IN THE SUPREME COURT OF TENNESSEE

AT NASHVILLE

June 2, 2011 Session

RANDALL D. KISER v. IAN J. WOLFE ET AL.

Appeal by Permission from the Court of Appeals, Eastern Section

Circuit Court for Bradley County

No. V-05-869 Lawrence Howard Puckett, Judge

No. E2009-01529-SC-R11-CV - Filed August 24, 2011

SHARON G. LEE, J., concurring in part and dissenting in part.

I concur with the majority’s conclusion that our review should include all three pages

of the insurance application appended to the summary judgment motion. I, however, would

construe Tennessee Code Annotated section 56-7-1201 (2008) to require more than merely

the insured’s signature at the end of an application for insurance in order for the insured to

effectively reject “in writing” the amount of uninsured motorist (“UM”) coverage otherwise

mandated by the statute.

The statute at issue provides in pertinent part:

(a) Every automobile liability insurance policy delivered, issued for delivery

or renewed in this state, covering liability arising out of the ownership,

maintenance, or use of any motor vehicle . . . shall include uninsured motorist

coverage . . . .

(1) The limits of the uninsured motorist coverage shall be equal to the bodily

injury liability limits stated in the policy.

Tenn. Code Ann. § 56-7-1201 (emphasis added). The language of the statute is

mandatory. Home Builders Ass’n of Middle Tenn. v. Williamson Cnty., 304 S.W.3d 812,

819 (Tenn. 2010) (“As a general matter, when the word ‘shall’ is used in a statute it is

construed to be mandatory, not discretionary.”); see also Pugh’s Lawn Landscape Co. v.

Jaycon Dev. Corp., 320 S.W.3d 252, 259 (Tenn. 2010). The exception to the requirement

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that UM coverage limits shall be equal to stated bodily injury liability limits is provided in

subsection (a)(2) of the statute, which provides in relevant part, “However, any named

insured may reject in writing the uninsured motorist coverage completely or select lower

limits of the coverage but not less than the minimum coverage limits in § 55-12-107.” Tenn.

Code Ann. § 56-7-1201(a)(2) (emphasis added).

We are charged with interpreting statutes “‘as a whole, giving effect to each word and

making every effort not to interpret a provision in a manner that renders other provisions of

the same statute inconsistent, meaningless or superfluous.’” Culbreath v. First Tenn. Bank

Nat’l Ass’n, 44 S.W.3d 518, 524 (Tenn. 2001) (quoting Cafarelli v. Yancy, 226 F.3d 492,

499 (6th Cir. 2000)); see Leab v. S & H Mining Co., 76 S.W.3d 344, 350 n.3 (Tenn. 2002)

(“[W]e must avoid constructions which would render portions of the statute meaningless or

superfluous.”).

As the majority opinion observes, before 1982, the statute required UM coverage

equal to liability coverage unless “any insured named in the policy shall reject the

coverage.” Tenn. Code Ann. § 56-7-1201 (1980). In 1982, the Tennessee General Assembly

amended the statute to specifically require “in writing” a rejection of UM coverage or a

selection of UM limits lower than the stated liability limits. 1982 Tenn. Pub. Acts Ch. 835,

472-73. As the court stated in Dunn v. Hackett,

When the legislature makes a change in the language of a statute, the general

rule is that such change raises a presumption that the legislature intended a

departure from the old law. . . . We are persuaded that when the legislature

changed the language in the uninsured motorist statute from “may reject” to

“may reject in writing” and required the writing to be a part of the policy, the

legislature evidenced its intent that the only way to eliminate uninsured

motorist coverage was a written rejection as a part of the policy.

833 S.W.2d 78, 81 (Tenn. Ct. App. 1992) (emphasis in original) (citation omitted).

A policy of insurance is a contractual agreement between the insured and the

insurer. Tenn. Code Ann. § 56-7-101 (2008). Before 1982, an applicant signed the

application for insurance. If the insured’s signature at the end of an application alone

demonstrated a sufficient rejection of UM coverage or selection of lower UM limits, there

would have been no need for the 1982 amendment specifically requiring the rejection to be

“in writing.” The majority’s conclusion that the mere signature at the end of the insurance

application, with no further “writing” on the insured’s part, suffices to satisfy the statute’s

requirement, thwarts the intent of the legislature and renders the “in writing” requirement of

subsection (a)(2) meaningless and superfluous. Insurance companies are now at liberty to

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write policies with whatever UM limits they choose (subject to the statutory minimum

referenced in section 56-7-1201(a)(2)), and as long as the applicant signs at the end of the

application, the applicant will be deemed to have effectively rejected UM coverage or

selected UM limits lower than those otherwise mandated by subsection (a)(1).

Further, assuming arguendo that the unpublished Court of Appeals decision relied on

by the majority, Peak v. Travelers Indemnity Co., was correctly decided, it is clearly

distinguishable. In Peak, the court was presented with undisputed proof that the insured, Mr.

Peak, specifically requested UM coverage in an amount lower than the liability limits; the

insurance agent in Peak filed an affidavit testifying that:

The “Uninsured Motorist Coverage Option Selection Form” reflects $60,000

in uninsured motorist bodily injury and property damage coverage because

those were the limits that Mr. Peak requested. The selection was marked and

the amount was handwritten in by me at Mr. Peak’s instructions. . . . Mr. Peak

specifically declined uninsured motorist coverage equaling his liability limits

and specifically instructed that the uninsured motorist limits equals

$60,000. Mr. Peak also signed an acceptance of a quote for $300,000 liability

limits and $60,000 U.M. limits.

2002 WL 31890892, at *4 (emphasis in original). The Court of Appeals found “the crucial

undisputed fact is that Mr. Peak requested of [agent] Ms. Barnes $60,000 in

uninsured/underinsured motorist coverage and Ms. Barnes penned-in the $60,000 figure on

the selection form, then forwarded the form to Mr. Peak who signed it on October 10, 1996

and returned it to Ms. Barnes.” Id. at *5 (emphasis added). There is no such undisputed

proof in the case before us regarding the insured’s intent.

In this case, Consumers Insurance Company drafted the following language in its

application in an obvious attempt to satisfy the “in writing” requirement at issue here:

1. I SELECT UNINSURED MOTORISTS BODILY INJURY LIMIT(S)

INDICATED IN THIS APPLICATION. _____ (INITIALS)

2. I REJECT UNINSURED MOTORISTS BODILY INJURY AND

PROPERTY DAMAGE COVERAGE IN ITS ENTIRETY. _____

(INITIALS)

3. I REJECT ONLY UNINSURED MOTORISTS PROPERTY DAMAGE

COVERAGE IN ITS ENTIRETY. ______ (INITIALS)

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The fact that the agent failed to have Mr. Lawson sign, initial, or otherwise indicate in

writing his agreement or consent to any of the three options raises a legitimate and reasonable

inference that he did not agree to the reduced UM limits. As the majority holds, the fact that

the first page of the application lists UM limits in the amount of $60,000 raises a reasonable

inference that the parties discussed UM coverage and agreed on this reduced amount. The

language of the application is thus susceptible to more than one reasonable interpretation –

actually two possible reasonable interpretationsthat are diametrically opposed. Asthis Court

held in Tata v. Nichols,

Where language in an insurance policy is susceptible of more than one

reasonable interpretation, however, it is ambiguous. See, e.g., Moss v. Golden

Rule Life Ins. Co., 724 S.W.2d 367, 368 (Tenn. App. 1986). Where the

ambiguous language limits the coverage of an insurance policy, that language

must be construed against the insurance company and in favor of the

insured. Allstate Ins. Co. v. Watts, 811 S.W.2d 883, 886 (Tenn. 1991).

848 S.W.2d 649, 650 (Tenn. 1993). I would hold that Mr. Lawson’s refusal or failure to

initial or sign any of the three listed options, particularly the one stating “I select uninsured

motorists bodily injury limit(s) indicated in this application,” created an ambiguity in the

application that the trial court should have resolved in favor of the insured, in accordance

with Tata.

The purpose of the UM statute is “to provide protection for an innocent party by

making the insurance carrier stand as the insurer of the uninsured motorist.” Dunn, 833

S.W.2d at 82; see also Sherer v. Linginfelter, 29 S.W.3d 451, 454 (Tenn. 2000); Marler v.

Scoggins, 105 S.W.3d 596, 598 (Tenn. Ct. App. 2002). The plaintiff in this case, Mr. Kiser,

is such an innocent party who was harmed by the negligence of an insufficiently-insured

motorist. I would hold that the General Assembly, by its passage of Tennessee Code

Annotated section 56-7-1201, intended to provide innocent Tennessee drivers a greater

degree of protection than does the majority opinion’s interpretation of this

statute. Accordingly, I respectfully dissent.

______________________________

SHARON G. LEE, JUSTICE

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