Session May 30, 2019 
by Permission from the Court of Appeals Chancery Court for
Bradley County No. 2015-CV-61 Jerri S. Bryant, Chancellor
granted review to determine whether a trial court had
authority in a declaratory judgment action to resolve
coverage issues between an insurance company and its insured
when a claimant, who had sued the insured but did not have a
judgment against him, was not a party to the action. Here,
the claimant sued the insured for damages arising from an
automobile accident. The insured did not cooperate with his
insurance company. The insurance company sued its insured,
seeking a declaratory judgment that the company did not have
to provide liability coverage based on the insured's lack
of cooperation. The trial court awarded the insurance company
a default judgment, holding that the company did not have to
provide coverage under the policy. Nearly two years later,
the claimant moved the trial court to set aside the default
judgment and allow her to intervene, asserting that she was a
necessary party. The trial court denied the motion. The Court
of Appeals ruled that the trial court lacked jurisdiction
over the declaratory judgment action because the claimant was
a necessary party, and the insurance company had not joined
the claimant in the action. We hold that the insurance
company and its insured-not the claimant-were necessary
parties to the declaratory judgment action. The trial court
could decide the coverage dispute between the insurance
company and its insured with finality and certainty without
the claimant's participation in the action. The claimant,
who had no judgment against the insured and could not bring a
direct action against the insurance company to collect any
damages caused by the insured, had no interest affected by
the dispute between the company and its insured. The trial
court had authority to grant declaratory relief because all
necessary parties were before the court.
R. App. P. 11 Appeal by Permission; Judgment of the Court of
Appeals Reversed; Judgment of the Trial Court
Michael R. Campbell and Lauren M. Turner, Chattanooga,
Tennessee, for the appellant, Tennessee Farmers Mutual
Ethan Hargraves, Gary Massey, and Joshua R. Ward,
Chattanooga, Tennessee, for the appellee, Christina Wright.
Kenneth W. Ward, Hannah S. Lowe, and Elijah T. Settlemyre,
Knoxville, Tennessee, and Hal S. "Hank" Spragins,
Jr., Memphis, Tennessee, for amicus curiae Tennessee Defense
G. Lee, J., delivered the opinion of the Court, in which
Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Holly Kirby,
and Roger A. Page, JJ., joined.
G. LEE, JUSTICE
vehicle driven by Brandon DeBruce rear-ended a vehicle driven
by Christina Wright on Interstate 24 in Hamilton County in
December 2012. DeBruce was insured under an automobile
liability insurance policy issued by Tennessee Farmers Mutual
Insurance Company. DeBruce's wife timely reported the
accident to Tennessee Farmers. Tennessee Farmers paid DeBruce
and Wright for their property damage under DeBruce's
December 2013, Wright sued DeBruce in the Circuit Court for
Hamilton County, seeking compensation for her injuries
arising out of the collision. In September 2014, DeBruce was
served with a summons and a complaint. DeBruce did not notify
Tennessee Farmers about the lawsuit even though the policy
required him to send to Tennessee Farmers "at once . . .
every summons, legal process or other legal paper
received." Tennessee Farmers learned about the
lawsuit in January 2015 from Wright's attorney.
did not respond to telephone calls from Tennessee Farmers and
twice failed to appear for an examination under oath. Under
the policy, DeBruce had to cooperate with Tennessee Farmers
in investigating and defending the claims asserted in the
March 2015, Tennessee Farmers filed this declaratory judgment
action against DeBruce in the Bradley County Chancery Court
under Tennessee's Declaratory Judgments Act, Tennessee
Code Annotated section 29-14-101 et seq. Tennessee Farmers
asserted that DeBruce breached the insurance policy when he
did not notify Tennessee Farmers of the lawsuit filed by
Wright and failed to cooperate in the investigation of the
accident. Tennessee Farmers sought a declaratory judgment
that it did not have to provide a defense to DeBruce in the
personal injury suit or indemnify him for any damages awarded
to Wright. DeBruce did not respond. In June 2015, the trial
court granted Tennessee Farmers' motion for default
judgment, holding that it had no duty to defend or indemnify
DeBruce in the personal injury lawsuit based on his breach of
the insurance policy.
March 2017, Wright moved to set aside the default judgment
under Tennessee Rule of Civil Procedure 60.02 and allow her
to intervene. Wright asserted that she was an
indispensable party to the declaratory judgment action
because she had a direct interest in the outcome of the case.
In denying Wright's motion, the trial court held that she
was not a necessary party. The trial court found that
Wright's interest was insufficient to make her a
necessary party because she was merely an incidental
beneficiary of the insurance contract between Tennessee
Farmers and DeBruce.
Court of Appeals reversed, relying in part on our ruling in
Commercial Casualty Insurance Co. v. Tri-State Transit
Co. of Louisiana, 146 S.W.2d 135 (Tenn. 1941). Tenn.
Farmers Mut. Ins. Co. v. DeBruce, No.
E2017-02078-COA-R3-CV, 2018 WL 3773912, at *8 (Tenn. Ct. App.
Aug. 9, 2018). In Commercial Casualty, we held that
parties injured in a bus accident who had obtained a judgment
against the bus operator in an Arkansas state court were
necessary parties in a Tennessee declaratory judgment action
to resolve coverage issues between the bus operator and its
insurance company. 146 S.W.2d at 136-37. Our ruling in
Commercial Casualty was based, in part, on the
assumption that the bus operator was subject to the Federal
Motor Carrier Act and its mandatory insurance provisions.
Id. Here, the Court of Appeals relied on
Commercial Casualty, noting that drivers in
Tennessee are subject to the mandatory provisions of the
Tennessee Financial Responsibility Law of 1977, Tennessee
Code Annotated section 55-12-101 et seq. Tenn.
Farmers, 2018 WL 3773912, at *6. Under the rationale of
Commercial Casualty, the Court of Appeals decided
that Wright had a "sufficiently direct" interest ...