1

FILED

December 30, 1997

Cecil Crowson, Jr.

Appellate Court Clerk

IN THE COURT OF APPEALS OF TENNESSEE

HAULERS INSURANCE COMPANY, INC., ) C/A NO. 03A01-9611-CV-00356

 )

 )

Plaintiff-Appellant, )

 )

v. )

 )

 )

DAMIAN V. BURKE, ) APPEAL AS OF RIGHT FROM THE

 ) BRADLEY COUNTY CIRCUIT COURT

Defendant-Appellee, )

 )

and )

 )

 )

MICHAEL T. HUNTER, )

 )

Intervening ) HONORABLE JOHN B. HAGLER, JR.,

Petitioner-Appellee. ) JUDGE

For Appellant For Appellee Hunter

JOHN T. RICE ROGER E. JENNE

Rice, Kreitzer & Winer, P.C. Jenne, Scott & Bryant

Chattanooga, Tennessee Cleveland, Tennessee

For Appellee Burke

NO APPEARANCE

O P I N I O N

AFFIRMED AS MODIFIED

REMANDED Susano, J.
1

The trial court also declared that Thompson was not an insured under

the Haulers policy. Since there has been no appeal from this portion of the

lower court’s judgment, we do not find it necessary or appropriate to consider

the correctness of that ruling.

2

This is a declaratory judgment action filed by Haulers

Insurance Company, Inc. (Haulers). As originally filed, it

sought a declaration that Haulers was not required to indemnify

or defend Damian V. Burke (Burke) and Edward Thompson (Thompson)

with respect to a suit for personal injuries filed by Michael T.

Hunter (Hunter) against Burke, Thompson, and the owners of J & D

Auto Sales. Hunter, who was allowed to intervene in the instant

case, filed a motion for summary judgment, as did Haulers and

Burke. After the underlying tort action was tried, the trial

judge in the case at bar considered the pending motions for

summary judgment. He entered a judgment on July 15, 1996,

declaring that Burke was covered as an insured up to $100,000

under the liability feature of the garage insurance policy issued

by Haulers to Donnie Wear and Joe Guffey, a partnership which

operated a used car lot in Cleveland, Tennessee under the trade

name of J & D Auto Sales.1 Haulers appealed, arguing (1) that

Hunter was not entitled to summary judgment; (2) that the trial

court erred in denying Haulers’ motion for summary judgment; (3)

that the trial court erred in allowing Hunter discretionary

costs; and (4) that the trial court erred in not requiring the

production of a statement given by Thompson to Hunter’s counsel.

I. Background

The instant litigation was commenced on December 13,

1994. It followed the filing of the underlying tort action on

September 6, 1994. The earlier suit was styled Mike T. Hunter v.
2

Mike T. Hunter and Michael T. Hunter are one and the same person.

3

Damian V. Burke; Edwin Thompson, also known as Edward Thompson;

and Donnie Wear and Joe Guffey, individually and doing business

as J & D Auto Sales. It was also filed in the Bradley County

Circuit Court. For ease of reference, it will be referred to in

this opinion as Hunter v. Burke or “the underlying tort action.” 

The case of Hunter v. Burke was tried to a jury. The

trial judge in the instant case, the Honorable John B. Hagler,

Jr., also presided at the trial of the underlying tort action. 

In that case, the jury returned a verdict for the plaintiff Mike

T. Hunter2 in the amount of $270,000. The trial judge approved

the verdict, and the defendants Damian V. Burke, Donnie Wear, and

Joe Guffey appealed. We affirmed the judgment, and the Supreme

Court denied permission to appeal on December 22, 1997. See

Hunter v. Burke, C/A No. 03A01-9606-CV-00207, 1997 WL 170307

(Court of Appeals at Knoxville, April 11, 1997; petition for

rehearing denied June 27, 1997).

II. Hunter v. Burke

Our opinion in Hunter v. Burke, supra, recites the

relevant facts in that litigation:

On the afternoon of June 3, 1994, Burke, who

was then 18 years old, along with his friend,

Edwin Thompson (Thompson), went to J&D Auto

Sales, a used car lot owned and operated by

Wear and Guffey. Earlier that day, Burke and

Thompson had been at Burke’s house with two

or three other individuals, smoking marijuana

and drinking beer. There is evidence that
4

Burke approached Guffey and asked to drive a

1971 Chevrolet Malibu. Guffey agreed. Burke

and Thompson drove off the lot with the

latter behind the wheel. Guffey did not

accompany them. 

After traveling a short distance, Thompson

apparently realized that he was too impaired

to drive. He then asked Burke to drive. 

Burke agreed, despite the fact that he too

was under the influence of marijuana and

alcohol. 

Burke drove a few blocks, swerved into the

oncoming lane of traffic, and struck Hunter,

who was riding his bicycle. Burke stopped

the car, and he and Thompson fled the scene. 

They were apprehended by the police shortly

thereafter. Burke gave a statement admitting

that he caused the accident.

* * *

Hunter subsequently brought suit against

Burke, Thompson, Wear, and Guffey. At trial,

Burke admitted responsibility for the

accident and the trial court granted Hunter’s

motion for a directed verdict against him on

the issue of liability. It granted the same

motion as to Wear and Guffey, finding them

vicariously liable for Burke’s actions, due

to the fact that Burke had been test-driving

a vehicle owned by them at the time of the

accident. During the court’s jury

instructions, Hunter moved for a voluntary

nonsuit on the issue of punitive damages. 

The trial court granted the motion and

consequently submitted the case to the jury

only on the issues of compensatory damages,

and whether Thompson was liable for

negligently entrusting the vehicle to Burke. 

The jury found that Thompson was not liable. 

It awarded compensatory damages of $270,000

against the remaining three defendants. 

Expressly approving of the jury’s verdict,

the trial judge denied the defendants’

motions for a new trial or remittitur.

Id., 1997 WL 170307 at *3-5.

III. Standard of Review
5

An appellate court, when reviewing a grant of summary

judgment, must decide anew if judgment in a summary fashion is

appropriate. Cowden v. Sovran Bank/Central South, 816 S.W.2d

741, 744 (Tenn. 1991). We must affirm the grant of summary

judgment “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment

as a matter of law.” Rule 56.04, Tenn.R.Civ.P.

In making our Rule 56 analysis, we are not bound by the

trial court’s reasoning. Summary judgment is a question of law. 

Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Cowden, 816 S.W.

at 744. There is no presumption of correctness as to the result

reached by the trial court. Bain, 936 S.W.2d at 622; Cowden, 816

S.W.2d 744.

IV. Analysis

The first two issues raised by Haulers require that we

focus on the pertinent language of the policy of insurance issued

by Haulers to Donnie Wear and Joe Guffey, doing business as J & D

Auto Sales. The parties agree that these issues can be resolved

with reference to the “Who is an Insured” provisions of the

policy under Section II-Liability Coverage:

SECTION II-LIABILITY COVERAGE

A. COVERAGE
6

* * *

1. WHO IS AN INSURED

a. The following are

“insureds” for covered

“autos”.

(1) You for any

covered “auto”.

(2) Anyone else

while using

with your

permission a

covered “auto”

you own, hire

or borrow

except:

(a) The owner

or anyone else

from whom you

hire or borrow

a covered

“auto”. This

exception does

not apply if

the covered

“auto” is a

“trailer”

connected to a

covered “auto”

you own.

(b) Your

employee if the

covered “auto”

is owned by

that employee

or a member of

his or her

household.

(c) Someone

using a covered

“auto” while he

or she is

working in a

business of

selling,

servicing,

repairing,

parking or

storing “auto”

unless that

business is
3

Burke had “no other available insurance.”

7

your “garage

operations”.

(d) Your

customers, if

your business

is shown in the

Declarations as

an “auto”

dealership. 

However, if a

customer of

yours:

(i)

Has

no

other

avail

able

insur

ance

(whet

her

prima

ry,

exces

s or

conti

ngent

),3

they

are

an

“insu

red”

but

only

up to

the

compu

lsory

or

finan

cial

respo

nsibi

lity

law

limit

s

where

the

cover
8

ed

“auto

” is

princ

ipall

y

garag

ed.

* * *

(Emphasis added). The policy provides that Haulers’ maximum

liability for any one accident is $100,000.

The trial court held that the material facts regarding

Haulers’ coverage with respect to Burke’s liability in Hunter v.

Burke were undisputed. It determined that Burke was driving a

vehicle owned by Wear and Guffey at the time he struck Hunter’s

bicycle and that Burke was then driving with the actual or

constructive permission of the owners of the car lot. The court

further concluded that the words “customer” and “customers”, as

used in the “Who is an Insured” part of the liability coverage of

the policy, either did not apply to Burke or were ambiguous. It

held that Burke was therefore entitled to the full $100,000 of

coverage.

On this appeal, Haulers makes a number of arguments as

to why Hunter and Burke are not entitled to summary judgment and

why it is entitled to summary judgment. We believe there are

really only two questions:
4

Haulers also argues that it is entitled to summary judgment (1) because

its insureds’ permission to drive was induced by fraud or misrepresentation;

and (2) because Burke and Thompson exceeded the “scope of consent and

permission.” We find no evidence to support either position.

9

1. Did Burke have the car lot owners’

permission to use their vehicle at the time

of the accident?4

2. If so, what is the limit of Haulers’

coverage as to the liability of Burke?

A. Issue of Permission

Haulers argues that Burke did not have its insureds’

permission to drive their vehicle at the time of the accident;

or, in the alternative, that there is a genuine issue of material

fact with respect to permission that renders summary judgment

inappropriate.

When Hunter v. Burke, supra, was appealed to this

court, we held that Burke “had the permission of Guffey to testdrive the car.” In view of this specific finding, can Haulers

now re-litigate the issue of permission in this case? We hold

that it cannot. The doctrine of collateral estoppel precludes a

re-litigation of that issue in this case.

Collateral estoppel has been defined by the Supreme

Court as follows:

the doctrine of collateral estoppel or

estoppel by judgment is an extension of the

principal [sic] of res judicata, and is

generally held to be applicable only when it

affirmatively appears that the issue involved

in the case under consideration has already

been litigated in a prior suit between the

same parties, even though based upon a
10

different cause of action, if the

determination of such issue in the former

action was necessary to the judgment.

Dickerson v. Godfrey, 825 S.W.2d 692, 694 (Tenn. 1992)(citing

Home Insurance Co. v. Leinart, 698 S.W.2d 335, 336 (Tenn. 1985)

and other cases). In another case, the Supreme Court stated that 

[c]ollateral estoppel operates to bar a

second suit between the same parties and

their privies on a different cause of action

only as to issues which were actually

litigated and determined in the former suit.

Richardson v. Tennessee Bd. of Dentistry, 913 S.W.2d 446, 459

(Tenn. 1995)(quoting Goeke v. Woods, 777 S.W.2d 347, 349 (Tenn.

1989))(quoting Massengill v. Scott, 738 S.W.2d 629, 631 (Tenn.

1987)) (emphasis added); or, as stated another way, the doctrine

precludes re-litigation of individual issues

which were actually and necessarily

determined in a former action between the

named parties or their privies on a different

cause of action.

Allied Sound, Inc. v. Neely, 909 S.W.2d 815, 820 (Tenn.App.

1995)(emphasis in original).

The case of Phillips v. General Motors Corp., 669

S.W.2d 665 (Tenn.App. 1984), contains the following explanation

of the concept of privity:

Privity in the traditional sense meant mutual

or successive relationship to the same rights

of property, but various states have employed
11

other definitions when used in the context of

res judicata and collateral estoppel. 

* * *

The Tennessee rule holds that privity as used

in the context of res judicata does not

embrace relationships between persons or

entities, but rather [goes] to the subject

matter of the litigation. Cantrell v.

Burnett & Henderson Co., 187 Tenn. 552, 216

S.W.2d 307 (1948).

Id. at 669. In another case, after finding that collateral

estoppel was applicable to the facts before it, the Supreme Court

noted that collateral estoppel was an extension of the doctrine

of res judicata, and that “[p]rivity within the meaning of the

doctrine of res judicata is privity as it exists in relation to

the subject matter of the litigation.” Harris v. St. Mary’s

Medical Center, Inc., 726 S.W.2d 902, 905 (Tenn. 1987).

In the instant case, it is clear that there was privity

between Haulers and its insureds, Wear and Guffey. These parties

had an identical interest “in relation to the subject matter” of

the underlying tort action. See Harris, 726 S.W.2d at 905. Wear

and Guffey sought to avoid personal liability in the underlying

tort action by showing that Burke did not have permission to

drive their vehicle. By the same token, a lack of permission is

at the core of Haulers’ position in the instant case. If Burke

did not have permission to drive, his liability to Hunter is not

covered under the terms of Haulers’ policy. Under the doctrine

of collateral estoppel, Haulers is estopped from re-litigating

the issue of whether Burke had the permission of the car lot

owners since this issue was previously litigated in the
5

The word “customer” is not defined in the policy in the context of the

provision under discussion.

12

underlying tort action. Since Wear and Guffey are bound by that

decision, so is Haulers. Thus, Haulers is bound by a decision

that has been adversely decided to its position in this case.

B. Coverage

Haulers argues that, even if Burke had permission to

drive the vehicle in question, the trial court erred in holding

that the maximum limit of liability under the policy -- $100,000

-- applies to Burke’s liability to Hunter, as determined in the

underlying tort action. Haulers points to paragraph

A(1)(a)(2)(d)(i) of the liability coverage, which provides, in

pertinent part, as follows:

...if a customer of yours [h]as no other

available insurance (whether primary, excess

or contingent), they are “insured” but only

up to the compulsory or financial

responsibility law limits where the covered

“auto” is principally garaged.

Thus, Haulers claims that its maximum coverage for Burke’s

liability to Hunter in the underlying tort action is $25,000, the

minimum individual limit of coverage under the Tennessee

Financial Responsibility Law. See T.C.A. § 55-12-102(12)(C)(ii).

The trial court held that the word customer “seems to

be synonymous with a buyer or a purchaser.”5 It concluded that,

since Burke did not purchase the car that he was test-driving at

the time of the accident, he was “no more a purchaser than a
13

prospective insured is an insured.” It concluded that Burke was

a “mere ‘prospective customer[].’” Hence, so the trial court

reasoned, paragraph A(1)(a)(2)(d)(i) of the liability section of

the policy did not encompass him within its terms.

In the alternative, the trial court concluded that the

“meaning of ‘customers’ is ambiguous and must, therefore, be

construed against the insurance company and in favor of the

insured,” citing the case of St. Paul Fire & Marine Ins. v.

Torpoco, 879 S.W.2d 831 (Tenn. 1994). Thus, the trial court held

that, as construed in favor of the insured, Burke was a noncustomer who was driving with permission, and hence entitled to

the full $100,000 of coverage under the general “permission”

language of paragraph A(1)(a)(2).

It is axiomatic that “[i]nsurance contracts are subject

to the same rules of construction and enforcement as apply to

contracts generally.” McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn.

1990); see also Allstate Ins. Co. v. Wilson, 856 S.W.2d 706, 708

(Tenn.App. 1992); Whaley v. Underwood, 922 S.W.2d 110, 112

(Tenn.App. 1995). Therefore, generally speaking, courts must

enforce contracts as written, absent fraud or mistake. Id. 

Words used in insurance contracts must be given their usual and

ordinary meaning. Drexel Chemical Co. v. Bituminous Ins. Co.,

933 S.W.2d 471, 477 (Tenn.App. 1996); Gredig v. Tennessee Farmers

Mut. Ins. Co., 891 S.W.2d 909, 912 (Tenn.App. 1994); Hill v.

Tennessee Rural Health Improvement Ass’n, 882 S.W.2d 801, 802

(Tenn.App. 1994).
14

We must respectfully disagree with the trial court’s

reasoning. We find and hold that the word “customer,” according

to its usual and ordinary meaning, includes within its ambit

someone who comes on a car lot for the purpose of test-driving a

car. In ordinary parlance, one who is considering a purchase --

as was Burke -- is a customer whether that person actually

consummates a purchase or not. This is particularly true in this

case, given the context in which the word is used in the subject

policy.

The policy provisions before us address coverage for

the liability of one using a vehicle “own[ed], hire[d] or

borrow[ed]” by J&D Auto Sales. The word “customer” must be

viewed in this context. To construe the word “customer” to mean,

or at a minimum to include, one who has already purchased a

vehicle is inconsistent with the general focus of the liability

section of the policy. Generally speaking, once an individual

takes ownership of a vehicle, the previous owner -- in this case

J&D Auto Sales -- no longer has a need for liability insurance

since it no longer has any potential liability. The provision in

question is designed to cover a “customer” before ownership

passes; therefore, “customer” cannot be construed to address a

user of a vehicle after ownership has passed.

If possible, we must construe a single word in a policy

of insurance in a way that is consistent with other pertinent

parts of the policy. See Rainey v. Stansell, 836 S.W.2d 117, 119

(Tenn.App. 1992) (“All provisions of a contract should be
6

Customer is generally defined as “a person who purchases goods or

services from another; buyer; patron.” Webster’s Universal College Dictionary

200 (1997 ed.)(emphasis added).

15

construed as in harmony with each other... so as to avoid

repugnancy between the several provisions of a single contract.”)

We find no ambiguity in the word “customer” as used in

the Haulers policy.

6 We hold that the specific provisions of

paragraph A(1)(a)(2)(d)(i) apply to Burke. It results that

Burke, as a “customer”, is limited to coverage of $25,000 with

respect to his liability to Hunter in the underlying tort case. 

In so holding, we do not address the question of available

coverage under the Haulers policy with respect to Hunter’s

judgment against Wear and Guffey. The instant case did not seek

a declaration as to the coverage available to Wear and Guffey

with respect to Hunter’s suit against them. This issue is not

before us and we do not decide it.

C. Other Issues

The trial court allowed discretionary costs to the

appellee Hunter in the amount of $371.00, representing a portion

of the cost of the transcript of the underlying tort action. 

That transcript was filed in the instant case. An award of such

costs is subject to the discretion of the trial court. Lock v.

National Union Fire Ins. Co. of Pittsburgh, 809 S.W.2d 483, 490

(Tenn. 1991). We find no abuse of that discretion.
16

The last issue made by the appellant pertains to the

trial court’s refusal to require Hunter to produce a statement

allegedly given by Thompson to Hunter’s counsel. This statement

is relevant to the issue of whether Burke had the permission of

the car lot owners to drive their car at the time of the

accident. Our finding that Haulers is collaterally estopped to

raise this issue renders this question moot.

V. Conclusion

The trial court’s judgment is modified to reflect that

the limit of liability coverage applicable to Burke’s liability

to Hunter under the Haulers’ policy is $25,000. In all other

respects, the judgment of the trial court is affirmed. 

Exercising our discretion, we tax the costs on appeal one-half to

the appellant and one-half to the appellee Hunter. This case is

remanded for such further proceedings as may be necessary,

consistent with this opinion, and for collection of costs

assessed below, all pursuant to applicable law.

__________________________

Charles D. Susano, Jr., J.

CONCUR:

________________________

Houston M. Goddard, P.J.

________________________

Don T. McMurray, J.