§71.6 Uninsured Motorist Insurance Companies
The Case: Sherer v. Linginfelter , 29 S.W.3d 451 (Tenn. 2000).
The Basic Facts: Sherer was a passenger in a vehicle driven by Linginfelter. She was injured in a one car accident. She reached a settlement with the defendant and his insurance company. Her underinsured motorist insurance carrier also contributed to the settlement. She filed a products liability suit against the vehicle manufacturer; that case was settled. Her underinsured motorist insurance company then sought subrogation against the products liability suit settlement.
The Bottom Line:
- "The uninsured motorist statute establishes an insurance company's right of subrogation. The subrogation provision provides:
In the event of payment to any person under the coverage required by this part, and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be subrogated to all of the rights of the person to whom such payment has been made, and shall be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury or property damage for which such payment is made, including the proceeds recoverable from the assets of an insolvent insurer."29 S.W.3d at 454.
- "Tenn. Code Ann. § 56-7-1204(a) (emphasis added). This statutory provision provides that the insurer who makes a payment under the uninsured motorist coverage 'steps into the shoes' of the person receiving the payment and may recover against any person who occasioned the payment by the insurer." Id.
- "Taken together, the language of these statutes: 1) limits the liability of an uninsured motorist carrier to payments for damages caused by the uninsured/underinsured motorist in the ownership, maintenance, or use of the vehicle; and 2) allows the insurer to recover from its insured only those amounts received from the person or entity causing those same damages. USAA argues that 'the subrogation statute provides for broad subrogation rights against any recovery the insured may receive.'" Id.
- "In support of its argument, USAA relies upon Erwin v. Rose, 980 S.W.2d 203 (Tenn. Ct. App. 1998), and Thompson v. Parker, 606 S.W.2d 538, 540 (Tenn. Ct. App. 1980). We note that Erwin and Thompson construed Tenn. Code Ann. § 56-7-1205 and did not address § 56-7-1204, the section of the uninsured motorist statute providing for subrogation. We express no opinion as to the holding of those cases, inasmuch as the construction of § 56-7-1205 is not presently before us." Id.
- "In McIntyre v. Balentine, 833 S.W.2d 52, 57 (Tenn. 1992), this Court adopted the doctrine of modified comparative fault. The purpose of comparative fault is to assess liability in proportion to fault. See Owens v. Truckstops of Am., 915 S.W.2d 420, 429 (Tenn. 1996); McIntyre, 833 S.W.2d at 58. We have stated that 'where the separate, independent negligent acts of more than one tortfeasor combine to cause a single, indivisible injury, each tortfeasor will be liable only for that proportion of the damages attributable to its fault.'Owens, 915 S.W.2d at 430. The adoption of comparative fault rendered the doctrine of joint and several liability obsolete. See id.; McIntyre, 833 S.W.2d at 58. In Whitehead v. Toyota Motor Corp., 897 S.W.2d 684, 693-94 (Tenn. 1995), we held that comparative fault principles will apply to products liability actions such as the case before us, in which the defective product did not cause or contribute to the underlying accident but did cause 'enhanced injuries.'FN1
FN1 'Enhanced injuries' represent the portion of the total damages for which the manufacturer is potentially liable. See Whitehead, 897 S.W.2d at 694-95. In this case the claim for 'enhanced injuries' is 'nothing more than a claim for injuries that were actually and proximately caused by the defective product.' See e.g. id."Id . at 455.
- "In this case, the Court of Appeals correctly construed the statutory language of Tenn. Code Ann. § 56-7-1204 and applied these principles of comparative fault to hold that § 56-7-1204(a) provides that the insurer's subrogation rights are limited to the injuries for which the insurer has made payment. USAA's payments compensated the Sherers for the injuries to Teal Sherer arising from the negligence of Mr. Linginfelter, the uninsured motorist, in the operation of the vehicle. GM's payments, on the other hand, compensated the Sherers for the enhanced or additional injuries to Teal Sherer caused by the vehicle's rear seat belt system." Id.
- "We agree with the lower courts that GM's payment to the Sherers compensated them for a different portion of the injuries sustained by Teal Sherer. We hold that under Tenn. Code Ann.§ 56-7-1204(a) USAA may not exercise its subrogation rights against the portion of the Sherers' recovery received from GM." Id.