Progressive Cas. Ins. Co. v. Vigil

• Citation: 345 P.3d 1096
• Decision Date: 21 January 2015
• Docket Number: No. 35,130.,32,171.,35,130.
• Parties: PROGRESSIVE CASUALTY INSURANCE COMPANY, Plaintiff–Appellant, v. Nancy Colleen VIGIL and Martin Vigil, Defendants–Appellees.
• Court: Court of Appeals of New Mexico

345 P.3d 1096

PROGRESSIVE CASUALTY INSURANCE COMPANY, Plaintiff–Appellant

v.Nancy Colleen VIGIL and Martin Vigil, Defendants–Appellees.

32,171.

No. 35,130.

Court of Appeals of New Mexico.

Jan. 21, 2015.

Certiorari Granted, March 23, 2015,

O'Brien & Padilla, P.C., Daniel J. O'Brien, Albuquerque, NM, Horvitz & Levy LLP, Lisa Perrochet, Andrea M. Gauthier, Encino, CA, for Appellant.

Santillanes & Neidhardt, P.C., Janet Santillanes, Olivia Neidhardt, James T. Roach, Albuquerque, NM, for Appellees.

OPINION

GARCIA, Judge.

{1} Plaintiff, Progressive Casualty Insurance Company (Progressive), appeals from the judgment entered in favor of Defendants, Nancy Colleen Vigil (Colleen) and her son, Martin Vigil (Martin), (collectively, the Vigils) following a jury trial. Progressive filed this declaratory judgment action against the Vigils, asking the district court to determine that the Vigils had no coverage on the day that Martin was involved in an accident, and the Vigils counterclaimed for bad faith. The jury found that the Vigils had coverage on the day of the accident and that Progressive acted in bad faith in not providing coverage. The jury awarded the Vigils $37,000 in compensatory damages and $11.7 million in punitive damages for their bad faith claim. The district court then awarded the Vigils about $1.4 million in attorney fees and $35,000 in costs under NMSA 1978, Section 39–2–1 (1977).

{2} Because we conclude that the district court erred when it excluded certain evidence from being admitted at trial, we reverse the judgment as to the bad faith claim. We vacate the $37,000 compensatory damages award, the $11.7 million punitive damages award, the $1.4 million attorney fees award, the $35,000 costs award, and we remand to the district court for a new trial on the issue of bad faith. We affirm the verdict in favor of the Vigils regarding insurance coverage under the policy.

BACKGROUND

{3} In the fall of 2002, Colleen and Martin were insured under a Progressive automobile insurance policy. In late September 2002, Colleen called Progressive to add a car to the policy. Believing the policy premium was due on October 3, 2002, Colleen called Progressive to pay the premium over the telephone. During this call, Progressive told Colleen that the premium was not due until October 15, 2002. She paid the premium on October 3 anyway. She received a notice in the mail from Progressive showing that the payment she made on October 3 was due on October 15. She later received another notice from Progressive stating that her policy would renew on November 3. Colleen testified that she called Progressive because “[t]he date was confusing” and the automated system told her that her next premium was due on November 15. She did not pay the premium by November 3.

{4} On November 4, Martin got into a car accident in which one passenger was killed and another seriously injured. Colleen testified that on November 4, after the accident, she called Progressive's billing department to check on her coverage and Progressive told her that she was covered through November 15. She paid the policy premium over the telephone during that call and then she reported Martin's accident to Progressive's claims department. About two weeks later, Progressive determined that the Vigils did not have coverage on the date of the accident because the policy had lapsed on November 3. The Vigils disagreed and much of the litigation between the parties has involved this dispute.

{5} In December 2002, Progressive filed this action in the district court seeking a declaration that the Vigils did not have insurance coverage on the date of the accident. The Vigils filed a counterclaim against Progressive alleging bad faith, among other claims. While the action was pending, Progressive settled the personal injury and wrongful death claims that the injured passenger and the deceased passenger's family brought against the Vigils, paying $100,000 to each of them, subject to a reservation of rights. Progressive then amended its complaint to seek reimbursement from the Vigils for this $200,000 in the event that the factfinder determined that the Vigils did not have insurance coverage on the date of the accident.

{6} After about two years of discovery between the parties and cross motions for summary judgment, the district court granted partial summary judgment in favor of Progressive on the coverage issue. It concluded as a matter of law that the Vigils did not have coverage on the date of the accident. After three more years of discovery and numerous motions and other filings by both the Vigils and Progressive, a jury trial was held on Progressive's $200,000 reimbursement claim. The jury found that Progressive was entitled to reimbursement from the Vigils, and the district court entered final judgment in favor of Progressive. The Vigils appealed. In 2009 we reversed the district court's grant of partial summary judgment because the issue of whether the Vigils had coverage involved disputed material facts. Progressive Cas. Ins. Co. v. Vigil, Nos. 28,023, 28,393, memo. op. at 5, 2009 WL 6567550 (N.M.Ct.App. Aug. 18, 2009) (non-precedential). In Progressive, we declined to consider the Vigils' argument regarding Progressive's reimbursement claim because we noted the claim would be moot if the jury found that the Vigils had coverage. Id. at 6. We remanded the case to the district court for further proceedings and a new trial on the coverage and reimbursement claims. Id. at 13.

{7} While the appeal was pending, the case was reassigned to a different district court judge. After we remanded the case, the Vigils moved for summary judgment on the reimbursement issue. The district court granted summary judgment, concluding as a matter of law that Progressive did not have a right to seek reimbursement for the payments it made to settle the third-party claims, even if the Vigils did not have insurance coverage on the date of the accident.

{8} Prior to re-trial, the Vigils moved to exclude from evidence the fact that the district court had previously concluded there was no coverage. At the hearing on this 3 motion, the district court stated that any evidence of the previous judge's ruling would be excluded because it was not relevant. The court then entered an order that prohibited Progressive “from introducing evidence, or making any reference before the jury in testimony, exhibits, voir dire[,] or argument, about what any prior [j]udge said, decided[,] or ruled about the facts, evidence or issues here or that a prior [j]udge ruled in a certain way in this case.”

{9} Separate from its decision that the district court's previous rulings would be inadmissible at trial, the district court held another pre-trial conference to address whether Progressive's actions in settling the third party claims against the Vigils would be admitted into evidence. It ruled that, “as a limine matter, ... issues concerning the payment ... should not go to the jury.” Progressive's counsel asked the district court whether it was “saying that the jury will not be allowed to know that Progressive ... settled those claims for $100,000 each[.]” The district court replied, “I don't think it's relevant to the issues of whether there was coverage. No, I think that's part of the reimbursement claim [that was disposed of on summary judgment]. No.” Progressive's counsel explained that given such a ruling, it could be anticipated that the Vigils were “going to say [Progressive] should have paid these claims and [Progressive] acted in bad faith and [it] left [the Vigils] hanging out there like that.” The district court nonetheless entered an order prohibiting “all witnesses and attorneys ... from mentioning ... [that Progressive] ... paid $200,000 to settle [the third-party] liability claims.”

{10} The second jury trial was held in 2011. During her closing argument, the Vigils' counsel emphasized, among other things, that “[t]his case ha[d] been going on for nine years” and that, during that time, Progressive “wouldn't even pay for [Martin's] truck, let alone all the other coverages they should have provided under this policy. ” (Emphasis added.)

{11} The jury found that the Vigils had coverage on the date of the accident and Progressive acted in bad faith regarding the resulting coverage claims. In addition to the award of about $40,000 in contract damages under the policy, the jury awarded the Vigils $37,000 in compensatory damages and $11.7 million in punitive damages for their bad faith claim. The district court later awarded the Vigils about $1.4 million in attorney fees and $35,000 in costs under Section 39–2–1.

DISCUSSION

A. Evidence of the Previous Ruling

{12} Progressive argues that the district court erred in prohibiting Progressive from admitting any evidence about the previous judge's ruling that the Vigils were not covered under the policy on the date of the accident. Progressive argues that even though this ruling was reversed on appeal because it involved a disputed factual issue, the fact of the ruling “indicate[s] that Progressive did not act in bad faith, and certainly that it should not be liable for punitive damages.” We agree.

{13} “We review the admission or exclusion of evidence for abuse of discretion.” Kilgore v. Fuji Heavy Indus. Ltd., 2009–NMCA–078, ¶ 39, 146 N.M. 698, 213 P.3d 1127. Generally, relevant evidence is admissible and irrelevant evidence is inadmissible. See Rule 11–402 NMRA. “Evidence is relevant if ... it has any tendency to make a fact more or less probable than it would be without the evidence, and ... the fact is of consequence in determining the action.” Rule 11–401 NMRA ; see Coates v. Wal–Mart Stores, Inc., 1999–NMSC–013, ¶ 37, 127 N.M. 47, 976 P.2d 999. We will reverse a judgment based on the erroneous exclusion of evidence only if “the complaining party on appeal ... show[s] the erroneous ... exclusion of evidence was prejudicial.” Id. (alteration, internal quotations marks, and citation...