Nevada Gen. Ins. Co. v. Encee
| Decision Date | 06 January 2012 |
| Docket Number | No. Civ. 11-183 JCH/CG,Civ. 11-183 JCH/CG |
| Parties | NEVADA GENERAL INSURANCE COMPANY, Plaintiff, v. PHILELICIA ENCEE, Defendant. |
| Court | U.S. District Court — District of New Mexico |
This matter comes before the Court on Defendant Philelicia Encee's Motion to Dismiss for Failure to State a Claim [Doc. 8]. The Court, having considered the motion, briefs, exhibits, and relevant law, and being otherwise fully informed, finds that Defendant's motion is well taken and should be GRANTED.
This case has its genesis in New Mexico's much-litigated uninsured motorists statute (NMSA § 66-5-301) and an associated regulation (NMAC 13.12.3.9). In particular, Plaintiff Nevada General Insurance Company ("NGIC") challenges a recent interpretation of the statute and regulation by the New Mexico Supreme Court in Jordan v. Allstate, 2010-NMSC-051 (2010). NGIC contends that, as interpreted by Jordan, NMSA § 66-5-301 and NMAC 13.12.3.9 violate NGIC's rights under the United States Constitution.
NGIC has brought a declaratory judgment action in this Court, seeking a determination of its rights and legal obligations with respect to Uninsured/Underinsured Motorist (UM/UIM) coverage. NGIC has brought this action because of a related state court action currently pending as Philelicia Encee v. Angelica Silva, CV-2010-10045, in the Second Judicial District, County of Bernalillo, State of New Mexico. The related state court action arises out of an automobileaccident that took place on July 24, 2010, between Ms. Encee and Angelica Silva. Ms. Encee and Ms. Silva dispute who caused the accident, and have filed claims against each other. Ms. Encee had an insurance policy with NGIC ("the Policy") that was in place at the time of the accident. See Ex. A, attached to Complaint [Doc. 1]. NGIC is representing Ms. Encee in the state court action under the liability coverage provisions of the Policy. In addition, Ms. Encee has represented to NGIC that Ms. Silva had no liability insurance at the time of the accident, and has demanded in the state court action that NGIC provide Ms. Encee with UM/UIM coverage.
Ms. Encee does not base her claim for UM/UIM coverage on an assertion that she selected and paid for such coverage. Indeed, as part of Ms. Encee's insurance application, she elected in writing to reject all UM/UIM coverage, and signed and dated her election to reject this coverage. See Ex. A-2, attached to Doc. 1. The Declarations Page provided for Ms. Encee's initial term of the Policy, as well as Declarations Pages for subsequent renewal periods, notified Ms. Encee in at least three separate places on a single page that she had chosen to reject UM/UIM coverage and indicated that she had the right to purchase such coverage by contacting her agent. See Exs. B and C-4, attached to Doc. 1. Instead, Ms. Encee claims that she is entitled to UM/UIM coverage because, under the New Mexico Supreme Court's decision in Jordan v. Allstate, her rejection of UM/UIM coverage was invalid and the Policy should therefore be reformed to provide UM/UIM coverage equal to the liability limits of the Policy.
The New Mexico Supreme Court filed its opinion in Jordan on October 18, 2010, approximately three months after the accident at issue in the related state court case. The Jordan court interpreted New Mexico's UM/UIM statute, NMSA § 66-5-301, to require auto insurers to provide policyholders with the premium costs corresponding to the available levels of UM/UIM coverage in order for a rejection of UM/UIM coverage to be considered valid. Jordan, 2010-NMSC-051 at ¶¶ 2, 21, and 30. Jordan held that a failure to include a menu of available coverage options would result in a judicial reformation of the policy to include UM/UIM coverage equal to the liability limits of the policy. Id. at ¶¶ 2, 36.
In announcing its decision, the Jordan court held that its construction of the requirements for compliance with NMSA § 66-5-301 would be applied retroactively to reach policies, such as the one at issue in this case, that had been written prior to the decision. The court noted that this would "ensur[e] that every insured has been afforded his or her statutory right to either obtain UM/UIM insurance coverage equal to the liability limits of the policy or to make a knowing and intelligent rejection of part or all of that coverage." Id. at ¶ 28.
The Jordan court offered several rationales for applying its decision retroactively. It noted that "[d]espite this Court's repeated pronouncements that an insured's decision to reject UM/UIM coverage must be knowing and intelligent in order to effectuate New Mexico's public policy...these consolidated cases indicate that insurers continue to offer UM/UIM coverage in ways that are not conducive to allowing the insured to make a realistically informed choice." Id. at ¶ 20. It explained that "although in the past we have not expressly articulated the need for insurers to provide premium costs for each available UM/UIM coverage level, our holding is based on settled principles articulated in twenty years of UM/UIM jurisprudence." Id. at ¶ 27. The court found that "retroactive application will provide meaningful enforcement of the requirements of [NMSA] 66-5-301 and 13.12.3.9 NMAC..." and that "[a]s we noted in Marckstadt [v. Lockheed Martin Corp., 147 N.M. 678, 689 (2009)], 'the Legislature and the superintendent of insurance intended their rules to take effect immediately, and we will not second-guess them.'" Id. at ¶ 28. The court concluded that "on balance, we deem it more equitable to let the financial detriments be borne by insurers, who were in a better position toensure meaningful compliance with the law, than to let the burdens fall on non-expert insureds, who are the Legislature's intended beneficiaries." Id. at ¶ 29.
Plaintiff does not ask this Court to determine whether Ms. Encee's rejection of UM/UIM coverage was effective under New Mexico law. That is an issue to be determined in the related state court case. Instead, Plaintiff asks this Court to find that Jordan's interpretation of New Mexico's UM/UIM statute (NMSA § 66-5-301) violates the Contracts Clause and the Takings Clause of the United States Constitution by forcing it to provide coverage for which it did not receive payment.
Defendant has moved to dismiss this case pursuant to Fed. R. Civ. P. Rule 12(b)(6). Rule 12(b)(6) provides in relevant part that "failure to state a claim upon which relief can be granted" is a defense to a claim for relief in any pleading. A motion to dismiss should be granted if, viewing the well-pleaded factual allegations of the complaint as true, the complaint does not contain "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). In considering a Rule 12(b)(6) motion, a court must assume all well-pleaded facts, but not conclusory allegations, to be true, and must draw all reasonable inferences in favor of a plaintiff. See Housing Auth. of the Kaw Tribe v. City of Ponca, 952 F.2d 1183, 1187 (10th Cir. 1991); Maher v. Durango Metals, Inc.,144 F.3d 1302, 1304 (10th Cir. 1998).
In addressing pleading requirements, the Supreme Court has held that "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a causeof action will not do." Twombly, 550 U.S. at 555 (citations omitted). In determining whether a complaint states a plausible claim for relief, the Court must engage in Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) (quoting Fed. R. Civ. P. 8(a)(2)). In evaluating a Rule 12(b)(6) motion, the Court's function "is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Sutton v. Utah State Sch. for the Deaf and Blind, 173 F.3d 1226, 1236 (10th Cir. 1999).
Plaintiff contends that the Jordan court's interpretation of New Mexico's UM/UIM statute violates its rights under the United States Constitution by substantially rewriting the law to add requirements that the statute does not contain. NMSA § 66-5-301 entitles an insured to purchase UM/UIM coverage "in minimum limits...and such higher limits as may be desired...up to the limits of liability" and also gives an insured the right to reject UM/UIM coverage. New Mexico Administrative Code regulation 13.12.3.9 provides that "[t]he rejection of the provisions covering damage caused by an uninsured or unknown motor vehicle as required in writing by the provisions of Section 66-5-301 NMSA 1978 must be endorsed, attached, stamped or otherwise made a part of the policy of bodily injury and property damage insurance."
The meaning of this statute and regulation has been subject to judicial interpretation numerous times over the years. In 1990, the New Mexico Supreme Court laid out the basic requirements for a valid rejection of UM/UIM coverage as consisting of: (1) a written rejection;(2) that is endorsed, attached, stamped, or otherwise made a part of the policy; and (3) that clearly and unambiguously calls to the attention of the insured the fact that the UM/UIM coverage has been waived. Romero v. Dairyland Ins. Co., 111 N.M. 154, 156 (1990). Case law developed to require that a waiver be made "knowingly and intelligently." Marckstadt v. Lockheed Martin Corp., 147 N.M. 678, 684(2009); Vigil v. Rio Grande Ins. Co. of...
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