State Farm Fire & Cas. Co. v. Ruiz

• Citation: 36 F.Supp.2d 1308
• Decision Date: 21 January 1999
• Docket Number: No. Civ. 96-1336-MV/JHG.,Civ. 96-1336-MV/JHG.
• Parties: STATE FARM FIRE & CASUALTY COMPANY, Plaintiff, v. Della RUIZ, Patrick Ruiz, and Jessica Munoz, Personally and as Guardian and Personal Representative of the Estate of Patrick Munoz, Defendants.
• Court: U.S. District Court — District of New Mexico

36 F.Supp.2d 1308

STATE FARM FIRE & CASUALTY COMPANY, Plaintiff, v. Della RUIZ, Patrick Ruiz, and Jessica Munoz, Personally and as Guardian and Personal Representative of the Estate of Patrick Munoz, Defendants.

No. Civ. 96-1336-MV/JHG.

United States District Court, D. New Mexico.

January 21, 1999.

Rudolph A. Lucero, Miller, Stratvert, Torgerson & Schlenker, Albuquerque, NM, Wayne C. Wolf, Albuquerque, NM, for State Farm Fire & Casualty Company, plaintiff.

Mark J. Riley, Riley, Shane & Hale, PA, Albuquerque, NM, for Della Ruiz, defendant.

Mark J. Riley, Shane & Hale, Robert J. Maguire, Maguire & Associates, Albuquerque, NM, Peter D. White, Santa Fe, NM, for Jessica Munoz, Personally and as Guardian and Personal Representative of the Estate of Patrick Munoz est Patrick Munoz, defendant.

Patrick Ruiz, Las Cruces, NM, defendant pro se.

Robert J. Maguire, Maguire & Associates, Albuquerque, NM, Peter D. White, Santa Fe, NM, for Jessica Munoz est Patrick Munoz, counter-claimant.

MEMORANDUM OPINION AND ORDER

VAZQUEZ, District Judge.

THIS MATTER is before the Court on Defendant Jessica Munoz's Motion for Partial Summary Judgment filed December 3, 1998 [Doc. No. 83]. The Court, having considered the motion, response, reply, relevant law, and being otherwise fully informed, finds that the motion is well-taken and will be GRANTED IN PART AND DENIED IN PART.

BACKGROUND

Plaintiff State Farm Fire & Casualty Company ("State Farm") brought this action seeking a declaratory judgment that it was not liable to defend or indemnify its insured, Patrick Ruiz, as a result of a state court action brought by Defendant Jessica Munoz. Jessica Munoz filed counterclaims asserting bad faith, breach of contract, unfair insurance practices, unfair trade practices, and prima facie tort, and seeking to hold State Farm liable for a $1,000,000 settlement entered in favor of Jessica Munoz and against the insured Patrick Ruiz.

For the purpose of resolving this motion, the Court finds that the following are the undisputed facts:

1. On or about August 12, 1991, Patrick Munoz, then five years old, sustained injuries which ultimately resulted in his death.

2. At the time of his death, Patrick Munoz was at the home of Patrick Ruiz, his biological father, and Della Ruiz, Patrick Ruiz' wife.

3. Patrick Ruiz was subsequently convicted of child abuse in violation of Section 30-6-1-(C) of the New Mexico Statutes as a result of Patrick Munoz' death. He appealed the conviction which was affirmed. State v. Ruiz, 119 N.M. 515, 892 P.2d 962 (Ct.App.) cert. denied 119 N.M. 354, 890 P.2d 807 (1995).

4. At the time of Patrick Munoz' death, Patrick and Della Ruiz were covered by a homeowner's policy issued by State Farm. The policy provided coverage for bodily injury caused by an "occurrence" which is defined as an "accident." The policy specifically excluded injuries "either expected or intended by an insured."

5. In 1994, Jessica Munoz, personally and as guardian and personal representative of the estate of Patrick Munoz, filed a civil suit against Patrick Ruiz, Della Ruiz, and Efren Ruiz in the Second Judicial District, County of Bernalillo, State of New Mexico.¹

6. The factual allegations of the complaint state that "Patrick Munoz died on August 12, 1991. The death was caused by traumatic closed head injuries. It was reported that he fell off a trailer from a height of five feet, seven inches at his father's residence...." The complaint further alleges that all three named defendants were present and owed a duty of care to Patrick Munoz. Under the caption "Wrongful Death," the complaint asserts that Patrick Munoz's death was "caused by the wrongful act, neglect of default" of defendants. Under the caption "Negligence," the complaint asserts that Patrick Ruiz's death "was proximately caused by the negligence of Defendants." Finally, under the caption "Negligence Per Se," the complaint alleges that Patrick Ruiz was convicted of "knowingly, intentionally, or negligently, and without justifiable cause, causing or permitting Patrick Munoz to be placed in a situation that may endangered his life or health which resulted in the death or great bodily harm to Patrick Munoz" and that such conduct constitutes negligence per se. No other facts are alleged in the complaint.

7. Della Ruiz subsequently requested a defense and indemnification from State Farm under the Ruiz' Policy for the claims asserted against her in the civil action. State Farm provided a defense to Della Ruiz under a reservation of rights.

8. State Farm sent Patrick Ruiz a reservation of rights letter and non-waiver agreement on April 2, 1996, although Patrick Ruiz had not yet requested a defense at that time.

9. On September 24, 1996, State Farm filed the instant action seeking a declaratory judgment that it was not required to defend or indemnify Della Ruiz.

10. At some point after September 24, 1996, Patrick Ruiz requested a defense and indemnification from State Farm.

11. On October 25, 1996, State Farm sent Patrick Ruiz a letter denying coverage and refusing to provide a defense.

12. State Farm subsequently amended the complaint in this action seeking a declaratory judgment that it was not obliged to defend or indemnify Patrick Ruiz.

13. Prior to trial, Jessica Munoz offered to settle her claims against the Ruizes within the policy limits. State Farm refused these offers.

14. The case against Della Ruiz proceeded to trial in April of 1997. At trial, Jessica Munoz presented evidence that Patrick Munoz died as a result of physical abuse inflicted by his father and that Della Ruiz was aware of the ongoing abuse but failed to take action. An attorney for State Farm, representing Della Ruiz, presented evidence that Patrick Munoz died from a fall from a tree. A verdict was entered in favor of Della Ruiz.

15. State Farm subsequently dismissed Della Ruiz from this action.

16. On May 2, 1997, the state district court entered a stipulated judgment against Patrick Ruiz and in favor of Jessica Munoz in the amount of $1,000,000. An amended judgment was entered on August 21, 1997, clarifying that the state district court had not determined whether the settlement amount was reasonable.

17. The amended judgment incorporated the terms of a settlement agreement and an assignment of rights in which Jessica Munoz obtained all of Patrick Ruiz's rights as an insured against State Farm in exchange for a covenant not to execute the judgment against Patrick Ruiz personally.

In the present action, State Farm previously moved for summary judgment in its favor, arguing that it was not required to defend or indemnify Patrick Ruiz for the injuries sustained by Patrick Munoz. This Court issued a Memorandum Opinion and Order on June 16, 1998, denying summary judgment to State Farm. Jessica Munoz now moves for partial summary judgment in her favor.

STANDARD OF REVIEW

Summary judgment is an integral part of the Federal Rules of Civil Procedure, which are intended to "`secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 1). Under Rule 56(c), summary judgment is appropriate when the court, viewing the record in the light most favorable to the non-moving party, determines that "there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law." Thrasher v. B & B Chemical Co., 2 F.3d 995, 996 (10th Cir.1993).

The movant bears the initial burden of showing "there is an absence of evidence to support the nonmoving party's case." Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). Once the movant meets this burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324, 106 S.Ct. 2548. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Although the material submitted by the parties in support of and in opposition to the motion must be construed liberally in favor of the party opposing the motion, Harsha v. United States, 590 F.2d 884, 887 (10th Cir. 1979), the burden on the moving party may be discharged by demonstrating to the district court that there is an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. In such a situation, the moving party is entitled to judgment as a matter of law, "because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Id. at 322, 106 S.Ct. 2548.

ANALYSIS

In the motion currently before the Court, Jessica Munoz seeks judgment in her favor on that part of her claim which asserts that State Farm breached its duty to defend Patrick Ruiz. In addition, Jessica Munoz argues that, as a result of the breach of the duty to defend, State Farm is liable as a matter of law for the full amount of the settlement entered into by Jessica Munoz and Patrick Ruiz. State Farm resists, arguing that it had no duty to defend and that even if it did, it is not automatically liable for the settlement amount. Further, the parties both seek to collaterally or judicially estop the other from raising certain arguments regarding the manner of Patrick Munoz's death.

Having reviewed these arguments, the Court concludes that State Farm did breach its duty to defend and, as a result, may not now raise coverage defenses to avoid liability for the settled judgment. However, State Farm is only liable beyond the policy limits if Jessica Munoz can...