By: Douglas Bergeron
The Tennessee Court of Appeals in Larry Stine Bates v. Michael J. Greene, W2016-01868-COA-R3-CV, 2017 WL 3206599 (Tenn. Ct. App. 2017) dealt with an issue involving the statute of limitations that applies to the filing of a claim against an uninsured/underinsured motorist carrier. The carrier in this case was Shelter Insurance. The plaintiff filed suit against the primary defendant, the alleged tortfeasor, within one year of the accident. However, the civil warrant and a subsequent alias warrant was returned unserved Over two years after the accident, a second amended alias civil warrant was issued against the defendant, which added Shelter Insurance Company, plaintiff’s uninsured/underinsured motorist carrier, as a defendant. The uninsured/underinsured motorist carrier was served over two years after the accident occurred.
After being served, the insurance company filed a Motion for Summary Judgment claiming that the action against it was barred by the expiration of the one-year (sometimes 2 years) statute of limitations applicable to personal injury actions. The circuit court granted the Motion for Summary Judgment, dismissing the case against the uninsured motorist carrier. The Circuit court found the one-year personal injury statute of limitations applied to the uninsured motorist claim. On appeal, the Tennessee Court of Appeals reviewed the situation in detail. They reviewed a significant amount of prior cases as well as statutory changes to the uninsured motorist statute. Ultimately, the Court concluded that in this case, the one-year statute of limitations for a personal injury claim did not apply. Instead, the six-year statute of limitations for a contract cause of action applied for the claim against the uninsured motorist carrier. Multiple prior Tennessee cases have held consistent with this opinion in the past.
The Court also analyzed T.C.A. § 56 -7-1206(d) which provides the following:
(d) In the event that service of process against the uninsured motorist, which was issued to the motorist’s last known address, is returned by the sheriff or other process server marked, “Not to be found in my county,” or words to that effect, or if service of process is being made upon the secretary of state for a nonresident uninsured motorist and the registered notice to the last known address is returned without service on the uninsured motorist, the service of process against the uninsured motorist carrier, pursuant to this section, shall be sufficient for the court to require the insurer to proceed as if it is the only defendant in the case.
Based on this statute the Court noted that the legislature intended that a plaintiff could sue the uninsured motorist carrier directly if they are unable to obtain service or process over the uninsured motorist defendant. As a result, the Court held: “we discern nothing in the uninsured motorist statute that mandates service on an uninsured motorist carrier within one year of an accident.” The Court went on to discuss prior decisions that rejected these similar arguments.
Typically, the situation that gives rise to serving process on an uninsured/underinsured motorist carrier is underinsurance. That is, where primary defendant’s Insurance limits are less than the uninsured/underinsured coverage obtained by the allegedly injured plaintiff. For a plaintiff, it is best to always to try to add the uninsured/underinsured motorist carrier as a party within one year. That is the safest path forward. However, this case confirms that an uninsured/underinsured motorist carrier defendant may be sued pursuant to Contracts statute of limitations of six (6) years. This is only accurate as long as the underlying tortfeasor is sued within the one-year statute of limitations. There are nuances to this situation. Shelter Insurance, in this suit, raised on appeal the issue of undue prejudice for the long delay (over two years). The Court did not take that argument up. Certainly, defense counsel for a carrier in similar circumstances must set forth any undue prejudice that may have accrued. Also, if defending the primary defendant, it may be wise to have a discussion with counsel for plaintiff to inquire as to the availability of uninsured/underinsured coverage of his client. This is helpful in many respects. Primarily it makes things as smooth as possible in the defense of the case (reduced litigation expenses) and without the possibility of significant delays as occurred in the Bates case. Secondarily, dependent on the facts of the claim the ability to settle a claim becomes more feasible, and potentially at a reduced rate to the primary defendant, if an uninsured/underinsured carrier is a party.
This case provides a great overview of Tennessee cases on this issue and should be thoroughly considered when dealing with any issue on the statute of limitations involving uninsured motorist claims.
Douglas Bergeron focuses on insurance tort defense, insurance coverage and bad faith, workers’ compensation and business and commercial representation in the Knoxville office.
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