and, if so, the amount that should be awarded. Rather, we 

remand this question to the trial court.

V. Conclusion

For the foregoing reasons, we vacate the trial court’s order holding that 

prejudgment interest is precluded under the subject policy. We remand the case to the 

trial court for consideration of whether prejudgment interest is necessary and equitable 

under the specific facts of this case and for such further proceedings as may be necessary 

and are consistent with the opinion. Costs of the appeal are assessed to the Appellee, 

State Farm Mutual Automobile Insurance Company, for all of which execution may issue 

if necessary.

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KENNY ARMSTRONG, JUDGE