Konnick v. Farmers Ins. Co. of Arizona

• Citation: 703 P.2d 889,103 N.M. 112,1985 NMSC 70
• Decision Date: 30 July 1985
• Docket Number: No. 15236,15236
• Parties: Tiffany KONNICK, et al., Plaintiffs-Appellees, v. FARMERS INSURANCE COMPANY OF ARIZONA, Defendant-Appellant.
• Court: Supreme Court of New Mexico

Page 889

703 P.2d 889

103 N.M. 112

Tiffany KONNICK, et al., Plaintiffs-Appellees, v. FARMERS INSURANCE COMPANY OF ARIZONA, Defendant-Appellant.

No. 15236.

Supreme Court of New Mexico.

July 30, 1985.

Rehearing Denied Aug. 14, 1985.

[103 N.M. 113] Civerolo, Hansen & Wolf, William P. Gralow, Albuquerque, for defendant-appellant.

Shwartz & Loughren, Kevin M. Brown, James J. Loughren, Albuquerque, for plaintiffs-appellees.

OPINION

SOSA, Senior Justice.

Plaintiffs Tiffany Konnick, Richard Steadman and Jo Steadman brought suit for damages and declaratory relief on the grounds that defendant Farmers Insurance Company of Arizona (Farmers) had refused to pay insurance benefits. The four count complaint alleged that Farmers had refused to pay underinsurance benefits due, had intentionally and negligently inflicted emotional distress on plaintiffs and had violated statutory and fiduciary duties owed to plaintiffs. Plaintiffs moved for partial summary judgment as to Count I asking that the court declare their right to stack two underinsured motorist policies issued to them by Farmers. Defendant responded with its own motion for summary judgment as to that count. The district court granted plaintiffs' motion and defendant appeals. This matter having come before us on interlocutory appeal, the sole issue we address is whether an insured may stack two underinsured motorist policies.

The uncontroverted facts are the following. Farmers issued two insurance policies to the Steadmans, one on each of two automobiles owned by them. Each vehicle had uninsured/underinsured motorist coverage in the amount of $15,000, and a separate premium was paid for each. As stepdaughter of Mr. Steadman, Konnick was an insured under the terms of both policies.

While driving one of the family-owned automobiles, Konnick was struck by a car driven by Phillip E. Gonzales. As a result, Konnick incurred medical expenses in excess of $100,000. Gonzales had liability coverage totalling $15,000. Farmers paid plaintiffs $15,000 under one underinsured motorist policy but failed to tender the proceeds of the second policy.

At the hearing on the motions for summary judgment, the district court found that the tortfeasor was underinsured pursuant to New Mexico's uninsured/underinsured motorist statute. NMSA 1978, Sec. 66-5-301 (Repl.Pamp.1984). The court then found that Konnick was entitled to stack the proceeds of both policies. Therefore, Farmers was ordered to pay the $15,000 available under the second underinsured motorist policy.

On appeal, Farmers contends that although uninsured motorist policies may be stacked, underinsured motorist policies may not be. Defendant argues that the two types of coverage are intrinsically different and based on divergent policy considerations; therefore, they may not be treated alike. Plaintiffs assert that they may stack the two policies in question since underinsured motorist coverage is an extension of uninsured motorist coverage and similar policy considerations underlie each.

New Mexico's uninsured motorist statute states that "uninsured motorist coverage * * * shall include underinsured motorist coverage for persons protected by an insured's policy ". Sec. 66-5-301B (emphasis added). Under the express terms of this provision, underinsured motorist protection is a subcategory of uninsured motorist coverage. Similar policy considerations, therefore, inhere in both types of coverages.

This Court stated in Chavez v. State Farm Mutual Automobile Insurance Co., 87 N.M. 327, 329, 533 P.2d 100, 102 (1975), and State Farm Automobile Insurance Co. v. Kiehne, 97 N.M. 470, 471, 641 P.2d 501, 502 (1982), that the policy underlying uninsured motorist coverage is to compensate persons injured through no fault of their own. We note, therefore, that in expanding uninsured motorist coverage to include underinsured motorist coverage, the Legislature manifested the intent to compensate the innocent victims of inadequately insured drivers.

We have already ruled that stacking is an appropriate means by which to compensate an insured for losses suffered through the fault of an uninsured motorist, where the total payout would not exceed the amount of the insured's damages. Lopez v. Foundation Reserve Insurance Co., Inc., 98 N.M. 166, 646 P.2d 1230 (1982) (allowing intra-policy stacking); Sloan v. Dairyland Insurance Co., 86 N.M. 65, 519 P.2d 301 (1974) (allowing inter-policy stacking). In Lopez, 98 N.M. 166, 171, 646 P.2d 1230, 1235, we stated that "[w]here an insurance company charges a separate full uninsured motorist premium for each vehicle under a single or several policies, it is only fair that the insured be permitted to stack the coverages for which he has paid." Addressing the case before us, we find that the stacking of underinsured motorist benefits is an appropriate means by which to compensate losses caused by an underinsured driver. As with uninsured motorist coverage, an insured is entitled to stack the underinsured motorist policies for which separate premiums have been paid. Nothing in the uninsured/underinsured motorist statute or the cases construing the statute indicates otherwise.

Farmers also contends that Konnick is merely an insured under the terms of both policies and that only named insureds may stack policy proceeds.¹ In this regard, Farmers begins by noting that a distinction is made in the policies between the "insured" and the "named insured." The "named insured" is the person specifically designated as such on the face of the policy. The "insured" is defined, in relevant part, as "(1) the named insured as stated in the policy and, while residents of the same household, the spouse of any such named insured and relatives of either; (2) any other person while occupying an insured motor vehicle. * * * " We agree with defendant that the terms "named insured" and "insured" are not synonymous, the latter being a broader category which encompasses the former.

Defendant then urges that this distinction was crucial to our disposition of the Lopez case. In that case, Lopez, the named insured, purchased one policy of uninsured motorist insurance and paid two separate premiums to cover the two cars he owned. While driving one of the covered vehicles, Lopez and a passenger, Torres, were killed in an accident with an uninsured motorist. Lopez had been the named insured and he had paid two insurance premiums. In order that Lopez' representatives might reap the benefits of all Lopez had purchased, this Court held that the estate of Lopez was entitled to stack the two uninsured motorist coverages. 98 N.M. at 172, 646 P.2d at 1236. In contrast, Torres' representatives could collect only under the coverage on the vehicle in which Torres was riding, since the protection purchased for Torres' benefit was limited to that vehicle. Id.

Defendant argues that for purposes of stacking, Lopez recognizes only two categories of claimants: (1) named insureds and (2) additional insureds, defined as passengers riding in an insured vehicle. Thus, defendant concludes that Konnick was an additional insured and stands in the same position as Torres did, since she was not the named insured. In Lopez we did hold that "uninsured motorist coverage of passengers who are not named insureds applies only to passengers injured while occupying an insured vehicle." Id. However, in Lopez we were not confronted with the set of facts before us now. Torres was not a relative of Lopez and, hence, we did not articulate the rule that applies when relatives of named insured seek to stack policy proceeds. We do so now.

Plaintiff correctly asserts that Farmers' uninsured motorist policy recognizes two classes of insureds, relevant to this case. They are, as is noted previously, (1) the named insured as stated in the policy, the spouse, and relatives residing in the household; and (2) any person while occupying an insured motor vehicle. In defining persons to which it will extend coverage, Farmers groups named...