1997 -NMCA- 65, Dominguez v. Dairyland Ins. Co.

• Decision Date: 10 June 1997
• Docket Number: No. 17574,17574
• Citation: 123 N.M. 448,1997 NMCA 65,942 P.2d 191
• Parties: , 1997 -NMCA- 65 Candelario DOMINGUEZ, Plaintiff-Appellant, v. DAIRYLAND INSURANCE COMPANY, a Wisconsin corporation, Defendant-Appellee.
• Court: Court of Appeals of New Mexico

Page 191

942 P.2d 191

123 N.M. 448, 1997 -NMCA- 65

Candelario DOMINGUEZ, Plaintiff-Appellant, v.DAIRYLAND INSURANCE COMPANY, a Wisconsin corporationDefendant-Appellee.

No. 17574.

Court of Appeals of New Mexico.

June 10, 1997.

Certiorari Denied July 24, 1997.

Alexander A. Wold, Jr., Alexander A. Wold, Jr., P.C., Albuquerque, for Plaintiff-Appellant.

Terri L. Sauer Miller, Stratvert, Torgerson & Schlenker, P.A., Albuquerque, for Defendant-Appellee.

OPINION

DONNELLY, Judge.

¶1Plaintiff appeals from an order granting summary judgment and dismissing his declaratory judgment action against DefendantDairyland Insurance Company(Dairyland).Two issues are raised on appeal: (1) whether the district court erred in upholding the validity of the territorial limitation clause contained in Dairyland's motor vehicle insurance policy; and (2) whether the district court erred in denying Plaintiff's motion to amend his complaint.For the reasons discussed herein, we affirm.

FACTS AND PROCEDURAL POSTURE

¶2Plaintiff, a resident of Bernalillo County, New Mexico, sustained bodily injuries in 1993 when the automobile he was driving in Ciudad Juarez, Mexico, was struck by an uninsured motorist.It is undisputed that the accident was caused by the negligence of the uninsured driver and that Plaintiff was the named insured in an automobile insurance policy issued by Dairyland.It is also undisputed that Dairyland's policy was in effect at the time of the accident and that it provided uninsured motorist coverage.The policy, however, contained a provision expressly restricting Dairyland's obligation to provide insurance coverage for any losses which occur outside of certain specified territorial limits.Under the heading, "GENERAL POLICY PROVISIONS," the policy stated: "Territory This policy applies only to car accidents and losses within the United States of America, its territories or possessions and Canada, or while the car is being transported between their ports."(Emphasis omitted.)

¶3Plaintiff made a claim for damages sustained by him as a result of the accident.Dairyland denied the claim, relying on the territorial limitation contained in its policy.Thereafter, Plaintiff filed a complaint for declaratory judgment on August 17, 1994, and the parties filed opposing motions for summary judgment.Following a hearing, the district court heard the arguments of counsel and granted Dairyland's cross-motion for summary judgment on March 18, 1996.Before a written order was entered, Plaintiff moved to amend his complaint to add a claim alleging that Dairyland's licensed agent had misrepresented the policy's coverage.Plaintiff's motion to amend was filed on March 21, 1996.The district court verbally denied Plaintiff's motion to amend the complaint and entered an order granting summary judgment in favor of Dairyland.Plaintiff subsequently filed this appeal.

VALIDITY OF THE TERRITORIAL EXCLUSION

¶4Plaintiff argues that the territorial limitation contained in Dairyland's insurance policy violates NMSA 1978, Section 66-5-301(Repl.Pamp.1994), the provision for uninsured motorist coverage for motor vehicle or automobile liability policies delivered or issued for delivery in New Mexico.Both parties acknowledge that the language of Section 66-5-301 is silent on the question of whether an uninsured motorist provision contained in a motor vehicle insurance policy may impose territorial limitations.Plaintiff argues that this statutory silence indicates a legislative intent to disallow territorial limitations upon uninsured motorist coverage.Because the issue before us turns primarily on legislative intent, we review the issues involving statutory interpretation de novo as a matter of law.SeeRomero Excavation & Trucking, Inc. v. Bradley Constr., Inc., 121 N.M. 471, 473, 913 P.2d 659, 661(1996);Madrid v. University of Cal., 105 N.M. 715, 718, 737 P.2d 74, 77(1987).

¶5 The precise issue argued here is one of first impression in New Mexico.Other jurisdictions have considered the validity of territorial restrictions contained in motor vehicle insurance policies and uninsured motorist provisions.Relying on different rationales, these jurisdictions have overwhelmingly rejected claims that motor vehicle policy provisions imposing territorial limitations are invalid where the applicable uninsured motor vehicle statutes are silent concerning the efficacy of such restrictions.SeeCurtis v. Allstate Ins. Co., 473 F.Supp. 315, 316(E.D.La.1979), aff'd631 F.2d 79(5th Cir.1980)(per curiam);Bartning v. State Farm Fire & Cas. Co., 162 Ariz. 344, 347-48, 783 P.2d 790, 793-94(1989)(en banc);Robles v. California State Auto. Ass'n, 79 Cal.App.3d 602, 145 Cal.Rptr. 115, 119-21(Ct.App.1978);Fischer v. State Farm Mut. Auto. Ins. Co., 495 So.2d 909, 910-11(Fla.Dist.Ct.App.1986);Degollado v. Gallegos, 260 Kan. 169, 917 P.2d 823, 826-27(1996);Higbee v. USAA Cas. Ins. Co., 617 So.2d 51, 56(La.Ct.App.1993);Heinrich-Grundy v. Allstate Ins. Co., 402 Mass. 810, 525 N.E.2d 651, 653-54(1988);Hall v. Amica Mut. Ins. Co., 538 Pa. 337, 648 A.2d 755, 758-61(1994);Pollard v. Hartford Ins. Co., 583 A.2d 79, 81(R.I.1990);Marchant v. South Carolina Ins. Co., 281 S.C. 585, 316 S.E.2d 707, 709(Ct.App.1984);Lovato v. Liberty Mut. Fire Ins. Co., 109 Wash.2d 43, 742 P.2d 1242, 1243-44(1987)(en banc).

¶6 In considering the validity of provisions imposing territorial limitations on uninsured motorist coverage, courts in a number of jurisdictions have upheld such restrictions where the restrictions were shown to apply to the policy as a whole and not solely to the provisions for uninsured motorist coverage.See, e.g., Bartning, 783 P.2d at 793-94;Brillo v. Hesse, 560 So.2d 84, 87(La.Ct.App.1990);Heinrich-Grundy, 525 N.E.2d at 652;Pollard, 583 A.2d at 81;Lovato, 742 P.2d at 1243.

¶7The legislative intent giving rise to the adoption of our uninsured motorist law is "to make uninsured motorist coverage a part of every automobile liability insurance policy issued in this state."Romero v. Dairyland Ins. Co., 111 N.M. 154, 156, 803 P.2d 243, 245(1990).In this regard, Section 66-5-301 should be read in conjunction with the Mandatory Financial Responsibility Act (MFRA).The MFRA states:

The legislature is aware that motor vehicle accidents in the state of New Mexico can result in catastrophic financial hardship.The purpose of the [MFRA] ... is to require and encourage residents of the state of New Mexico who own and operate motor vehicles upon the highways of the state to have the ability to respond in damages to accidents arising out of the use and operation of a motor vehicle.It is the intent that the risks and financial burdens of motor vehicle accidents be equitably distributed among all owners and operators of motor vehicles within the state.

NMSA 1978, § 66-5-201.1(Repl.Pamp.1994).From this statutory language, we conclude the MFRA was primarily adopted in response to the legislative concern about "motor vehicle accidents in the state of New Mexico" and that its provisions apply to owners and operators of motor vehicles within New Mexico.Nothing in the overall statutory scheme indicates that the legislature intended to mandate broader geographical coverage for uninsured motorist coverage than for other types of coverage.See, e.g., Fischer, 495 So.2d at 910.Although Plaintiff argues that mandating worldwide coverage for uninsured motorists would further the statute's objective of expanding insurance coverage, we do not read the statute so expansively.As observed in Degollado, 917 P.2d at 825, "[T]o the extent that [policy] provisions do not conflict with or attempt to diminish or omit the statutorily mandated coverage, the limiting provisions will be controlling between the parties."

¶8 Although the uninsured motorist statute is remedial and the statute should be liberally interpreted to further its objectives, a policy of liberal interpretation, absent a clear statutory provision to the contrary, may not negate reasonable and unambiguous policy limitations.SeeState Farm Auto. Ins. Co. v. Ovitz, 117 N.M. 547, 550, 873 P.2d 979, 982(1994);see alsoArchunde v. International Surplus Lines Ins. Co., 120 N.M. 724, 726-27, 905 P.2d 1128, 1130-31(Ct.App.), cert. denied, 120 N.M. 533, 903 P.2d 844(1995);Hall, 648 A.2d at 761.Our Supreme Court, while recognizing the importance of protecting the public from financially irresponsible drivers, has stated that "uninsured motorist coverage is 'not intended to provide coverage in every uncompensated situation.' "Ovitz, 117 N.M. at 550, 873 P.2d at 982(citation omitted).

¶9Plaintiff cites various New Mexico cases that have invalidated certain policy limitations or exclusions on uninsured motorist coverage.See, e.g., Stinbrink v. Farmers Ins. Co., 111 N.M. 179, 180, 803 P.2d 664, 665(1990)(provision excluding coverage for punitive damages against uninsured motorists violated the statute because a claimant may be legally entitled to receive punitive damages from an uninsured tort-feasor);Continental Ins. Co. v. Fahey, 106 N.M. 603, 605, 747 P.2d 249, 251(1987)(insurance company was not entitled to offset amount of the workers' compensation it paid to the worker/insured against the amount it would have paid under its uninsured motorist policy because to do so would have reduced the insurer's liability below the statutory minimum)(superseded by statute as stated inMountain States Mut. Cas. Co. v. Vigil, 121 N.M. 812, 814-15, 918 P.2d 728, 730-31(Ct.App.1996));Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 220-21, 704 P.2d 1092, 1096-97(1985)("class one" insureds are entitled to stack all uninsured and underinsured motorist policies for the purpose of determining underinsured tort-feasor's status; abstruse exclusionary clause that attempted to do otherwise was void);Chavez v. State Farm Mut. Auto. Ins. Co., 87 N.M. 327, 330, 533 P.2d 100, 103(19...