Tezozomoc "Ted" Alcantar v. Haulers Insurance Company

Citation: Not availableDocket: M2003-01004-COA-R3-CV

Court: Court of Appeals of Tennessee; December 19, 2004; Tennessee; State Appellate Court

Original Court Document: View Document

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In the case Tezozomoc “Ted” Alcantar, et al. v. Haulers Insurance Company, the plaintiffs, Tezozomoc and Judy Alcantar, previously obtained a default judgment against Rajiv Wadhwa due to injuries sustained in a vehicular accident involving Wadhwa, who was driving a taxi owned by Chinedu Nwagwu, the insured under a policy with Haulers Insurance Company. Haulers provided a defense for Nwagwu but denied coverage to Wadhwa, who did not defend himself in the prior action. As a result, the Alcantars were awarded $459,460 against Wadhwa, who was unable to satisfy the judgment without insurance coverage. Believing he was insured, Wadhwa assigned his cause of action against Haulers to the Alcantars, who then sued Haulers for damages, including the amount of the default judgment. The trial court dismissed their action, ruling that the default judgment was void because it exceeded the relief sought. Alternatively, the court found that even if the judgment were valid, Wadhwa was not covered under the policy as it excluded intentional injuries, which were determined in the prior judgment. The Court of Appeals affirmed the trial court's decision.

Defendants in the prior action included Rajiv Wadhwa, Mai Cagle (doing business as Music City Taxi Company), Chinedu Raphael Nwagwu, and Nasir Auto Sales, Inc. Among them, only Chinedu Nwagwu was listed as an insured under the Haulers Business Auto Policy, which covered his 1993 Ford Crown Victoria leased to Music City Taxi. The complaint asserted that Wadhwa, as the driver of the taxi, was negligent in causing a collision with the Alcantars while operating within the scope of his employment. Haulers provided a defense for Nwagwu but not for Wadhwa, who was not represented by the law firm Ortale, Kelly, Herbert & Crawford, which defended Nwagwu.

The Alcantars alleged Wadhwa's negligence led to their injuries, claiming he operated the vehicle recklessly and violated traffic laws, including Tennessee Code Ann. § 55-10-205 (reckless driving). Specific allegations included failing to keep a proper lookout and yielding the right of way. The amended complaint included counts for common law negligence and negligence per se, identifying multiple relevant statutes.

Contrary to the negligence claims, the judgment in the prior action found that Wadhwa acted willfully and maliciously, intending the harmful consequences of the collision, without any findings of negligence or negligence per se. The judgment stated that the Alcantars suffered permanent injuries and damages as a direct result of Wadhwa's intentional actions.

The judgment does not indicate that Ted or Judy Alcantar sustained injuries or received damages due to Rajiv Wadhwa’s negligence. The judgment was a default judgment governed by Tenn. R. Civ. P. 54.03, which stipulates that such judgments must align with the relief sought in the complaint. The complaint against Wadhwa alleged injuries and damages due to negligence but did not assert any intentional or willful misconduct. However, the judgment stated that the Alcantars’ injuries were the result of Wadhwa’s intentional acts, resulting in damages awarded that exceeded those specified in the original complaint. This discrepancy violates Tenn. R. Civ. P. 54.03, which prohibits courts from granting relief beyond what the pleadings allow. Case law supports that a judgment beyond the pleadings is void, reinforcing that judgments must correspond with the claims made. The principle behind this rule is to ensure that parties are adequately notified of the issues at stake, allowing them to prepare their defenses accordingly. A party should not be surprised by a judgment that offers a different kind of relief than what was requested, as this undermines the right to a fair legal process.

Unless all relevant parties have voluntarily litigated an issue not included in the pleadings, the court will adhere strictly to the issues raised within those pleadings. A default judgment cannot encompass matters outside the pleadings or exceed the relief requested; a judgment is void if it disregards the pleadings (Gentry v. Gentry, 924 S.W.2d 678, 680 (Tenn. 1996)). A voidable judgment remains valid until overturned or impeached, while a void judgment can be challenged collaterally. Consequently, the Alcantars’ default judgment against Mr. Wadhwa is deemed void and without legal effect, negating any judgment amount ($459,460) that Mr. Wadhwa could assign to the Alcantars. Without this judgment, there is no basis for the Plaintiffs' claim against Haulers, and both Mr. Wadhwa and the Alcantars have not sustained any damages warranting relief. The trial judge correctly dismissed the Plaintiffs' action for failure to state a valid claim under Tenn. R. Civ. P. 12.02(6).

Even if the prior judgment were valid, the findings indicate that Mr. Wadhwa’s actions were intentional, which would exclude him from coverage under the policy, as it does not cover intentional acts. Mr. Wadhwa was driving a taxi, identified in the policy, with permission from Music City Taxi. As a named insured's additional insured, he would typically be covered unless an exclusion applied. The policy specifically excludes injuries expected or intended from the insured's standpoint. Since the prior judgment states that the damages were a result of Mr. Wadhwa's intentional conduct, he would not be entitled to coverage or indemnification for those damages. Therefore, Mr. Wadhwa is not insured for the damages awarded to the Alcantars, and the Plaintiffs' assertion that Haulers is bound by the prior judgment is flawed.

The prior judgment is deemed valid but does not hold Haulers liable; instead, it holds Mr. Wadhwa responsible. Since Haulers was not a party to the previous action, the judgment does not bind them. The judgment against an insured does not apply to issues outside the insurance contract's scope, and the insurance company is not obliged to defend or be bound by court findings if the claim is not covered by the policy. Assuming the judgment is valid, it excludes Mr. Wadhwa’s actions from coverage, meaning Haulers had no duty to defend him or inform him of his rights, nor to indemnify him. The trial judge appropriately dismissed the Plaintiffs’ action under Tenn. R. Civ. P. 12.02(6) for failure to state a claim.

Additionally, the Plaintiffs claimed the trial court erred by not disqualifying the law firm Ortale, Kelly, Herbert, Crawford, which they alleged initially represented Mr. Wadhwa. The court denied this motion correctly, as the firm never represented Mr. Wadhwa and promptly corrected a clerical error regarding its notice of appearance. Mr. Wadhwa was never under the impression that the firm represented him.

The Plaintiffs raised other issues, including claims of error regarding the trial court’s summary judgment favoring Haulers based on the Alcantars breaching a Release and Settlement Agreement, but this issue is rendered moot by prior findings. They also contested the trial court's order for the Alcantars to pay Haulers $1,160.05 in discretionary costs, arguing Haulers should not prevail. However, since the court affirmed the dismissal of the Plaintiffs’ complaint, Haulers is entitled to recover those costs. The trial court's judgment granting Haulers’ motion to dismiss is affirmed, and the case is remanded for any necessary further proceedings, with costs assessed against Tezozomoc Alcantar and Judy Alcantar.