Young v. Hartford Cas. Ins. Co., No. CIV 19-0688 LF\GJF

CourtUnited States District Courts. 10th Circuit. District of New Mexico
PartiesRICHARD YOUNG and PATRICIA YOUNG, Plaintiffs, v. HARTFORD CASUALTY INSURANCE COMPANY and PROPERTY & CASUALTY INSURANCE COMPANY OF HARTFORD. Defendants.
Decision Date30 November 2020
Docket NumberNo. CIV 19-0688 LF\GJF

RICHARD YOUNG and PATRICIA YOUNG, Plaintiffs,
v.
HARTFORD CASUALTY INSURANCE COMPANY and
PROPERTY & CASUALTY INSURANCE COMPANY OF HARTFORD.
Defendants.

No. CIV 19-0688 LF\GJF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

November 30, 2020


MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on the Defendants' Amended Motion to Dismiss and to Strike the Plaintiffs' Complaint, filed February 4, 2020 (Doc. 23)("MTD"). The Court held a hearing on April 15, 2020. See Clerk's Minutes Before the Honorable James O. Browning at 1, taken April 15, 2020 (Doc. 41)("Clerk's Minutes"). The primary issues are: (i) whether the Court should, pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure, dismiss Counts I, II, III, IV, V, and VI from the Plaintiffs' First Amended Complaint for Breach of Contract and Related Causes of Action, to Recover UM/UIM Benefits for Property Damage and for Declaratory Judgment, filed November 8, 2019 (Doc. 11)("Complaint"); (ii) whether the Court, pursuant to rules 12(b)(6) and 12(f), should dismiss and strike the Plaintiffs' request for punitive damages in ¶¶ 53, 65, 68, and 74, see Complaint ¶¶ 48-74, at 6-11; and (iii) whether the Court should certify to the Supreme Court of New Mexico the questions: (a) whether punitive damages are available on a breach-of-contract claim in the context of an insurance contract; (b) whether the Uninsured Motorist Act's ("UMA") § 66-5-301 covers automobile theft and loss-of-use damages arising from

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the theft of personal property, see NMSA 1978, § 66-5-301; and, (iii) whether punitive damages are available to insured persons ("insureds") under the UMA's § 66-5-301, see NMSA 1978, § 66-5-301.

The Court grants the MTD in part, and denies it in part. The Court denies the Defendants' -- Hartford Casualty Insurance Company and Property & Casualty Insurance Company of Hartford (collectively, "Hartford Insurance") -- Motion to Dismiss Count I of Rich Young's and Patricia Young's ("the Youngs") Complaint, because the Court concludes that questions of fact exist as to (i) whether Hartford Insurance breached its Automobile Policy with the Youngs by not paying the Youngs the full amount they argue they are entitled to related to their 2007 Case Tractor theft, and (ii) whether Hartford Insurance breached its Homeowners Policy with the Youngs by allegedly paying the Youngs only 12.48% of the amount to which the Youngs argue they are entitled to based on their March 30, 2016, property damage. The Court, relatedly, denies Hartford Insurance's Motion to Dismiss Count IV of the Youngs' Complaint, because the Court concludes that questions of fact exist whether Hartford Insurance breached its implied covenant of good faith and fair dealing with the Youngs when allegedly breaching the terms of the Youngs' Homeowners Policy and Automobile Policy. The Court grants Hartford Insurance's Motion to Dismiss the Youngs' request for punitive damages, pursuant to the Youngs' breach-of-contract claim against Hartford Insurance, see Complaint ¶ 53, at 7, because the Youngs do not advance evidence showing that Hartford Insurance acted with "wanton disregard" for the Youngs' rights, Romero v. Mervyn's, 1989-NMSC-081, ¶ 23, 784 P.2d 992, 998, or with an "evil motive or a culpable mental state," Paiz v. State Farm Fire & Cas. Co., 1994-NMSC-079, ¶ 25, 880 P.2d 300, 308, when allegedly underpaying the Youngs under the Automobile Policy or the Homeowners Policy. The Court denies Hartford Insurance's Motion to Dismiss Counts II and III of the Youngs' Complaint,

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because the Court concludes that the Youngs advance sufficient facts to show that Hartford Insurance committed unfair trade practices in violation of New Mexico's Unfair Insurance Practices Act ("UIPA"), NMSA 1978, § 59A-16-1, and in violation of New Mexico's Unfair Practices Act ("UPA"), NMSA 1978, § 57-12-2(D). The Court grants Hartford Insurance's Motion to Dismiss Count V of the Youngs' Complaint, because the Court concludes that the UMA's § 66-5-301(A) does not cover "property theft" and "loss of use" damages, see NMSA 1978, § 66-5-301(A). The Court, in turn, grants Hartford Insurance's Motion to Dismiss the Youngs' request for punitive damages pursuant to the UMA's § 66-5-301(A), because of the Court's conclusion that the UMA's § 66-5-301(A) does not cover the Youngs' theft and property damage. See NMSA 1978, § 66-5-301(A); Mortensen v. Liberty Mut. Ins., 2019 WL 1571730, at *3 (D.N.M. Apr. 11, 2019)(Khalsa, M.J.); Arnold v. Farmers Ins. Co., No. CIV 09-0030 JB\WDS, at 28, filed May 10, 2012 (Doc. 130)("Arnold III"); Arnold v. Farmers Ins. Co., 827 F. Supp. 2d 1289, 1300-1301 (D.N.M. 2011)(Browning, J.)("Arnold II"); Arnold v. Farmers Ins. Co., 760 F. Supp. 2d 1272, 1286 (D.N.M. 2010)(Browning, J)("Arnold I"). In addition, the Court grants Hartford Insurance's Motion to Dismiss Count VI of the Youngs' Complaint -- the Youngs' request for a Declaratory Judgment on their rights, status, and liabilities related to their UM/UIM benefits under the Hartford Insurance Automobile Policy -- because of the Court's determination that the UMA's § 66-5-301(A) does not cover the Youngs' March 30, 2016, theft and related property damage. Finally, because the Court determines that New Mexico courts have charted a "reasonably clear and principled course" on the Youngs' state law questions, the Court concludes that there is no sound reason to certify the Youngs' state law issues to the Supreme Court of New Mexico. Pino v. United States, 507 F.3d 1233, 1236 (10th Cir. 2007).

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FACTUAL BACKGROUND

The Court takes its facts from the Complaint. The Court accepts the factual allegations as true for the purposes of a motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Court does not, however, accept as true the legal conclusions within the Complaint. See Ashcroft v. Iqbal, 556 U.S. at 678 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.").

This case arises out of breach of contract and related causes of action claims that the Plaintiffs, the Youngs, filed against the Defendants, Hartford Casualty Insurance Company and Property & Casualty Insurance Company of Hartford (collectively, "Hartford Insurance"), on November 8, 2019. See Complaint ¶ 1, at 1. The Youngs are currently residents of Sandoval County, New Mexico. Complaint ¶ 1, at 1. Hartford Insurance is "a foreign corporation, doing business in New Mexico." Complaint ¶ 1, at 1. The Superintendent of Insurance, located in Santa Fe County, New Mexico, is Hartford Insurance's agent for service of process. Complaint ¶ 1, at 1.

PROCEDURAL BACKGROUND

In their Complaint, the Youngs allege six causes of action. See Complaint ¶¶ 48-74, at 6-11. In the MTD, Hartford Insurance asks the Court to "dismiss Counts I-VI of the First Amended Complaint against it," which allege "breach of contract, breach of the Unfair Claims Practices Act (UCPA), the Unfair Practices Act (UPA), and breach of the covenant of good faith and fair dealing" because each Count (i) "fail[s] to state a claim upon which relief can be granted"; (ii) and "lacks a factual basis to support a prima facie claim against Hartford and is therefore legally insufficient as a matter of law." MTD at 2.

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1. The Complaint.

The Youngs' six causes of action relate to their prior ownership of the following property: (i) a 2004 Ford F-350, (ii) a 2010 JB trailer; (iii) a 2007 Case Tractor with attachments; and (iv "other miscellaneous property that was identified." Complaint ¶ 6, at 2. On March 30, 2016, the Youngs "reported to the Rio Rancho Police Department" that the aforementioned property -- the "2004 Ford F-350, 2010 JB trailer, 2007 Case Tractor with attachments," as well as "other miscellaneous property" -- "had been stolen during the night from the side of their residence." Complaint ¶ 7, at 2. The Youngs contended that "[a]t the time of the theft, the 2010 JB trailer was loaded with the 2007 Case Tractor and attachments, and was attached to the 2004 Ford F-350," Complaint ¶ 8, at 2, and "[t]he configuration of the truck and trailer was such that they could not have been carried away," Complaint ¶ 9, at 2. They allege further that "[a]n unknown motorist, with no permission, took the 2004 Ford F-350, 2010 JB trailer, 2007 Case Tractor with attachments, and other miscellaneous items." Complaint ¶ 10, at 2.

Following the theft, Richard Young signed and submitted Vehicle Theft Declarations for "the stolen vehicles and property." Complaint ¶ 11, at 2. "On or about April 8, 2016," according to the Youngs, they "were advised the 2004 Ford F-350 was recovered by the Bernalillo County Sheriff's Department and towed . . . ." Complaint ¶ 12, at 2. Thereafter, the 2004 Ford F-350 was recovered with the following damage "by the perpetrators: "blown tire with possible rim damage, possible front-end damage, door lock, ignition lock, steering column, unclean interior, engine and transmission needed to be checked, scratched paint on driver's side door, damage to custom floor mats, dent in front bumper, broken light left front, and spare tire." Complaint ¶ 13, at 2. The Youngs assess that "[b]ased upon the property damage, the thief(ves) conduct was malicious,

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willful, reckless and wanton," therefore entitling them "to recover punitive damages." Complaint ¶ 14, at 2.

Following the assessment of damage to their stolen property, the Youngs "made claims under their homeowners and automobile insurance policies." Complaint ¶ 15, at 3. On March 30, 2016, the Youngs had been "named insured on homeowners' insurance policy no. 55 RBC 929354," which was issued by Hartford Insurance. Complaint ¶ 16 at 3. The Homeowners Policy's coverage was "in force at the time of the theft at issue." Complaint ¶ 16, at 3. See Hartford Insurance Homeowners Policy at 1, filed...

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