Williams v. Irby, 2:13-cv-02481

Plaintiff Cassandra Williams, Mississippi resident, owned an Allstate auto policy issued and delivered in Mississippi that included uninsured/underinsured motorist (UM) coverage.
Williams was rear-ended in Memphis, Tennessee, by defendant Willie Irby; she sued Irby (negligence claims) and Allstate (breach of contract for failure to pay UM benefits).
Allstate moved for judgment on the pleadings, arguing Tennessee law governs under the policy’s choice-of-law clause and, under Tennessee law, the suit naming the insurer must be dismissed because Tenn. Code Ann. § 56-7-1206(a) bars direct suits against UM insurers in some circumstances.
The policy’s choice-of-law clause stated Mississippi law “shall” govern, but added that losses or accidents outside Mississippi “may be governed by the laws of the jurisdiction” where the loss occurred.
Williams argued the clause is ambiguous and must be construed against Allstate, and that Tennessee’s UM statute does not apply to policies issued and delivered outside Tennessee.
The court accepted the complaint’s factual allegations, construed the clause permissively ("may"), applied Tennessee choice-of-law principles, and held Mississippi substantive law governs; alternatively, even if Tennessee law applied, Tennessee precedent holds its UM statute does not apply to policies issued/delivered outside Tennessee—so dismissal was improper.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper governing substantive law	The clause is ambiguous; construe against Allstate; Mississippi law governs (policy issued/delivered in MS)	Clause permits the law of the jurisdiction where the accident occurred to govern, so Tennessee law governs this Tennessee accident	Mississippi substantive law governs; the clause’s second paragraph is permissive (“may”), not mandatory, under Tennessee conflict rules
Effect of Tennessee UM statute (Tenn. Code Ann. § 56-7-1206(a))	Statute does not apply to policies issued/delivered outside Tennessee; Nelson (Tenn. Ct. App.) supports this	Even if policy was issued in MS, parties contracted to apply Tennessee law to Tennessee accidents, so statute should apply and requires dismissal or refiling without insurer named	Even under Tennessee law, Nelson controls: §56-7-1206(a) applies only to policies issued/delivered in Tennessee; dismissal is not warranted

Nelson v. Nelson, 409 S.W.3d 629 (Tenn. Ct. App. 2013) (Tennessee Court of Appeals holding Tenn. Code Ann. § 56-7-1206(a) does not apply to policies issued and delivered outside Tennessee)
Goodwin Bros. Leasing, Inc. v. H & B, Inc., 597 S.W.2d 303 (Tenn. 1980) (factors for enforcing parties’ contractual choice-of-law provision)
Ohio Cas. Ins. Co. v. Travelers Indem. Co., 493 S.W.2d 465 (Tenn. 1973) (insurance-policy choice-of-law principles and lex loci contractus)
Webster v. Harris, 727 S.W.2d 248 (Tenn. Ct. App. 1987) (discussing insurer anonymity/right to intervene under Tennessee UM framework)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (federal courts sitting in diversity must apply forum state substantive law)