Charter Oak Fire Insurance Company et al v. Hovlik et al

Filing 59

MEMORANDUM OPINION AND ORDER by District Judge William P. Johnson DENYING 33 Motion for Summary Judgment by Defendants and GRANTING 51 Motion for Summary Judgment by Plaintiffs AS FURTHER DESCRIBED HEREIN. (mag)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
__________

CHARTER OAK FIRE INSURANCE
COMPANY, TRAVELERS PROPERTY
CASUALTY COMPANY OF AMERICA,
Plaintiffs,
v.

No. 1:17-CV-0010 WJ/SCY

STEPHANIE HOVLIK, as Personal
Representative of the Estate of Salvador Garcia,
ROBERT A. GARCIA, GABRIELLA P.
GARCIA, and FRANCISCO GARCIA,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT
and
DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

THIS MATTER comes before the Court upon a Motion for Summary Judgment by
Defendants, filed on June 30, 2017 (Doc. 33), and a Motion for Summary Judgment by Plaintiffs
filed on October 25, 2017 (Doc. 51). Having reviewed the parties’ pleadings and the applicable
law, the Court finds that Plaintiffs’ motion is well taken and, therefore, is granted.
BACKGROUND
Plaintiffs are two insurers who issued two separate policies to Don Curry Housemoving
(the “Insured”).

Travelers Property Casualty Company of America (“Travelers”) issued a

general liability policy, and Charter Oak Fire Insurance Company (“Charter Oak”), an affiliate of
Travelers, issued an automobile policy. Plaintiffs filed this declaratory action pursuant to 28
U.S.C. § 2201(a) seeking to determine whether Charter Oak’s liability under an insurance policy

is limited to $500,000, or whether the policy should be reformed to meet minimum statutory
liability amounts in New Mexico’s Motor Carrier Act. Plaintiffs further seek a declaration
whether an automobile exclusion in the Travelers general liability policy is void.1
The Defendants are the representative and family members of Salvador Garcia, a victim
of a drunk driving accident involving Randolph Curry, an employee of the insured. The insured,
Don Curry Housemoving, is not a party to this case. The parties have apparently agreed that this
accident is covered by the Charter Oak policy and have settled the issue of liability. They seek
solely to determine the extent and amount of coverage.
UNDISPUTED FACTS
The parties have filed cross-motions for summary judgment. The Court will combine the
facts presented by the parties and where necessary, point out those parts that are contested. The
parties generally do not dispute the facts but rather contest the relevancy or legal significance of
those facts. The Court will omit facts that are redundant, irrelevant, unsupported, or conclusory.
On March 22, 2012, on NM 337 in Bernalillo County, New Mexico, Salvador Garcia was
killed in a collision with Randolph Curry (the “Collision”). At the time, Randolph Curry was an
employee of Don Curry Housemoving and was driving drunk.

The parties stipulated that

Randolph Curry was acting in the scope of his employment at the time of the Collision. (Doc.
24).2
At the time of the Collision, Randolph Curry was driving his personal 2004 GMC pickup.
National General Insurance Company, a GMAC company, had a policy in effect insuring the

1

These are the only issues raised by the parties in the complaint for declaratory judgment or in the cross-motions
for summary judgment.
2
It is unclear from the facts and this stipulation whether Randolph Curry was involved in motor carrier operations at
the time of the crash.

2

2004 GMC pickup. This policy provided liability coverage in the amount of $50,000.00 per
person and $100,000 per accident. GMAC paid the $50,000 policy limit to Defendants.
The Defendants in this action filed a lawsuit against Randolph Curry; Cindy Dale, as
Trustee of the Estate of Don C. Curry d/b/a Curry Housemoving; Terry A. Curry; Christopher J.
Curry; and Freeway Liquors, Inc., in the First Judicial District Court, County of Santa Fe, State
of New Mexico, Case No. D-101-CV-2015-00695, seeking to recover damages for the death of
Salvador Garcia as a result of the Collision.
Plaintiffs Travelers and Charter Oak insured Don Curry Housemoving’s structural
moving operations, from which Don Curry Housemoving reported it was earning $135,000 per
year.
Charter Oak issued a commercial automobile liability insurance policy to Don Curry
Housemoving, policy number BA-4a158207-11-GRP, with effective dates of July 20, 2011 to
July 20, 2012, which has a liability coverage limit of $500,000.00 (the “Charter Oak Policy”)
Travelers issued a commercial general liability insurance policy to Don Curry
Housemoving (hereafter, the “Insured”), policy number 660-4A856704-TIL-11, with effective
dates of July 20, 2011 to July 20, 2012, which has a liability coverage limit of $1,000,000.00 (the
“Travelers general liability policy”).
The insurance policies issued by Travelers and Charter Oak were arranged by a broker,
Maguire Agency.3 Maguire Agency, and Charter Oak, knew they were insuring structural
moving operations.

3

Defendants argue that Maguire Agency was an affiliate of Travelers.
concludes that the exhibits Defendants cite to do not support their assertion.

3

Plaintiffs dispute this, and the Court

Charter Oak issued insurance cards to the Insured stating: “[t]he Vehicle described below
is covered by a liability policy that meets New Mexico’s insurance requirements.” The 2004
GMC pickup was not listed.
On October 3, 1996, Insured was issued a Warrant for Transportation Services as an
intrastate motor carrier of property, which remained in effect through the date of the Collision.
The warrant specified “transportation of general commodities between points and places
throughout the state of New Mexico.” The commodity description in the warrant provided:
“transportation of undismantled houses, buildings and structures of every kind and character,
from points and places in the state of New Mexico to points and places in the state of New
Mexico.” The warrant was subject to revocation in 2014.
Insured was never categorized by the New Mexico Public Regulation Commission as a
motor carrier of household goods and was never issued a certificate to that effect.
The Travelers general liability policy contains an exclusion for bodily injuries arising out
of the use of an “auto.” Auto means “a land motor vehicle, trailer or semitrailer designed for
travel on public roads.” The exclusion provides as follows:
2. Exclusions
This insurance does not apply to:
….
g. Aircraft, Auto Or Watercraft
“Bodily injury” or “property damage” arising out of the ownership, maintenance,
use or entrustment to others of any aircraft, “auto” or watercraft owned or
operated by or rented or loaned to any insured. Use includes operation and
“loading or unloading”. This exclusion applies even if the claims against any
insured allege negligence or other wrongdoing in the supervision, hiring,
employment, training or monitoring of others by that insured, if the “occurrence”
which caused the “bodily injury” or “property damage” involved the ownership,
maintenance, use or entrustment to others of any aircraft, “auto” or watercraft that
is owned or operated by or rented or loaned to any insured.

4

The amount of liability coverage provided by the Charter Oak Policy, $500,000.00, was
the amount requested by the Insured. After receiving a quote for an auto policy with liability
limits of $750,000.00, the Insured requested that the automobile liability limit be lowered to
$500,000.00. Plaintiffs assert in argument that Charter Oak initially offered a $750,000 policy,
but there is no evidence supporting that assertion. Instead, there is evidence that Bituminous
Insurance Company (“Bituminous”) offered a $750,000 policy.
Insured did not request that Charter Oak or Travelers make a filing with the New
Mexico Public Regulation Commission, or any other regulatory agency, in connection with its
request for insurance.

In its application, the Insured was asked whether any filings were

necessary to comply with state or federal regulatory requirements. Specifically, the applications
asked “ARE ICC, PUC or OTHER FILINGS REQUIRED?” The Insured answered “no.” It
appears to be undisputed that Charter Oak did not file a Uniform Form E, which certifies to New
Mexico that the policy met the requirements of the motor carrier statute and associated
regulations.
Don Curry Housemoving was insured by Bituminous in two separate policies, one from
September 14, 2010 to September 13, 2011, and one from February 1, 2011 to February 1, 2012,
for $750,000. Bituminous filed a certificate of liability insurance (Uniform Form E) with the
New Mexico Public Regulation Commission. This certificate of liability insurance was on file
with the Public Regulation Commission at all relevant times. A cancellation form was not filed
with the Public Regulation commission until March 6, 2017.
Because of these filings by Bituminous, Plaintiffs assert that at the time the application
was submitted by the Insured to Charter Oak, the Insured was in full compliance with the New
Mexico financial responsibility requirements.

Defendants assert there is no evidence that

5

Charter Oak knew about these filings or relied on them. While Bituminous’ certificate of
liability insurance was on record as described, the Court does not rule on any legal implications
thereto.
Defendants asserted for the first time in a reply that Charter Oak did not advise the
Insured that the limits were deficient. Defendants also later asserted this in a response to
Plaintiffs’ motion, but did not set this out as a separate additional fact that could be rebutted or
disputed.4 Therefore, the Court will not consider this fact.5
Charter Oak has paid to Defendants the $500,000 liability limit in the Charter Oak
Policy, and the parties agreed to proceed with this declaratory judgment action to resolve
remaining disputes regarding the extent of insurance coverage.

LEGAL STANDARD
Summary judgment is appropriate where no genuine issues of material fact exist and the
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Rule 56(a) of the
Federal Rules of Civil Procedure provides that “[t]he court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Where there is an absence of evidence to
support the nonmoving party’s case, summary judgment is appropriate. See Bacchus Indus., Inc.
v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). A genuine issue of fact is one that “can
be resolved only by a finder of fact because [it] may reasonably be resolved in favor of either
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). Importantly, summary
judgment is appropriate “unless there is sufficient evidence favoring the nonmoving party for a
4

Defendants asserted this fact to dispute Plaintiffs’ facts 6 and 7. However, this is really a new factual assertion,
and does not tend to dispute Plaintiffs’ facts.
5
Additionally, Defendants support this fact by citing to previous assertions of fact in their own motion for summary
judgment, which do not establish this fact. There is no evidence on the record to support this assertion.

6

jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly
probative, summary judgment may be granted.” Id. at 249 (internal citations omitted).
DISCUSSION
I.

Reformation of the Charter Oaks Policy.
Defendants argue that the Charter Oak policy should be reformed to increase the policy

limit to the statutory amount motor carriers are required to carry under the New Mexico Motor
Carrier Act and associated regulations. Plaintiffs argue that the Charter Oak policy should not be
reformed, as the Motor Carrier Act places the duty on motor carriers, and not insurers, to
comply.
a.

Statutory and regulatory language.

The policy of the New Mexico Motor Carrier Act, NMSA § 65-2A-2 et seq., is:
…to foster the development, coordination and preservation of a safe, sound and
adequate motor carrier system, requiring financial responsibility and
accountability on the part of motor carriers, providing for economic regulation
of motor carriers of persons and household goods and towing services performing
nonconsensual tows and by streamlining and promoting uniformity of state
regulation of motor carriers.
NMSA 1978, § 65-2A-2 (2011) (emphasis added).
The Financial Responsibility section of New Mexico’s Motor Carrier Act in effect at the
relevant time provided:
A. The commission shall prescribe minimum requirements for financial
responsibility for all motor carriers, including incidental carriers pursuant to this
section…
B. A motor carrier or incidental carrier shall not operate on the highways of
this state without having filed with the commission proof of financial
responsibility in the form and amount as the commission shall by rule
prescribe.
…
N.M. Stat. Ann. § 65-2A-18 (2011) (emphasis added).

7

The New Mexico Public Regulation Commission prescribed the following regulations (as
of 2011) to effectuate the New Mexico Motor Carrier Act:
18.3.3.8 PROOF OF FINANCIAL RESPONSIBILITY: Every motor carrier
must file proof of financial responsibility with the commission.
…
A. Intrastate motor carriers.
(1) Public liability financial responsibility. The commission will accept
the following documents as proof of the required public liability financial
responsibility:
(a) a certificate showing the issuance of an insurance policy with
the required uniform endorsement by a company authorized to
transact insurance business in New Mexico on uniform filing form
E6 for public liability insurance; or…
18.3.3.10 MINIMUM LIMITS OF PUBLIC LIABILITY INSURANCE:
...
D. Household goods carriers must maintain a combined single-limit public
liability insurance policy of at least one million five hundred thousand dollars
($1,500,000) per occurrence for bodily injury to or death of all persons injured or
killed and property damage.
E. Towing services, repossession services, and motor carriers of property
must maintain a combined single-limit public liability insurance policy of at least
seven hundred and fifty thousand dollars ($750,000) per occurrence for bodily
injury to or death of all persons injured or killed and property damage.
…
18.3.3.14 AUTOMATIC SUSPENSION OF OPERATING AUTHORITY:
The commission shall, in accordance with 18.3.2.30 NMAC, suspend the
operating authority of a motor carrier if it fails to continuously maintain the
amounts of financial responsibility required by this rule.
NMAC 18.3.3 (2011) (emphasis added).
Initially, the Court notes that the relevant statutory language places the burden of
compliance on the motor carrier or insured. NMSA § 65-2A-18(B) (2011) (“A motor carrier or
6

Uniform Form E, used in all states, provides:
This is to certify that [insurer] has issued to [Motor Carrier] a policy or policies of insurance effective from
________ standard time at the address of the insured stated in said policy or policies and continuing until
canceled as provided herein, which, by attachment of the Uniform Motor Carrier Bodily Injury and
Property Damage Liability Insurance Endorsement, has or have been amended to provide automobile
bodily injury and property damage liability insurance covering the obligations imposed upon such motor
carrier by the provision of the motor carrier law of the state in which the Commission has jurisdiction or
regulations promulgated in accordance therewith.

8

incidental carrier shall not operate on the highways of this state without having filed with the
commission proof of financial responsibility in the form and amount as the commission shall by
rule prescribe.”); NMAC 18.3.3.8 (2011) (“Every motor carrier must file proof of financial
responsibility with the commission.”); NMAC 18.3.3.10 (“motor carriers of property must
maintain a combined single-limit public liability insurance policy of at least…”). In addition, the
regulatory system suspends motor carriers who do not file proof of compliance with financial
responsibility laws. NMAC 18.3.3.14.

This interpretation accords with the interpretation of

similar statutory language in motor carrier statutes in other jurisdictions, which acknowledge that
such statutes place the burden of compliance on motor carriers. Howard v. Quality Xpress, Inc.,
989 P.2d 896, 899 (N.M. Ct. App. 1999) (interpreting the federal motor carrier act).
b.

Reformation of policies to meet Motor Carrier Act requirements.

The parties did not assert, and the Court could not find, New Mexico case precedent
requiring reformation of insurance policies to meet statutory minimums in all circumstances.
Rather, courts tend to reform policies where the burden of compliance with the statute is placed
on insurers. For example, courts have reformed policies where the statute expressly places the
burden on the insurer to offer or provide certain insurance coverage. See North Carolina Farm
Bureau Mut. Ins. Co. v. Armwood, 638 S.E.2d 922, 926–27, rev’d and adopting dissent, 653
S.E.2d 392 (N.C. 2007) (reformation of policy not appropriate where statute, by its plain
language, placed burden on owners to maintain required insurance); see also Howard v. Quality
Xpress, Inc., 989 P.2d 896, 899 (N.M. Ct. App. 1999) (noting that federal motor carrier statute
places burden of compliance on motor carrier, and declining to decide whether the federal motor
carrier act necessarily becomes part of the applicable insurance policy). Several such cases cited
by the Defendants are uninsured motorist statutes, which have their own statutory language and

9

analysis, and are not applicable here. See Clark v. State Farm Mut. Auto Ins. Co., 433 F.3d 703,
710 (10th Cir. 2005) (policy reformed to include uninsured motorist coverage where insurer
failed to offer it as required by statute); Jordan v. Allstate Insurance Co., 245 P.3d 1214 (N.M.
2010) (policy reformed where uninsured motorist statute expressly required insurer to offer
uninsured motorist coverage and insurer failed to offer it); Progressive Nw. Ins. Co. v. Weed
Warrior Servs., 245 P.3d 1209, 1214 (N.M. 2010) (same).
Courts also have reformed policies when statutes mandate that policies only be issued
with a certain minimum level of coverage. See, e.g., Bovain v. Canal Insurance, 678 S.E.2d 422
(S.C. 2009) (reformation appropriate where regulation stated that “Insurance policies… will have
limits of liability not less than...”). In Bovain, the court reasoned that the relevant statute creates
a duty for insurers to issue policies in accordance with the mandated minimum level of coverage.
Id. at 429.
However, where the statute places the burden of meeting statutory minimum coverage
requirements on the motor carrier, courts generally do not reform such policies to meet the
statutory minimum amount. See N. Carolina Farm Bureau Mut. Ins. Co. v. Armwood, 413, 638
S.E.2d 922, 926, rev'd and adopting dissent, 361 N.C. 576, 653 S.E.2d 392 (2007) (“our
Supreme Court has only reformed policies in cases where an insurer failed to comply with a
requirement of the 1953 Act that places a direct burden on the insurer and policy, not the
owner.”); Tri-State Pipe & Equip., Inc. v. S. Cty. Mut. Ins. Co., 8 S.W.3d 394, 400 (Tex. App.
1999) (“We also note that the [motor carrier statute] seems to place the burden of securing the
minimum amount of insurance on the motor carrier when it provides that every “motor carrier ...
shall maintain ” the required insurance.”); Brewer v. Maynard, 2007 WL 2119250, at *3
(S.D.W.V. 2007) (policy not reformed because federal motor carrier act places burden of

10

compliance on insured). Reforming policies under these circumstances would shift the burden of
compliance to the insurers, where there is no relevant statutory or New Mexico Supreme Court
authority to do so. See N. Carolina Farm Bureau v. Armwood, 638 S.2.2d 922, 923 (dissent,
later adopted by the North Carolina Supreme Court, concluded that burden of compliance was on
insured where statute stated “[a]n owner of a commercial motor vehicle… shall have financial
responsibility for the operation of the motor vehicle in an amount equal to …”); Carolina Cas.
Ins. Co. v. Estate of Zinsmaster, 2007 WL 670937, at *5 n.1 (N.D. Ind. 2007) (“The [Federal]
Motor Carrier Act is not an insurance statute, and it is not Carolina Casualty's duty to make sure
that the companies it insures comply with its provisions.”)
Courts interpreting similar language in the Federal Motor Carrier Act have noted it places
the responsibility of obtaining minimum levels of insurance on the motor carrier. See Illinois
Central Railroad Co. v. Dupont, 326 F.3d 665 (5th Cir. 2003) (declining to read into motor
carrier policy the statutory minimum levels of insurance); Howard v. Quality Xpress, Inc., 989
P.2d 896, 899 (N.M. Ct. App. 1999) (“[T]he [Federal] regulatory scheme appears to place the
burden of compliance with the compulsory insurance coverage requirements upon the motor
carrier, not the insurer.”); Canal Ins. Co. v. Barker, 2007 WL 3551508, at *5 (E.D. Va. 2007) 49
C.F.R. § 387.1 (“This subpart prescribes the minimum levels of financial responsibility required
to be maintained by motor carriers of property operating motor vehicles in interstate, foreign, or
intrastate commerce.”); 49 C.F.R. § 387.7 (“No motor carrier shall operate a motor vehicle until
the motor carrier has obtained and has in effect the minimum levels of financial responsibility as
set forth in § 387.9 of this subpart.”). Thus, courts that have considered this issue have refused
to write into interstate motor carrier policies federal statutory minimums. Waters v. Miller, 560
F. Supp. 2d 1318, 1322 (M.D. Ga. 2008), aff'd, 564 F.3d 1355 (11th Cir. 2009) (citing Howard);

11

Grange Mut. Cas. Co. v. Pinson Trucking Co., 2013 WL 443619, at *5 (M.D. Ga. 2013) (quoting
Dupont); see also Howard, 989 P.2d at 899 (declining to decide whether insurance statutes are
necessarily written into policies).
The language of the New Mexico Motor Carrier Act neither places the burden on the
insurer to offer or provide policies at certain amount, nor mandates that policies only be issued at
or above a certain amount. Rather, it places the burden on the motor carrier to have insurance
that meets the minimum statutory requirements.

If a motor carrier fails to file proof of

complying insurance, its authority to operate is revoked. As noted above, this interpretation
accords with other jurisdictions’ interpretation of similar language.7
c.

Plaintiffs did not know that insured needed insurance that complied with the New

Mexico Motor Carrier Act.
Defendants argue that the Charter Oak policy should be reformed, because the Plaintiffs
knew or should have known that the Insured needed insurance that complied with New Mexico’s
Motor Carrier Act. See Sapp v. Canal Insurance Co., 706 S.E.2d 644, 648 (Ga. 2011)8 (court
reformed the motor carrier policy to meet statutory minimums, concluding that the insurer knew
or should have known that the insured needed motor carrier insurance that complied with
Georgia law).
Here, the Insured stated on its application that no insurance filings were necessary. This
meant that Charter Oak did not know it needed to file Uniform Form E with the Public
Regulation Commission certifying (and endorsing) that the insurance policy met minimum
7

Since the Court concludes that Plaintiffs did not have a duty to issue a policy that met New Mexico’s statutory
minimum for motor carriers, the Court declines to address Plaintiffs’ alternative arguments. Specifically, the Court
declines to address the argument that there is no public policy reason to reform Charter Oak’s policy, on the grounds
that Bituminous’ insurance filing satisfied the motor carrier financial responsibility scheme. Neither party has
adequately briefed or addressed this issue.
8
In Sapp, the Georgia statute in effect at the time provided that “the failure to file any form required by the state revenue
commissioner shall not diminish the rights of any person to pursue an action directly against a motor common or motor
contract carrier’s insurer.”) OCGA 46-7-12.1(a) (2007). New Mexico has no analogous provision.

12

statutory requirements. See Howard, 989 P.2d at 899 (“Quality chose to answer “no” and leave
blank the questions regarding interstate travel and filings required.”) “The answers to these
questions were material to [insurer’s] issuance of the policy because they directly affected the
steps necessary for [insurer] to meet [] regulatory requirements on behalf of [insured] and may
have affected the premium charged.” Howard, 989 P.2d at 899.
Under these facts, the Court declines to hold that the Plaintiffs knew or should have
known that the Insured was seeking motor carrier insurance that met the minimum statutory
guidelines. The Insured answer “no” as to whether any insurance filings were required. Thus,
the insurer was not asked to file a Uniform Form E certifying that the plan met the requirements
of New Mexico’s motor carrier act. Moreover, the insured rejected a conforming offer of
insurance, and opted for a lower amount of $500,000. Had Charter Oak known it would be
required to certify that the policy met higher statutory standards, it would likely have only
offered the $750,000 policy, and required the Insured to pay a higher premium. There is no
evidence that the insurer did file a Form E.9
Moreover, terms which the motor carrier did not bargain for should generally not be
incorporated into a motor carrier policy. See Illinois Central Railroad Co. v. Dupont, 326 F.3d
665 (5th Cir. 2003). If they were, “[m]otor carriers would then have an incentive not to comply
with the regulations and obtain the endorsement and pay the additional premiums associated with
it, knowing that the courts would deem the endorsement part of the policy whether or not it was
requested by the carrier.” Id. at 667, quoted in Grange Mut. Cas. Co. v. Pinson Trucking Co.,
2013 WL 443619, at *5 (M.D. Ga. Feb. 5, 2013). Here, the insured was offered a policy which
complied with the minimum statutory requirements. The insured apparently rejected the offer

9

In fact, Defendants’ exhibit 1, doc. 53-1, would indicate there was no such form filed, and Defendant’s exhibit 2,
doc. 53-2, indicates that the only active insurance on file was from Bituminous.

13

and asked for a policy with a lower liability limit, apparently to pay lower premiums. The
remedy in this situation is not to shift burden of compliance to insurers when neither the New
Mexico statutes nor case law does so, but instead to revoke the insured’s authorization to operate
as set forth in the regulations.

See, e.g., Brewer v. Maynard, 2007 WL 2119250, at *3

(S.D.W.V. 2007) (insurer had no duty to make sure insured complied with federal motor carrier
act where insured indicated no insurance filings were necessary and motor carrier regulations
place burden of compliance on insured, not insurer), citing Tri-State Pipe & Equip., Inc. v. S.
Cty. Mut. Ins. Co., 8 S.W.3d 394, 400 (Tex. App. 1999) (amount of insurance that insured
purchases is within control of insured; statute places burden of securing minimum amount of
insurance on motor carrier).
d.

Defendants’ remaining arguments.

Defendants’ arguments to the contrary are unavailing. Initially, the Court notes that
Defendants cite to cases where the relevant statutes do place the burden of compliance on the
insurer or require the issuance of policies with certain minimum liability. For example, in
Bovain v. Canal Insurance, 383 S.C. 100, 678 S.E.2d 422 (S.C. 2009), the court reformed the
policy where the regulatory language shifted the burden of compliance to the insurer. See S.C.
Code. Ann. Regs. 38-414 (Supp. 2008) (“Insurance policies… for bodily injury and property
damage will have limits of liability not less than…”). This language clearly prohibited the
issuance of policies for motor carriers less than a certain amount, and imposed a duty on insurers
to meet that statutory regulation. There is no analogous provisions in the New Mexico statutes
or regulations that shift the burden to insurers to comply with the statute.
Similarly, the New Mexico Uninsured Motorist Statute, NMSA § 66-5-301, requires
insurers to offer certain coverage, obtain a written objection from the insured, and incorporate

14

that rejection into the policy. Jordan v. Allstate, 245 P.3d 1214 (N.M. 2010). The statutory
language provides that “[n]o motor vehicle or automobile liability policy insuring against loss…
shall be delivered or issued for delivery in New Mexico, unless coverage is provided therein or
supplemental thereto in minimum limits…” NMSA § 66-5-301. There is no corresponding
language in New Mexico’s motor carrier statute prohibiting the issuance of insurance policies
without meeting the statutory minimum.
II.

Insured was a Motor Carrier of Property.
Defendants argue that the insured was a motor carrier of household goods, which is

subject to a higher statutory minimum liability of $1.5 million.

NMAC 18.3.3.10 (2011)

(“Household goods carriers must maintain a combined single-limit public liability insurance
policy of at least one million five hundred thousand dollars…”). The Court concludes that, even
if the Court had reformed the Charter Oak policy, it would have reformed the policy to meet the
applicable $750,000 liability amount for motor carriers of property, and not the $1.5 million
amount for motor carriers of household goods.
Initially, the Court notes that the New Mexico Public Regulation Commission is charged
with determining the appropriate operating authority based on the services provided by the motor
carrier. NMAC 18.3.2.8. Here, the commission determined that the Insured was a motor carrier
of property. It issued a warrant allowing the Insured to operate, which described the operations
as “transportation of undismantled houses, buildings and structures of every kind and
character…” (Doc. 51-1, Ex. 1). There is no reference in the warrant to household goods.
Defendants argue that this classification is irrelevant, as the Insured was really a motor
carrier of household goods and should be subject to the higher insurance requirements thereto.
Even if this classification were irrelevant, the Court concludes that the insured was actually a

15

motor carrier of property, and not household goods. The statutory definition of “household
goods” provides:
X. “household goods” means personal effects and property used or to be used
in a dwelling when a part of the equipment or supply of the dwelling and other
similar property as the federal motor carrier safety administration may provide by
regulation…
Y. “household goods service” means the intrastate transportation, packing and
storage of household goods for hire;
N.M. Stat. Ann. § 65-2A-3 (emphasis added). Here, the insured is a structural mover of
prefabricated structures, portable classrooms, and other buildings. “Structures,” including prefabricated classrooms and mobile homes, does not fall within the statutory definition of
household goods. The insured moved dwellings, not the “personal effects or property to be used
in a dwelling.” Id.

Defendants speculate that a structure, when moved, includes household

goods. There is no evidence to that effect.
III.

Auto Exclusion in the Travelers’ General Liability Policy is Not Void as against

Public Policy.
Defendants argue that the auto exclusion in the Travelers general liability policy should
be void as matter of public policy.10 Specifically, Defendants argue that it is public policy that
innocent victims receive compensation sufficient to meet minimum statutory amounts in the
motor carrier act. Defendants seek to have the auto exclusion declared void, so that they may
recover up to the statutory amount.
“[W]hen an insurance provision conflicts with the public policy expressed in a statute, it
is void.” Estep v. State Farm Mut. Auto. Ins. Co. 703 P.2d 882, 885 (N.M. 1985). “Exclusionary
provisions in an insurance policy will be enforced if they (1) are clear and unambiguous in
meaning, and, (2) if they do not conflict with public policy stated in express statutory language
10

Plaintiffs separately argue that the auto exclusion in the Travelers policy should not be void on that basis that it is
repugnant to the insuring clause. Marshall v. Providence Washington Ins. Co., 951 P.2d 76, 79 (N.M. Ct. App.
1997). Defendants do not appear to contest this argument and the Court otherwise finds it well-taken.

16

or by indication of legislative intent.” Jimenez v. Found. Reserve Ins. Co., 757 P.2d 792, 794
(N.M. 1988); New Mexico Physicians Mut. Liab. Co. v. LaMure, 860 P.2d 734, 737 (N.M. 1993).
“In evaluating whether an exclusionary provision conflicts with a particular statute and is
therefore void, our inquiry focuses on the legislative intent behind the statute.” LaMure, 860
P.2d at 737.
Automobile exclusions in general liability policies exist to exclude coverage of risks
normally covered by automobile insurance. See Strickland v. Auto-Owners Ins. Co., 273 Ga.
App. 662, 663, 615 S.E.2d 808, 810 (2005) (to prevent duplicative premiums and overlapping
coverage, general liability policies often contain exclusions to make it clear that it does not cover
motor vehicle collisions). Liability for operation of a motor vehicle is usually not within the risk
which general liability policies are designed to cover. See, e.g., Farm Bureau Mut. Ins. Co. of
Michigan v. Stark, 437 Mich. 175, 185, 468 N.W.2d 498, 503 (1991), overruled on other
grounds, 597 N.W.2d 28 (1999) (“The risk of liability from the use of a motor vehicle is
traditionally and properly covered by motor vehicle policies, not by homeowner's insurance.”).
The Travelers general liability policy was issued alongside the Charter Oak Policy, which
provided auto coverage.
As explained above, the Court concludes that it would not further public policy to void
the auto exclusion in the Travelers general liability policy, because the motor carrier act does not
mandate that insurance policies only be issued with certain coverage, or place the burden on
insurers to issue coverage that meets statutory requirements.
Furthermore, it is not appropriate to convert a general commercial liability policy into an
automobile policy, and Defendants have not provided relevant case law to support such a drastic
step. Defendants instead cite to cases where courts void exclusions in automobile policies

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because they restrict coverage required by mandatory automobile insurance statutes. In fact,
cases from other jurisdictions refuse to void an auto exclusion in a general liability policy.
Nautilus Ins. Co. v. Nicky & Claire's Day Care, Inc., 630 F. Supp. 2d 727, 735 (W.D. Tex. 2009)
(auto exclusion in general liability policy not void as a matter of public policy, noting that
insured could procure an automobile policy); Tri-State Pipe & Equip., Inc. v. S. Cty. Mut. Ins.
Co., 8 S.W.3d 394, 400 (Tex. App. 1999); BP Am., Inc. v. State Auto Prop. & Cas. Ins. Co., 148
P.3d 832, 839, as corrected (Ok. 2006) (refusing to convert a general liability policy to an
automobile policy).
Moreover, the Travelers general liability policy was not issued to satisfy the requirements
of the motor carrier act. The motor carrier act is designed to regulate transportation activities
and operations on the highways of the state. NMSA § 65-2A-2. The only insurance policy
required to be certified to Public Regulation Commission is an automobile policy, not a general
liability policy. See NMAC 18.3.3.8 (commission will accept proof of financial responsibility by
filing of Uniform Form E.).11 Therefore, the auto exclusion in the Travelers general liability
policy does not conflict with either statutory language or legislative intent.
Because of this ruling, the Court does not address Plaintiffs’ arguments that the financial
responsibility requirements in the motor carrier act were satisfied by Bituminous’ insurance
filing. Moreover, the Court will not address Plaintiffs’ arguments that (1) public policy is not
implicated because Randolph Curry was driving his personal 2004 GMC pickup and was not

11

The parties cite to Uniform Form E, which in part reads: “…which, by attachment of the Uniform Motor Carrier
Bodily Injury and Property Damage Liability Insurance Endorsement, has ... been amended to provide automobile
bodily injury and property damage liability insurance covering the obligations imposed upon such motor carrier
by the provisions of the motor carrier law.” (emphasis added).

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involved in motor carrier operations during the Collision,12 or (2) that public policy was satisfied
by the $50,000 GMAC policy.
CONCLUSION
In sum, the Court finds and concludes that Plaintiffs’ motion is well taken. The Court
concludes that the limit of liability insurance in the Charter Oak Policy is $500,000.00 and
Charter Oak has no additional obligations under the policy. Furthermore, the Court finds and
concludes that the auto exclusion in the Travelers general liability policy is not void on public
policy grounds. A final judgment shall issue separately.
THEREFORE,
IT IS ORDERED with respect to Plaintiffs’ Motion for Summary Judgment (Doc. 51)
that:


Summary Judgment is GRANTED as to Charter Oak’s request for a declaration

that the limit of liability insurance in the Charter Oak Policy is $500,000 and Charter Oak has no
additional obligations under the policy or New Mexico law; and


Summary Judgment is GRANTED as to Travelers’ request for a declaration

that the auto exclusion in the Travelers general liability policy is not void.
IT IS FURTHER ORDERED that Defendants’ Motion for Summary Judgment (Doc.
33) is hereby DENIED for reasons described in this Memorandum Opinion and Order.

________________________________
UNITED STATES DISTRICT JUDGE

12

Plaintiffs have also not asserted as an undisputed fact that Randolph Curry was involved in motor carrier
operations during the Collision.

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