AMERICAN JUSTICE INS. v. Hutchison

• Decision Date: 27 March 2000
• Citation: 15 S.W.3d 811
• Parties: AMERICAN JUSTICE INSURANCE RECIPROCAL, Plaintiff/Appellant, v. Tim HUTCHISON, Ben Harkins, Charles Spangler, Knox County, Tennessee and Sheriff Tim Hutchison, in his official capacity, Defendants/Appellees.
• Court: Tennessee Supreme Court

15 S.W.3d 811

AMERICAN JUSTICE INSURANCE RECIPROCAL, Plaintiff/Appellant, v. Tim HUTCHISON, Ben Harkins, Charles Spangler, Knox County, Tennessee and Sheriff Tim Hutchison, in his official capacity, Defendants/Appellees.

Supreme Court of Tennessee, at Nashville.

March 27, 2000.

Paul Campbell, III, Witt, Gaither & Whitaker, P.C. Chattanooga, Tennessee, Reggie E. Keaton, Franz, McConnell & Seymour, Knoxville, for Plaintiff-Appellant.

Robert L. Crossley, The Crossley Law Firm, P.C., Knoxville, Tennessee, John E. Owings, Chief Deputy Law Director, Knox County, Tennessee, for Defendants-Appellees.

G. Brian Jackson, Amanda Haynes Young, David L. Johnson, Miller, Martin & Trabue, Nashville, Tennessee, for amicus curiae: National Association of Independent Insurers.

OPINION

DROWOTA, J.

QUESTIONS CERTIFIED

Pursuant to Rule 23 of the Rules of the Supreme Court of Tennessee,¹ this Court has accepted two questions certified to us by the United States District Court for the Eastern District of Tennessee. The questions are as follows:

1. Whether the Sheriff of Knox County and employees of the Knox County Sheriff's Department were volunteers of the Scott County Sheriff's Department when they received no compensation from Scott County but received their regular salary from Knox County.

2. Whether a standard liability policy is automatically forfeited when the insured fails to comply with the policy's notice provision, regardless of whether the insurer has been prejudiced by the delay.

As explained below, the answer to the first certified question is that the Knox County Sheriff and employees of the Knox County Sheriff's Department were volunteers of the Scott County Sheriff's Department when they rendered assistance in connection with a siege in Scott County but received no compensation from Scott County. We reach this conclusion because we find the term "volunteer," as used in the liability policy issued to the Scott County Sheriff's Department, to be ambiguous. With respect to the second question, we conclude that a standard liability policy is not automatically forfeited when the insured fails to comply with a policy's notice provision. Rather, breach of a notice provision establishes a presumption that the insurer was prejudiced by the failure to provide timely notice. The insured may rebut the presumption with competent evidence that the insurer was not prejudiced by the delay in notice.

FACTS AND PROCEDURAL BACKGROUND

On January 22 and 23, 1994, Max Carpenter, a Scott County resident, barricaded himself in his trailer home in an effort to resist arrest. Believing Mr. Carpenter to be armed, law enforcement officials attempted to negotiate with him before resorting to the use of ammunition and tear gas to force Mr. Carpenter from the trailer. Initially the officers involved in the siege included only Scott County Sheriff's deputies and agents of the Tennessee Bureau of Investigation ("TBI"). However at some point during the incident the Scott County Sheriff's Department asked the TBI to contact the Knox County Sheriff's Department to request assistance in removing Mr. Carpenter from the trailer home. In response to this request, Tim Hutchison, the Sheriff of Knox County, went with two deputies to the scene and aided efforts to eject Mr. Carpenter from the trailer. The Knox County Sheriff and deputies did not receive any form of compensation from Scott County in connection with the assistance they provided to the Scott County Sheriff's Department. As salaried employees of the Knox County Sheriff's Department, they each received their regular salary for the pay period that included the time they provided assistance in the Carpenter incident.

Mr. Carpenter died as a result of the confrontation with the law enforcement officials. As a result, in 1994, representatives of his estate filed a wrongful death suit against the Scott County Sheriff's Department and several of its deputies in the United States District Court for the Eastern District of Tennessee.² The Scott County defendants were served with the complaint in August and October 1994, and filed an answer in January 1995. On June 6, 1995, pursuant to discovery procedures, they issued disclosures in which they stated that American Justice Insurance Reciprocal ("American Reciprocal"), the liability insurance carrier for the Scott County Sheriff's Department, may be liable to satisfy all or part of any judgment rendered against them. A copy of their policy with American Reciprocal was attached to the disclosures.

Also named as defendants in the Carpenter wrongful death suit were Knox County and Knox County Sheriff Tim Hutchison, in both his official and individual capacities, as well as deputies Ben Harkins and Charles Spangler, in their individual capacities ("Knox County defendants"). The Knox County defendants were served with the complaint on August 1, 1994. They then proceeded to defend the lawsuit without making a request that American Reciprocal provide a defense on their behalf and incur liability for any judgment rendered against them. The Knox County defendants assert that they were not aware of the general liability insurance policy issued by American Reciprocal to the Scott County Sheriff's Department until June 6, 1995.

In September 1997, Knox County Sheriff Hutchison and the two deputies wrote to American Reciprocal and demanded that the company provide benefits under the policy with regard to their potential liability in the Carpenter suit. In response to this demand, American Reciprocal filed an action in the United States District Court for the Eastern District of Tennessee to obtain a declaratory judgment asserting that it is not liable to the Knox County defendants under the liability policy it had issued the Scott County Sheriff's Department. As basis for the suit, American Reciprocal asserted that the Knox County defendants were not "volunteers" of the Scott County Sheriff's Department, within the meaning of the policy, in connection with the assistance they provided in the Carpenter incident. The insurance company further contends that the Knox County defendants failed to provide it with timely notice of the January 22-23, 1994 incident or the filing of the Carpenter suit against them and that they therefore forfeited any coverage under the policy.

The Knox County defendants filed a counterclaim for a declaratory judgment asserting that they are entitled to coverage under the liability policy in connection with the Carpenter suit because they were volunteers of the Scott County Sheriff's Department within the meaning of the liability policy. On August 16, 1999, after both American Reciprocal and the Knox County defendants filed motions for summary judgment, the District Court filed an order in this Court certifying the questions of law quoted above.

Although the parties devote significant portions of their briefs in this Court to discussion of factual disputes surrounding the Carpenter incident, we need not address these issues in resolving whether the Knox County defendants were volunteers of the Scott County Sheriff's Department within the meaning of the liability insurance policy. Moreover, we need not address factual disputes concerning compliance with the notice provision because the District Court made implicitfindings that the Knox County defendants failed to give timely notice under the liability policy but that such failure did not result in prejudice to the insurance company.

QUESTION ONE

The first question of law to be resolved, as certified by the United States District Court for the Eastern District of Tennessee, is whether the Sheriff of Knox County and employees of the Knox County Sheriff's Department were volunteers of the Scott County Sheriff's Department when they received no compensation from Scott County but received their regular salary from Knox County. After a careful review of the policy at issue and the parties' arguments, we conclude that they were volunteers.

The policy issued by American Reciprocal to the Scott County Sheriff's Department is a standard general liability policy covering "those sums that the insured becomes legally obligated to pay as damages because of `personal injury' or `property damage' arising out of the insured's operations in the performance of or failure to perform official law enforcement duties." The policy provides that the term "insured" includes "volunteers," but "only for acts within the scope of their law enforcement duties for the Scott County Sheriff's Department." The policy does not define the term "volunteers."

In general, courts should construe insurance contracts in the same manner as any other contract. See McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn.1990); Draper v. Great Am. Ins. Co., 224 Tenn. 552, 458 S.W.2d 428, 432 (1970). The language of the policy must be taken and understood in its plain, ordinary and popular sense. See Bob Pearsall Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn.1975). Where language in an insurance policy is susceptible of more than one reasonable interpretation, however, it is ambiguous. See Tata v. Nichols, 848 S.W.2d 649, 650 (Tenn.1993). If 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. See Allstate Ins. Co. v. Watts, 811 S.W.2d 883, 886 (Tenn.1991); Renfro v. Doe, 979 S.W.2d 311, 312-13 (Tenn.Ct.App.1998).

When called upon to interpret a term used in an insurance policy that is not defined therein, courts in Tennessee sometimes refer to dictionary definitions. See Tata v. Nichols, 848 S.W.2d at 653; Hogins v. Ross, 988 S.W.2d 685, 687 (Tenn.Ct.App.1998). Black's Law Dictionary, 1576 (6th ed.1990), defines "volunteer" as follows:

A person who gives his services without any express or implied promise of remuneration. One who intrudes himself into a matter which does not concern him, or one who

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