Bhasker v. Fin. Indem. Co.

• Decision Date: 23 March 2022
• Docket Number: 1:17-cv-00260-KWR-JHR
• Court: U.S. District Court — District of New Mexico
• Parties: HELEN BHASKER, on behalf of herself and all others similarly situated, Plaintiff, v. FINANCIAL INDEMNITY COMPANY, Defendant.

HELEN BHASKER, on behalf of herself and all others similarly situated, Plaintiff,
v.
FINANCIAL INDEMNITY COMPANY, Defendant.

No. 1:17-cv-00260-KWR-JHR

United States District Court, D. New Mexico

March 23, 2022

MEMORANDUM OPINION AND ORDER

KEA W. RIGGS, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court upon Plaintiff's Motion for Class Certification (Doc. 152). Having reviewed the parties' pleadings and the applicable law, the Court finds that Plaintiff's Motion for Class Certification is NOT WELL-TAKEN in part and, therefore, is DENIED.

This putative class action arises out of a dispute over “underinsured motorist coverage.” In New Mexico, underinsured motorist coverage generally consists of the difference between an insured's uninsured motorist coverage limit and a tortfeasor's liability coverage. NMSA § 66-5-301 (“‘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.”).

Plaintiff argues that pursuant to the statutory offset under NMSA § 66-5-301, underinsured motorist coverage at minimum limits generally does not exist. If a tortfeasor's liability limit is $25, 000 and an insured's uninsured motorist coverage limit is $25, 000, the insured will rarely

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access the underinsured motorist coverage portion of his or her motorist insurance. Plaintiff alleges that Defendant sold her underinsured motorist coverage but did not disclose that it had limited value. Defendant asserts there are instances where underinsured motorist coverage at minimum limits has value.

Plaintiff moves to certify this class action. Defendant argues that certification is inappropriate. It also argues that certification under Fed.R.Civ.P. 23(b)(3) is inappropriate because individual issues predominate over common ones.

Plaintiff has satisfied the majority of the requirements under Fed.R.Civ.P. 23(a) and (b)(3) for class certification. However, because of a potential conflict of interest, the Court cannot find at this time that representation is adequate under Fed.R.Civ.P. 23(a)(4). Plaintiff also did not move to certify class counsel, which would also prevent the court from entering an order certifying the class. See Fed. R. Civ. P. 23(g) (“Unless a statute provides otherwise, a court that certifies a class must appoint class counsel.”) (emphasis added); Fed.R.Civ.P. 23(b)(1)(B) (“An order that certifies a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel under Rule 23(g).”).

BACKGROUND

On June 24, 2015, Plaintiff was injured in an automobile collision with another driver. Doc. 12 at ¶¶ 11-17. The tortfeasor carried minimum limits of liability coverage, that is, $25, 000 per person and $50, 000 per accident. Plaintiff received the full extent of liability coverage carried by the tortfeasor, but that coverage was insufficient to fully compensate Plaintiff for her damages. Doc. 12 at ¶ 18. When Plaintiff requested that Defendant provide her with the UIM benefits for which she paid a premium, Defendant denied her claim. Id. at ¶ 44

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At the time of the collision Plaintiff was insured by Defendant. She had purchased uninsured and underinsured motorist coverage in the amount of $25, 000 per person and $50, 000 per occurrence. According to Plaintiff, the insurance application and policy issued by Defendant failed to advise her that UIM coverage is “illusory” in the event of an accident involving a minimally insured driver. Id., ¶¶ 32-33, 47. Plaintiff alleges that “Defendant misrepresented to Plaintiff that she would benefit from underinsured coverage when they knew, or should have known, that the coverage was meaningless. [Defendant's] misrepresentations or lack of representations were made, knowingly and willfully, with the intent to deceive and induce Plaintiff in purchasing underinsured coverage.” Id. at ¶ 29. Plaintiff alleges that the “policy failed to state that underinsured coverage is illusory in the event of a covered occurrence, as in this case, involving a minimally insured driver.” Id. at ¶ 32. The policy documents also “materially misrepresented underinsured coverage and did not contain clear, unambiguous language regarding the effects of New Mexico's underinsured coverage offset laws.” Doc. 12 at ¶ 39. “Defendant's [policy] did not alert Plaintiff, nor made clear to the ordinary and similarly situated insured, the fact that the New Mexico offset law drastically and materially diminished payment of benefits arising from a covered occurrence under the policy. Specifically, there is virtually no possible underinsured minimum limits claim available to the Plaintiff and other similarly situated members of the class.” Id. at ¶ 43.

Plaintiff subsequently filed this putative class action, asserting the following claims:

Count I: Negligence

Count II: Violations of the Unfair Trade Practices Act (N.M.S.A.1978, Section 57-12-2) (“UPA”)

Count III: Violations of the Unfair Insurance Practices Act (N.M.S.A.1978, §§ 59A-16-1 et seq.) (“UIPA”);

Count IV: Breach of Contract and claim for Motorist Coverage Count V: Breach of Contract and Covenant of Good Faith and Fair Dealing;

Count VI: Injunctive Relief;

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Count VII: Declaratory Judgment; and

Count VIII: Punitive Damages.

Doc. 12.

In Crutcher v. Liberty Mut. Ins. Co., et al., Case No. 18-cv-00412-JCH-LF (D.N.M.), United States District Judge Judith C. Herrera certified the following questions to the New Mexico Supreme Court:

Under N.M. Stat. Ann. § 66-5-301, is underinsured motorist coverage on a policy that offers only minimum UM/UIM limits of $25, 000 per person/$50, 000 per accident illusory for an insured who sustains more than $25, 000 in damages caused by a minimally insured tortfeasor because of the offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, and, if so, may insurers charge a premium for that non-accessible underinsured motorist coverage?

Crutcher, 2019 WL 12661166, at *4. This matter was stayed pending the New Mexico Supreme Court's answer. Doc. 140.

The New Mexico Supreme Court answered the question, concluding that (1) underinsured motorist coverage at the minimum limits was illusory in the sense that it was misleading to the average insured, but (2) insurers were permitted by statute to charge premiums for minimum limit underinsured motorist coverage as long as the limitations of the coverage were disclosed to insureds in the form of an “exclusion.” Crutcher v. Liberty Mut. Ins. Co., 2022-NMSC-001, ¶ 33. “Without this disclosure, an insurer may not charge a premium for minimum underinsurance coverage.” Id. at ¶2. The Crutcher court concluded that “this type of policy is illusory in that it may mislead minimum UM/UIM policy holders to believe that they will receive underinsured motorist benefits, when in reality they may never receive such a benefit.” Id. at ¶ 33. The Court subsequently denied Defendant's Motion for Summary Judgment.

Plaintiff seeks to certify a class that consists of the following:

All persons (and their heirs, executors, administrators, successors, and assigns), from whom Defendant collected a premium for underinsured motorist coverage after August 14, 1985 to present, on a policy that was issued or renewed in New

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Mexico by Defendants and that purported to provide underinsured motorist coverage, but which effectively provides no underinsured motorist coverage (“UIM”) and/or misleading UIM coverage, because of the statutory offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, 704 P.2d 1092 (1985).

Doc. 152 at 16. Plaintiff also seeks to certify the following subclass:

All Class Members (and their heirs, executors, administrators, successors, and assigns) where an underinsured motorist coverage on a policy that was issued or renewed in New Mexico by Defendant and that purported to provide an amount of UM/UIM limits per occurrence, but which in fact provides none or a misleading amount of underinsured motorists coverage, because of the statutory offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, 704 P.2d 1092 (1985), and who sustained damages in excess of an insured tortfeasor's policy limits, received the extent of all bodily injury liability limits available, made a claim with Defendants for underinsured motorist, and who received no UIMBI, or reduced UIMBI, benefits because of application of the Schmick offset.

Id.

LEGAL STANDARD

To certify a class under Fed.R.Civ.P. 23, Plaintiff bears the burden of showing that “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims and defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a). Plaintiff must also show that the action is maintainable under Fed.R.Civ.P. 23(b)(1) -(3).

The Court must engage in a “rigorous analysis of whether the threshold requirements of Rule 23(a) are satisfied.” Shook v. El Paso County, 3865 F.3d 963, 968 (10th Cir. 2004); Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1218 (10th Cir. 2013). This is not a pleading standard, and Plaintiff must “affirmatively demonstrate” her compliance with the rules. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S.Ct. 2541, 2551 (2011); XTO Energy, Inc., 725 F.3d at 1218 (plaintiff has “strict burden of proof”). “Whether a case should be allowed to proceed as a class action involves...