Russell v. Protective Insurance

9 ture, or surmise and reference to * * fairly some definite standard *. Damages Am.Jur.2d § Deaton, Aeroglide Corp., Inc. v.

also 253, 258, (1983); Exploration Corp. Ranchers & Dev. v. Miles,

Herzog raises one further on Paul, appeal, alleging that St. under NMSA (Repl.Pamp.1985), 13-4-18 some Act,” times referred to as the “Little Miller Herzog profits is liable for loss of under the labor and materials bond it wrote for A

& Counsel for S. have volumi nously issue, briefed this but need not into a

enter detailed of the discussion rele case clearly vant law. Our statute unequivocally recovery limits

surety in a situation one such as this to “all just performed, claims for labor and mate furnished____” supplies rials

Nothing is said about recovery loss of

profits; nothing “delay is said about dam-

ages,” and we decline to extend the mean-

ing purpose further than the clear would take it. judgment of the trial court is af- firmed in its entirety.

IT IS SO ORDERED.

SCARBOROUGH, C.J., RANSOM, J., concur. RUSSELL, Petitioner,

Richard COMPANY, PROTECTIVE INSURANCE Insurer, Motorline, and Merchants Fast

Inc., Employer, Respondents.

No. 16966. Supreme Court of New Mexico.

March 1988.

OPINION

SOSA, Justice. Senior (1987), In Russell v. Protective Ins. Co. we ruled that NMSA 59A-16-1 Fraud), (Trade par- -30 -30, ticularly 59A-16-20 and allow a cause of action workers’ faith refusal to tion insurers for bad to workers. We held that the cause of action must be for damages physical unrelated to the worker’s psychological job-related disability. On 13, 1987, respondents October Protective (Insurer) Company Insurance and Mer- Motorline, (Employer) chants Fast Inc. filed rehearing urging their motion for us to opinion in reconsider our Russell and to allow “extensive briefs to be filed persons as well as other interested (amicus curiae) making a final deter- before Upon mination this case.” consideration motion, respondents’ we withdraw the opinion originally submitted and substitute following: in its stead the petition the court on This case is before for writ of certiorari. Petitioner Richard (Russell) II Russell count of his complaint respondent, Protective In- (Insurer), Company surance had refused attempt good faith to effectuate a “to equitable settlement prompt, fair and compensation] claim.” The workers’ [his 59A- tracks NMSA 16-20(E). The Insurer filed a motion to complaint. dismiss count II of the denied with leave to file an motion was interlocutory appeal. appeal, On the court appeals reversed the trial court. After appeal, reviewing the record and briefs on appeals. we reverse court applicability The issue concerns the Insurance Article the New Mexico Frauds,” “Trade Practices and Compensation Act.2 The New Workers’ Moore, Duhigg, Bruce P. Cronin & by the Mexico Insurance Code was enacted Duhigg, Albuquerque, for Spring, David L. years two after our petitioner. opinion in Dickson v. Mountain States McCulloch, Bradley, Bradley Sarah M. Casualty Mut. recovery respondents. in which we denied to a

Albuquerque, for (Repl. 2. NMSA Sections 52-1-1 to -70 1. NMSA Sections 59A-16-1 to -30. Pamp.1987).

H sought damages panies. worker who had from her There was private right no of ac- employer’s compensation explicitly grants pri- carrier for bad tion. The new act pay hospitalization faith refusal vate of action. 59A-16-30. expenses. medical In Dickson stated: Thus is narrowed as follows: expressly This that if Court stated light legislature’s In enactment of a compensation provides remedy the act a private action, new act with a do for wrong, remedy the then that the decisions in Gonzales v. United States Here, alleged wrong is is exclusive. the Fidelity & Guar. and Co. Dickson v. pay the to refusal a medical bill. The Mountain Mut. Casualty States Co. cease compensation clearly provides a rem act pursuing indepen- to bar a worker from an edy. As noted in v. Kennecott [Chavez against tort compensation dent action a (10th Copper Corp., 547 541 F2d Cir. insurer for faith pay bad refusal to com- 1977) Employ and v. Am. ] [Escobedo pensation benefits? Co., ers Ins. 547 544 Cir. F.2d reversing court, In the trial the court of 1977)], plaintiff only a com need file appeals reasoned that “Section 59A-16-30 plaint compel payment in state court to is so broad its terms and so clear and any benefits to she which explicit in its words to it as show was responsibility entitled. A defendant’s displace provi- intended to pay, responsible, if it is fact exists sion of the Compensation] Act.” [Workers’ solely by virtue of Workmen’s Com (Opinion 24, February 1987, 3, page filed pensation Act referred to Work as [now 5-6). appeals lines The court of relied on ers’ Compensation itself Act Act]. City Albuquerque, Galvan v. 87 N.M. provides the and the remedies 235, 531 1208 P.2d that held to pay. failure * * * * * * “later broader liberal” more 481, 650 P.2d at 3. implicitly repealed “spe- statute an earlier In Fidelity Gonzales v. States United 236, cial” statute. Id. at 531 P.2d at 1209. Co., 432, (Ct. 659 Guar. The court held that the later statute was App.1983), appeals the court of addressed a broad in its “so terms so clear and somewhat similar it situation when held explicit in its words as to show was independent that a workman had no cause intended subject, to cover the whole against of action an allegedly insurer who therefore, displace prior ** by acted bad faith attempting to coerce added.) 237, Id. at 531 accepting workman into an unfavorable P.2d at 1210. Russell does not contend compensation case, In settlement. -30 that Sections 59A-16-1 to were intend- argued workman had In- that the Unfair by ed to “cover whole surance gave implied Practices Act3 him compensation subject” of workers actions private right against of action insurer. against asserted insurers who refuse or Rather, pay compensation fail benefits. The Unfair Insurance Practices Act had argues implicitly he these sections purpose the same present as the Mexi- New amended the Workers’ Act regulate co namely, Insurance “to by allowing against cause of com- action practices trade in the insurance business faith pensation insurers for bad refusal related businesses accordance in agree pay compensation benefits. We Congress with the intent as ex- * * * point. Russell on this pressed in 15 1011 to U.S.C. Sections 1978, 1015.” NMSA 59A-16-2. opinion, legislature, In our § 5(1) prior equivalent -30, act enacting Sections 59A-16-1 intend present Section 59A-16-20. Under the for- ed to broaden Workers’ act, superintendent provide mer the insurance Act so as to authority New Mexico had against to assess civil insurers who in bad faith action penalties offending pay compensation com- insurance refuse benefits. Laws, 5, 6-10, -18, repealed by formerly ch. 3. codified 14 to Laws ch. 59-11-13(I)(5) as NMSA § 59-11- 997. Fire Ins. v. Westchester words, private right hold that the other ford (Alaska 1974), overruled on other ap- created Section 59A-16-30 of action Argonaut Cooper v. Ins. grounds, intentional, refusal plies only to willful (Alaska 1976); Hays v. Aetna benefits, and not to an pay Underwriters, to Fire 187 Mont. dilatory negligent or failure insurer’s Acci- Penn v. Standard (1980); benefits, situation is P.2d 257 since the latter Co., 4 A.D.2d 164 N.Y.S.2d dent Ins. Compen- already by the Workers’ covered sation Act. recov which have allowed Jurisdictions 52-l-6(D) 1978, Section following grounds, ery done so on the “Nothing in (Repl.Pamp.1987) provides: * * * supportive of decision our each which Compensation Act the Workmen’s Co., v. Travelers Ins. herein. See Martin affect, to shall affect or be construed * * * Cir.1974), (1st holding that the 497 F.2d 329 any way, claim the existence provision in the Maine workers’ exclusivity has or cause of action which the workman * * * * * * only to the compensation statute extended his em- against the insurer insurer; Gibson v. and not to the employer Dickson, read those words ployer.” In we Co., 387 A.2d 220 Ben Franklin Ins. Nat’l exclusivity restating “the as (Me.1978), exclusivity said was where slightly different man- tion benefits a injuries arising out of pertain only to ner.” N.M. at 650 P.2d at 2. employment and not and in the course (Section 59A-16-1 light of the new statute pay on the refusal benefits bad faith -30), however, conclude that Section we v. Ferndale insurer; Broaddus 52-l-6(D) permitting the should be read as Div., Mich.App. 269 N.W. Fastener action which Russell asserted cause of (1978), exclusivity holding that 2d 689 complaint. Specifically, count II of his compensa state’s workers’ provision of the against where a cause of action is asserted alleg tort action not bar a statute did tion compensation a insurer for dam- workers’ injury; Reed v. ing nonphysical Hartford ages physical or unrelated to.the workers’ Co., F.Supp. 134 Indem. Accident & psychological job-related disability, then v. Am. Uni (E.D.Pa.1973), and Coleman of, independent such a cause of action is Co., 273 N.W.2d Ins. versal 86 Wis.2d from, separate and of action con- cause action holding that an both templated by the Workers’ sounding in tort would against an insurer Act, predicated and on Sections complained of the misfeasance lie where 59A-16-1 to -30. workers’, employ not related was jurisdictions We note that some Liberty Mut. Ins. v. ment; Hollman reasoning have followed same line of as Cir.1983), holding 712 F.2d 1259

Dickson procedures have different state involves refusal bad-faith remedies than are available New Mexico. Act itself not Fund, Hixon v. State of industri independent separate tort but a (App.1977), 115 Ariz. 565 P.2d 898 injury. al d jurisdiction hearings decide where respondents’ motion Having read provid before an industrial commission are only for, Young Fideli rehearing, we conclude United States ed and concerns raised therein ty & Guar. (Mo.App. viable issue 588 S.W.2d compensation 1979), the workers’ jurisdiction decided in a contention that where Russell’s statute, the time of agency compen state reviews and monitors known compensation workmen’s complaint as the sation claims. Jurisdictions which have re to -59 statute, 52-1-1 compen lied on the of workers’ amended in NMSA as (Orig.Pamp.), action revised sation statutes bar (Repl.Pamp. 52-6-25 52-1-1 to have indicated that a different result would injured job on the if, here, 1987), a worker as we have held the cause excludes obtain speci as being an insured rather considered premised of action is on intentional from 59A-16-20(E). That subsec- See Staf- negligent pay. refusal fied than attempt- an developing judicial tion censures insurer “not trend of opinion in this ing in good prompt, faith to effectuate fair says area when it that non-contractual lia- equitable and settlements of an bility promisor insured’s of a to a party third is valid liability claims in which reason- become when “is consistent with the terms of the 59A-16-20(E). ably clear.” contract and with the policy the law added.) authorizing the contract and prescribing remedies for its breach.” Restatement Respondents argue that the workers’ (Second) 313(2)(b) (1981) of Contracts § compensation indemnity, contract is one of added). (emphasis In the case before us insured, involving an insurer and already concluded that Russell’s only employer that “insured” can mean the against to recover the insurer is con- employee. respondents and not the As in- policy sistent with the of the law authoriz- terpret the workers’ ing causes of action under Article Sixteen. and the Trade Fraud article code, of the insurance the worker has no As to congruence the issue of place relationship between insurer the written contract between the insurer employer. respondents, To since the employer, universally it is typical for insureds, they workers are little such language preclud contracts to contain bystanders more than uninvolved con- ing actions third signed passively to their the await fate at insurer. But that does not mean that such hands those the who are true arbiters valid, language especially is if it contrary authority, employer. the insurer and the public policy. Shingleton Bussey, disagree respondents’ We with assessment (Fla.1969). Further, 223 So.2d 713 we have of the situation. paramount held that indicator of “[t]he We note first of all that other party beneficiary sections of third showing status is a the parties Trade and Fraud article are that the to the contract intended to than broader the section with we party, which benefit the third either individually equate in they deal here that insureds with or as member of a class of beneficiaries. See, example, “claimants.” for appear Such intent must [Cases omitted.] 59A-16-20(J), speaks “making which either from the or contract itself from ** known to insureds person or claimants some evidence that the claiming 59A-16-20(J). Such indicates to be a third party beneficiary in to us legislature that the did beneficiary.” not intend to tended Valdez v. Cillessen Son, simply Inc., limit 575, 581, Article Sixteen to the tradition- & “insured”; is, added!) al notion of that it' intended expand parties words, that notion to than this other other neither court nor Russell may signed those who con- written is limited the terms of the contract tract reading of insurance beneath a blank the employer between insurer the from arriving “insured.” at a conclusion that Russell is a beneficiary. third-party And in since our referring We parties traditionally opinion presented original evidentiary referred to in third-party contract law as why as to Russell reasons should benefit beneficiaries, and in law as incidental from the contract between the insurer and today tort victims. It is clear that the law employer that —in away drastically has moved from strict prescribed Article Sixteen that he should so privity limitations of of contract which the benefit—there is no further need ad respondents impose would in this case. dress ourselves to the issue of evidence as expanded many The on law fronts to why beneficiary. Russell is an intended point third-parties where who have obligation Finally, made formal no contractual we are not unmindful the in- promisor promisee either obligation or to a con- surer’s to Russell in tort as well capable asserting tract are nonetheless as in contract. Here too the traditional standing as expanded enlarge beneficiaries the contract. rule has been so as to (Second) The may Restatement summarizes the the class of third who avail provided by contracting except as dies were abolished of an action themselves con- parties. Act. This A, cept has further considered [B]y into been entering a contract with may place Copper himself in defendant such of Chavez v. Kennecott cases Cir.1977) (10th (New B im- relation toward that law will Corp., 547 F.2d sounding in pose obligation, him an upon Act was Mexico Workmen’s contract, tort and not act such remedy of a claim for denial the exclusive injured. way B will not be good faith or compensation, whether incidental fact the existence of faith) Em- v. American bad Escobedo A negative does contract with F.2d 544 ployers Insurance responsibility of he enters the actor when Cir.1977) (plaintiff’s theory that the upon of affirmative conduct a course terminating faith of defendant bad in- expected to affect the compensation cre- payments installment person. terests of another apart ated a cause of action KEETON, AND THE W. PROSSER W. compensation action failed workmen’s from p. LAW OF TORTS § pro- Compensation Act as the Workmen’s reasons, these we hold that The exclusivi- remedy). For vided exclusive beneficiary Russell an intended was Act was ty of the Workers’ employer in contract between his and the Tele- in Mountain States also addressed rehearing having surer. The motion for Montoya, 91 Co. v. phone Telegraph granted opinion being been and this substi wherein opinion, any initial inference tuted for our this Court stated: rehearing or statement the motion compensation act has aOnce workmen’s original holding our is de we reverse through compul- applicable either become Appeals nied. The decision of the Court of election, the exclusive it affords sion reversed, judgment and the of the trial injury by employee or remedy for court is reinstated. employer and dependents against the his IT ORDERED. IS SO This is of insurance carrier. pro in which the sacrifices and quid quo C.J., SCARBOROUGH, employers gains employees of RANSOM, JJ., WALTERS and concur. balance, for, put in while some extent J., STOWERS, dissenting. liability without employer assumes new fault, prospect of he is relieved of STOWERS, Justice, dissenting.' large damage verdicts. opin- Having the substituted considered (quoting P.2d at 1286 2A A. at I ion case still dissent. this Larson, Compen- The Law Workmen’s of The in this Article case is whether (1976)). Even Section 52- sation 65.10 16 of “Trade the Insurance entitled Compensation Act it- of the 1-6 Workers’ Frauds,” NMSA recognizes of self (Orig.Pamp. and 59A-16-1—59A-16-30 in the This is the law state tion benefits. grafted can into the Cum.Supp.1987) New been some Mexico has Act, Compensation Workers’ period of time. (Repl.Pamp.1987) 52-1-1—52-1-70 as a new and additional cause action. looking specifically Article Sec- answer is no. right entitled “Private tion 59A-16-30 action,” readily apparent it becomes concept grafting This new cause ways. in two this of action limited compensation stat- action into the workers’ First, person to be covered in the case ute was dealt with of Dickson Article 16 and must have suffered dam- Casualty v. Mountain States Mutual Second, ages. damages suffered must (1982). 650 P.2d 1 In that 98 N.M. a violation of Article 16 of case, be as result of specifically that all this Court stated rights These then are the statutory and and reme- the Insurance Code. common-law requirements you two basic before requires statutes legislative enactments private right of action. Legislature wherein the speaks clearly to subject provides matter and proper reading A careful of the causes of action amendments to the statutes to reach the provided for very under Article 16 makes it majority conclusions that the suggests are clear apply that it was never intended to to be found I now. cannot find this. Compensation Nor, Act. any statute, reading reasonable can As we many times, have stated this you any conclude that it was intended into interject Court will not itself into those way exclusivity provisions overrule the areas appropriate which it deems legis- Workers’ Act. Nor can lative action. Sanchez v. Bernalillo Coun- you implication find reasonable ty, 57 N.M. 257 P.2d 909 I there was an intent to amend the Workers’ think and, that this is one of those areas any way. Act in reason, for that I dissent. history

In view the of the Workers’ Act, readily apparent it is change occur, that if this kind of is to through appropriate legisla- should occur tive action. See Varos Union Oil 688 P.2d 31 This change application kind of a of two

Case Details

Case Name: Russell v. Protective Insurance

Court Name: New Mexico Supreme Court

Date Published: Mar 22, 1988

Citation: 751 P.2d 693

Docket Number: 16966

Court Abbreviation: N.M.