Progressive Nw. Ins., Co. v. Weed Warrior Services, Civ. No. 05-0817 JCH/ACT.

• Citation: 588 F.Supp.2d 1281
• Decision Date: 05 December 2008
• Docket Number: Civ. No. 05-0817 JCH/ACT.
• Parties: PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Plaintiff, v. WEED WARRIOR SERVICES and Brenda Etcheverry, Defendants.
• Court: U.S. District Court — District of New Mexico

588 F.Supp.2d 1281

PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, Plaintiff, v. WEED WARRIOR SERVICES and Brenda Etcheverry, Defendants.

Civ. No. 05-0817 JCH/ACT.

United States District Court, D. New Mexico.

December 5, 2008.

Meena H. Allen, Stephen Simone, Simone, Roberts & Weiss, Albuquerque, NM, for Plaintiff.

George Wright Weeth, Albuquerque, NM, for Defendants.

MEMORANDUM OPINION AND ORDER

JUDITH C. HERRERA, District Judge.

This matter comes before the Court on cross-motions for summary judgment. Plaintiff Progressive Northwestern Insurance Company's ("Progressive's") motion [Doc. 81] and accompanying brief [Doc. 82] as well as Defendant Brenda Etcheverry's ("Mrs. Etcheverry's") motion [Doc. 79] and accompanying brief [Doc. 80] were both filed April 28, 2008. In addition, Mrs. Etcheverry filed a Motion for Leave to File a Surreply to Progressive's Motion for Summary Judgment [Doc. 99] on June 13, 2008. The Court having considered the motions, briefs, and relevant law, and being otherwise fully informed, finds that Progressive's motion for summary judgment [Doc. 81] should be DENIED, Mrs. Etcheverry's motion for summary judgment [Doc. 79] should also be DENIED, and Mrs. Etcheverry's Motion for Leave to File a Surreply [Doc. 99] should be DENIED as well.

BACKGROUND

On September 26, 2000, Mrs. Etcheverry was involved in a motor vehicle accident and injured. The vehicle that she was occupying when injured was not owned by her or a member of her household, nor was it insured by a policy on which she was the named insured. Instead, at the time of the accident, Mrs. Etcheverry was working in her capacity as a school security officer and driving a car owned by the Carlsbad Municipal Schools.

Mrs. Etcheverry settled her claim against the tortfeasor for his policy limits of $100,000. Ms. Etcheverry then sought to claim an additional settlement under a commercial automobile insurance policy ("the policy") issued by Progressive to Defendant Weed Warrior Services ("WWS"), under which Mrs. Etcheverry was a named driver. WWS was a company owned by Mrs. Etcheverry's husband that engaged in the business of spraying weeds. The policy provided $100,000 in uninsured/underinsured motorist ("UM/UIM") coverage for each accident. On September 25, 2006, the Court issued a memorandum opinion and order granting Progressive's motion for summary judgment [Doc. 20] and issued a declaratory judgment in favor of Progressive [Doc. 21] holding that any amount due to Mrs. Etcheverry under the UM/UIM portion of her insurance policy should be offset by the amount of liability proceeds received from the tortfeasor. Because the amount Mrs. Etcheverry claimed under the UM/UIM policy equaled the amount recovered from the tortfeasor, the Court held that Progressive had no duty to provide UM/UIM coverage to Mrs. Etcheverry for injuries that arose out of the accident.

However, that declaratory judgment did not end the case. On October 10, 2006, Mrs. Etcheverry filed a motion to amend the declaratory judgment [Doc. 23], arguing that her previous counsel had failed to notify her of Progressive's declaratory judgment lawsuit or to consult with her at all regarding the defense of the suit. After a hearing on August 14, 2007, the Court issued an order [Doc. 39] granting Mrs. Etcheverry's motion to amend the declaratory judgment, thereby allowing Mrs. Etcheverry to supplement her response to Progressive's motion for summary judgment. The Court's order did not allow Mrs. Etcheverry to reargue the offset issue that had been decided against her, but rather enabled her to raise for the first time the argument that her UM/UIM limits should be reformed to be $1 million rather than the $100,000 reflected on her policy. Progressive filed a motion for reconsideration of the Court's decision allowing Mrs. Etcheverry to present her argument on the UM/UIM policy limits [Doc 42], and on March 31, 2008, the Court issued a memorandum opinion and order [Doc. 76] denying Progressive's motion. The cross-motions for summary judgment that are currently before the Court followed.

SUMMARY JUDGMENT STANDARD

In diversity of citizenship cases such as this one, the forum state's substantive law governs the analysis of the underlying claims, but federal law determines the propriety of the court's summary judgment ruling. See Hill v. Allstate Ins. Co., 479 F.3d 735, 739 (10th Cir.2007). "Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

DISCUSSION

In her brief supporting her motion for summary judgment [Doc. 80], Mrs. Etcheverry argues that the UM/UIM limits of her policy should be reformed to provide $1 million in coverage in order to match the liability limits of the policy. She argues that New Mexico law requires that a policy contain a written rejection of UM/UIM coverage for any limit lower than the policy's liability limits, and that, because the purchaser of the insurance did not execute such a written rejection, the maximum UM/UIM coverage must therefore be read into the policy by the Court. Progressive's brief supporting its motion for summary judgment [Doc. 82] argues that Mrs. Etcheverry is not a covered insured, and therefore not entitled to UM/UIM coverage in any amount, so the Court should not even reach the question of what the UM/UIM policy limits should be.

The Court will address Progressive's contention first, as New Mexico courts have made clear that the first question to look at in a claim for coverage under an insurance contract is whether the claimant qualifies as an "insured." See Jaramillo v. Providence Washington Ins. Co., 117 N.M. 337, 871 P.2d 1343 (1994); Herrera v. Mountain States Mutual Cas. Co., 115 N.M. 57, 846 P.2d 1066 (1993). Only those who qualify as "insureds" are entitled to any coverage, including UM/UIM coverage. See Morro v. Farmers Ins. Group, 106 N.M. 669, 670-71, 748 P.2d 512 (1988); Gamboa v. Allstate Ins. Co., 104 N.M. 756, 758, 726 P.2d 1386 (1986).

A. Whether Mrs. Etcheverry is an Insured

In its motion for summary judgment, Progressive claims that the policy at issue only covers the vehicles specifically listed in the policy and occupants of those vehicles. Because Mrs. Etcheverry's accident occurred while she occupied a vehicle that was not specifically listed in the policy, Progressive now argues that she has no coverage under the policy. However, this argument contradicts Progressive's position taken earlier in this case.

At the outset of this case, when Mrs. Etcheverry sought only the $100,000 of UM/UIM coverage specified in the policy, Progressive never contested coverage when making its offset argument. In fact, in its own Statement of Undisputed Facts in its brief accompanying its motion for summary judgment on the offset issue, Progressive stated "[u]nder said policy, Brenda Etcheverry and her husband John Etcheverry were named drivers and covered under said policy." Doc. 13 at 2, ¶ 2. Progressive went on to state that "Plaintiff argues and Defendant acknowledges that the available UM/UIM coverage under the policy is $100,000." Id. at 3, ¶ 10. Similarly, in the Initial Pretrial Report jointly submitted by Progressive and Mrs. Etcheverry, the parties stipulated that Mrs. Etcheverry was covered under the policy, Doc. 11 at 2, ¶ 2, and stated that "Plaintiff has under the Progressive policy of insurance, specifically under the UM/UIM portion available $100,000." Id. at 1. Stipulations such as these are generally considered judicial admissions, and courts routinely accept them because they increase the efficiency of the judicial process. See Miller v. Eby Realty Group LLC, 396 F.3d 1105, 1116 (10th Cir.2005). Perhaps Progressive made a strategic decision initially to acknowledge coverage rather than contest it because it reasoned that disposing of the matter with the offset argument would be more expedient than contesting coverage. Regardless of its reasoning, Progressive cannot now retreat from its earlier fundamental admission simply because circumstances have changed and the amount at stake is greater. Progressive will be held to its initial admission that Mrs. Etcheverry is covered under the policy.¹

B. Whether UM/UIM Policy Limits Should be Reformed to $1 Million

In January, 2000, prior to Mrs. Etcheverry's accident, her husband ("Mr. Etcheverry") purchased a commercial automobile policy from Progressive through an independent agent. The named insured was listed as Weed Warrior Services. The application listed Mr. and Mrs. Etcheverry, as well as their son, as drivers of a single insured vehicle to be used in their business.² On the second page of the application, Mr. Etcheverry selected liability limits of $1 million and a UM/UIM combined single limit coverage of $100,000. The application page listed several potential levels of UM/UIM coverage, ranging from $25,000 up to $1 million. Above the signature line on the application, signed by Mr. Etcheverry, were a number of statements, including the following: "I understand several options of Uninsured/Underinsured Motorists Coverage are available and they have been explained to me. The option selected on this application is the option I desire." Mr. Etcheverry was never asked to sign, nor did he sign, a separate statement specifically acknowledging that he was selecting UM/UIM coverage that was less than his liability limit of $1 million. Mrs. Etcheverry contends that New Mexico law requires that anyone selecting UM/UIM coverage at a level less than their policy's liability limits must execute a written rejection of the maximum limits and, in the absence of such a written rejection, a court must reform the policy to reflect UM/UIM coverage equal to the...