# FILED
December 15, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

______________________________________________ WILLIAM KENNETH SIMS and wife EDNA W. SIMS, Plaintiffs-Appel

lees, Gibson Circuit No. 7177 Vs. C.A. No. W1998-005 60-COA-R3-CV EDDIE STEWART, JR. and TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendants-Ap

pellants.

______________________ _____________________________________________________ _ FROM THE GIBSON COUN TY CIRCUIT COURT THE HONORABLE DICK JERMAN, JR., JUDGE

T. J. Emison, Jr., of

Alamo For Plaintiffs-Appellees Wesley A. Clayton, Greg A. Petrinjak; Waldrop & Hall, P.A., of Jackson For Appellant, Tennessee Farmers Mutual Insurance Company

AFFIRMED AS MODIFIED Opinion filed:

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S.

CONCUR: ALAN E. HIGHERS, JUDGE HOLLY KIRBY LILLARD, JU DGE

This case, which

is before us a second time, involves a dispute concerning the amount2

due under an uninsured/underinsured motorist insurance policy. Defendant/Appellant , Tennessee Farmers Mutual Insurance Company, appea ls the or der of the trial court awarding $198,046.43 in damages to the Plaintiff/Appellee, Kenneth Sims, and directing defendant to pay plaintiff the sum of $61,862.57($100,000 policy limit minus $38,137.43 p reviou sly paid in partial satisfaction of judgment.) The circumstances leading to this appeal are set out in Sims v. Stewart , 973 S.W.2d 597 (Tenn. App.1998); therefore, a brief recitation of the facts will s uffice. Kennet h Sims, while engaged in the scope of his employment as a Deputy Sheriff, was injured when he was stru ck by a car d riven by Eddie Stewart. Sims’s complaint against Stewart sought $250,000.0 0 i n dam ages. Tennessee Farme rs, the plaintiff’ s uninsured motoris t carrier, was n

amed as a defendant andserved with a copy of the complaint. Tennessee Farmers’s answer asserted policy limits of $100,000.00 per person and pled as a defense that it was entitled to a credit or reduction of payment for any workers compensation benefits paid to plaintiff pursuant to the provision of the Tennessee Farme

rs’s policy with pla

intiff. The worke

rs compensation in

surer for Si

ms’ s employer paid benefits totaling $61,862.57. Stewart’s liability carrier

paid its coverage

limit of $25,000.00 in

settlement. The parties stipulated, among other things, that Stewart would be released, the workers compensation

carrier would accept in full settlement of its subrogation claim the $25,000.00 paid by Stewart’s carrier, andthat Tennessee Farmers would pay its limits of uninsured motorist coverage less proper credit for the workers compensation payment. The issue for review in the first appeal was whether Tennes see Fa rmers should have a credit for the total amoun

t of the workers c

ompensation bene

fits paid , or whethe r its credit should be the amount of the workers compensation payments made, less the $25,000.00 received by the workers compensation carrier. This Court concluded that Tennessee Farmers was entitled to receive credi

t for the entire a

mount paid

by the workers compensation carrier, but that under the terms of the policy, the workers compensation ben e fits reduced the amount of damages payable to the insured under the underinsured motorist coverage. Since the tri al court did not consider or make any finding a

s to the damages,

this Court remanded the case to the trial court in order to

determine damages and, thus, reach a decision regarding the amount due the insured under the underinsured motorist coverage.3 Upon remand, the tria

l court, after a

n evidentiary hea

ring, found plainti

ff’s damages to be $198,046.43. The Court further found that theamount of workers compe

nsation benefits p

aid to or on behalf of the plaintiff was $61,862.57. The Court then subtracted $61,862.57 from the total dam age award of $198,046.43 and found that the resulting amount exceeded Tennessee Farmers’s policy limits of $100,000.00. Therefore, the Court found that Tennessee Farmers would be responsible for paying a total judgment equal to its limits of $100,000.00. Tennessee Farmers appeal s the trial courts ruling and i n its brief asks this

Court to consider thre e issues: (1 ) whether the trial court erred in its application of Tennessee law regarding the workers compensation offset provision contained in the Tennessee Farmers’s policy (2) whether the

trial court erre

d in failing to proper

ly apply stipulations entered into prior to this trial and (3) whether the trial court’s finding of damages totaling $198,046.43 is supported by a preponderance of the evidence. Plaintiff asserts that the f

irst tw o iss ues were resolved in the first appeal, and pursuant to the ruling of this Court, is the law of the case. While we agree with plaintiff’s analysis of the law of the case doctrine, we do not agree that

it applies as argued by plaintiff. This Court determinedon the first appea l that the reduction for workers compensation benefits is applied to damages and not to the coverage limit. The Court felt that a determination of damages was essential considering the provisions of the insurance policy. The ins urance company’s obligation is premised upon da

mages, and it state

s: We will pay only compensatory damages which a covered person is legally entitled

to recover from the

owner or operator of an uninsured motor vehicle. . . . Thus, to determine an obligation on the part of Tennessee Farmers to pay under its policy, there must be a finding that

the Tennessee Fa

rmers’s insured i

s legally entitled to

recover damag

es. Under the policy, Tennessee Farmers’s payment responsibility is determined by the amount of damages ass es sed, either by way of settlement or by court award. In the instant case, the trial court assessed damages at more than the policy limit of $100,000.00, and after deduct ing t he workers compensation be nefits pai d in the amount of $61,862.57, the Court concluded that TennesseeFarmers was obliga ted to pay the polic

y limits of $100,000.0

0. Therefore, w

e must determine if the trial court’s conclusion is consistent with the policy provisions that govern the amount to be paid by

Tennessee Farme

rs.4 In construing contra

cts, the words expressing the parties' intentions should be given the usual, natural, and ordinary meaning, and in the absence of fraud or mistake, a contract must be interpreted

and enforced

as written, even though it contains terms that may be thought harsh and unjust. Ballard v. North American Life & Casualty Co. , 667 S.W.2d 79, 82 (Tenn. App. 1983). In Blaylock & Brown Construction, Inc. v. AIU Insurance Co. , 796 S.W.2d 146 (Tenn. App.1990), this Cour

t discussed the inte

rpretation of insu

rance contrac

ts: Insurancecontracts like other contracts should beconstrued so as to give effect to the intention and express language of the parties. (cita tions omitted). In construing and applying insurance policies, the apparent objec t and intent of the p

arties must

be kept in mind

. (citations omitted). Language in a contract which happens to be technical or complex to the layman, does not render it ambiguous, (citations omitted) and where there is no ambiguity it i s the duty of the court to apply to the words used their us ual , natural a nd ordinary meaning. (citations omitted). The court cannot, under the guise of construction, make a newand different contract for the parties. (citations omitted). Id. at 149. The interpretation of

a written instrume

nt is a question of

law. Provident Washington Ins. Co. v. Reese , 213 Tenn. 355, 373 S.W.2d 613 (1963). TennesseeFarmers' Uninsur ed Mo torist policy, which is at issue in this case, contains the following, relevant language:

Our limit of liability for this Uninsured Motorist Coverage

shall be reduced by the su

m of the limits payab

le under all

liabi lity and/or primary uninsured

motorist insurance policies, bonds, and securities applic

able to the bodily

injury or death of the covered person. Damages payable underthis coverage to or for a covered person shall be reduced by: 1. the amount paid

un der the Liability a

nd Medical Paymen

ts Coverages of this policy or an y oth er automobile insurance policy; 2. the amount

paid or payable under any workers' compensation law, disability benefits law or any similar law; 3. a payment made by or on behalf of the owner or operator of the uninsuredmotor vehicle, or by or on behalf of the person or entity who may be legally liable. (Emphasis added). Tennessee Farmers asserts that the trial court er

red in finding as a matter of law that the total damages should be red uced by the workers compensation benefits. Tennessee Farmers5

argues that the policy lan guage, “damage

s payable under t

his coverage,”

limits any payments by Tennessee Farmers to the $100,000 policy limit. Although this precise language has not been interpret ed by our Court, similar policy provisions with essentially the sam e m eaning have been considered. In Hudson v. Hudson Municipal

Contractor , 898 S.W.2d 187 (Tenn. 1995), our Supreme Court had before it the issue of “whether the wo

rkers compensat

ion insurance ca

rrier is entitle

d to an award against the proceeds of a settlemen t between the worker’s pe rsonal represe ntative and the uni

nsured motorist ins urer.” Id. at 189. In reaching its conclusion that the workers compensation carrier is not entitled to the award, the Court discussed the re duction provision of the insurance policy involved. The policy stated:

Limits of Liability . Regardless of the number of insureds under this policy, t

he company’s liab

ility is limited as foll

ows: (a) . . . (b) Any amount payable under the terms of this ins

urance becaus

e of bodil y inj ury sustained in an accident by a person who is an insuredunder this coverage shall be reduc ed by . . . the amount paid andthe present valueof all amounts payable on account of such bodily injury under any work ers ’ compensation law, disability benefits law or any similar law. Id. at 188. In reaching its decision, the Court discussed two cases - Terry v. Aetna Casual ty & Sur. Co. , 510 S .W.2d 509 (Tenn. 1974) and Dwight v. Tennessee Farmers Mut. Ins. Co. , 70 1 S.W.2d 621 (Tenn. App. 1985). In Terry , the worker, in the cours e a nd scope of his employment,was killed, and wo rkers compensat

ion benefits w

ere pa id. The worker had uninsuredmotorist coverage with Aetna which contained an offset provision identical to the provision in the Hudson case. Workers compensa

tio n benefits in the amount of $10,080.26 were paid. As a result of the accident, the widow of the deceased worker recovere d a judgment against the uninsured motorist in the amount of $100,000.00. The widow sued Aetna to recover the $10,000.00 uninsur

ed motorist cover

age. The Court he

ld that since the workers compensation carrier had paid $10,080.26, and the policy limit for recovery under

the uninsured motor ist policy was $10,000.00, the insured had already received more than $10,000. 00 pai d under the workers comp

ensation law and w

as therefore e

ntitled to nothing. Th

e Supreme

Court, in discussing the cas

e in Hudson , referred to the fact that the Terry Court held that the “insured’s6

right of recovery ” against the uninsured motorist carrier was reduced by the amount that had been received under the workers compensation law. 898 S.W.2d at 189. (Emphasis added). The “right of recovery” s

eems to refer to t

he damages rec

overable under the policy. The Hudson Courtconsidered the setoff provision in Dwight

as identical to the provision in the Hudson case. The Supreme Court

referring to the Dwight

case, stated: The Court of Appeals

h eld that the insured’s right to recover under the uninsured motorist policy was reduced by theamount the insured could have recove red u nder the Worker s’ Compensation Law. 898 S.W.2d at 189. Significantly, the Suprem e Court, in discussing this case, used the term “right to recover” indicating once again that the term is analogous to damages recoverable. Courts in other jurisdicti

ons have reache

d different res

ults. Some

courts have held that under a policy provision reducing the amount due under an uninsured and underinsured policy by the amount of wor

kers compensatio

n benefits paid, th

e setoff is again

st the total amount of damages awarded, rathe

r than against a da

mage award withi

n the policy coverage. See American Ins. Co. v. Tutt, 314 A.2d 4 81 (Dist. Co l. App. 1974); McClure v. Northland I ns. Co. , 424 N.W.2d 448 (Io

wa 1988); Kilner v. State Farm Mut. & Auto Ins. Co. , 252 Kansas 675, 847 P.2d 1292 (1993). O ther courts have

held that t

he reduction was to be set off against the amount due as damages pa

yable under the p

olicy rather th

an against

the total damages. See Edmundson v. Commercial Union Ins. Co. , 249 Ark. 350, 459 S.W.2 d 112 (1970); Jarrett v. Allstate I ns. Co. , 409 Cal. App. 2d 804, 26 Cal.Rptr. 231 (1 962); State Farm Mut. Auto Ins. Co. v. Murphy , 263 Ill. App. 3d 100, 100 Ill. Dec. 190, 635 N.E.2d 533 (1994). In Hudson, our Supreme Court in its interpretation of Terry and Dwight stated:

Under the holdings in Terry v. Aetna Casualty & Sur. Co. and Dwight v. Tennessee Farmers Mut. Ins. Co. , it is clear that an insured party’s right t o recover under an uninsure

d motorist policy that contains a setoff provision such as the one involved in this case may be reduced by the amount that the insured has collected, or could collect, under the Workers’ Compensation Law. 898 S.W.2d at 189 (emphasis added). It is our opinion thatthe “right to recover” referred to by the Supreme Court in Hudson is based upon the poli

cy language wh ich declares that the insurance company will pay to the insuredsuch sums as the insured is legally entitled to recover from the uni nsured m otorist.7

Considering this policy provision together with the p

olicy provis ion th at “damages pay able under this coverage . . . shall be reduced” causes us to conclude that “

damages payable

under this coverage” is limited to the maximum of $ 100,000.00. Thus, Stewart’s recovery in the instant case, or the “right to recovery,” as referred to by the Supreme Court

in Hudson, is $100,000.00, less the workers compensation benefits paid. Tennessee Farmers’s last issue on appeal is whether the trialcourt’s finding of damages totaling $198,046.43 is supported by a preponderance of the evidence. Since this case was tried by the court sitting without a jury, we review the case de novo upo n the record with a presumpti on of co rrectness of the findings of fact by the trial court. Unless the evidence preponderates against the findings, we must affirm, absent error of law. T.R.A.P. 13(d). The trial court found that Sims should recover dam ages as follows: Me dical bills, $30,046.43; for pain and

suffering, past a

nd future, $127,00

0; for permanent

disability to his left leg $41,000.00; a total of $198,046.43. Considering the entire body of proof, we cannot say that the evidence preponderates against the trial court’s award. Sims sustained compound fractures of his left tibia and f

ibula, laceratio

ns to his head and avuls

ion of his fingerna

ils. As a result of the accident, Sims walked on crutches for almost a year, missed approximately eight months of work, and upon his return to work, worked on light duty for s ix months. Sims has undergone three surgeries on his leg. The fir st plate and screws that were placed in his leg were unsuccessful and had to be removed. Subsequently, he had a bone graft

from his hip and now has a metal rod in his tibia. Further, the orthopedic surgeon testified that Mr.

Sims has a

10% impairm ent

to his left leg. Based on the foregoing, we conclude that the evidence does no t preponderate against the findings of the trial court. T.R.A.P. 13(d). Therefore, the judgment of t he trial court is modifie d to award damage

s against Tennessee Farmers in the amount of $100,000.00 to be reduced by the sum of $61,862.57 for the workers compensation benefits paid. Tennessee Farmers is to be giv

en credit for an

y amounts heretoforepaid in partial satisfaction of the judgment. Costs of the appeal are asse ssed one-half to appellant and one-half to appellee. The case is remanded to the trial court for such furthe r proceedings as may be necessary.

_________________________________ W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.8

CONCUR:

____________________________________ ALAN E. HIGHERS, JUDGE

____________________________________ HOLLY KIRBY LILLARD, JU DGE