Progressive Nw. Ins. Co. v. Weed Warrior Serv., 32,220.

• Docket Nº: No. 32,220.
• Citation: 2010 -NMSC- 050, 149 N.M. 157, 245 P.3d 1209
• Case Date: October 18, 2010
• Court: Supreme Court of New Mexico

245 P.3d 1209
149 N.M. 157
2010 -NMSC- 050

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

No. 32,220.

Supreme Court of New Mexico.

Oct. 18, 2010.

245 P.3d 1210

George Wright Weeth, Albuquerque, NM, for Appellants.

Simone, Roberts & Weiss, P.A., Meena H. Allen, Albuquerque, NM, for Appellee.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Lisa Mann, Jennifer Noya, Albuquerque, NM, for Amici Curiae American Insurance Association and Property Casualty Insurers Association of America.

OPINION

SERNA, Justice.

{1} In this case we consider the duty imposed on insurers to offer uninsured/underinsured motorist (UM/UIM) coverage under NMSA 1978, Section 66-5-301 (1983). We answer in the affirmative the question, certified to us by the United States Court of Appeals for the Tenth Circuit, of whether the election by an insured to purchase UM/UIM coverage in an amount less than the policy liability limits constitutes a rejection of the maximum amount of UM/UIM coverage permitted under Section 66-5-301. This Opinion responds to the certified question only; application is discussed in the consolidated cases of Jordan v. Allstate Insurance Co., Romero v. Progressive Northwestern Insurance Co., No. 32,065, and Lucero v. Trujillo, No. 32,203, filed this same day. See Jordan v. Allstate Ins. Co., 2010-NMSC-051, 149 N.M. 162, 245 P.3d 1214 (2010).

FACTUAL AND PROCEDURAL BACKGROUND

{2} Brenda Etcheverry was injured in a car accident and settled her claim against the tortfeasor for his policy limits of $100,000. Progressive Nw. Ins. Co. v. Weed Warrior Servs., 588 F.Supp.2d 1281, 1282 (D.N.M.2008). Mrs. Etcheverry filed a claim with Progressive Northwestern Insurance Company (Progressive), with whom her husband's company, Weed Warrior Services, insured their vehicles. Id. The Progressive policy included liability limits of $1,000,000 and UM/UIM coverage of $100,000 for each accident. Id. The United States District Court for the District of New Mexico entered a declaratory judgment in favor of Progressive, because the amount of UM/UIM coverage available under the Progressive policy was offset by the settlement with the tortfeasor. Id. Mrs. Etcheverry was permitted to amend her complaint and argued that the Progressive policy should be reformed to provide UM/UIM coverage equal to the liability limits of $1,000,000, rather than $100,000, because the purchase of UM/UIM coverage at an amount lower than the liability limits was not evidenced with a written rejection. Id. at 1282, 1284.

{3} The district court predicted that this Court would interpret New Mexico law to provide that "the affirmative selection of a level of UM/UIM coverage in an amount less than full liability coverage [does not] constitute[ ] a 'rejection' of coverage such that an insurer must obtain a written waiver of coverage and include it in the policy." Id. at 1288. Mrs. Etcheverry and Weed Warrior Services appealed the district court's ruling to the Tenth Circuit Court of Appeals, which certified the following question pursuant to Rule 12-607 NMRA and NMSA 1978, Section 39-7-4 (1997):

Does the election to take UM/UIM coverage for less than the general policy liability limits constitute a rejection under the New Mexico uninsured motorist statute, [Section] 66-5-301[ ]?

{4} Although an issue of first impression for this Court, it is not the first time the question has arisen in the federal or state courts of New Mexico. Our Court of Appeals

245 P.3d 1211

considered the offer and rejection requirements of UM/UIM coverage in Romero v. Progressive Northwestern Insurance Co., 2010-NMCA-024, 148 N.M. 97, 230 P.3d 844, cert. denied, 2010-NMCERT-001, 147 N.M. 673, 227 P.3d 1055, and reh'g granted, 2010-NMCERT-003, 148 N.M. 560, 240 P.3d 15 (No. 32,065, Mar. 1, 2010). See also Farmers Ins. Co. of Ariz. v. Chen, 2010-NMCA-031, 148 N.M. 151, 231 P.3d 607, cert. granted, 2010-NMCERT-004, 148 N.M. 573, 240 P.3d 660 (No. 32,243, Apr. 1, 2010) ¹; Lucero v. Trujillo, No. 29,859, slip op., 2010 WL 3968651 (N.M.Ct.App. Jan.7, 2010), cert. granted, 2010-NMCERT-003, 148 N.M. 560, 240 P.3d 15 (No. 32,203, Mar. 1, 2010); Jordan v. Allstate Ins. Co., No. 28,638, slip op., 2009 WL 6634039 (N.M.Ct.App. Oct.29, 2009), cert. denied, 2010-NMCERT-001, 147 N.M. 673, 227 P.3d 1055, and reh'g granted, 2010-NMCERT-003, 148 N.M. 560, 240 P.3d 15 (No. 32,063, Mar. 1, 2010). The question also was addressed by a federal district court in Farm Bureau Mutual Insurance Co. v. Jameson, 472 F.Supp.2d 1272 (D.N.M.2006). With the exception of the district court in Mrs. Etcheverry's case, the courts determined that the purchase of UM/UIM coverage in an amount less than the policy's liability limits constitutes a rejection of the maximum amount of UM/UIM coverage statutorily available. Farm Bureau Mut., 472 F.Supp.2d at 1280-81; Romero, 2010-NMCA-024, ¶ 24, 148 N.M. 97, 230 P.3d 844. We agree with that conclusion.

ANALYSIS

{5} Section 66-5-301 of the New Mexico statutes governs uninsured and underinsured motorist coverage. The UM/UIM statute is "intended to expand insurance coverage and to protect individual members of the public against the hazard of culpable uninsured motorists." Romero v. Dairyland Ins. Co., 111 N.M. 154, 156, 803 P.2d 243, 245 (1990). Subsection A of Section 66-5-301 mandates uninsured motorist coverage:

No motor vehicle or automobile liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person and for injury to or destruction of property of others ... shall be delivered or issued for

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