Hawley v. Farm Bureau Property & Casualty Insurance Comapny
Filing
22
MEMORANDUM OPINION AND ORDER by Magistrate Judge Jerry H. Ritter granting 17 Motion for Partial Summary Judgment. (mlt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
JOHN HAWLEY,
Plaintiff,
v.
CV 18-0489 JHR/SCY
FARM BUREAU PROPERTY &
CASUALTY INSURANCE COMPANY,
Defendant.
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on Defendant Farm Bureau Property & Casualty
Insurance Company’s Motion for Partial Summary Judgment [Doc. 17], filed November 2, 2018,
in which it requests that the Court grant summary judgment in its favor and dismiss Plaintiff John
Hawley’s Complaint with prejudice. [See id., p. 17]. 1 Pursuant to 28 U.S.C. § 636(c) and Federal
Rule of Civil Procedure 73(b), the parties have consented to the undersigned Magistrate Judge to
conduct dispositive proceedings in this matter, including entry of final judgment. [Docs. 6, 7, 8].
Having considered the relevant law and the parties’ submissions, the Court grants Farm Bureau’s
Motion.
I)
INTRODUCTION
Plaintiff Hawley was injured in an automobile collision with an underinsured tortfeasor.
After receiving the full limits of the tortfeasor’s liability coverage, Hawley turned to his own
insurer, Defendant Farm Bureau, to recover underinsured motorist benefits. Having insured six
vehicles with Farm Bureau, Hawley sought to stack his UM/UIM coverage. However, prior to the
1
The only surviving claim is for breach of contract (Count IV). [Doc. 17, at *2; see Docs. 1-1, p. 10].
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accident, he had rejected intra-policy stacking of his UM/UIM coverage in a written document. As
such, Farm Bureau only paid Hawley the undisputed coverage, the value of one of his vehicles’
UM/UIM coverage.
Hawley now argues that his rejection of stacked UM/UIM coverage was invalid as a matter
of New Mexico law, and asks this Court to reform his policy to provide for coverage he rejected
and for which he paid no premium. The Court denies his claim as a matter of law. As the Court
reads New Mexico law, Hawley was free to reject UM/UIM coverage, and, because UM/UIM
coverage is not tied to a particular vehicle, Farm Bureau’s all-or-nothing offer of stacked coverage
was permissible. Farm Bureau’s Motion will be granted.
II)
ISSUES
At issue is whether Defendant Farm Bureau failed to properly inform Hawley of his full
options for stacking UM/UIM coverage under his policy. That question raises another: whether
Farm Bureau was required to offer a “per vehicle” premium cost for stacking UM/UIM coverage.
III)
UNDISPUTED MATERIAL FACTS
The relevant policy covered Plaintiff Hawley’s October 27, 2015, accident, and was issued
to Hawley and his wife Amy. [Doc. 17, p. 4, ¶ 1, p. 8, ¶¶ 22-24; Doc. 18, p. 2, ¶ 1, p. 4, ¶¶ 22-24].
The Policy provided bodily injury liability coverage of $100,000.00 per person and $300,000.00
per occurrence for the Hawleys’ six vehicles and corresponding UM/UIM bodily injury coverage
equal to the liability limits. [Doc. 17, p. 4, ¶¶ 2-3; Doc. 18, p. 2, ¶¶ 2-3]. However, pursuant to
Endorsement PKNM.EV009.0412, completed and signed by Hawley on January 4, 2013, Hawley
rejected stacked UM/UIM coverage. [Doc. 17, pp. 5-7, ¶¶ 6-17; Doc. 18, p. 3, ¶¶ 6-17].
After his accident with the tortfeasor, Hawley received the bodily injury liability limits of
$25,000.00 afforded by the tortfeasor’s policy with State Farm. [Doc. 17, p. 8, ¶ 23; Doc. 18, p. 4,
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¶ 23]. Farm Bureau paid Hawley the remaining undisputed non-stacked UM coverage limits of
$75,000.00 available under the Policy after applying an offset for the $25,000.00 paid by State
Farm. [Doc. 17, p. 8, ¶ 24; Doc. 18, p. 4, ¶ 24]. At issue is whether Hawley’s rejection of stacked
UM/UIM coverage was invalid as a matter of law, entitling him to judicial reformation of his
policy to provide a total UIM limit of up to $600,000.00. [Doc. 17, p. 8, ¶ 25; Doc. 18, p. 4, ¶ 25].
Pertinent here, the Selection/Rejection Form employed by Farm Bureau provided the costs
of non-stacked coverage, side-by-side, to the costs of stacked UM/UIM coverage. [Doc. 17, p. 6,
¶ 13; Doc. 18, p. 3, ¶ 13]. [See also Doc. 17-1, p. 1]:
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Notably, the policy premiums presented on the Selection/Rejection form were either for Nonstacked UM coverage or Stacked UM coverage; they did not break down nor offer stacking on a
per-vehicle basis. [Doc. 17-1, p. 1].
The next page of the form contains representations that Hawley agreed to, as well as
Section II, which permitted him to request or reject intra-policy stacking:
[Doc 17-1, p. 2; Doc. 17, pp. 6-7, ¶ 16; Doc. 18, p. 3, ¶ 16]. As shown above, Hawley checked
the second box, rejecting Intra-Policy Stacked UM Coverage. [Doc. 17, p. 7, ¶ 17; Doc. 18, p. 3, ¶
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17]. The primary question presented is whether Farm Bureau’s Selection/Rejection form complied
with New Mexico law so that it prevents stacked UM/UIM coverages in this case.
IV)
LEGAL STANDARDS
In this diversity action, the Court applies the substantive law of New Mexico to the legal
questions at issue. See Patterson v. Powder Monarch, LLC, 926 F.3d 633, 637 (10th Cir. 2019).
Thus, the Court must follow the most recent decisions of New Mexico’s Supreme Court. Id. Where
no controlling decision exists, the Court must attempt to predict what the New Mexico Supreme
Court would do, “seeking guidance from decisions rendered by lower courts in the relevant state,
appellate decisions in other states with similar legal principles, district court decisions interpreting
the law of the state in question, and the general weight and trend of authority in the relevant area
of law.” Id. (quoting Wade v. EMCASCO Ins. Co., 483 F.3d 657, 666 (10th Cir. 2007)). The Court
is also bound by the Tenth Circuit’s “own prior interpretations of state law … unless an intervening
decision of the state’s highest court has resolved the issue.” Id. (quoting Kokins v. Teleflex, Inc.,
621 F.3d 1290, 1295 (10th Cir. 2010)).
Under Federal Rule of Civil Procedure 56(a): “[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). “A dispute is genuine when the
evidence is such that a reasonable jury could return a verdict for the nonmoving party, and a fact
is material when it might affect the outcome of the suit under the governing substantive law.” Bird
v. W. Valley City, 832 F.3d 1188, 1199 (10th Cir. 2016). Only material factual disputes preclude
the entry of summary judgment. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138,
1148 (10th Cir. 2000).
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V)
APPLICABLE LAW
The parties direct the Court to Montano v. Allstate Indemnity Co., 2004-NMSC-020, 135
N.M. 681, 92 P.3d 1255, as the most relevant decision of the New Mexico Supreme Court on the
issues at bar. [See Doc. 17, pp. 9-13; Doc. 18, pp. 6-12]. Montano, however, stands in a landscape
of statutory, regulatory, and common law rules that requires some discussion.
General Structure of New Mexico Motor Vehicle Insurance Law
New Mexico requires all motor vehicle, unless exempted, to have liability insurance or
other acceptance self-insurance. NMSA 1978, § 66-5-205(A) and (B) (2013). A minimum level
of coverage is set by statute, NMSA 1978, § 66-5-208(A – C) (1983), currently $25,000 for bodily
injury to or death of a person and $50,000 for all persons plus $10,000 for property damage caused
in any one accident. New Mexico recognizes, however, that some negligent drivers will not comply
and will not have the mandatory liability insurance and others will meet the minimum requirements
but will not have enough liability insurance to cover all the damages they cause. To address those
problems, New Mexico requires that insurers offer, to those who purchase motor vehicle liability
insurance, a separate coverage to provide at least the same benefit as the mandatory coverage when
the tortfeasor’s insurance is lacking.
The specifics of New Mexico’s uninsured motorist/underinsured motorist (UM/UIM)
coverage scheme are important to its application. First, New Mexico requires that UM/UIM
coverage be available with every motor vehicle liability policy, § 66-5-208(A, B), but allows the
purchaser to reject the coverage, § 66-5-208(C). In other words, New Mexico does not mandate
that UM/UIM coverage be purchased, but that it be offered so that every purchaser of motor vehicle
liability insurance has a real opportunity to obtain that additional coverage. Second, distinct from
most automobile liability coverage, UM/UIM coverage generally is not tied to any specific motor
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vehicle but goes with the person, even when occupying a vehicle not on the same policy, or
occupying no vehicle at the time of injury by a negligent driver. Chavez v. State Farm Mut. Auto.
Ins. Co., 1975-NMSC-011, ¶ 11, 87 N.M. 327, 330, 533 P.2d 100, 103; Lopez v. Foundation
Reserve Ins. Co., 1982-NMSC-034, ¶ 8, 98 N.M. 166, 169, 646 P.2d 1230, 1233. An insurer must
offer UM/UIM coverage equivalent to the minimum mandatory liability coverage. NMSA 1978,
§ 66-5-301 (1983); § 66-5-215(A) (1983). Third, an insurer must also offer coverage equivalent in
amount to the purchaser’s own liability coverage limit (if greater than the mandatory minimum).
§ 66-5-301(A). In addition to those mandatory requirements upon the insurer, the UM/UIM statute
contemplates that the insurer and insured can agree to UM/UIM coverage in an intermediate
amount, greater than the minimum but less than the maximum. Id. (Stating that UM/UIM policies
may provide “such higher limits as may be desired by the insured, but up to the limits” (of the
insured’s liability coverage)).
Public policy considerations support and inform New Mexico’s statutory structure. The
purpose of UM/UIM coverage is to protect persons who are injured by negligent drivers from the
consequences of the tortfeasor's failure to have liability insurance. Chavez, 1975-NMSC-011, ¶ 7,
87 N.M. at 329, 533 P.2d at 102. Because New Mexico's UM/UIM statute is remedial, it must be
liberally construed to accomplish its purpose, and any limitations of the statute (i.e., insured must
be legally entitled to damages and negligent driver must be “uninsured”) must be construed strictly.
See Schmick v. State Farm Mut. Auto. Ins. Co., 1985-NMSC-073, ¶ 11, 103 N.M. 216, 219, 704
P.2d 1092, 1095; see also Foundation Reserve v. Marin, 1990-NMSC-022, ¶ 9, 109 N.M. 533,
535, 787 P.2d 452, 454 (overruling Willey v. Farmers Ins. Group, 1974-NMSC-054, 86 N.M. 325,
523 P.2d 1351, for misinterpreting the definition of an “uninsured” driver). Moreover, while
insurance policies are contracts and interpreted by contract principles, Thompson v. Occidental
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Life Ins. Co. v. Cal., 1977-NMCA-071, ¶ 4, 90 N.M. 620, 621, 567 P.2d 62, 63, interpretation must
be compatible with public policies expressed by applicable statutes and regulations. Romero v.
Dairyland Ins. Co., 1990-NMSC-111, ¶ 17, 111 N.M. 154, 159, 803 P.2d 243, 248. Ambiguities
in UM/UIM policy provisions are construed by the court against the insurer and in favor of the
reasonable expectations of the insured. Rodriguez v. Windsor, 1994-NMSC-075, ¶ 12, 118 N.M.
127, 130, 879 P.2d 759, 762; see also Lopez v. Foundation Reserve Inx. Co., Inc., 1982-NMSC034, ¶ 16, 98 N.M. 166, 170, 646 P.2d 1230, 1230 (“Another reason for intra-policy stacking is
that if fulfills the reasonable expectations of the insured.” (citations omitted)).
New Mexico Courts Favor but Do Not Always Require “Stacking” of Motor Vehicle
Insurance Coverages
“Stacking” is the aggregation of coverages for multiple vehicles insured under a single
policy. State Farm Mut. Auto. Ins. Co. v. Safeco Ins. Co., 2013-NMSC-006, ¶ 8, 298 P.3d 452
(internal quotation marks and citation omitted). New Mexico common law allows courts to reform
policies to impose stacking under certain circumstances. In the UM/UIM context, stacking is
possible and sometimes even mandatory when it is not clear that only a single UM/UIM coverage
exists. In Montano, a landmark case of UM/UIM stacking, the New Mexico Supreme Court
invalidated an express anti-stacking clause that purported to limit stacking to two UM coverages,
even though the policy covered four vehicles, where the policy was ambiguous about whether the
insured truly paid a single premium for a single coverage. See 2004-NMSC-020, ¶¶ 23-27. The
Court emphasized it has “always understood [judicial] stacking to be the remedy for an ambiguous
contract or the charging of multiple premiums.” Id. at ¶ 9. Tying UM/UIM premiums to specific
automobiles creates ambiguity because of “the simple fact that UM personal injury coverage does
not follow the automobile.” Id. This untethered nature is important to the consumer so that “general
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UM coverage also insures one against bodily injury while a pedestrian or a passenger in someone
else’s vehicle.” Id.
The Montano court did not mandate stacking in every case because that “would reduce the
freedom of the parties to contract for less coverage and thus their freedom to decide how much
coverage they can afford.” Id. at ¶ 16.
[I]t may be possible to give effect to a truly unambiguous antistacking clause,
provided it plainly notifies the insured that only one premium has been charged for
one insurance coverage, that the coverage provides personal accident insurance that
cannot be stacked regardless of the number of vehicles covered by the policy, and
that the insured should bear this feature in mind when purchasing insurance.
Id., ¶ 14 (quoting Rodriguez, 1994-NMSC-075, ¶ 22, 879 P.2d at 765 (emphasis in original)). The
Montano court then “chart[ed] a new course,” id. at ¶ 17, concluding that “[i]n order to clarify and
make explicit the intention of the parties,”
the solution is to treat stacked coverage as extra coverage for which the parties have
contracted, and to which the insured is entitled by default, unless the insurance
company undertakes the burden of obtaining a separate, comprehensible, and
written disclaimer of stacking. Under this rationale those who want stacked
coverage pay for it, and those who don’t want it don’t pay for it.
Id. at ¶ 18 (quoting U.S. Fidelity & Guarantee Co. v. Ferguson, 698 So.2d 77, 84 (Miss. 1997)
(Dan Lee, C.J., specially concurring)).
UM/UIM Coverage Rejection Can Be Effective If Done Properly
An insured can reject some of or all the UM/UIM coverage that must be offered, NMSA §
66-5-301(C), but the rejection must meet certain standards or will be set aside with the court
reforming the policy to provide the full offered amount. Jordan v. Allstate Ins. Co., 2010-NMSC051, ¶ 30, 149 N.M. 162, 245 P.3d 1214, 1233. A rejection of UM/UIM coverage must be written
and “must be endorsed, attached, stamped or otherwise made a part of the policy.” 13.12.3.9
NMAC.
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A choice of any UM/UIM coverage amount less than the equivalent of the policy’s liability
limits is considered a rejection of the higher amount and must comply with all legal requirements
for rejection. Romero v. Progressive Northwestern Ins. Co., 2010-NMCA-024, ¶ 24, 148 N.M. 97,
102, 230 P.3d 844, 849; see also citations in Progressive Northwestern Ins. Co. v. Weed Warrior
Services, 2010-NMSC-050, ¶ 1, 149 N.M. 157, 158, 245 P.3d 1209, 1210-11. Once an insured
properly rejects UM/UIM coverage, the insurer can assume rejection for all future renewals unless
the insured later requests UM/UIM coverage in writing. NMSA 1978, § 66-5-301(C) (1983).
Premium quotes are constituents of a “meaningful offer.” An offer of coverage is not
meaningful unless it includes a premium quote for each offered coverage level. See Jordan, 2010NMSC-051; see also Whelan v. State Farm Mut. Auto. Inc. Co., 2014-NMSC-021, 329 P.3d 646.
An insurer must provide a premium quote for each level of stacking that it offers, Ullman v.
Safeway Insurance Company, 2017-NMCA-071, ¶ 45, 404 P.3d 434, 447, cert. granted (Aug. 24,
2017), although it need not make an express offer of every possible stacking combination. See
Jaramillo v. Government Employees Ins. Co., 573 F. App’x 733 (10th Cir. 2014).
To honor the legislative intent of a “meaningful offer” of coverage and a knowing and
intelligent decision to forego it, Marckstadt v. Lockheed Martin Corp., 2010-NMSC-001, ¶ 16,
147 N.M. 678, 684, 228 P.3d 462, 468, “some positive act” is required for a valid rejection of the
maximum UM/UIM coverage under New Mexico law. Id. at ¶ 15. New Mexico’s implementing
regulation for rejection of UM/UIM coverage requires that every rejection be written and signed,
that it be made a part of the insurance policy, and that a notification of the rejection be delivered
to the insured. NMAC 13.12.1.3.9. The purpose of the incorporation and delivery requirements is
to provide the insured the opportunity to reflect upon and reconsider the choice later. Romero, 199NMSC-111, ¶ 9; see also Kaiser v. DeCarrera, 1996-NMSC-050, ¶ 14, 122 N.M. 221, 224, 923
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P.2d 588, 591. The requirement that a rejection of UM/UIM coverage must be signed has been
construed to mean that a signature must accompany the act of rejection, although the specific
evidence of rejection can be unsigned. Marckstadt, 2010-NMSC-001, ¶ 4. The notification of
rejection need not be a copy of the original rejection document. Id.
The Montano Illustration Does Not Mandate a Specific UM/UIM Coverage Structure
To illustrate how its holding could apply to future cases, the Montano court imagined a
scenario where the insurer offered four UM options:
[I]n a multiple-vehicle policy insuring three cars, the insurer shall declare the
premium charge for each of the three UM coverages and allow the insured to reject,
in writing, all or some of the offered coverages. Thus, hypothetically, in the case of
a $25,000 policy, if the premium for one UM coverage is $65, two coverages is an
additional $60, and three coverages $57 more, the insured who paid all three (for a
total premium of $182) would be covered up to $75,000 in UM bodily injury
coverage. However, the insured may reject, in writing, the third available coverage
and pay $125 for $50,000 of UM coverage; or the insured may reject, in writing,
the second and third coverages and pay $65 for $25,000 of UM coverage; or the
insured may reject all three UM coverages. In any event, the coverage would not
depend on which vehicle, if any, was occupied at the time of the injury. Thus
the insured’s expectations will be clear, and an insured will only receive what he or
she has paid for.
Montano, 2004-NMSC-020, ¶ 20 (emphasis added).
The “shall declare” language of the Montano illustration is not a holding of the case that a
UM premium quote must be offered for each insured vehicle on the policy or else stacking will be
imposed. That interpretation defies the principle that UM/UIM insurance coverage is not tied to a
particular vehicle, id. at ¶ 9, as well as the clear holding of Montano that anti-stacking clauses are
not prohibited by New Mexico’s public policy where they are truly unambiguous and where only
one premium has been charged for the coverage. Id. at ¶ 15. Montano stressed that mandatory
UM/UIM stacking runs counter to the policy favoring consumer choice where possible:
[R]equiring stacking in all cases on a take-it-or-leave-it basis would reduce the
freedom of the parties to contract for less coverage and thus their freedom to decide
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how much coverage they can afford. This could frustrate, rather than advance, the
legislative intent behind the UM statute. By requiring insurers to offer UM
coverage … the legislature wanted to encourage insureds to purchase such
coverage. Requiring stacking for all vehicles would put the insured who owns
multiple vehicles in the position of paying for all of the coverages or rejecting UM
coverage altogether, rather than deciding how much coverage they can afford. This
could result in some lower-income insureds who own multiple vehicles being
effectively “priced out” of UM coverage.
Id. at ¶ 16.
V. ANALYSIS
Must every New Mexico insurer, as a matter of law, structure its offer of UM insurance to
match the Montano illustration with the same number of options as vehicles insured? More
generally, is an insurer required to offer intermediate options at all? Because the New Mexico
Supreme Court’s decision in Montano does not resolve the issue, the Court turns to recent decisions
of the Tenth Circuit and New Mexico Court of Appeals which have discussed Montano and its
requirements.
Hawley’s Montano-based argument was rejected by a panel of the Tenth Circuit in
Jaramillo, 573 F. App’x 733. There, the insured argued that Montano “provides the legal
foundation for the New Mexico Supreme Court’s mandate that insurance carriers provide the
premium costs for each available level of stacked coverage.” Id. at 744. The Tenth Circuit,
however, found Montano to be distinguishable from the plaintiffs’ case because the insurer in
Jaramillo permitted stacking, whereas the insurer in Montano prohibited it but did not obtain a
valid rejection, consequently requiring the imposition of judicial stacking. Id. at 745. The court
further rejected the plaintiffs’ reliance on Arias v. Phoenix Indem. Ins. Co., 2014-NMCA-027, --P.3d ----, determining that:
[j]ust as Montano was clearly predicated on the ambiguousness of anti-stacking
language in a policy, Arias presupposed ambiguousness caused by the imposition
of UM/UIM coverage on a policy. In other words, stacking in the situation
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contemplated by Arias follows only after the court finds an invalid rejection of
UM/UIM coverage and reads that coverage into a policy.
Id. at 746. Ultimately, the Tenth Circuit concluded “that Montano does not stand for the
proposition that the Option Form could only have been valid under New Mexico law if it had
specifically mentioned the concept and effect of stacking coverage.” Id.
After Jaramillo, the New Mexico Court of Appeals decided Ullman, 2017-NMCA-071,
and held that “an insurer has no duty to offer or explain stacking to a customer[.]” Id., ¶ 15. Relying
on Jaramillo’s analysis of New Mexico law, the Ullman court determined that “the ‘maximum
amount’ contemplated [by New Mexico’s UM/UIM statute] is simply an amount equal to the
policy’s liability limits[.]” Id. at ¶ 37. In other words, the court concluded that stacked coverage,
while an option that an insurer could offer, is coverage above and beyond that which must be
offered under New Mexico’s insurance case law. This view was reinforced by the New Mexico
Court of Appeal’s recent decision in Lueras v. GEICO General Insurance Company, 2018NMCA-051, 424 P.3d 665, cert. granted (Aug. 16, 2018). There, the plaintiffs argued, like
Hawley, that GEICO’s “all-or-nothing” requirement that they purchase UM/UIM coverage on
each of their vehicles, or reject UM/UIM coverage on all vehicles, was contrary to Montano’s
illustration. See id. at ¶ 13. The Lueras court addressed head-on the Montano illustration,
explaining:
Plaintiffs forget the context that led to the inclusion of this passage… our
Supreme Court was merely explaining what an insurance company would have to
do if it wanted to obtain an effective rejection of stacking by an insured. By its own
terms, Montano’s “illustration” does not describe a mandatory requirement
imposed on all insurers offering UM/UIM coverage, but rather provides a voluntary
option for those insurers that do not wish to offer stacking.
We conclude that Montano did not consider whether automobile insurers
should be required to offer policy holders UM/UIM coverage on a per-vehicle basis,
much less impose such a requirement…. Other than the illustration in Montano,
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Plaintiffs have cited to no authority supporting their contention that GEICO must
offer UM/UIM coverage on a per-vehicle basis, as opposed to a per-policy basis.
Id. at ¶¶ 17-18 (emphasis in original). As such, the New Mexico Court of Appeals concluded that
“GEICO’s offer of UM/UIM coverage on a per-policy basis was not contrary to New Mexico law.”
Id. at ¶ 18.
Despite Ullman and Lueras’ findings to the contrary, Hawley posits that the New Mexico
Supreme Court, which has granted certiorari in both cases, will reverse course. [See Doc. 18, pp.
9-10]. Hawley bases his argument on Judge Attrep’s special concurrence in Lueras, where she
agreed with the result based on Ullman, but then stated that she had “reservations” about that
decision. See Lueras, 2018-NMCA-051, ¶ 29. Most basically, Judge Attrep opined that Ullman’s
reliance on Jaramillo was misplaced because the Tenth Circuit did not accurately apply Montano.
See id., ¶ 32 (stating that Montano “requires ‘insurers to disclose the premium costs for each
available level of stacked coverage as a means of guaranteeing that consumers can knowingly
exercise their statutory rights to UM/UIM coverage.’”) (quoting Whelan, 2014-NMSC-021, ¶ 25).
Nonetheless, Judge Attrep concurred in the case because the issue was recently decided (in
Ullman), “which now awaits decision by the Supreme Court.” Id., ¶ 36.
This Court is bound by the Tenth Circuit’s application of Montano in Jaramillo, and takes
guidance from the New Mexico Court of Appeals’ decisions in Ullman and Lueras. As Montano
dictated, upon deciding to include anti-stacking language in its policy, Farm Bureau undertook
“the burden of obtaining a separate, comprehensible, and written disclaimer of stacking.” See
Montano, 2004-NMSC-020, ¶ 18. Pursuant to Section II of the Selection/Rejection Form in this
case, Hawley rejected intra-policy UM stacking and instead opted for non-stacked UM coverage.
[See Doc. 17-1, pp. 1-2]. In obtaining Hawley’s rejection, Farm Bureau presented the cost of nonstacked UM coverage side-by-side with the premium amount for stacked coverage. [Id.]. Hawley
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has not argued, nor could he, that he paid a separate premium for stacked UM coverage. Therefore,
under Montano and the cases interpreting it, Hawley’s rejection of stacking was permissible, and
he is not entitled to stack his coverage.
In reaching this conclusion the Court rejects Hawley’s position that Farm Bureau was
required to present a menu of all levels of stacked coverage that might have been applicable to the
six vehicles he insured under the Policy. This conclusion rests on the premise recognized by
Montano: “that UM personal injury coverage does not follow the automobile.” 2004-NMSC-020,
¶ 9. Hawley’s greatest ammunition against this proposition, Arias, [see Doc. 18, p. 8 (“before
Ullman was decided, the New Mexico Court of Appeals previously agreed that, under Montano,
‘absent the execution of a sufficient rejection of each and every possible combination of stacking,
stacking is something to which the insured is entitled by default.’”)], is rejected for the same
reasons the Tenth Circuit found it to be distinguishable in Jaramillo. That is, Arias was a case
which dealt with judicially-imposed UM/UIM coverage and the inherent ambiguity created
thereby in relation to stacking. See Jaramillo, 573 F. App’x at 746 (“stacking in the situation
contemplated by Arias follows only after the court finds an invalid rejection of UM/UIM coverage
and reads that coverage into a policy.”). It is undisputed that Hawley did not reject UM/UIM
coverage in this case, and that Farm Bureau paid out the undisputed non-stacked UM coverage
limits of $75,000.00 available under the Policy after applying an offset for the $25,000.00 paid by
the tortfeasor. As such, Arias is distinguishable, especially in light of Ullman and Lueras.
VI)
CONCLUSION
Despite its illustration suggesting the contrary, the Montano court made clear that UM/UIM
coverage is not tied to a specific vehicle. 2004-NMSC-020, ¶ 9. As the Lueras court found, there
is nothing in New Mexico’s insurance case law that requires an insurer to offer stacked UM/UIM
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coverage on a per-vehicle, as opposed to a per-policy, basis. Therefore, Hawley’s argument that
Farm Bureau violated New Mexico’s public policy by failing to obtain a valid rejection of stacked
coverage, is invalid.
Wherefore, Defendant Farm Bureau Property & Casualty Insurance Company’s Motion
for Partial Summary Judgment [Doc. 17], in which it requests that the Court grant summary
judgment in its favor and dismiss Plaintiff John Hawley’s Complaint with prejudice, is hereby
granted. A Final Order pursuant to Rule 58 will be entered concurrently.
SO ORDERED.
______________________________
JERRY H. RITTER
U.S. MAGISTRATE JUDGE
Presiding by Consent
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