FARMERS INSURANCE COMPANY OF ARIZONA, Plaintiff-Appellee, v. Christine SANDOVAL and Melissa Carter, Defendants-Appellants.
No. 29,537.
Court of Appeals of New Mexico.
April 4, 2011.
2011-NMCA-051 | 253 P.3d 944
654
{14} Statutes may be read in conjunction with surrounding provisions in order to deduce legislative intent. When doing so, it can be fairly inferred that silence in one particular instance is indicative of deliberate intent in another related provision. In the present case, both
{15} When read in conjunction with
{16} Because Officer Ahlm‘s belief that Defendant‘s failure to complete a left-hand turn into the leftmost lane of the approaching roadway was based on a mistake of law, the resulting traffic stop was without a reasonable basis in the law. The evidence obtained as a result of the stop was the fruit of the illegality and should have been suppressed. State v. Ingram, 1998-NMCA-177, 110, 126 N.M. 426, 970 P.2d 1151. The district court erred in denying Defendant‘s motion to suppress, and we reverse.
{17} IT IS SO ORDERED.
I CONCUR: LINDA M. VANZI, Judge.
RODERICK T. KENNEDY, Judge (dissenting).
KENNEDY, Judge (dissenting).
{18} I read
Whitener Law Firm, P.A., Thomas M. Allison, Albuquerque, NM, for Appellants.
OPINION
WECHSLER, Judge.
{1} In this appeal, we must determine whether an insurer is entitled to offset an injured insured‘s award of underinsured motorist (UIM) benefits by a tortfeasor‘s liability policy limits when the insured receives an amount less than policy limits due to a contractual exclusion for punitive damages. In light of the remedial purpose of
BACKGROUND
{2} The facts are undisputed. On March 19, 2006, Christine Sandoval and Melissa Carter (collectively, Defendants) were involved in an automobile accident with Shawna Chavez, who was driving while intoxicated. As a result of the accident, Sandoval incurred medical expenses in the amount of $2194.74, lost wages in the amount of $444.48, and pain and suffering. Carter incurred medical expenses in the amount of $2213, lost wages in the amount of $1000, and pain and suffering.
{3} Defendants sought compensatory and punitive damages from Mid-Century Insurance Company (Mid-Century), which insured Chavez‘s vehicle for liability coverage in the amount of $25,000 per person and $50,000 per accident. However, the Mid-Century policy explicitly excluded punitive damages from liability coverage. Because Defendants’ compensatory damages are less than $25,000 each, it is anticipated that they will settle their claims against Mid-Century for an amount less than policy limits.
{4} Defendants filed a UIM claim against Farmers Insurance Company of Arizona (Farmers), which insured Carter‘s vehicle for $30,000 per person and $60,000 per accident. Defendants each sought $30,000 in punitive damages, alleging that Chavez was underinsured with respect to punitive damages. Farmers determined that Defendants were entitled to UIM benefits in the amount of $5000 each, which it calculated by offsetting the policy limits of Defendants’ UIM coverage ($30,000) by the policy limits of the Mid-Century policy ($25,000). Defendants did not dispute that Farmers was entitled to an offset, but claimed that this offset must be based on the amount of money actually received by Defendants in settlement of their claims, rather than the liability limits of the Mid-Century policy.
{5} Farmers filed a declaratory judgment action in district court to determine the amount of its offset under
STANDARD OF REVIEW
{6} “Summary judgment is proper when the material facts are undisputed and
STATUTORY OFFSET
{7} We begin our analysis with
{8} Given the remedial purpose of the statute, our Supreme Court has held that “uninsured motorist coverage includes coverage for punitive damages.” Stewart v. State Farm Mut. Auto. Ins. Co., 104 N.M. 744, 746, 726 P.2d 1374, 1376 (1986). Punitive damages, which derive from actual damages, “‘are as much a part of the potential award under the uninsured motorist statute as damages for bodily injury, and therefore they cannot be contracted away.‘” Manzanares v. Allstate Ins. Co., 2006-NMCA-104, 15, 140 N.M. 227, 141 P.3d 1281 (quoting Stinbrink v. Farmers Ins. Co., 111 N.M. 179, 180, 803 P.2d 664, 665 (1990)). Accordingly, “an insured may recover punitive damages from his insurer if he would be legally entitled to recover them from the uninsured tortfeasor.” Stewart, 104 N.M. at 747, 726 P.2d at 1377.
{9} However, the amount of punitive damages recovered through an insured‘s UIM carrier may not be commensurate with the amount of punitive damages for which a tortfeasor is liable. This is so because “the Legislature, in defining [a UIM], set the maximum on the amount an insured can collect from his [UIM] carrier.” Schmick, 103 N.M. at 222, 704 P.2d at 1098. Specifically, an insured‘s recovery is limited to the aggregate amount of uninsured motorist coverage purchased for the insured‘s benefit reduced by the statutory offset inherent in
{10} In this case, we must determine the amount of Farmers’ statutory offset. In Schmick and its progeny, the insureds actually received an amount equal to the liability limits of the tortfeasor and, therefore, the courts did not directly address the question before us. See, e.g., Am. States Ins. Co. v. Frost, 110 N.M. 188, 189, 793 P.2d 1341, 1342 (1990); Fasulo v. State Farm Mut. Auto. Ins. Co., 108 N.M. 807, 808, 780 P.2d 633, 634 (1989); Schmick, 103 N.M. at 218, 704 P.2d at 1094; State Farm Mut. Auto. Ins. Co. v. Jones, 2006-NMCA-060, 12, 139 N.M. 558, 135 P.3d 1277; Manzanares, 2006-NMCA-104, 12, 140 N.M. 227, 141 P.3d 1281; Martinez v. Allstate Ins. Co., 1997-NMCA-100, 13, 124 N.M. 36, 946 P.2d 240. Accordingly, language in those cases stating that an insurer‘s offset should be measured by the tortfeasor‘s “liability coverage” or, alternately, by the “liability proceeds” received by the insured, is not dispositive. See Fernandez v. Farmers Ins. Co. of Ariz., 115 N.M. 622, 627, 857 P.2d 22, 27 (1993) (“The general rule is that cases are not authority for propositions not considered.” (internal quotation marks and citation omitted)).
{11}
{12} Because it is unclear whether a valid contractual exclusion for punitive damages, such as the one at issue in this case, reduces the “limits of liability” under the tortfeasor‘s policy under
{13} As previously explained, the purpose of
Fasulo, 108 N.M. at 811, 780 P.2d at 637. In this case, $30,000 in UIM coverage has been purchased for each Defendant‘s benefit. To assure that Defendants receive at least this sum certain in coverage, we conclude that Farmers’ offset is limited to the amount of liability proceeds actually received by Defendants from Mid-Century.1is to assure that, in the event of an accident with an underinsured vehicle, an insured motorist entitled to compensation will receive at least the sum certain in underinsurance coverage purchased for his or her benefit. To the extent the amount of other available insurance proceeds from responsible underinsured tortfeasors does not equal or exceed the amount of coverage purchased, the UIM carrier must satisfy the difference.
{14} We find support for our conclusion in Gonzales v. Millers Casualty Insurance Co. of Texas, 923 F.2d 1417 (10th Cir. 1991), and State Farm Mutual Automobile Insurance Co. v. Valencia, 120 N.M. 662, 905 P.2d 202 (Ct.App.1995), which considered whether the UIM benefits of multiple claimants whose total damages exceeded the liability coverage of the tortfeasor‘s policy should be calculated based on the tortfeasor‘s policy limits, or the amount of liability proceeds actually received by the claimants. The Tenth Circuit Court of Appeals and this Court both concluded “that New Mexico‘s uninsured/underinsured motorist statute should be liberally construed to implement the purpose of the statute” and that “restricting an insured to the policy limits of the tort-feasor‘s liability coverage, ‘rather than the liability proceeds actually available to a given insured [under his or her own policy] would tend to produce the illogical . . . situation the legislators sought to avoid.‘” Valencia, 120 N.M. at 665, 905 P.2d at 205 (quoting Gonzales, 923 F.2d at 1422) (alterations in original). As a result,
in multiple-claimant situations, insured motorists who are covered under an uninsured/underinsured motorist policy and who suffer from injuries resulting from an automobile accident are entitled to collect up to the limit of their underinsurance policy to the extent that their damages exceed the amounts that the tort-feasor‘s insurer has previously paid to them.
{15} In oral argument before this Court, Farmers argued that Gonzales and Valencia are factually distinguishable from this case because Defendants seek punitive damages, which “generally evoke less compelling concerns” than compensatory damages. Manzanares, 2006-NMCA-104, 110, 140 N.M. 227, 141 P.3d 1281. In Manzanares, the plaintiff received a “total recovery of $60,000” for bodily injuries sustained in an automobile accident. Id. 2. The tortfeasors’ policies excluded recovery for punitive damages and, therefore, the plaintiff submitted a claim to her own insurer for UIM benefits. Id. 112-3. The limit of the plaintiff‘s UIM coverage was $30,000, but the plaintiff argued that “the tortfeasors should be deemed ‘uninsured’ or ‘partially uninsured’ [rather than] ‘underinsured‘[] for purposes of punitive damages.” Id. 113, 6.
{16} We rejected the plaintiff‘s invitation to draw a distinction between punitive damages and compensatory damages in Manzanares, noting that “New Mexico has characterized punitive damages as deriving from actual damages.” Id. 5. Indeed, a claimant “is generally entitled to recover punitive damages under [the claimant‘s] UIM coverage” precisely “because they are a part of [the claimant‘s] bodily injury claim.” Id. Accordingly, we held that the plaintiff‘s UIM carrier was entitled to an offset in the amount of $60,000, regardless of whether the tortfeasors were uninsured or underinsured, or whether the tortfeasors’ policies excluded payment for punitive damages. Id. 9. To the extent that the plaintiff asked this Court to create “a special exception” to the offset provisions for punitive damages, we rejected her claim. Id. 10. We observed that it would be “illogical to create a special rule that allows offset of UIM coverage for bodily injury damages, but does not allow offset for punitive damages,” because “punitive damages generally evoke less compelling concerns.” Id.
{17} Farmers’ reliance on Manzanares does not translate to this case. In Manzanares, we expressly refused to distinguish between punitive damages and compensatory damages in the context of a UIM claim because punitive damages “stem from bodily injury damages.” Id. Although we noted that “punitive damages generally evoke less compelling concerns[,]” we did so in response to the plaintiff‘s request to make a special exception to the offset provision for punitive damages only. Id. As in Manzanares, we refuse to formulate a special rule in this case simply because Defendants seek to recover punitive damages, rather than compensatory damages, under their UIM policy.
{18} Moreover, “[w]e must take care to avoid adoption of a construction that would render the statute‘s application absurd or unreasonable or lead to injustice or contradiction.” State v. Nick R., 2009-NMSC-050, 111, 147 N.M. 182, 218 P.3d 868 (internal quotation marks and citation omitted). If we were to construe
CONTRACTUAL OFFSET
{19} Farmers next claims that it is entitled to a contractual offset in the amount of the tortfeasor‘s liability limits under the plain language of the UIM policy, which provides that “[t]he amount of [u]ninsured [m]otorist [c]overage we will pay . . . shall be reduced by the amount of any other bodily injury coverage available to any party held to be liable for the accident.” (Emphasis omitted.) Farmers argues that $25,000 in liability coverage was “available” under the Mid-Century policy and, therefore, Defendants’ UIM benefits may be reduced by this amount. Defendants respond that coverage
{20} “Once uninsured motorist coverage is purchased, the insurance consumer is entitled to secure the full extent of the benefit which the law requires to be offered. Attempts by insurers to reduce this benefit by exclusion clauses are repugnant to the public policy of protecting persons injured in automobile accidents.” Boradiansky v. State Farm Mut. Auto. Ins. Co., 2007-NMSC-015, 110, 141 N.M. 387, 156 P.3d 25 (internal quotation marks and citation omitted). Thus, contractual exclusions that conflict with the mandatory requirements of
{21} Under
CONCLUSION
{22} We conclude that Farmers’ offset is limited to the amount of liability proceeds actually received by Defendants under the Mid-Century policy. Accordingly, we reverse the judgment of the district court granting Farmers’ motion for summary judgment.
{23} IT IS SO ORDERED.
WE CONCUR: CELIA FOY CASTILLO,
Chief Judge and MICHAEL D. BUSTAMANTE, Judge.