Arias v. Phx. Indem. Ins. Co.
| Decision Date | 05 December 2013 |
| Docket Number | Docket No. 31,571 |
| Citation | 495 P.3d 1136 |
| Parties | Carmen ARIAS, Plaintiff/Counter-Defendant/Appellee, v. PHOENIX INDEMNITY INSURANCE COMPANY, Defendant/Counter-Plaintiff/Appellant. |
| Court | Court of Appeals of New Mexico |
Carter & Valle Law Firm, P.C., Richard J. Valle, Kathryn L. Eaton, Albuquerque, NM, for Appellee
The Law Offices of Bruce S. McDonald, Bruce S. McDonald, Daniel P. Ulibarri, Laura K. Vega, Albuquerque, NM, for Appellant
{1} "The term ‘stacking’ refers to an insured's attempt to recover damages in aggregate under ... one policy covering more than one vehicle." State Farm Mut. Auto. Ins. Co. v. Safeco Ins. Co. , 2013-NMSC-006, ¶ 8, 298 P.3d 452 (internal quotation marks and citation omitted). Plaintiff attempts to impose intra-policy stacking of uninsured/underinsured motorist (UM/UIM) coverage into an insurance policy we previously reformed, owing to the imperfect handling of her rejection of UM/UIM coverage. See Arias v. Phoenix Indem. Ins. Co. , 2009-NMCA-100, 147 N.M. 14, 216 P.3d 264. In Arias , we held that her rejection of UM/UIM coverage was legally deficient and required judicial intervention to read the coverage into the policy. Id. ¶ 18. On similar grounds, we hold that she is also entitled to have her coverage stacked under our Supreme Court's opinion in Montano v. Allstate Indem. Co. , 2004-NMSC-020, 135 N.M. 681, 92 P.3d 1255. We affirm the district court and remand.
{2} Carmen Arias (Plaintiff), having settled for policy limits with the insurance company of a tortfeasor whose vehicle struck hers, attempted to pursue UM/UIM benefits under an insurance policy that she had purchased from Phoenix Indemnity Insurance Company (Defendant). This policy covered her liability up to the statutory minimum and covered two vehicles but, at the time of its purchase, she rejected UM/UIM coverage. In a previous appeal in this case, we held that, because her rejection of UM/UIM coverage was legally invalid, she was entitled to UM/UIM coverage as a matter of law. See Arias , 2009-NMCA-100, ¶ 12, 147 N.M. 14, 216 P.3d 264. The issue of whether the coverage "stacked" because two vehicles were covered under the policy had not been addressed by the district court, and we remanded with instructions to consider and rule on the stacking issue. Id. ¶ 19.
{3} On remand, the district court resolved the stacking issue on summary judgment. Plaintiff's judicially-minted UM/UIM coverage would apply to her damages, and the coverage would be stacked, reflecting the two vehicles covered under the policy. In doing so, the district court first determined that reasonable expectations of an insured in the terms of a policy are irrelevant once it was determined by this Court that Defendant had failed to obtain a valid rejection of UM/UIM coverage from Plaintiff. Second, interpreting the arc of New Mexico's common law holdings that read UM/UIM coverage into a policy in amounts equal to the full extent of its liability limits, the district court determined that, in the absence of any valid rejection of UM/UIM coverage in a multiple-vehicle policy, the full coverage due is properly established by multiplying the available liability limits of the policy by the number of vehicles insured, rather than the number of premiums paid by an insured. The district court stated that UM/UIM coverage had been read into the policy as a result of Defendant entirely failing to obtain a valid rejection of coverage, and the reformation of the policy should include reading in stacking as well. From this judgment, Defendant now appeals. We agree with the district court.
{4} The facts of this case are not in issue and discussed fully in our previous opinion. The question is solely one involving interpretations of law, which we review de novo. Jordan v. Allstate Ins. Co. , 2010-NMSC-051, ¶ 14, 149 N.M. 162, 245 P.3d 1214 ; City of Albuquerque v. BPLW Architects & Eng'rs, Inc. , 2009-NMCA-081, ¶ 7, 146 N.M. 717, 213 P.3d 1146 ().
{5} In Romero v. Dairyland Insurance Co. , our Supreme Court observed that unless rejection is accomplished in a manner consistent with the requirements imposed by the statute and regulations, UM/UIM coverage will be read into the policy "regardless of the intent of the parties." 1990-NMSC-111, ¶ 1, 111 N.M. 154, 803 P.2d 243. Our Supreme Court further stated that the UM/UIM statute "embodies a public policy of New Mexico to make uninsured motorist coverage a part of every automobile liability insurance policy issued in this state," and "[t]he statute was intended to expand insurance coverage and to protect individual members of the public against the hazard of culpable uninsured motorists." Id. ¶ 6. Finally, our Supreme Court stated that the statute should be liberally interpreted in order to implement its remedial purpose, and the language in the statute that provides for an exception to UM/UIM coverage should be construed strictly to protect the insured. Id. ; Farmers Ins. Co. of Ariz. v. Chen , 2010-NMCA-031, ¶ 25, 148 N.M. 151, 231 P.3d 607.
{6} Our courts have a continuing interest in implementing the legislative goal to direct New Mexicans to insure for damages caused by uninsured and underinsured motorists. In Arias , we followed Romero to implement the strong expansive legislative and public policy in New Mexico favoring insurance coverage to protect members of the public against losses caused by uninsured and underinsured motorists. Arias , 2009-NMCA-100, ¶ 7, 147 N.M. 14, 216 P.3d 264. We recognize that the Legislature enacted NMSA 1978, Section 66-5-301(A) and (C) (1983) to provide that every insurance policy in the state is to include UM coverage and, if the insured does not want the coverage, it should be specifically rejected in writing. Marckstadt v. Lockheed Martin Corp. , 2010-NMSC-001, ¶¶ 16-17, 25-26, 147 N.M. 678, 228 P.3d 462 (). Under our law, the insurer offers the maximum amount of UM/UIM coverage to the insured based on the liability limits of the policy and, in no event, less than the statutory minimum. Progressive Nw. Ins. Co. v. Weed Warrior Servs. , 2010-NMSC-050, ¶ 12, 149 N.M. 157, 245 P.3d 1209 ; Romero v. Progressive Nw. Ins. Co. , 2010-NMCA-024, ¶ 16, 148 N.M. 97, 230 P.3d 844. Such coverage may only be foregone by an insured's express and legally satisfactory rejection of it.
{7} The history of our case law considering the offer and rejection of UM/UIM coverage is extensive. See Weed Warrior , 2010-NMSC-050, ¶ 4, 149 N.M. 157, 245 P.3d 1209 (). The default position of our courts is that any rejection of coverage that is found to be invalid under Section 66-5-301 results in courts reforming the insurance policy in question by reading into it UM/UIM coverage as if it was fully provided at the level of policy limits to the insured in the first instance. Romero , 2010-NMCA-024, ¶ 16, 148 N.M. 97, 230 P.3d 844 ; see Jordan , 2010-NMSC-051, ¶ 2, 149 N.M. 162, 245 P.3d 1214. "Where a valid rejection of UM/UIM coverage has not been obtained by the insurer, New Mexico law requires UM/UIM coverage to be read into the policy at the liability limits, regardless of the intent of the parties or the fact that a premium has not been paid." Chen , 2010-NMCA-031, ¶ 27, 148 N.M. 151, 231 P.3d 607 ().
{8} We have already reformed Plaintiff's insurance contract to include UM/UIM coverage to the liability limits of her policy because Section 66-5-301 and 13.12.3.9 NMAC (5/14/2004) provide that automobile liability policies shall contain UM/UIM coverage in the absence of an appropriate rejection. Arias , 2009-NMCA-100, ¶ 15, 147 N.M. 14, 216 P.3d 264. Now that the district court on remand has separately considered whether Plaintiff's two insured vehicles’ coverage should be stacked, we review this remaining question.
{9} There is no question that, in the absence of a valid rejection of UM/UIM coverage, such coverage will be read into the insured's coverage as if there was no rejection at all. That is the law of the case here.
Id. ¶ 12. The invalid rejection of partial UM/UIM stacking, or the ambiguous subjecting of a policy to a limitation on stacking, was similarly held in Montano to be no rejection at all, resulting in stacking to the policy limits for each covered vehicle being read into the policy. The question here is simply whether a complete reading of UM/UIM coverage where none had been before also requires the reading in of stacking of coverage if multiple vehicles are insured.
{10} Plaintiff insured two vehicles under her policy. By our earlier decision in Arias , she is entitled to UM/UIM coverage to the limits of her liability under the policy irrespective of her intention to reject coverage or whether separate premiums were paid. Chen , 2010-NMCA-031, ¶ 27, 148 N.M. 151, 231 P.3d 607. To begin answering the question of whether stacking applies here, we will first assess the circumstances under which common law imposition of stacking upon insurance policies has occurred.
{11} Montano holds that insurers must obtain written rejections of stacking to avoid liability. 2004-NMSC-020, ¶ 1, 135 N.M. 681, 92 P.3d 1255. UM/UIM coverage as required by statute is a mandatory component of an insurance policy. In Montano , the policy provided for some, but not all, covered vehicles’ coverage to be stacked. As a result, our Supreme Court's pronouncements in Montano treated the stacking issue as a ...
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