Rehders v. Allstate Insurance Co.

tribal, compliance with oversight ensure 2006-NMCA-058 federal, and, applicable, if state laws as the The serves regulations. commission Rehders, Shirley REHDERS and John employed body individuals licensing wife, Reh- G. husband and John d/b/a operation. gaming Contractor, ders, and Robert General Plaintiffs-Appellees, Rehders, “Robbie” Burris, Gaming Commis- Tracy How Tribal Evolving, Gaming L.Rev. Are sions (2004). compact, 5 of the Under Section COMPANY, INSURANCE ALLSTATE entity Gaming Commission Defendant-Appellant. Gaming gaming licenses. Under issues 25,284. No. Commission, Ordinance, Gaming entity Appeals with author- Enterprise, of New Mexico.

Gaming Court previously suspend or issued ity to revoke April 2006. gaming license. Granted, 29,763, No. Certiorari sovereign [tribal] May waiver “[A] ex immunity unequivocally ... ‘must be 5, 2006. As Corrected June ” ¶ 7, Sanchez, 2005-NMCA-003, pressed.’ (quoting 104 P.3d 548 Santa Martinez, 58, 98 Pueblo v. 436 U.S. Clara (1978)). 56 L.Ed.2d Under

S.Ct. compact governmental actions of regulating gaming

Gaming Commission clearly the commer distinguishable from Gaming Enterprise.

cial activities

Plaintiff, gaming his license whose loss of by improper caused

alleged have been Gaming action Commis

governmental

sion, standing to assert the waiver lacks

immunity contained Section injuries are of whose

limited victims Gaming Enter conduct of

caused a waiver of to establish

prise. Plaintiff failed Gaming Commission’s Tribe’s and the

immunity suit on the claims asserted

Plaintiff. judgment of the district court

dismissing complaint is affirmed. IT ORDERED. SOIS D. CONCUR: MICHAEL

WE

BUSTAMANTE, Judge Chief and CELIA CASTILLO, Judge.

FOY Fe, NM, corporate auto Berardinelli, insured under commercial Santa David J. officer, employee, was he an nor Appellees. stockholder, agent Roehl, Sisk, Modrall, Harris & Sperling, Nevertheless, the accident. the time of Mann, Noya, P.A., A. Albu- Lisa Jennifer under UM en- was covered asserted he NM, Appellant. querque, for cov- and entitled to stack the UM dorsement for a total of erage of all seven vehicles OPINION $1,750,000. Allstate denied VIGIL, Judge. their adult Son therefore Parents and {4} Summary judgment granted was enti- {1} declaratory complaint for a a verified filed Rehders tling Plaintiff Robert “Robbie” judgment that Son is entitled to stack (Son) stacked uninsured motorist to for the seven vehicles insured UM auto corporate under a commercial by with the corporation. Simultaneous by corporation to a owned issued also filed a motion for complaint, Plaintiffs (Par- Shirley Rehders and Rehders John summary corporate judgment. Since the ents). by not in a vehicle insured Son was excluded commercial auto accident, corporation at time of coverages was an UM unless the business any way and is not in connected with the proprietorship though even individual sole officer, stockholder, corporation an em- as premium paid for each separate UM was any capacity. All- ployee, agent, or vehicle, sought declaring judgment appeals, arguing that is not an state Son They exclusion invalid. asserted that corporate under the commercial auto “not issue of who could motion did raise the corporation, policy issued to Parents’ and stacking” because if the benefit from therefore not entitled benefits. validly prohibited stacking cov- of UM with instructions to agree We and reverse erages, “then issue who would benefit judgment in favor of Allstate. enter added.) (Emphasis is moot.” BACKGROUND deny- complaint, Allstate answered the August Son was back On grounds ing coverage on that Son passenger by Dairy- seat in vehicle insured corporate under the commercial “insured” struck Company land Insurance when was policy. response auto to Plaintiffs’ motion vehicle, resulting an uninsured in severe argued summary judgment, for Allstate injuries his to Son. Son settled uninsured attempting “put part that Plaintiffs were (UM) Dairyland claim with for its motorist by seeking a cart the horse” decla- before policy limits. also made a claim for UM required stack ration that Allstate Allstate, coverage with which insured Par- coverages corporate under the commercial personal ents’ two automobiles. Even policy. argued It that even where an auto adult, though living Son was with he was stacking, it policy expressly allows insurance Parents at the time of the accident and was only required if the claimant is an “in- as therefore covered a Class insured under policy. is not an sured” under Since Son paid also Son underin- Allstate express terms of “insured” (UIM) policy limits under sured motorist corporate commercial auto Allstate personal policy. Parents’ arguments pre- argued that Plaintiffs’ were a third claim for Son made UM/UIM irrelevant. mature and policy of coverage on a commercial John G. pleadings Contractor, summary judgment dis- Inc. This com- Rehders General company sub-chapter that Parents started the pany S whose close Rehders, At the G. General Contractor” sole are Parents. time “John stockholders From 1983 proprietorship. insured seven as a sole accident Parents commercial corporate commercial auto until vehicles under policies from Allstate and by Allstate with a UM endorse- auto issued $250,000. coverage on separate premium for UM covering ment each vehicle owned the business. Under not listed as a driver a named each vehicle Son was policies, protect those the form of myself business and benefit designated my named insured “individu- wife as the owners of our busi- proprietorship,” I expected ness. also intended and al/husband wife/sole Parents contended that as a result of business our children re- designation, siding par- there was UM in our household with the benefit individually any family protection any coverages ents applicable members resident their household. The last such to them. through September 13, was in effect

2001, (prior injury) to Son’s and if the acci- explained 6. Allstate never or informed dent had occurred September before us, either before or at the time the 2001 13, 2001, argued, Plaintiffs Son would have issued, policy business was there coverage been entitled to stack the UM would be in substantial reduction the separately each insured vehicle. protection insurance afforded under the myself, my In September policy to Parents wife and our notified resident

{7} they changed Allstate that children change had the result in business proprietorship sub-chapter family from a sole form of our to a owned I al- S business. corporation, they requested ways and our poli- policy that the believed that business in cy provided changed be to in change pro- reflect the the same benefits and form of the tection as it had thereupon business. Allstate between 1983 and 2000. policy issued new which inwas effect for we When business auto period from September 2001 until coverage in 2001 from Allstate I still in- September 2002. The “named insured” expected, tended and as the overall man- changed Rehders, was from “John G. Gener- business, ager of the for this business al Contractor” to “John G. Rehders General coverage protect surance to and benefit Contractor, Inc.,” and the “form of named my myself and wife as the sole owners of changed insured’s business” was from “indi- family expected I business. also still “corporation.” However, vidual” to substan- policy pro- and intended the to to continue tially separate premium the same vide our children residing in our household charged coverage and for UM on each protection with the same benefits and in separately insured business vehicle. This 2001 as it had in 2000. in policy was the at the effect time of Son’s Allstate filed its own motion sum- accident. mary judgment, seeking ruling that Son argued Plaintiffs that Parents intended corporate was not an insured under the com- policy to coverage new have the same as mercial policy auto and therefore not entitled prior policy, and since Allstate did not coverage, to stacked UM and Plaintiffs re- separate (apart them with a notice sponded, repeating many argu- of the same itself) policy from the that changing the form support ments made in of their own proprietorship the insured a sole to a summary judgment. motion for Plaintiffs corporation change right would to stack corporation added that since a cannot sustain coverage, UM an ambiguity Fur- resulted. bodily injury, object and the of UM ther, asserted, ambiguity Plaintiffs must protect persons bodily injury who suffer stacking, be in favor of resolved notwith- motorist, providing an uninsured UM cov- standing any provisions corporate erage to a itself makes no prohibit commercial stack- UM asserted, sense. Plaintiffs ing. Father’s affidavit was submitted con- policy apply persons, must be construed to cerning change. pertinent In part, if corporation, even the named insured is a said: family and when a is issued ato small business, initially pur- [Wife 3. When logical I] persons have cover- chased auto age for our are living Parents and members Thus, business from in I Allstate intended with them. coverages the same expected, manager objectives as the overall same are achieved as business, for this business insurance ease where an individual is the named in- policy. corporate commercial auto Plaintiffs separate pays premiums for sured and Finally, argue that the district court’s order should vehicles. argued public policy grounds definitions because: affirmed on (1) relating are to an “insured” for of who is insured definition inscrutable, average “ambiguous, if not ambiguous and it should therefore ambiguities should be re- and the against insured” and in Son’s be construed Allstate reply, Allstate ar- (2) in their favor. favor; expec- solved Plaintiffs had a reasonable (3) not favor stack- gued public Son; does coverage for tation of stacked is the ing in the case where as an policy definitions that exclude Son pertinent policy and that the definitions, named void because ambiguous. is not effect, prohibit thus stacking, and violate policy of public New Mexico. court did not rule on The district motion, summary granted Allstate’s STANDARD OF REVIEW allow Son to judgment favor of Plaintiffs to Summary judgment proper coverage for each of the seven stack UM of material genuine when there are no issues com- corporate vehicles insured judgment fact and the movant is entitled appeal, Pertinent to this auto mercial Rule 1-056 NMRA. The a matter of law. following district court made the find- the has the initial burden to show that movant ings: genuine is no issue as to a material fact there paid the sub- premiums 1. The under favor is judgment and that its therefore ject policy paid were or for benefit Force, Inc., Spencer v. Health appropriate. Shirley their Rehders and of the John ¶ 64, 2005-NMSC-002, 1, 137 N.M. 107 P.3d opera- family, as owners and the exclusive opponent to the 504. The burden then shifts family The insured tors of the business. as to the to show at least reasonable doubt multiple underin- paid separate of genuine issue fact. Id. We existence (“UM”) coverage motorist sured/uninsured to the light view the facts in most favorable 7 vehicles insured premiums on each of the party summary judgment, opposing policy. under the of all inferences in favor draw reasonable reading 2. A insured reasonable the material trial on the merits. Id. Where they think that policy terms would legal ques undisputed, leaving only facts are premium more paying more than one tions, our court order review district than one summary judgment granting is de novo. are entitled the ben- insureds Co., 2004-NMSC- Ocana v. Am. Furniture have for. efit of what ¶ 539, 58; 018, 12, 135 N.M. 91 P.3d Barncas expectation 4. The insured’s reasonable Cos., 2000- Prop. Casualty v. Am. & tle Nat’l always policy under this was NMCA-095, 5, 1234. 129 N.M. 11 P.3d Shirley then’ Rehders and John DISCUSSION stacking multiple of with benefit A. Son Is Not an “Insured” Under busi- coverages under their Policy Corporate Auto Commercial policy. ness policy exclusion does not Allstate’s argues de Allstate that before All- validly prohibit stacking where ciding avail whether stacked UM is clearly charges multiple, state corporate commercial auto under the able each vehicle insured. premiums question policy, which must be re the first appeals, arguing that the dis- Allstate is under solved is whether an “insured” when it ruled that trict court erred policy. agree. It is fundamental We required without first is be insured under an that must under determining whether Son is insured to be entitled receive being precon- is a because pursuant to the benefits receiving coverage. All- dition to stacked “Stacking an insured’s argues not “in- refers to further that Son is an state recovery damages by attempted aggregat- unambiguous sured” under the terms

SAI ing suggest under more than one Plaintiffs’ briefs that the policy covering or under one more than one complete failure to set forth the name Co., automobile.” Gamboa v. Allstate Ins. corporation in the endorsement somehow 756, 757, 104 N.M. 726 P.2d 1387 However, misled them. spe was (1986). ‘stacking’ It follows “the issue cifically changed request at the and direction arises when it is determined that of Parents to reflect that the person seeking to cumulate benefits two insured, documents as a coverages or more motorist an uninsured clearly whole demonstrate that the insured is policies.” insured under those Moreover, the corporation. suggestion (citing P.2d at Kelly, Seaton v. not supported establishing facts (La.1976)); So.2d see Lucero v. N.M. anyone Parents believed other than the cor Auth., 465, 466, Pub. Sch. Ins. 119 N.M. poration was undisput and it is (1995) (holding that claimant that the corporation ed was in in fact the entitled UM was she sured. we do not further discuss policy); “insured” as defined suggestion. consider the The UM en Jaramillo v. Providence Ins. Wash. states, dorsement consistent 337, 343, (1994) Parents, with the wishes that the “Named (“The proof burden of is on the claimant to Insured” “John G. Rehders belongs show that he or she to the class explic General.” The UM endorsement then beneficiaries.”); intended Konnick v. Farm- itly defines who is an insured for UM cover Ariz., 112, 115-16, ers Ins. Co. age. It states: (1985) (holding 892-93 If designated the Named Insured is step-daughter “insured” under the Declarations as: policy and entitled to stack underinsured mo- coverage). torist individual, 1. An following then the are “insureds”: It is not our task to determine may who policy, stack under the “insured”, Any a. meaning Class 1 is our task to determine whether Son himself any “family the Named Insured and is coverage. entitled to stacked UM See members”. Jaramillo, 117 N.M. at 871 P.2d at 1348. Anyone b. other than a 1 “in- Class by analyzing We make this determination “occupying” sured” a “auto” covered by whether Son was covered the UM en a temporary or substitute for a cov- dorsement of presents the which a ered “auto”. The covered “auto” must Gamboa, question of law. See 104 N.M. at be out of of service because its break- (stating 726 P.2d at 1388 that when down, repair, servicing, “loss” or de- reviewing policy coverage, language of struction. given must its be natural and Anyone damages e. he or she is ordinary meaning unless the is am “bodily entitled to because of recover biguous). While we determine whether injury” by sustained another “in- a ambiguous question is law, sured”. of Richardson Farmers Insurance Co. Arizona, of 2. A partnership, liability limited com- (1991), we remain mindful that “the lan pany, corporation or other form of guage at issue should be considered not from organization, following then the “in- viewpoint lawyer, of a or a with sureds”. field, training in the insurance from but “insured”, Any a. meaning Class 2 standpoint reasonably intelligent layman, Named Insured is not individu-

viewing fairly reasonably, the matter al Named Insured. accordance with usual and natural mean ing Anyone of Lexington the words.” Rummel v. b. other than a 1 “in- Class Co., 1997-NMSC-041, ¶ 19, Ins. “occupying” sured” while a covered (internal quotation 945 P.2d 970 a temporary marks “auto” or for a substitute omitted). citation covered “auto”. The auto covered declarations as the named insured. There- because of its

must out of service satisfy fore, A breakdown, servicing, “loss” or he does not criteria. repair, Anyone specifically than a includes “Class insured” also destruction. person “occupying” includes the Named a “covered ‘auto’” or 1 “insured” (if In- partners the Named for a auto” “temporary Insured’s substitute covered partnership), or members of its is a was “out service because sured of (if breakdown, ‘loss,’ limited servicing, Insured or repair, Named de- accident, di- company), “employees”, liability of and a struction” at the time shareholders; or seeking rectors person who is recover because bodily injury by sustained someone else she Anyone damages c. policy. claim or There no sured under “bodily to recover because entitled any of crite- that Son satisfies these evidence “in- injury” by sustained another not a ria is therefore “Class either. Son sured”. insured.” added.) forego- Considering (Emphasis ing language in with the usual accordance Both New Mexico case law cases meaning used and natural words in jurisdictions from other demonstrate lay- standpoint reasonably intelligent fail dividuals who to meet definition man, following. we discern by unambiguously defined “insured” as policy language UM First, cannot stack endorsement estab- the UM Gamboa, plaintiffs policy. of an refer- lishes two classes “insured” passenger in his father’s insured” is an decedent was ence to whether “named by his The organization. Unless driven friend. or a business Chevrolet individual killed in a qualifies as a 1 insured” and the driver were both “Class decedent an “insured” motorist. “Class insured” he head-on collision with uninsured qualified to receive benefits under the The 104 N.M. at express terms insurer of the the estates Chevrolet of its the decedent and the driver limits Second, qualify as a Son does not plaintiff sought also 1>insured” under the terms of the “Class policy insuring a Ford under is not an policy because the “named insured” owned the driver’s father that was not individual, corporation, John G. Reh- but the any in the accident. The manner involved Contractor, Inc. An “insured” ders General on Supreme framed the sole issue Court an is falls into 1” when individual “Class as an “in appeal whether the decedent was designated in the declarations as the “named policies and therefore al sured” under both specifi- A 1 is then insured.” “Class insured” coverages of the lowed to stack the UM cally person any and “fami- described as that 757-58, at and the Ford. 104 N.M. Chevrolet separate pro- ly person. A member” of ques In deciding 726 P.2d at 1387-88. “family member” vision of defines law, Supreme specifically tion of Court as “a related to individual Named “ provisions look of said that it ‘must blood, by marriage adoption who Insured or policy are policy; of the not if terms a such Named Insured’s house- is resident of given ambiguous, language used must be hold, including a child.” ward foster ordinary meaning.’” at its natural and Id. Third, any falls into other “insured” {19} 758, (quoting at 726 P.2d 1388 Sears Wil specifically A 2 “Class 2.” “Class insured” 389, son, Kan.App.2d 704 P.2d partner partnership, of the described (1985)). Supreme concluded that The Court liability company member the limited was not an “insured” decedent directors, employees, and stockholders clear, unambiguous policy pro terms corporation partnership, limited lia- where for Ford. viding coverage UM designated bility company, corporation he to stacked UM was entitled the named insured. declarations as Gamboa, 760, 726 P.2d at 1390. 104 N.M. at director, employee, or stock- is not an In States Mu- Herrera v. Mountain holder of John Rehders Contrac- G. General {21} tor, Inc., Casualty 846 P.2d corporation designated tual (1993), plaintiff injured in was policy language ambiguous. similar is not ¶ occupying an accident while automobile Id. 20 & n. 3. by parents by and operated owned her her We conclude Son is not an “in- at at

mother. Id. clear, sured” under the unambiguous lan- plaintiff attempted stack coverage the UM guage of the UM endorsement and not enti- by of four trucks owned which tled to corporate UM benefits under the employed Supreme her father. Id. Our commercial auto issued to John G. grant- Court affirmed the district court order Contractor, Rehders General Inc. Since insurer, ing summary judgment to the be- coverage, entitled to UM he is not enti- plaintiff cause the was not under insured tled to UM stacked benefits. unambiguous language of the commercial corporation. issued Id. Expecta- B. The Insured’s Reasonable 846 P.2d at 1068. Policy tions and Public Lucero, Finally, granted The district court plaintiff summary judgment injured public policy grounds. driving while a vehicle owned and It concluded that by expectation the reasonable employer, insured her sought and she Parents was that had purchased damages coverage under the UM provided stacked for 465-66, for themselves the automobile. 119 N.M. at their P.2d at UM cover- expressly 598-99. The exclud- age prohibited by cannot injuries ed UM for suffered policy when the company charges employees in the employment. course of their premiums each vehicle in- Id. at Supreme 599. Our sured. The effect of district court Court held order plain- as matter law that the is that Son is a tiff Insured of was not entitled UM given benefits her (cid:127) corporate commercial auto under our express status under the terms of the law, UM case Son therefore entitled Id. stacked UM for each of the seven The appli- trial court did not find the vehicles corporation. Plain- language of policy ambiguous, cable argument tiffs’ that the district court order do In Economy neither we. American In- public should be affirmed is also based on ¶ 0, Bogdahn, surance Co. v. 2004 OK policy. They argue that Plaintiffs had a closely-held the insured was a expectation reasonable of stacked operated pharmacy. Son and that the definitions exclud- pharma- UM endorsement identified the ing effect, prohibit Son as an cy as the sole “named insured" and listed the stacking, public policy which violates the “corporation.” “form of business” as New Mexico. (internal omitted). quotation marks part, the analysis endorsement defined is an begin “who our We exam [; you insured” as “1. You If ining background and] 2. are an the stacking juris of our ” individual, any ‘family “family prudence. A Again, member.’ “stacking” to refers the member” was then “a person right defined as re- of an aggregate coverage insured to the you by blood, marriage lated to adoption or policies under two or more (interpolicy your household, who is a stacking), resident policy includ- or under covering one UM ing a ward or foster child.” Id. than (intrapolicy court more one automobile stack the ing), concluded that word “You” was not damages sus- until all the of the insured are ceptible interpretation: plainly to it referred or applicable satisfied until the limits of the to policies as named insured. are exhausted. Morro v. Farmers clearly, 669, 670, Just 512, since the named insured Group, was Ins. 106 N.M. 748 P.2d individual, family (1988); Gamboa, 757, not an members were not 513 104 N.M. at ¶ Therefore, 1387; insured. Id. 13. Lopez the owner’s P.2d at see v. Found. Reserve Co., 166, (1982) minor son was not entitled UMto benefits. Ins. 98 N.M. 646 P.2d 1230 Id. majority (allowing The court noted that the vast intrapolicy stacking), in modified jurisdictions respects by conclude as matter of law that other Montano v. Allstate Indem. ¶ 1, 681, paid policy 2004-NMSC-020, premiums are when the

Co., N.M. Montano, ambiguous.” 2004- 1255; Dairyland Ins. 86 otherwise Sloan ¶ (1974) NMSC-020, 15, P.3d 1255 (allowing inter- 135 N.M. 519 P.2d N.M. omitted). way, In this our stack- stacking). (emphasis policy two func- ing jurisprudence effectuates the “Policy stacking” refers to Lopez: to that the enunciated ensure tions coverage granted by which is stacked for, gets pays what and to he she policy of the itself. Jar express terms expectations fulfill reasonable amillo, n. at 1345 at 339 N.M. ¶ Montano, 2004-NMSC-020, 21, 135 sured. stacking” “policy case. n. 1. This is not reiterates 92 P.3d 1255. Montano stacking” to stacked UM cov refers “Judicial multiple premiums charged that “when a rule of construc erage results from cars, multiple on even for UM policy by on the courts applied tion truly unambiguous limitation-of- face example, public policy. Id. For grounds of clause, stacking required.” liability will be single policy Lopez, the insured ¶ required stacking is Id. 23. paid insuring two vehicles policy clearly charges only when the coverage on each vehicle. premium for UM premium single at at 1231. Since the stacking. Id. unambiguously precludes also clearly explain the effect of the policy did ¶ objectives Discussing the two achieved single poli multiple premiums by stacking, Montano states: vehicles, insuring Supreme two cy primary goal is to fulfill the reason- If the ambig Court determined then expectations able Stacking 646 P.2d at 1232. uous. Id. anything is no to look at be- there need closely on the basis of two relat was allowed If, yond language itself. (1) payment rationales: ed hand, primary goal separate premiums entitled the insured to for, they pay then we (2) give insureds what recoveries, and to fulfill the reason two should, least, very at the concerned expectations of the insured. 170- able actuarial methods used arrive with the 646 P.2d at 1234-35. premium look at the and should behind well in New It now settled itself. Supreme that our Court has favored Mexico Id. 23. pursu “stacked” UM is issued (re (1983) 1978, § 66-5-301 ant NMSA objective To our unin achieve the liability every insurance quiring automobile statute, 66-5-301, our sured motorist Section in New Mexico issued stacking jurisprudence recog common law against uninsured motorists unless Konnick, two classes of insureds. nizes insured). rejected by the such 1NN15, 891-92, N.M. at 703 P.2d at strong judi past defined, have evolved a Supreme Our cases rec and our Court class-one, in this cial rooted state’s uninsured ognized, two classes insureds: (NMSA 1978, insurance statute motorists consisting of the named insured as stated 66-5-301[1983]), favoring stacking and, Section while residents of same injured by an unin in order that household, spouse of that named insured may compensa ... class-two, motorist receive either; sured relatives of con damages tion for his or her extent of person occupying sisting of other while for his or her the court- an insured vehicle. We note that protection. terms insured” and “class- defined “class-one necessarily square do not with Co., 127, two insured” v. Ins. 118 N.M. Rodriguez Windsor of insureds ar 759, definitions for classes as 127, (1994), 879 P.2d 759 in modified Montano, policies such as the 2004-NMSC-020, ticulated within insurance respects by 681, Assuming in case at that the 1, one bar. public 92 P.3d 1255. The 135 N.M. purchaser was the same stacking in support in of New Mexico policy, as our Su named the insured always “has tied to notion that been multiple preme recognized rightly that he could when Court unfair not allow

545 covered, expect to be no matter his what chased to benefit the named insured and family, of location was at time the accident. Id. his or her but Class II insureds 2, By may only at 115 & n. 703 P.2d at 892 & n. 2. recover under the on the referencing they in- ear further the two classes of pur- rode because the purchaser only occupants sureds defined chaser intended to benefit spouse rightly expect particular could also that his relatives, while residents the same house- Ponder, 2000-NMSC-033, ¶22, 129 N.M. hold, protection, would the same be afforded 698, strong 12 P.3d public policy 960. Our no matter what their location. Id. Accord- favoring stacking applies to Class 1 insureds. ingly, recognized class-one insureds were as ¶ 33. having they no matter where judgment The of the district circumstances, were because arguments court and in support Plaintiffs’ vehicle, particular limited to a judgment following are based on the class-two insureds were afforded reasoning. When the insured business was they only occupied because covered vehicle. as a proprietorship identified sole and Par Morro, 671, 106 N.M. at 748 P.2d at 514. insureds, ents were named Parents were recognized This classification continues to be 1 paid sepa insureds. Since Parents part of our stacking jurispru- common law premium vehicle, rate UM they each dence. See Ponder v. State Farm Mut. were entitled to stack the UM Co., 2000-NMSC-033, ¶22, Auto. Ins. 129 they all seven vehicles insured. This fulfilled 698, 960; N.M. 12 P.3d v. Samora State expectation having their reasonable a re Co., 467, 469, Farm Mut. Auto. 119 Ins. N.M. covery they paid under each for. Son 600, (1995); Jaramillo, 892 P.2d 602 117 was Class 1 insured because lived 1, 1; at N.M. 339 n. 871 P.2d at 1345 n. Parents, with but this also status entitled Son Dairyland 555, Padilla v. Ins. 109 N.M. to stacked UM When the insured 557, 835, (1990); Gamboa, 837 104 changed proprietor business was from a sole 758, N.M. at 726 P.2d at 1388. ship corporation, nothing really changed A subcategory of class-two has also premiums were still recently recognized, been giving rise to three charged for each of the vehicles “‘(1) classes of UM insureds: the named substantially amounts, the same and Parents insureds and members named insured’s corporation. were the stockholders of the (class-one (2) insureds) ], persons household [ expectation reasonable Par injured who are occupying while ents was that remained Class 1 insureds (class-two insureds) (3) ], per- [ vehicle coverage, and entitled to stacked UM as did consequential damages sons who sustain as a Son because he lived with at the Parents personal injuries per- result sustained reject time his accident. We this reason ” (1) (2) sons class who are or class insureds.’ ing. Pulis, Phoenix Indem. Ins. Co. v. 2000- The doctrine of reasonable ¶ 7, NMSC-023, 129 N.M. 639 P.3d expectations may the lan be invoked when Widiss, (quoting E. Robert Keeton & Alan I. guage representa of an insurance 4.9(e), (1988)) (alter- § at Insurance Law company tions of the insurance an in lead Gamboa, in original). ation also See See, reasonably expect coverage. sured to N.M. in which our P.2d Coleman, 5,1, e.g., N.M. Barth Supreme Court noted that the at issue (1994); Martinez v. Allstate expressly created these three classes of Co., 1997-NMCA-100, ¶11, Ins. sureds. 36, 946 P.2d doctrine also Whether an UM insured falls ambigu policy language available where 1” 2” important ¶¶21- “Class or “Class has conse ous, Rummel, 1997-NMSC-041, see quences. and when may “dynamics I

Class insureds stack all uninsured the of the insurance transaction” Barth, policies purchased by application. way motorist the named make for its policies pur- example, insured because those were at 878 P.2d at 323. For N.M. ease, expec- Plaintiffs’ Ponder, 240. In this cov- 946 P.2d parents purchased UM the owned, they coverage Son were and of UM eight on vehicles tations erage light the enti- a of law daughter was Class insured as matter their reasonable coverage unambiguous she lan- because and the undisputed tled to stacked facts 2000-NMSC-033, parents. excluding as an lived with her the guage of ¶ daugh- insured. living in continued her got ter married but operated their business as Parents When parents’ home with her husband. years and for several proprietorship sole daughter her husband decided to and the change to the busi- made a conscious decision move, reported to the insurance the mother corporation thereby obtain ness to a marriage change daughter’s agency her being with benefits associated inquired she on of residence. She said personal limited such as tax benefits and adequacy about the several occasions expressly then directed liability. Parents to make coverage and wanted daughter’s changed re- that the insurance daughter to have that the continued sure changed flect the named insured be ¶ (internal quotation Id. coverage.” “full op- they to own and the formed omitted). Specifically, she said that marks assume that We will not erate the business. married, expect- daughter had she was the changing form not know that the Parents did baby, moving in out of ing a and was they operated the business had to know home. The mother wanted the implications. pre- coverage surance change daughter’s mari- the whether that Parents con- no evidence were sented that, coverage her so if tal status limited unambiguous of the UM fused terms necessary, the nec- mother could take an defining who is insured endorsement coverage essary steps to obtain that would All- they the new when received daughter on all the Id. cover the vehicles. only really says that Father’s affidavit state. ¶¶ agency repeatedly 15-16. The insurance corpo- new for the and after the before daughter con- the mother that the assured ration, expected insurance coverage” “full no tinued have applicable to that was Son with agency tell time did the ask that we hold that him. Parents now daughter’s change in mother that very to be made is change that directed affect the extent her residence would to state that void and rewrite the back ¶¶3, coverage. 16. motorist Id. After individually named are the Parents parents’ daughter moved out of her is not corporation. We hold home, in an with an unin- she was accident under the circum- expectation a reasonable ¶ Considering the sur- sured driver. Id. 1. stances. circumstances, rounding the conduct parties, expressions oral of their and the remaining arguments Plaintiffs’ intentions, Supreme held there Court premised assumption daugh- concerning ambiguity charges separate premium for UM Allstate had a ter’s and that mother vehicles, some coverage on seven different daughter expectation that reasonable to stacked UM cover one must be entitled type extent had the same provides that age. The UM endorsement parents. her she lived with as when stacked insured entitled Class ¶¶ 15, daughter was therefore af- Moreover, coverage. the UM endorse forded stacked UM policies ment limits 1 insureds to those designated in in which the named insured hand, judgment against On Thus, the as an individual. the Declarations appropriate insured as matter law effect, prohibits when policy, in not ex- expectations do when insured’s corporation. case, insured is a named to the facts of the or when the tend corporation, as when the named with the clear expectations insured’s conflict case, Samora, has stacked in this no one itself. though 603-04; even 470-71, under the terms of Mar- N.M. at enti- tinez, 1997-NMCA-100, someone should be Plaintiffs assert that coverage jured separate by driving tied to stacked an uninsured motorist while charged. premiums were Plaintiffs accord- by a employer. vehicle owned his Id. After ingly in- contend that the definition of an payments receiving applicable UM under his prohi- sured in the UM endorsement and the employer’s policy, sought coverage he UM they against are bition void because under a policy commercial auto two issued to they ambiguity result in an and violate corporations by owned his father because his public policy. urge Plaintiffs us to therefore personal in policy vehicle was included conclude that Parents Son are Class along actually by with the vehicles owned insureds and that is to entitled stacked corporations. pertinent part, Id. In two coverage. UM classes of insureds in policy defined were: You[; you individual, “1. 2. If and] are an Plaintiffs in effect contend that a ” ‘family member.’ The corporate further defined commercial auto al- must ways coverage “you” person entity as the include for a that was listed both separate insured and Class 2 insured when as the named insured. at Id. premium charged UM is each corporations for vehicle. 462. The were listed in the arguments Plaintiffs’ risk assume insured; policy as the named therefore insuring assumed Allstate for the business driver was neither a named insured nor proprietorship sole is identical to the ‘family member’ of a named and the it insuring risk assumed for as a business court held he was not entitled to UM benefits corporation. We decline to make that as- corporate policy. Id. The court sumption in this case. While rec- Montano acknowledged New public policy Mexico’s ognizes that actuarial used to methods arrive injured placing in holder the same premiums are considered determine position recovering damages as if the tort- gets for, pays whether the insured what possessed liability insurance, feasor had but we have no such evidence this case. applying concluded that as written Moreover, pronounce the authorities which because, not public policy did violate our it public policy rely upon are “granted coverage to the insured entities premiums cases which UM were over the insured vehicles in a manner paid by on of an behalf individual who was otherwise with New consistent Mexico The insured in this policy.” prevailing law and case, hand, clearly on the other and unam- “you” view the United States is that when biguously corporation which was named corporation, in the UM endorsement is a specific as such at the direction of Parents. coverage “family not extended to a mem- circumstances, public policy Under the Bowers, ber.” See Ins. Co. Evanston relating considerations UM (col- (Pa.Super.Ct.2000) 758 A.2d corporation are different. authorities); lecting summarizing see purchases When Holmes, Appleman also 24 Eric Mills oper- vehicles it owns and (2004) § (collecting Insurance 2d 148.1[B][2] ates, against injury not insuring personal summarizing cases courts have where itself, because a does suf- refused to to an extend UM individ- personal injuries. Instead, purchas- fer it is legal ual because the named insured is a ing for each who is entity). authorities, Based on these we con- occupying public a covered Our automobile. public policy clude that our does not extend require occupant does each to Son under the circumstances of this case. vehicle, party covered who is not CONCLUSION contract, expect stacked UM public policy require Nor does our stacked summary judgment entered coverage to be further extended to fami- favor of Plaintiffs is reversed case ly occupants members who are not even judg- remanded enter with instructions to injured. covered vehicle when ment in favor Allstate. Casualty Benns v. 982 F.2d Continental (10th Cir.1993), driver was IT IS SO ORDERED. 548 insured. CASTILLO, of a Class 1 about this definition

I CELIA FOY CONCUR: goes on to in The then endorsement Judge. (B)(2)(a) if the named insured is Section FRY, (dissenting). Judge A. CYNTHIA liability company, partnership, limited “[a] FRY, Judge (dissenting). any organiza- or form of other tion,” “[a]ny 2 Class then an insured includes I affirm respectfully I dissent. would {41} ‘insured’, meaning the Insured is not Named summary judgment in the district court’s Majority Insured.” an individual Named ground that on the favor of Plaintiffs ¶ is from opinion, language 16. This far endorse- of “insured” in definition read, “any Class 2 construed clear. If the sentence had ambiguous and should be ment is Insured,” expectations ‘insured’, meaning according to the reasonable Named 2 is clear a Class insured the insured. would be organization on the business listed determining whether an insurance the sentence does the named insured. But policy provision ambiguous, we consider purported defini- way, this and the read susceptible to more language “is whether language that tion 2 insured” adds of “Class meaning, when the structure of the than one The confusion. endorsement defines creates particular illogical, or when a contract 2 Insured is a Class insured as “the Named explicitly is not addressed matter of Insured.” This sen- not an individual Named Rummel, 1997-NMSC-041, by policy.” rath- appears a statement of fact tence to be ¶ 752, en- N.M. 945 P.2d 970. We definition; consequently, reason- a a er than by asking under- gage analysis “what in may able well surmise that “Class insured reasonably non-lawyer standing intelligent, meaning. separate, has unstated insured” lay glean person might flip through then the re- The insured would light meaning of the words and of the usual in vain maining pages policy, looking purchase leading to the circumstances 2 insured.” for definition of “Class Kemper Fed. Assur. policy.” Berry v. Life ¶ 61, 136 2004-NMCA-l N.M. majority’s approach The to this diffi- knowledge of the “Specialized P.3d 1166. lawyers cult is one familiar law, industry case academic treat- industry: it over- of the insurance members ments, industry norms standards Class looks the absence definition for inquiry.” Id. not enter into the should by resorting in the blanks insured fills Referencing Rummel’s definition of approach probably an makes no sense to I ambiguity, am convinced UM endorse- non-lawyer reasonably intelligent, lay per- “a ambiguous ment because structure ¶ 2004-NMCA-116, Berry, son.” illogical, definitions is the endorsement’s majority first explicitly do address definitions not a appropriately concludes that Son is family particular matter family business 1 insured because Class closely when the insured is held members majority con- corporation. then corporation. Reading as a the endorsement family not include that Class must cludes whole, it is that Allstate tried to estab- clear only 1 does. This members lish of insureds reference to two classes approach fine if the endorsement would be the “named insured” an individual whether actually Class 2 insureds some defined failed organization, but it a business certainly possible It is intelligible fashion. hypothetical in- communicate to a reasonable definition, as illustrated intelligible draft an intelligible distinction between the sured cases. discussed the definitions two classes. ¶ 7, example, Bogdahn, 2004 OK For individual, “AN IN- defined If the is an named insured You[; you If and] SURED” as “1. plainly states in Section endorsement ” individual, any ‘family term (B)(1)(a) member.’ The “[a]ny that an “insured” includes insured, and the ‘insured’, “You” refers to the named meaning the Named In- Class 1 it clear that ‘family Majority paragraph makes members’.” second sured and if the named confusing are included opinion, nothing 16. There is members Benns, Thus, insured is an individual. See hypothetical also 982 surance. we assume the (quoting F.2d at 462 the same definition as in had when he was however, Here, Bogdahn). the endorsement proprietor a sole and understood from the of provides no definition Class 2 at all. In- (B)(1)(a) intelligible language of Section stead, provides ambiguous it statement family definition of “insured” that mem- majority interpret through that the must ex- bers were covered. We then assume the legal analysis. tensive hypothetical changed insured his form to a corporation. Although business the rec- Supreme Our Court has noted that complete copy ord does contain a of the who “the insurer drafts the must rea- change that was in effect before the sonably anticipate ... the effect the lan- form, business there is no suggest- evidence mind, guage upon used an untrained or ... ing significant anything changed about language how the is understood the ordi- policy except form description of the nary person.” Rodriguez, 118 of the on the page business declarations (internal quotation 879 P.2d at 763 marks change premiums charged. minor omitted). and citation insurer has “[T]he No one notified the insured that responsibility issuing intelligible poli- changed materially. had Because the lan- cy.” Id. The insurer did issue an under- guage intelligibly convey of the did not case; policy in despite my standable this different, anything a reasonable insured legal training, I even could make no sense of expect could that UM remained the the endorsement’s definition of Class 2 in- same and that still members were And, my legal training sureds. while allows respon- covered. Because Allstate failed its majority’s me to interpretive path, follow sibility clearly to communicate to its expect lay unfair to to be able give we should expectations effect to these negotiate necessary twists turns. and conclude is an insured under ambiguity Given the created the UM endorsement. endorsement’s inscrutable definition of Class insureds, give we should effect to view, my In our courts should not expectations. sured’s reasonable See id. at endeavor to sense of make that is (“Giving effect “by doing not sensible because so we encour- expectations, insured’s reasonable in cases of age perpetuation of unintelligible ... lan- policy ambiguity, is of course a well-settled guage” policies. Computer insurance Cor- approach construing applying lan- ner, Inc. Fireman’s Ins. Fund 2002- (internal guage policies.” quota- NMCA-054, omitted)). tion marks and citation concepts seek insurers to commu- endeavor, hypothetical we consider “what the beyond nicate insureds are not under- glean reasonable insured would expression. By holdings, standable we wording and the kind of insur- discourage using should insurers from obfus- issue,” expectations ance at rather than the drafting encourage cation in them to specific who clearly. communicate ease, a hypothetical Id. In this rea- glean sonable insured would able to little

from reading the UM defini- endorsement’s

tion “insured.” But we must consider the ’ being purchased, kind of insurance so we

assume the existence the same circum- surrounding purchase

stances Parents’ of in-

Case Details

Case Name: Rehders v. Allstate Insurance Co.

Court Name: New Mexico Court of Appeals

Date Published: Jun 5, 2006

Citation: 135 P.3d 237

Docket Number: 25,284

Court Abbreviation: N.M. Ct. App.