Court Opinion

ID: 4509971
Source: CourtListenerOpinion
Date Created: 2020-02-24 23:08:49.894467+00
Date Added: 2024-06-11T12:13:10.752505
License: Public Domain

02/24/2020
               IN THE COURT OF APPEALS OF TENNESSEE
                            AT JACKSON
                               January 14, 2020 Session

 SIDNEY W. WHITE ET AL. v. STATE FARM MUTUAL AUTOMOBILE
                   INSURANCE COMPANY

                 Appeal from the Chancery Court for Shelby County
                     No. CH-18-1120 Jim Kyle, Chancellor
                     ___________________________________

                           No. W2019-00918-COA-R3-CV
                       ___________________________________

Appellants were injured in a car accident and, with the permission of their insurance
company, Appellee State Farm Mutual Automobile Insurance Company (“State Farm”),
settled with the at-fault driver for his policy limits under his coverage with United
Services Automobile Association (“USAA”). To fully recover for their injuries,
Appellants notified State Farm of their willingness to settle or submit their underinsured
motorist (“UIM”) claim to binding arbitration. After evaluating Appellants’ claim, State
Farm informed Appellants that it would not offer a settlement for the UIM claim because
it believed they had been fully compensated by the payment from USAA. Appellants, in
response, demanded that State Farm elect to either participate in binding arbitration or
decline arbitration and preserve its subrogation rights under Tennessee Code Annotated
section 56-7-1206 (“the Statute”). Believing that its obligation under the Statute was
never triggered, State Farm refused to make an election. Appellants filed an action for
declaratory judgment asking the trial court to declare that State Farm failed to comply
with the Statute. On competing motions for summary judgment, the trial court granted
State Farm’s motion and denied Appellants’ motion. Finding no error, we affirm.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                            Affirmed and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which JOHN W.
MCCLARTY and ARNOLD B. GOLDIN, JJ., joined.

Randall N. Songstad, Memphis, Tennessee, for the appellants, Mardess W. White, and
Sidney W. White.

Christopher L. Vescovo, Memphis, Tennessee, for the appellee, State Farm Mutual
Automobile Insurance Company.
                                        OPINION

                                     I. Background

      On September 10, 2017, Sidney and Mardess White (the “Whites” or
“Appellants”) were involved in an automobile accident with another driver, Keireon
Smith. Mr. Smith, the at-fault driver, was insured by United Services Automobile
Association (“USAA”). Mr. Smith’s policy with USAA included liability coverage of
$25,000 per person and $50,000 per accident. The Whites’ automobile insurance policy
was issued by State Farm Mutual Automobile Insurance Company (“State Farm” or
“Appellee”) and included underinsured motorist (“UIM”) coverage with policy limits of
$100,000 per person and $300,000 per accident.

      By letter dated April 24, 2018, the Whites, through their attorney, notified State
Farm of their intent to settle with USAA for the liability insurance policy limits of
$25,000 per person and $50,000 per accident. The letter also explained that the Whites
were willing to submit their UIM claim to arbitration and that they hoped to work
amicably toward a settlement with State Farm.

        On May 2, 2018, State Farm responded giving the Whites permission to settle with
USAA. State Farm also explained that it was “in the process of evaluating the under-
insured demand and [would] present an offer as soon as possible.” Thereafter, the Whites
settled with USAA for $50,000.

       On May 16, 2018, State Farm informed the Whites that it would not offer a
settlement for their UIM bodily injury coverage because State Farm believed the Whites
had been fully compensated for their injuries. On May 30, 2018, the Whites sent State
Farm a letter explaining that they were

       putting [State Farm] on notice that [they were] invoking the provisions of
       [Tennessee Code Annotated] 56-7-1206 [(“the Statute”)] wherein State
       Farm ha[d] thirty (30) days from the date of [the] letter to tender $25,000 to
       each insured in order to proceed to a jury trial or waive jury and go to
       arbitration.

The letter further stated that the Whites fully complied with their obligations under the
Statute as set forth in the April 24, 2018 letter. By letter dated June 28, 2018, State Farm
informed the Whites that “the provisions of th[e] [S]tatute have not been adhered to in
order to bind State Farm to arbitration.”

       On July 30, 2018, the Whites filed a Petition for Declaratory Judgment in the
Chancery Court of Shelby County (“trial court”), wherein they alleged, inter alia, that
State Farm refused to comply with its obligation under the Statute. State Farm filed its
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answer to the petition on October 18, 2018 wherein it denied that the mandatory
prerequisites under the UIM Statute had been met.

       On February 6, 2019, the parties filed a joint stipulation of facts. On March 5,
2019, the parties filed competing motions for summary judgment. The Whites argued,
inter alia, that State Farm failed to follow the requirements of Tennessee Code Annotated
sections 56-7-1206(g) and (k). Conversely, State Farm argued, inter alia, that because
the requirements of Tennessee Code Annotated section 56-7-1206(g)(2) had not been
met, State Farm’s obligation under the Statute was never triggered. By order of April 25,
2019, the trial court granted State Farm’s motion for summary judgment and denied the
Whites’ motion for summary judgment. The Whites appeal.

                                           II. Issue

       Appellants’ sole issue on appeal is whether the trial court erred when it found that
the requirements under Tennessee Code Annotated section 56-7-1206(g)(2) had not been
met such that State Farm was not obligated to make an election under the Statute.

                                  III. Standard of Review

       A trial court’s decision to grant a motion for summary judgment presents a
question of law. Therefore, our review is de novo with no presumption of correctness
afforded to the trial court’s determination. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.
1997). This Court must make a fresh determination that all requirements of Tennessee
Rule of Civil Procedure 56 have been satisfied. Abshure v. Methodist Healthcare-
Memphis Hosps., 325 S.W.3d 98, 103 (Tenn. 2010). When a motion for summary
judgment is made, the moving party has the burden of showing that “there is no genuine
issue of material fact and the moving party is entitled to judgment as a matter of law.”
Tenn. R. Civ. P. 56.04. The parties filed a joint stipulation of facts and agree that there
are no genuine issues of material fact. However, because the parties filed competing
motions for summary judgment, both parties allege that they are entitled to judgment as a
matter of law. We now turn to that question.

                                        IV. Analysis

       In Tennessee,

       if a party . . . alleged to be liable for the bodily injury . . . of the insured
       offers the limits of all liability insurance policies available to the party . . .
       in settlement of the insured’s claim, the insured . . . may accept the offer
       [and] execute a full release of the party or parties on whose behalf the offer
       is made . . . .

                                             -3-
Tenn. Code Ann. § 56-7-1206(f). The insured may also “preserve the right to seek
additional compensation” from his or her UIM insurance carrier upon agreement that the
insured will submit his or her UIM claim to binding arbitration on all issues of tort and
liability damages. Tenn. Code Ann. § 56-7-1206(f).

       Tennessee Code Annotated section 56-7-1206(g) outlines certain requirements and
conditions that must be met to accomplish a settlement under the Statute. Section 56-7-
1206(g)(2) provides that the liability insurance company, which provided coverage to the
party to be released,

                 shall give written notice of the offer to the insured’s [UIM]
                 insurance carrier or its attorney, provide verification of the
                 coverage upon request and confirm to the [UIM] insurance
                 carrier or its attorney that the party or parties to be released
                 will agree in writing to cooperate with the [UIM] insurance
                 carrier in connection with the arbitration of the [UIM] claim;
                 provided, that the [UIM] insurance carrier will agree to waive
                 its subrogation rights against the party or parties to be
                 released;

Tenn. Code Ann. § 56-7-1206(g)(2). Additionally, Section 56-7-1206(g)(3) requires that
“the insured . . . shall give written notice to the [UIM] insurance carrier . . . of the
insured’s intent to accept the offer and agreement to submit the [UIM] claim to binding
arbitration.” Tenn. Code Ann. § 56-7-1206(g)(3). If the requirements of Sections 56-7-
1206(g)(2) and (g)(3) are met, then the UIM carrier may either (1) consent to settlement,
agree to binding arbitration of the UIM claim, and waive its subrogation rights, Tenn.
Code Ann. § 56-7-1206(g)(4); or (2) decline binding arbitration and preserve its
subrogation rights. Tenn. Code Ann. § 56-7-1206(k).1

       USAA offered the Whites $25,000 per person, the limits of its liability insurance
policy, in settlement of the Whites’ claims against Mr. Smith. See Tenn. Code Ann. §
       1
           Tennessee Code Annotated section 56-7-1206(k) provides, in pertinent part:

                 Notwithstanding the provisions of this section relating to binding
                 arbitration, after receipt of both of the notices referred to in subdivisions
                 (g)(2) and (3), the [UIM] insurance carrier, at its option, may elect to
                 decline binding arbitration and preserve its subrogation rights; provided,
                 that within thirty (30) days after receipt of both of the notices, it pays the
                 insured the full amount of the offer made by the liability insurance
                 company or companies providing coverage to the party or parties seeking
                 the release.

Tenn. Code Ann. § 56-7-1206(k).

                                                     -4-
56-7-1206(f). In accordance with Section 56-7-1206(g)(3), the Whites notified State
Farm of their intent to settle with USAA and informed State Farm of their willingness to
submit their UIM claim to arbitration. See Tenn. Code Ann. § 56-7-1206(g)(3).

       At issue in this case is whether the requirements of Section 56-7-1206(g)(2) were
met. It is undisputed, and the parties agreed in their joint stipulation of facts, that

        [a]t no time did USAA as the liability carrier give written notice of the offer
        of the liability limits and confirm to State Farm that its insureds, the
        Smiths, [would] agree in writing to cooperate with State Farm in
        connection with any future arbitration.

Nonetheless, the Whites argue that the requirements of Section 56-7-1206(g)(2) were
met, and that State Farm was required, under Section 56-7-1206(g)(4) or 56-7-1206(k), to
elect to either submit to binding arbitration, or to decline binding arbitration and preserve
its subrogation rights.

        The Whites’ argument rests on the placement of the phrase “upon request” in
Section 56-7-1206(g)(2). The Whites contend that the phrase “upon request” applies to
the liability insurance company’s duty to (1) provide verification of the coverage, and (2)
confirm to the UIM insurance carrier that the party to be released would agree to
cooperate with the UIM insurance carrier at arbitration. See Tenn. Code Ann. § 56-7-
1206(g)(2). Because State Farm did not request that USAA provide it with either
verification of the liability insurance coverage or with confirmation that Mr. Smith would
cooperate with State Farm at arbitration, the Whites contend that the requirements of
(g)(2) were satisfied.

       Conversely, State Farm argues that the phrase “upon request” only applies to
USAA’s duty to provide verification of the coverage and not to USAA’s duty to confirm,
to State Farm, that Mr. Smith would agree to cooperate with State Farm at arbitration.
Further, because it is undisputed that USAA did not provide State Farm with
confirmation that Mr. Smith would cooperate with State Farm at arbitration, State Farm
contends that the requirements of Section 56-7-1206(g)(2) were not satisfied and, as such,
it was not required to make an election under either Section 56-7-1206(g)(4) or (k).2

        In resolving the foregoing dispute, the trial court found that the Legislature’s use

        2
            We note that State Farm is not disputing that the first and second parts of (g)(2) were satisfied.
The Whites’ attorney gave State Farm written notice of USAA’s offer in the April 24, 2018 letter to State
Farm, and State Farm did not request that USAA provide verification of the liability insurance coverage.
See Tenn. Code Ann. § 56-7-1206(g)(2) (“The liability insurance company . . . providing coverage to the
party . . . to be released shall give written notice of the offer to the insured’s [UIM] insurance carrier . . .,
provide verification of the coverage upon request . . . .”).

                                                     -5-
of the word “shall” indicates that the requirements and conditions in Section 56-7-
1206(g)(2) must be fulfilled before State Farm would be required to make an election
under the Statute. The trial court further found that

      [t]he parties . . . stipulated that at no time did [USAA] . . . confirm[] to
      State Farm that USAA’s insured[] would agree in writing to cooperate with
      State Farm in connection with any future arbitration.

Therefore, the trial court denied the Whites’ motion for summary judgment and granted
State Farm’s motion for same. While we do not dispute that the Legislature’s use of
“shall” means that the statutory requirements are mandatory, the parties’ arguments,
supra, rest on the more subtle question of whether the phrase “upon request” is a
triggering event for the requirement that the liability insurance company confirm to the
UIM insurance carrier that the party to be released would agree in writing to cooperate
with the UIM insurance carrier at arbitration. See Tenn. Code Ann. § 56-7-1206(g)(2).

      In interpreting statutes, the Tennessee Supreme Court has provided the following
guidance:

      Issues of statutory construction present questions of law that we review de
      novo with no presumption of correctness. Martin v. Powers, 505 S.W.3d
512, 518 (Tenn. 2016). The primary goal of statutory interpretation is to
      carry out legislative intent without expanding or restricting the intended
      scope of the statute. State v. Smith, 484 S.W.3d 393, 403 (Tenn. 2016)
      (citations omitted). In determining legislative intent, we first must look to
      the text of the statute and give the words of the statute “their natural and
      ordinary meaning in the context in which they appear and in light of the
      statute’s general purpose.” Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368
      (Tenn. 2012) (citations omitted). When a statute’s language is clear and
      unambiguous, we enforce the statute as written; we need not consider other
      sources of information. Frazier v. State, 495 S.W.3d 246, 249 (Tenn.
      2016). We apply the plain meaning of a statute’s words in normal and
      accepted usage without a forced interpretation. Baker v. State, 417 S.W.3d
428, 433 (Tenn. 2013). We do not alter or amend statutes or substitute our
      policy judgment for that of the Legislature. Armbrister v. Armbrister, 414
S.W.3d 685, 704 (Tenn. 2013).

Coleman v. Olson, 551 S.W.3d 686, 694 (Tenn. 2018). Further, “[t]his Court is . . .
bound by the general rules of grammatical construction” when we interpret the language
in statutes. Nationwide Mut. Fire Ins. Co. v. Memphis Light, Gas & Water, 578 S.W.3d
26, 34 (Tenn. Ct. App. 2018), appeal denied (Apr. 15, 2019) (quoting Hawkins v. Case
Mgmt., Inc., 165 S.W.3d 296, 300 (Tenn. Ct. App. 2004) (citing Melton v. State, 23
S.W.2d 662 (Tenn. 1930); McCollum v. Huffstutter, No. M2002-00051-COA-R3-CV,
                                         -6-
2002 WL 31247077 (Tenn. Ct. App. Oct. 8, 2002))). An examination of the grammatical
construct of (g)(2) clearly leads to the conclusion that the prepositional phrase, “upon
request,” modifies only the phrase requiring USAA to provide verification. Section
(g)(2) outlines a series of three things the liability insurance company “shall” do. Items
in a series are most often separated from one another with a comma. The use of the
comma clearly delineates the items in the series (and any phrases modifying those items)
from other items (and their modifiers) in the series.

       The confusion in section (g)(2) arises from the grammatical construction joining
the last two requirements, i.e., “provide verification of coverage upon request and
confirm . . . that the party . . . to be released will . . . cooperate . . . .” (Emphasis added).
In the absence of a comma separating the prepositional phrase “upon request” from the
coordinating conjunction “and,” the Whites argue that the prepositional phrase “upon
request” modifies both the second and third statutory requirements, such that, in the
absence of a request from the UIM insurance carrier, State Farm, USAA would neither be
required to provide verification of coverage nor to confirm that the party to be released
would cooperate.

       There has been much debate in academics concerning the necessity of the so-
called Oxford or Serial Comma, i.e., the comma used before the coordinating conjunction
that separates the last item in a series. Had the Legislature included this comma between
“upon request,” and “and,” it would be clear that the prepositional phrase “upon request”
modifies only the requirement that the liability insurance company provide verification of
coverage.

        However, even in the absence of the Oxford Comma, the Legislature joined the
last two requirements with the coordinating conjunction “and.”             Coordinating
conjunctions, i.e., and, or, but, for, nor, so, are used to connect grammatically equal
elements. See DIANA HACKER & NANCY SOMMERS, THE BEDFORD HANDBOOK 233
(Michelle M. Clark et al. eds., 9th ed. 2014) (“Choose coordinat[ing conjunctions] to
indicate that the ideas are equal or nearly equal in importance.”). As such, “and”
provides a line of demarcation separating the words that come before it from those used
after it.    Here, the prepositional phrase falls immediately before the coordinating
conjunction, i.e., “upon request and.” As a coordinating conjunction, “and” provides a
grammatical wall between what comes before it and what comes after it in the sentence.
Thus, applying modern grammatical rules and constructs, “upon request” modifies only
the second requirement, i.e., “to provide verification of coverage.” Because “upon
request” modifies only the second requirement, the third requirement, i.e. that USAA
would confirm to State Farm that Mr. Smith would agree to cooperate with State Farm at
arbitration, was a mandatory requirement, which State Farm did not have to request. In
other words, absent any request, USAA was required to notify State Farm of Mr. Smith’s
willingness to cooperate with arbitration in order to trigger State Farm’s obligation to
make its election under the Statute. It is undisputed that USAA did not confirm to State
                                            -7-
Farm that Mr. Smith would cooperate with State Farm at arbitration. It further appears
that Appellants, who desire arbitration, have taken no action to obtain USAA’s
confirmation that Mr. Smith would cooperate with State Farm at arbitration. As such, the
third requirement of (g)(2) has not been satisfied, and State Farm’s duty to elect an option
has not been triggered under the Statute. Accordingly, we affirm the trial court’s order.

                                     V. Conclusion

       For the foregoing reasons, we affirm the trial court’s order. The case is remanded
for such further proceedings as may be necessary and are consistent with this opinion.
Costs of the appeal are assessed to the Appellants, Sidney W. White and Mardess W.
White, for all of which execution may issue if necessary.

                                                 _________________________________
                                                 KENNY ARMSTRONG, JUDGE

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