Pedroza v. Lomas Auto Mall, Inc.

• Decision Date: 02 August 2013
• Docket Number: CIV 07-0591 JB/RHS
• Parties: DELFINO PEDROZA and LILIANA ANDRADE, Plaintiffs, v. LOMAS AUTO MALL, INC.; M. D. LOHMAN d/b/a LOHMAN MOTORS; WESTERN SURETY COMPANY; USAA CASUALTY INSURANCE COMPANY d/b/a USAA; and INDEPENDENT AUTO DEALERS SERVICE CORPORATION, LTD., Defendants. LOMAS AUTO MALL, INC. and M.D. LOHMAN d/b/a LOHMAN MOTORS, Third-Party Plaintiffs, v. INDEPENDENT AUTO DEALERS SERVICE CORPORATION, LTD. and NEW MEXICO INDEPENDENT AUTOMOBILE DEALERS' ASSOCIATION, INC., Third-Party Defendants.
• Court: U.S. District Court — District of New Mexico

DELFINO PEDROZA and LILIANA ANDRADE, Plaintiffs,

v.LOMAS AUTO MALL, INC.; M. D. LOHMAN d/b/a

LOHMAN MOTORS; WESTERN SURETY COMPANY;

USAA CASUALTY INSURANCE COMPANY d/b/a USAA;

and INDEPENDENT AUTO DEALERS SERVICE

CORPORATION, LTD., Defendants.

LOMAS AUTO MALL, INC. and M.D. LOHMAN d/b/a LOHMAN MOTORS, Third-Party Plaintiffs,

v.INDEPENDENT AUTO DEALERS SERVICE CORPORATION, LTD. and NEW MEXICO

INDEPENDENT AUTOMOBILE DEALERS' ASSOCIATION, INC., Third-Party Defendants.

CIV 07-0591 JB/RHS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

Dated: August 2, 2013

MEMORANDUM OPINION AND ORDER ENFORCING SETTLEMENT AGREEMENT

THIS MATTER comes before the Court on M.D. Lohman d/b/a Lohman Motors' and Lomas Auto Mall, Inc.'s Motion for Enforcement of Indemnity Provisions of Settlement Agreement with USAA Casualty Company, filed April 2, 2010 (Doc. 546)("Motion to Enforce Settlement"). The Court held a hearing on January 25, 2012. The primary issues are: (i) whether the Court should re-open this matter under rule 60(a) of the Federal Rules of Civil Procedure; (ii)whether the Court has jurisdiction over the Motion to Enforce Settlement; (iii) whether the indemnification provision of the Settlement Agreement which Defendants M.D. Lohman d/b/a Lohman Motors ("Lohman Motors"), Lomas Auto Mall, Inc., and USAA Casualty Insurance Company d/b/a USAA ("USAA Casualty") executed requires that a jury find USAA Casualty legally liable or award damages against it before USAA Casualty's indemnification obligations are triggered; and (iv) whether the Settlement Agreement requires USAA Casualty to indemnify Lohman Motors and Lomas Auto Mall (collectively, "the Dealerships") for the jury award against them, the Plaintiffs' Delfino Pedroza and Liliana Andrade's attorneys' fees and costs, Defendant Western Surety Company's attorneys' fees and costs, and the Dealerships' attorneys' fees and costs. Although the Court has entered Final Judgment in this matter and did not expressly retain jurisdiction over the Settlement Agreement, the Court determines that it entered Final Judgment out of an oversight, and it should vacate the Final Judgment under rule 60(a). The Court also determines that it has diversity jurisdiction over the Motion to Enforce Settlement. The Court determines that the Settlement Agreement does not require a finding of legal liability or a jury to award damages against USAA Casualty to trigger USAA Casualty's indemnification obligations in the indemnification provision. Additionally, the Court determines that the Settlement Agreement is unambiguous, that it requires USAA Casualty to indemnify the Dealerships for the jury award against them, and for the Plaintiffs' attorneys' costs and fees, and that it also requires USAA Casualty to indemnify the Dealerships for Western Surety's attorneys' costs and fees and the Dealerships' attorneys' costs and fees, which are attributable to, or arise from actions attributable to, USAA Casualty's titling of a 2005 GMC Sierra truck which the Plaintiffs purchased. On the other hand, the Settlement Agreement does not provide for a blanketindemnification of all losses the Dealerships incurred after USAA Casualty placed the Sierra truck into the stream of commerce. Accordingly, the Court will not require USAA Casualty to indemnify the Dealerships for the entire sum of their defense costs, unless further evidence is provided to the Court. The Motion to Enforce Settlement is granted in part and denied in part.

FACTUAL BACKGROUND

This matter relates to the Plaintiffs' purchase of the Sierra truck from Lomas Auto Mall on December 29, 2006. At the time of purchase, Lomas Auto Mall did not disclose to the Plaintiffs that the Sierra truck previously had a salvage title and had gone through an eventful history. The Sierra truck was stolen from its original owner, Lori Buckner, in August, 2006. USAA Casualty took title to the Sierra truck in a settlement with Buckner. When CoPart Auto Auctions applied for a title in USAA Casualty's name, the Sierra truck was initially issued a salvage title, but the title was later changed to a clean title. The reasons for this change were at the center of the Plaintiffs' case. See Memorandum Opinion and Order at 2, filed January 20, 2009 (Doc. 344)("Jan. 20, 2009 MOO").

When USAA took title to the Sierra truck, it was damaged, but USAA Casualty considered it uneconomical to repair. See Memorandum Opinion and Order at 3, filed May 16, 2009 (Doc. 437)("May 16, 2009 MOO"); Jan. 20, 2009 MOO at 2-3. CoPart Auction applied for a title for the Sierra truck through Defendant Independent Auto Dealers Service Corporation, Ltd. ("IADSC"), a New Mexico Motor Vehicle Department ("MVD") fee agent, authorized to issue title on the MVD'S behalf. Jan 20, 2009 MOO at 2-3. The Dealerships contended that USAA Casualty authorized CoPart Auction to apply for a clean title, but the Plaintiffs alleged that USAA Casualty initially instructed IADSC to obtain a salvage title. CoPart Auction first received asalvage title, but then requested a clean title from IADSC. IADSC then issued a clean title to the Sierra truck. Lohman Motors purchased the Sierra truck in an auction from USAA Casualty, and the Sierra truck was eventually transferred to Lomas Auto Mall, from whom the Plaintiffs purchased the Sierra truck. Jan. 20, 2009 MOO at 3; Seconded Amended Complaint for Damages and for Declaratory Relief and Jury Demand ¶ 38, at 6 (filed July 9, 2008)(Doc. 193).

In April, 2009, USAA Casualty offered to indemnify Lomas Auto Mall and Lohman so that these three Defendants could "be on the same side" at trial. Electronic Mail Transmission from Brett Steinbook to William Davis (April 8, 2009, 9:19 a.m.) at 1, filed May 20, 2010 (Doc. 551-1)("April 8 Steinbook/Davis Email")(Counsel for Lomas Auto Mall, Mr. Steinbook, indicating that USAA has offered to indemnify Lomas Auto Mall and Lohman Motors so that the Defendants are "on the same side at trial"). USAA Casualty and the Dealerships distilled a settlement agreement, including an indemnification provision, into writing on May 15, 2009. See Motion to Enforce Settlement ¶ 6, at 3; Electronic Mail Transmission from Charles Vigil to Brett Steinbook and Robert Valdez (May 15, 2009, 3:22 p.m.) at 15, filed May 20, 2010 (Doc. 555-1)("May 15 Vigil/Steinbook/Valdez Email"); Electronic Mail Transmission from Charles Vigil to Brett Steinbook (May 15, 2009, 3:50 p.m.), filed May 20, 2010 (Doc. 555-1)("May 15 Vigil/Steinbook Email"). The Settlement Agreement provides, in paragraph 3:

3. Indemnification. USAA hereby agrees to indemnify the Dealerships, LAM and Lohman, and Western Surety and hold them individually and/or jointly harmless from any damages, liability, loss, direct or indirect awarded to Plaintiff or any other party to the Case, plus defense costs including attorneys' fees, taxes, and costs attributable to USAA's or CoPart Auto Auction's ("CoPart") actions in securing a clean title at the time of the sale of the 2005 silver GMC Sierra, VIN #2GTEK13T551364583 (the "Sierra") to the Dealerships, including the following claims of Plaintiffs' Second Amended Complaint for Damages and for Declaratory Relief and Jury Demand [Docket No. 193]: First Claim for Relief: Violations of the MVICSA by the Dealerships [¶¶ 84-87] for failure to present the salvage titlecertificate at the time the Sierra was sold to Plaintiffs; [¶¶ 120-124];

USAA hereby agrees to indemnify the Dealerships and hold them harmless from any damages, liability, or loss awarded to Plaintiff or any other party to the Case, plus defense costs including attorneys' fees, taxes, and costs attributable to USAA's or CoPart's actions in obtaining a clean title at the time of the sale of the Sierra to the Dealerships, including the failure to disclose the salvage title to Plaintiffs at the time of the sale, failure to provide or present the salvage title to Plaintiffs at the time of the sale, fraud related to USAA's or CoPart's conduct in securing a non-salvage title at the time of the sale of the Sierra to the Dealerships, violations of the New Mexico Unfair Practices Act related to the titling actions of USAA at the time of the sale of the Sierra to the Dealerships, and breach of warranty of title due to USAA's titling actions at the time of the sale of the Sierra to the Dealerships. Should any party to the Case win a judgment against Lohman, LAM, or Western Surety individually or jointly for any actions attributable to USAA or CoPart or arising out of actions attributable to USAA, or CoPart, USAA hereby agrees to pay the award, including any award of costs and attorneys fees, and pay the defense costs in full and in a timely manner, subject to any appeals as contemplated by the parties in paragraph 14.

Final Draft of Settlement Agreement at 17-18, filed May 20, 2010 (Doc. 555-1)("Settlement Agreement").¹ The Settlement Agreement required the Dealerships to dismiss with prejudice their claims against USAA Casualty and the Plaintiffs, and required USAA Casualty to pay $42,500.00 to the Dealerships. See Motion to Enforce Settlement ¶¶ 7-8, at 3.

The Dealerships and USAA Casualty finalized the Settlement Agreement on May 19, 2009, one day after trial started, and the Dealerships subsequently dismissed their counterclaims against the Plaintiffs and their cross-claims against USAA Casualty. See Motion to Enforce Settlement ¶ 6, at 3; Stipulated Order Dismissing With Prejudice Dealership Defendants' Cross Claims Against USAA, filed June 17, 2009 (Doc. 475)("Stipulated Order"). USAA Casualty paid the Dealerships $42,500.00 on May 19, 2009. See Motion to Enforce Settlement ¶ 8, at 3.because of the Settlement Agreement, the Dealerships and USAA Casualty did not present testimony or other evidence against each other at trial.

PROCEDURAL BACKGROUND

On July 9, 2008, the Plaintiffs filed a Second Amended Complaint against the Dealerships for fraud, violations of the New Mexico Unfair Practices Act, N.M.S.A. 1978, §§ 57-12-1...