McConal Aviation, Inc. v. Commercial Aviation Insurance
799 P.2d 133
N.M.
1990
Check Treatment

*1 in a disciplinary matter and with the IT IS SO ORDERED. Disciplinary Board that additional sanctions SOSA, C.J., participating. warranted,

are we must bear in mind that purpose attorney discipline of an punish past wrongs attorneys or to prevent again using them from ever their

training public. and skills to serve the evidence,

Where there is some as there is

in this that factors over which an attorney may had no control have contrib- P.2d 133

uted to the misconduct that rehabilita- INC., AVIATION, McCONAL effected, tion could be hesitate to we Plaintiff-Appellee, impose the ultimate sanction of disbarment. prefer Tapia’s instead continue present suspension very for at the least COMMERCIAL AVIATION year hope one in the additional that he will COMPANY, INSURANCE upon utilize this time in an effort to reflect Defendant-Appellant. may what egregious have caused his con- No. 18466. steps duct to take neces- whatever are sary to him to enable demonstrate Supreme Court of New Mexico. problems proceeding reinstatement Oct. experienced by former clients likely be to recur.

IT IS ORDERED that the THEREFORE

suspension Jr., Joseph Tapia, M. practice hereby law continued for period

an additional indefinite least (1) year pursuant to SCRA 17-

206(A)(3).

IT Tapia IS FURTHER ORDERED that

may petition Court for reinstate- September 12,1991, until that his

reinstatement not be but will automatic will proceedings

occur after conducted

pursuant 17-214(B)(2) to SCRA

17-214(D),wherein he will have the burden demonstrating by convincing clear and qualifica-

evidence that has the moral again

tions is once fit to resume

practice of law without detriment to the bar,

integrity standing the ad- justice, public

ministration of or the inter- Tapia showing,

est. Should make such a probationary

his reinstatement will be on a subject to terms

basis and conditions

previously ordered and additional appropriate.

terms and conditions deemed proceedings

Costs these the amount $1,173.77 hereby assessed

Tapia Disciplinary and must be prior any application

Board for reinstate-

ment.

request binder for a Commercial issued a 12, ending thirty-day period, November then sent Aviation fill requesting that McConal out an letter return it application for insurance and be- Although expired. the binder fore timely completed apparently received a application subsequently and forwarded Commercial, not receive Commercial did 1984, 25, days it until November thirteen expired. after the binder its aircraft McConal was unaware that No- insured for one month. On was 21, vember 1984 the aircraft involved $47,369.30 in dam- a crash and sustained ages. requested monies to When McConal aircraft, repair the disclosed that Falcon the insurance was not in effect at the time pay. the crash and refused August Fal- On 1985 McConal sued con, Aviation, alleging and Commercial contract, faith, negligence, bad Olmsted, Rebecca Carpenter, Crout & deceptive practices. Specifically, trade Fe, Eyler, McClure & Dempsey, Santa (1) alleged: Falcon McConal breached Denver, Eyler, Rice, Ann Richard R. C. duty procure property insur- contractual Colo., defendant-appellant. for (2) aircraft; for Falcon was Com- ance Eaton, Hinkle, Cox, agent and was thus Hensley, mercial’s Coffield & (3) Pitts, Roswell, principal; as its Aviation was Cusack, Nancy Albert L. S. failing negligent in forward to Commer- plaintiff-appellee. for necessary cial the information to continue sought policy. McConal com- McConal’s OPINION damages, pensatory damages, punitive WILSON, Justice. damages pursuant treble Unfair Act, Trade Practices NMSA Section Defendant Commercial Aviation Insur- seq. (Commercial) 57-12-1 et appeals Company, Inc. ance awarding judgment Plaintiff trial court appeared in A never the action. Falcon $65,000 (McConal) Inc. McConal prior week Aviation settled with costs, plus interest damages without $40,000 for held and trial was amounts solely against The trial court Commercial. We affirm the trial court. defendant. granted motion for a directed Commercial’s count, negligence verdict as to the FACTS deceptive trade McConal withdrew the Agen- Falcon In October 1984 Insurance practices claim re- claim. Thus (Falcon) agreed cy and McConal that Fal- maining was for breach property insurance an con would obtain against Commercial. contract exe- owned McConal. McConal aircraft Among proposed jury instructions pay contract to cuted an installment pol- Commercial submitted was a modified ver- insurance and Falcon indicated that (UJI 1825), beginning sion of SCRA 13-1825 icy was effective October rejected grounds then contacted Aviation Gen- which court 1984. Falcon (Aviation), Company, Inc. was not entitled be informed eral Insurance prior broker, was not told to obtain insurance settlement. insurance original policy. At of the other defendants and was binder for McConal’s Aviation’s err; merely dam- did prop- instructed as to McConal’s the instruction was ages. erly refused. returned favor. McConal’s *3 2. Credit McConal’s Settlement of verdict, argued After the Commercial contends Commercial that the trial court $40,000 that it should receive a credit to- by refusing committed reversible error judgment, representing wards the the paid the by credit amount in settlement amount of Aviation’s settlement with against Aviation to the verdict entered McConal. The trial court denied Commer- Commercial. the Commercial asserts that cial’s motion a credit for the settlement failure to credit the amount Avia- against judgment amount and entered impermissible tion results in re- double $65,000. ap- Commercial covery by argument McConal. The peals judgment. the trial court’s based on the contention that “McConal ISSUES sued several Defendants to redress the one appeal On Commercial claims trial the wrong clearly which it suffered. It was (1) refusing court in: erred to submit Com- seeking only recovery arising from the requested jury mercial’s based instruction agree. one incident.” We cannot (2) refusing on UJI to credit the jury The found a valid that contract amount of Aviation’s settlement with existed between McConal and Commercial against judgment toward the $65,000 damages found of result Commercial. address each issue in ed from Commercial’s breach of the con

turn. against tract. The claim Aviation was DISCUSSION failing negligence in applica forward the

1. Jury Instruction gone tion. Had that claim jury also the well have awarded McConal addi Commercial first claims the negli damages by tional caused Aviation’s erred by refusing to submit its modified gence. represented That would not have version of jury the uniform instruction on recovery for wrong, double the same among contribution tortfeasors. changed by this fact is not Aviation’s deci any against sion to settle claims it. directions use of UJI 1825 state that instruction is to be used “[t]his McConal, the on asserts that joint where been has tortfeasor squarely the settlement with falls Aviation conformity released in with the Uniform within the confines of v. Ferguson, Exum Act, Among Contribution 41- Tortfeasors (1981), 97 N.M. 637 P.2d 553 and there- * * ” * * 3-1, (emphasis NMSA add against fore should not be credited jury the ed). purposes For of Contribution against award Commercial. We Among Act, ‘joint Tortfeasors “the term Exum controls this case. or persons tortfeasors’ means two In Exum sued de two tort for the jointly severally or fendants, one of whom settled with person injury property, same or whether plaintiff prior proceeded to trial. The case judgment has been recovered remaining on defendant based against all or some of them.” NMSA of a breach contract claim. defendant added). (Repl.Pamp.1989) (emphasis 41-3-1 requested amount the settle successfully award,

In this case Commercial ob- jury ment be credited complaint negli- Among tained a dismissal of the based on the Contribution Uniform gence jury and the matter went Tortfeasors Act. trial court refused contract claim. There- credit the settlement amount fore, deciding damages was not a tort claim awarded for breach of Also, court, upheld but claim. nev- This court the trial contract there was contract. liability against er a determination pointing Avia- out that no tort claim had been tion, finding so there has been no made defendant. “[bjecause ais tortfeasor. Thus the trial We held that Occidental’s After compensation plaintiff. different based on

Ferguson’s suits were joint hospital liability, they tort- the defendant theories Ferguson right entitled to a credit for the claimed the feasors and settling paid settlement.” Id. defendants. Occidental’s Likewise, this case claim, rejecting hospital’s theory. There- not tried under a court noted that defendants fore, and Aviation are not were found to be free fault tortfeasors, is not entitled and Commercial they and that were therefore not tort- credit for the settlement feasors, as had committed no tort. *4 tion. settling the defen- amounts attempts distinguish to were, sense, voluntary. legal “in dants the in that by out that case pointing Exum were, legal They terminology, collateral the the that had settled with insurer The court then sources.” Id. 1236. claim and breach of contract plaintiff on a Lazarus, quoted 217 F.2d Hudson v. to on claims proceeded the case (D.C.Cir.1954): 346 defendant, whereas this another general “In law seeks to award the alleged an tortfeasor settled with case more, personal compensation, no breach of contract McConal and the in- injuries negligently Yet an inflicted. was tried. find against the We suit insurer jured person may usually recover in As in to be irrelevant. this distinction wrongdoer regardless anything from a of Exum, joint in- are no tortfeasors there may get he a source’ from ‘collateral case. volved wrongdoer. unconnected with the Usual- necessarily ly the collateral contribution argues in New also injured the person either the benefits plaintiff a cannot recover Mexico gift wrongdoer. it is a or the Whether is a losses. While this than actual employment or product of a contract of rule, general correct statement of insurance, purposes parties of of source rule. exception is the collateral obviously better served and the to are plaintiff allows a to collateral source rule likely to responsible society interests of be better from recover his full losses injured person if the is benefitted defendant, though may have recov served even wrongdoer a than if the is benefitted.” part of his losses from collateral ered source. F.Supp. agree We with the 335 rule, a general As benefits received if a collateral resource Hudson court that plaintiff from a source collateral party, a it should better bene- is to benefit may or contract the tortfeasor breacher wrongdoer. injured party than the fit to reduce the defendant’s not be used also There are sound reasons liability damages. This rule holds policy of permitting the offset. The not payable to though the benefits are even Mexico is favor amicable settle New plaintiff because the defendant’s litigation. claims without Ratzlaff though the conduct and even actionable Serv., Inc., N.M. Flying 98 v. Seven-Bar plaintiff’s are measured benefits denied, (Ct.App.), 586 98 646 P.2d cert. losses. (1982). feel N.M. Handbook the Law Reme- compelled expec to enforce terms and 3.6, (1973). at 185 dies § settling parties. See D. D. tations Corp., v. & Co. v. Allied Chem. persuasive the case Rose Williamson

We find Williamson, (D.D.C.1971) Hakim, (Ky.1978). F.Supp. 1221 cit- 569 S.W.2d (Allied) argued that it was case one defendant ed McConal. Hakim involved malpractice set- entitled to a credit award where practitioners extent of a settlement with two of the medical tled (PB S). The plaintiff & William the sum of and then took defendant son, McConal, like that he should hospital recovering a insisted $294,777.25, representing bargain of his and settle- retain the benefit MONTGOMERY, ment with PB Allied should (specially & S and that Justice concurring). benefit from the settlement which it was not a The Williamson I concur in the result. said: by refusing trial court did not err give a modified UJI 1825 instruction. Williamson PB & S reached Ferguson Exum holds UJI 1825 is length negotiated arms settlement. PB applicable where tortfeasors are bought peace S & and Williamson sold involved, 97 N.M. at 637 P.2d at price its claim PB S for & question 556. This does not answer the satisfactory parties. Al- whether should be instructed as to dispute lied and Williamson their took by previous a settlement defendant when To Allied to benefit allow now proceeds the case determine remain- PB generosity discourages & S’s contract, ing defendant’s but I encouraging finalizing hold that defendant’s * * * partial *. settlements entitlement to a credit for the other defen- policy militates in favor plaintiff or We being [*] conclude in to bound [*] enjoy this case [*] a favorable settlement [*] poor that the allowing [*] settlement. same [*] with court, not dant’s *5 credit, Is the remaining if any, the settlement defendant? should be is a defendant entitled to a question previously applied do not of law. The believe made answered, question this that can be as this 569 S.W.2d Exum, by simply in Court answered it clas- settle, agreeing In to McConal and Avia- sifying the remaining claim de- gambled faring both tion were as a fendant contract claim rather than a if they gone than had to trial. Both better claim severally and the defendants as settlement, remain bound to even if rather than liable as tortfeasors. subsequent prove them events should question The should instead be answered wrong. Yet if we were to allow Commer- identifying evaluating the relevant seeks, odds cial offset it would be opposed policies favor of and to each for a refuses set- better defendant who to deciding policy poli- answer which proceeds trial; might tle and to well given primacy in cies should be this case. part party liability have borne policy against awarding The first is that had not adjudged who been liable and compensation that a claimant exceeds his if might gone never have been even he had duplicate policy against recov- losses—the short, reap trial. would to policy This is a in American ery. venerable benefit of a settlement which it was See, Co., e.g., Hale Basin Motor law. v. (1990) (citing 1006 110 N.M. Fulkerson, 677, 680, N.M. 699 Hood CONCLUSION Keeton, (1985)); W. P.2d policy conclude that the same which Owens, R. Keeton D.& Prosser per- poor to a settlement binds and Keeton on the Law Torts § him enjoy a favorable settlement. mits (5th ed.1984) Prosser & [hereinafter refusing was no error in to offset There being clearly It denied effect is Keeton]. the trial judgment and therefore this case. affirmed. is plurality speculates had the gone to the it Aviation IT IS SO ORDERED. might well McConaladdition- have awarded However, damages. there is no indica- al BACA, J., concurs. have done so. would MONTGOMERY, J., specially concur- sued for the costs of airplane, transportation repairing its ring. charges, policy on a loan. Another relevant one relied storage and interest jury’s verdict awarded McConal plurality opinion on in the fa- —the damages. requested slightly more than the voring theory if is that settlements. refers in brief to Although McConal its nonsettling its defendant knows that it have claimed other amounts which liability pre- reduced because of the nothing pointed we settlement, it incentive vious will have no indicating that McConal’s loss the record itself; have make a will indivisible, single, uni- than the other every gamble on a favorable incentive tary alleges was. loss which Commercial favoring outcome at gone case Had the thereby settlements will be frustrated. defendants, have re- both standpoint the non- Looked at from against one exonerat- a verdict turned defendant, theory probably ed McConal concedes the other. However, makes from the stand- sense. Commercial and claims asserted opposite proba- point the claimant the of a contract claim for breach Aviation—a bly If the knows that the true. negligent fail- and a claim insurance previous settlement will be credited insurance, respectively— procure ure to judgment against nonsettling defen- mutually the case were exclusive. Since dant, every the claimant will have reason defendant, proceeded against if, get; settle as much as he or she can allowing justification for what is the settlement than the amount of plaintiff to retain more credited, every have rea- the claimant will damages? “go press the case to son for broke” and duplicate recovery, *6 against policy A against at one defendant. least strong longstanding, and doubt while no reduction, victory trial will mean no exceptions. of those One does admit loss will the claimant whereas a leave pervasive— the most exceptions perhaps — through the partially compensated least provided by source rule.1 is the collateral n settlement(s) previous with defen- (I to consideration shall return below dants). rule.) poli- policy underlying that Since result in this case hesitate to endorse a cy exceptions, one what has wonder fire of this sort that fuels the in lawsuits policy Is the is for the itself. reason many encourages bring claimants to as niggardly in its conferral of benefits law so many they against can as claims2 as devise rights simply it recognition of they pro- as can find and then defendants claimant receive more to see a cannot stand turn, losses, out-of-pocket no ceed settle with each defendant or her than his that, Again, making among circumstances? a settlement other what matter things, litigation against source rule stands as ob- the collateral finances the enforcement defendants) an across-the-board stacle to enables penurious policy. of any such gamble big stakes. claimant However, to the I conclude that the answer commonly assumed that It is encouraged is question whether settlement recovery prevents unjust against duplicate discouraged by crediting the amount enrichment, see, Prosser Keeton at e.g., & judg- against settlement later the first questions: 330; only raises further but this probably really is de- neutral “enrichment,” when What rela- settlement in pends on the size “unjust”? deemed negli- against E.g., 2. claim one defendant for widely source believed that collateral It is application gence, to contract intention- has little or no a claim another rule See, (Second) e.g., tort, Con Restatement claims. another for breach al a claim (1979); e § tracts comment (contract), warranty still and a 8.10, at § on the Law Remedies Handbook liability. for strict (1973). exhaustive demonstration For an correct, generally see J.G. Flem that this ing, Contract Source Rule and The Collateral (1983). Damages, 71 Calif.L.Rev. 7Q3 nonsettling expo- placed defendant’s going the onus of forward on the sure and potential recovery. the claimant’s insured. undergo The insured had to previous inconvenience, If delays, relatively uncertainties and ex- large, pense litigation; as in crediting then insurer and the agent keep between them could recovery an ultimate the in- diminishes the money sured’s until voluntarily either remaining defendant’s incentive to settle settled or the court told one of pay. them to and correspondingly pressure increases the compromise, on the rather than Under these circumstances it does not going risk the cost of to trial when the seem require insurer, unreasonable to marginally greater recovery will re- be Commercial, pay what it contracted to if duced the claimant is successful. On the pay insured, McConal, and to allow if the amount of the settlement keep agent, what the voluntarily exposure is small in relation to the and contributed in order to alleged settle its potential recovery, crediting it does liability. materially lessen the claimant’s risk If there must certainly be windfall it is going provides nonsettling to trial and just injured person shall defendant little incentive to reduce his own profit therefrom, wrong- rather than the by making risk a settlement before trial. doer shall be relieved responsi- of his full policy in bility Still another the mix is that wrongdoing. We think we may judicially which underlies the collateral notwithstanding source rule: note that wrongdoer contemplates compensa- that the law should not tion, handicaps incidental losses and provided by benefit from a fund collateral * * * great suffered in a number of source and as between an innocent not, be, cases fully which are and cannot culpable defendant, and a if one compensated. party is to benefit from a fund received source, preferable

from another it is Williams, Grayson (10th 256 F.2d allocate the benefit to the innocent Cir.1958). See also v. Southern Helfend *7 case, In this it is clear that McConal’sloss Dist., 1, 12, Rapid Cal. Cal.3d Transit compensated only ques- in full. The 173, 180, Cal.Rptr. (1970): $40,000 paid tion is whether the plaintiff rarely actually receives [T]he augment recovery tion will McConal’s compensation injuries for his as com- liability. will reduce Commercial’s puted by The collateral source partially compensate rule serves to question by resorting I answer this attorney’s share and does not actual- (and therefore, expecting ly recovery” render “double for the case, requiring) the context of in- plaintiff. agent-broker company surance and the get together. bought their act company The insurance in this property damage insurance. seeking judicial determination as to the company liability, The insurance denied coverage policy, existence of under its finger agent; agent pointing the at the picture not fit the classical responsible it was not claimed “wrongdoer” is denied an who offset of the by implication, at least it had not under the collateral source rule. benefit duty procure failed in its insurance from However, Commercial and Aviation be- Meanwhile, insurer. the insured was them did force McConal to endure tween compensated loss and had to for its handicaps” the “losses and entailed litigation. every- commence It had done delay payment necessity and the thing required property of it to see that its insig- litigation. One of these losses—not insured; agent amount, the insurer and the nificant in I have no doubt—was attorney’s responsibility them evaded and the fees. Under the between “duplicate recovery” real- rule—that “wind- collateral source ized in this case. to the innocent to be allocated fall” is culpable arguably rather than the has determined who giving concur its contract—I breached