                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                 August 24, 2011 Session

           REYNALDO COLLAZO ET AL. v. JOE HAAS D/B/A HAAS
                      CONSTRUCTION ET AL.

                  Appeal from the Circuit Court for Davidson County
                     No. 08C2530      Barbara N. Haynes, Judge


               No. M2011-00775-COA-R3-CV - Filed December 15, 2011


This is an action to recover uninsured motorist benefits following a motor vehicle collision
involving the plaintiff and another vehicle. The driver of the defendant vehicle left the scene
and has not been identified. The owner of the vehicle was subsequently identified, but denied
knowing the identity of the driver and claimed no one had permission to operate the vehicle
at the time of the accident. The named defendants in this action are the owner of the vehicle
and John Doe, the unknown driver. Plaintiffs’ uninsured motorist insurance carrier,
Nationwide Insurance Co., is an unnamed defendant. The defendant owner has liability
insurance coverage through State Farm Insurance Co. The plaintiffs settled all claims against
the defendant-owner and State Farm for $90,000, $10,000 less than the uninsured motorist
limits with Nationwide. Thereafter, the plaintiffs continued to pursue their claims against
Nationwide for uninsured motorist benefits, insisting the settlement with the owner of the
vehicle did not bar their claims against the uninsured John Doe driver. Upon motion for
summary judgment by Nationwide, the trial court found that because the owner of the vehicle
had $100,000 of liability insurance, there was not an “uninsured motor vehicle.” Based on
this finding, the trial court summarily dismissed the plaintiffs’ uninsured motorist claim
against Nationwide. We reverse and remand for further proceedings.

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

F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.

Aldo J. Stolte and Thomas R. Lewis, Nashville, Tennessee, for the appellants, Reynaldo
Collazo and Sharon Collazo.

Thomas J. Smith, Courtney E. Smith, and Spicer Rudstrom, Nashville, Tennessee, for the
appellees, John Doe and Nationwide Insurance Co.

                                          OPINION

        Plaintiff Reynaldo Collazo was in his vehicle on Haywood Lane near the intersection
with Nolensville Road around 5:00 p.m. on Friday, August 3, 2007, when his vehicle was
struck from behind by a truck that was hauling a trailer. Although the driver of the truck got
out of the truck and approached Mr. Collazo’s vehicle, he did not wait for the police to
arrive; instead, the driver fled the scene of the accident without identifying himself. Before
the driver left the scene, Mr. Collazo observed that he was an adult, Hispanic male, and
recorded the license plate number of the truck. It was later determined that the truck was
registered to Joe Kenneth Haas d/b/a Haas Construction Company, LLC, and AWS, LLC
(collectively, “Haas”). Mr. Haas is the managing member of both LLCs.

       Mr. Haas was contacted by the police two weeks after the accident. He stated that he
was not aware of any of his trucks being involved in an accident, but he conceded that the
license plate number provided by Mr. Collazo matched a truck owned by and registered to
Haas Construction. Based on the date of the accident, Mr. Haas determined that during the
week prior to and after the accident, the truck was being used on a concrete job Haas had
been subcontracted to perform as part of a larger condominium construction project in
downtown Nashville.

        Mr. Haas then contacted Jim Seigler, Haas’s foreman for that particular job, who
stated that the truck was left at the downtown job site on the Friday afternoon of the accident,
and when Mr. Seigler returned to the job site the following Monday morning, the truck was
in the same location, with no obvious damage, and with nothing missing. Mr. Haas also
inspected the truck and confirmed there was nothing amiss.

        There were four Haas employees working on the downtown condominium project: a
young Hispanic male known as “Fonzie,” two other laborers, and Mr. Seigler. In addition to
Haas, there were several other subcontractors working on the project, plus the general
contractor, for a total of more than 300 construction workers. The construction site was
enclosed by a chain link fence, which was frequently locked, though not always. The
superintendent for the general contractor controlled the flow of people, vehicles and
resources into and out of the construction site. Many of the subcontractors worked on
weekends, and, according to Mr. Seigler, the general contractor required him to leave the
Haas truck unlocked with the keys under one of the floormats, so that the truck could be
moved in the event the truck was blocking another vehicle from entering or leaving the site
at a time when Mr. Seigler was not available to move the truck himself. Mr. Haas explained



                                              -2-
that the truck was a heavy industrial truck used to transport tools and materials and was
typically left on a construction site overnight and on weekends until the job was completed.

        Mr. Seigler also stated that he left the job site at about 3:30 p.m. on the day of the
accident and that he was the last Haas employee to leave. He further stated that no Haas
employees were required to work over the weekend on the downtown condominium
construction job, and as far as Mr. Seigler knew, no Haas employee returned to the job site
until 7:30 a.m. Monday morning.

                                        P ROCEDURAL H ISTORY

        Mr. Collazo and his wife, Sharon Collazo, (“Plaintiffs”), filed this action on August
4, 2008. The defendants named in the complaint were Joe Haas, d/b/a Haas Construction, and
John Doe (collectively, “Defendants”). Nationwide Insurance Co. (“Nationwide”), which
provided uninsured motorist coverage for Plaintiffs under their automobile liability insurance
policy, was served with process and included in the action as an unnamed defendant. In their
complaint, Plaintiffs alleged that Mr. Collazo’s injuries were caused by the negligent driving
of John Doe for which John Doe is liable. Plaintiffs also asserted that Haas was vicariously
liable for John Doe’s negligence as his employer under the principle of respondeat superior,
and for being negligent in entrusting the vehicle to John Doe. Alternatively, they alleged that
Haas was negligent in leaving the keys in the vehicle thus negligently making it available to
John Doe. Mr. Collazo sought $325,000 in compensatory damages for his medical bills, the
damage to his vehicle, lost income, and pain and suffering. Ms. Collazo sought $75,000 in
compensatory damages for service and support of her husband and loss of consortium.1

       Haas, who was insured by State Farm Insurance Co. (“State Farm”), filed an answer
denying any liability for Plaintiffs’ injuries.2 Haas denied that its vehicle was involved in the
accident, denied that John Doe was “about the business” of Haas when the accident occurred,
and denied being at fault for leaving the keys in the vehicle after work. As an affirmative
defense, Haas alleged that the fault of all parties, including Plaintiffs, John Doe, and those
not currently named as parties but who might be at fault, must be compared. Haas also
alleged that the general contractor on the construction project, Solomon Brothers, was a
possible tortfeasor, due to the fact that the superintendent for the general contractor required
that Haas leave the keys in the vehicle any time it was being stored on site.


        1
         Plaintiffs also alleged that Haas was grossly negligent for being unable to identify who was driving
the truck and they sought $1,000,000 in punitive damages on their gross negligence claim.
        2
       In the answer, Haas stated that the truck was not owned by Joe Haas individually, instead it was
owned by Joe Haas Construction Company and AWS, LLC, of which Mr. Joe Haas is a member.

                                                    -3-
        Nationwide filed an answer pursuant to Tennessee Code Annotated § 56-7-1201,
expressly reserving its right to elect to defend in its own name or in the name of the allegedly
uninsured/under-insured defendant John Doe. It denied that any of the defendants were
uninsured or under-insured motorists in accordance with the uninsured motorist provisions
(“UM provisions”) of Plaintiffs’ insurance policy. Nationwide also affirmatively asserted that
it was not liable as a UM insurer based upon the facts of this case, because Haas’s truck was
insured by State Farm with limits equal to that of Plaintiffs’ UM coverage, $100,000.

       The parties participated in mediation on October 14, 2010. As a result of the
mediation, Plaintiffs settled their claims against Haas for $90,000, which was paid by State
Farm and which was $10,000 less than Haas’s policy limit with State Farm. Plaintiffs signed
a Release of All Claims and Indemnification against Haas and State Farm on October 25,
2010, and shortly thereafter, the trial court entered an Agreed Order of Compromise,
Settlement and Dismissal with Prejudice (“Agreed Order”) as to all claims against Haas and
State Farm.3 Neither the Release nor the Agreed Order referenced John Doe or Nationwide.
Furthermore, at no time did Haas admit any degree of fault for Plaintiffs’ injuries.

        Nationwide filed a motion for summary judgment on January 18, 2011, asserting that
Plaintiffs were no longer entitled to pursue a UM claim because, regardless of the identity
of the driver, the vehicle that struck Mr. Collazo was an insured motor vehicle due to Haas’s
policy with State Farm. Further, Nationwide asserted that Plaintiffs did not have an under-
insured claim because Haas’s policy with State Farm provided the same limits as Plaintiffs’
policy with Nationwide, $100,000. Nationwide also asserted that Plaintiffs violated express
provisions of their insurance policy by releasing Haas, a potentially liable party, without
Nationwide’s written permission.

        Following a hearing on the motion, the trial court concluded that:

        1.      The motor vehicle that was involved in the accident with the Plaintiff
                was an insured motor vehicle for the purposes of determining whether
                or not the Plaintiff had an uninsured motorist claim; and
        2.      In the absence of the involvement of an uninsured motor vehicle, the


        3
         As Plaintiffs’ UM coverage provider, Nationwide participated in the mediation on behalf of John
Doe, and reviewed the Agreed Order before it was entered in the trial court without objecting to the fact that
John Doe was not released. When the trial court entered the Agreed Order, Plaintiffs indicated they intended
to pursue their claims against John Doe under their UM coverage with Nationwide. Nationwide, however,
took the position that no UM claim survived because the settlement revealed that Haas’s truck was insured
by State Farm.

                                                     -4-
                  Plaintiff has no uninsured motor vehicle claim against Nationwide
                  Insurance Company available under the provisions of T.C.A. § 56-7-
                  1201, et seq.

     Based on these findings, the trial court granted Nationwide’s Motion for Summary
Judgment in an order entered March 6, 2011. Plaintiffs filed a timely appeal.

                                                A NALYSIS

       The trial court summarily dismissed Plaintiffs’ UM claims, holding that as a matter
of law, Plaintiffs did not have a viable claim for UM benefits because Haas has the same
amount of liability insurance as is provided by Nationwide. We have determined this holding
was in error because the allocation of comparative fault between Haas and John Doe has not
been determined. As we explain below, Haas’s liability insurance does not preclude the UM
claim unless Haas is found to be “legally liable” for no less than $100,000 of Plaintiffs’
damages or it is established that John Doe is insured for no less than $10,000 and is found
to be “legally liable” for no less than that amount, for an aggregate of $100,000, being the
policy limits under Plaintiffs’ UM coverage with Nationwide.4

                                                I.
        This dispute involves separate but overlapping issues of comparative fault, liability
insurance coverage, and uninsured motor vehicle coverage. As this Court has stated,
“[t]echnically, an insured’s action against his or her own uninsured motorist coverage carrier
is a breach of contract action. Nevertheless, UM insurance recovery cases are typically a
hybrid that also involve tort law principles.” Gov’t Employees Ins. Co. v. Bloodworth, No.
M2003-02986-COA-R10-CV, 2007 WL 1966022, at *34 (Tenn. Ct. App. June 29, 2007).

       In order to resolve the issues presented, we must conduct a legal analysis of the
statutes covering uninsured motor vehicle coverage, Tennessee Code Annotated §§ 56-7-
1201 et seq. (“UM Statutes”) and the contract of insurance, which involve questions of law
that we review pursuant to the de novo standard. Gleaves v. Checker Cab Transit Corp., Inc.,
15 S.W.3d 799, 802 (Tenn. 2000); Guiliano v. Cleo, Inc. 995 S.W.2d 88, 95 (Tenn. 1999).
The primary rule of statutory construction is “to ascertain and give effect to the intention and
purpose of the legislature.” Carson Creek Vacation Resorts, Inc. v. Dep’t of Revenue, 865
S.W.2d 1, 2 (Tenn. 1993); see also McGee v. Best, 106 S.W.3d 48, 64 (Tenn. Ct. App. 2002).
Similarly, we review contractual issues de novo and reach our own independent conclusions
regarding their meaning and legal import. Guiliano, 995 S.W.2d at 95; Hillsboro Plaza
Enters. v. Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App. 1993).

       4
           This assumes that Plaintiffs are awarded damages of at least $100,000.

                                                    -5-
                                             II.
       The Tennessee General Assembly has mandated that every automobile liability
insurance policy “covering liability arising out of the ownership . . . or use of any motor
vehicle . . . shall include uninsured motorist coverage . . . for the protection of persons
insured under the policy who are legally entitled to recover compensatory damages from
owners or operators of uninsured motor vehicles because of bodily injury, . . .” Tenn. Code
Ann. § 56-7-1201(a).

       For purposes of uninsured motor vehicle coverage, an “uninsured motor vehicle” is
defined as:

        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 . . . 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.

Tenn. Code Ann. § 56-7-1202(a)(1).

         When read together, these two statutes require that where an insured has purchased
UM coverage, the UM carrier must pay benefits in cases where: (1) a claimant is legally
entitled to recover damages from the uninsured motorist and, (2) the total amount of liability
coverage available to the insured is less than the insured’s uninsured motorist coverage
limits.5
         To be “legally entitled” to recover UM benefits, a claimant must prove damages and
fault on the part of the uninsured motorist. See Phillip A. Fleissner & Paul Campbell III,
Tennessee Automobile Liability Ins., § 17:1 Uninsured Motorist Litigation Procedures,
Existence and Amount of Legal Liability (2010);6 see also Alan I. Widiss, Uninsured and


        5
         The law is well-established that UM Statutes, “as a matter of law, become provisions of all
automobile insurance policies issued for delivery in Tennessee.” Fleming v. Yi, 982 S.W.2d 868, 870 (Tenn.
Ct. App. 1998). We note that UM providers are free to offer UM coverage greater than that which is required
by the UM Statutes. However, for the purposes of this opinion and the question of whether summary
judgment is appropriate, this issue does not affect our analysis.
        6
          Fleissner and Campbell go on to write, “[s]uch coverage, therefore, is not like first-party coverage
for collision, comprehensive, medical payments, or ‘no fault’ (medical and wage loss) benefits, which are
                                                                                                 (continued...)

                                                     -6-
Underinsured Motorist Insurance, § 7.2 (2 rev. ed. 1999) (“The uninsured motorist coverage
is intended by insurers to apply only to accidents where fault is attributable, and it is not
available to a claimant in the absence of negligence.”).

       The liability of a UM carrier is limited to “payment for damages caused by the
uninsured . . . motorist in the ownership, maintenance, or use of the vehicle,” up to the UM
claimant’s policy limit. Sherer v. Linginfelter, 29 S.W.3d 451, 454 (Tenn. 2000)(emphasis
added); Fleissner & Campbell, supra (citing Tenn. Code Ann. 56-7-1201(a)) (“Uninsured
motorist coverage indemnifies only against losses and damages for which an uninsured or
under-insured motorist is legally liable. Thus, the obligation to pay insurance benefits is
dependent upon a determination of legal liability and damages.”); see also generally Murray
v. Tenn. Farmers Assurance Co., No. M2008-00115-COA-R3-CV, 2008 WL 3452410 (Tenn.
Ct. App. Aug. 12, 2008). If a claimant is unable to establish fault on the part of the uninsured
motorist, in addition to damages and causation, the UM provider is not obligated to provide
benefits.

        The second requirement under the UM statutes involves the question of whether the
motorist allegedly at fault (here, John Doe) is uninsured or under-insured. Whether one is
uninsured is generally a straightforward issue. Whether one is under-insured is dependent
upon the extent of damages the claimant is legally entitled to recover, the available insurance
attributable to the party or parties at fault, and the allocation of fault. A motorist is under-
insured if, i.e., “the sum of the limits of liability available to the insured under all valid and
collectible insurance policies . . . is less than the applicable limits” of the insured’s UM
coverage. Tenn. Code Ann. § 56-7-1202(a)(1) (emphasis added).

        Where there is more than one alleged tortfeasor and the allocation of fault is at issue,
especially when one tortfeasor is presumed to be uninsured, the viability of a UM claim must
be examined in the context of Tennessee’s system of modified comparative fault, as adopted
in McIntyre v. Ballentine, 833 S.W.2d 52 (Tenn. 1992). The purpose of comparative fault “is
to link one’s liability to his or her degree of fault in causing a plaintiff’s damages.” McNabb
v. Highways, 98 S.W.3d 649, 652 (Tenn. 2003). Accordingly, where there are multiple
tortfeasors, each is liable only for damages representing the percentage or amount of their
respective fault. McIntyre v. Ballentine, 833 S.W.2d 52, 56-58 (Tenn. 1992). Therefore, the
liability insurer for each respective tortfeasor is obligated to indemnify its insured for injury
or damage based upon the insured tortfeasor’s degree of fault and no more. See Fleissner &
Campbell, supra, § 5:3 Bodily Injury and Property Damage, Limits of Liability.



        6
         (...continued)
payable regardless of a determination of fault.” Fleissner & Campbell, supra.

                                                   -7-
                                                III.
        Nationwide presents several arguments to support the trial court’s decision to
summarily dismiss the UM claim. It asserts that Haas’s truck is not an uninsured vehicle, a
fact that bars a UM claim. It asserts that it presented a prima facie case that John Doe was
a permissive user of Haas’s truck, which proves that John Doe is not uninsured. It also asserts
that UM coverage is no longer available to Plaintiffs because they settled with Haas without
Nationwide’s written consent, thereby failing to protect its subrogation interests. Nationwide
also asserts that Plaintiffs will be unjustly enriched by a double recovery if the UM claim is
not dismissed. We will discuss each in turn.

                                               A.
        The truck driven by John Doe was insured under Haas’s automobile liability insurance
policy up to $100,000 for damages caused by Haas’s negligence or that of a permissive user.
Thus, if Haas is found to be 100% at fault for Plaintiffs’ damages, Haas’s insurance policy
bars Plaintiffs’ UM claim against Nationwide. However, if Haas is not at fault and John Doe
is not insured, the fact that Haas has a $100,000 liability policy on the truck does not bar the
UM claim.

        At this stage in the proceedings, we are in no position to comparatively allocate fault
between John Doe and Haas. The finder of fact may determine that Haas is not at fault, or
is only minimally at fault for Plaintiffs’ injuries. However, the finder of fact may find Haas
at fault for a significant portion of Plaintiffs’ damages by leaving the truck unlocked and
unattended, with the keys inside.7 This was the subject of the Court’s analysis in McClenahan
v. Cooley, 806 S.W.2d 767 (Tenn. 1991). In that case, the defendant, who owned the vehicle,
drove it to a bank and left the keys in the ignition when he went into the bank. Id. at 769.
While the defendant was inside the bank, a thief stole the car and drove away. Id. A high
speed police chase ensued and, after running a red light, the thief crashed into another car,
killing Mr. McClenahan’s wife and two children and injuring another child. Id. The trial
court granted the defendant car owner’s motion for judgment on the pleadings. Id. at 770.
The Supreme Court reversed, holding that a jury should be allowed to determine the issues
of proximate cause and intervening cause. Id. As the Court explained: “Leaving a key in the
ignition of an unattended automobile in an area where the public has access, be it public or
private property, could be found by a reasonable jury to be negligent, whether or not a




        7
         This is assuming, for the sake of this portion of the analysis, that Haas is not liable as John Doe’s
employer, or for negligently entrusting the truck. Those questions relate to whether John Doe is covered by
Haas’s liability insurance policy, which we also address later in the opinion.

                                                     -8-
prohibitory statute is involved.”8 Id. at 776. As for the issue of proximate cause, the Court
set out a three-pronged test:

        (1) the tortfeasor’s conduct must have been a “substantial factor” in bringing
        about the harm being complained of; and (2) there is no rule or policy that
        should relieve the wrongdoer from liability because of the manner in which the
        negligence has resulted in the harm; and (3) the harm giving rise to the action
        could have reasonably been foreseen or anticipated by a person of ordinary
        intelligence and prudence.

Id. at 775.

        The reasoning in McClenahan was recently applied by this court in Newman v.
Jarrell, No. M2010–00586–COA–R3–CV, 2010 WL 4968079 (Tenn. Ct. App. Dec. 7,
2010). In Newman, we reversed the trial court’s summary dismissal of the plaintiff’s personal
injury claims against the owner of a vehicle that had been stolen. Id. at *9. We concluded that
material facts were in dispute, for example, the location of the keys left in the car by the
owner, whether they were hidden from view, whether the car was locked or the windows
rolled down, whether the car was parked in the driveway or on the street in front of the
house, and whether it was foreseeable that the car may be stolen because the area was
considered a high crime area. Id.

        If John Doe is not a permissive user, there are disputed questions of fact concerning
whether Haas is legally liable for Plaintiffs’ injuries and, if so, to what extent; thus, the extent
to which Haas’s liability insurance is available to Plaintiffs cannot be determined at this time.
Because we do not know the extent, if any, of Haas’s “legal liability” to Plaintiffs, the mere
fact that Haas maintains $100,000 liability insurance on the truck does not preclude
Plaintiffs’ claim for UM benefits. If, however, John Doe is a permissive user and thus also
covered by Haas’s liability insurance policy with State Farm,9 the issue of comparative fault
is moot. This is because if John Doe is a permissive user, there is $100,000 in liability
coverage “available” to Plaintiffs from Haas’s policy. Under these circumstances, Plaintiffs
would have no UM claim. However, because these material facts are in dispute, summary
judgment is not appropriate. See Tenn. R. Civ. P. 56.04.

        8
          The prohibitive statute referenced in McClenahan is Tennessee Code Annotated § 55–8–162(a),
which states: “No person driving or in charge of a motor vehicle shall permit it to stand unattended without
first stopping the engine, locking the ignition, and effectively setting the brake thereon and, when standing
upon any grade, turning the front wheels to the curb or side of the highway.” Id . at 772.
        9
         Or, if John Doe is identified, located, and found to have his own liability insurance policy with
sufficient coverage limits.

                                                    -9-
                                               B.
       Nationwide asserts that the record establishes that John Doe is covered as a
“permissive user” of Haas’s truck and thus insured by State Farm. We disagree because the
record reveals that this material fact is very much in dispute.

        Nationwide’s position is based on Tennessee Code Annotated §§ 55-10-311(a) & -
312, which provide that proof of ownership or registration of a vehicle constitutes prima
facie evidence that the vehicle was being used by the owner or with the consent of the owner,
for the owner’s benefit and within the course and scope of employment. Plaintiffs, however,
put this factual assertion in dispute by presenting testimony from Mr. Haas and Mr. Seigler,
who both testified that no Haas employee other than themselves, had permission to drive the
trucks, and that the accident occurred after work hours in an area of Nashville where Haas
had no ongoing jobs and no suppliers. Further, the record reveals that Haas did not learn of
the accident until several days later, and that no tools or materials were missing from inside
the truck. Nationwide’s assertion that John Doe was a permissive user of Haas is further
undermined by Tennessee Code Annotated § 56-7-1201(g), which provides that, “[f]ailure
of the motorist from whom the insured is legally entitled to recover damages to file the
appropriate forms required by the department of safety . . . within 90 days of the accident
date shall create a rebuttable presumption that the motorist was uninsured.” No one filed the
appropriate forms; thus, a rebuttable presumption exists that John Doe is uninsured.

        Although Nationwide presented “a prima facie case” based on Tennessee Code
Annotated §§ 55-10-311(a) & -312, Plaintiffs presented countervailing evidence that created
a dispute of fact and, pursuant to Tennessee Code Annotated § 56-7-1201(g), Plaintiffs have
the benefit of the rebuttable presumption that John Doe is uninsured. As our Supreme Court
noted in Warren v. Estate of Kirk, 954 S.W.2d 722, 724 (Tenn. 1997), “[s]ummary judgment
is not ordinarily the proper procedure for determining whether a prima facie case has or has
not been overcome by countervailing evidence.”

                                             C.
       Nationwide also asserts that, even if John Doe is uninsured, Plaintiffs forfeited any
potential UM benefits by failing to obtain Nationwide’s written consent before settling with
Haas and by failing to preserve Nationwide’s subrogation rights, a violation of the provisions
of the UM Coverage Agreement. We respectfully disagree.

       As the Nationwide policy states, the UM claimant, Plaintiffs, must “preserve and
protect [Nationwide’s] right to subrogate against any liable party.” (Emphasis added). The
policy also expressly provides that UM coverage is excluded “if the insured settles without
our written consent with a liable party.” (Emphasis added). The fallacy with Nationwide’s
argument, at least at this stage of the proceedings, is that Haas may not be a liable party; this

                                              -10-
is because liability of the alleged tortfeasors has not been determined. The fact that Haas
settled with Plaintiffs and obtained a full release does not change this as Haas did not admit
any degree of liability.

        Subrogation rights only pertain to those who are legally liable; thus, if Haas is not at
fault and therefore not liable, Nationwide would have no right of subrogation against Haas
or State Farm. Accordingly, Plaintiffs’ release of Haas and State Farm without Nationwide’s
written consent may or may not constitute a violation of their UM coverage Agreement;
therefore, it would not be appropriate to grant summary judgment on this ground.10

                                              D.
        As the result of a voluntary settlement with Haas, Plaintiffs recovered $90,000 as
partial compensation for the damages alleged in this case. Even though Haas did not admit
fault, the settlement with Haas is significant in that, as Tennessee Code Annotated § 56-7-
1206(i) provides, the UM carrier is entitled to credit “for the total amount of damages
collected by the insured from all parties alleged to be liable for the bodily injury or death of
the insured whether obtained by settlement or judgment and whether characterized as
compensatory or punitive.” (emphasis added). Thus, Nationwide is entitled to a credit of
$90,000 against any liability it may have, if any, under the UM provisions.

       It is also important to note that the credit to which Nationwide is entitled is not
affected by principles of comparative fault. See Poper v. Rollins, 90 S.W.3d 682, 686-87
(Tenn. 2002); see also Terry v. Aetna Cas. & Sur. Co., 510 S.W.2d 509, 513 (Tenn. 1974)
(Discussing the difference between a “limited coverage” jurisdiction, in which plaintiffs are
only able to collect up to a statutory minimum notwithstanding their damages, versus a
“broad coverage” jurisdiction, in which plaintiffs are able to recover up to the policy limits
so long as they do no exceed actual damages; and concluding Tennessee is a “limited
coverage” jurisdiction). Thus, regardless of the allocation of fault between Haas and John
Doe, Nationwide is entitled to a $90,000 credit; thus, leaving its exposure under the
$100,000 UM policy at $10,000.




        10
           There are also disputed facts concerning whether Nationwide waived the written consent
requirement, where Nationwide participated in the mediation and reviewed the Agreed Order of Settlement
before it was submitted to the trial court for entry without objecting. See Gaston v. Tenn. Farmers Mut. Ins.
Co., 120 S.W.3d 815, 820, 821 n.4 (Tenn. 2003).

                                                    -11-
                                    I N C ONCLUSION

      The judgment of the trial court is reversed, and this matter is remanded for further
proceedings in accordance with this opinion, with costs of appeal assessed against the
Appellee, Nationwide Insurance Company.


                                                    ______________________________
                                                    FRANK G. CLEMENT, JR., JUDGE




                                           -12-
