Bird v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 31 May 2007
• Docket Number: No. 26,688.,26,688.
• Parties: Scott and Shana BIRD, Husband and Wife, Plaintiffs-Appellees/Cross-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeals of New Mexico

165 P.3d 343

2007 NMCA 088

Scott and Shana BIRD, Husband and Wife, Plaintiffs-Appellees/Cross-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee.

No. 26,688.

Court of Appeals of New Mexico.

May 31, 2007.

Certiorari Denied, No. 30,485, July 16, 2007.

The Titus & Murphy Law Firm, Victor A. Titus, Farmington, NM, for Appellees/Cross-Appellants.

Guebert, Bruckner & Bootes, P.C., Don Bruckner, Anita X. Tellez, Albuquerque, NM, for Appellant/Cross-Appellee.

OPINION

CASTILLO, Judge.

{1} In this case, we consider the extent of coverage afforded a vehicle covered under the "newly acquired car" provision of an automobile insurance policy. We also address questions concerning double costs, pre-judgment interest, attorney fees, and the rate of post-judgment interest imposed in this case. As to the coverage question, we conclude that under the circumstances of this case, the policy provided additional uninsured motorist (UM) coverage on the newly acquired car and that the coverage could be stacked. Therefore, we affirm on this issue. We further conclude that the trial court did not err in awarding costs; nor did it err in declining to award pre-judgment interest and attorney fees. Finally, we determine that the appropriate rate of post-judgment interest is 8.75%. We thus affirm in part and reverse in part on these issues.

I. BACKGROUND

{2} This case arises from a claim for benefits made by Appellees/Cross-Appellants, Scott and Shana Bird (Parents), after their son, David, was killed in an automobile accident. The material facts are undisputed. The Bird family had four automobile insurance policies with Appellant/Cross-Appellee, State Farm Mutual Automobile Insurance Company (State Farm), at the time of the accident on May 12, 2004. Each policy carried liability and UM coverage of $100,000 per person. Each policy provided thirty-day coverage for a newly acquired car. Prior to April 20, 2004, David drove a Jeep Cherokee (Jeep), which was insured as a named vehicle on one of the four policies. On April 20, 2004, David informed his State Farm agent, Ron Goimarac, that he had purchased a Subaru and that he was trying to sell the Jeep. At that time, the Subaru became the named vehicle on the policy that had originally named the Jeep. Mr. Goimarac informed David that the Jeep would continue to be covered under the terms of the Subaru policy for thirty days but that he would need to obtain a new policy on the Jeep for coverage to continue beyond the thirty-day period. During the thirty-day period, David was riding as a passenger in the Subaru and was killed in an automobile accident.

{3} Parents made a demand for UM coverage on all five cars covered by their State Farm policies. State Farm paid Parents a total of $400,000, consisting of $100,000, based on the per person limit of coverage under the Subaru policy for liability on the driver of the Subaru, and $300,000 in stacked UM coverage under the other three policies. The UM coverage for the Subaru was fully offset by the payment of liability to the coverage limits on the Subaru policy. Therefore, State Farm denied Parents' claim for benefits due under the UM coverage on the Jeep.

{4} Subsequently, Parents filed a petition for declaratory judgment, seeking an additional $100,000, based on the UM coverage on the Jeep. The parties stipulated that Parents' damages exceed $500,000. The parties filed cross-motions for summary judgment. The trial court granted summary judgment in favor of Parents in the amount of $100,000. The court also awarded $613.62 in costs to Parents but denied their motion for attorney fees and pre-judgment interest. In the judgment, the trial court made several findings, including one finding that there was no indication State Farm acted in bad faith or unreasonably in failing to pay the claim.

{5} After the case on appeal was assigned to this Court's general calendar, the trial court entered an order awarding Parents post-judgment interest at 15%, pursuant to NMSA 1978, § 56-8-4 (2004). State Farm filed a motion to include in this appeal the issue regarding the rate of post-judgment interest. This motion was granted. Thus, on appeal, State Farm raises two issues — whether the coverage extended to the Jeep, pursuant to the Subaru policy, created additional UM coverage that could be stacked and whether Parents are entitled to 15% post-judgment interest. Parents cross-appeal the trial court's award of costs and the denial of Parents' motion for attorney fees and pre-judgment interest.

{6} We begin by addressing the coverage extended to the Jeep under the Subaru policy. We then discuss the trial court's rulings regarding attorney fees, pre-judgment interest, and double costs. Finally, we address the trial court's award of post-judgment interest. We detail additional facts, including the pertinent terms of the policy, as we address each argument below.

II. DISCUSSION

A. Extent of Coverage

{7} Summary judgment is proper when the material facts are undisputed and the only remaining issues are questions of law. Rehders v. Allstate Ins. Co., 2006-NMCA-058, ¶ 12, 139 N.M. 536, 135 P.3d 237, cert. dismissed, 2007-NMCERT-007, ___ N.M. ___, 165 P.3d 343. We review the trial court's grant of a summary judgment motion de novo. Id. Insurance contract interpretation also presents a question of law, which we review de novo. See Rummel v. Lexington Ins. Co., 1997-NMSC-041, ¶ 60, 123 N.M. 752, 945 P.2d 970.

{8} When granting Parents' summary judgment motion, the trial court entered judgment in their favor for $100,000. State Farm contends that the judgment should be reversed because Parents are "not entitled to stack based upon the number of vehicles that may be entitled to coverage at a particular time." State Farm does not argue that the policy is unambiguous. Rather, State Farm contends that by "[u]sing the rationale by the Supreme Court in Monta[ñ]o [v. Allstate Indemnity Co., 2004-NMSC-020, 135 N.M. 681, 92 P.3d 1255], the amount of stacked coverage is determined by looking to the contractual expectations of the insured, which [are] tied to the number of policies and number of premiums — not the number of vehicles that may actually be entitled to coverage at a particular time, depending upon when an insured decides to sell one vehicle to obtain another, and holds onto the old vehicle for a short period of time in the process." Montaño is not dispositive in this case because we are not dealing with a limitation-of-stacking clause — the issue in Montaño. See 2004-NMSC-020, ¶¶ 5, 19-21, 135 N.M. 681, 92 P.3d 1255 (holding that when an insurance policy contains an anti-stacking clause, the insurance company must obtain a written rejection of UM coverage for each additional vehicle covered by a policy, in order to clarify the insured's expectations and to make certain that the insured gets only what he or she has paid for). Rather, the issue at hand is whether the coverage that was extended to the Jeep under the newly acquired car provision of the Subaru policy constituted coverage separate and apart from the limits of coverage on the Subaru. If so, then the payment of policy limits on the Subaru would not affect the availability of UM coverage on the Jeep, and this coverage could be stacked, resulting in an additional $100,000 in coverage. To address this issue, we do a traditional contract analysis. See Rummel, 1997-NMSC-041, ¶ 18, 123 N.M. 752, 945 P.2d 970; see also Montaño, 2004-NMSC-020, ¶ 22, 135 N.M. 681, 92 P.3d 1255 (relying on a traditional ambiguity analysis). We apply principles of contract construction while bearing in mind the UM statute. See Rummel, 1997-NMSC-041, ¶ 18, 123 N.M. 752, 945 P.2d 970 ("[A]bsent a statute to the contrary, insurance contracts are construed by the same principles which govern the interpretation of all contracts." (internal quotation marks and citation omitted)).

1. Policy Provisions

{9} We begin with the pertinent policy provisions. The coverage in question is provided pursuant to an automatic insurance clause, which provides coverage for a new vehicle acquired by the insured. See generally 8A Lee R. Russ et al., Couch on Insurance §§ 117:2,:3 (3d ed.2005) (stating that an automatic insurance clause is for the benefit and the convenience of the insured and that this provision should be construed liberally in favor of the insured). The coverage language in this case is found in the definitions section of the policy:

Newly Acquired Car — means a replacement car or an additional car.

Replacement Car — means a car purchased by or leased to you or your spouse to replace your car. This policy will only provide coverage for the replacement car if you or your spouse:

1. tell us about it within 30 days after its delivery to you or your spouse; and

2. pay us any added amount due.

Additional Car — means an added car purchased by or leased to you or your spouse. This policy will only provide coverage for the additional car if:

1. it is a private passenger car and we insure all other private passenger cars; or

2. it is other than a private passenger [car] and we insure all cars owned or leased by you or your spouse on the date of its delivery to you or your spouse.

This policy provides coverage for the additional car only until the earlier of:

1. 12:01 A.M. Standard Time at the address shown on the declarations page on the 31st day after the delivery of the car to you or your spouse; or

2. the effective date and time of a policy issued by us or any other company that describes the car on its declarations page.

You or your spouse may apply for a policy that will provide coverage beyond the 30th day for the additional car. Such policy will be issued only if both you and the vehicle are eligible for coverage at the time of application.

{10} The language quoted above states that coverage will be provided for a newly acquired car by this policy under certain conditions....