Soseeah v. Sentry Insurance, 808 F.3d 800

Background

After New Mexico Supreme Court decisions in Weed Warrior and Jordan (2010) held insurers must offer UM/UIM coverage equal to liability limits and that valid rejections require written, in-policy waivers with premium disclosure, plaintiffs sued Sentry alleging failure to notify policyholders of reformation and inadequate post-decision notices.
Plaintiffs (Soseeah and Borrego) sought class treatment for all New Mexico Sentry policyholders (1995/2004–2011 range alleged) whose UM/UIM coverage had been purportedly rejected, and sought injunctive, declaratory, contract, bad-faith and UPA/TPFA relief and reformation of policies.
The district court certified a broad Rule 23(b)(2) class and two subclasses (recipients of two different Sentry form letters), finding numerosity, commonality, typicality and adequacy satisfied and that injunctive relief was appropriate.
Sentry obtained permission to appeal the class-certification order under Rule 23(f); the Tenth Circuit reviewed for abuse of discretion and whether the district court applied the correct Rule 23 standards.
The Tenth Circuit reversed the general class certification because plaintiffs failed to show a common, legally cognizable injury across the whole class (no uniform contractual or statutory duty to notify existing insureds post-issuance; many class members lack any UM/UIM claim). The court remanded for the district court to reconsider certification, particularly as to the two subclasses.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 23(a)(2) commonality is satisfied for a broad class of policyholders allegedly not notified after Weed Warrior/Jordan	Lack of post-decision notice injured all class members and supports common injunctive relief	No cognizable common injury: no legal duty to give purely prophylactic notice to all existing insureds; most class members have no UM/UIM claim	Reversed: broad class fails commonality because plaintiffs did not show a common, legally cognizable injury for all members
Whether plaintiffs stated a duty under New Mexico's Unfair Practices Act (UPA) to notify existing insureds after policy issuance	Sentry’s post-decision notices were misleading and violated the UPA	The UPA governs acts in connection with sale/issuance; post-issuance notices fall outside its plain scope	Court held UPA did not impose a duty to notify existing policyholders post-issuance (though UPA claims about defective rejection forms at issuance could be cognizable)
Whether breach of contract theory supports common injury requiring notice to all class members	Policies created a contractual duty to inform or were uniformly defective, giving rise to common breach claims	Plaintiffs did not identify any common policy provision imposing a duty to notify about reformation	Rejected: plaintiffs failed to identify a common contractual provision that would impose such a duty across the class
Whether alleged bad-faith (implied covenant) claim yields a common injury from failure to notify	Failure to disclose post-Weed Warrior/Jordan constitutes bad faith injury to policyholders	Bad-faith protects only where insurer injures insured’s contractual rights; absent a viable UM/UIM claim, lack of notice causes no injury	Rejected as class-wide theory: lack of notice alone (without an underlying claim) does not show common injury; bad-faith claim cannot support certification of the broad class

Key Cases Cited

Progressive Northwestern Ins. Co. v. Weed Warrior Servs., 245 P.3d 1209 (N.M. 2010) (statute requires insurer to offer UM/UIM equal to policy liability limits; insured’s lower election functions as rejection of maximum coverage)
Jordan v. Allstate Ins. Co., 245 P.3d 1214 (N.M. 2010) (valid rejection of full UM/UIM must be written, included in delivered policy, and include premium disclosures; decision applied retroactively)
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011) (commonality requires class members have suffered the same injury; certification requires rigorous, merits-tinged analysis)
Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883 (7th Cir. 2011) (no cognizable injury without breach of a recognized legal duty; class-wide notice claims can fail if they only create evidentiary bases for individualized determinations)
Salas v. Mountain States Mut. Cas. Co., 202 P.3d 801 (N.M. 2009) (insurer estopped from enforcing undisclosed exclusion against class-two insured; focused on disclosure in context of breach-of-contract relief)
Dairyland Ins. Co. v. Herman, 954 P.2d 56 (N.M. 1997) (insurance contracts include implied covenant of good faith and fair dealing protecting insured’s right to receive contract benefits)