Ammons v. Sentry Ins. Co.
| Decision Date | 31 December 2019 |
| Docket Number | Civ. No. 19-419 SCY/JHR |
| Parties | Shawn AMMONS and Jessica Ammons, Plaintiffs/Counter-Defendants, v. SENTRY INSURANCE COMPANY , Defendant/Counter-Plaintiff. |
| Court | U.S. District Court — District of New Mexico |
Brian G. Grayson, Grayson Law Office, LLC, Albuquerque, NM, for Plaintiffs/Counter-Defendants.
Sonya R. Burke, Jennifer A. Noya, Modrall Sperling Roehl Harris & Sisk PA, Albuquerque, NM, for Defendant/Counter-Plaintiff.
This Opinion addresses Plaintiffs'/Counter-Defendants' Motion for Partial Summary Judgment for UM Benefits (Doc. 13), filed May 24, 2019; Defendant's/Counter-Plaintiff's Cross-Motion for Summary Judgment (Doc. 17), filed June 12, 2019; and Plaintiffs' Opposed Motion for Leave to File First Amended Complaint (Doc. 33), filed September 12, 2019. I held a hearing on these motions on December 16, 2019. Doc. 39.1
The central issue before the Court is whether Plaintiffs are entitled to recover punitive damages under their uninsured property damage coverage for the actions of an unknown thief, who crashed Plaintiffs' car after stealing it. Defendant argues that Plaintiffs have no valid punitive damages claim under their uninsured property damage coverage for two primary reasons: (1) uninsured motor vehicle coverage (on which the punitive damages claim is based) is not available for insured vehicles such as the one at issue here, and (2) even if such coverage were available, punitive damages are not available against an unknown tortfeasor. Regarding Defendant's first argument, although the operative policy defines Plaintiffs' vehicle as insured (and therefore ineligible for uninsured motorist coverage), it is uncertain whether this policy exclusion would be valid under New Mexico's Uninsured Motorist Act. Regarding Defendant's second argument, the Court agrees that punitive damages, which are meant to punish and deter, are not available against an unknown tortfeasor. The Court therefore determines that Plaintiffs are not entitled to the punitive damages they seek.
Although this conclusion necessarily resolves most of the issues Plaintiffs raise in their complaint, a portion of Plaintiffs' extra-contractual allegations not related to denial of coverage remains viable. Specifically, the Court's decision that punitive damages are not available against an unknown tortfeasor has no effect on Plaintiffs' extra-contractual claims that are premised on Defendant's alleged delays in responding to Plaintiffs' requests. However, Plaintiffs' failure to allege sufficient facts to sustain those allegations makes them subject to dismissal. Plaintiffs shall be allowed 30 days from the entry of this Order to move to amend to remedy this deficiency.
Thus, the Court denies Plaintiffs' Partial Motion for Summary Judgment and grants Defendant's Motion for Summary Judgment. The Court also denies as futile Plaintiffs' Motion for Leave to File First Amended Complaint because the claims in that proposed amendment would be subject to dismissal.
This case arises from the theft of Plaintiffs' vehicle, which was stolen from an auto repair shop on November 22, 2018. Plaintiffs' Undisputed Material Facts ("P-UMF") 1. A police officer later spotted the stolen vehicle and initiated a traffic stop. Doc. 27 at 1 (Joint Status Report). The driver fled, leading the officer on a chase. Id. The officer lost sight of the vehicle but later found it unoccupied and crashed. Id. ; P-UMF 2. The auto repair shop's insurer paid Plaintiffs for the property damage to the car. Defendant's Undisputed Material Facts ("D-UMF") 7. Plaintiffs seek, under their uninsured ("UM")/underinsured motorist ("UIM") policy with Defendant Sentry Insurance Company, only punitive damages for the acts of the unknown thief.2 D-UMF 7. Defendant Sentry denied the claim, asserting that UM property damage coverage does not provide coverage for theft. See Docs. 13-3 to 13-10.
Plaintiffs initially filed this suit in state court. Doc. 1-1. The Complaint brings three counts: (1) UIM benefits; (2) breach of contract; and (3) violations of the insurance practices act, insurance bad faith, and punitive damages. Id. Defendant removed the matter to federal court, Doc. 1, and filed a counterclaim with two counts: (1) declaratory relief regarding UM/UIM coverage; and (2) declaratory relief regarding UM/UIM limits. Doc. 4. Plaintiffs now seek partial summary judgment on Count I of their Complaint and on Count II of the Counterclaim. Doc. 13. Defendant filed a cross-motion, seeking summary judgment on all three counts of Plaintiffs' Complaint. Doc. 17.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute about a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In other words, a dispute is genuine "if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way," and it is material "if under the substantive law it is essential to the proper disposition of the claim." Becker v. Bateman , 709 F.3d 1019, 1022 (10th Cir. 2013) (internal quotation marks omitted). In reviewing a motion for summary judgment, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the non-moving party. S.E.C. v. Thompson , 732 F.3d 1151, 1156-57 (10th Cir. 2013) (internal quotation marks omitted). Initially, the party seeking summary judgment has the burden of showing that there is no genuine dispute as to any material fact. See Shapolia v. Los Alamos Nat'l Lab. , 992 F.2d 1033, 1036 (10th Cir. 1993). Once the moving party meets its burden, the non-moving party must show that genuine issues remain for trial. Id.
Because this Court is sitting in diversity jurisdiction, the substantive law governing this case is that of New Mexico. Racher v. Westlake Nursing Home Ltd. P'ship , 871 F.3d 1152, 1164 (10th Cir. 2017). New Mexico courts "resolve questions regarding insurance policies by interpreting their terms and provisions in accordance with the same principles which govern the interpretation of all contracts." Ponder v. State Farm Mut. Auto. Ins. Co. , 2000-NMSC-033, ¶ 11, 129 N.M. 698, 12 P.3d 960 (internal quotation marks omitted). "In order to determine coverage, [courts] initially look to the language of the policy itself." Gonzales v. Allstate Ins. Co. , 1996-NMSC-041, ¶ 12, 122 N.M. 137, 921 P.2d 944. New Mexico courts "interpret unambiguous insurance contracts in their usual and ordinary sense unless the language of the policy requires something different." Id. (internal quotation marks omitted).
"Thus, when the policy language is clear and unambiguous, [courts] must give effect to the contract and enforce it as written." Ponder , 2000-NMSC-033, ¶ 11, 129 N.M. 698, 12 P.3d 960 . "But when an insurance provision does conflict with a statute, it is void." Chavez v. State Farm Mut. Auto. Ins. Co. , 1975-NMSC-011, ¶ 6, 87 N.M. 327, 533 P.2d 100.
Before addressing the merits of the pending cross-motions, the Court must determine whether it has subject matter jurisdiction to hear this case. Plaintiffs originally filed this lawsuit in state court and Defendant removed it to federal court, citing diversity jurisdiction under 28 U.S.C. § 1332. Doc. 1 at 2. Section 1332(a) gives federal courts "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States...." When a plaintiff files a civil action in state court over which the federal court would have original jurisdiction based on diversity of citizenship, the defendant may remove the action to federal court, provided that no defendant is a citizen of the State in which such action is brought. See 28 U.S.C. § 1441(a), (b). However, if the federal court determines it lacks subject matter jurisdiction, such as lacking diversity jurisdiction, it must remand the matter to the state court. 28 U.S.C. § 1447(c). The removing party bears the burden of establishing the requirements for federal jurisdiction. Martin v. Franklin Capital Corp. , 251 F.3d 1284, 1290 (10th Cir. 2001), abrogated on other grounds by Dart Cherokee Basin Operating Co. v. Owens , 574 U.S. 81, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).
In this case, the parties do not dispute that they are citizens of different states. See Doc. 1 at 2. Rather, Plaintiffs challenge whether the amount in controversy is met. Doc. 21 at 16. Plaintiffs assert that the Court should dismiss Count II of the Defendant's Counterclaim (seeking declaratory relief regarding UIM/UM limits) because the amount of available UM coverage is only $14,763.37—that is, $25,000 minus the offset from the underlying settlement with the auto repair shop. Doc. 13 at 25. Plaintiffs argue that Defendant only brought Count II of the Counterclaim to justify removing the case to federal court when the amount in controversy is clearly less than $75,000. Id. Although Plaintiffs' argument focuses on the Defendant's Counterclaim, the Court must begin with whether it has subject matter jurisdiction over Plaintiffs' Complaint.3
To determine the amount in controversy, the court should first look to the complaint. If the plaintiff's complaint, filed in state court, demands monetary relief of a stated sum, that sum, if...
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