Garza v. Glen Falls Ins. Co.

• Decision Date: 17 December 1986
• Docket Number: No. 16633,16633
• Citation: 731 P.2d 363,1986 NMSC 94,105 N.M. 220
• Parties: Homer GARZA, d/b/a Sunshine Dairy, for himself as insured, and in behalf of Camilla, a/k/a Kammy Villalobos, Claimant and also insured, Plaintiffs-Appellees, v. GLEN FALLS INSURANCE COMPANY and Continental Insurance Companies, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 363

731 P.2d 363

105 N.M. 220

Homer GARZA, d/b/a Sunshine Dairy, for himself as insured and in behalf of Camilla, a/k/a Kammy Villalobos Claimant and also insured Plaintiffs-Appellees, v. GLEN FALLS INSURANCE COMPANY and Continental Insurance Companies, Defendants-Appellants.

No. 16633.

Supreme Court of New Mexico.

Dec. 17, 1986.

Rehearing Denied Jan. 30, 1987.

[105 NM 220] Farlow, Simone, Roberts & Weiss, LeRoi Farlow, Albuquerque, for defendants-appellants.

Edward E. Triviz, Las Cruces, for plaintiffs-appellees.

OPINION

FEDERICI, Justice.

This litigation arose out of a one vehicle automobile accident which occurred on May 18, 1985, in Dona Ana County, New Mexico. At that time, Adriel Garza, the son of plaintiff-appellee Homer Garza (plaintiff), was driving a vehicle owned by plaintiff and insured by defendants. Plaintiff-appellee Camilla Villalobos, also known as Kammy Villalobos (Villalobos), was a passenger in the vehicle driven by Adriel Garza. Both plaintiff and defendants filed motions for summary judgment. The court granted plaintiff's motion for partial summary judgment and denied defendants' motion for summary judgment. This Court granted an interlocutory appeal. We reverse.

The accident occurred while Adriel Garza was travelling at excessive speeds and was being chased by the New Mexico State Police. After being chased by the police vehicles for several miles, the motor vehicle driven by Adriel Garza ran off the road and turned over. As a result of the accident, the passenger, Villalobos, allegedly sustained personal injuries.

Villalobos has not instigated litigation against either Adriel Garza or plaintiff to recover damages for personal injuries sustained in the accident. The caption of the complaint reads: "HOMER GARZA d/b/a SUNSHINE DAIRY, Vado, New Mexico, for Himself, as Insured, and in Behalf of Camilla (a/k/a Kammy) Villalobos, Claimant and Also Insured." There are no allegations in the complaint to support plaintiff's purported representation in behalf of Villalobos.

Plaintiff's first amended complaint asked for relief based upon several causes of action. Plaintiff asked for punitive damages against Glen Falls Insurance Company and Continental Insurance Companies (defendants) for bad faith denial of insurance coverage to plaintiff and Adriel Garza. Plaintiff also asked for compensatory damages for breach of contract and breach of fiduciary obligations. Plaintiff's motion for partial summary judgment asked the trial court to determine that he was entitled to insurance coverage under defendants' policies at the time of the accident.

Defendants insured plaintiff under Policy No. RFD 49670. In connection with this particular automobile policy, defendants, through a "drivers exclusion endorsement," excluded all coverage of plaintiff's insured automobiles while they were being driven or operated by Adriel Garza, effective December 1, 1984. The drivers exclusion endorsement to the policy was signed by plaintiff and reads:

In consideration of the premium for which the policy is written, it is agreed that the company shall not be liable and no liability or obligation of any kind shall be attached to the company for losses or damages sustained after the effective date of this endorsement while any motor vehicle insured hereunder is driven or operated by ADRIEL GARZA.

The drivers exclusion endorsement was requested by defendants and was attached to the policy because Adriel Garza, plaintiff's son, had on previous occasions been involved in accidents, been convicted of driving while intoxicated, been cited for speeding, and had his driver's license revoked. Plaintiff, in his deposition, stated that he understood that there would be no insurance for him or for his son, Adriel, at any time that Adriel was driving one of plaintiff's cars after this drivers exclusion endorsement became effective. He acknowledged that he was told by defendants' insurance agent that his son was being excluded from the policies for the reasons mentioned above. Plaintiff knew and understood that Adriel was not to drive plaintiff's motor vehicles after the drivers exclusion endorsement became effective, and that if he did, there would be no coverage under the policy while Adriel was driving. Defendants denied insurance coverage for the accident of May 18, 1985, to plaintiff and Adriel Garza because of the drivers exclusion endorsement.

Defendants moved for summary judgment on the following grounds: (1) Plaintiff signed the drivers exclusion endorsement, set forth above, which was attached to the policy in question and excluded coverage while the motor vehicle was driven by Adriel Garza; and (2) Plaintiff was aware of the meaning of the drivers exclusion endorsement and knew there would be no coverage under the policy in question at any time any motor vehicle insured under the policy was driven by Adriel Garza.

The trial judge entered an order denying defendants' motion for summary judgment and granting plaintiff's motion for partial summary judgment. Relying on State Farm Automobile Insurance Co. v. Kiehne, 97 N.M. 470, 641 P.2d 501 (1982), the judge reasoned that uninsured motorist coverage can be bargained away since it is not mandatory coverage, whereas liability insurance coverage cannot be bargained away since it is statutorily mandated. We disagree.

The single issue presented by both motions for summary judgment concerns the validity of the drivers exclusion endorsement and whether that exclusion governs not only the driver of the vehicle, the insured's son, but also extends to liability incurred by others because of the conduct of the son.

This Court has held that a drivers exclusion endorsement is valid and enforceable insofar as it concerns uninsured motorist coverage. Kiehne. However, this is a case of first impression because liability coverage of a named insured is involved.

The drivers exclusion endorsement provides that the company shall...