Bhasker v. Kemper Cas. Ins. Co.

• Decision Date: 07 February 2019
• Docket Number: No. CIV 17-0260 JB\JHR,CIV 17-0260 JB\JHR
• Citation: 361 F.Supp.3d 1045
• Parties: Helen BHASKER, Plaintiff, v. KEMPER CASUALTY INSURANCE COMPANY; Unitrin Specialty Financial Indemnity Company; Financial Indemnity Company; Elite Financial Insurance and Noelia Luna Sucet, Defendants.
• Court: U.S. District Court — District of New Mexico

361 F.Supp.3d 1045

Helen BHASKER, Plaintiff,

v.KEMPER CASUALTY INSURANCE COMPANY; Unitrin Specialty Financial Indemnity Company; Financial Indemnity Company; Elite Financial Insurance and Noelia Luna Sucet, Defendants.

No. CIV 17-0260 JB\JHR

United States District Court, D. New Mexico.

Filed February 7, 2019

William Ferguson, Adrian O. Vega, Kedar Bhasker, Will Ferguson & Associates, Albuquerque, New Mexico, Attorneys for the Plaintiff

Kerri Lee Allensworth, Alicia M. Santos, O'Brien & Padilla, PC, Albuquerque New Mexico and Mark L. Hanover, Dentons, Chicago, Illinois, Attorneys for the Defendant

MEMORANDUM OPINION AND ORDER

James O. Browning, UNITED STATES DISTRICT JUDGETHIS MATTER comes before the Court on the Defendant's Motion for Judgment on the Pleadings and Memorandum of Law in Support, filed April 4, 2018 (Doc. 58)("MJP"). The Court held a hearing on August 10, 2018. The primary issues are: (i) whether Defendant Financial Indemnity Company is entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits underinsured motorist ("UIM") coverage;¹ and (ii) whether, as a matter of law, Financial Indemnity can be liable to Plaintiff Helen Bhasker for extracontractual or punitive damages. The Court concludes that: (i) Financial Indemnity is not entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits UIM coverage, because Bhasker has alleged that Financial Indemnity's business practices misled and deceived not only herself but also proposed class members who purchased greater-than-minimum-limits UIM coverage; and (ii) Financial Indemnity can be liable to Bhasker for extracontractual and punitive damages, at this stage in the proceedings, because Bhasker has alleged that Financial Indemnity's decision to sell illusory UIM coverage was willful or reckless. Although the Court will not dismiss Bhasker's claims on behalf of proposed class members who purchased greater-than-minimum-limits UIM coverage, the Court predicts that the Supreme Court of New Mexico would conclude that higher-than-minimum limits UIM coverage has value, because New Mexico's statutory offset provision is in accord with New Mexico public policy. The Court therefore permits Bhasker's claims on behalf of proposed class members to proceed on the theory that Financial Indemnity misled her and a class of insureds who, like Bhasker, purchased UIM coverage believing that they would receive the full UIM coverage reflected on their declarations pages, whether minimum limits or some greater figure. Accordingly, the Court denies the MJP.

FACTUAL BACKGROUND

Bhasker contends that, "[b]ased on the information provided by the Defendant," she agreed to "pay a six-month premium for the State of New Mexico mandated minimum automobile bodily injury and uninsured/underinsured motorist coverage." First Amended Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties ¶ 30, at 5, filed March 23, 2017 (Doc. 12)("Complaint"). According to Bhasker, her insurance policy features: (i) liability coverage on one vehicle for $25,000.00 per person and $50,000.00 per accident, per vehicle; and (ii) underinsured coverage on one vehicle for $25,000.00 per person and $50,000.00 per occurrence, per vehicle. See Complaint ¶¶ 42-43, at 7 (citing Coverage for 1995 Lexus LS 500 4D at 1 (dated May 14, 2015), filed March 23, 2017 (Doc. 12-2) ). Bhasker asserts that Financial Indemnity did not "fully inform" her that "a purchase of 25/50 underinsured coverage, when triggered by a crash with a tortfeasor who has 25/50 bodily injury liability limits, will result in a payment of premium for which no payment of benefits will occur ...." Complaint ¶ 48, at 8.

Bhasker avers that, on June 24, 2015, she was driving eastbound on I-40 in Albuquerque, New Mexico, when another driver, Stephanie Martinez, "failed to stop for the traffic in front of her vehicle" and struck Bhasker's car in the rear, causing "serious bodily injuries and other damages." Complaint ¶¶ 12-14, at 2-3. Bhasker asserts that Martinez "was an underinsured motorist at the time of the collision" as Bhasker's insurance policy and New Mexico law define the term. Complaint ¶ 17, at 3. Bhasker contends that she "received the full extent of liability coverage carried by Ms. Martinez," which was $25,000.00. Complaint ¶ 18, at 3. Bhasker asserts that, after the accident, Financial Indemnity provided a certified copy of a document summarizing her policy. See Complaint ¶ 38, at 6 (citing New Mexico Personal Auto Application at 1-4 (dated July 14, 2011), filed March 23, 2017 (Doc. 12-1)("Policy Application") ). Bhasker contends that the "certified copy of the [Policy Application] materially misrepresented the terms of [its] underinsured [motorist] coverage and did not contain clear, unambiguous language regarding the effects of New Mexico's underinsured coverage offset laws." Complaint ¶ 39, at 6. Furthermore, Bhasker contends that the Policy Application's language is "deceptive and clearly ambiguous in that it states that the applicant may purchase underinsured coverage in excess of the bodily injury coverage limits, which is the opposite of the legislative intent" of N.M. Stat. Ann. § 66-5-301 and New Mexico case law. Complaint ¶ 40, at 6. Bhasker contends that Financial Indemnity's Policy Application

did not alert [her], nor make 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.

Complaint ¶ 43, at 7. Bhasker avers that, when she, "through counsel, demanded Defendant provide [her] with underinsured benefits that Defendant solicited and for which the Plaintiff paid a premium," Financial Indemnity denied her claim for underinsured benefits. Complaint ¶ 44, at 7. Bhasker further contends that Financial Indemnity has "written direct premium automobile insurance to thousands of New Mexico residents and, from 2010-2014, wrote direct premiums" around the United States totaling $1.09 billion. Complaint ¶ 22, at 4.

PROCEDURAL BACKGROUND

Bhasker originally brought this case in the Second Judicial District Court, County of Bernalillo, State of New Mexico. See Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties, filed in the Second Judicial District Court, County of Bernalillo, State of New Mexico (filed in state court on December 30, 2016), filed in federal court February 24, 2016 (Doc. 1-1)("State Complaint").² Financial Indemnity removed the action to federal court on February 24, 2017. See Notice of Removal, filed February 24, 2017 (Doc. 1). Financial Indemnity removed the case pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"), because "this is a putative class action with more than 100 putative class members that seeks to recover more than $5,000,000.00." Notice of Removal at 1.

Financial Indemnity filed a Motion to Dismiss. See Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15)("MTD"). In the MTD, Financial Indemnity argues that the filed rate and voluntary payments doctrines bar Bhasker's claims. See MTD at 1. Financial Indemnity also asserts that Bhasker's illusory coverage argument is "simply wrong" as a matter of law, "because minimum limits underinsured motorists coverage does provide tangible benefits to those who choose it." MTD at 1. The Court held a hearing on July 24, 2017. See Hearing Transcript (taken July 24, 2017) (Doc. 34).

The Court filed a Memorandum Opinion and Order ("MOO") denying Financial Indemnity's requests in the MTD. See Memorandum Opinion and Order, filed January 10, 2018 (Doc. 48); Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d 1191, 1191 (D.N.M. 2018) (Browning, J.). Specifically, the Court concluded that: (i) the filed rate doctrine does not bar Bhasker's claims, because the Supreme Court of New Mexico would not apply the filed rate doctrine³ to bar claims against insurers for unfair or deceptive business practices; (ii) Bhasker's claims are well-pled even if the UIM insurance is not illusory; and (iii) the voluntary payment doctrine⁴ does not bar Bhasker's claims, because she alleges that she did not know all the material facts. See MOO at 56; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1226.

1. The MJP.

In the MJP, Financial Indemnity, pursuant to rule 12(c) of the Federal Rules of Civil Procedure, moves for the entry of an order granting Financial Indemnity partial judgment on the pleadings as to two of Bhasker's claims: "1. Defendant is entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits underinsured motorist ... coverage; and 2. Defendant cannot, as a matter of law, be liable to Plaintiff for extra-contractual or punitive damages." MJP at 1. Financial Indemnity asserts that, although the Court, in its MOO, denied Financial Indemnity's MTD, the MOO reflects that all Bhasker's claims "are premised on the theory that the minimum limits UIM coverage at issue in this case is ‘illusory.’ " MJP at 1. Financial Indemnity further asserts that the Court should hold that Bhasker is not entitled, as a matter of law, to the extracontractual or putative damages that she seeks, because Financial Indemnity "certainly had a reasonable basis for enforcing the offset as it did, and for believing its minimum limits UIM coverage was neither illusory nor otherwise unlawful." MJP at 2.

Financial Indemnity argues that "[t]his Court's Order indicates clearly that the illusory coverage claim raised by this case applies to minimum limits UIM coverage, not where any level of UIM limits above the minimum is at issue." MJP at 4. Financial Indemnity cites language from...