Jordan v. Allstate Ins. Co.

Decision Date18 October 2010
Docket NumberNos. 32,063, 32,065, 32,203.,s. 32,063, 32,065, 32,203.
Citation245 P.3d 1214,2010 -NMSC- 051,149 N.M. 162
PartiesRosemary JORDAN, Scott Jordan, Tracey Jordan, Donald Romero, and Theresa Romero, Plaintiffs-Respondents, v. ALLSTATE INSURANCE COMPANY, Defendant-Petitioner. Donald Romero and Theresa Romero, Plaintiffs-Respondents, v. Progressive Northwestern Insurance Company, Defendant-Petitioner. Consuelo Lucero, Plaintiff-Respondent, v. David Trujillo, Safeco Insurance Company of America, and Progressive Halcyon Insurance Company, Defendants-Petitioners.
CourtNew Mexico Supreme Court
245 P.3d 1214
149 N.M. 162
2010 -NMSC- 051


Rosemary JORDAN, Scott Jordan, Tracey Jordan, Donald Romero, and Theresa Romero, Plaintiffs-Respondents,
v.
ALLSTATE INSURANCE COMPANY, Defendant-Petitioner.
Donald Romero and Theresa Romero, Plaintiffs-Respondents,
v.
Progressive Northwestern Insurance Company, Defendant-Petitioner.
Consuelo Lucero, Plaintiff-Respondent,
v.
David Trujillo, Safeco Insurance Company of America, and Progressive Halcyon Insurance Company, Defendants-Petitioners.


Nos. 32,063, 32,065, 32,203.

Supreme Court of New Mexico.

Oct. 18, 2010.

245 P.3d 1216

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Lisa Mann, Jennifer A. Noya, Albuquerque, NM, for Petitioner Allstate Insurance Company.

Simone, Roberts & Weiss, P.A., Meena H. Allen, Albuquerque, NM, for Petitioner Progressive Northwestern Insurance Company.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Douglas G. Schneebeck, Alex C. Walker, Albuquerque, NM, for Petitioner Progressive Halcyon Insurance Company.

Berardinelli Law Firm, L.L.C., David J. Berardinelli, O'Friel and Levy, P.C., Daniel J. O'Friel, Pierre Levy, Santa Fe, NM, for Respondents Rosemary Jordan, Scott Jordan, Tracey Jordan, Donald Romero, and Theresa Romero.

Garcia & Vargas, L.L.C., Ray M. Vargas, II, Santa Fe, NM, Law Office of Geoffrey R. Romero, Geoffrey R. Romero, Bach & Garcia, L.L.C., Matthew L. Garcia, Albuquerque, NM, for Respondent Consuelo Lucero.

OPINION

DANIELS, Chief Justice.

{1} The plaintiff insureds (Plaintiffs) in these three consolidated cases were issued uninsured/underinsured motorist (UM/UIM) coverage in amounts less than the liability coverage provided by their automobile insurance policies. See Progressive Nw. Ins. Co. v. Weed Warrior Servs., 2010-NMSC-050, ¶ 15, 149 N.M. 157, 245 P.3d 1209 (2010)

245 P.3d 1217
(holding that New Mexico's uninsured motorist statute, NMSA 1978, Section 66-5-301 (1983), "requires an insurer to offer UM/UIM coverage in an amount equal to the liability limits of the policy and that the choice of the insured to purchase any lower amount functions as a rejection of that maximum amount of coverage statutorily possible"). The Court of Appeals concluded that none of the defendant insurers obtained valid rejections of UM/UIM coverage as required by statute, Section 66-5-301, and by regulation, 13.12.3.9 NMAC, and that the appropriate remedy was to reform the policies to provide UM/UIM coverage equal to the liability limits.

{2} We affirm the Court of Appeals and hold that a rejection of UM/UIM coverage equal to the liability limits in an automobile insurance policy must be made in writing and must be made a part of the insurance policy that is delivered to the insured. In order to honor these requirements effectively, insurers must provide the insured with the premium charges corresponding to each available option for UM/UIM coverage so that the insured can make a knowing and intelligent decision to receive or reject the full amount of coverage to which the insured is statutorily entitled. If an insurer fails to obtain a valid rejection, the policy will be reformed to provide UM/UIM coverage equal to the limits of liability.

I. BACKGROUND

{3} We granted writs of certiorari in three cases, Jordan v. Allstate Insurance Co., No. 32,063, Romero v. Progressive Northwestern Insurance Co., No. 32,065, and Lucero v. Trujillo, No. 32,203, and held them in abeyance pending our resolution of Weed Warrior, 2010-NMSC-050, 149 N.M. 157, 245 P.3d 1209, filed on the same date as this Opinion. In their petitions for certiorari, the insurers collectively raise six issues: (1) whether insurers must affirmatively offer UM/UIM coverage in an amount equal to the liability coverage selected by an insured; (2) whether an insured's selection of less UM/UIM coverage than liability coverage constitutes a rejection of UM/UIM coverage equal to the liability limits; (3) if such a selection is a rejection, what form and manner must a valid rejection take; (4) whether our Court of Appeals erred in its interpretation of Section 66-5-301; (5) whether our holding in this case should be applied prospectively or retroactively; and (6) whether our Court of Appeals erred by reforming the automobile liability policies in these cases to provide UM/UIM coverage equal to the liability limits.

{4} Weed Warrior, 2010-NMSC-050, ¶¶ 13-15, 149 N.M. 157, 245 P.3d 1209, answers the first two questions, holding that insurers must affirmatively offer UM/UIM coverage in an amount equal to the policy's liability limits and that an insured's decision to purchase a lesser amount of UM/UIM coverage constitutes a rejection. This Opinion addresses the remaining questions. Before discussing these issues, we summarize the background of each case.

a. Jordan v. Allstate Insurance Company

{5} Two sets of insureds, Scott, Tracey, and Rosemary Jordan (the Jordans) and Donald and Theresa Romero (the Romeros) 1 had policies with Allstate Insurance Company that provided liability limits of $100,000 per person and UM/UIM bodily injury coverage of $25,000 per person. During the application process, Scott Jordan and Theresa Romero each signed and dated an Allstate UM/UIM Selection/Rejection form. The UM/UIM Selection/Rejection forms provided a list of coverage options ranging from $25,000 per person/$50,000 per accident to $2,000,000 per person/$2,000,000 per accident. The forms signed by Jordan and

245 P.3d 1218
Romero have a checkmark next to the lowest available UM/UIM coverage level, $25,000 per person/$50,000 per accident, and a checkmark next to the following option: "I want to purchase Uninsured Motorists Insurance for Bodily Injury at the [coverage] limits which I have indicated below. I understand that I may only purchase Uninsured Motorists Insurance for Bodily Injury up to my Bodily Injury Liability ... limits."

{6} Allstate periodically delivered declarations pages to the Jordans and the Romeros that indicated the amounts of liability and UM/UIM coverage provided under the policies. According to the last page of declarations, the Jordans' and Romeros' policies consisted of these declarations pages and two forms, each indicated by form number only, that are not included in or described by the record before this Court. The signed UM/UIM Selection/Rejection forms were not attached to the declarations pages, and the declarations pages did not expressly inform the Jordans and the Romeros that UM/UIM coverage equal to the limits of liability had been rejected.

{7} Allstate also sent the Jordans and the Romeros generic (that is, not policy specific) "Important Notice" forms, instructing the recipients to review their policies' declarations pages to verify that UM/UIM coverage had been issued as requested. The Important Notice forms explained that policyholders may purchase UM/UIM coverage "equal to, but not greater than, [their] limits for Bodily Injury Liability Insurance and Property Damage Liability Insurance [and] ... at limits less than [their] BI and PD limits, but not less than the minimum limits required by law in New Mexico[,] ... [or they] may reject UM coverage entirely."

{8} Rosemary Jordan and Donald Romero were injured by uninsured/underinsured motorists in two separate accidents while their Allstate policies were in effect. Allstate paid the Jordans and the Romeros UM/UIM benefits in the amounts specified by their policies.

b. Romero v. Progressive Northwestern Insurance Company

{9} At the time of his accident, Donald Romero, as sole proprietor of AllTech Electric, had a commercial automobile insurance policy with Progressive Northwestern Insurance Company, in addition to his personal Allstate policy. The Progressive policy contained single liability limits of $100,000 and UM/UIM limits of $50,000 per person. Romero attested by affidavit that during the application process he never signed a document rejecting higher limits of UM/UIM coverage and was not told he could obtain UM/UIM coverage equal to his liability limits. There is no other evidence in the record concerning his application process. The policy Progressive delivered to Romero contained declarations pages listing the amounts of liability and UM/UIM coverage provided by the policy. The policy did not indicate that any amount of UM/UIM coverage had been rejected. After Donald Romero's accident, Progressive, as Romero's secondary insurer, paid Romero $50,000 in UM/UIM coverage stacked for each of the three vehicles insured by the policy, for a total of $150,000.

c. Lucero v. Trujillo

{10} Diana Lucero purchased her insurance through Progressive Halcyon Insurance Company's website. Progressive Halcyon's website uses customer-entered information to suggest an insurance package, which the customer can alter using "pull-down menus." In her online application, Diana Lucero clicked on liability limits of $50,000 per person. While Progressive Halcyon's suggested packages provide default UM/UIM coverage equal to the liability limits, customers can purchase lesser amounts of UM/UIM coverage by using a pull-down menu. Diana Lucero clicked on the minimum amount of UM/UIM coverage available, $25,000 per person.

{11} After purchasing a policy from Progressive Halcyon, Diana Lucero's selections were listed on declarations pages. Further contract terms were provided in a generic New Mexico Motor Vehicle Policy. Toward the end of the forty-nine-page policy, a short paragraph states that the online application "is made a part of this policy as if attached hereto." The record does not show whether Diana Lucero printed the declarations pages

245 P.3d 1219
and policy at home or whether Progressive Halcyon delivered them in some other way. Neither the declarations pages nor the policy expressly alerted Diana Lucero to the fact that she had rejected UM/UIM coverage equal to her liability limits.

{12} Consuelo Lucero, who was covered by the Progressive Halcyon policy, was injured in an accident with an underinsured motorist. Progressive paid Consuelo...

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