Nationwide Mut. Ins. Co. v. Shannon, 1000

• Decision Date: 26 July 1985
• Docket Number: No. 1000,1000
• Citation: 701 S.W.2d 615
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Melinda E. SHANNON, et al., Defendants-Appellees. 701 S.W.2d 615
• Court: Tennessee Court of Appeals

Page 615

701 S.W.2d 615

NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Melinda E. SHANNON, et al., Defendants-Appellees.

No. 1000

701 S.W.2d 615

Court of Appeals of Tennessee,

Eastern Section.

July 26, 1985.

Permission to Appeal Denied by

Supreme Court Oct. 28, 1985.

Ray J. Campbell, Jr., and Brian H. Trammell with Kennerly, Montgomery & Finley, Knoxville, for plaintiff-appellant.

Harry Lillard with Lillard & Seivers, Oak Ridge, for appellee Melinda E. Shannon.

Fred G. Musick with Jenkins & Jenkins, Knoxville, for appellee State Farm Mut. Auto. Ins. Co.

OPINION

SANDERS, Judge.

The Plaintiff has appealed from an adverse judgment in its declaratory judgment suit to void coverage under its automobile liability policy for failure of the insured to give timely notice of an accident.

In April, 1983, the Plaintiff-Appellant, Nationwide Mutual Insurance Company, had in effect an automobile liability insurance policy on a 1980 model Pontiac automobile issued in the name of the Defendant-Appellee, Melinda E. Shannon. On April 12, while Melinda was operating her automobile in an easterly direction on Cumberland Avenue at the intersection of 15th Street in Knoxville, she struck the rear bumper of the 1975 Ford Mustang belonging to, and in which Lesa R. Gardner was riding, along with three other people. Melinda did not report the accident to Nationwide or its agent until March 29, 1984, after Lesa Gardner had filed suit on March 21 for $25,000 for personal injuries and property damages. The Gardner complaint also named Lesa's uninsured motorist carrier, State Farm Mutual Automobile Insurance Company, as a party, stating Melinda was uninsured.

Nationwide filed a declaratory judgment action, pursuant to Rule 57, T.R.C.P., and T.C.A. Sec. 29-14-101, et seq., making Lesa Gardner and State Farm Mutual defendants along with Melinda Shannon. In its complaint Nationwide alleges the policy was in effect on the date of the accident but, as pertinent here, the policy provides: "The Policyholder or other person entitled to protection or someone on his behalf shall: (1) give the Company or its agent written notice of all accidents, occurrences and losses as soon as practicable." The complaint alleges Melinda breached the conditions of the policy set out above by failing to report the accident until almost a year after it happened. It asked the court to find that the policy afforded no coverage as a result of the breach of its conditions.

Melinda, for answer to the complaint, as pertinent here, said she admitted hitting the car in front of her as a result of her foot slipping off the clutch. She said that after the accident she examined her bumper and the rear bumper of the Gardner automobile and, although they each had a small amount of damage, she did not consider it significant. She questioned the occupants of the car and was told they were not hurt. She attempted approximately six times to call Nationwide on a toll-free number but was unable to reach it. She then tried, that same day, five or six times, to reach Nationwide's local agent by phone but couldn't get through. Since she was unable to reach Nationwide or the agent and since she had given her name and address and the name of her insurance company to the other parties, she "felt that she had done her duty and thought no more about the matter."

Upon the trial of the case the court found the issues in favor of the Defendants. In so doing, he stated he felt it was an insignificant accident and Melinda was correct in not reporting it.

The Plaintiff has appealed, presenting the following issues:

"Whether appellee Melinda E. Shannon had an obligation under the terms of her policy and applicable law to report the accident which is the subject of this lawsuit to her insurer, appellant Nationwide Mutual Insurance Company.

"Whether appellee Melinda E. Shannon's failure to notify appellant Nationwide Mutual Insurance Company of the occurrence of an accident until nearly one (1) year after said accident breached the conditions and provisions of her policy and relieves appellant Nationwide of any obligation to provide coverage for said accident."

Since the two issues are interrelated, they will be considered together. The pertinent testimony relating to what occurred on the day of the accident is that of Lesa Gardner and Melinda Shannon. Ms. Gardner testified she was stopped at a traffic light on Cumberland Avenue and had just started to go forward after the traffic light turned green when her car was struck in the rear by the Shannon car. When asked about the impact, she stated, "It was a pretty good jolt. The car was moved forward some amount. We just jerked." When asked about what happened to her, she said, "My head hit the steering wheel." When first asked if she had told Ms. Shannon about striking her head on the steering wheel, she said:

"A I don't remember if I told her I had struck my head or not. I was holding my neck at the time. I was pretty shaken up.

"Q You were holding your neck at the scene of the accident?

"A Yes, sir."

When her memory was refreshed by her pre-trial deposition, she confirmed she had made the following statement: "She asked me if anybody was hurt and I told her that I hit my head, and I didn't know about the other girls. And the other girls had went and sat down on a bench on the side."

When asked about injuries to other passengers in the car, she said, "But the other person [Robbins] that was injured also had the same type injuries that I had."

She was asked about damage to her car and stated, "There was an indentation on the right side of the bumper about the size of a saucer." "About five inches."

The record further shows, from her testimony and exhibits, that State Farm Mutual had collision insurance on her car. On May 23 it made an estimate of the cost of repairs to her car of $416.18. She had a $50 deductible provision in her policy and State Farm made a cash settlement of $342.62.

Melinda Shannon testified that after the accident she examined her front bumper and "there was a small nick about the size of a nickel." When asked about the damage to the rear bumper of the Gardner automobile, she described it as "a tiny nick." She then testified as follows:

"A Well, I did see a small nick but I wasn't sure if that was from the accident we had just experienced or whether that was already there.

"Q Did you ask Miss Gardner about that nick that you saw as to whether or not it was old damage or had been caused by this accident?

"A No, I didn't.

"Q Do you remember after the accident Miss Gardner telling you that she had hit her head against the steering wheel when this accident happened?

"A I asked her if she was hurt and she said no.

"Q Do you remember her saying that she hit her head against the steering wheel?

"A I don't know.

"Q Do you remember that she was holding her neck there at the scene of the accident?

"A No.

"Q Do you recall that?

"A No."

When asked if anyone appeared to be injured in the accident, she said, "No. I think there was a--one of the riders--I know that there was a girl that was riding in the middle on the hump and she had bumped her head, but she said she was all right."

She gave a statement to a representative of Nationwide prior to trial in which she described the accident as follows: "I was approaching the intersection, and like I said it had been stopped at the traffic and I was going in a very slow rate of speed and I was getting ready to shift to come to a stop at the intersection and I must have been in 3rd or 2nd gear and when I had depressed the clutch I was wearing very high heels, spike heels and the clutch, my foot had slipped off the clutch. The clutch became stuck between the heel of my shoe and the toe of my shoe and I looked down and I was trying to get my foot free and brake and you know come to a stop and I looked to, took my eyes off the road for a minute and the next thing I know I had bumped the car in front of me."

She further stated that after the accident Ms. Gardner got out of her car "and she was really angry" and "wanted to get the police called." The police were called and filed an accident report. The police officer did not testify but the report indicates there were no personal injuries and damages to the vehicle of "less than $200."

Ms. Shannon testified she gave her name and address and the name of her insurance carrier to both Ms. Gardner and the police officer. She further testified that on the afternoon of the accident she tried to call Nationwide on a toll-free number about six times but each time the line was busy. She said she tried to call the local insurance agent of Nationwide five or six times and couldn't reach him. She testified her reason for making these calls was to find out if she was required to report the accident. No further effort was made to report the accident after the day it occurred. She testified that after the accident she talked with some of her fellow workers and was then asked:

"Q As a result of those conversations, what did you decide about whether or not this was even an accident?

"A Well, I decided it wasn't and I was using common sense. I didn't see anything to report."

The Appellant, in its brief, relies upon the cases of Phoenix Cotton Oil Company v. Royal Indemnity Company, 140 Tenn. 438, 205 S.W. 128 (1918); Foreman v. Union Indemnity Company, 12 Tenn.App. 89 (1928); Barfield v. Insurance Company of North America, 59 Tenn.App. 631, 443 S.W.2d 482 (1968); Osborne v. Hartford Accident & Indemnity Company, 63 Tenn.App. 518, 476 S.W.2d 256 (1971); and Hartford Accident & Indemnity Company v. Creasy, 530 S.W.2d 778 (Tenn.1975) as supportive of its contention.

The Phoenix Cotton Oil Company case is the landmark case on the requirement to give the insurer notice. The court, speaking through Chief Justice Neil, said:

" 'The promise to insure is not absolute but conditional. The condition is that the notice,...