                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                 September 19, 2002 Session

              SHERI M. ENGLISH, ET AL. v. CHRIS PRETTI, ET AL.

                   Direct Appeal from the Circuit Court for Shelby County
                       No. 89929 T.D.   John R. McCarroll, Jr., Judge



                   No. W2001-01657-COA-R3-CV - Filed October 24, 2002


The trial court awarded summary judgment to the Plaintiffs’ uninsured motorist insurance carrier,
finding that the carrier’s liability was offset by the workers’ compensation award which the Plaintiff
received for her injuries. We affirm.

   Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; and
                                       Remanded

DAVID R. FARMER , J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and HOLLY K. LILLARD, J., joined.

Joseph M. Sparkman, Southaven, Mississippi, for the appellants, Sheri M. English and husband,
David W. English.

Robert M. Fargarson, Memphis, Tennessee, for the appellee, Allstate Insurance Company.

                                             OPINION

        The relevant facts in this case are undisputed. In September of 1996, Sheri English was
walking across a lawn in a residential neighborhood of Memphis when a utility trailer disconnected
from a motor vehicle operated by Chris Pretti. The trailer was owned by Glen Caldwell, a passenger
in the motor vehicle. The trailer struck Ms. English, causing serious and permanent injuries. At the
time of the injury, Ms. English was in the course and scope of her employment with Trinity Health
Care Services. She received workers’ compensation benefits of $106,675.92 for her injuries.

        In September of 1997, Sheri English and her husband, David English, filed a complaint for
negligence against Chris Pretti and Glen Caldwell. Mr. English asserted an additional cause of
action for loss of consortium. Notice was also served on Allstate Insurance Co. (“Allstate”), the
Englishes’ uninsured motorist carrier. Trinity Health Care Services intervened, alleging it was
entitled to a subrogation lien under the Tennessee Workers’ Compensation Statute. Disputes
between the Englishes and Chris Pretti, Glen Caldwell and Trinity Health Care Services have been
settled and are not before this Court. Allstate denied liability under the policy and was awarded
summary judgment in the court below. The Englishes now appeal the award of summary judgment
to Allstate.

                                         Issues Presented

       The issue as presented by the Englishes for review by this Court is whether the trial court
erred by awarding summary judgment to Allstate. We restate the issues as:

               (1) Did the trial court err in determining that under the contract for insurance
       Allstate’s liability to Ms. English was offset by the workers’ compensation amounts
       she received?

               (2) Did the trial court err in determining that liability to Mr. English for his
       loss of consortium damages was offset by the workers’ compensation award to Ms.
       English?

                                        Standard of Review

         Our review of an award of summary judgment is de novo, with no presumption of correctness
accorded to the judgment of the trial court. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995).
Summary judgment is appropriate where there is no genuine issue regarding material facts relevant
to a claim, and the moving party is entitled to a judgment as a matter of law. Tenn. R. Civ. P. 56.04.
In determining whether to award summary judgment, the court must view the evidence in the light
most favorable to the nonmoving party, drawing all reasonable inferences in favor of that party.
Staples v. CBL & Assoc., 15 S.W.3d 83, 89 (Tenn. 2000). When a party makes a properly supported
motion for summary judgment, the burden shifts to the nonmoving party to establish the existence
of disputed material facts. Id. Summary judgment should be awarded only when a reasonable
person could reach only one conclusion based on the facts and inferences drawn from those facts.
Id.

                           Offset of Liability for Ms. English’s Injuries

        The parties do not dispute that the Englishes’ uninsured motorist coverage with Allstate was
limited to $100,000 for bodily injury to one person and $300,000 for all persons in one accident.
The limitations section of the Englishes’ insurance policy with Allstate provides that coverage
amounts will be offset by recovery received from other enumerated sources. The section states:

       Limitations of Liability
       2. Damages payable will be reduced by:
             a) all amounts paid by or on behalf of the owner or operator of the
             uninsured auto, including an underinsured auto or anyone else



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               responsible. This includes all sums paid under the bodily injury
               liability coverage of this or any other auto policy.
               b) all amounts paid or payable under any workers compensation law,
               disability benefits law, or similar law, Automobile Medical Payments,
               or any similar medical payments coverage under this or any other auto
               policy. If the accident arises from the use of an uninsured motor
               vehicle, we aren’t obligated to make any payment under this coverage
               until the limits of liability for all liability protection in effect and
               applicable at the time of the accident have been exhausted by
               payment of judgments or settlements.

        Allstate submits that the language of the policy provides that Allstate’s liability would be
offset by any amount paid by workers’ compensation which, in this case, was greater than the policy
maximum of $100,000 for a single injury. Such provisions limiting or reducing liability where other
benefits are available are permissible pursuant to Tenn. Code Ann. § 56-7-1205, which reads:

       Minimum policy limits not increased. –- Nothing contained in this part shall be
       construed as requiring the forms of coverage provided pursuant to this part, whether
       alone or in combination with similar coverage afforded under other automobile
       liability policies, to afford limits in excess of those that would be afforded had the
       insured thereunder been involved in an accident with a motorist who was insured
       under a policy of liability insurance with the minimum limits described in §55-12-
       107, or the uninsured motorist liability limits of the insured’s policy if such limits are
       higher than the limits described in §55-12-107. Such forms of coverage may
       include such terms, exclusions, limitations, conditions, and offsets, which are
       designed to avoid duplication of insurance and other benefits.

Tenn. Code Ann. § 56-7-1205 (2000)(emphasis added).

        Ms. English argues that the statute should be read in such a way as to avoid duplication of
damages, and that the offset provision accordingly should apply to the amount of actual damages,
rather than the amount of coverage. She contends that the code provision should be interpreted
broadly, and that such a broad coverage theory would fulfill the legislative intent that an insured be
fully compensated for her injuries before an offset would occur.

        When interpreting a legislative provision, this Court’s primary objective is to effectuate the
purpose of the legislature. Lipscomb v. Doe, 32 S.W.3d 840, 844 (Tenn. 2000). Insofar as possible,
the intent of the legislature should be determined by the natural and ordinary meaning of the words
used, and not by a construction that is forced or which limits or extends the meaning. Id. Likewise,
the Court must seek to ascertain the intended scope, neither extending nor restricting that intended
by the legislature. State v. Morrow, 75 S.W.3d 919, 921(Tenn. 2002) (citing State v. Sliger, 846
S.W.2d 262, 263 (Tenn. 1993)). Our interpretation must not render any part of a legislative act
“inoperative, superfluous, void or insignificant.” Id. (quoting Tidwell v. Collins, 522 S.W.2d 674,


                                                  -3-
676-77 (Tenn. 1975)). Rather, we seek to give effect to the legislature’s over-arching purpose.
Merrimack Mut. Fire Ins. Co. v. Batts, 59 S.W.3d 142, 151 (Tenn. Ct. App. 2001). In so doing,
we must interpret the statute involved reasonably, bearing in mind its objective, the harm it seeks
to avoid, and the purposes it seeks to promote. Voss v. Shelter Mut. Ins. Co., 958 S.W.2d 342, 345
(Tenn. Ct. App. 1997).

        The courts of this state have interpreted the legislative intent of Tenn. Code Ann. § 56-7-1205
section as providing less than broad coverage. Terry v. Aetna Cas. & Sur. Co., 510 S.W.2d 509
(Tenn. 1974); Shambely v. Walls, 600 S.W.2d 247 (Tenn. Ct. App. 1980). We have also held that
policy provisions which reduce coverage where other coverage or benefits are available are valid as
long as they do not deny payments to the insured of less than the minimum required by statute.
Terry, 510 S.W.2d at 513; Mathis v. Stacey, 606 S.W.2d 290 (Tenn. Ct. App. 1980). This Court
has had recent occasion to revisit policies containing identical offset provisions in Green v. United
States Automobile Ass’n, No. E2000-02713-COA-R3-CV, 2001 Tenn. App. LEXIS 603 (Tenn. Ct.
App. Aug. 16, 2001 ) (no perm. app. filed) and Akin v. Thompson, No. M2001-00851-COA-R3-
CV, 2002 Tenn. App. LEXIS 494 (Tenn. Ct. App. July 12, 2002)(perm. app. pending). In both
cases, we reiterated our interpretation of the statute as permitting clauses which provide that an
insurer’s liability pursuant to an uninsured motorist provision may be offset by other benefits
received, including workers’ compensation benefits.

          The Englishes argue that the narrow interpretation of the uninsured motorist statutes as
promulgated in Terry has been abrogated by subsequent amendments to the statutes, which reflect
a legislative intent that the provisions be interpreted broadly. We agree with this contention insofar
as it is applicable to much of the statutory scheme. In Alcazar v. Hayes, the supreme court addressed
the issue of whether an insured could recover under the terms of his uninsured motorist policy when
he failed to comply with the notice provisions of that policy. Alcazar v. Hayes, 982 S.W.2d 845
(Tenn. 1998). Utilizing a broad coverage approach, the court held that the policy could be enforced
despite untimely notice where the carrier had not been prejudiced by the delay. Id. at 853.

          The Alcazar court addressed three rationales in its re-examination of the consistently held
common law approach that notice is a condition precedent to recovery under an insurance policy
regardless of prejudice to the carrier. Id. at 849-850. The court addressed the adhesive nature of
contracts for insurance, the public policy goals of compensating tort victims, and “the inequity of
the insurer receiving a windfall due to a technicality.” Id. at 850. Noting that “stare decisis is not
. . . a universal inexorable command,” the court rejected the traditional common law approach and
joined the majority of jurisdictions in holding that recovery under the policy was possible despite
delayed notice where the insurance carrier had not been prejudiced by the delay. Id. at 852-853
(quoting City of Memphis v. Overton, 392 S.W.2d 98, 100 (Tenn. 1965)(quoting Burnet v.
Coronado Oil & Gas Co., 285 U.S. 393 (1932))).

       In Albin v. City of Memphis, this Court addressed the issue of whether an insurer can, by
express terms in the insurance policy, exclude uninsured/underinsured coverage for self-insured and
government-owned vehicles. Albin v. City of Memphis, Shelby Law # 24, 1988 Tenn. App. LEXIS


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537 (Tenn. Ct. App. Aug. 24, 1988)(no perm. app. filed). Upon examination of the 1982
amendments to the Uninsured Motorist Act, we held that the language utilized in the amended statute
indicated that the legislature no longer intended to allow an insurer to exclude coverage for accidents
involving uninsured/underinsured motorists by limiting the definition of an uninsured motor vehicle
in its policy. Id. at *6. In Albin, we noted that the defendant insurance carrier relied for support
upon Terry for the proposition that the uninsured motorist provisions should be narrowly construed.
Id. We rejected this contention, holding that in enacting the 1982 amendments the legislature “took
a significant step toward joining the majority of the states in providing broad uninsured motorist
coverage.” Id. at *5 (citing, Cf. Terry v. Aetna Cas. & Sur. Co., 510 S.W.2d 509, 513 (Tenn. 1974)).

        Notwithstanding this trend, we are unable to extend the rationale embracing broad coverage
as found in Albin and Alcazar to the issue of whether the offset language as found in Tenn. Code
Ann. § 56-7-1205 should be construed to prevent duplication of damages rather than coverage. In
Terry, the supreme court specifically addressed the question of whether the word “duplication” as
used in then Tenn. Code Ann. § 56-1152 (currently Tenn. Code Ann. § 56-7-1205) referred to
duplication of damages or coverage. Terry, 510 S.W.2d at 509. In so doing, the court sought to
reconcile its decision in State Farm Mutual Automobile Insurance Co. v. Barnette, 485 S.W.2d
545 (Tenn. 1972) with its earlier holding in Shoffner v. State Farm Mutual Automobile Insurance
Co., 494 S.W.2d 756 (Tenn. 1972). Id. The court noted,

        [u]nder a review of these cases there arises a possibility of conflict when these
        decisions are applied to a different set of facts. The solution to this problem requires
        that we come to grips with the legislative purpose contained in T.C.A. § 56-1152, as
        a section of our uninsured motorist statute.

Terry, 510 S.W.2d at 513. The Terry court discussed two approaches to offset provisions contained
in uninsured motorist policies. Id. Under the first theory, which the court recognized as being the
broad coverage approach embraced by a majority of jurisdictions, uninsured motorist statutes were
interpreted to provide for full coverage up to the policy limits so long as the payments did not exceed
the actual damages. Id. The second theory provides for limited coverage, under which set-off
provisions in a policy operate to reduce coverage by amounts received from other sources. Id. The
court noted that although the first approach is the majority approach in jurisdictions having similar
uninsured motorist statutes, the Tennessee statute is distinguished by the provisions of Tenn. Code
Ann. § 56-7-1205. Id. The court accordingly held that the enactment of Tenn. Code Ann. § 56-7-
1205 reflected a

        legislative purpose to provide an insured motorist a right of recovery under the
        uninsured motorist provisions of his policy only up to the statutory required
        minimum . . . and provisions in such policies . . . operating to reduce coverage where
        other coverage or benefits are available to the insured arising from accident causing
        the loss, are valid if such provisions do not operate to deny payments to the insured
        of less than the statutory minimum.



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Terry v. Aetna Cas. & Sur. Co., 510 S.W.2d 509, 513-14 (1974).

        The Englishes contend that in light of legislative amendments to the uninsured motorist
statutes, recent judicial opinions, and the inferences to be drawn from application of the made-whole
doctrine to subrogation rights, the holding of the Supreme Court in Terry no longer reflects
Tennessee public policy. The public policy of this state is “found in its constitution, statutes, judicial
decisions and applicable rules of common law.” Alcazar, 982 S.W.2d at 851 (quoting State ex rel.
Swann v. Pack, 527 S.W.2d 99 (Tenn. 1975)). It is primarily the function of the legislature to
determine public policy. Id. However, the judiciary may make public policy determinations in the
absence of constitutional or legislative directives. Id. In Terry, the Supreme Court interpreted the
code as enacted by the legislature as permitting insurance carriers to include provisions that provide
for the offset coverages in their uninsured motorist provisions. In Hudson v. Hudson Municipal
Contractors, Inc., the court reiterated the holding of Terry as applied to workers’ compensation
benefits, stating, “it is clear that an insured party’s right to recover under an uninsured motorist
policy that contains a setoff provision . . . may be reduced by the amount that the insured has
collected, or could collect, under the Workers’ Compensation Law.” Hudson v. Hudson Mun.
Contractors, Inc., 898 S.W.2d 187, 189 (Tenn. 1995). Although the Hudson Court did not address
the issue of whether this interpretation continues to reflect public policy in light of legislative
enactments since Terry, the holding of Terry clearly remains the law of this state. We additionally
note that the legislature has had nearly thirty years to revise the statute in light of the supreme court’s
holding in Terry, and has declined to do so. In the absence of a legislative directive, the holding of
the supreme court is controlling precedent which may not be disturbed by this Court. The judgment
of the trial court accordingly is affirmed on this issue.

                              Mr. English’s Loss of Consortium Claim

        The Englishes contend that the trial court erred in awarding summary judgment to Allstate
against David English for his loss of consortium. They argue that Mr. English’s cause of action is
a separate and distinct claim for which he is entitled to compensation. As we understand the
Englishes’ argument, they submit that since Mr. English has a distinct and separate cause of action,
his injuries are independently compensable under the policy of insurance, notwithstanding any offset
resulting from workers’ compensation benefits to Ms. English. Since workers’ compensation
benefits to Ms. English do not compensate Mr. English for his loss of consortium, those damages
should be covered by the uninsured motorist coverage.

         Allstate contends that Mr. English’s claim arises out of Ms. English’s injuries. Citing Green,
supra, Allstate argues that the $100,000 per injury policy limitation provides the maximum amount
of liability for all damages which derive as a consequence of the one physical injury. Allstate further
argues that the contractual language of the policy relieves it of liability for any amount paid by
workers’ compensation for that bodily injury. Since the workers’ compensation award was over
$100,00, Allstate submits that its liability has been completely offset.

        The “Limits of Liability” section of the Allstate policy provides:


                                                   -6-
       1. The coverage limit shown on the declarations page for:
                      a) “each person” is the maximum that we will pay for
              damages arising out of bodily injury for one person in any one motor
              vehicle accident, including all damages sustained by anyone else as
              a result of that bodily injury.

        In general, contracts of insurance are construed by the courts according to the general rules
of contract construction. Tennessee Farmers Mut. Ins. Co. v. Witt, 857 S.W.2d 26, 30-32 (Tenn.
1993). When called upon to interpret a contract, courts seek to ascertain the intent of the parties
through the natural and ordinary meaning of the words employed. Guiliano v. Cleo, Inc., 995
S.W.2d 88, 95 (Tenn. 1999). The courts of this state recognize, however, that contracts of insurance
are not generally negotiated contracts in the traditional sense. Alcazar v. Hayes, 982 S.W.2d 845,
850 (Tenn. 1998). They are in reality contracts of adhesion, the provisions of which are determined
by the insurer. Id. at 851. Thus we resolve any ambiguity in a contract of insurance in favor of the
insured. Id.

        The provision in the Allstate policy of insurance noted above clearly is not ambiguous. The
$100,000 per injury coverage is the maximum liability Allstate contracted to incur as the result of
any one bodily injury, including damages sustained by anyone else as a result of that bodily injury.
While Mr. English has a separate and distinct cause of action against the tortfeasors in this case, his
injuries are not covered under the policy of insurance where the maximum coverage has been offset
by the workers’ compensation benefits received by Ms. English. As noted above, the offset
provision in the insurance policy offsets coverage, not actual damages. The policy limits for injuries
arising from the one injury to Ms. English have been offset by the workers’ compensation award,
notwithstanding Mr. English’s separate cause of action for loss of consortium. The judgment of the
trial court accordingly is affirmed.

                                             Conclusion

         Allstate’s liability to Ms. English under the uninsured motorist provision in the contract of
insurance has been offset by the workers’ compensation benefits which Ms. English received. Loss
of consortium damages suffered by Mr. English as a result of injuries to Ms. English are subject to
the contractual limitation of $100,000 per bodily injury. Allstate’s liability for loss of consortium
damages, therefore, likewise is offset by the workers’ compensation award to Ms. English. In light
of the foregoing, the judgment of the trial court awarding summary judgment to Allstate is affirmed.
Costs of this appeal are taxed to the Appellants, Sheri M. English and husband, David W. English,
and their surety, for which execution may issue if necessary.


                                                       __________________________________
                                                       DAVID R. FARMER, JUDGE




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