Guaranty Nat. Ins. Co. v. C de Baca

• Decision Date: 17 October 1995
• Docket Number: No. 16301,16301
• Citation: 907 P.2d 210,120 N.M. 806,1995 NMCA 130
• Parties: GUARANTY NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. Lena C de BACA, Defendant-Appellant, v. ESTATE OF Mario SERNA, Real Party in Interest, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 210

907 P.2d 210

120 N.M. 806

GUARANTY NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. Lena C de BACA, Defendant-Appellant, v. ESTATE OF Mario SERNA, Real Party in Interest, Defendant-Appellant.

No. 16301.

Court of Appeals of New Mexico.

Oct. 17, 1995.

Certiorari Denied Nov. 21, 1995.

[120 N.M. 807] Gregory V. Pelton, Pelton & O'Brien, P.A., Albuquerque, for Plaintiff-Appellee.

David J. Berardinelli, Berardinelli & Associates, Santa Fe, for Defendants-Appellants.

OPINION

ALARID, Judge.

Lena C de Baca (C de Baca) appeals an order of the District Court granting a declaratory judgment in favor of Guaranty National Insurance Company (Guaranty). The order stated that Guaranty owed no duty to defend or indemnify C de Baca for an automobile accident that occurred on March 7, 1989, with Mario Serna, and that C de Baca was uninsured at the time of that accident. C de Baca raises seven points that we treat as three issues on appeal: (1) whether the trial court's findings of fact and conclusions of law that Guaranty had no duty to defend are supported by substantial evidence; (2) whether the trial court's findings of fact and conclusions of law that C de Baca had no insurance coverage at the time of her accident are supported by substantial evidence; and (3) whether Guaranty was bound by NMSA 1978, Section 59A-18-29(A) (Repl.Pamp.1995), to give C de Baca a ten-day notice of cancellation. For the reasons that follow, we affirm. C de Baca's motion to take judicial notice is denied.

FACTS

In December 1988, C de Baca bought a 1982 Plymouth Reliant. On February 2, 1989, C de Baca called the Department of Motor Vehicles and asked what she needed to do to register her car. She was told that she needed to have "proof of insurance." When C de Baca contacted the Albert Gallegos Agency (Agency) in order to obtain car insurance, she got a quote of $31.00, to insure her vehicle. On February 2, 1989, she purchased and mailed a postal money order in the amount of $31.00 payable to Guaranty National. The money order was received by the Agency on February 3, 1989. On February 4, 1989, C de Baca received the application signed by a representative of the Agency. She signed the application on February 5, 1989, and mailed it back to the Agency on February 6, 1989. This application clearly stated that the effective dates of coverage would be from February 3, 1989 to March 3, 1989. C de Baca acknowledged at trial that she knew if she failed to pay her insurance premium on time she would not have any insurance coverage.

On February 9, 1989, C de Baca received a "Dear Customer" letter from the Agency. This letter advised her to review a list of items concerning her auto insurance policy. C de Baca also registered her car on this date. On or about February 12, 1989, C de Baca received her first renewal notice that her premium was due for the next month. The renewal notice said there was no grace period and payment was due on March 3, 1989. Before the accident, C de Baca had notice that her insurance would expire at 12:01 a.m. March 3, 1989, unless the second month's premium was paid prior to March 3, 1989.

At her deposition, C de Baca testified unequivocally that she purchased and mailed the second postal money order on March 4, 1989. However, the envelope in which she mailed the payment to Guaranty was postmarked March 8, 1989, and the money order she sent to Guaranty was dated March 8, 1989. On March 7, 1989, C de Baca was involved in the accident with Mario Serna, and Mr. Serna died as a result of the accident.

His estate filed a wrongful death action against C de Baca and Guaranty on April 11, 1990, seeking damages and declaratory relief regarding Guaranty's duty to provide C de Baca with liability coverage. On May 10, 1990, Guaranty filed its Answer denying coverage but admitting that a "genuine controversy" existed on the issue of coverage. In August of 1990, Guaranty successfully moved to be dismissed from the wrongful death action. In February of 1991, Mr. Serna's estate offered to settle its wrongful death claim against C de Baca for $250,000.00 in exchange for providing C de Baca with a release from all future liability under the judgment, provided that C de Baca assign all rights she might have under the policy at issue in this case. On March 11, 1991, Guaranty filed its declaratory judgment complaint in this case. Subsequently, judgment was entered against C de Baca in the wrongful death action pursuant to the settlement agreement noted above.

Effective Date of Insurance Coverage

C de Baca advances four points concerning why she had insurance coverage at the time of the accident: (1) that the trial court erred in finding that her insurance coverage began on February 3, 1989; (2) that Guaranty's application form was ambiguous as a matter of law and should have been construed in favor of coverage; (3) that she had no reasonable expectation of actual coverage until February 9, 1989, as a matter of law; and (4) that the trial court erred in refusing to accept the unambiguous stipulation of the parties during trial that C de Baca received her proof of insurance on February 9, 1989. Although C de Baca attempts to cast most of her arguments as questions of law, we agree with Guaranty that the essence of C de Baca's contentions is that the trial court's findings of fact and conclusions of law, ruling that the effective date of insurance coverage was February 3, 1989, are not supported by substantial evidence. Accordingly, we review whether the trial court's findings that C de Baca's insurance coverage began on February 3, 1989, and ended on March 3, 1989, are supported by substantial evidence.

"Unless clearly erroneous or deficient, findings of the trial court will be construed so as to uphold a judgment rather than to reverse it." Herrera v. Roman Catholic Church, 112 N.M. 717, 721, 819 P.2d 264, 268 (Ct.App.1991). "[S]ubstantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." See Sunwest Bank v. Colucci, 117 N.M. 373, 375, 872 P.2d 346, 348 (1994). In considering a substantial evidence claim, the appellate court "resolve[s] all disputed facts in favor of the successful party, indulge[s] all reasonable inferences in support of a verdict, and disregard[s] all evidence and inferences to the contrary." Clovis Nat'l Bank v. Harmon, 102 N.M. 166, 168-69, 692 P.2d 1315, 1317-18 (1984).

Our Supreme Court has recognized that coverage would normally be expected to commence upon receipt of a premium by an agent. See Ellingwood v. N.N. Investors Life Ins. Co., 111 N.M. 301, 306, 805 P.2d 70, 75 (1991). In Ellingwood it was stated that:

Where an insurance company has authorized the agent to accept payment, the agent may well appear to have the authority to effect immediate coverage. We believe a typical customer would have a reasonable belief that in return for a payment of cash, and an authorization for subsequent automatic payments, he has purchased some immediate benefit in return, especially where the consumer questions the agent and is assured that this is the case.

Id. The trial court found that Guaranty was at risk as of February 3, 1989, and on that same day, C de Baca could have expected her insurance coverage to commence. The trial court also found that, at the time of the accident, C de Baca did not have insurance coverage. The trial court further found that C de Baca knew at the time of the accident she had no liability insurance and that she attempted to reinstate coverage by purchasing the money order after the accident.

We believe that the trial court's findings of fact and conclusions of law concerning February 3, 1989, as the effective date of insurance coverage, are supported by substantial evidence for several reasons. First, C de Baca received many documents clearly showing that coverage began on February 3, 1989, including a renewal notice, a car policy, a "Dear Customer" letter, and a signed insurance application. All of these documents are substantial evidence in support of the trial court's finding that coverage began on February 3.

Second, to the extent C de Baca argues the Agency lacked authority to bind coverage on February 3, 1989, Guaranty persuasively argues that it ratified the agent's binder, thus making the effective date of coverage February 3, 1989. See Jessen v. National Excess Ins. Co., 108 N.M. 625, 630, 776 P.2d 1244, 1249 (1989) ("Ratification may be implied by acquiescence in the results of an unauthorized act or by retention of the benefits of [that] act.") (citations omitted); Grandi v. LeSage, 74 N.M. 799, 809-10, 399 P.2d 285, 293 (1965) (upon acquiring knowledge of agent's unauthorized act, the principal should promptly repudiate it, otherwise he will be presumed to have ratified and affirmed it); Ulibarri Landscaping Material, Inc. v. Colony Materials, Inc., 97 N.M. 266, 270, 639 P.2d 75, 79 (Ct.App.1981) ("Ratification is the adoption or confirmation by a principal of an unauthorized act performed on its behalf by an agent."), cert. denied, 98 N.M. 50, 644 [120 N.M. 810] P.2d 1039 (1982). Indeed, the trial court's findings indicate that even if the Agency was not authorized to begin coverage on February 3, Guaranty nevertheless waived any right it had to contest the Agency's authority to provide C de Baca with coverage on February 3. We believe those findings can be construed to mean that Guaranty ratified the Agency's decision to commence coverage on February 3. See Herrera, 112 N.M. at 721, 819 P.2d at 268 ("findings of the trial court will be construed so as to uphold a judgment rather than to reverse it" and findings "may properly be given a liberal interpretation if the interpretation is supported by the evidence").

Third, it does not appear that C de Baca ever objected to the coverage date commencing on February 3, 1989, or asked for a different date of coverage. Moreover, the "Dear Customer" letter...