Trial Court's Denial of Directed Verdict to Insuror in Declaratory Judgment Action Reversed on Appeal

The Tennessee Court of Appeals has recently released its decision Tennessee Farmers Mutual Insurance Co. v. Simmons, No. E2020-00791-COA-R3-CV (Tenn. Ct. App. Sept. 14, 2021).  The syllabus from the slip opinion reads:

In the underlying declaratory judgment action, an insurance company sought a judgment that an automobile insurance policy issued to a mechanic does not provide coverage for an accident involving the mechanic. After examining the mechanic under oath, the insurance company moved for summary judgment, arguing that the policy contained a business purpose exclusion for accidents occurring while road testing a vehicle, which the mechanic stated he was doing at the time the accident occurred. The mechanic responded with an affidavit asserting that he was driving the vehicle for personal errands. The trial court denied the motion, finding that there was a genuine issue of material fact as to the mechanic’s purpose for driving the vehicle. At trial, the mechanic testified that he was running personal errands at the time of the accident but offered no explanation for his contradictory sworn statements. Following the close of proof, the insurance company renewed its argument regarding the policy’s exclusion and moved for a directed verdict. The trial court denied the motion and submitted the matter to a jury, which found that the exclusion did not preclude coverage of the accident. On appeal, the insurance company contends that the trial court erred by not applying the cancellation rule. We agree and hold that if the rule had been applied, no genuine issue existed for the jury to consider with respect to the mechanic’s business purpose at the time the accident occurred. Thus, the trial court should have directed a verdict in favor of the insurance company. The judgment of the trial court approving the jury verdict is vacated and the case is remanded.

Here is a link to the opinion:

https://www.tncourts.gov/sites/default/files/e2020-791_tn_ins._v._simmons.pdf.

NOTE: This opinion offers a good discussion of Tennessee insurance policies, the cancellation rule, etc.  It is worth reading in my humble opinion.