Jerry Moorehead v. Tennessee Farmers Mutual Insurance Company
M2020-01319-COA-R3-CV
| Tenn. Ct. App. | Jul 13, 2021Background
- On May 29, 2017 the Mooreheads were injured in an automobile accident; they sued the at-fault driver and his parents. Both families had insurance with Tennessee Farmers Mutual Insurance Company (Farmers).
- The parties mediated in May 2020 and signed a written Mediation Agreement stating, among other payments, that the Mooreheads’ uninsured motorist (UM) carrier, Tennessee Farmers, “will pay” Debra $50,000 and “will pay” Jerry $50,000 for full and complete settlement.
- Farmers paid $25,000 to each Moorehead during mediation (May 2020) and had previously paid $25,000 each in April 2018 under the policy’s medical payments coverage.
- The Mooreheads moved to enforce the Agreement, arguing the Agreement required Farmers to pay $50,000 each in new money (i.e., without offset for prior medical-payment disbursements). Farmers contended its prior medical payments offset its UM obligation and that its total payments satisfied the Agreement.
- The trial court found the Agreement binding but ruled Farmers was entitled to offset the earlier medical payments and had complied with the Agreement. The Mooreheads appealed.
- The Court of Appeals reversed, holding the plain language of the Mediation Agreement (future tense: “will pay $50,000”) obligated Farmers to pay $50,000 to each Moorehead in new money; the Agreement did not reference or incorporate the insurance policy or prior payments and therefore superseded the policy on that subject.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the mediation agreement’s $50,000 UM payments may be offset by prior medical‑payment disbursements | Moorehead: Agreement unambiguous — Farmers must pay $50,000 each in new money; no mention of offsets or the policy | Farmers: Entitled to credit for prior $25,000 medical payments; total payments equal $100,000 so Agreement satisfied | Reversed trial court — Agreement’s plain language obligates Farmers to pay $50,000 each in new money; prior payments do not offset absent express incorporation in the Agreement |
| Whether attorney Nichols bound Farmers to pay beyond policy limits at mediation | Moorehead: Nichols had actual or apparent authority to bind Farmers to the Agreement terms (including payments beyond policy limits) | Farmers: No agreement/request to exceed policy limits; Nichols lacked authority to bind beyond limits | Not decided on merits — issue not litigated below/preserved for appeal, so court declines to rule on agent authority |
Key Cases Cited
- Perkins v. Metro. Gov’t of Nashville, 380 S.W.3d 73 (Tenn. 2012) (settlement agreements are contracts; contract interpretation rules apply)
- Individual Healthcare Specialists, Inc. v. BlueCross BlueShield of Tennessee, Inc., 566 S.W.3d 671 (Tenn. 2019) (courts should ascertain parties’ intent and give primacy to contract text while considering context)
- Dick Broad. Co., Inc. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653 (Tenn. 2013) (where contract language is clear and unambiguous, literal meaning controls)
- Allstate Ins. Co. v. Watson, 195 S.W.3d 609 (Tenn. 2006) (contract words are ambiguous only if susceptible to more than one reasonable interpretation)
- Merrimack Mutual Fire Ins. Co. v. Batts, 59 S.W.3d 142 (Tenn. Ct. App. 2001) (insuring agreement defines insurer’s contractual liability — cited by Farmers for related proposition)
- Bringhurst v. Tual, 598 S.W.2d 620 (Tenn. Ct. App. 1980) (the later signed agreement on the same subject matter supersedes prior agreements)