Whaley v. Underwood

922 S.W.2d 110, 1995 Tenn. App. LEXIS 218

• Court: Court of Appeals of Tennessee
• Decided: March 31, 1995
• Status: Published

Opinions

OPINION

SUSANO, Judge.

This appeal involves a coverage question under the uninsured motorist (UM) provisions of the appellants’ automobile insurance policy. In their original complaint, the appellants, Sanders K. Whaley and his wife, Della Whaley (Whaleys), sued Christopher S. Underwood and Robert S. Underwood (Un-derwoods) for damages arising out of an automobile accident. Almost four years later, the Whaleys joined their insurer, Preferred Risk Mutual Insurance Company (Preferred Risk), in that suit under the UM feature of their policy pursuant to the provisions of T.C.A. § 56-7-1206. Preferred Risk filed a motion for summary judgment on the ground that the Whaleys did not “promptly” send it “copies of the legal papers” in their suit against the Underwoods as they were required to do by the terms of their policy. The trial court granted Preferred Risk summary judgment, and the Whaleys filed this appeal.

I

The appellants frame one issue for our review. Taken verbatim from their brief, it is as follows:

Whether the trial court erred in granting summary judgment in favor or (sic) the uninsured/underinsured motorist insurance company, which had timely notice of the plaintiffs automobile accident and received formal service of the Summons and Complaint just over one and one-half years after receiving copies of the pleadings from plaintiffs’ counsel, when a question of material fact exists regarding prejudice to the insurance company?

We find that the trial court acted properly in granting summary judgment. Accordingly, we affirm the judgment below.

II

On February 8, 1988, Mr. Whaley was injured in an automobile accident when his vehicle was struck in the rear by one driven by Christopher S. Underwood. The next day, he reported the accident to Preferred Risk as he was required¹ to do by the terms of his policy. The Whaleys² filed suit against the Underwoods on January 12,1989. In mid-February, 1991, two years after suit was filed, the Whaleys, through their counsel, ascertained, apparently for the first time, that the Underwoods’ liability insurance coverage was not sufficient to cover Mr. Wha-ley’s claim. Counsel for the Whaleys sent a letter to Preferred Risk dated April 2, 1991, informing it that he “may” issue a summons and complaint against Preferred Risk “within the next few days ... as required by the Tennessee UM statute.” Counsel’s letter of April 2,1991, enclosed a copy of the Whaleys’ complaint against the Underwoods. As far as the record before us reflects, counsel’s letter of April 2, 1991, was the first time the Whaleys had sent Preferred Risk a copy of their complaint against the Underwoods. In defense of their position in this case, the Whaleys insist that they and their attorney were in frequent contact with representatives of Preferred Risk by telephone throughout the interval between January, 1989, and April, 1991; however, the Whaleys did not serve the complaint and summons on Preferred Risk until December 30, 1992, almost four years after the suit was originally filed and some 20 months after sending the letter notifying Preferred Risk of a possible UM suit. There is no proof in the record before us that Preferred Risk was aware of the lawsuit against the Underwoods until it received counsel’s letter of April 2,1991.

Preferred Risk filed its answer in May, 1993, asserting that the Whaleys had failed to promptly send it a copy of the original complaint as required by their policy. In its answer, Preferred Risk argues that it has been prejudiced by the delay because, as it routinely does under similar circumstances, it destroyed its file on the underlying claim in the interim between notification of the accident on February 9, 1988, and the receipt of counsel’s letter of April 2,1991.

Preferred Risk filed a motion for summary judgment, asserting that no genuine issue of material fact remained to be decided. Preferred Risk’s claims manager asserts in a supporting affidavit that the company never received any notice of suit prior to formal service of the summons in December, 1992; however, an adjuster for Preferred Risk stated during his deposition that he remembered receiving a letter with contents similar to the April 2,1991, letter. For the purpose of this appeal, we accept³ as true the appellants’ assertion, as established by their counsel’s letter of April 2, 1991, that this letter transmitted a copy of the complaint against the Underwoods. Hence, we must determine if the transmittal of the complaint on April 2, 1991, satisfies the policy requirement that the insured promptly send the insurer copies of the legal papers in the underlying tort action.

The pertinent provisions of the Wha-leys’ insurance policy provide as follows:

PART E—DUTIES AFTER AN ACCIDENT OR LOSS

⅜ ‡ ⅜ ⅜ sjs ⅜

C. A person seeking Uninsured Motorists Coverage must also:

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2. Promptly send us copies of the legal papers if a suit is brought.

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PART F—GENERAL PROVISIONS

‡ ⅞! ‡ ‡ ‡ ‡

LEGAL ACTION AGAINST US

A. No legal action may be brought against us until there has been full compliance with all the terms of this policy.

While we have found a number of appellate decisions in this state addressing policy provisions requiring notice of the accident or event that leads to the insured’s claim, we have not found any authority on the precise issue before us on this appeal; however, we believe the “notice” cases we have found are, by analogy, helpful in resolving the issue before us.

Ill

Our review of the judgment in this case is controlled by Tenn.R.Civ.P. 56.03, which provides that summary judgment “shall be rendered” when the pleadings and evidence “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” In considering a summary judgment motion, we must “take the strongest legitimate view of the evidence in favor of the non-moving party” and “allow all reasonable inferences in favor of that party,” while discarding all countervailing evidence. Byrd v. Hall, 847 S.W.2d 208, 210-11 (Tenn.1993). The phrase “genuine issue” refers exclusively to factual issues and not to legal conclusions that could be drawn from the facts. Id. at 211.

We begin our analysis by observing that “[ijnsurance contracts are subject to the same rules of construction and enforcement as apply to contracts generally.” McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn.1990); Allstate Ins. Co. v. Wilson, 856 S.W.2d 706 (Tenn.App.1992). Therefore, contracts will be enforced as written, absent fraud or mistake, even though they contain arguably harsh or unjust terms. Id. at 708. This court pointed out in Allstate that “[njotice provisions of an insurance policy are valid conditions precedent to coverage, and in the absence of notice as required no coverage is afforded even though ... the insurer has not been prejudiced by the delay in notice.” Id. at 709. Although the Allstate case involved a homeowner’s insurance policy and a policy provision requiring notice of a loss, we believe that the teachings of that case are applicable to the instant litigation. Both the Allstate contract and the contract at issue here mandate that the insured “promptly” take some action. Both policies contain additional clauses conditioning suit against the insurance company on “full compliance” with the terms of the policies. As we said in Allstate⁴, prejudice to the insurer is irrelevant, and hence it cannot be relied upon to create a genuine issue of material fact.

The Allstate case is also instructive on the meaning of the term “prompt” as used in the notice requirement there as well as the one at issue in the instant case. In Allstate, the court quoted with approval from American Jurisprudence 2d:

A requirement in a policy for “prompt” or “immediate notice,” or that notice must be given “immediately,” “at once,” “forthwith,” “as soon as practicable,” or “as soon as possible” generally means that the notice must be given within a reasonable time under the circumstances of the case.

44 Am.Jur.2d, Insurance, § 1330.

The appellants rely on the case of Gatlin v. Tennessee Farmers Mut. Ins. Co. 741 S.W.2d 324 (Tenn.1987). The facts of Gatlin are very different from the ones before us in the instant case. Furthermore, the issue of notice was only tangentially involved in Gatlin. The main holding of Gatlin is that “[t]he only [statutory] requirements [for suing under UM coverage] are that the issue of coverage be plead and tried before the original action is terminated.” Id. at 326. In Gatlin, the question was compliance with T.C A. § 56-7-1206, an issue not before us in this case. The Whaleys complied with that statutory provision. What they failed to do was comply with their policy’s requirement that they promptly send Preferred Risk copies of their legal papers against the tortfeasor. Almost 27 months passed after the Whaleys filed suit against the Underwoods before the Whaleys complied with the notice of suit papers requirement. Delaying for 27 months cannot in this case, under any stretch of the imagination, be considered reasonable. The appellants failed to “promptly send [Preferred Risk] copies of the legal papers” in its suit against the Underwoods. Their failure to comply with this condition precedent bars their claim against Preferred Risk under the UM provisions of their policy.

There is no genuine issue as to any material fact in this case. The facts before us clearly show that Preferred Risk is entitled to judgment as a matter of law.

The judgment of the trial court is affirmed. This cause is remanded to the court below for the collection of costs assessed there. The costs of this appeal are taxed against the appellants and their surety.

GODDARD, P.J. (E.S.), and FRANKS, J., concur.

1 . This requirement is separate and distinct from the one at issue in this case. The former provides that Preferred Risk "must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses.”

2 . Mrs. Whaley’s claim was for loss of consortium.

3 . "The evidence offered by the nonmoving party must be taken as true.” Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn.1993).

4 . The Allstate case relied upon an earlier decision by this court in the case of Tennessee Farmers Mutual Insurance Co. v. Nee, 643 S.W.2d 673, 675 (Tenn.App.1982):

It is established that notice provisions of an insurance policy are valid conditions precedent to coverage, and in the absence of notice as required no coverage is afforded even though (1) the policy does not contain a forfeiture claim (sic), and (2) the insurer had not been prejudiced by the delay in notice.