The Tennessee Supreme Court’s recent decision in Haddon v. Vanlier, No. M2023-01151-SC-R11-CV (Tenn. May 12, 2026) [1] is a significant reaffirmation of longstanding Tennessee law on prejudgment interest. In a unanimous opinion authored by Justice Mary Wagner, the court held that prejudgment interest is not recoverable in a personal injury action defended by an uninsured or underinsured motorist carrier (“UM carrier”). In doing so, the court preserved the distinction between tort and contract damages, reinforced the historical limits on prejudgment interest, and protected the jury’s traditional role in valuing personal injury claims.
The case arose from a motor vehicle collision between Cinda Haddon and Ladarius Vanlier. Ms. Haddon sued Mr. Vanlier for negligence and negligence per se. When Mr. Vanlier could not be served, Ms. Haddon proceeded against her UM carrier, Auto-Owners Insurance Company, under Tennessee’s Uninsured Motorist Act. See Tenn. Code Ann. §§ 56-7-1201–1206. The case was tried to a jury, which awarded $320,000 for personal injury damages, including pain and suffering, loss of enjoyment of life, permanent injury, and medical expenses. The trial court denied the plaintiff’s request for prejudgment interest based on longstanding Tennessee precedent that prejudgment interest is not recoverable in personal injury actions.
The Tennessee Court of Appeals reversed, reasoning that the claim sounded in contract (for which prejudgment interest is recoverable) because an uninsured/underinsured motorist policy was involved. In doing so, the Court of Appeals relied on Schleif v. Hardware Dealer’s Mutual Fire Insurance Co., 404 S.W.2d 490 (Tenn. 1966), which treated a UM coverage-denial claim as contractual for purposes of determining the applicable statute of limitations.
The Tennessee Supreme Court reversed the Court of Appeals. Applying Tennessee’s gravamen analysis, the Supreme Court considered (1) the legal basis of the plaintiff’s claims; and (2) the type of injury for which damages are sought. On both points, the case sounded in tort. Plaintiff’s complaint alleged claims of negligence against Mr. Vanlier, not breach of contract against Auto-Owners. And the damages awarded were personal injury damages, not contract damages.
The distinction between the existence of insurance coverage and the nature of the underlying tort claim is critical. An insurance policy does not itself create a breach-of-contract claim. Here, although the plaintiff had uninsured motorist coverage, Auto-Owners had no contractual obligation to pay until the alleged tortfeasor’s liability and the plaintiff’s damages were established. Until then, there was no fixed amount owed and no breach of a payment obligation. For that reason, the Supreme Court rightly distinguished Schleif, which involved a denial of coverage, from Haddon, which involved the adjudication of a negligence claim defended by a UM carrier because of coverage.
Tennessee Code Annotated section 47-14-123 is central to the Supreme Court’s analysis because the statute expressly limits prejudgment interest to what was permitted under Tennessee statutory and common law as it existed on April 1, 1979. That date matters. By 1979, Louisville & N.R. Co. v. Wallace, 17 S.W. 882 (Tenn. 1891), had been controlling Tennessee law for nearly ninety years and had long prohibited prejudgment interest in personal injury actions. In other words, when the legislature enacted section 47-14-123, it adopted a legal framework that already recognized a categorical distinction between personal injury damages and the types of fixed or ascertainable claims upon which prejudgment interest traditionally could accrue. The Haddon decision respects Tennessee’s longstanding precedent limiting prejudgment interest and honors the Tennessee legislature’s prerogative to maintain the status quo when it enacted the prejudgment interest statute.
The Supreme Court’s decision follows not only from the precedent set in Wallace, but also from its reasoning. Wallace recognized that personal injury damages are inherently unliquidated and incapable of precise calculation until determined by the factfinder. Until a verdict or settlement establishes a sum certain, no debt exists upon which prejudgment interest can accrue.
The Supreme Court’s ruling also promotes fairness and consistency. Two plaintiffs with identical injuries should not receive different recoveries merely because one case involves uninsured motorist coverage and the other does not. The Uninsured Motorist Act is designed to place the insured in substantially the same position the insured would have occupied if the tortfeasor had carried liability insurance. See Tenn. Code Ann. § 56–7–1205. It is not designed to increase the value of the underlying tort claim. Id. Permitting prejudgment interest solely because a UM carrier is involved would create a two-tiered damages system based on the source of payment rather than the nature of the injury.
Haddon is important beyond uninsured or underinsured motorist litigation. It reinforces the distinction between tort and contract damages, respects the historical limits on prejudgment interest, and declines to let insurance coverage alter either the measure of damages or the jury’s role in valuing personal injury claims.
[1] Butler Snow represented the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies as amici curiae in support of the position ultimately adopted by the court.
