Ullman v. Safeway Ins. Co.

• Decision Date: 28 June 2017
• Docket Number: NO. A-1-CA-34897.,A-1-CA-34897.
• Parties: Betty E. ULLMAN, for herself and others similarly situated, Plaintiff-Appellee, v. SAFEWAY INSURANCE COMPANY, Defendant-Appellant, and Richard Bailey, Defendant.
• Court: Court of Appeals of New Mexico

404 P.3d 434

Betty E. ULLMAN, for herself and others similarly situated, Plaintiff-Appellee,

v. SAFEWAY INSURANCE COMPANY, Defendant-Appellant,andRichard Bailey, Defendant.

NO. A-1-CA-34897.

Court of Appeals of New Mexico.

Filing Date: June 28, 2017

Certiorari Granted, August 24, 2017, No. S-1-SC-36580

Law Offices of Geoffrey R. Romero, Geoffrey R. Romero, Albuquerque, NM, Garcia Ives Nowara, LLC, Matthew L. Garcia, Albuquerque, NM, Freedman, Boyd, Hollander, Goldberg, Urias & Ward, P.A., Joseph Goldberg, David A. Freedman, Vincent J. Ward, Albuquerque, NM, Vargas Law Firm, LLC, Ray M. Vargas, II, Albuquerque, NM, O'Connell Law LLC, Erin B. O'Connell, Albuquerque, NM, for Appellees.

Butt, Thornton & Baehr, P.C., Rheba Rutkowski, James H. Johansen, Albuquerque, NM, for Appellant.

OPINION

JONATHAN B. SUTIN, Judge

{1} This matter comes to us on interlocutory appeal from the denial of Safeway Insurance Company's motion for summary judgment seeking dismissal of class action claims. Safeway sought to prove that its insurance documents were legally adequate to support its rejections of claims of class members to uninsured and underinsured motorist (UM/UIM) benefits. The district court certified that the case involved "a controlling question of law as to which there is [a] substantial ... difference of opinion and that an immediate appeal ... may materially advance the ultimate termination of the litigation." The court identified that controlling question as "whether Safeway has complied with New Mexico law in obtaining waivers of [UM/UIM] coverage insurance, including stacked coverage, from its insureds."

{2} Safeway asks this Court to (1) rule that Safeway obtained valid rejections of UM/UIM coverage in compliance with New Mexico law; (2) reverse the order denying Safeway's class-related motion for summary judgment; and (3) remand with instructions to dismiss the class claims with prejudice and de-certify the class because "a ruling on the certified question in Safeway's favor means that the alleged violation of law that grounds the class definition and class claims does not exist, leaving no common question appropriate for class litigation." We hold that Safeway obtained valid rejections of UM/UIM coverage in compliance with New Mexico law. We further hold that, on remand, the district court is to address any remaining class-related issues or concerns.

I. THE CLASS

{3} In pursuit of class certification in an action against Safeway, Plaintiff Betty E. Ullman stated the certified class to be:

All New Mexico residents, who are all Safeway policyholders or insureds under any Safeway policy issued, or reissued, in New Mexico where that Safeway policy did not provide the maximum amount of [UM/UIM] coverage allowed by law and for which Safeway did not obtain a valid waiver/rejection of UM/UIM coverage with limits equal to the limits of liability coverage. An invalid waiver/rejection of UM/UIM coverage is one which did not include an offer of UM/UIM limits up to the liability limits and a disclosure of premium amount for each available level of coverage, including stacked coverage.

Ullman's claims and the class membership are based on Ullman's assertion of legally inadequate Safeway UM/UIM documentation affecting all policyholders in the class.

II. STANDARD OF REVIEW

{4} In the district court, Ullman argued that the issue was whether Safeway's uniform documentary language complied with New Mexico law, and for that reason, the particular circumstances surrounding an ultimate rejection, including the means in which the rejection was obtained, were immaterial. Whether the documents met the legal requirements for offering and obtaining waivers of UM/UIM coverage and for stacking of benefits is a legal question resolved by interpretation of applicable statutory, regulatory, and case law, calling for de novo review. See Marckstadt v. Lockheed Martin Corp. , 2010-NMSC-001, ¶ 13, 147 N.M. 678, 228 P.3d 462 ; Wilkeson v. State Farm Mut. Auto Ins. Co. , 2014-NMCA-077, ¶ 6, 329 P.3d 749.

{5} The question whether language in a document meaningfully informs a customer regarding the insurance offered requires this Court "to consider legal concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles[.]" State v. Attaway , 1994-NMSC-011, ¶ 6, 117 N.M. 141, 870 P.2d 103 (internal quotation marks and citation omitted). Like the concept of reasonableness, the concept of meaningful involves the exercise of reasoned and evaluative judgment as to concepts inherently factual yet in need of appellate court de novo review. See id. ¶ 9 (discussing "rules and tests, based as they are on careful balancing of the underlying constitutional values," serving as "a proxy for reasonableness, generally applicable, but inherently factual[,]" yet "extend [ing] beyond fact-finding and implicat[ing] an assessment of broader legal policies ... entrust[ed] to the reasoned judgment of the appellate courts of this state"); Randall H. Warner, All Mixed Up About Mixed Questions , 7 J. App. Prac. & Process, No. 1, at 129 (Spring 2005) ("[E]valuative determinations involve the judging of a person's conduct or belief. This is typically done by applying a standard like ‘reasonable’ or ‘fair’ that conveys to the decision-maker that he or she is judging according to a community standard."). In such instances, appellate courts are free to conclude that, as a matter of policy, the issue should be reviewed de novo in the interests of judicial administration. Attaway , 1994-NMSC-011, ¶¶ 6-8, 117 N.M. 141, 870 P.2d 103 ; Warner, supra , at 109-12, 118, 130-31. Thus, it is for this Court to determine whether the documents were legally adequate to meaningfully inform Ullman of required insurance information. For the purposes of our de novo review, it is to be understood that Ullman received the critical documents.

III. THE LEGAL REQUIREMENTS

A. UM/UIM Coverage and Rejection of Coverage

{6} UM/UIM coverage and rejection of coverage are subjects of NMSA 1978, Section 66-5-301(1983), and its implementing regulation, 13.12.3.9 NMAC. Section 66-5-301 reads:

A. 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 arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in New Mexico with respect to any motor vehicle registered or principally garaged in New Mexico unless coverage is provided therein or supplemental thereto in minimum limits for bodily injury or death and for injury to or destruction of property as set forth in Section 66-5-215 NMSA 1978 and such higher limits as may be desired by the insured, but up to the limits of liability specified in bodily injury and property damage liability provisions of the insured's policy, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, and for injury to or destruction of property resulting therefrom, according to the rules and regulations promulgated by, and under provisions filed with and approved by, the superintendent of insurance.

B. The uninsured motorist coverage described in Subsection A of this section shall include underinsured motorist coverage for persons protected by an insured's policy. For the purposes of this subsection, "underinsured motorist" means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage....

C. The uninsured motorist coverage shall provide an exclusion of not more than the first two hundred fifty dollars ($250) of loss resulting from injury to or destruction of property of the insured in any one accident. The named insured shall have the right to reject uninsured motorist coverage as described in Subsections A and B of this section; provided that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured has rejected the coverage in connection with a policy previously issued to him by the same insurer.

The regulation states: "The rejection of the provisions covering damage caused by an uninsured ... motor vehicle as required in writing by the provisions of Section 66-5-301... must be endorsed, attached, stamped or otherwise made a part of the policy of bodily injury and property damage insurance." 13.12.3.9 NMAC ; see Romero v. Dairyland Ins. Co. , 1990-NMSC-111, ¶ 8, 111 N.M. 154, 803 P.2d 243 ("An insured may reject [UM] coverage, but the rejection must satisfy the regulations promulgated by the superintendent of insurance.").

{7} In Montano v. Allstate Indemnity Co. , 2004-NMSC-020, ¶¶ 17, 20, 135 N.M. 681, 92 P.3d 1255, our Supreme Court charted a "new course" in UM/UIM law, which, among other rulings, required insurers in multiple-vehicle policies to "declare the premium charge for each of the ... coverages" as a means of ensuring that consumers get what they pay for. In Progressive Northwestern Insurance Co. v. Weed Warrior Services , 2010-NMSC-050, ¶¶ 8, 14-15, 149 N.M. 157, 245 P.3d 1209, our Supreme Court required that insurers offer UM/UIM coverage that includes "the maximum amount statutorily available" equal "to the liability limits of the policy[.]" Further, the Court explained the insured's choice to purchase any lower amount functions as a rejection of that maximum amount of coverage statutorily possible. Id. ¶ 14.

{8} With respect to obtaining valid rejections of UM/UIM coverage, several New Mexico Supreme Court cases have stated what constitutes compliance,...