Brandon has written a couple of excellent posts on the recent Tennessee Court of Appeals opinion of Tuturea v. Tennessee Farmers Mutual Insurance Company and whether the opinion calls the ability of an insurer to “end-around” (as he puts it) the innocent spouse or innocent co-insured doctrine.
I think we must look to the pronouncements of our state’s highest court, the Tennessee Supreme Court. The most in depth discussion of these doctrines came in the case of Spence v. Allstate Ins. Co. , 883 S.W.2d 586, 591 (Tenn. 1994). In the case, Allstate relied upon the following provisions to deny recovery to the allegedly innocent spouse:
“You” or “Your”-means the person named on the declarations page as the insured and that person’s resident spouse.
“Insured person”-means you and, if a resident of your household: (a) any relative; and (b) any dependent person in your care.
. . . . .
The terms of this policy impose joint obligations on persons defined as an insured person. This means that the responsibilities, acts and failures to act of a person defined as an insured person will be binding upon another person defined as an insured person.
. . . . .
CONCEALMENT OR FRAUD
This policy is void if it was obtained by misrepresentation, fraud or concealment of the material facts or if you intentionally conceal or misrepresent any material fact or circumstance, before or after loss.
Allstate contended that the policy unambiguously sets forth its intention to prevent an innocent co-insured from recovering for losses caused by the wrongdoing of an insured. The Tennessee Supreme Court disagreed, but stated:
Although we would be inclined to agree if these were the only provisions applicable to this case, other relevant provisions introduce a substantial amount of ambiguity into the status of an innocent co-insured under the policy. For example, in addition to the “CONCEALMENT OR FRAUD” provision, Allstate relied upon the following provision in its denial letters to James and Pamela Spence:
LOSSES WE DO NOT COVER
We do not cover loss to the property … resulting in any manner from:
. . . . .
6. Intentional or criminal acts of an insured person, if the loss that occurs: (a) may be reasonably expected to result from such acts; or (b) is in fact the intended result of such acts.
Spence, 883 S.W.2d at 591. I would simply note that this case seemingly signals that our highest court would allow an insurance company to avoid the innocent spouse or innocent co-insured doctrine if the policy were clear, and its provisions did not create the ambiguity discussed in Spence.