GULBRANSEN v. PROGRESSIVE HALCYON Ins. Co. d/b/a Progressive Direct

• Decision Date: 07 May 2010
• Docket Number: Aug. 13,Certiorari Denied,512.,No. 32,2010,087.,No. 29,29,32
• Citation: 2010 NMCA 082,241 P.3d 183,148 N.M. 585
• Parties: Lee GULBRANSEN, Plaintiff-Appellant, v. PROGRESSIVE HALCYON INSURANCE COMPANY d/b/a Progressive Direct, a foreign corporation, and Ian Willis, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

148 N.M. 585

241 P.3d 183

2010 NMCA 082

Lee GULBRANSEN, Plaintiff-Appellant,

v.PROGRESSIVE HALCYON INSURANCE COMPANY d/b/a Progressive Direct, a foreign corporation, and Ian Willis, Defendants-Appellees.

No. 29,087.

Court of Appeals of New Mexico.

May 7, 2010.

Certiorari Denied, Aug. 13, 2010, No. 32,512.

Law Office of LeeAnn Ortiz, LLC, LeeAnn Ortiz, Albuquerque, NM, for Appellant.

Simone, Roberts & Weiss, P.A., Meena H. Allen, Albuquerque, NM, for Appellees.

OPINION

VIGIL, Judge.

{1} This is another case that requires us to determine whether the insured Plaintiff validly rejected underinsured motorist (UIM) coverage, and whether such coverage should therefore be read into Plaintiff's policy. What makes this case different is that the question is presented in the context of UIM property damage coverage. For the reasons that follow, we reverse the district court summary judgment ruling that denies Plaintiff's claim for UIM property damage coverage up to policy liability limits of $50,000.

BACKGROUND

{2} Defendant Progressive Halcyon Insurance Company (Progressive) issued an automobile insurance policy to Plaintiff which, in significant part, provided property damage liability coverage, for each accident, in the amount of $50,000 and uninsured motorist (UM) property damage coverage of $25,000. The policy provides no coverage for UIM property damage coverage.

{3} The present case was precipitated when Tortfeasor drove her vehicle into two vehicles owned by persons other than Plaintiff, and then into Plaintiff's house, causing actual property damages of $34,939. This did not include other damages such as loss of use, diminished value, emotional distress, or punitive damages. Tortfeasor's own property damage liability coverage was for $25,000, and Plaintiff and the other two victims each received a pro rata share of that coverage. Plaintiff's share was $19,405, and with Progressive's consent, Plaintiff settled with Tortfeasor and her insurer for this amount. Plaintiff's home insurer then paid for the actual construction costs of $34,939 to repair the damages to the home and received the entire $19,405 pro rata share paid by Tortfeasor's liability carrier. The home insurer did not pay any other damages.

{4} Plaintiff thereafter sought UM and UIM property damage coverage from Progressive. The district court ruled that Plaintiff is not entitled to any coverage from Progressive on the basis that there is no UIM coverage for property damage under either the automotive policy or NMSA 1978, Section 66-5-301 (1983). Summary judgment was granted to Progressive, and Plaintiff appeals.

DISCUSSION Standard of Review

{5} Summary judgment is properly granted when “there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. On appeal, we review de novo the district court decision to grant summary judgment, Rehders v. Allstate Insurance Co., 2006-NMCA-058, ¶ 12, 139 N.M. 536, 135 P.3d 237, and construe all reasonable inferences in favor of the non-moving party. Montgomery v. Lomos Altos, Inc., 2007-NMSC-002, ¶ 16, 141 N.M. 21, 150 P.3d 971. Similarly, we review de novo questions of statutory construction. Cooper v. Chevron U.S.A., Inc., 2002-NMSC-020, ¶ 16, 132 N.M. 382, 49 P.3d 61.

New Mexico Law Requires That Insurers Offer UIM Coverage for Property Damage

[1] {6} At the outset, we briefly address Plaintiff's argument that he is entitled to both UM and UIM coverage-UM coverage because Tortfeasor's insurance policy excluded punitive damages under the liability policy and UIM coverage because his actual damages exceeded the $19,405 pro rata share paid by Tortfeasor's insurer. We disagree with Plaintiff's demarcation between UM and UIM coverage. Because Plaintiff recovered some money from Tortfeasor's liability policy, but not all of his claimed damages, his claim is appropriately viewed as a claim for UIM coverage. See Manzanares v. Allstate Ins. Co., 2006-NMCA-104, ¶¶ 5-6, 140 N.M. 227, 141 P.3d 1281 (characterizing punitive damages as deriving from actual damages for purposes of UIM coverage, and viewing the plaintiff's attempt to parse out the punitive damages portion of her claim from the remainder of her claim as “an overly semantical distinction unsupported by the language of the statutes, regulations, or case law”).

[2] {7} It is statutorily mandated that insurance companies offer both UM and UIM coverage to their insureds. See Arias v. Phoenix Indem. Ins. Co., 2009-NMCA-100, ¶ 7, 147 N.M. 14, 216 P.3d 264, cert. denied, 2009-NMCERT-008, 147 N.M. 395, 223 P.3d 940. In relevant part, Section 66-5-301 provides:

A. No motor vehicle or automobile liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person and for injury to or destruction of property of others arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued ... unless coverage is provided therein or supplemental thereto in minimum limits for bodily injury or death and for injury to or destruction of property as set forth in Section 66-5-215 NMSA 1978 and such higher limits as may be desired by the insured, but up to the limits of liability specified in bodily injury and property damage liability provisions of the insured's policy, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, and for injury to or destruction of property resulting therefrom, according to the rules and regulations promulgated by, and under provisions filed with and approved by, the superintendent of insurance.

B. The uninsured motorist coverage described in Subsection A of this section shall include underinsured motorist coverage for persons protected by an insured's policy. For the purposes of this subsection, “underinsured motorist” means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage. No motor vehicle or automobile liability policy sold in New Mexico shall be required to include underinsured motorist coverage until January 1, 1980.

{8} Progressive asserts that the requirement that insurers offer UIM coverage extends only to coverage for bodily injury or death and does not extend to UIM property damage coverage. In support of its position, Progressive refers to the statutory definition of “underinsured motorist” as provided in the second sentence of Subsection (B), which only mentions coverage for bodily injury and not property damage. From this, Progressive concludes that an underinsured motor vehicle is one in which there is inadequate coverage for bodily injury, but not for property damage.

[3] {9} Progressive's view, however, fails to acknowledge the first sentence of Subsection (B), which provides that UM coverage described in Subsection (A) (which includes bodily injury and property damage) shall include UIM coverage. In resolving any conflict between the first and second sentences of Subsection (B), we are mindful that the requirement that insurers offer UM and UIM coverage embodies a strong public policy “to expand insurance coverage and to protect individual members of the public against the hazard of culpable uninsured [and underinsured] motorists.” Arias, 2009-NMCA-100, ¶ 7, 147 N.M. 14, 216 P.3d 264 (alteration in original) (internal quotation marks and citation omitted). To view Subsection (B) as limiting this public policy to bodily injury would ignore the underlying legislative intent to put the insured in the same position he or she would have been in if the tortfeasor had liability coverage equal to the UM and UIM protection as provided by the insured's policy. Id. Thus, we conclude that the failure of the Legislature to reference property damage in its definition of underinsured motorist was necessarily the result of legislative oversight rather than a limitation on the requirement that insurers offer UIM property damage coverage. See State v. Trujillo, 2009-NMSC-012, ¶ 21, 146 N.M. 14, 206 P.3d 125 (recognizing that if adherence to the literal words of a statute would lead to “injustice, absurdity or contradiction,” the Court will reject the plain meaning “in favor of an interpretation driven by the statute's obvious spirit or reason.” (internal quotation marks and citation omitted)); Romero v. Dairyland Ins. Co., 111 N.M. 154, 156, 803 P.2d 243, 245 (1990) (holding that “[b]ecause we liberally interpret the statute in order to implement its remedial purpose, language in the statute that provides for an exception to [UM] coverage should be construed strictly to protect the insured” (citation omitted)).

In the Absence of a Valid Rejection of UIM Coverage, the Policy Must Be Read to Include UIM Coverage Equal to the Amount of Liability Limits in the Automobile Insurance Policy

{10} In light of our conclusion that Progressive was statutorily required to offer Plaintiff UIM property damage coverage, we next consider the effect of its failure to do so. Absent an offer of UIM coverage, Plaintiff necessarily had no opportunity to opt out of and reject UIM property damage coverage. See Marckstadt v. Lockheed Martin Corp., 2010-NMSC-001, ¶ 15, 147 N.M. 678, 228 P.3d 462 (concluding that “the insurer may not exclude UM/UIM coverage from an automobile liability policy unless it has offered it to the insured, and the insured has exercised the right to reject the coverage” (citation omitted)). And absent a valid rejection, our case law provides that statutorily mandated UM and UIM coverage must be read into the insurance...