Bhasker v. Kemper Cas. Ins. Co.

• Decision Date: 10 January 2018
• Docket Number: No. CIV 17–0260 JB/JHR,CIV 17–0260 JB/JHR
• Citation: 284 F.Supp.3d 1191
• 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

284 F.Supp.3d 1191

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 January 10, 2018

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 JUDGE

THIS MATTER comes before the Court on the Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15) ("MTD"). The Court held a hearing on July 24, 2017. The primary issues are: (i) whether New Mexico's filed rate doctrine bars Plaintiff Helen Bhasker's negligence claims, claims under New Mexico's Unfair Practices Act, N.M. Stat. Ann. § 57–12–1 ("UPA") violations, claims under New Mexico's Unfair Insurance Practices Act, N.M. Stat. Ann. § 59A–16–1 ("UIPA"), and claims of breach of contract alleging that Financial Indemnity Company ("Financial Indemnity") sold her illusory underinsured motorist insurance ("UIM"); (ii) whether, if New Mexico applies the filed rate doctrine to consumer-protection claims against insurers, Bhasker can seek premium-based damages, which depends on whether Bhasker's UIM coverage was illusory; (iii) whether, if the UIM coverage is not illusory, Bhasker's claims fail as a matter of law, because the UIM coverage offers benefits in some situations; and (iv) whether the voluntary payment doctrine bars Bhasker's claims. The Court concludes 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 doctrine to claims against insurers alleging unfair or deceptive business practices; (ii) even if New Mexico applied the filed rate doctrine to those claims, Bhasker and the proposed class could still seek premium-based damages, because the Supreme Court of New Mexico would determine that the UIM coverage was illusory in light of little coverage it provides; (iii) even if the UIM coverage is not illusory, Bhasker's claims may proceed, because they do not require that the UIM coverage be illusory; and (iv) the voluntary payment doctrine does not bar Bhasker's claims, because she alleges that she did not know all the material facts. Accordingly, the Court denies the MTD.

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 per occurrence, per vehicle. See Complaint ¶¶ 42–43, at 7 (citing Coverage for 1995 Lexus LS 500 4D at 1 (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 (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 2010–12–14, 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"). 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. One week later, Financial Indemnity filed a Motion to Dismiss. See Defendant Financial Indemnity Company's Motion to Dismiss and Memorandum of Law in Support, filed March 2, 2017 (Doc. 4).¹

1. The Complaint.

A few weeks later, Bhasker filed her Complaint on March 23, 2017. In her Complaint, Bhasker argues that Financial Indemnity² "failed to act honestly and in good faith when it solicited and sold superfluous and illusory minimal limits underinsured motorist coverage to their insureds (in whole or in part)" in violation of New Mexico law, "and/or they denied claims for the benefits of that coverage." Complaint ¶ 1, at 1. Bhasker contends that, "[b]asically, there is no such thing as 'minimum limits underinsured motorist coverage.' " Complaint ¶ 1, at 1. Bhasker asserts that she "brings this action on her own behalf, and on behalf of the many insured around the state who have been deceived by [Financial Indemnity's] practices." Complaint ¶ 4, at 2. Bhasker contends that, before the accident, she had "properly paid a premium for automobile coverage under the Financial Indemnity Company auto insurance policy," and, therefore, "had a reasonable expectation" that she carried underinsured motorist coverage for "$25,000.00 each person and $50,000.00 each accident." Complaint ¶ 19, at 3.

Next, Bhasker asserts that the Supreme Court of New Mexico "established that underinsured coverage is superfluous when the tortfeasor and the injured driver both carry the statutory minimum of liability and underinsured coverage." Complaint ¶ 23, at 4 (citing Progressive Northwestern Ins. Co. v. Weed Warrior, 2010-NMSC-050, ¶ 10, 149 N.M. 157, 245 P.3d 1209, 1213 (" Weed Warrior").

Bhasker then asserts that Financial Indemnity's insurance agents told her that she "must be insured for the state mandated minimum automobile bodily injury insurance coverage of $25,000.00 per person and $50,000.00 per accident." Complaint ¶ 26, at 4. Bhasker also avers that Financial Indemnity used an "incorrect and inappropriate form from another state," which "included ambiguous language that Plaintiff could purchase underinsured coverage in excess of her selected liability coverage limits." Complaint ¶ 27, at 4 (citing Policy Application at 1–4).

Bhasker alleges that Financial Indemnity "misrepresented to [her] that she would benefit from underinsured coverage when they knew, or should have known, that the coverage was meaningless," and that Financial Indemnity made these misrepresentations "knowingly and willfully, with the intent to deceive and induce the Plaintiff in purchasing underinsured coverage." Complaint ¶ 29, at 5.

Bhasker contends that Financial Indemnity breached its duty to "fully inform Plaintiff what the monthly premiums would be for the next available tier of coverage." Complaint ¶ 33, at 5. Bhasker states that she paid a $80.00 premium for bodily injury coverage and $54.00 for uninsured/underinsured ("UM/UIM") coverage...