                 IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                        2/19/02 Session

             ALFRED AKIN, ET AL. v. KYLAN THOMPSON, ET AL.

                     Appeal from the Circuit Court for Davidson County
                        No. 99C-1561, Thomas W. Brothers, Judge



                     No. M2001-00851-COA-R3-CV - Filed July 12, 2002


          The plaintiff Alfred Akin was rear-ended by a vehicle driven by the defendant Kylan
Thompson, who was uninsured. The Allstate Insurance policy on the Akin vehicle provided
uninsured motorist coverage with limits of $100,000 per person and $300,000 per occurrence.
Though in his personal vehicle, Mr. Akin was in the course and scope of his employment with the
Metropolitan Nashville Water Works when injured. Metro government does not have a workers’
compensation program, but has a benefit program for on-the-job injuries, under which it paid more
than $100,000 for medical bills and disability benefits. The trial court held that Allstate’s limits
were reduced by amounts paid “under any workers’ compensation law, disability law, or similar law
. . . .” and also found that the loss of consortium claim of Mrs. Akin was derivative in nature and
subject to the same $100,000 “each person” limit and reduction. We affirm the trial court’s grant
of summary judgment in favor of Allstate.

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

ROBERT L. JONES, SP .J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J, M.S.,
and WILLIAM B. CAIN , J., joined.

John B. Carlson and Anna B. Williams, Nashville, Tennessee, for the appellants, Alfred Akin and
wife, Peggy Akin

Michael H. Johnson and K. Melissa Bradford, Nashville, Tennessee, for the appellees, Kylan
Thompson and Pamela Williams


                                            OPINION

       On June 10, 1998, the plaintiff Al Akin was injured when his personal vehicle was rear-ended
by a vehicle driven by Kylan Thompson and owned by Pamela Williams. Mr. Akin and his wife
filed a civil suit against Thompson and Williams, but were unable to serve either defendant. The
plaintiffs served notice on Allstate Insurance Company and were permitted by order of the trial court
to proceed directly against Allstate as their uninsured motorist carrier.

      At the time of the accident Mr. Akin was acting in the course and scope of his employment
with Metro Water Works, a division of the Metropolitan Government of Nashville and Davidson
County (“Metro”). Metro does not have workers’ compensation as such, but has a benefit program
for work-related injuries under its governmental charter, which pays the employee’s medical
expenses, 100% of wages for 130 days, and disability benefits thereafter. The total of benefits paid
by Metro to or for Mr. Akin exceeded $100,000.

        The Akins’ policy with Allstate provided that the uninsured motorist coverage was limited
to $100,000 for “each person,” which was the maximum Allstate would pay for “damages arising
out of bodily injury to one person in any one motor vehicle accident, including all damages sustained
by anyone else as a result of that bodily injury.”

       On page 17 of the policy under a heading entitled “Coverage Agreement,” the provisions of
the uninsured motorist coverage begin as follows:

       We will pay those damages that an insured person is legally entitled to recover from
       the owner or operator of an uninsured auto . . . .

On pages 19 and 20 of the policy are the following limitations of coverage:

       Limits of Liability

       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 to one person in any one motor vehicle accident, including all
                      damages sustained by anyone else as a result of that bodily injury . . . .
                                               ****
               Limits payable will be reduced by all amounts paid or payable by the owner or
               operator of the uninsured auto or anyone else responsible.
                                               ****
               In no event shall our liability under this coverage be more than the limits of the
               uninsured motorist coverage provided.

       2.      Damages payable will be reduced by:
                                             ****
               b)   all amounts paid or payable under any workers compensation law, disability
                    benefits law, or similar law . . . .

      Allstate filed a motion for summary judgment and contended that Allstate owed nothing to
Mr. Akin because the benefits paid to or for Mr. Akin under provisions of the Metro Charter were

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“paid or payable under any workers’ compensation law, disability benefits law, or similar law”and
exceeded, thereby fully offsetting, the $100,000 “each person” policy limits. Allstate also contended
that nothing was owed to Mrs. Akin on her loss of consortium claim because it was derivative in
nature and for purposes of policy limits was included in Mr. Akin’s $100,000 “each person”
maximum, which included “all damages sustained by anyone else as a result of that bodily injury
. . . .”

        The plaintiffs disputed the summary judgment motion and contended that Allstate’s policy
permitted amounts recovered from the owner or operator of the uninsured auto to be offset against
“limits payable” rather than the amount of an eventual judgment, but that the “damages payable”
language permits a reduction for amounts paid under workers’ compensation, disability, or similar
law only from the amount of an eventual judgment amount, rather than from policy limits. The
plaintiffs contended that the distinction between “limits payable” and “damages payable” either
favored the plaintiffs or that such language was ambiguous and must be construed in favor of the
insured plaintiffs.

       The trial court found there were no genuine issues of material facts, that the Metro benefits
received by Mr. Akin were of the type to be offset under the uninsured motorist coverage and that
such benefits were to be deducted from the policy limits rather than from the amount of an eventual
judgment. Since Mr. Akin had already received benefits in excess of policy limits and Mrs. Akin’s
claim was derivative, summary judgment was granted against Mr. and Mrs. Akin on their uninsured
motorist claim.

        The plaintiffs appealed to this court and argue that the trial court erred in holding as a matter
of law that (1) the Metro benefits must be offset against policy limits rather than against the amount
of an eventual judgment, (2) the Metro benefits were the type used to offset an uninsured motorist
claim, and (3) Mrs. Akin’s loss of consortium claim was also subject to Mr. Akin’s same $100,000
“each person” limit.

         On the issue of whether or not the benefits paid to Mr. Akin were of the type for which
reductions could be made, a similar issue was presented to this court in Williams v. Prewitt, No. 01-
A-01-9207-CV-00272, 1992 Tenn. App. LEXIS 951 (Tenn. Ct. App. Dec. 2, 1992), in which the
court held the uninsured motorist carrier was entitled to have its liability reduced by payments made
to a city employee under a city ordinance. In that case the insurance company’s policy said its
uninsured motorist “limit of liability” would be reduced by sums “paid or payable because of the
bodily injury under any workers’ compensation law, disability benefits law, or similar law.” In that
case it was undisputed that the payments under a city ordinance were under “similar law” and the
only dispute in that case dealt with whether or not future payments could be used to offset the
liability.

       We conclude that benefits paid to or for Mr. Akin under a program provided for under
Metro’s Charter is under a “similar law” and, therefore, are the type of benefits for which the amount


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paid shall be offset against the amounts otherwise payable under Allstate’s uninsured motorist
coverage.

         On the issue of whether the setoff should be against policy limits or the eventual judgment,
the trial court and the parties have focused on Sims v. Stewart, No. 02-A-01-9901-CV-00008, 1999
Tenn. App. LEXIS 859 (Tenn. Ct. App. Dec. 15, 1999), which held that the insurer was entitled to
an offset against the limits under its uninsured motorist policy in the amount of workers’
compensation benefits received by the insured. In that case the trial court determined the plaintiff’s
damage claim against the underinsured motorist to be $198,046.43, deducted $61,862.57 for
workers’ compensation benefits received by the plaintiff and ordered the uninsured motorist carrier
to pay its full limit of $100,000. On appeal, cases from other states were cited for both sides of the
issue of whether workers’ compensation benefits should be set off against the damage award or
against the insurance coverage. The Sims policy with Tennessee Farmers Mutual Insurance
Company stated “Damages payable under this coverage . . . shall be reduced by . . . the amount paid
or payable under any workers’ compensation law, disability benefits law or similar law.” The trial
court relied on Sims v. Stewart in granting summary judgment in favor of Allstate.

         Mr. and Mrs. Akin attempt to distinguish Sims v. Stewart because the policy language made
it clear that “damages payable” meant “under that coverage”, rather than an eventual judgment. Mr.
and Mrs. Akin contend that this court should find an ambiguity in their Allstate policy, because the
words “under this coverage” are not present and that the alleged ambiguity should be resolved in
favor of the insureds.

         The material facts of this case are undisputed, and our Supreme Court has recognized that
issues relating to the scope of coverage present questions of law. Standard Fire Ins. Co. v. Chester-
O'Donley & Assoc., Inc., 972 S.W.2d 1, 6 (Tenn. Ct. App. 1998). Therefore, our review concerns
whether Allstate is entitled to judgment as a matter of law. We are to conduct a de novo review of
the trial court's conclusions of law with no presumption of correctness of the trial court's decision.
Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997).

        An insurance policy's language is ambiguous if it "is susceptible of more than one reasonable
interpretation . . . ." American Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 815 (Tenn.
2000). The courts, however, should "avoid strained constructions that create ambiguities where none
exist." Marshall v. Jackson & Jones Oils, Inc., 20 S.W.3d 678, 682 (Tenn. Ct. App. 1999).
Moreover, "[a]ll provisions in the contract should be construed in harmony with each other, if
possible, to promote consistency and to avoid repugnancy between the various provisions of a single
contract." Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999).

        In Sims v. Stewart, the western section of this court relied upon Hudson v. Hudson Mun.
Contractors, 898 S.W.2d 187 (Tenn. 1995), in which our Supreme Court interpreted another policy
providing that amounts payable under its coverage would “be reduced by” amounts paid under any
workers’ compensation or similar law. Like the Sims policy that limited amounts payable “under
this coverage,” the Hudson policy limited amounts payable “under the terms of this insurance.”

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        In a case decided since the briefs of the parties in this case, State Farm Ins. Co. v. Schubert,
No. E2000-02054-COA-R3-CV, 2001 Tenn. App. LEXIS 405 (Tenn. Ct. App. May 31, 2001),
considers different policy language on the same offset issue and reaches a conclusion favorable to
the insured. That case discussed and then distinguished the holdings in Sims and Hudson as follows:

               The UM language in Sims , as well as that in Hudson , states, in effect, that
       the insurance company's liability will be reduced by the amount of the workers'
       compensation benefits payable to the insured. Those provisions clearly state how the
       insurer's liability is to be calculated. The policy language now before us does not
       focus on a calculation; rather, it focuses on what the insurance company will not pay.
       It simply says that if its insured is entitled to recover compensation benefits, it, the
       insurance company, will not pay those benefits "again." The Sims and Hudson
       provisions basically say "we will pay our coverage less the workers' compensation
       benefits" while the policy before us essentially says "we will not allow you to recover
       from us any loss paid for by workers' compensation." In our view, there is a huge
       difference in the import of the language now before us and that before the courts in
       Sims and Hudson. That difference is of sufficient magnitude to render the holdings
       of Sims and Hudson inapplicable to the facts of the instant case. Our holding today
       commits State Farm to its coverage liability of $100,000 while, at the same time,
       steering clear of violating the bargain between State Farm and its policyholder that
       State Farm would not "again" pay the benefits payable under workers' compensation.

               While we find no ambiguity in the policy language under consideration, we
        note the well-established principle that if a provision in an insurance policy is
        ambiguous and susceptible to more than one reasonable meaning, we must adopt the
        meaning favorable to the insured. Gredig [v. Tennessee Farmers Mut. Ins. Co.], 891
        S.W.2d at 912. Thus, even if there is some ambiguity in the UM coverage found in
        Schubert's policy, we must accept the meaning favorable to him. While State Farm
        may have meant to say what the policies in Sims and Hudson clearly say, it failed to
        do so. As the author of the policy, it must suffer the consequences of this failure.
        Under the language used by it, it is responsible to Schubert for $100,000.

State Farm Ins. Co. v. Schubert, 2001 Tenn. App. LEXIS 405, at *14-16.

        Allstate’s provisions are certainly far different from the not pay “again” language in State
Farm Ins. Co. v. Schubert. While the Allstate policy would be essentially identical to those in Sims
and Hudson, if it included the words “under this coverage,” it is still unambiguous in its meaning
and reduces its coverage amounts in the same calculation manner. Therefore, we agree with Allstate
and the trial court that the reduction for amounts paid to or for Mr. Akin is against the policy limits
rather than any eventual judgment against the tortfeasors.




                                                  -5-
       On the issue of whether or not Mrs. Akin’s loss of consortium claim is subject to the Mr.
Akin’s same $100,000 “each person” limit, the facts and policy provisions are similar to those in
Green v. United States Auto. Ass’n, No. E2000-02713-COA-R3-CV, 2001 Tenn. App. LEXIS 603
(Tenn. Ct. App. Aug. 16, 2001), which stated the following:

                A loss of consortium claim is “a derivative claim in that the physical injuries
       or incapacities of one's spouse give rise to and establish the claim.” Tuggle v.
       AllRight Parking Sys., Inc., 922 S.W.2d 105, 108 (Tenn. 1996), (quoting Jackson v.
       Miller, 776 S.W.2d 115, 117 (Tenn. Ct. App. 1989)). However, a person's "right to
       recover for loss of consortium is a right independent of the spouse's right to recover
       for the injuries themselves." Swafford v. City of Chattanooga, 743 S.W.2d 174, 178
       (Tenn. Ct. App. 1987); see also Tenn. Code Ann. § 25-1-106 (providing that "there
       shall exist in cases where such damages are proved by a spouse, a right to recover for
       loss of consortium").
                *****
        . . . The UM Limit of Liability section clearly provides that the "maximum limit of
       liability for all resulting damages, including, but not limited to, all direct, derivative
       or consequential damages recoverable by any persons, is the limit of BI liability . .
       . for 'each person' . . . ." (emphasis added). The Policy, when "taken and understood
       in its plain, ordinary and popular sense. . .," provides that Plaintiff Green has
       coverage for her Bodily Injury and that "all resulting damages" sustained by her or
       "any persons", including Plaintiff Ferguson, are subject to the "each person" UM
       limit. American Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d at 814.

Green v. United States Auto Ass’n, 2001 Tenn. App. LEXIS 603 at #12-15.

        We agree with Allstate and the Trial Court that Mrs. Akin’s claim for loss of consortium,
while independent, is still derivative and is expressly subject to Allstate’s “each person” maximum
for “damages arising out of bodily injury to one person in any one motor vehicle accident, including
all damages sustained by anyone else as a result of that bodily injury.”

        We affirm the Trial Court's grant of summary judgment to Defendant. The costs on appeal
are assessed against the Appellants, Mr. and Mrs. Akin.



                                                        ____________________________________
                                                        ROBERT L. JONES, SPECIAL JUDGE




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