Hunt v. N.C. Logistics, Inc., No. CIV 15-0233 JB/GJF

CourtUnited States District Courts. 10th Circuit. District of New Mexico
PartiesLEE HUNT, as personal representative Of the Estate of SEAN BREEDEN, Deceased, Plaintiff, v. NORTH CAROLINA LOGISTICS, INC., a North Carolina corporation, SANVIL GROUP CORP., a Florida corporation, LEONARDO R. CABREDRA-SALGADO, Individually, and BENITO A. OLIVA, individually, Defendants.
Decision Date23 June 2016
Docket NumberNo. CIV 15-0233 JB/GJF

LEE HUNT, as personal representative
Of the Estate of SEAN BREEDEN, Deceased, Plaintiff,
v.
NORTH CAROLINA LOGISTICS, INC.,
a North Carolina corporation, SANVIL GROUP CORP.,
a Florida corporation, LEONARDO R. CABREDRA-SALGADO,
Individually, and BENITO A. OLIVA, individually, Defendants.

No. CIV 15-0233 JB/GJF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

June 23, 2016


MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on Atlantic Specialty Insurance Company's Motion to Intervene as Plaintiff, filed November 25, 2015 (Doc. 67)("Motion"). The Court held a hearing on March 7, 2016. The parties have agreed that the Court should treat the Motion as a motion to dismiss Proposed Intervenor Atlantic Specialty Insurance Company from the case. The primary issue is whether Atlantic Specialty, a Pennsylvania corporation, has a right to subrogation to recover benefits it paid to Plaintiff Lee Hunt, personal representative of the Estate of Sean Breeden, pursuant to an insurance contract, after Breeden was killed in an automobile accident in New Mexico. This question requires the Court to determine whether: (i) New Mexico or Pennsylvania law applies to this dispute; and (ii) whether Atlantic Specialty's policies are indemnity contracts or investment contracts. The Court grants the Motion in part and denies it in part. It allows Atlantic Specialty to intervene solely to advance its equitable subrogation argument. Because the Court does not agree with Atlantic Specialty's equitable subrogation

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argument, however, it will dismiss Atlantic Specialty from this case. First, the Court concludes that New Mexico law applies to this dispute. Second, the Court concludes that Atlantic Specialty's policies are investment contracts and thus do not allow for equitable subrogation. The Court thus concludes that Atlantic Specialty has no right to equitable subrogation in this dispute.

FACTUAL BACKGROUND

The Court takes its facts from: (i) the Complaint for Wrongful Death, filed in state court November 3, 2014, filed in federal court March 19, 2015 (Doc. 1)("Complaint"); (ii) the Motion; and (iii) Atlantic Specialty Insurance Company's Combined Reply Brief in Support of its Motion to Intervene, filed December 23, 2015 (Doc. 87)("Reply").

Breeden, a New Mexico resident, was the beneficiary of two insurance policies that OneBeacon Insurance issued: (i) a Group Voluntary Accident Policy; and (ii) a Group Basic Accident Policy (collectively, the "Policies"). See Complaint ¶ 1, at 2; Motion ¶ 6, at 2; Group Voluntary Accident Policy for Tyco International Management Company, filed December 9, 2015 (Doc. 76-5); Group Basic Accident Policy for Tyco International Management Company, filed December 9, 2015 (Doc. 76-5). The Policies provided benefits of up to nine times Breeden's salary upon proof of "accidental loss of life, limb or sight." Reply at 8.

On the early morning of March 6, 2014, Defendants Leonardo R. Cabrera-Salgado and Benito A. Oliva -- both Florida residents -- were traveling west on Interstate 40 through Guadalupe County, New Mexico in a 2007 freightliner. See Complaint ¶¶ 7-8, 37, at 2, 14. Defendant North Carolina Logistics, Inc. ("NC Logistics"), a North Carolina corporation with its principal place of business in North Carolina, and/or Defendant Sanvil Group Corp., a Florida corporation with its principal place of business in Florida, owned the truck. See Complaint ¶¶ 3,

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5, 37, at 1, 2, 14. Cabrera-Salgado was driving the truck. See id. ¶¶ 39, 41, at 14. Oliva was sleeping in the sleeper cab. See id. ¶ 40, at 14.

Cabrera-Salgado experienced mechanical problems with the truck's engine. See id. ¶ 41, at 14. He had sufficient time to move the truck onto the shoulder, and the shoulder was wide enough to accommodate the truck. See id. ¶ 42, at 14. Instead of pulling off the road onto the shoulder, Cabrera-Salgado allowed the truck to stop in the interstate's right-hand westbound lane. See id. ¶ 41, at 14. Although it was "extremely dark, with no ambient lighting from street lights, highway lights, or lights from businesses, houses, or other structures," neither Cabrera-Salgado nor Oliva activated the hazard flashers or brake lights, or deployed warning devices in the roadway. Id. ¶¶ 43-46, at 15.

At approximately 4:00 a.m., Breeden's car collided with the back of the truck's trailer. See id. ¶¶ 48-52, at 15. The impact nearly sheared off the top of Breeden's car and positioned the car in the left lane perpendicular to the direction of travel. See id. ¶¶ 52-54, at 15-16. Diana Miller, who was driving a van in the westbound left lane, then collided with the passenger side of Breeden's car. See id. ¶¶ 55-57, at 16. Although Breeden was wearing his seatbelt, he did not survive the crashes. See id. ¶ 48, at 16. Atlantic Specialty paid benefits on Breeden's behalf pursuant to the Policies. See Motion ¶ 7, at 2.

PROCEDURAL BACKGROUND

Hunt, a New Mexico resident, brought suit as Breeden's personal representative in New Mexico state court on November 3, 2014. See Complaint ¶ 2, at 1. The Complaint names NC Logistics, Inc., Sanvil Group, Cabrera-Salgado, and Oliva as Defendants. See Complaint ¶¶ 3-8, at 1-2. The Complaint alleges four counts: (i) negligence per se; (ii) common-law negligence; (iii) negligence, negligent entrustment, and lease liability; and (iv) respondeat superior liability

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and liability for negligent hiring, training, supervision and retention. See Complaint ¶¶ 62-85, at 16-20. It seeks compensatory damages for wrongful death, "including aggravating damages; punitive damages, costs, pre-judgment and post-judgment interest, attorneys' fees, expenses and costs of suit, and such other relief as the Court deems just and proper." Complaint at 21. NC Logistics removed the case to federal court on March 19, 2015. See Notice of Removal to the United States District Court for the District of New Mexico, filed March 19, 2015 (Doc. 1).

1. The Motion.

Atlantic Specialty moved to intervene in the litigation on November 25, 2015. See Motion at 1. It explained that it "provided two group accidental death and dismemberment insurance policy [sic] to the Decedent and his beneficiaries pursuant to two group policies issued to Tyco International Management Company, and its affiliated company or covered subsidiary Simplex Grinnell." Motion ¶ 6, at 2. When Breeden died, Atlantic Specialty explains, it paid benefits under the Policies "on behalf of the Decedent." Motion ¶ 7, at 2. Atlantic Specialty asserts that, under "New Mexico's remedy of equitable subrogation," it "has a right of subrogation and reimbursement from any third party." Motion ¶ 8, at 2. It contends that the Court must allow it to intervene so that it may protect its remedy of equitable subrogation, a remedy the other patties have no interest in preserving. See Motion ¶ 9, at 3 (citing Fed. R. Civ. Proc. 24(a)(2)). Atlantic Specialty then contends that both New Mexico and Pennsylvania law support its right to equitable subrogation. See Motion ¶ 12(a), at 3-4 (citing State Farm Mut. Auto. Ins. Co. v. Found. Reserve Ins. Co., 1967-NMSC-197, ¶ 27, 431 P.2d 737, 741 and Holloran v. Larrieu, 431 Pa. Super. 558, 561, 637 A.2d 317, 318 (1994)).

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2. The Responses.

NC Logistics responded on December 8, 2015. See Defendant North Carolina Logistics, Inc.'s Response to Atlantic Specialty Insurance Company's Motion to Intervene as Plaintiff, filed December 8, 2015 (Doc. 74)("NC Response"). The NC Response argues that Atlantic Specialty is a life insurer not entitled to subrogation. See NC Response at 2. First, it groups together life insurance and accidental death insurance. See NC Response at 4-5. Second, it allows that New Mexico has not addressed "whether a life insurer can seek equitable subrogation for funds paid to the beneficiaries of life insurance policies," but cites United States Court of Appeals for the Tenth Circuit and Pennsylvania cases, and several treatises, suggesting that it should not recognize such a right to subrogation. See NC Response at 3 (citing Lee Way Motor Freight, Inc. v. Yellow Transit Freight Lines, Inc., 251 F.2d 97, 99 (10th Cir. 1957); 16 Couch on Insurance § 222:25 (3d ed. 2015); Panea v. Isdaner, 2001 PA Super 108, ¶ 25, 773 A.2d 782, 795 (2001); 46A C.J.S. Insurance § 2027). It adds that Atlantic Specialty's cited cases "address the rights of indemnity insurers, not life insurers." NC Response at 2. Third, it notes that Atlantic Specialty cannot point to any statutory or contractual provision entitling it to subrogation. See NC Response at 5-6. Finally, it explains that allowing subrogation for life insurance would harm public policy, as the proceeds "of a wrongful death action are for the exclusive benefit of the surviving spouse." Response at 6.

Cabrera-Salgado responded on December 8, 2015. See Defendants Cabrera-Salgado's Response in Opposition to Atlantic Specialty Insurance Company's Motion to Intervene as Plaintiff, filed December 8, 2015 (Doc. 75)("Cabrera-Salgado Response"). The Cabrera-Salgado Response makes many of the same arguments that NC Logistics makes, even citing the same sources that NC Logistics cites. See Cabrera-Salgado Response at 3 (citing 46A C.J.S. Insurance

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§ 2027). It cites to a new Pennsylvania case, Panea v. Isdaner, 2001 PA Super 108, 773 A.2d 782 (2001), which states that "a life insurance carrier does not obtain any right to subrogate against the recovery in the malpractice action by virtue of its paying a claim pursuant to the life insurance policy." Cabrera-Salgado Response at 4 (citing 2001 PA Super 108, ¶ 25, 773 A.2d at 795). It concludes that Atlantic Specialty "has failed to carry its burden, regardless of whether New Mexico or Pennsylvania law is applied." Cabrera-Salgado Response at 5.

Hunt responded on December 9, 2015. See Plaintiff's Response in Opposition to Atlantic Specialty Insurance Company's Motion to Intervene as Plaintiff, filed December 9,...

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