Merton v. Farmer's Ins. Co.
35,571
| N.M. Ct. App. | Sep 21, 2016Background
- Plaintiff appealed dismissal of his third-party bad-faith claim against an insurer following an underlying negligence action against the insured that has not reached final enforceable judgment.
- The Court of Appeals issued a notice of proposed summary disposition proposing to affirm; plaintiff filed a memorandum in opposition.
- Plaintiff relied on Hovet v. Allstate to argue no finality requirement governs third-party unfair-settlement-practices claims.
- The district/local rule LR2-603 produced only a nonenforceable order at this stage; the court treated the underlying negligence action as unresolved.
- Plaintiff raised due process and equal protection challenges to LR2-603 and asked the Court of Appeals to direct modification of the local rule.
- The Court declined to reach unpreserved/undeveloped constitutional arguments and held it lacked authority to order a lower court to change its local rules, affirming dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a third-party bad-faith claim against an insurer may proceed before final resolution of the underlying negligence action | Hovet eliminates any finality requirement; plaintiff may pursue claim now | Insurer (and court) contends Hovet requires conclusion of the underlying negligence action before third-party claim | Court: Hovet requires awaiting conclusion of the underlying negligence action; here underlying action not concluded because only a nonenforceable order exists — affirm dismissal |
| Whether LR2-603 violates due process/equal protection as applied to Hovet plaintiffs | LR2-603 denies rights and treats Hovet claimants unfairly | Rule is procedural and applicable; issues were not preserved | Court: Constitutional claims not preserved or adequately developed on appeal; refusal to consider them |
| Whether this Court can direct a local court to modify its local rules (LR2-603) | Request that Court of Appeals order modification of LR2-603 due to potential for abuse | Court of Appeals lacks authority to amend or order amendment of local rules; rulemaking power vested in Supreme Court | Court: Denies request; rule-change arguments should be directed to the Supreme Court |
| Whether dismissal should be reversed on appeal (overall disposition) | Plaintiff seeks reversal and relief | Appellate court proposes affirmance based on Hovet and procedural grounds | Court: Affirms dismissal |
Key Cases Cited
- Hovet v. Allstate Ins. Co., 135 N.M. 397 (2004-NMSC-010) (third-party statutory bad-faith claim must await conclusion of underlying negligence action)
- Aragon v. Westside Jeep/Eagle, 117 N.M. 720 (1994-NMSC-060) (distinguishes enforceable vs. nonenforceable orders under local rules)
- Spingola v. Spingola, 91 N.M. 737 (1978-NMSC-045) (Supreme Court alone has constitutional rulemaking power; district courts may adopt local rules not inconsistent with Supreme Court rules)
- State ex rel. Martinez v. City of Las Vegas, 135 N.M. 375 (2004-NMSC-009) (Court of Appeals is bound by Supreme Court precedent)
- Duran v. Eichwald, 146 N.M. 341 (2009-NMSC-030) (policy-based suspension or amendment of rules is for the Supreme Court)