                    IN THE COURT OF APPEALS OF TENNESSEE
                               AT KNOXVILLE

           MORRIS SLUTSKY, ET UX v. CITY OF CHATTANOOGA

                  Direct Appeal from the Circuit Court for Hamilton County
                          No. 97C2663    W. Neil Thomas, III, Judge



                    No. E1999-00196-COA-R3-CV - Decided June 30, 2000


This case arose out of a two-vehicle accident involving an automobile owned by the City of
Chattanooga (“the City”). The plaintiffs sued the City for damages arising out of that accident.
Process was also served on the plaintiffs’ uninsured motorist carrier. The claim against the latter
seeks to recover the portion of the plaintiffs’ damages that exceed the City’s limit of liability under
the Governmental Tort Liability Act (“the GTLA”). The trial court granted the insurance company’s
motion to dismiss, holding that the plaintiffs’ suit did not implicate their uninsured motorist
coverage. The plaintiffs appeal, arguing that they are entitled to recover under the uninsured
motorist coverage of their automobile insurance policy. We affirm.

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

SUSANO, J., delivered the opinion of the court, in which GODDARD , P.J., and FRANKS, J., joined.

Marvin Berke, Chattanooga, Tennessee, for the appellants, Morris Slutsky and Anetha Slutsky.

Michael A. McMahan, Chattanooga, Tennessee, for the appellee, City of Chattanooga.

Daniel M. Gass, Knoxville, Tennessee, for the appellee, St. Paul Guardian Insurance Company.


                                             OPINION


                                                  I.

       The plaintiffs, Morris Slutsky and Anetha Slutsky, were injured when their vehicle was
struck head-on by a police vehicle owned by the City. The trial court awarded each plaintiff a
judgment for $130,000 against the City, in accordance with the limit of liability set forth in the
GTLA.1 The plaintiffs seek to recover additional amounts under the uninsured motorist coverage
of their automobile insurance policy. That policy was issued by St. Paul Guardian Insurance
Company (“the insurance company”).2 The trial court granted the insurance company’s motion to
dismiss, finding that, pursuant to the uninsured motorist statutes in effect at the time of the accident3,
the insurance company was not liable for damages in excess of the City’s limited liability under the
GTLA. The court further determined that the application of amendments to the uninsured motorist
statutes -- amendments that became effective after the accident -- to the facts of this case would
unconstitutionally impair the insurance company’s vested contractual rights. The plaintiffs appeal,
arguing (1) that the amendments should apply retrospectively so as to permit them to recover under
their uninsured motorist coverage and (2) that even if those amendments do not apply, the plaintiffs
are entitled to recover under their uninsured motorist coverage pursuant to the statutes in effect at
the time of the accident.

                                                    II.

       The subject accident occurred on October 28, 1997. At that time, T.C.A. § 56-7-1201(d)
provided as follows:

                  The limit of liability for an insurer providing uninsured motorist
                  coverage under this section is the amount of that coverage as
                  specified in the policy less the sum of the limits collectible under all
                  liability and/or primary uninsured motorist insurance policies, bonds,
                  and securities applicable to the bodily injury or death of the insured.

On the same date, T.C.A. § 56-7-1202 provided that a vehicle owned by a governmental entity was
not an “uninsured motor vehicle” for the purposes of uninsured motorist coverage. As pertinent
here, the then-existing version of T.C.A. § 56-7-1202 provided as follows:

                  (a) For the purpose of [uninsured motorist] coverage, “uninsured
                  motor vehicle” means a motor vehicle whose ownership,
                  maintenance, or use has resulted in the bodily injury, death, or
                  damage to property of an insured, and for which the sum of the limits
                  of liability available to the insured under all valid and collectible
                  insurance policies, bonds, and securities applicable to the bodily
                  injury, death, or damage to property is less than the applicable limits
                  of uninsured motorist coverage provided to the insured under the
                  policy against which the claim is made.


        1
            See T.C.A. § 29-20-311 (1980); T.C.A. § 29-20-403(b)(2)(A) (Supp. 1999).
        2
            The plaintiffs’ uninsured motorist coverage had a single limit of $1,000,000 per occurrence.
        3
            T.C.A §§ 56-7-1201 and 56-7-1202 (1994).

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                (b) “Uninsured motor vehicle” does not include a motor vehicle:

                                        *       *          *

                (4) Owned by any governmental unit, political subdivision or agency
                thereof....

(Emphasis added).

       In 1999, the Legislature passed Chapter 196 of the Public Acts of 1999, which amended
T.C.A. §§ 56-7-1201 and 56-7-1202. T.C.A. § 56-7-1201(d), as amended, includes the following
provision:

                With regard to a claim against a governmental unit, political
                subdivision or agency thereof, the limitations of liability established
                under applicable law shall be considered as limits collectible under
                a liability insurance policy.

Chapter 196 also repealed T.C.A. § 56-7-1202(b)(4), which, as previously indicated, had excluded
a vehicle owned by a governmental entity from the definition of “uninsured motor vehicle.” Finally,
subsection (c) was added to T.C.A. § 56-7-1202 and provides as follows:

                (c) Notwithstanding any other provision of law, the applicable limits
                of liability for a governmental unit, political subdivision or agency
                thereof for claims arising out of the operation of a motor vehicle shall
                be considered as liability coverage available under a valid and
                collectible insurance policy.

        The trial court in the instant case found that under the law in effect at the time of the subject
accident, the plaintiffs were not entitled to recover under their uninsured motorist coverage. The
court further concluded that retrospective application of the pertinent amendments would impair the
insurance company’s vested rights under the insurance contract. It therefore granted the insurance
company’s motion to dismiss. This appeal followed.

                                                    III.

        The 1999 amendments to T.C.A. §§ 56-7-1201 and 56-7-1202 became effective after the date
of the subject accident. The plaintiffs argue that these amendments should apply retrospectively,
thereby enabling the plaintiffs to recover under their uninsured motorist coverage for amounts in
excess of the liability limit imposed by the GTLA. We disagree.

       Although statutes are presumed to operate prospectively, State Dep’t of Human Services v.
Defriece, 937 S.W.2d 954, 957 (Tenn. Ct. App. 1996), statutes that are remedial or procedural in
nature may be retrospectively applied. Nutt v. Champion Int’l Corp., 980 S.W.2d 365, 368 (Tenn.

                                                    -3-
1998); Saylors v. Riggsbee, 544 S.W.2d 609, 610 (Tenn. 1976). A procedural statute defines the
manner by which a party may enforce a legal right. Doe v. Sundquist, 2 S.W.3d 919, 923 (Tenn.
1999). A remedial statute “provides the means by which a cause of action may be effectuated,
wrongs addressed, and relief obtained.” Id. A statute that creates a new right of recovery, however,
is not considered remedial in nature. Shell v. State, 893 S.W.2d 416, 420 (Tenn. 1995).

        If a remedial or procedural statute impairs a vested right or contractual obligation,
retrospective application of that statute is constitutionally impermissible. Kee v. Shelter Ins., 852
S.W.2d 226, 228 (Tenn. 1993). The primary authority is found at Article I, Section 20, of the
Tennessee Constitution, which provides that “no retrospective law, or law impairing the obligations
of contracts, shall be made.” The Supreme Court has construed Article I, Section 20 as prohibiting
laws “which take away or impair vested rights acquired under existing laws or create a new
obligation, impose a new duty, or attach a new disability in respect of transactions or considerations
already passed.” Doe, 2 S.W.3d at 923 (quoting Morris v. Gross, 572 S.W.2d 902, 907 (Tenn.
1978)).

        The rights of parties to a contract of automobile insurance accrue “on the date of the
accident.” Crismon v. Curtiss, 785 S.W.2d 353, 354 (Tenn. 1990). To retrospectively apply a
statutory amendment that impairs these vested contractual rights would violate Article I, Section 20
of the Tennessee Constitution. See Kee, 852 S.W.2d at 229 (holding amendment to Savings Statute
could not be retrospectively applied); Crismon, 785 S.W.2d at 354-55 (holding amendment to
uninsured motorist statute limiting kinds of damages recoverable could not be retrospectively
applied).

                                                  IV.

        In the instant case, the application of the amendments to the facts of this case would have the
effect of broadening the insurance company’s liability beyond that as it existed on the date of the
accident. On the date of the accident, the insurance company was not liable, under its uninsured
motorist coverage, for any portion of the damages that exceeded the City’s limited liability of
$130,000. After the subject amendments, and assuming, for the purpose of discussion, their
applicability to the facts of this case, the insurance company’s liability for uninsured motorist
coverage would extend to damages in excess of the City’s statutory liability. This analysis requires
that we find that the application of the 1999 amendments to the subject accident would
impermissibly impair the insurance company’s vested contractual rights that accrued as of October
28, 1997, the date of the accident, in violation of Article I, Section 20, of the Tennessee Constitution.
Therefore, we must apply the law that was in effect on the date of the plaintiffs’ accident.

       As an alternative argument, the plaintiffs contend that at the time of the accident, T.C.A. §§
56-7-1201 and 56-7-1202 permitted recovery under the uninsured motorist coverage of amounts
above the limit imposed by the GTLA. The crux of the plaintiffs’ argument is that although T.C.A.
§ 56-7-1202(b)(4) excludes a government vehicle from the definition of an “uninsured motor
vehicle,” this provision only applies to an uninsured vehicle and not to an underinsured vehicle.


                                                  -4-
Hence, so the argument goes, T.C.A. § 56-7-1202(b)(4) does not apply because this case involves
a claim for underinsured motorist coverage.

        We addressed a similar argument in Hempy v. City of Chattanooga Parks & Recreation,
C/A No. 03A01-9412-CV-00435, 1995 WL 309986 (Tenn. Ct. App. E.S., filed May 22, 1995), a
case involving nearly identical facts. In Hempy, the plaintiff was injured in an accident involving
a truck owned by the City of Chattanooga. The plaintiff sought to recover under her uninsured
motorist coverage for damages she incurred in excess of the $130,000 statutory limit. We affirmed
a grant of summary judgment to the insurance company, rejecting the same argument being
advanced in the instant case:

               The statute provides no judgment in excess of $130,000 could be
               entered against the City of Chattanooga in this case, and the city was
               “self-insured” for that amount. See T.C.A. § 29-20-311; T.C.A. § 29-
               20-403(b)(2)(A). Ms. Hempy argues the above statute, T.C.A. § 56-
               7-1202(b)(4), does not apply to the situation at bar because the city
               vehicle was not “uninsured,” but rather “underinsured.” This
               argument is not persuasive, since the statutory definition of an
               “uninsured motor vehicle” clearly encompasses “underinsured” motor
               vehicles as well. “It appears to us the Legislature simply combined
               those two categories in a single paragraph....” Dockins v. Balboa
               Insurance Co., 764 S.W.2d 529, 532 (Tenn. 1989).

Hempy, 1995 WL 309986, at *2. Hempy controls the resolution of the second issue argued by the
plaintiffs. Accordingly, that issue is found adverse to the plaintiffs.4

                                                 V.

        The judgment of the trial court is affirmed. Costs on appeal are taxed to the appellants. This
case is remanded for collection of costs assessed below, pursuant to applicable law.




       4
       Our decision in this case renders moot the other issues raised by the insurance company.
Accordingly, they are pretermitted.

                                                 -5-
