# FILED May 15, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF AP PEALS OF TENNESSEE AT JACKSON

_______________________________________________________ ) RANDALL RAY FLEMING , ) Madison County Circuit Court ) Nos. C-96-117 and C-96-122 Plaintiff/Appellee. ) ) VS. ) ) JACQUELINE YI , ) ) Defendant. ) ) AND ) C.A. No. 02A01-9706-CV-00129 ) JACK DAVIS, JR. , ) ) Plaintiff/Appellee, ) ) VS. ) ) JACQUELINE YI , ) ) Defendant. )

______________________________________________________________________________ From the Circuit Court of Madison County at Jackson. Honorable Whit LaFon, Judge
Robert V. Redding, WALDROP & HALL, P.A., Jackson, Tennessee Attorney for Appellant Haulers Insura nce Company, Inc. Floyd S. Flippin B. Chadwick Rickman ADAMS, RYAL & FLIPPI N, Humboldt, Tennessee Attorneys f

or Defendant Jac

queline Yi. Thomas A. Travagli

ni , Madison, Tennessee Attorney for Pl aintiff/A ppellee Ran dall Flemi ng. R. N. (Bo) Taylor , Goodlettsville, Tennessee Attorney for Plaintiff/Appellee Jack Davis, Jr. Attorney for Plaintiff/Appellee.

OPINION FIL

ED: AFFIRMED AND

REMANDED FARMER, J. LILLARD, J. : (Concurs) TOMLIN, Sr. J. : (Concurs)We granted the parties’ joint Rule 9 T.R.A.P. app licat ion to determine the validity of a provision contained in an automobile insurance policy issued by Appellant Haulers Insurance Com pan y. The provision at issue purported to limit the amount of uninsured/underinsured

motorist coverage available to an injured insured in certain cases to “the hig

hest limit of uninsur

ed motorists coverage on an auto owned by the insured.” Inasmuch a s the named insured, ValueAuto Mart, Inc., didnot select lower limits of such coverage in writing as required by this state’s uninsured/underinsured

motorist statutes, w

e conclude that th

e provision is inval

id and, th us , we affirm the trial court’s order denying Haulers’ motion for summary judgment on this issue.

For p urposes of these summary judgment proceedings, the following facts we r e undisputed. In April 1995, Plaintiff/Appellee Randall Ray Fleming was involved in an automobile accident while he was driving an automobile o wned by the n amed insured, Aut

o Mart. Plaintiff/Appellee Jack Davis, Jr., was a passenger in the Auto Mart automobile. The driver of the other automobile, Defe

ndant/Appellee Jac

queline Yi, was al

legedly a t fault in the acci

dent. Yi, however, was considered to be an underinsured motorist because her automobile insurance policy providedfor the minimum unins ured/underinsur

ed mo t orist coverages of $25,000 per person and $50,000 per accident. See T.C.A. §§ 55-12-102(1 2)(C)(ii), 55- 12- 107 (a) ( 199 3). Acco rdi ngly, Flemi ng and Davis sought to recover their respective damages under the uninsured/under insured motorist (UM) provisions of

Auto Mart’s automobile insura nce policy.

Neither Fleming

nor Davis had an i ndi vid ual aut omo bil e in sur ance pol icy.

Auto Mart’s policy

, as issued by

Haulers, provide

d both liability

and UM coverages in the amount of $300,000. As pertinent, however, the policy purported to limit the amount of UM coverage available when

an insured was injured while occupying an automobile not owned by the insured. Specifically, the policy contained the f ollowing provision:

D. LIMI

T OF INSURANC

E

. . . . 2. The most we will pay for all damages resulting from “bodily injury” to an “insured”

when the “insured” is “occupying” an “auto” notowned by the “insured,” or is not“occupying” any

“auto,” is the highest limit of uninsured motorists coverage on an “auto”owned by1 See T.C.A. § 56-7-1201(a)(1) (1994) (providing that the limits of UM coverage “shall be

equal to the bodily injury liability limits stated in the policy ”).
2 Section 56-7-1201(a)(2) provides that [A]ny named ins

ured may re

ject in writing su

ch uninsured motor

ist the “insured.”
Citing this policy

provision, Haulers denied UM coverage to Fleming and Davis and moved for summary judgment on the coverage issue. For purposes of i

ts summary judgment motion, Haulers conceded that bo th Fleming and Davis met the definition of an “insured”und er t he p oli cy, and that both insureds s

ustained damag

es in excess of th

e amount a

vai lab le u nde r Yi ’s p oli cy. Haulers contended, however, that neither Fleming nor Davis were covered under Auto Mart’s policy because neither insured had UM cov erage on a s elf-owned automobile. The trial court denied Haulers’ motion for summary judgment, thus precipitating this Rule 9 application.

In Tennessee, the law is well-established that “any statut

e applicable

to an insurance policy becomes part of the policy and such statutory provisions override and supersede anything in the policy repugnant to the provisions of the statute.” Hermitage Health & Life Ins. Co. v. Cagle , 420 S.W.2d 591, 594 (Tenn. App. 1967). In this regard,all provisions of thi s state’s UM statute

s,
as a matter of law, b

ecome provisions o

f all auto mobile insurance policies issued fo

r delivery in Tennessee. Dunn v. Hackett , 833 S.W.2d 78, 82 (Te nn . App. 1992). Where there is a conflict betweena statutory provision and a policy provision, the statutory provision must prevail. Id
. This appeal, therefore, requires us to determine whether the policy provision at issue violates this state’s UM statutes.

As we stated in Dunn v. Hackett , 833 S.W.2d 78 (Tenn. Ap p. 1992), t he language of the UM statutes “is cle

ar and unequivoc

al that every

automobile

liability policy issued for delivery in this state

shall include unins

ured motorist

coverage with

limits equal to the bo

dily injury

liability limits, unless the coverage is rejected by the namedinsured.” Dunn v. Hackett , 833 S.W.2d at 81 (citing T.C.A. § 56-7-1201). 1 Under the UM statu tes, a named insured may reject UM coverage or select UM limits which are lower than a policy’s liability limits. See T.C.A. § 56-7-1201 (a )(2) (1994). 2 In order to do

so, however, the

insured must rejec

t such coverag

e or select such l

ower limitscoverage completely or select lower limits of such cover age but not less than the minimum coverage limits in § 55-12-107. Any document signed by the named insured or legal repr esentative which initially rejects such coverage or selects lower limits shall be binding upon eve

ry insured t

o whom such policy

applies, and shall be conclusively presumed to become a part of the policy or contract when issued or delivered, irrespective of whether physically attached thereto. . . . T.C.A. § 56-7-1201(a)(2) (1994). in writing, and the writing must be made a part of the policy. Dunn v. Hackett , 833 S.W.2d at 81. This writing is the only way that a named insure d may eliminate or reduce a policy ’s UM coverage. Id
.

In Dunn v. Hackett , the provisions of t he subject automob

ile insurance policy did not expressly include UM coverage for vehicles based in Tennessee. Dunn v. Hackett , 833 S.W.2d at 80. Nevertheless, this court held that the policy provided UM coverage bec

ause the named insured, Holiday Inns, had not effectively rejected UM coverage as required by the UM statutes. Id . at 81. We similarly conclude that the policy issued by Haulers in

this case provides UM coverage in an amount equal to the policy’s liability limits, $300,000. A s required by law, the subject policy initially providedUM coverage w ith limits equal to

the policy’s liability limits, $300,000; however, the policy then p urported to lower the $300,000 limits of UM coverage in certain situations, such
as when the injured insured was not occupying an automobile owned by the insur ed or when th

e injured insured was not occupying any automobile. The record contains no evidence that the named insured, Aut o Mart, ever signed any document selecting UM limits which were lower than the policy’s $300,000 liability limits, nor does the record contain evidence that Auto Mart signed any document signifying its understanding that the p olicy provided for lower UM limits in certain situations. In accordance with Dunn v. Hackett , therefore, we

hold that the policy provision at issue does not effecti

vely lower

the policy’ s UM limits in the desc ribed situations.

In contending that the trial court erred in denying its motion for summary

judgment, Haulers cites several cases in which the courts of this st

ateupheld policy provisions which excluded UM coverag e in certain situa tions or provisions w

hich reduced an

insured’s recov

ery by amounts received from other

sources. See Dockins v. Balboa Ins. Co. , 764 S.W.2d 529, 529 (Tenn. 1989) (upholding policy provision which excluded coverage for “damages bec

ause of bodily

injury causedby

a motor vehicle owned

by [the insured] or a famil

y member”) ; Rutherford v. Tennes see Farmers Mut. Ins. Co. , 608 S.W.2d 843, 845 (Tenn. 1980) (noting va lidity of pro vision which excluded coverage for “bodily injury or other damag es with respect to which

the insured had, without written consent of the company , made settl ement with any person legally

liable therefor

”); Hill v. Nationwide Mut. Ins. Co. , 535 S.W.2d 327, 329 (Tenn. 1976) (upholding provision which excluded coverage for bodily in

ju ry to an insur

ed while riding in another family vehicle not carried on the family liability insur ance policy ); Smith v. Allstate Ins. Co. , 456 S.W.2d 654, 655 (Tenn. 1970) (upholding provision which excl uded coverage for hit-and-run accidents unless

bodily injury aros

e outof “physic

al c ontact” between unidentified car and car which insured was occupy ing); Thompson v. Parker , 606 S.W.2d 538, 539 (Tenn. App. 1980) (upholding provision which reduced insured’s recovery for bodily injury by amounts received from owne r or ope rator of uninsured automobile

and any other

party jointly

or severally liable). Haulers insists that such provisions are specifically

authorized by

the UM statutes, wh

ich provide that U

M coverage “m

a y inc lude such terms, exclusion s, limitations, conditions, and offsets, which are designed to avoid duplication of insurance and other benefits.” T.C.A. § 56-7-1205 (1994); see Hill v. Nationwide , 535 S.W.2d at 330; Thompson v. Parker , 606 S.W.2d at 540.

We conclude that the foregoing decisions are inapposite to t h e present appeal. Unlike the provisions in the cited cases, the provision in this case does not purport to be an exclusionary provision or an offset provision. The provision does not expressly exclude cove rage in certa in situations, nor does it reduce an insured’s recovery by amounts received from other sources. Instead, the policy provi

sion at issue purpor

ts to lower the policy’s limits of UM coverage to a certain amount
as established by the provisions of a separate policy, regardless of whether the insured has recovered any amounts from other sources. Inasmuch as the nam ed insured, Auto Mart, did not select such lower limits in writing as

required by

the UM statutes, we

hold that th

e subject provision cannot stand.

Haulers al so contends that the policy pro vision at issue is pre sumptively va

lid because the provision has bee

n approved by

this state’s insura

nce commissioner

. Our supreme cou

rt, however, has made it clear that, although the insurance commissioner’s approval is a fa ctorto be considered, such approval is n ot conclusive in

determining the validity of a policy provision. Hill v.Nationwide Mut. Ins. Co. , 535 S.W.2d 327, 331 (T enn. 19 76). The insurance commissioner’s

approval will not render a policy provision invulnerable if the provision is violative of existing law. Smith v. AllstateIns. Co. , 456 S.W.2d 654, 656 (Tenn. 1970). In light of our conclusion that the subject provision violates section 56-7-1201(a)(2) of this state’s UM statutes, we hold that the provision is invalid, despite the insurance commissioner’s approval thereof.

The trial court’s judg

ment is affirmed,

and this cause is remanded f or further proceedings.

Costs of this appeal are taxed to Appellant, for which execution may issue if n eces sar y.

____________________________________ FARMER

, J.

______________________________ LILL ARD, J. (Concurs)

______________________________ TOMLIN, S

r. J. (Concurs)