Integrity Ins. Co. v. Dudney
| Decision Date | 23 April 1990 |
| Docket Number | No. 3-87-0059.,3-87-0059. |
| Citation | 745 F. Supp. 1299 |
| Parties | INTEGRITY INSURANCE COMPANY, in Rehabilitation v. Barbara M. DUDNEY, et al. |
| Court | U.S. District Court — Middle District of Tennessee |
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Thomas M. Donnell, Jr., Jerry W. Carnes, W. Stuart Scott, Stewart, Estes & Donnell, Nashville, Tenn., for plaintiff.
Barry L. Howard, Gracey Howard & Sowell, James F. Neal, Aubrey B. Harwell, Jr., Thomas H. Dundon, and Douglas Fisher, Thomas Pinckney, and W. Bryan Brooks, Michael P. Mills and Brenda N. Phillips, Brewer, Krause & Brooks, Nashville, Tenn., for defendants.
Pending before the Court are the following documents: the Magistrate's Report and Recommendation; the Dudney Defendants' Objections to the Report and Recommendation; the Response of Alexander Howden to Dudney Defendants' Objections to Report and Recommendation; the plaintiff's Objections to the Report and Recommendation of Magistrate and Motion for De Novo Determination; a Memorandum in Support of Plaintiff's Objections to Report and Recommendation of Magistrate and Motion for De Novo Determination; the Objections of Alexander Howden North America, Inc., Alexander Howden Insurance Services, Inc., and Alexander Howden Group U.S., Inc., to the Magistrate's Report and Recommendation; the Response of Great Republic Excess & Surplus, Inc. to the Objections of the Howden Defendants and Integrity to the Report and Recommendation of the Magistrate; and the Dudneys' Response to Objections of Integrity and Alexander Howden to Report and Recommendation of Magistrate.
In this action the plaintiff, Integrity Insurance Company, is suing for a declaratory judgment that it did not provide uninsured or underinsured motorist coverage to the Dudneys. In the alternative, Integrity seeks a declaration for a $5,000,000 limit for any uninsured motorist coverage for the Dudneys under the insurance policy issued to the Dudney defendants by Integrity. Finally, Integrity seeks a declaration that it is entitled to indemnification from Great Republic for any uninsured motorist coverage over $5,000,000 that it must provide to the Dudneys and for any costs that Integrity incurs in defense of the Dudneys' state court action.
In response to Integrity's complaint, several of the remaining defendants asserted counter-claims or cross-claims against Integrity and/or other defendants.
The Dudney defendants asserted counterclaims against Integrity and the Alexander Howden defendants to enforce their insurance contract with Integrity and the Alexander Howden defendants.
The Alexander Howden defendants asserted cross-claims against Great Republic and the Frost defendants for breaches of their duties to the Alexander Howden defendants in the sale of an insurance policy to the Dudney defendants.
In the Report and Recommendation the Magistrate made the following recommendations: (1) that the Dudney defendants' motion for summary judgment be granted; (2) that the Alexander Howden defendants' motion for summary judgment be denied; (3) that the Great Republic motion for summary judgment be granted; and (4) that Integrity's motion for summary judgment be denied.
The plaintiff essentially objects to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment be granted, that the Great Republic motion for summary judgment be granted and that the plaintiff's motion for summary judgment be denied.
The Alexander Howden defendants essentially object to the Magistrate's recommendation that summary judgment be granted for the Dudneys and Great Republic. The Alexander Howden defendants also object to the failure of the Magistrate to consider their motion for summary judgment against the Frost defendants.
The parties have objected to numerous portions of the Magistrate's Report and Recommendation. The Court finds that many of the objections are clearly without import to the analysis or conclusions reached by the Magistrate and the Court. These objections are not considered in the body of this Memorandum and are DENIED. Those objections that contain some merit are reviewed below.
Local Rule 302(i)(1) of the Local Rules Governing Duties of and Proceedings Before Magistrates provides in part that:
The District Judge shall consider the written objections ... and shall ... make a de novo determination of all matters objected to, and shall issue a written memorandum opinion and an appropriate order disposing of the issues raised.
The Court has conducted a de novo examination of the matters to which the parties have objected and hereby ADOPTS in part and REJECTS in part the Magistrate's Report and Recommendation.
The plaintiff, Integrity Insurance Company, objects to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment should be granted. For the reasons stated below, the Court ADOPTS the Magistrate's recommendation that the Dudney defendants' motion for summary judgment should be granted.
The Magistrate recommended that summary judgment should be granted in favor of the Dudney defendants because the Magistrate determined that under Tennessee law uninsured or underinsured motorist insurance was included in the Dudney-Integrity insurance contract and was not rejected by the Dudney defendants. The Magistrate, in reaching his recommendation, relied, in part, on Tennessee Code Annotated § 56-7-1201(a). Tennessee Code Annotated § 56-7-1201(a) provides, in pertinent part:
The Magistrate also relied upon a Tennessee rule of construction by which contracts for insurance which are ambiguous are construed against the insurer and in favor of the insured. See, Palmer v. State Farm Mutual Automobile Insurance Company, 614 S.W.2d 788, 789 (Tenn. 1981).
The plaintiff has essentially three objections to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment be granted: 1) that "there are genuine issues of material fact with respect to whether or not the requirements of T.C.A. § 56-7-1201 et seq. with respect to rejection of uninsured motorist coverage have been satisfied;" 2) that there is a genuine issue of material fact as to whether a written rejection of uninsured motorist insurance is needed in all cases; and 3) that "there are genuine issues of material fact with regard to whether the policy should be reformed so as to exclude uninsured motorist coverage." (Memorandum in Support of Plaintiff's Objections to Report and Recommendation of Magistrate and Motion for De Novo Determination, at pp. 4-5 and 18).
The Magistrate concluded that because the Dudney defendants did not reject uninsured motorist coverage that T.C.A. § 56-7-1201(a) operated to include uninsured motorist coverage in the 1983 policy.
The plaintiff argues that Robert Frost was the legal representative of the Dudney defendants, that Robert Frost signed Binder 617 which excludes uninsured motorist insurance on their behalf, and that T.C.A. § 56-7-1201(a)(2) allows for the legal representative of the insured to reject uninsured motorist coverage. The Magistrate rejected this argument on the basis of Tennessee Code Annotated § 56-6-1241. T.C.A. 56-6-124 provides in pertinent part:
Every insurance agent or limited insurance representative who solicits or negotiates an application for insurance of any kind shall, in any controversy arising from the application for insurance or any policy issued in connection therewith between the insured or his beneficiary and the insurer, be regarded as the agent of the insurer and not the insured or his beneficiary. This provision shall not affect the apparent authority of an agent.
The Magistrate concluded that the operation of T.C.A. 56-6-124 conclusively established that Robert Frost was the agent of the plaintiff and thus precluded the possibility that Robert Frost was acting as the Dudney defendants' legal representative.
The plaintiff attempts to argue that this statute is inapplicable to the present situation because Robert Frost was acting as an insurance broker for the Dudneys and not as an insurance agent. The plaintiff argues that there is a genuine issue of material fact as to whether Robert Frost was serving as an insurance agent for the Dudneys, or...
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