                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                  October 21, 2008 Session

         BOOKER T. HOLLOWAY and wife, BRENDA HOLLOWAY
                              v.
                JAMES C. PURDY and CHRIS PURDY

                       Appeal from the Circuit Court for Shelby County
                         No. 95161-2 T.D. James F. Russell, Judge



                     No. W2007-02795-COA-R3-CV - Filed May 15, 2009


This appeal involves the Tennessee Uninsured Motorist Act. The plaintiffs owned a body shop that
was insured under a garage owner’s policy. The policy limited its uninsured motorist coverage to
vehicles that were owned by the plaintiffs and listed on the policy. While driving to an auto parts
store in a customer’s car, one of the plaintiffs was hit by an uninsured motorist and sustained
physical injuries. The plaintiffs then submitted claims to the insurance company that issued the
garage owner’s policy, and also to his customer’s insurance company, seeking recovery under the
uninsured motorist provisions of both policies. After the claims were denied, the plaintiffs filed a
lawsuit against the uninsured motorist. The insurance company that issued the plaintiffs the garage
owner’s policy filed a motion for summary judgment, arguing that there was no coverage because
the policy did not cover the plaintiffs while operating a non-owned vehicle. The trial court granted
the motion for summary judgment. As a permissive operator, the injured plaintiff was covered under
his customer’s uninsured motorist policy. The customer’s insurance company settled with the
plaintiffs, obtained an assignment of their rights against the insurance company that issued them the
garage owner’s policy, and then intervened as a third party plaintiff. The intervening plaintiff now
appeals the trial court’s grant of summary judgment to the insurer under the garage owner’s policy,
arguing that the Uninsured Motorist Act prohibits such a limitation. We affirm, finding that the
statute does not prohibit the limitation.

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

HOLLY M. KIRBY , J., delivered the opinion of the Court, in which DAVID R. FARMER , J., and J.
STEVEN STAFFORD , J., joined.

Stephen W. Vescovo, Memphis, Tennessee, for the Intervening Plaintiff/Appellant State Farm
Mutual Automobile Insurance Company

Andrew H. Owens, Memphis, Tennessee, for the Uninsured Motorist Defendant/Appellee Clarendon
National Insurance Company
                                        OPINION
                                     FACTS AND PROCEDURAL HISTORY

       Booker Holloway (“Mr. Holloway”) and his wife Brenda Holloway were the owners and
operators of a wrecker service and body shop in Memphis. The business was insured under a garage
owner’s business insurance policy issued by Defendant/Appellee Clarendon National Insurance
Company (“Clarendon”).

       On June 9, 1997, Mr. Holloway was working on a car owned by one of his customers.1 The
customer’s vehicle was insured by Plaintiff/Appellant State Farm Mutual Automobile Insurance
Company (“State Farm”). In the course of working on the vehicle, Mr. Holloway drove the car to
an auto parts store to have the battery checked. On the way, he was struck by a vehicle driven by
James Purdy (“Mr. Purdy”), allegedly due to Mr. Purdy’s negligence. Mr. Purdy was uninsured and
Mr. Holloway sustained serious injuries.

       The Holloways submitted an uninsured motorist claim to Clarendon, under the garage
owner’s policy, and to State Farm, under the customer’s policy, pursuant to the uninsured motorist
provisions of each policy. Both claims were apparently denied.

       On June 9, 1998, the Holloways filed the instant lawsuit against Mr. Purdy, alleging
negligence in the vehicular accident. Presumably both State Farm and Clarendon were served2
because both filed answers to the complaint, citing the provisions of Tennessee Code Annotated §
56-7-1201, et seq.

        Clarendon filed a motion for summary judgment, asserting that the uninsured motorist
provision in the Holloways’ garage owner’s insurance policy was not applicable because, at the time
of the accident, Mr. Holloway was occupying and operating a non-owned vehicle. The trial court
granted Clarendon’s motion for summary judgment on February 12, 2001, leaving State Farm as the
only insurer remaining in the lawsuit.

        State Farm subsequently settled with the plaintiffs under its uninsured motorist provision and
so the claims against State Farm were dismissed. State Farm preserved its rights against Clarendon
by obtaining an assignment from the plaintiffs of their rights against Clarendon and intervening as
an additional party plaintiff. On November 2, 2007, the order granting summary judgment to
Clarendon was made final pursuant to Rule 54.02 of the Tennessee Rules of Civil Procedure,
enabling State Farm to appeal on the issue of the uninsured motorist coverage. State Farm then filed
a timely notice of appeal.

                             ISSUES ON APPEAL AND STANDARD OF REVIEW

         1
        The customer was Larry Finch, former player and head coach of the Memphis State (now the University of
Memphis) men’s basketball team.
         2
           Pursuant to Tennessee Code Annotated § 56-7-1206(a), the plaintiffs would serve State Farm and Clarendon
in order to assert the uninsured motorist claims against them. Under the statutory provisions, State Farm and Clarendon
then had the right to file pleadings in their own names. T.C.A. § 56-7-1206(a) (2008).

                                                         -2-
        The only issue on appeal is whether the trial court erred in granting Clarendon’s motion for
summary judgment. This turns on whether the Tennessee Uninsured Motorist Act, codified at
Tennessee Code Annotated § 56-7-1201, et seq., allows an insurance company to write a policy of
insurance in the state of Tennessee that limits its uninsured motorist coverage to situations in which
the insured is driving or occupying a listed automobile under the policy.

         Because only questions of law are involved, there is no presumption of correctness regarding
a trial court’s grant of summary judgment. See Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997)
(citation omitted). Therefore, our review is de novo on the record before this Court. See Warren
v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997) (citation omitted). In reviewing a trial
court’s grant of summary judgment, the appellate court is to determine whether the requirements
of Tennessee Rule of Civil Procedure 56 have been met. Staples v. CBL & Assocs., Inc., 15
S.W.3d 83, 88 (Tenn. 2000) (citations omitted). Summary judgment is appropriate when there are
no genuine issues of material fact in dispute and the moving party is entitled to a judgment as a
matter of law. Tenn. R. Civ. P. 56.04.

                                             ANALYSIS

        In Tennessee, statutory provisions governing insurance policies become part of the insurance
contract. Sherer v. Linginfelter, 29 S.W.3d 451, 453–54 (Tenn. 2000) (quoting Hermitage Health
& Life Ins. Co. v. Cagle, 420 S.W.2d 591, 594 (Tenn. Ct. App. 1967)). This includes provisions
relating to uninsured motorist coverage. To the extent that a conflict arises between the statute and
a provision of the contract, the statute will prevail. Fleming v. Yi, 982 S.W.2d 868, 870 (Tenn. Ct.
App. 1998) (citing Dunn v. Hackett, 833 S.W.2d 78, 82 (Tenn. Ct. App. 1992)). This is not to say
that no contractual limitations are permitted. The statute expressly states that “[t]he forms of
coverage may include terms, exclusions, limitations, conditions, and offsets that are designed to
avoid duplication of insurance and other benefits.” T.C.A. § 56-7-1205 (2008); see Thompson v.
Parker, 606 S.W.2d 538, 540 (Tenn. Ct. App. 1980). These limitations, however, must not conflict
with the uninsured motorist statute and must not offend public policy. Ragsdale v. Deering, No.
M2004-00672-COA-R9-CV, 2006 WL 2516391, at *3 (Tenn. Ct. App. Aug. 30, 2006) (citing
Dockins v. Balboa, 764 S.W.2d 529, 530 (Tenn. 1989)). In addition, any ambiguities in the
limitations will be construed against the insurance company, as the drafter of the policy. Id. (citing
Tata v. Nichols, 848 S.W.2d 649, 650 (Tenn. 1993); Allstate Ins. Co. v. Watts, 811 S.W.2d 883, 886
(Tenn. 1991)).

       In the case at bar, there is nothing ambiguous about the limitation. “A contract is ambiguous
only when it is of uncertain meaning and may fairly be understood in more ways than one.” Johnson
v. Johnson 37 S.W.3d 892, 896 (Tenn. 2001) (quoting Farmers-Peoples Bank v. Clemmer, 519
S.W.2d 801, 805 (Tenn. 1975)). The present policy cannot be fairly understood in more than one
way. The policy clearly states that

       Each of these coverages will apply only to those “autos” shown as covered “autos.”
       “Autos” are shown as covered “autos” for a particular coverage by the entry of one



                                                 -3-
       or more of the symbols from the COVERED AUTO Section of the Garage Coverage
       Form next to the name of the coverage.

The uninsured motorist coverage has the symbol “27” next to the type of coverage provided. The
symbol “27” refers to “Specifically Described ‘Autos.’ ” These are the autos that are specifically
described in the policy as covered vehicles owned by the insured. In this case, the Holloways had
three vehicles specifically listed. Thus, coverage under the uninsured motorist provisions of the
policy is expressly limited to the three listed vehicles.

        State Farm argues that the uninsured motorist provisions of the policy issued by Clarendon
were intended to, and should be interpreted to, cover Mr. Holloway when he is driving a non-owned
vehicle. State Farm points to Mr. Holloway’s deposition testimony, in which he states that he
believed that he was covered while driving a non-listed vehicle. Mr. Holloway also testified that the
insurance agent who sold him the Clarendon garage owner’s policy was aware that he drove
customers’ vehicles in the course of his business. State Farm maintains that this testimony supports
its argument that the Clarendon policy covered Mr. Holloway in this situation.

        We disagree. Insurance contracts are construed like other contracts, so as to give effect to
the express language and the intention of the parties. Harrell v. Minn. Mut. Life Ins. Co., 937
S.W.2d 809, 814 (Tenn. 1996) (citing Tata, 848 S.W.2d at 650). The words should be given their
express meaning unless some other meaning is clearly provided in the insurance policy. Id. (citing
Elsner v. Walker, 879 S.W.2d 852 (Tenn. Ct. App. 1994)). Here, the language of the policy
clearly limits uninsured motorist coverage to owned vehicles listed in the policy. Although any
ambiguity will be construed in favor of the insured, the Court will not create ambiguity where none
exists. See Ragsdale, 2006 WL 2516391, at *3 (citations omitted); Maggart v. Almany Realtors,
Inc., 259 S.W.3d 700, 704 (Tenn. 2008) (citation omitted). Mr. Holloway’s statement to the effect
that he assumed coverage existed does not establish ambiguity. The Tennessee Supreme Court has
stated that “ ‘the insured is conclusively presumed to have knowledge of, and to have assented to,
all the terms, conditions, limitations, provisions or recitals in the policy,’ irrespective of whether
the insured actually read, or could read, the insurance contract.” Webber v. State Farm Mut. Auto.
Ins. Co., 49 S.W.3d 265, 274 (Tenn. 2001) (quoting General Am. Life Ins. Co. v. Armstrong,
185 S.W.2d 505, 506–07 (Tenn. 1945)). We hold, then, that the Clarendon garage owner’s policy
unambiguously limits its uninsured motorist coverage to the vehicles listed in the policy.


       In light of this holding, the issue becomes whether such a limitation conflicts with
Tennessee’s Uninsured Motorist Act or is in violation of public policy. If the limitation is prohibited
by the Act, then Clarendon admits that its policy is primary pursuant to Section 56-7-1101(b).3


       3
           Subsection (b) states in pertinent part:

       [W ]hen any non-owned vehicle is in the possession, custody or control of a person who is in the
       business of storing, parking, servicing or repairing vehicles, then any insurance available to the owner
                                                                                                           (continued...)

                                                         -4-
         In construing a statute, this Court’s role is to try to ascertain the intention of the legislature.
See McGee v. Best, 106 S.W.3d 48, 64 (Tenn. Ct. App. 2002) (citing Mangrum v. Owens, 917
S.W.2d 244, 246 (Tenn. Ct. App. 1995)). “Legislative intent is derived from the plain and ordinary
meaning of the statutory language unless the statute is ambiguous.” Sallee v. Barrett, 171 S.W.3d
822, 828 (Tenn. 2005) (citing State v. Blackstock, 19 S.W.3d 200, 210 (Tenn. 2000); Owens v.
State, 908 S.W.2d 923, 926 (Tenn. 1995)). A statute is ambiguous if it is “capable of conveying
more than one meaning.” Id. (quoting LeTellier v. LeTellier, 40 S.W.3d 490, 498 (Tenn. 2001)).
If the statute is ambiguous, to construe it, we look to the statutory scheme in an effort to discern the
legislative intent. Id. (citing Owens, 908 S.W.2d at 926). Our determination of the legislative intent
should be based on “a reasonable construction in light of the purposes, objectives, and spirit of the
statute based on good sound reasoning. ” Id. (quoting Scott v. Ashland Healthcare Ctr., Inc., 49
S.W.3d 281, 286 (Tenn. 2001)). “Component parts of a statute are to be construed, if possible,
consistently and reasonably.” Id. (citing State v. Alford, 970 S.W.2d 944, 946 (Tenn. 1998)).

       State Farm argues that the limitation in Clarendon’s policy, limiting the uninsured motorist
coverage to owned, listed vehicles, is prohibited under the Uninsured Motorist Act and under public
policy. In support, State Farm relies on two provisions in the Act. We first address State Farm’s
argument that the provision of the Act governing the priority of recovery prevents such a limitation.
This provision provides as follows:

        (b)(1) With respect to bodily injury to an insured, at a time when the insured is not
        occupying any motor vehicle, the insurance on the vehicle under which the injured
        party is an insured with the highest limits of uninsured motorist coverage shall apply,
        and no other uninsured motorist coverage shall apply. . . .
                                                  ***
        (3) With respect to bodily injury to an insured while occupying an automobile not
        owned by the insured, the following priorities of recovery under uninsured motorist
        coverage apply.

T.C.A. § 56-7-1201(b)(1), (3) (2008).
        State Farm insists that the statute mandates that, when an insurance company issues an
automobile insurance policy containing uninsured motorist provisions, there must always be
coverage for an insured who is a permissive occupant regardless of whether he or she is occupying
a non-owned vehicle or even if the insured is not occupying a vehicle at all. State Farm argues that,
for a limitation such as that in the Clarendon policy to be permitted, the language of the statute
would have to state in effect: “If the uninsured motorist coverage provides coverage for an insured
while occupying a non-owned vehicle, then the following priorities of recovery under the uninsured
motorist coverage shall apply.” Otherwise, State Farm argues, subsection (b) would be meaningless.


        3
         (...continued)
        shall not be applicable unless and until all insurance that is available under a garage policy of the
        person in possession has been exhausted.

T.C.A. § 56-7-1101(b) (2008).

                                                        -5-
        We must respectfully disagree. Section 56-7-1201(b) appears directed at determining the
priority of recovery from the applicable policies, if any. The cited section does not prohibit an
insurance company from limiting its uninsured motorist coverage to instances in which the insured
is occupying an owned, listed vehicle. If the legislature intended to prohibit such a limitation, it
could have made its intent plain.

        State Farm also asserts that, under Section 56-7-1201(a)(2), a named insured may reject
uninsured motorist coverage completely or select lower limits, but may not select different types
of uninsured motorist coverage.4 State Farm insists that the statute does not permit the rejection of
uninsured motorist coverage for non-owned vehicles. Therefore, State Farm argues, once Clarendon
extended uninsured motorist coverage to the Holloways, they received uninsured motorist coverage
for both owned and non-owned vehicles.

        We must reluctantly disagree. We acknowledge that the thought of a garage owner’s
insurance policy that limits coverage to owned, listed vehicles seems anomalous. However, the
statute explicitly allows limitations designed to avoid duplicate coverage. See T.C.A. § 56-7-1205
(2008). In this case, the customer’s car driven by Mr. Holloway at the time of the accident was
insured under an automobile policy with uninsured motorist coverage that applied to cover Mr.
Holloway. If we were to determine that the limitation at issue conflicts with the provisions of the
Uninsured Motorist Act, that would result in coverage under two policies, with the policy issued by
Clarendon as the primary policy.

         The Tennessee Supreme Court has interpreted the statutory provision allowing for exclusions
and limitations designed to avoid duplication of insurance coverage. In Hill v. Nationwide Mutual
Insurance Co., 535 S.W.2d 327 (Tenn. 1976), the plaintiff was injured while operating his brother’s
motorcycle. Id. at 328. At the time of the accident, both the plaintiff and his brother lived with their
parents. Id. The plaintiff sued the owners of the other vehicle involved in the accident and was
awarded a judgment, but the defendant vehicle owners had no liability insurance. Id. The
motorcycle was insured under a separate policy issued to the plaintiff’s father. Unfortunately for the
plaintiff, when his father obtained the policy on the motorcycle, he declined uninsured motorist
coverage. Id. With no uninsured motorist coverage under the policy on the motorcycle, the plaintiff
attempted to recover under the uninsured motorist provisions in his parent’s uninsured motorist
policy. Id. However, the uninsured motorist provisions in the family policy contained an exclusion,
stating that the policy would not apply to injury “to an Insured while occupying a land motor vehicle
(other than an insured land motor vehicle) owned by a Named Insured or any relative resident in the
same household.” Id. The plaintiff sued the insurance company that issued the family policy,
arguing that the exclusion was contrary to Tennessee Code Annotated § 56-1148, the predecessor
to the current Section 56-7-1201; the trial court upheld the exclusion, and the plaintiff appealed. Id.




         4
          This section provides in pertinent part as follows: “[A]ny named insured may reject in writing the uninsured
motorist coverage completely or select lower limits of the coverage but not less than the minimum coverage limits in
§ 55-12-107.” T.C.A. § 56-7-1201(a)(2) (2008).

                                                         -6-
        The Tennessee Supreme Court likewise upheld the resident relative exclusion. Id. at 332.
The Court noted that, had uninsured motorist coverage been purchased on the motorcycle, the
plaintiff would have been covered, and the resident relative exclusion would have operated so as to
avoid “duplication of insurance” as authorized in the statute. Id.; see T.C.A. § 56-7-1205 (2008).
The Court did not “attach controlling significance” to the fact that it was the plaintiff’s father, who
was the named insured under the policy at issue, who had rejected uninsured motorist coverage on
the motorcycle. Hill, 535 S.W.2d at 332. Despite the fact that there was no duplication under the
facts presented, and that application of the exclusion resulted in no coverage being available to the
plaintiff, the Court observed that “[t]he statute does not speak in absolute terms.” Id. Rather, the
statute permits exclusions that “are designed to avoid duplication,” adding,

       Under all of the circumstances, therefore, we are unable to say that the policy
       provision in question was not “designed” to avoid such duplication, or that it so
       conflicts with the underlying purpose of the uninsured motorist statutes, as construed
       in this state, that it must be deemed illegal and void.

Id.

        In the present case, the limitation in the Clarendon policy, like the exclusion in Hill, appears
designed to avoid duplication of coverage. Unlike the plaintiff in Hill, Mr. Holloway was driving
a customer’s vehicle that had uninsured motorist coverage, and consequently the limitation served
to avoid actual duplication of coverage. Regardless, as the Hill case points out, actual duplication
is not necessary for the limitation to be valid, only that it be “designed” to do so. That appears to
be the case here. Therefore, the exclusion is not contrary to Tennessee statutes.

      State Farm also contends that the limitation in the Clarendon garage owner’s policy violates
Tennessee public policy. The Tennessee Supreme Court has described the policy underlying the
Uninsured Motorist Act as follows:

       Our uninsured motorists statute was enacted in response to the growing public
       concern over the increasing problem arising from property and personal injury
       damage inflicted by uninsured and financially irresponsible motorists. Its purpose
       is to provide, within fixed limits, some recompense to . . . persons who receive bodily
       injury or property damage through the conduct of an uninsured motorist who cannot
       respond in damages.

Tata, 848 S.W.2d at 654 (citation omitted). State Farm cites no authority indicating that application
of the exclusion in the Clarendon policy under the facts of this case would violate the public policy
of the state, and we have found none. Under all of these circumstances, we find no error in the trial
court’s grant of summary judgment in favor of Clarendon.

                                            CONCLUSION




                                                  -7-
        The decision of the trial court is affirmed. Costs of this appeal are taxed to the appellant
State Farm Mutual Automobile Insurance Company, and its surety, for which execution may issue
if necessary.




                                                      ___________________________________
                                                      HOLLY M. KIRBY, JUDGE




                                                -8-
