Edward Martin v. Gregory Powers, 505 S.W.3d 512

Background

On July 20, 2012, Edward Martin was struck by a Kia Sorento rented from Enterprise and driven by Gregory Powers; Martin sued Powers, Powers’ insurer (Mountain Laurel), Enterprise, and notified his UM carrier IDS.
Mountain Laurel won a declaratory judgment that it had no duty to indemnify Powers for intentional acts; claims against Mountain Laurel were later dismissed.
Plaintiff voluntarily dismissed Enterprise; IDS moved for summary judgment denying UM coverage because Enterprise held a Tennessee certificate of self-insurance under the Financial Responsibility Law (FR Law).
The trial court granted IDS’s summary judgment; the Court of Appeals affirmed; the Tennessee Supreme Court granted review to decide whether the rental car qualified as an “uninsured motor vehicle” under the insured’s policy.
The policy excluded vehicles “owned or operated by a self-insurer under any applicable motor vehicle law,” but excepted insolvent self-insurers; the UM statute similarly excepts vehicles self-insured under the FR Law.
The Court analyzed the policy language, Tennessee FR statutes (including Tenn. Code Ann. § 55-12-111 and § 55-12-106(10)), and the federal Graves Amendment (49 U.S.C. § 30106), and held Enterprise was not a self-insurer for renter-caused risks so the rental car was an uninsured motor vehicle.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the rental car was an “uninsured motor vehicle” under the UM policy	Martin: rental car qualifies as uninsured because Enterprise cannot be held vicariously liable for renter-caused harms (so UM should cover)	IDS: Enterprise’s Tennessee certificate of self-insurance makes the vehicle excluded from UM coverage	Held: Rental car was an uninsured motor vehicle; IDS not entitled to summary judgment
Definition/meaning of “self-insurer” in the policy	Martin: term is ambiguous; ordinary insured wouldn’t know it includes entities exempt from vicarious liability	IDS: certificate of self-insurance under FR Law makes Enterprise a self-insurer within policy exclusion	Held: Policy term ambiguous; ordinary meaning is entity able to pay judgments; exclusion read narrowly for insurer in favor of insured
Whether a Tennessee certificate of self-insurance under §55-12-111 covers renter risks given Graves Amendment and §55-12-106(10)	Martin: certificate does not show ability to pay judgments for renter-caused (vicarious) liability; commissioner did not consider such liabilities	IDS: Certificate shows Enterprise qualified as self-insurer and thus its vehicles are excluded from UM coverage	Held: §55-12-106(10) and Graves Amendment mean commissioner did not and could not evaluate Enterprise’s ability to pay vicarious-renter judgments; certificate does not make Enterprise a self-insurer as to renter risks
Interaction of policy, UM statute, and FR Law — statutory construction	Martin: UM Act and policy should be read to protect insureds; ambiguous exclusions construed for insured	IDS: FR Law language controls and makes rental car insured (not "uninsured")	Held: Courts must harmonize laws; reading statutes and federal law together, the exclusion does not apply to renter risks and UM coverage remains available

Key Cases Cited

Garrison v. Bickford, 377 S.W.3d 659 (Tenn. 2012) (principles for construing insurance contracts and giving terms their ordinary meaning)
Hermitage Health & Life Ins. Co. v. Cagle, 420 S.W.2d 591 (Tenn. Ct. App. 1967) (statutes applicable to an insurance policy become part of the policy)
Bethke v. Auto-Owners Ins. Co., 825 N.W.2d 482 (Wis. 2013) (holding similar "self-insurer" exclusion ambiguous as applied to rental-car companies)
Farmers Ins. Exchange v. Enterprise Leasing Co., 708 S.E.2d 852 (Va. 2011) (discussing that self-insurance operates as assurance that judgments will be paid)
Interstate Fire & Casualty Co. v. Abernathy, 93 So.3d 352 (Fla. Dist. Ct. App. 2012) (observing that where there is no risk there can be no insurance)