Court Opinion

ID: 4302337
Source: CourtListenerOpinion
Date Created: 2018-08-09 16:23:00.998888+00
Date Added: 2024-06-11T14:29:31.632500
License: Public Domain

08/09/2018
               IN THE COURT OF APPEALS OF TENNESSEE
                          AT KNOXVILLE
                                April 19, 2018 Session

               TENNESSEE FARMERS MUTUAL INSURANCE
                  COMPANY v. BRANDON W. DEBRUCE

                Appeal from the Chancery Court for Bradley County
                  No. 2015-CV-61    Jerri S. Bryant, Chancellor

                            No. E2017-02078-COA-R3-CV

This appeal involves a plaintiff with a personal injury claim who has challenged the
validity of a declaratory judgment involving the defendant tortfeasor and his insurer
because the personal injury plaintiff was not made a party to the declaratory judgment
action. The personal injury plaintiff brought an action for damages against the defendant
tortfeasor in December 2013 in Hamilton County, prior to the filing of the instant
declaratory judgment action, based upon an automobile accident that occurred in
December 2012. The defendant tortfeasor in the personal injury action reportedly failed
to notify his insurance company of the lawsuit or cooperate with his insurance company
regarding an investigation into the accident, which allegedly amounted to a breach of the
automobile insurance policy between them. In March 2015, the insurance company filed
the instant action in the Bradley County Chancery Court against the defendant tortfeasor,
seeking a declaratory judgment that the insurance company had no duty to defend or
indemnify the defendant tortfeasor based on his alleged breach of the insurance contract.
In June 2015, the Bradley County Chancery Court entered a declaratory judgment against
the defendant tortfeasor, holding that the insurer had no duty to defend or indemnify him.
In June 2017, the personal injury plaintiff filed a petition to set aside that declaratory
judgment pursuant to Tennessee Rule of Civil Procedure 60.02, alleging that she was a
missing indispensable party to the declaratory judgment action and requesting to
intervene therein. Following a hearing, the Bradley County Chancery Court denied the
personal injury plaintiff’s petition. The personal injury plaintiff has appealed. Having
determined that the personal injury plaintiff had a sufficient interest in the declaratory
judgment action and was therefore an indispensable party, we set aside the underlying
declaratory judgment as void for lack of subject matter jurisdiction.

      Tenn R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                           Vacated; Case Remanded
THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and JOHN W. MCCLARTY, J., joined.

Gary Massey, R. Ethan Hargraves, Danny R. Ellis, and Joshua R. Ward, Chattanooga,
Tennessee, for the appellant, Christina Wright.

Michael R. Campbell, Chattanooga, Tennessee, for the appellee, Tennessee Farmers
Mutual Insurance Company.

                                               OPINION

                              I. Factual and Procedural Background

       The underlying facts of this case are undisputed. On December 12, 2012, Brandon
W. DeBruce was involved in an automobile accident with Christina D. Wright in
Hamilton County, Tennessee. At that time, Mr. DeBruce was insured through an
automobile insurance policy issued by Tennessee Farmers Mutual Insurance Company
(“Tennessee Farmers”). Following notification of the accident by Mr. DeBruce’s spouse,
Tennessee Farmers paid $15,033.06 to Mr. DeBruce and $1,807.00 to Ms. Wright for
property damages pursuant to the collision and liability coverage provisions of the policy.
Subsequently, on December 6, 2013, Ms. Wright filed a complaint against Mr. DeBruce
in Hamilton County Circuit Court, alleging personal injury as a result of the automobile
accident and requesting $500,000.00 in damages.1 Tennessee Farmers concedes that Ms.
Wright obtained service of process upon Mr. DeBruce in September 2014.

       On March 19, 2015, Tennessee Farmers filed a complaint in the Bradley County
Chancery Court (“trial court”), seeking a declaratory judgment pursuant to Tennessee’s
Declaratory Judgments Act. See Tenn. Code Ann. § 29-14-101, et seq. (2012). With its
complaint, Tennessee Farmers attached a copy of the automobile insurance policy
covering Mr. DeBruce, which expressly required Mr. DeBruce to notify Tennessee
Farmers “[i]f a claim is made or a suit is brought against any person or entity who claims
coverage under this policy” and further required Mr. DeBruce to cooperate with
Tennessee Farmers’ investigation following any accident. Tennessee Farmers alleged
that Mr. DeBruce had neither notified the company of Ms. Wright’s lawsuit against him
nor cooperated with its investigation into the accident, which it claimed amounted to a
material breach of Mr. DeBruce’s responsibilities pursuant to the automobile insurance

1
  The pleadings from the personal injury action filed in Hamilton County are not part of the record for this
case on appeal. The record does not indicate whether Tennessee Farmers provided legal defense for Mr.
DeBruce in the personal injury action or was in any other way involved in the Hamilton County Circuit
Court proceedings.
                                                     2
policy. Tennessee Farmers did acknowledge, however, that Ms. Wright’s counsel had
notified it of the pending Hamilton County lawsuit in January 2015. Tennessee Farmers
requested a declaratory judgment that it was no longer required to defend or indemnify
Mr. DeBruce in Ms. Wright’s lawsuit against him because of his breach of the policy’s
requirements.

        Although service in the declaratory judgment action was perfected against Mr.
DeBruce, he did not respond to the complaint. Subsequently, Tennessee Farmers filed a
motion for default judgment on May 11, 2015. On May 26, 2015, Tennessee Farmers
filed a notice of hearing on its motion for default judgment, and on June 15, 2015, the
trial court conducted a hearing on the motion. The trial court subsequently entered
default judgment against Mr. DeBruce on June 22, 2015. None of the pleadings in the
declaratory judgment action reflect service upon Ms. Wright or her counsel.

       On March 17, 2017, Ms. Wright, who was not a party to the declaratory judgment
action, filed a motion in the trial court to set aside the judgment pursuant to Tennessee
Rule of Civil Procedure 60.02. Ms. Wright alleged that she was an indispensable party to
the declaratory judgment action because she had “a direct interest in its outcome, as the
judgment leaves Mr. DeBruce without the means to satisfy or defend himself in the
proceedings in Hamilton County.”2 Ms. Wright requested that the trial court set aside the
judgment as void, “allow Ms. Wright to intervene as an interested party, and set a hearing
to determine the matter on the merits.” On June 6, 2017, Ms. Wright filed a “Petition to
Set Aside Judgment,” which was nearly identical in form and substance to her March 17,
2017 motion.

       Following a hearing, the trial court denied Ms. Wright’s petition to set aside the
default judgment via an order entered September 20, 2017.3 The court explained in its
order in pertinent part:

              Both parties have provided case law concerning the rights of parties.
        According to the case law, Ms. Wright is, at most, an incidental

2
  The record does not indicate the financial status of Mr. DeBruce or whether Mr. DeBruce had
independently retained counsel to represent him in the personal injury action in Hamilton County.
3
  The trial court ruled on Ms. Wright’s “Petition to Set Aside Judgment” in its order and did not explicitly
rule on or dismiss the “Motion to Set Aside Final Judgment.” The trial court acknowledged the existence
of the identical motion, however, and appears to have consolidated the two filings in its order. We
determine that the redundant motion in this case raised no new issues, meaning that the finality of the
judgment was not affected. See, e.g., In re Estate of Ridley, 270 S.W.3d 37, 40 (Tenn. 2008) (determining
that a judgment is final “if it adjudicated all the claims raised in the pleadings and the rights and liabilities
of all the parties”).
                                                       3
      beneficiary. As such, there is an additional question of “does she have an
      interest which would be affected by the declaration.” Certainly Ms.
      Wright’s ability to collect on any judgment she obtained against Mr.
      DeBruce for his liability in an automobile accident would be affected by the
      declaration in this case. [Tennessee Farmers] was put on notice that Ms.
      Wright would be making a claim against [Mr. DeBruce] in January 2015.
      [Tennessee Farmers] filed this declaratory judgment action in March 2015
      claiming [Mr. DeBruce] failed twice to give his examination under oath
      after failing to give them notice he was in an accident. A default judgment
      was granted. Ms. Wright claims she is an indispensable party to this suit,
      since indispensable is defined as “any person with an interest.” After
      questioning both counsel in this case, it was represented [that] this is a case
      of first impression.

              Mr. DeBruce had a right in this case, which he failed to protect by
      not filing an answer to the complaint in this matter and having a default
      judgment rendered against him in 2015. He has not asked this Court to set
      it aside. The court therefore finds that while Ms. Wright had an interest
      affected by the outcome of the case, she was an incidental beneficiary.
      Further, her rights rise no higher than the rights of Mr. DeBruce which
      were negated by his failure to cooperate. . . .

            Therefore, the petition filed in this matter by Ms. Wright is hereby
      denied and dismissed.

Ms. Wright timely appealed.

                                   II. Issues Presented

      Ms. Wright presents one issue for our review:

      1.     Whether the trial court erred by denying Ms. Wright’s petition
             seeking to set aside the declaratory judgment based upon the trial
             court’s finding that Ms. Wright had only an “incidental” interest in
             the outcome of the case.

Tennessee Farmers presents one additional issue for review:

      2.     Whether Ms. Wright had standing or asserted proper grounds to
             challenge the trial court’s entry of default judgment in favor of
             Tennessee Farmers against Mr. DeBruce.
                                            4
                                   III. Standard of Review

       We review a non-jury case de novo upon the record with a presumption of
correctness as to the findings of fact unless the preponderance of the evidence is
otherwise. See Tenn. R. App. P. 13(d); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn.
2000). “In order for the evidence to preponderate against the trial court’s findings of fact,
the evidence must support another finding of fact with greater convincing effect.” Wood
v. Starko, 197 S.W.3d 255, 257 (Tenn. Ct. App. 2006). We review questions of law,
including those of statutory construction, de novo with no presumption of correctness.
See Bowden, 27 S.W.3d at 916 (citing Myint v. Allstate Ins. Co., 970 S.W.2d 920, 924
(Tenn. 1998)); see also In re Estate of Haskins, 224 S.W.3d 675, 678 (Tenn. Ct. App.
2006).

       A trial court’s decision to deny relief pursuant to Tennessee Rule of Civil
Procedure 60.02 is reviewed for an abuse of discretion. See Henry v. Goins, 104 S.W.3d
475, 479 (Tenn. 2003). Similarly, trial courts have discretion to determine the presence
of necessary parties to a declaratory judgment and to require their joinder. 4 See Reed v.
Town of Louisville, No. E2006-01637-COA-R3-CV, 2007 WL 816521, at *2 (Tenn. Ct.
App. Mar. 19, 2007). Our Supreme Court has elucidated generally that “[a]n abuse of
discretion occurs when a court strays beyond the applicable legal standards or when it
fails to properly consider the factors customarily used to guide the particular
discretionary decision.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010).
“A court abuses its discretion when it causes an injustice to the party challenging the
decision by (1) applying an incorrect legal standard, (2) reaching an illogical or
unreasonable decision, or (3) basing its decision on a clearly erroneous assessment of the
evidence.” Id.

                          IV. Standing and Subject Matter Jurisdiction

        Rule 60.02 provides in pertinent part that “[o]n motion and upon such terms as are
just, the court may relieve a party or the party’s legal representative from a final
judgment, order or proceeding” if the judgment is void or for “any other reason justifying
relief from the operation of the judgment.” Tenn. R. Civ. P. 60.02. In her motion and

4
  The courts of this state have traditionally utilized the terms “necessary party” and “indispensable party”
interchangeably. See, e.g., Brewer v. Lawson, 569 S.W.2d 856, 858 (Tenn. Ct. App. 1978) (“Only a party
who will be directly affected by a decree and whose interest is not represented by any other party to the
litigation is an indispensable or necessary party, that is, one without which no valid decree may be entered
settling the rights between the parties that are before the Court.”) .

                                                     5
petition to set aside the final judgment, Ms. Wright asserted that the order granting a
declaratory judgment was void because the trial court did not possess subject matter
jurisdiction due to the non-joinder of an indispensable party. Ms. Wright also sought to
intervene in the action. Tennessee Farmers contends that Ms. Wright had no standing to
file a motion to set aside the final judgment because (1) she was not a party to the
proceedings and (2) Tennessee Rule of Civil Procedure 60.02 provides no avenue of
relief for non-parties.

       We note, however, that Ms. Wright’s petition to set aside the judgment and her
sole issue on appeal challenge the trial court’s subject matter jurisdiction due to the
court’s alleged noncompliance with the Declaratory Judgments Act. A declaratory
judgment action with missing indispensable parties raises a question of the trial court’s
subject matter jurisdiction, which this Court may address sua sponte. See Osborn v.
Marr, 127 S.W.3d 737, 739 (Tenn. 2004) (“Tennessee’s courts derive subject matter
jurisdiction from the state constitution or from legislative acts.”); Morrow v. Bobbit, 943
S.W.2d 384, 392 (Tenn. Ct. App. 1996) (“This Court is required to consider the subject
matter jurisdiction of both this Court and the trial court regardless of whether the
existence thereof is presented as an issue.”); Huntsville Util. Dist. of Scott Cty., Tenn. v.
Gen. Trust Co., 839 S.W.2d 397, 403 (Tenn. Ct. App. 1992), perm. app. denied (Tenn.
May 26, 1992) (“Parties seeking declaratory relief must also satisfy the more specific
requirements of the Declaratory Judgments Act before the courts have jurisdiction to
grant declaratory relief.”). “It is well settled that, when the court has no jurisdiction of
the subject-matter, it cannot be conferred either by waiver or consent, and all of its orders
and decrees are a nullity, and may be collaterally attacked.” Shelby Cty. v. City of
Memphis, 365 S.W.2d 291, 292 (Tenn. 1963) (quoting In re S. Lumber & Mfg. Co., 210
S.W. 639, 640 (Tenn. 1919)).

       Upon an examination of the trial court’s jurisdiction over this case, and for the
reasons set forth in the following section, we determine that the trial court did not have
subject matter jurisdiction to enter a declaratory judgment in Ms. Wright’s absence. See
Huntsville Util. Dist., 839 S.W.2d 403. The trial court, therefore, also did not have
subject matter jurisdiction to subsequently rule on Ms. Wright’s petition to set aside the
judgment. See Osborn, 127 S.W.3d at 739 (“Courts may not exercise jurisdictional
powers that have not been conferred on them directly or by necessary implication.”).
Having determined that the issue of subject matter jurisdiction is dispositive, we will not
review the trial court’s order denying Ms. Wright’s petition to set aside the judgment or
Tennessee Farmer’s argument regarding Ms. Wright’s standing. We vacate the
declaratory judgment order and remand this case for either the joinder of all
indispensable parties or dismissal for lack of subject matter jurisdiction.

                                             6
                   V. Indispensable Parties to a Declaratory Judgment

        Tennessee Code Annotated § 29-14-107 (2012) sets forth the general requirements
for parties to be joined to a claim brought pursuant to the Declaratory Judgments Act.
Pertinent to this case, the statute provides that “[w]hen declaratory relief is sought, all
persons shall be made parties who have or claim any interest which would be affected by
the declaration, and no declaration shall prejudice the rights of persons not parties to the
proceedings.” Tenn. Code Ann. § 29-14-107(a). As this Court has explained concerning
the strict requirements imposed by the Declaratory Judgments Act with respect to the
joinder of necessary parties:

              Because of the nature of declaratory relief, the Declaratory
       Judgments Act, Tenn. Code Ann. § 29-14-101 et seq., “makes it incumbent
       that every person having an affected interest be given notice and an
       opportunity to be heard before declaratory relief may be granted.” The
       Huntsville Utility District of Scott County, Tenn. v. General Trust Co., 839
S.W.2d 397, 403 (Tenn. [Ct.] App. 1992). Tenn. Code Ann. § 29-14-
       107(a) requires:

              When declaratory relief is sought, all persons shall be made
              parties who have or claim any interest which would be
              affected by the declaration, and no declaration shall prejudice
              the rights of persons not parties to the proceedings.

       Id. The statute, therefore, imposes stricter requirements than those imposed
       generally by the Tennessee Rules of Civil Procedure requiring the joinder
       of indispensable parties in all types of cases. See[,] e.g., Tenn. R. Civ. P.
       19.01 and 19.02. Consequently, non-joinder of necessary parties is fatal on
       the question of a justiciable issue, which, in an action for declaratory
       judgment, is a necessary condition of judicial relief. See Huntsville Utility,
839 S.W.2d at 399 (citing Wright v. Nashville Gas & Heating Co., 183
Tenn. 594, 598, 194 S.W.2d 459, 461 (1946)); Powers v. Vinsant, 165
Tenn. 390, 54 S.W.2d 938 (1932).

Timmins v. Lindsey, 310 S.W.3d 834, 839 (Tenn. Ct. App. 2009), perm. app. denied
(Tenn. Mar. 15, 2010).

        Ms. Wright contends that the plain language of the statute requires the joinder of
all persons who claim an interest that would be affected by the declaration, regardless of
how minor that interest may be. Specifically, Ms. Wright asserts that the trial court
applied an incorrect legal standard by determining that she was not an indispensable party
                                             7
despite finding that she “had an interest affected by the outcome of the case.” Under Ms.
Wright’s interpretation of the statute, the trial court’s determination that she was “at
most, an incidental beneficiary” should not have factored into the determination of
whether she was an indispensable party.

       In contrast, Tennessee Farmers contends that the trial court has wide discretion to
determine who might be necessary or indispensable parties to a declaratory judgment
action. See Timmins, 310 S.W.3d at 839. Tennessee Farmers postulates that the trial
court applied a proper legal standard by determining that Ms. Wright, being “at most, an
incidental beneficiary,” was too remotely affected to be an indispensable party to a
declaratory judgment. See Shelby Cty. Bd. of Comm’rs v. Shelby Cty. Quarterly Court,
392 S.W.2d 935, 940 (Tenn. 1965) (“It is true the nonjoinder of necessary parties is fatal
on the question of a justiciable issue, which, in an action for a declaratory judgment, is a
necessary condition of judicial relief. This does not mean, however, all persons who
might be remotely affected need be joined.”). In the alternative, Tennessee Farmers
contends that Ms. Wright was not an indispensable party because her inclusion in the
declaratory judgment action would not change the outcome. Upon a thorough review of
the record and relevant case law, we determine that the trial court applied an incorrect
legal standard when determining that Ms. Wright was not an indispensable party to the
declaratory judgment concerning Tennessee Farmers’ defense and indemnification of Mr.
DeBruce.

       Contrary to the parties’ representations to the trial court, this is not a case of first
impression in Tennessee. Our Supreme Court addressed a similar situation in the case of
Commercial Cas. Ins. Co. v. Tri-State Transit Co. of La., 146 S.W.2d 135 (Tenn. 1941).
In Commercial Cas. Ins. Co., a bus operated by Tri-State Transit Company (“Tri-State”)
was involved in an automobile accident while covered under an insurance policy issued
by Commercial Casualty Insurance Company (“Commercial Casualty”). Id. at 135. The
injured parties from that accident subsequently filed suit against Tri-State in Scott
County, Arkansas. Id. Tri-State did not notify Commercial Casualty of the pending
lawsuit, however, in an apparent breach of the contract of insurance between them. Id. at
136. After learning of the lawsuit through other means, Commercial Casualty notified
Tri-State of the breach and its decision to “proceed[] with the defense of the case under
protest and with full reservation of rights.” Id. After the Arkansas trial court rendered
judgment against Tri-State, Commercial Casualty brought suit against Tri-State in
Tennessee, requesting a declaratory judgment that the insurance policy had been
breached and Commercial Casualty had no duty to indemnify Tri-State.5 Id. Tri-State

5
  The relevant section of Tennessee’s Declaratory Judgments Act was codified at Tennessee Code
Annotated § 8845 at the time that the opinion in Commercial Cas. Ins. Co. was filed. The language of §
8845, now codified at Tennessee Code Annotated § 29-14-107, has not changed.
                                                  8
moved to dismiss, arguing, inter alia, that the injured parties who had filed the personal
injury claim against it were missing necessary parties in the declaratory judgment action.
Id.

       In Commercial Cas. Ins. Co., our Supreme Court held that the injured parties who
had filed the original personal injury claim were necessary parties and indispensable to
the declaratory judgment action regarding the insurance company’s duty to indemnify.
Id. As the Court explained:

      Declaratory judgment may be refused where, if rendered, it would not
      terminate the uncertainty or controversy giving rise to the proceedings. . . .
      It may be inferred from the bill that defendant is an interstate motor carrier.
      If such is the case, then under the Federal Motor Carrier Act . . . defendant,
      under its certificate or permit, was obligated to comply with such
      reasonable rules and regulations as the Interstate Commerce Commission
      shall prescribe [including the maintenance of surety bonds or an insurance
      policy for payment of] any final judgment recovered against such motor
      carrier for bodily injuries to or the death of any person resulting from the
      negligent operation, maintenance, or use of motor vehicles under such
      certificate or permit, or for loss or damage to property of others. . . . If this
      be true, and if the policy of insurance be conditioned as required by the
      Federal Motor Carrier Act, then it follows that [the injured parties from the
      personal injury suit] were necessary parties to this bill, their interests being
      directly involved. Not having been made parties defendant, any declaratory
      judgment entered herein would not be binding upon them . . . and would
      not terminate the controversy or remove the uncertainty giving rise to the
      proceedings.

Id. at 136-37 (internal quotations and citations omitted) (emphasis added). The High
Court accordingly affirmed the trial court’s dismissal of the declaratory judgment action
for failure to join the necessary interested parties. Id. at 136.

       Similarly, and as pertinent to this matter, Tennessee law requires automobile
drivers to maintain acceptable proof of financial responsibility as defined by the
Tennessee Financial Responsibility Law of 1977. See Tenn. Code Ann. § 55-12-101, et
seq. (2017). “Although the Financial Responsibility Law does not, by its express terms,
require drivers to obtain liability insurance in order to comply, the Law clearly
contemplates that most drivers will comply by purchasing liability insurance.” Purkey v.
Am. Home Assur. Co., 173 S.W.3d 703, 706-07 (Tenn. 2005); see Tenn. Code Ann. § 55-
12-102(12) (2017) (defining “proof of financial responsibility” as proof of liability

                                             9
insurance, self insurance, or deposit of cash or post of bond in the amount of $60,000).
As our Supreme Court has explained:

              The purpose of Tennessee’s Financial Responsibility Law is to
       protect innocent members of the public from the negligence of motorists on
       the roads and highways. Specifically, “[t]he financial responsibility laws of
       this State are concerned with the ability of an automobile driver to pay for
       bodily injury and property damage for which he may be legally liable.”

Purkey, 173 S.W.3d at 706 (quoting Schultz v. Tenn. Farmers Mut. Ins. Co, 463 S.W.2d
702, 703 (Tenn. 1971)).

       We do not agree with Ms. Wright’s contention that Tennessee’s Declaratory
Judgments Act requires the joinder of all parties who claim an interest that might be
affected by the declaratory judgment regardless of the directness or proximity of their
claim. See Shelby Cty. Bd. of Comm’rs, 392 S.W.2d at 940; Byrn v. Metro. Bd. of Pub.
Educ., No. 01-A-019003-CV-00124, 1991 WL 7806, at *5 (Tenn. Ct. App. Jan. 30, 1991)
(“Persons having only an indirect interest in the subject matter of the suit need not be
joined.”). However, we determine our Supreme Court’s decision in Commercial Cas.
Ins. Co. to be controlling on the issue of Ms. Wright’s interest in the instant action.
Specifically, we determine that the mandatory nature of liability insurance or other proof
of financial responsibility renders the interest of an injured motorist sufficiently direct so
as to make that motorist a necessary party to a declaratory judgment action on the issue of
coverage between a defendant tortfeasor and the tortfeasor’s insurer. See, e.g.,
Commercial Cas. Ins. Co., 146 S.W.2d at 136-37.

       Case law from other states with similar interpretations of the requirements for
declaratory judgment actions supports this determination as well. Although decisions
from other states are not binding on this Court, states adopting similar statutes based on
the Uniform Declaratory Judgments Act (“UDJA”) may be examined as persuasive
authority. See Ottinger v. Stooksbury, 206 S.W.3d 73, 79 (Tenn. Ct. App. 2006)
(determining that, in the absence of Tennessee case law directly on point, the court could
consider out-of-state case law as persuasive authority).

       When considering other jurisdictions that have incorporated the UDJA into their
statutory framework, we note that there is a lack of consensus concerning the
interpretation of the language stemming from Section 11 of the UDJA, which requires
that “all persons shall be made parties who have or claim any interest which would be
affected by the declaration, and no declaration shall prejudice the rights of persons not
parties to the proceeding.” See Unif. Declaratory Judgments Act § 11, 12 U.L.A. 516
(1994); see also Tenn. Code Ann. § 29-14-107. Specifically, certain states, such as North
                                             10
Carolina, Pennsylvania, Arkansas, and New Mexico, align with our Supreme Court’s
interpretation of the UDJA in Commercial Cas. Ins. Co. by strictly construing the above-
quoted language to mean that a court must either join all necessary parties or refuse to
entertain the declaratory judgment action. See Files v. Hill, 594 S.W.2d 836, 841 (Ark.
1980); Gallegos v. Nev. Gen. Ins. Co., 248 P.3d 912, 917 (N.M. Ct. App. 2010);
Edmondson v. Henderson, 99 S.E.2d 869, 871-72 (N.C. 1957); Vale Chem. Co. v.
Hartford Accident & Indem. Co., 516 A.2d 684, 687 (Pa. 1986).

         Other jurisdictions have held that the failure to join a necessary party does not
preclude the trial court from having subject matter jurisdiction over a declaratory
judgment action; rather, the declaratory judgment will be treated as non-binding on the
absent parties. See Hartman v. United Heritage Prop. & Cas. Co., 108 P.3d 340, 343
(Idaho 2005); Harp v. Ind. Dep’t of Highways, 585 N.E.2d 652, 658 (Ind. Ct. App. 1992);
Allstate Ins. Co. v. Hayes, 499 N.W.2d 743, 750 (Mich. 1993); El Naggar Fine Arts
Furniture, Inc. v. Indian Harbor Ins. Co., 248 S.W.3d 202, 209 (Tex. Ct. App. 2007); see
also Metro. Prop. & Liab. Ins. Co. v. Acord, 465 S.E.2d 901, 910 (W. Va. 1995) (holding
that “it was sufficient that all interested parties in the case had been notified of the
pending action, thereby providing them an opportunity to participate in the action if they
so desired”).

       One state in particular, Pennsylvania, interprets the joinder requirement from
Section 11 of the UDJA in a similar manner to our Supreme Court’s interpretation in
Commercial Cas. Ins. Co. and has also addressed the issue of whether injured parties are
indispensable to a declaratory judgment between a defendant tortfeasor and the
tortfeasor’s insurer. See Vale Chem. Co., 516 A.2d at 687 (“No adequate reason has been
advanced for us to ignore the statutory requirement that all interested parties shall be
joined before a declaratory judgment can issue.”). In Vale Chem. Co., Pennsylvania’s
Supreme Court reviewed a case wherein a drug manufacturer brought a declaratory
judgment action against its product liability insurers without also joining the plaintiff
from the related product liability action brought against the manufacturer. See 516 A.2d
at 685-86. First noting that the original parties to the declaratory judgment action
“concede, as they must, that the [product liability] plaintiff has an interest in seeing that
an insurance company pays the judgment against its insured,” the Pennsylvania Supreme
Court upheld the determination that

       where claims are asserted against an insured, the persons asserting the
       claims are indispensable parties in a declaratory judgment action on the
       issue of coverage between the insured and the insurance carrier. The failure
       to join a claimant whose interests would be affected has been held to be
       fatal error.

                                             11
Id. at 686 (quoting Pleasant Twp., Warren Cty. v. Erie Ins. Exch., 348 A.2d 477, 479-80
(Pa. Commw. Ct. 1975) (quoting in turn existing case law from a previous opinion issued
by Pennsylvania’s Supreme Court)).

       We find the reasoning of the Pennsylvania courts to be persuasive under these
circumstances. We therefore determine that the holding of our Supreme Court in Comm.
Cas. Ins. Co. and persuasive authority from similar jurisdictions support a determination
that Ms. Wright, as an injured plaintiff, had a sufficiently direct interest in the declaratory
judgment action between Mr. DeBruce and Tennessee Farmers so as to render her an
indispensable party to that action. The trial court therefore maintained no subject matter
jurisdiction to render a declaratory judgment in Ms. Wright’s absence.

       We note that the drug manufacturer in Vale Chem. Co. was no longer a party to the
product liability plaintiff’s suit at the time that the Pennsylvania Supreme Court reviewed
the declaratory judgment action, meaning that the plaintiff’s later inclusion in the suit
would have had no material effect on the outcome of the related controversy. See Vale
Chem. Co., 516 A.2d at 295 n.2. Recognizing that the non-joinder of parties was strictly
an issue of subject matter jurisdiction, the court in that case stated that any material effect
was “irrelevant to a determination of whether there was jurisdiction over this matter when
it was first filed.” Id. Similarly, here, although we cannot predict the extent to which
Ms. Wright’s inclusion will have an effect on the outcome of this litigation, we are not
persuaded that this uncertainty precludes Ms. Wright’s inclusion as a necessary party.
Tennessee’s Declaratory Judgments Act requires the joinder of all parties who “have or
claim any interest which would be affected by the declaration.” See Tenn. Code Ann. §
29-14-107(a). This is a qualification independent from whether a party has material
evidence to contribute. Ms. Wright’s impact on the outcome of the declaratory judgment
action is thereby irrelevant as to whether the trial court had subject matter jurisdiction
when the suit was initially filed.

        We conclude that Ms. Wright, as a person allegedly injured due to the actions of
the insured, Mr. DeBruce, was a necessary party to the declaratory judgment action
brought to resolve Tennessee Farmers’ obligation of defense and indemnification of Mr.
DeBruce. This means that without the joinder of Ms. Wright as a necessary party, the
trial court lacked subject matter jurisdiction and would have been unable to enter a
declaratory judgment in the case at bar. See Huntsville Util. Dist., 839 S.W.2d 403
(“Parties seeking declaratory relief must also satisfy the more specific requirements of the
Declaratory Judgments Act before the courts have jurisdiction to grant declaratory
relief.”).

       Accordingly, we determine that the trial court erred by applying an incorrect legal
standard concerning Ms. Wright’s position as an interested party. See Lee Med., Inc., 312
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S.W.3d at 524. Specifically, the trial court made two determinations with respect to Ms.
Wright’s legal interest. First, the court determined that Ms. Wright was “at most, an
incidental beneficiary.” As previously discussed, however, our Supreme Court has held
that mandatory insurance or proof of financial responsibility directly affects the interests
of injured motorists. See Comm. Cas. Ins. Co., 146 S.W. at 137. Second, the trial court
determined that Ms. Wright’s rights “rose no higher than the rights of Mr. DeBruce,”
which the court found Mr. DeBruce had negated “by not filing an answer to the
complaint in this matter and having a default judgment rendered against him in 2015.”
We note, however, that a judgment entered without subject matter jurisdiction is void and
thus cannot be relied upon as dispositive of rights. See Osborn, 127 S.W.3d at 739. We
therefore vacate the trial court’s declaratory judgment order as void due to lack of subject
matter jurisdiction.

                                      VI. Conclusion

       For the foregoing reasons, we vacate the declaratory judgment entered by the trial
court on June 22, 2015, as void due to lack of subject matter jurisdiction. We remand this
matter to the trial court, pursuant to applicable law, for the joinder of any necessary
parties pursuant to Tennessee Code Annotated § 29-14-107 and consistent with this
opinion or, in the alternative, dismissal of the case for lack of subject matter jurisdiction.
Costs on appeal are taxed to the appellee, Tennessee Farmers Mutual Insurance
Company.

                                                  _________________________________
                                                  THOMAS R. FRIERSON, II, JUDGE

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