The opinion of the court was delivered by: NIXON
JOHN T. NIXON, UNITED STATES DISTRICT JUDGE
Pending before the Court are the following documents: the Magistrate's Report and Recommendation; the Dudney Defendants' Objections to the Report and Recommendation; the Response of Alexander Howden to Dudney Defendants' Objections to Report and Recommendation; the plaintiff's Objections to the Report and Recommendation of Magistrate and Motion for De Novo Determination; a Memorandum in Support of Plaintiff's Objections to Report and Recommendation of Magistrate and Motion for De Novo Determination; the Objections of Alexander Howden North America, Inc., Alexander Howden Insurance Services, Inc., and Alexander Howden Group U.S., Inc. to the Magistrate's Report and Recommendation; the Response of Great Republic Excess & Surplus, Inc. to the Objections of the Howden Defendants and Integrity to the Report and Recommendation of the Magistrate; and the Dudneys' Response to Objections of Integrity and Alexander Howden to Report and Recommendation of Magistrate.
In this action the plaintiff, Integrity Insurance Company, is suing for a declaratory judgment that it did not provide uninsured or underinsured motorist coverage to the Dudneys. In the alternative, Integrity seeks a declaration for a $ 5,000,000 limit for any uninsured motorist coverage for the Dudneys under the insurance policy issued to the Dudney defendants by Integrity. Finally, Integrity seeks a declaration that it is entitled to indemnification from Great Republic for any uninsured motorist coverage over $ 5,000,000 that it must provide to the Dudneys and for any costs that Integrity incurs in defense of the Dudneys' state court action.
In response to Integrity's complaint, several of the remaining defendants asserted counter-claims or cross-claims against Integrity and/or other defendants.
The Dudney defendants asserted counterclaims against Integrity and the Alexander Howden defendants to enforce their insurance contract with Integrity and the Alexander Howden defendants.
In the Report and Recommendation the Magistrate made the following recommendations: (1) that the Dudney defendants' motion for summary judgment be granted; (2) that the Alexander Howden defendants' motion for summary judgment be denied; (3) that the Great Republic motion for summary judgment be granted; and (4) that Integrity's motion for summary judgment be denied.
The plaintiff essentially objects to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment be granted, that the Great Republic motion for summary judgment be granted and that the plaintiff's motion for summary judgment be denied.
The Alexander Howden defendants essentially object to the Magistrate's recommendation that summary judgment be granted for the Dudneys and Great Republic. The Alexander Howden defendants also object to the failure of the Magistrate to consider their motion for summary judgment against the Frost defendants.
The parties have objected to numerous portions of the Magistrate's Report and Recommendation. The Court finds that many of the objections are clearly without import to the analysis or conclusions reached by the Magistrate and the Court. These objections are not considered in the body of this Memorandum and are DENIED. Those objections that contain some merit are reviewed below.
Local Rule 302(i)(1) of the Local Rules Governing Duties of and Proceedings Before Magistrates provides in part that:
The District Judge shall consider the written objections . . . and shall . . . make a de novo determination of all matters objected to, and shall issue a written memorandum opinion and an appropriate order disposing of the issues raised.
The Court has conducted a de novo examination of the matters to which the parties have objected and hereby ADOPTS in part and REJECTS in part the Magistrate's Report and Recommendation.
2. Integrity Insurance Company's Objections to the Magistrate's Report and Recommendation
a. The Dudney Defendants' Motion for Summary Judgment
The plaintiff, Integrity Insurance Company, objects to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment should be granted. For the reasons stated below, the Court ADOPTS the Magistrate's recommendation that the Dudney defendants' motion for summary judgment should be granted.
The Magistrate recommended that summary judgment should be granted in favor of the Dudney defendants because the Magistrate determined that under Tennessee law uninsured or underinsured motorist insurance was included in the Dudney-Integrity insurance contract and was not rejected by the Dudney defendants. The Magistrate, in reaching his recommendation, relied, in part, on Tennessee Code Annotated § 56-7-1201(a). Tennessee Code Annotated § 56-7-1201(a) provides, in pertinent part:
(a) Every automobile liability insurance policy delivered, issued for delivery, or renewed in this state, covering liability arising out of the ownership maintenance, or use of any motor vehicle designed for use primarily on public roads and registered or principally garaged in this state, shall include uninsured motorist insurance, subject to provisions filed with and approved by the insurance commissioner, for the protection of persons insured thereunder who are legally entitled to recover compensatory damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom.
(1) The limits of such motorist coverage shall be equal to the bodily injury liability limits stated in the policy.
The Magistrate also relied upon a Tennessee rule of construction by which contracts for insurance which are ambiguous are construed against the insurer and in favor of the insured. See, Palmer v. State Farm Mutual Automobile Insurance Company, 614 S.W.2d 788, 789 (Tenn. 1981).
The plaintiff has essentially three objections to the Magistrate's recommendation that the Dudney defendants' motion for summary judgment be granted: 1) that "there are genuine issues of material fact with respect to whether or not the requirements of T.C.A. § 56-7-1201 et seq. with respect to rejection of uninsured motorist coverage have been satisfied[;]" 2) that there is a genuine issue of material fact as to whether a written rejection of uninsured motorist insurance is needed in all cases; and 3) that "there are genuine issues of material fact with regard to whether the policy should be reformed so as to exclude uninsured motorist coverage." (Memorandum in Support of Plaintiff's Objections to Report and Recommendation of Magistrate and Motion for De Novo Determination, at pp. 4-5 and 18).
i. There are No Genuine Issues of Material Fact With Respect to Whether or Not the Dudney Defendants Rejected T.C.A. § 56-7-1201's Automatic Uninsured Motorist Coverage
The Magistrate concluded that because the Dudney defendants did not reject uninsured motorist coverage that T.C.A § 56-7-1201 (a) operated to include uninsured motorist coverage in the 1983 policy.
The plaintiff argues that Robert Frost was the legal representative of the Dudney defendants, that Robert Frost signed Binder 617 which excludes uninsured motorist insurance on their behalf, and that T.C.A. § 56-7-1201(a)(2) allows for the legal representative of the insured to reject uninsured motorist coverage. The Magistrate rejected this argument on the basis of Tennessee Code Annotated § 56-6-124.
T.C.A. 56-6-124 provides in pertinent part:
Every insurance agent or limited insurance representative who solicits or negotiates an application for insurance of any kind shall, in any controversy arising from the application for insurance or any policy issued in connection therewith between the insured or his beneficiary and the insurer, be regarded as the agent of the insurer and not the insured or his beneficiary. This provision shall not affect the apparent authority of an agent.
The Magistrate concluded that the operation of T.C.A. 56-6-124 conclusively established that Robert Frost was the agent of the plaintiff and thus precluded the possibility that Robert Frost was acting as the Dudney defendants' legal representative.
The plaintiff attempts to argue that this statute is inapplicable to the present situation because Robert Frost was acting as an insurance broker for the Dudneys and not as an insurance agent. The plaintiff argues that there is a genuine issue of material fact as to whether Robert Frost was serving as an insurance agent for the Dudneys, or whether Robert Frost was serving as an insurance broker.
This line of argument is not persuasive for two reasons. First, Tennessee case law uniformly holds that T.C.A. 56-6-147 and its predecessor section are intended to benefit the insured, Driver v. Tennessee Farmers Mutual Insurance Company, 505 S.W.2d 476, 479 (Tenn. 1974) and American Bankers Life Assurance Company v. Tri-City Bank & Trust Company, 677 F.2d 28, 30 (6th Cir. 1982), and that it is to be liberally construed in favor of the insured. T.H. Hayes & Sons v. Stuyvesant Insurance Company, 194 Tenn. 35, 42-43, 250 S.W.2d 7, 10-11 (1952). Following this pro-insured approach to the construction of insurance contracts, Tennessee courts have applied this statute to almost any kind of independent solicitor who solicited insurance policies that are accepted and issued by the insurer. See e.g., T.H. Hayes & Sons v. Stuyvesant Insurance Company, 194 Tenn. 35, 42-43, 250 S.W.2d 7, 10-11 (1952).
Secondly, in addition to the cases holding that T.C.A. § 56-6-147 was designed to benefit insured, at least one Tennessee case has stated that T.C.A. § 56-6-147 applies to insurance brokers as well as insurance agents.
Recently, in Polk and Sullivan, Inc. v. United Cities Gas Company, 783 S.W.2d 538 (Tenn. 1989), the Tennessee Supreme Court reversed the decision of the Tennessee Court of Appeals and reinstated the decision of the trial court on an issue analogous to the situation in the present case. In Polk and Sullivan, an insurance broker was suing an insured for a commission on an insurance policy which the insurance broker had procured for the insured. The trial court relied on T.C.A. 56-6-124 to find that the insurance broker was the agent of the insurance carrier and not the insured and that therefore the insurance broker was not entitled to collect a commission from the insured. The Tennessee Court of Appeals reversed. In reinstating the opinion of the trial court the Tennessee Supreme Court stated:
The Chancellor found in favor of [the insured] upon this portion of the [insurance broker's] claim, finding that an insurance broker is the agent of the insurance carrier and not the insured, and questions concerning commissions are to be settled between the broker and the insurance carrier. The Chancellor relied on T.C.A. § 56-6-124, which then provided that every agent 'who solicits or negotiates an application for insurance of any kind shall, in any controversy arising from the application for ...