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Tennessee Supreme Court Rules That Claimant Was Not a Necessary Party to Declaratory Judgment Action Between Insurance Company and Insured

When someone has automobile accident liability insurance and he or she is sued due to a Tennessee car accident, the insurance company has two responsibilities: to provide a defense for the insured and to indemnify him or her in the event of a judgment. The insured individual also has certain obligations, perhaps the most important of which is the duty to cooperate with the insurance company during the legal proceedings arising from the accident.

When the insured does not cooperate in the way that he or she should, the insurance company may not have a duty to defend or indemnify him or her. Unfortunately, innocent people – namely, those injured by the insured’s negligence – may be negatively affected in such a situation.

Facts of the Case

In a recent case that was heard by the state’s highest court, the plaintiff was an insurance company that filed a declaratory judgment action against the defendant insured, seeking a declaration that it did not have to provide a defense to the insured in a personal injury lawsuit that had been file against him pertaining to an automobile accident or to indemnify him for any damages ultimately awarded to the claimant in that lawsuit. The insured reportedly did not respond, and the trial court entered a default judgment for the insurance company, holding that it did not have a duty to defend or indemnify the insured under the circumstances.

Two years later, the claimant who had filed the personal injury lawsuit against the insured filed a motion to set aside the default judgment and to intervene in the action on the basis that she was an indispensable party to the action. The trial court denied relief to the claimant. The intermediate appellate court reversed, holding that, without the joinder of the claimant, whom it opined was a “necessary party,” the trial court lacked subject matter jurisdiction in the case. The insurance company sought further appeal from the state supreme court.

The Court’s Decision on Appeal

The Tennessee Supreme Court reversed the court of appeals decision, holding that only the insurance company and the insured—not the claimant—were necessary parties to the declaratory judgment action. In the court’s opinion, the trial court was able to decide the coverage dispute between the insurance company and its insured with finality and certainty without the claimant’s participation in the action. Notably, the claimant did not yet have a judgment against the insured and, thus, had no right to bring a direct action against the insurance company seeking damages allegedly caused by the insured’s negligence.

Talk to Knoxville Personal Injury Attorney

If you have been involved in a Tennessee car accident, you need a legal professional looking out for your interests every step of the way. Insurance companies know all the tricks in the book when it comes to minimizing payouts or avoiding a finding of liability altogether; after all, it’s their job to make money for their stockholders – not to pay out maximum value on claims filed against their insured. At the Hartsoe Law Firm, our experienced team of east Tennessee legal professionals are here to look out for your interests following a car accident, truck wreck, or motorcycle collision. Call us at 865-524-5657 to schedule a free consultation about your accident.

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