Parveen v. ACG S. Ins. Agency, LLC

613 S.W.3d 113

Talat PARVEEN, et al.

v.ACG SOUTH INSURANCE AGENCY, LLC, et al.

No. E2018-01759-SC-R11-CV

Supreme Court of Tennessee, AT KNOXVILLE.

September 2, 2020 Session¹

FILED December 4, 2020

Charles W. Cook, III, and Rocklan W. King, III, Nashville, Tennessee, for the appellants, Jeffrey Norris and ACG South Insurance Agency, LLC.

W. Lewis Jenkins, Jr., Dyersburg, Tennessee, and F. Braxton Terry, Morristown, Tennessee, for the appellees, Khurshid Shaukat and Talat Parveen.

Julie P. Bowling, Columbia, Tennessee, and James Robert Layman, C.E. Hunter Brush, and Hannah Kay Hunt Freeman, Nashville, Tennessee, for amici curiae American Property Casualty Insurance Association, Independent Insurance Agents of Tennessee, Inc., and Tennessee Farmers Mutual Insurance Company.

Roger A. Page, J., delivered the opinion of the court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G. Lee, and Holly Kirby, JJ., joined.

Roger A. Page, J.

The present appeal concerns an insurance agent's alleged negligent failure to procure excess uninsured motorist coverage in accordance with a prospective insured's instructions. The two insured parties, a married couple, filed suit against their insurance agent and agency after they were denied coverage by the insurance carrier. The trial court found that it was undisputed that the insureds had paid the premium for the policy in effect and applied Tennessee Code Annotated section 56-7-135(b), which provides: "The payment of premium for an insurance contract, or amendment thereto, by an insured shall create a rebuttable presumption that the coverage provided has been accepted by all insureds under the contract." The trial court determined that the insureds had failed to rebut the statutory presumption that they had accepted the provided coverage, which did not include excess uninsured motorist coverage. Therefore, the trial court granted the insurance agent's motion for summary judgment. The Court of Appeals, however, reversed, concluding that the rebuttable presumption does not apply to actions against an insurance agent. We granted the ensuing application for permission to appeal to address whether section 56-7-135(b) applies to create a rebuttable presumption in actions against an insurance agent for negligent failure to procure an insurance policy as directed. Considering the plain language of the statute, we conclude that it does create such a presumption. Accordingly, we reverse the judgment of the Court of Appeals and reinstate the judgment of the trial court granting summary judgment.

I. FACTUAL & PROCEDURAL BACKGROUND

This case arises from the purchase of a personal umbrella insurance policy. Dr. Talat Parveen and Mr. Khurshid Shaukat (collectively, "Insureds"), a married couple, moved to Johnson City, Tennessee, from Georgia in 2013.²

While residing in Georgia, the couple was insured by State Farm Fire and Casualty Company and specifically possessed a personal umbrella liability policy that provided $2,000,000 in excess uninsured motorist coverage. The quotes received by the Insureds and subsequent policy documents and declarations pages for the State Farm umbrella policy showed excess uninsured motorist coverage as a separate line item with a separate premium amount for such coverage. The Insureds received these declarations pages annually from 2009 to 2012. The umbrella policy alone would only pay third parties for claims against the Insureds—losses for which one of the Insureds was held liable. However, as the name indicates, the excess uninsured motorist coverage would compensate the Insureds for claims against uninsured or underinsured motorists that exceeded the amount of uninsured motorist coverage under their automobile policies.

After relocating to Johnson City in March 2013, Mr. Shaukat scheduled a meeting with Jeffrey Norris, who was an insurance agent for ACG South Insurance Agency, LLC ("ACG"). Mr. Shaukat intended to obtain replacement auto, umbrella, and renters insurance policies—a task that Dr. Parveen agreed he undertook on her behalf as well. Notably, Mr. Shaukat maintains that during this roughly thirty-minute meeting, he provided Mr. Norris with a copy of his State Farm umbrella policy and explained that the Insureds wanted the exact same coverage in Tennessee. Mr. Norris, however, has consistently denied this claim.

As is pertinent to this appeal, Mr. Norris provided Mr. Shaukat with a quote for a personal umbrella policy through Safeco Insurance Company of America ("Safeco"). A copy of the quote provided to Mr. Shaukat reveals no separate line item for excess uninsured motorist coverage, nor did the policy's premium reflect the inclusion of such coverage.³ Indeed, the parties agree that the quoted policy did not include excess uninsured motorist coverage as the Insureds allegedly requested. Even so, Mr. Shaukat accepted coverage and purchased the Safeco umbrella policy, among other insurance policies, that day. The Insureds received a copy of the policy and a declarations page and paid the premiums, which did not include a charge for excess uninsured motorist coverage.

The Insureds renewed the Safeco umbrella policy and paid the premiums in 2014 and again in 2015. Each subsequent notice of renewal included a copy of the policy and a declarations page, which did not list excess uninsured motorist coverage as a separate line item. Moreover, the policy itself specifically contained the following exclusion:

This policy does not apply to any:

....

7. amounts payable under any:

....

b. Uninsured Motorists or Underinsured Motorists coverage or any similar coverage, unless this policy is endorsed to provide such coverage as shown in the Declarations.

On November 10, 2015, while the Safeco policy was in force, Dr. Parveen was involved in an automobile accident. Dr. Parveen sustained personal injuries, and her vehicle was totaled as a result of the crash. The Insureds then discovered that the driver of the wrecker vehicle who caused the accident was underinsured. In a later meeting with Mr. Norris, they further discovered that the Safeco umbrella policy in effect did not include excess uninsured motorist coverage. At that time, Mr. Shaukat requested that such coverage be added to their umbrella policy and paid the premium, though he was informed that the coverage was not retroactive.

In February 2016, the Insureds filed an action in the Circuit Court for Washington County against the driver and the wrecker service company that owned the wrecker vehicle seeking damages related to the November 2015 collision. They also served Safeco with a copy of the complaint. See Tenn. Code Ann. § 56-7-1206(a) (2016). The trial court granted summary judgment in favor of Safeco because the insurance policy in effect at the time of the accident did not include excess uninsured motorist coverage. It appears that the Insureds reached a settlement agreement with the remaining parties, and the case was later dismissed.

In December 2016, the Insureds filed the present action in the Washington County Circuit Court against ACG and Mr. Norris (collectively, "Appellants").⁴ The complaint alleged that Mr. Norris negligently failed to procure the requested excess uninsured motorist coverage as a part of the Safeco umbrella insurance policy.⁵ The Insureds sought damages from the Appellants "in an amount no less than One Million Dollars ($1,000,000)."

Following discovery, Appellants moved for summary judgment. Specifically, Appellants cited to Tennessee Code Annotated section 56-7-135 (2016)⁶ and argued that summary judgment must be granted because the Insureds could not overcome the statutory presumption that, by paying the premiums for the Safeco umbrella policy, they accepted the personal umbrella policy without excess uninsured motorist coverage.

The trial court granted Appellants’ motion for summary judgment, finding that it was undisputed that the Insureds had paid the premiums for the policies in effect in 2013, 2014, and 2015. The court concluded that Tennessee Code Annotated section 56-7-135(b) thereby created a rebuttable presumption that the Insureds had accepted the provided coverage, which did not include excess uninsured motorist coverage. It further determined that the Insureds had not presented evidence to rebut the presumption and that, therefore, summary judgment was appropriate.

The Court of Appeals, however, reversed the trial court's grant of summary judgment. Parveen v. ACG S. Ins. Agency , No. E2018-01759-COA-R3-CV, 2019 WL 5700048, at *6 (Tenn. Ct. App. Nov. 5, 2019), perm. app. granted, (Tenn. Mar. 26, 2020). It determined that the statutory presumption does not apply to actions against an insurance agent and, consequently, remanded the case to the trial court. Id.

We granted the Appellants’ ensuing application for permission to appeal to address whether the rebuttable presumption in Tennessee Code Annotated section 56-7-135(b) applies in actions against an insurance agent for failure to procure a policy in accordance with an insured party's instructions.

II. STANDARD OF REVIEW

This appeal originates from the trial court's grant of the Appellants’ motion for summary judgment and the Court of Appeals’ reversal of the trial court's order. We review the grant of a motion for summary judgment de novo with no presumption of correctness. Bain v. Wells , 936 S.W.2d 618, 622 (Tenn. 1997). Under Rule 56.04 of the Tennessee Rules of Civil Procedure, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Tenn. R. Civ. P. 56.04. On appeal, we must determine whether the moving party satisfied its burden of production "(1) by affirmatively negating an essential element of the nonmoving party's claim or (2) by demonstrating that the nonmoving party's evidence...