Hogins v. Ross

• Decision Date: 18 December 1998
• Citation: 988 S.W.2d 685
• Parties: John HOGINS, Plaintiff, and Tennessee Insurance Guaranty Association, Intervening Plaintiff/Appellant, v. Tony Andrew ROSS, Warner Ross and United States Fidelity & Guaranty Company, Defendants/Appellees.
• Court: Tennessee Court of Appeals

Page 685

988 S.W.2d 685

John HOGINS, Plaintiff and Tennessee Insurance Guaranty Association, Intervening Plaintiff/Appellant, v. Tony Andrew ROSS, Warner Ross and United States Fidelity &amp Guaranty Company, Defendants/Appellees.

Court of Appeals of Tennessee.

Dec. 18, 1998.

Application for Permission to Appeal

Denied by Supreme Court

April 12, 1999.

William D. Leader, Jr., Julie C. Murphy, Boult, Cummings, Conners & Berry, PLC, Nashville, Tennessee, Jef Feibelman, Melissa A. Maravich, Burch, Porter & Johnson, Memphis, Tennessee, for Intervening Plaintiff/Appellant Tennessee Insurance Guaranaty Association.

James A. Hopper, Hopper & Plunk, Savannah, Tennessee, for Defendant/Appellee United States Fidelity & Guaranty Company.

John Knox Walkup, Attorney General & Reporter, Michael E. Moore, Solicitor General, Sarah A. Hiestand, Senior Counsel, for Tennessee Department of Commerce and Insurance.

FARMER, J.

Tennessee Insurance Guaranty Association (TIGA), the intervening plaintiff in this action, appeals the trial court's order entering summary judgment in favor of Defendant/Appellee United States Fidelity & Guaranty Company (USF & G). We reverse the trial court's judgment based on our conclusion that the court erred in ruling that USF & G's policy did not provide uninsured motorist coverage to Plaintiff John Hogins.

On August 2, 1994, John Hogins was involved in a motor vehicle accident when his Jeep collided with a vehicle which was driven by Defendant Tony Andrew Ross and owned by Defendant Warner Ross. At the time of the accident, Hogins was covered by an automobile liability insurance policy issued by USF & G which, as pertinent to this appeal, contained the following definition of "uninsured motor vehicle:"

C. "Uninsured motor vehicle" means a land motor vehicle or trailer of any type:

....

4. To which a bodily injury liability bond or policy applies at the time of the accident but the bonding or insuring company;

....

b. is or becomes insolvent.

Hogins timely sued the Rosses for the injuries he allegedly suffered as a result of the accident. In December 1996, however, while this lawsuit was pending, the Rosses' automobile liability insurance carrier, Coronet Insurance Company, was found to be insolvent by an Illinois state court. As required by the Tennessee Insurance Guaranty Association Act, TIGA subsequently assumed the responsibilities of Coronet in this lawsuit to the extent of its obligation on "covered claims," as defined by the Act. See T.C.A. §§ 56-12-104, -107 (1994).

Although TIGA assumed Coronet's rights and duties to the extent of its obligation on covered claims, the Act required Hogins first to exhaust his right to coverage under his USF & G policy. See T.C.A. § 56-12-111 (1994). Accordingly, Hogins was required to seek coverage under the uninsured motorist provisions of the USF & G policy before he could recover from TIGA for any covered claims.

In July 1997, USF & G filed a motion for summary judgment, contending that the uninsured motorist provisions of its policy provided no coverage to Hogins because Coronet was found to be insolvent more than one year after the August 1994 accident. In support of this argument, USF & G relied upon the following statutory provision:

56-7-1203. Insolvency protection limitation--More favorable protection not precluded.--An insurer's insolvency protection shall be applicable only to accidents occurring during a policy period in which its insured's uninsured motorist coverage is in effect where the liability insurer of the tort-feasor becomes insolvent within one (1) year after such an accident. Nothing herein contained shall be construed to prevent any insurer from affording insolvency protection under terms and conditions more favorable to its insureds than is provided hereunder.

T.C.A. § 56-7-1203 (1994) (emphasis added). Citing the same statutory provision, TIGA also moved for summary judgment, contending that it was entitled to a judgment as a matter of law on the issue of whether the statute's minimum time limit for insurers to provide insolvency protection was incorporated into the uninsured motorist provisions of USF & G's automobile liability insurance policy.

After conducting a hearing, the trial court granted USF & G's motion for summary judgment and denied TIGA's motion. The trial court ruled that

pursuant to the provisions of [T.C.A.] § 56-7-1203, the automobile liability insurance policy issued to the Plaintiff, John Hogins, by [USF & G] does not provide uninsured/underinsured motorists coverage to John Hogins for injuries received in the accident of August 2, 1994 because Coronet Insurance Company, the individual defendants' automobile liability insurance carrier, was declared insolvent more than one year following the accident forming the basis of this lawsuit.

The trial court dismissed with prejudice all claims against USF & G and directed the entry of a final judgment as to USF & G. See T.R.C.P. 54.02.

On appeal, TIGA contends that, contrary to the trial court's ruling, the insolvency protection of USF & G's policy was not limited to the one-year minimum limit set forth in section 56-7-1203. TIGA points out that, although the statute provides that such protection shall be applicable only when the tortfeasor's liability insurer becomes insolvent within one year after the accident, the statute also expressly permits insurers to afford more favorable coverage. TIGA argues that, by providing uninsured motorist coverage when the insuring company "is or becomes insolvent," without limiting such coverage to a certain time period, USF & G has agreed to extend its insolvency protection beyond the one-year time period set forth in the statute.

We agree. As noted by TIGA and by the Court of Appeals of North Carolina, the majority of jurisdictions which have considered this issue have held that, by using the phrase "is or becomes insolvent" to describe the insolvency protection provided by an automobile liability insurance policy's uninsured motorist provisions, an insurer extends such insolvency protection beyond the time period specified in the applicable statute. North Carolina Ins. Guar. Ass'n v. State Farm Mut. Auto. Ins. Co., 115 N.C.App. 666, 446 S.E.2d 364, 368 (N.C.Ct.App.1994). Although the North Carolina statute mandated insolvency protection for a three-year period, the remainder of the statute's language was virtually identical to the statute at issue here. Id. at 366 (citing N.C. Gen.Stat. § 20-279.21(b)(3)(b)). In that case, the insurer, State Farm, also had issued a policy which defined an "uninsured motor vehicle" as "a land motor vehicle or trailer of any type" to which a "liability bond or policy applies at the time of the accident but the bonding or insuring company ... is or becomes insolvent." Id. at 367 (emphasis added). In holding that State Farm, by including such a provision in its policy, agreed to afford coverage under terms and conditions more favorable to the insured than required by the statute, the court reasoned:

Terms of an insurance contract must be given their plain, ordinary, and accepted meaning unless they have acquired some technical meaning or it is apparent another meaning was intended.... In addition, policies are to be accorded a reasonable interpretation, and, if not ambiguous, should be construed according to their terms and the ordinary and plain meaning of their language.... If ambiguous, the language of a policy is to be construed strictly against the insurer and liberally in favor of the insured....

....

The phrase "is or becomes insolvent" contemplates two occasions of insolvency. The first, represented by "is insolvent," refers to insolvency existing at the time of collision. The second, described by "becomes insolvent" refers, as the definition of "becomes" reveals, to insolvency occurring some time following the accident. "Become" is defined as: "to come to exist or occur." Webster's Third International Dictionary 195 (1976).

The policy phraseology "is or becomes insolvent" contains no ambiguity. Further it contains no time limitation. Giving the words a reasonable interpretation based upon their plain and ordinary meaning, ... we therefore conclude [that State Farm] by utilizing this wording agreed to furnish coverage beyond the three years mandated in [the statute]. Accordingly, we hold that under an insurance policy providing that a vehicle is uninsured if the liability insurer "is or becomes insolvent" without specifying any period of time, an uninsured motorist claim may not be barred even though the minimum period specified in [the statute] has elapsed. By including such language, the insurer agreed to afford coverage under terms and conditions more favorable to the insured than required by the statute.

North Carolina Ins. Guar. Ass'n, 446 S.E.2d at 367-68 (citations omitted).

In noting that its holding was consistent with a majority of jurisdictions which have considered this issue, the North Carolina court cited the following decisions: Utah Property & Casualty Insurance Guaranty Ass'n v. United Services Automobile Ass'n, 230 Cal.App.3d 1010, 281 Cal.Rptr. 917 (Cal.Ct.App.1991); Government Employees Insurance Co. v. Burak, 373 So.2d 89 (Fla.Dist.Ct.App.1979); Thomas v. American Family Mutual Insurance Co., 485 N.W.2d 298 (Iowa 1992); and Kentucky Insurance Guaranty Ass'n v. State Farm Mutual Automobile Insurance Co., 689 S.W.2d 32 (Ky.Ct.App.1985). In Kentucky Insurance Guaranty Ass'n v. State Farm Mutual Automobile Insurance Co., State Farm's policy defined an "uninsured motor vehicle" to include a motor vehicle "with respect to which there is a bodily injury liability bond or insurance policy applicable at the time of the accident but the company writing the same ... is or becomes insolvent." Kentucky Ins. Guar. Ass'n, 689 S.W.2d at 34 (emphasis added). Like the Tennessee statute at issue here, the Kentucky statute provided that an insurer's insolvency...