American States Ins. Co. v. Frost

• Court: New Mexico Supreme Court
• Writing for the Court: RANSOM
• Citation: American States Ins. Co. v. Frost, 793 P.2d 1341, 110 N.M. 188, 1990 NMSC 65 (N.M. 1990)
• Decision Date: 28 June 1990
• Docket Number: No. 18650,18650
• Parties: AMERICAN STATES INSURANCE COMPANY, f/k/a the Western Casualty and Surety Company, Plaintiff-Appellant, v. Ramona FROST, Defendant-Appellee.

Page 1341

793 P.2d 1341

110 N.M. 188

AMERICAN STATES INSURANCE COMPANY, f/k/a the Western Casualty and Surety Company, Plaintiff-Appellant, v. Ramona FROST, Defendant-Appellee.

No. 18650.

Supreme Court of New Mexico.

June 28, 1990.

[110 NM 188] Arlon L. Stoker, Jr., Albuquerque, for plaintiff-appellant.

Ferguson & Lind, William Ferguson, Steven K. Sanders, Albuquerque, for defendant-appellee.

OPINION

RANSOM, Justice.

Ramona Frost was injured in an automobile accident with Isabel Reynolds and collected the maximum available from Reynolds' liability insurance policy, $26,000. Claiming that her damages exceeded $51,000, and that the accident was caused in part by an unknown truck driver who left the scene of the accident, Frost sought the $25,000 uninsured motorist (UIM)¹ benefits under her own policy with American States Insurance Company. The phantom truck driver was uninsured by virtue of having left the scene of the accident. See NMSA 1978, Sec. 66-5-301 (Repl.Pamp.1989) (statute equates uninsured and unknown motorists).

American States filed suit for a declaratory judgment that it did not have to pay UIM coverage to Frost because the amount she had collected from Reynolds exceeded the amount of her UIM coverage. The trial court disagreed and ruled that Frost was entitled to pursue her uninsured motorist claim relative to the phantom truck driver.

On appeal, American States argues that Fasulo v. State Farm Mutual Automobile Insurance Co., 108 N.M. 807, 780 P.2d 633 (1989), decided after the trial court's ruling, is dispositive of this issue. Fasulo involved two underinsured motorists and held that the amount available from the insured's underinsured motorist coverage is to be reduced by the total benefits received from the insurance policies of concurrent tortfeasors. Frost claims that, because Fasulo involved two underinsured motorists, the amounts received from those tortfeasors could be combined, but that here, where one motorist is uninsured and one underinsured, UIM coverage should apply separately to each tortfeasor.

As support for her position, Frost cites American Mutual Insurance Co. v. Romero, 428 F.2d 870 (10th Cir.1970). In that case, Romero was a passenger in a car that was struck by another car. The insurer of the car in which Romero was riding paid $25,000 in liability insurance benefits to Romero in settlement of the action Romero filed. The other driver was uninsured, and Romero sought payment from his own insurer pursuant to his policy's uninsured motorist clause. His insurer sought a declaratory judgment that it owed nothing to Romero because Romero's $20,000 UIM limit had been surpassed by the $25,000 he had already received.

The Tenth Circuit Court of Appeals ruled that Romero's insurer could not reduce the amount due him under his UIM coverage by the $25,000 received from the insured driver. While Romero's insurance policy required such a reduction, the court, construing New Mexico statutes in effect at that time, concluded that there was minimum statutory coverage for uninsured motorists which could not be reduced by reimbursements from an insured tortfeasor. Id. at 872. However, our present statutory scheme, and the one considered in Fasulo and Schmick v. State Farm Mutual Automobile Insurance Co., 103 N.M. 216, 704 P.2d 1092 (1985), is significantly different from that considered in American Mutual Insurance.

As first amended in 1979, Section 66-5-301 now addresses coverage for underinsured as well as uninsured motorists, see 1979 N.M.Laws, ch. 96, Sec. 1; 1981 N.M.Laws, ch. 356, Sec. 30; 1983 N.M.Laws, ch. 318, Sec. 39, and this difference is critical to its construction. The statute now provides in Section 66-5-301(B):

[U]ninsured motorist coverage * * * shall include underinsured motorist coverage for persons protected by an insured's policy. For the purposes of this subsection, "underinsured motorist" means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage.

Schmick and Fasulo hold that the present statute means an insured may recover his uninsured/underinsured coverage less all liability insurance proceeds received from concurrent tortfeasors.

Frost also relies upon Continental Insurance Co. v. Fahey, 106 N.M. 603, 747 P.2d 249 (1987), in which this Court invalidated an insurance policy provision purporting to reduce the amount due an insured under his uninsured motorist coverage by amounts he received under workers' compensation benefits because of the same accident. We concluded that offsetting recovery by amounts received under the Workers' Compensation Act would contravene public policy and was...