Sarkar v. Hartford Ins. Co.
| Decision Date | 12 July 2013 |
| Docket Number | CV 12-0861 WPL/LAM |
| Parties | ADITI SARKAR, as personal representative of the Estate of Darrell K. Danner, Plaintiff, v. HARTFORD INSURANCE COMPANY OF THE MIDWEST, Defendant. |
| Court | U.S. District Court — District of New Mexico |
This matter is before me on a dispute over which state law governs an automobile insurance policy. Plaintiff Aditi Sarkar argues that New Mexico law governs the contract, and under New Mexico law she should be able to "stack"1 her underinsured motorist ("UIM") coverage. (Doc. 45; Doc 46.) Defendant Hartford Insurance Company of the Midwest counters that the insurance policy is subject to Oregon law, which holds that the anti-stacking provision in her insurance policy is enforceable. (Doc. 49.) Pursuant to 28 U.S.C § 636(c) and Federal Rule of Civil Procedure 73(b), the parties consented to have me serve as the presiding judge and enter a final judgment. After carefully considering the motions, the pleadings, and the relevant law, I find that there are insufficient facts to determine the choice of law question, so I must deny Sarkar's partial motion for summary judgment (Doc. 45) and deny in part Hartford's motion forsummary judgment (Doc. 49). Since New Mexico's relevant case law is ambiguous, I will grant in part Hartford's motion for summary judgment with respect to Sarkar's bad faith claims.
Darrell Danner was a resident of Las Cruces, New Mexico, since at least 2004, and until his death in November 2012. (Doc. 46 at 3; Doc. 55 Ex. 1 at 3.) In 2005 or earlier, Danner purchased an automobile insurance policy for a Ford F-150 truck from Hartford. (Doc. 49 Ex. 1.) Although Danner owned the truck, his adult son retained possession of the truck at his home in Scappoose, Oregon. (Doc. 49 at 2.) Danner's insurance policy reflected that the truck was principally garaged in Oregon at his son's address, but the mailing address for the policy was listed as Danner's P.O. Box in Las Cruces, New Mexico. (Doc. 49 at Ex. 1.)
In August 2006, Danner purchased a 2006 Chrysler while visiting his son in Oregon. (Doc. 49 at 3.) He registered the car in Oregon using his son's address. (Id.) Danner added the Chrysler to the Hartford insurance policy and indicated that the Chrysler was principally garaged in Oregon, even though he kept the Chrysler at his home in Las Cruces, New Mexico. (Doc. 46 at 3; Doc. 49 Ex. 4.) Danner renewed his policy every year in December, and every year from 2006 to 2009, Danner's policy indicated that the Chrysler was registered to and principally garaged in Oregon. (Doc. 49 Exs. 6-9.) Under the terms of the policy, Danner's premium was based in part on the place of principal garaging. (Doc. 49 Ex. 10 at 17.) The policy was mailed each year to Danner's address in New Mexico, and he paid all premiums "from New Mexico."(Doc. 49 Exs. 6-9; Doc. 54 at 8.) Danner did not have a local insurance agent in New Mexico, and he conducted all business with Hartford through the telephone. (Doc. 46 at 6.)
On April 9, 2010, Danner was in a motor vehicle accident in Las Cruces, New Mexico, while driving the Chrysler. (Id. at 2.) Clarissa Nanawa, an Auto Service Representative for Hartford, prepared a vehicle evaluation report after inspecting the vehicle in a Las Cruces repair shop and without reviewing the insurance policy. (Doc. 46 Ex. 16; Doc. 56 Ex. 2.) At the time, she had "no personal knowledge about where the vehicle was actually principally garaged." (Doc. 56 Ex. 2 at 2.) Brittney Watkins, a Hartford claims processor, sent Nanawa's report to Danner with a letter explaining that the total loss calculation was specific to New Mexico and that it was based on information such as "the Vehicle Identification Number, mileage, conditions, options and the zip code where it is garaged." (Doc. 46 Ex. 16.)
On January 7, 2011, after the car accident, Danner registered his Chrysler in New Mexico. (Doc. 49 at 7.) That April, Danner received an updated insurance policy, which included both the Chrysler and his wife's Ford Explorer and indicated that both cars were registered and principally garaged in New Mexico.3 (Id.)
Danner ultimately settled with the insurance company of the other driver involved in the accident for $100,000. (Doc. 42 at 2.) After settling, Danner made a claim of $100,000 with Hartford based on his belief that he could stack his UIM coverage.4 (Doc. 46 at 17.) In a letter dated June 21, 2012, Hartford denied Danner's claim, informing him that his policy as of April 9, 2010, contained an anti-stacking provision. (Doc. 49 at 7.) On July 30, 2012, Hartford later sent anotarized letter to Danner that attached a complete copy of the insurance policy effective on the day of the accident. (Doc. 46 Ex. 15; Doc. 49 Ex. 9.) However, the parties dispute which policy was actually attached to that letter. Hartford claims that it attached to its motion a complete and accurate copy of the letter sent to Danner, including an insurance policy which is labeled "Personal Injury Protection Oregon." (Doc. 49 Ex. 9 at 8.) The policy lists "Oregon" in several of the policy headings and references Oregon law repeatedly. (Id. at 8, 10, 12, 21, 22, 23, 24, 25, 26, 27, 37; Doc. 55 at 4.) The policy also contains an anti-stacking provision. (Doc. 49 Ex. 9 at 29.)
Sarkar, Danner's widow, testified that she did not recall receiving documents at any time that indicated that she and Danner had an Oregon policy. (Doc. 54 Ex. 1 at 13.) She also stated she found a New Mexico insurance policy handbook in her files at home (Doc. 54 Ex. 8 at 1-2), but this handbook is undated (id. at 3), and she did not say when she received it. By her own account, her files were not organized, and it was typical for mail to go unopened for months. (Doc. 55 Ex. 1 at 11-12.) She also testified that she would not have known which insurance materials Hartford would have sent to their home because Danner handled the mail. (Id. at 9.)
After a failed attempt to negotiate with Hartford through an attorney, Danner filed this lawsuit in state court (Doc. 1 Ex. 1), which Hartford subsequently removed to federal court on August 9, 2012 (Doc. 1). Danner sought a declaratory judgment that he is entitled to stack his coverage, in addition to damages for breach of contract, breach of the covenant of good faith and fair dealing, insurance bad faith and breach of fiduciary duties, unfair insurance claims practices, and unfair trade practices. (Doc. 1 Ex. 1 at 1-11.) During discovery, Danner passed away and his widow, Sarkar, substituted in as the personal representative on behalf of the estate of Darrell K.Danner. (Doc. 41.) The parties then filed their motions for summary judgment, which are presently before me.
Federal Rule of Civil Procedure 56 facilitates the entry of judgment without a trial when the pleadings, discovery materials, and affidavits, if any, show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). A fact is "material" if, under the governing law, it could have an effect on the outcome of the lawsuit, and the dispute is "genuine" if a rational jury could find in favor of the nonmoving party on the evidence presented. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (citations omitted). In considering the facts, the court must construe all facts in the light most favorable to the non-moving party. See Ricci v. DeStefano, 557 U.S. 557, 586 (2009).
Under New Mexico law, UIM insurance protection can be stacked, Konnick v. Farmers Ins. Co. of Arizona, 703 P.2d 889, 891 (N.M. 1985), and UIM limits are offset by the tortfeasor's liability coverage, Schmick v. State Farm Auto. Ins. Co., 704 P.2d 1092, 1099 (N.M. 1985). While the New Mexico Supreme Court has declined to condemn anti-stacking provisions altogether, it has clarified that such provisions will only be permissible when insurance companies receive written rejections from the insured. See Montano, 92 P.3d 1255, 1256. Under Oregon law, however, anti-stacking provisions in insurance policies are enforceable. VanWormer v. Farmers Ins. Co., 15 P.3d 612, 615 (Or. Ct. App. 2000); see also OR. REV. STAT. § 742.504(9)(a) (2011). It is undisputed that Danner's policy contained anti-stacking language, sothe enforceability of this provision and outcome of this case turn on whether New Mexico or Oregon law governs the contract.
When a federal court sits in diversity and must determine which state law to apply, the court must apply the choice of law rules of the state in which it sits. See Tucker v. R.A. Hanson Co., 956 F.2d 215, 217 (10th Cir. 1992) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Since this court sits in New Mexico, I will employ New Mexico's choice of law rules. Id.
In New Mexico, courts will apply the law of the state where the contract was made or executed. See O'Toole v. Northrop Grumman Corp., 305 F.3d 1222, 1225 (10th Cir. 2002) (citing Shope v. State Farm Ins. Co., 925 P.2d 515, 516, 517 (N.M. 1996)); Sheppard v. Allstate Ins. Co., 21 F.3d 1010 (10th Cir. 1994) (citing State Farm Mut. Ins. Co. v. Conyers, 784 P.2d 986 (N.M. 1989)). Also referred to as lex loci contractus, this rule holds that a contract is governed in the place where the last act necessary for its consummation is formed, see Conyers, 784 P.2d at 991 (citing Pound v. Ins. Co. of N. Am., 439 F.2d 1059, 1062 (10th Cir. 1971)), which is often the place where the last signature is affixed to the contract, id. (citing Brashar v. Mobil Oil Corp., 626 F. Supp. 434, 436 (D.N.M. 1984)).
On closer examination, though, it appears as if the characterization of the law as mandating a strict application of lex loci contractus is not entirely accurate, and the law...
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