Tennessee car wreck case brings choice of law dispute to Tennessee Court of Appeals

by Mandy Hicks

The Tennessee Court of Appeals in Nashville has upheld a choice of law provision that was included in an auto insurance policy. In Williams v. Smith, a couple and their young child were injured in a Putnam County, Tennessee car wreck that was caused by another driver. The accident was a head-on collision. At the time of the accident, the couple was headed east in a vehicle they borrowed from a North Carolina couple. Although the vehicle was registered in North Carolina, the owners of the vehicle secured liability insurance in Missouri in order to cover their college-age daughter while she was away at school. The accident policy included a Missouri choice of law provision and included uninsured motorist coverage of $50,000 per person and $100,000 per accident. The policy did not include underinsured motorist coverage because it is not required under Missouri law.

The driver who caused the Tennessee car wreck carried the minimum liability limits of $25,000 per person and $50,000 per incident as required by Tennessee law. Following the crash, the hurt family sought additional damages from the company that insured the vehicle they borrowed in a Tennessee court. Although the accident occurred in Tennessee, the issue in the case surrounded whether North Carolina or Missouri law applied to the insurance dispute. Since North Carolina requires a driver to carry liability coverage of $30,000 per person and $60,000 per accident, the at-fault motorist would be considered an uninsured motorist under North Carolina law. If, however, Missouri law controlled, the man was simply an underinsured motorist, and the family was not entitled to collect additional benefits.

Both the plaintiffs and the auto insurer filed a motion for summary judgment asking the court to rule in their favor without proceeding to trial. Next, the trial court held a hearing regarding which state’s law applied. After holding the Missouri choice of law provision was valid and enforceable, the trial court entered summary judgment in favor of the insurance company. The family then filed an appeal with the Nashville court.

According to the appellate court, Tennessee’s conflict of law doctrine states that “a contract is presumed to be governed by the law of the jurisdiction in which it was executed absent a contrary intent.” The court added that a “choice of law provision must be executed in good faith,” be materially related to the transaction, and the basis for the choice must be reasonable and not a “sham or subterfuge.” The Tennessee Court of Appeals agreed with the trial court’s determination that the Missouri choice of law provision was executed in good faith, had a material connection to the insurance transaction, and was not a sham.

Although the plaintiffs argued the choice of law provision was unenforceable because North Carolina had a “materially greater interest” in the issue, the court found it significant that the vehicle was principally operated in Missouri and rarely driven in North Carolina. The appellate court added that there was no reason to believe the choice of law provision was forced upon the owners of the vehicle, nor was it contrary to North Carolina public policy.

Since the Missouri choice of law provision was valid and enforceable, and Missouri law does not require drivers to carry underinsured motorist coverage, the Tennessee Court of Appeals in Nashville affirmed the trial court’s order in favor of the automobile insurer.

If you were hurt in a Tennessee motor vehicle collision, contact the skillful personal injury lawyers at English, Lucas, Priest & Owsley, LLP. Our Bowling Green attorneys have years of experience advocating on behalf of injured car accident victims. To schedule a free confidential consultation with a hardworking lawyer, call English, Lucas, Priest & Owsley, LLP at (270) 781-6500 or contact us through our website.

Additional Resources:

Williams v. Smith, Tenn: Court of Appeals 2014