Bad day for injured driver
In December 2012, a vehicle driven by Brandon DeBruce rear-ended a vehicle driven by Christina Wright on Interstate 24 in Hamilton County, Tennessee. DeBruce was insured under an automobile liability 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 policy.
In December 2013, Wright sued DeBruce, 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 do so.
Tennessee Farmers learned about the lawsuit in January 2015 from Wright’s attorney.
DeBruce 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 lawsuit.
In March 2015, Tennessee Farmers sought a declaratory judgment action against DeBruce that it did not have to provide him a defense in the personal injury suit or indemnify him for any damages awarded to Wright. Tennessee Farmers asserted that DeBruce breached the policy when he did not notify it of the lawsuit filed by Wright and that he failed to cooperate in the investigation of the accident. 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 policy.
In March 2017, Wright moved to set aside the default judgment 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 court held she was not a necessary party because she was merely an incidental beneficiary of the Tennessee Farmers policy. Wright appealed.
On appeal, the court stated that under Tennessee law, Wright’s status as a necessary party hinged on whether she had “any interest which would be affected by a declaration.” Declaratory relief will be granted “only to parties who have a real interest in the litigation and when the case involves present rights that have accrued under presently existing facts.”
On the other hand, the court said, a claimant whose interest has not been reduced to a judgment against an insured has a remote interest that has not accrued into a real interest in the insurance policy. Having only a remote interest, the claimant cannot bring a direct action against the insurance company to recover damages under the policy because of the insured’s negligence.
Wright’s claim had not been reduced to a judgment, and thus she had no interest that would be affected by the declaratory judgment action. Wright’s joinder (the joining of two or more legal issues) would not have prevented the default judgment from being entered against DeBruce. Wright’s absence from the litigation did not impede the full termination of the controversy between Tennessee Farmers and DeBruce.
The judgment of the trial court was upheld.
Tennessee Farmers Mutual Insurance Company v. DeBruce—Supreme Court of Tennessee at Knoxville—May 30, 2019—No. 2017-02078-SC-R11-CV.
