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Southern Trust Ins. Co. v. Morgan

United States District Court, E.D. Tennessee

September 29, 2014

SOUTHERN TRUST INSURANCE COMPANY, Plaintiff,
v.
STELLA MORGAN, ET AL., Defendants

For Southern Trust Insurance Company, Plaintiff: Terrill L Adkins, LEAD ATTORNEY, Trammell, Adkins & Ward, PC, Knoxville, TN.

For Stella Morgan, Mary Morgan Brooks, Individually, b/n/f for J.W. Lawson, a minor Deceased J. W. Lawson, Defendants: George T East, LEAD ATTORNEY, Law Office of George T. East, Kingsport, TN.

For Timothy G Lawson, Individually, b/n/f for J.W. Lawson, a minor Deceased J. W. Lawson, Defendant: Thomas D Dossett, William S Todd, Jr, TLEAD ATTORNEYS, Todd & Dossett, PC, Kingsport, TN; Thomas C Jessee, LEAD ATTORNEY, Jessee & Jessee, Johnson City, TN.

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MEMORANDUM OPINION AND ORDER

J. RONNIE GREER, UNITED STATES DISTRICT JUDGE.

Plaintiff Southern Trust Insurance Company (" plaintiff" or " Southern Trust" ) filed a Motion for Summary Judgment, [Doc. 13], in this declaratory judgment action. Specifically, the plaintiff asks this Court to find that there is no genuine issue of fact for trial as to whether plaintiff owes a duty of indemnity from the uninsured motorist insurance coverage based upon the failure of Defendant Stella Morgan to comply with the conditions of the Tennessee Auto Policy based upon her material misrepresentation

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and to declare the policy void. Then, the plaintiff filed a Motion for Judgment on the Pleadings or in the Alternative Supplement to Plaintiff's Motion for Summary Judgment, [Doc. 33]. For the reasons that follow, the Court agrees with the plaintiff and grants the Motion for Summary Judgment, [Doc. 13], and Motion for Judgment on the Pleadings, [Doc. 33].

I. FACTS

The parties did not dispute the material facts.[1] They are as follows. Stella Morgan, a high school graduate who can read and write, owns and resides at her single family residence at 247 Cold Comfort Road, Church Hill, Tennessee. She had resided there since 2002. Her grandson, J.W. Lawson, was a resident of this home since 2006. His school documents and his learner's permit listed this address as his residence. On December 7, 2010, J.W. Lawson obtained a Class D Tennessee driver's license at the age of 17. On March 17, 2011, J.W. Lawson was involved in a motor vehicle accident involving property damage in Hawkins County, Tennessee. As a result of this accident he was charged with underage driving while impaired and leaving the scene of an accident. On March 22, 2011, Stella Morgan executed an Exclusion of Specific Driver form for Farm Bureau Insurance Companies as named insured of an automobile policy, excluding J.W. Lawson as an insured driver on the policy. On May 10, 2011, J.W. Lawson pled guilty to the charges. As a result, his driver's license was held in juvenile court with a provision to provide a restricted license.

In April 2011, Stella Morgan went to McMillan Insurance Agency,[2] and obtained an automobile insurance policy with Kentucky National Insurance. She received a notice of nonrenewal due to the company no longer writing policies in the area. On September 30, 2011, Stella Morgan went back to McMillan Insurance Agency and

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executed a Tennessee Personal Auto Policy Application for an automobile insurance policy with Southern Trust. Dolly Christian, an employee of McMillan Insurance Agency, assisted Stella Morgan in completing the application. It is McMillan Insurance Agency's policy to always ask about other household residents when assisting a customer with an application. Ms. Christian asked Stella Morgan whether any other persons resided in her household. Stella Morgan told Ms. Christian that her grandsons, Timothy and J.W. Lawson received their mail there but did not reside there. Ms. Christian did not include J.W. Lawson on the application but would have done so if she had been advised that he resided there. Thus, Stella Morgan did not list J.W. Lawson as a resident or driver on the Tennessee Personal Auto Policy Application in the section entitled " Resident and Driver Information [List all residents and dependents (licensed or not) and regular operators]." Stella Morgan knew that J.W. Morgan had a learner's permit and driver's license prior to executing the application on September 30, 2011. Stella Morgan did not state that J.W. Lawson was a member of her household because she thought he was covered under his mother's automobile insurance policy.

Southern Trust adheres to private passenger underwriting guidelines, which were approved by the Tennessee Commissioner of Commerce and Insurance prior to the date of Stella Morgan's application. Under these guidelines, J.W. Lawson would have created youthful driver exposure under the Tennessee Auto Policy issued by Southern Trust and represented an increased risk of loss to Southern Trust. J.W. Lawson's status would have been flagged for further investigation which would have included a risk analysis. Part of that analysis would have included a review of MVR through the State of Tennessee, a Comprehensive Loss Underwriting Exchange (" CLUE" ) report through the State of Tennessee, and a young driver questionnaire prepared by the Accord Corporation. This questionnaire would have been filled out by Stella Morgan and used by Southern Trust to assess ...


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