State Farm Mut. Auto. Ins. Co. v. Maidment

• Decision Date: 30 June 1988
• Docket Number: No. 10336,10336
• Citation: 107 N.M. 568,761 P.2d 446,1988 NMCA 60
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent-Appellant, v. Paula Jo MAIDMENT, as Next Friend and Guardian of Edward Maidment, a minor, Applicant-Appellee.
• Court: Court of Appeals of New Mexico

Page 446

761 P.2d 446

107 N.M. 568

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent-Appellant, v. Paula Jo MAIDMENT, as Next Friend and Guardian of Edward

Maidment, a minor, Applicant-Appellee.

No. 10336.

Court of Appeals of New Mexico.

June 30, 1988.

Certiorari Denied Aug. 2, 1988.

[107 N.M. 569] Robert E. Sabin, R. Tracy Sprouls, Atwood, Malone, Mann & Turner, P.A., Roswell, for respondent-appellant.

Charles C. Currier, Hunt & Currier, Thomas E. Lilley, Roswell, for applicant-appellee.

OPINION

BIVINS, Judge.

In Stewart v. State Farm Mutual Automobile Insurance Co., 104 N.M. 744, 726 P.2d 1374 (1986), the supreme court held that under New Mexico's uninsured motorist law, an insured may recover punitive damages from his insurer if he would be legally entitled to recover them from the uninsured motorist. The case before us raises the question of whether an insured can recover punitive damages from his insurer when the uninsured motorist dies before an award is made. We hold he cannot since he would not be legally entitled to recover those damages from the estate of the uninsured motorist.

State Farm appeals an award of punitive damages in an uninsured motorist claim. The underlying cause of action arose out of a collision between a motorcycle driven by Edward Maidment, a minor, and an automobile driven by John Swelling. Swelling, an uninsured motorist, died before the claim was submitted to arbitration. After a hearing, the arbitrators awarded applicant $175,000 in compensatory damages, and recommended that the district court award $25,000 in punitive damages.

Applicant applied to the district court for confirmation of the arbitrators' award, and State Farm moved to correct or modify the award to the extent it recommended punitive damages. See NMSA 1978, Secs. 44-7-11 and -13. The district court denied State Farm's motion, accepted the arbitrators' recommendation as to punitive damages, and entered judgment for $175,000 compensatory damages, $25,000 punitive damages, and interest. State Farm paid the compensatory damages with interest, and appeals only from that portion of the judgment awarding punitive damages with interest thereon. We reverse.

Before discussing the substantive issue, we dispose of a jurisdictional question and a procedural matter raised by applicant in her brief. She argues, first, that, under SCRA 1986, 12-102(A)(1), this court does not have jurisdiction of this appeal because the controversy arises out of an insurance contract and requires the interpretation of the rights and obligations of the parties to that contract. We disagree.

This appeal is from a judgment of the district court confirming the arbitrators' award pursuant to Section 44-7-11. The appeal shall be taken in the manner as from judgments in civil actions. NMSA 1978, Sec. 44-7-19.

Although it is established that the obligations of an insurer are determined by application of contract law principles to the particular terms of an insurance policy, March v. Mountain States Mut. Cas. Co., 101 N.M. 689, 687 P.2d 1040 (1984), this court has determined that it has jurisdiction over uninsured motorist claims against an insurer where the insurer's liability is contingent upon the tort liability of the uninsured motorist. Sandoval v. Valdez, 91 N.M. 705, 580 P.2d 131 (Ct.App.1978) (construing former statute); see also Chacon v. Mountain States Mut. Cas. Co., 82 N.M. 54, 475 P.2d 320 (1970), transferred to 82 N.M. 602, 485 P.2d 358 (Ct.App.1971) (supreme court transfers uninsured motorist claim of bad faith of insurer to court of appeals as it sounds in tort).

State Farm's contention that its liability for payment of punitive damages is contingent upon the tort liability of the uninsured motorist is supported by the language of New Mexico's uninsured motorist coverage statutes, NMSA 1978, Secs. 66-5-301 to -303 (Repl.Pamp.1984), and case law interpreting the statutes. Section 66-5-301(A) requires, in relevant part, that uninsured motorist coverage be provided "for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles * * *." In Stewart v. State Farm Mutual Automobile Insurance Co., the supreme court examined this language and held that, under the uninsured motorist coverage statutes, an insured may recover punitive damages from an insurer if he would be legally entitled to recover them from the uninsured tort-feasor. Therefore, we hold this court has jurisdiction to entertain this appeal.

Second, applicant contends this appeal must fail because State Farm never offered into evidence either a copy of the contract of insurance or any proof of the death of the uninsured motorist. We, likewise, reject these claims. State Farm does not rely on the contract of insurance to limit recovery for punitive damages. In fact, at arbitration, it stipulated as to coverage. In denying liability for punitive damages, State Farm relies on the uninsured motorist coverage statutes and traditional concepts of tort law. Applicant seems to imply that the language of the contract provides for payment of punitive damages regardless of whether the insured would be legally entitled to recover them from the uninsured motorist. If that is the case, the burden of producing the contracts was on applicant, not State Farm.

With regard to applicant's contention that the record contains no proof of death, we note that State Farm's docketing statement contains a factual recitation that "[o]n March 12, 1987, Mr. Swelling died." Applicant did not challenge this factual allegation. As a general rule, unchallenged factual allegations in a docketing statement of a case that has been assigned to a legal calendar are accepted as the facts in the case. State v. Calanche, 91 N.M. 390, 574 P.2d 1018 (Ct.App.1978). This case was assigned to the legal calendar. In any event, the record and transcript of proceedings have nonetheless been forwarded to this court. Although these documents contain no proof of death other than an unanswered allegation in State Farm's motion to modify and statements by counsel for State Farm at oral argument, they do indicate that Swelling's death was never disputed. Moreover, the arbitrators' affidavits, contained in the supplemental transcript, show that an offer of proof of death was made during the arbitration proceedings and that counsel for applicant, as well as all of the arbitrators, agreed that no such proof was necessary. Additionally, the supplemental transcript contains a letter from the district judge to the parties' respective counsel, which reveals that Swelling's death was accepted as a fact. The record, transcript, and supplemental transcript demonstrate that the fact of Swelling's death was indeed an undisputed fact of the case presented to both the district court and the arbitrators. Cf. id. We turn now to the critical issue: whether the uninsured motorist's death precludes an award of punitive damages.

The arbitrators found that "the actions and conduct of John Swelling were grossly negligent or reckless so as to justify the award of punitive damages * * *." State Farm does not contest this determination. It contends that because punitive damages cannot be awarded against the estate of a deceased tort-feasor, an insured cannot recover them from his insurer under uninsured motorist coverage.

Although New Mexico has not addressed the question, the vast majority of jurisdictions hold that punitive damages cannot be recovered from the estate of a deceased tort-feasor. See Annotation, Claim for Punitive Damages in Tort Action as Surviving Death of Tortfeasor or Person Wronged, 30 A.L.R.4th 707 (1984). The Tenth Circuit Court of Appeals, predicting New Mexico law, adopted the majority view in holding that punitive damages are not available from the estate of a wrongdoer. Barnes v. Smith, 305 F.2d 226 (10th Cir.1962). The rationale underlying the majority position is that since the tort-feasor is dead, the primary purpose for imposition of punitive damages, punishment, can no longer be accomplished. Thus, no reason exists to impose punitive damages. See also 4 Restatement (Second) of Torts Sec. 908, comment a (1979); 3 L. Frumer & M. Friedman, Personal Injury, Damages Sec. 2.02 (1984); 5 M. Minzer, J. Nates, C. Kimball, D. Axelrod, Damages in Tort Actions Sec. 40.52 (1987).

New Mexico has long recognized that punitive damages are assessed to punish the tort-feasor and not to compensate for loss by a plaintiff. Stewart v. Potter, 44 N.M. 460, 104 P.2d 736 (1940). This principle has been consistently followed by the courts of this state. See, e.g., Bank of N.M. v. Rice, 78 N.M. 170, 429 P.2d 368 (1967), appeal after remand, 79 N.M. 115, 440 P.2d 790 (1968); Sanchez v. Dale Bellamah Homes of N.M., Inc., 76 N.M. 526, 417 P.2d 25 (1966); Gonzales v. Sansoy, 103 N.M. 127, 703 P.2d 904 (Ct.App.1984); Christman v. Voyer, 92 N.M. 772, 595 P.2d 410 (Ct.App.1979). Significantly, this principle was reaffirmed recently by the supreme court in Stewart v. State Farm Mutual Automobile Insurance Co.

Applicant reminds us that while punishment of the tort-feasor may be the primary purpose in awarding punitive damages, this state also recognizes deterrence to others as a legitimate goal. See Gonzales v. Sansoy. The deterrent effect of punitive damages on others, however, is inextricably tied to the punishment of the tort-feasor. If the tort-feasor cannot be punished, it follows that there can be no general deterrence. The Florida Supreme Court, in a case decided earlier this year, joined the majority by holding that punitive damages may not be awarded against the estate of a deceased tort-feasor. Lohr v. Byrd, 522 So.2d 845 (Fla.1988). The Florida Supreme Court said the decedent's innocent heirs should not be punished when the wrongdoer is unavailable because of death. It quoted with approval the statement of the Fifth District Court of...