ROMERO V. PROGRESSIVE NORTHWESTERN INS. CO., 2010-NMCA-024, 148 N.M. 97, 230 P.3d 844
DONALD ROMERO and THERESA ROMERO,
Plaintiffs-Appellees,
v.
PROGRESSIVE NORTHWESTERN INSURANCE COMPANY,
Defendant-Appellant.
COURT OF APPEALS OF NEW MEXICO
2010-NMCA-024, 148 N.M. 97, 230 P.3d 844
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY, James
A. Hall, District Judge.
Certiorari Granted, March 1, 2010, No.
32,065. Released for Publication March 16, 2010.
O’Friel and Levy, P.C., Daniel J.
O’Friel, Pierre Levy, Santa Fe, NM, Berardinelli Law Firm, David J.
Berardinelli, Santa Fe, NM, for Appellees.
Simone, Roberts & Weiss, P.A., Meena
H. Allen, Albuquerque, NM, for Appellant.
LINDA M. VANZI, Judge. WE CONCUR: MICHAEL
D. BUSTAMANTE, Judge, MICHAEL E. VIGIL, Judge.
{1} Progressive
Northwestern Insurance Company (Progressive) appeals the district court’s grant
of summary judgment in favor of the Appellees, Donald Romero and Theresa Romero
(the Romeros). Progressive contends that the district court erred when it held
that the Romeros’ purchase of uninsured motorist coverage in amounts lower than
the liability limits of their policy was a rejection of uninsured motorist
coverage.
{2} The district court
concluded that New Mexico law requires insurers to offer uninsured motorist
(UM) and/or underinsured motorist (UIM) coverage up to the liability limits in
an automobile insurance policy; that the Romeros’ selection of a lesser amount
of UM/UIM coverage constituted a rejection of UM/UIM coverage equal to the
difference between the two types of coverage (UM/UIM and liability); and
because Progressive failed to obtain a valid written rejection of that coverage,
UM/UIM coverage equal to the liability limits of the Romeros’ policy will be
read into the policy. We affirm.
{3} The facts of
this case are not in dispute. Progressive issued a business automobile
insurance policy (the Policy) to Donald Romero as sole proprietor of AllTech
Electric. The Policy contained single liability limits of $100,000 each
accident and UM/UIM limits of $50,000 per person and $100,000 per accident. The
Policy period at issue was from October 18, 2005, through October 18, 2006.
Three vehicles were insured under the Policy. The Romeros received a copy of
the Policy which contained a standard declarations page listing the amount of
liability and UM/UIM coverage. The Policy did not contain a rejection of any
amount of UM/UIM coverage.
{4} On September 23,
2006, Mr. Romero was involved in an accident caused by the negligence of an
uninsured motorist. The Romeros made a demand against the Policy for UM/UIM
coverage in the amount of $300,000, which represented UM/UIM coverage at the
liability limits of the Policy; that is, $100,000 stacked for each of the three
vehicles covered under the Policy. Progressive tendered, and the Romeros
accepted, UM coverage of $150,000. This sum represented the undisputed UM
benefits due under the Policy, which was $50,000 UM/UIM per person, stacked for
the three insured vehicles.
{5} The Romeros
subsequently brought suit in district court seeking declaratory relief. The
Romeros’ complaint asked the court to declare that they had not made a written
rejection of UM coverage equal to their liability limits and that the maximum
total UM coverage limits available to them under the Policy was $300,000 per
person. Progressive filed a motion to dismiss the complaint, which was denied
by the district court. The parties subsequently filed cross motions for summary
judgment.
{6} The district court
granted the Romeros’ motion for summary judgment and denied Progressive’s
motion for summary judgment. Progressive filed a timely appeal of that ruling.
{7} In its appeal,
Progressive argues that under New Mexico law, it is only required to offer
UM/UIM coverage equal to the minimum liability coverage required by law; that
the Romeros’ choice to purchase UM/UIM coverage in an amount less than the
liability limits of the Policy was not a rejection of UM/UIM coverage; and that
the declaration page of the Policy provided sufficient information regarding
coverage to meet New Mexico’s regulatory requirements. Progressive also argues
that because an insurance policy is a contract, it should be interpreted under
the law of contracts. Finally, Progressive argues that even if it was required
to offer UM/UIM coverage up to the liability limits of the Policy, there was no
harm because it has already paid benefits to the Romeros in excess of the
liability limits of the Policy.
{8} “Summary judgment
is appropriate where there are no genuine issues of material fact and the
movant is entitled to judgment as a matter of law.”
Self v. United Parcel
Serv., Inc.,
1998-NMSC-046, ¶ 6,
126 N.M. 396,
970 P.2d 582. “An appeal
from the grant of a motion for summary judgment presents a question of law and
is reviewed de novo.”
Montgomery v. Lomos Altos, Inc.,
2007-NMSC-002, ¶
16,
141 N.M. 21,
150 P.3d 971 (filed 2006). “All reasonable inferences are
construed in favor of the non-moving party.”
Id. (internal quotation
marks and citation omitted). “The meaning of language used in a statute is a
question of law that we review de novo.”
Cooper v. Chevron U.S.A., Inc.,
2002-NMSC-020, ¶ 16,
132 N.M. 382,
49 P.3d 61.
{9} UM/UIM insurance
coverage in New Mexico is regulated by the uninsured motorist statute contained
in NMSA 1978, Section
66-5-301 (1983). Our Supreme Court has interpreted this
statute to require insurers to offer UM/UIM coverage to their insureds, and if
the insured rejects such coverage, to attach a written rejection of UM/UIM
coverage to the policy.
See Romero v. Dairyland Ins. Co.,
111 N.M. 154,
159,
803 P.2d 243, 248 (1990);
see also Kaiser v. DeCarrera,
1996-NMSC-050, ¶ 8,
122 N.M. 221,
923 P.2d 588 (holding that rejection must be
made a part of the policy). The Court has further stated that where a rejection
is not made part of the policy, UM/UIM coverage will be read into the policy.
See
Romero, 111 N.M. at 155, 803 P.2d at 244.
{10} This case presents
two questions of first impression in New Mexico: (1) whether New Mexico law
requires insurers to affirmatively offer UM/UIM coverage equal to the amount of
liability coverage in an automobile insurance policy; and (2) whether the
purchase of a lesser amount of UM/UIM coverage by an insured constitutes a
rejection of UM/UIM coverage. To answer these questions, we examine the
statute, associated regulations, and New Mexico case law. We address each of
Progressive’s arguments in turn.
New Mexico Law Requires That
Insurers Offer UM/UIM Coverage up to the Amount of Liability Coverage
{11} Progressive argues
that the following language in New Mexico’s UM/UIM statute
requires the
insurer to offer UM/UIM coverage equal to the minimum liability limits set out
in NMSA 1978, Section
66-5-215 (1983) and
permits the insured to request
more UM/UIM coverage up to the amount of the insured’s liability limits on the
policy.
{12} Section 66-5-301(A)
provides as follows:
No motor vehicle or automobile
liability policy insuring against loss resulting from liability imposed by law
for bodily injury or death suffered by any person and for injury to or
destruction of property of others arising out of the ownership, maintenance or
use of a motor vehicle shall be delivered or issued for delivery in New Mexico
with respect to any motor vehicle registered or principally garaged in New
Mexico unless coverage is provided therein or supplemental thereto in minimum
limits for bodily injury or death and for injury to or destruction of property
as set forth in Section 66-5-215 NMSA 1978 and such higher limits as may be
desired by the insured, but up to the limits of liability specified in bodily
injury and property damage liability provisions of the insured’s policy, for
the protection of persons insured thereunder who are legally entitled to
recover damages from owners or operators of uninsured motor vehicles because of
bodily injury, sickness or disease, including death, and for injury to or
destruction of property resulting therefrom, according to the rules and
regulations promulgated by, and under provisions filed with and approved by,
the superintendent of insurance.
{13} In other words,
Progressive argues that it is the insured’s responsibility to request
additional coverage, not the insurer’s responsibility to offer it. We disagree.
{14} The issue here is
one of statutory interpretation. In interpreting statutory provisions, the
guiding principle should be to determine and give effect to the intent of the
Legislature.
Hovet v. Allstate Ins. Co.,
2004-NMSC-010, ¶ 10,
135 N.M.
397,
89 P.3d 69. In order to determine legislative intent, “we look not only to
the language used in the statute, but also to the purpose to be achieved and
the wrong to be remedied.”
Id.
{15} Our Supreme Court
has given specific guidelines for interpreting the uninsured motorist statute.
The Court has recognized that Section 66-5-301 “embodies a public policy of New
Mexico to make uninsured motorist coverage a part of every automobile liability
insurance policy issued in this state, with certain limited exceptions. The
statute was intended to expand insurance coverage and to protect individual
members of the public against the hazard of culpable uninsured motorists.”
Romero,
111 N.M. at 156, 803 P.2d at 245. Furthermore, in order to implement the
remedial purpose of the statute, the statute must be liberally interpreted and
“language in the statute that provides for an exception to uninsured coverage
should be construed strictly to protect the insured.”
Id.
{16} Applying these
guidelines of statutory interpretation, we read Section 66-5-301(A) to require
insurers to offer UM/UIM coverage of not less than the minimum amount
statutorily required and up to the level of liability coverage contained within
the policy. The language of the statute states that insurers must provide UM
coverage in “minimum limits . . . as set forth in Section
66-5-215 NMSA 1978
and
such higher limits as may be desired by the insured, but up to the limits of .
. . liability provisions of the insured’s policy.” Section 66-5-301(A)
(emphasis added). We interpret this provision to place two equally weighted
requirements on insurers. First, insurers are required to provide UM/UIM
coverage of not less than the minimum statutory requirement. Second, insurers
are required to provide UM/UIM coverage up to the limits of the liability
coverage contained within a given policy.
{17} We hold that the
Legislature intended that insureds have the option of purchasing UM/UIM
coverage up to the liability limits of the policy. This interpretation of the
statute is consistent with our opinion in
State Farm Mut. Auto. Ins. Co. v.
Marquez, where we concluded that “the [L]egislature intended for uninsured
motorist coverage to apply in the same amounts and in the same territory as a
particular policy provides for liability coverage.”
2001-NMCA-053, ¶ 7,
130
N.M. 591,
28 P.3d 1132.
{18} Progressive argues
that in
Pielhau v. RLI Ins. Co.,
2008-NMCA-099,
144 N.M. 554,
189 P.3d
687,
cert. quashed, 2009 -NMCERT- 002, 145 N.M. 705, 204 P.3d 30, this
Court interpreted the statute to only require insurers to offer minimum levels
of UM/UIM coverage. Therefore, according to Progessive, there is no need to
reject coverage that is greater than the minimum levels required. We disagree.
{19} In
Pielhau,
this Court declared the New Mexico UM statute to be a minimum liability
statute, and as such, the statute requires motorists to maintain at least
minimum liability coverage.
Id. ¶ 12. We further stated that “New Mexico
has no requirement that uninsured coverage must equal the policy’s coverage for
bodily injury and property liability.”
Id. This is true; New Mexico does
not have such a requirement. In fact, New Mexico has no absolute requirement
that an automobile insurance policy contain any UM/UIM coverage, as evidenced
by the fact that the insured is free to waive all UM/UIM coverage, as long as
such coverage is properly waived.
{20} New Mexico does,
however, have a statutory requirement that insurers
offer UM/UIM
coverage to insureds that purchase automobile insurance. The lack of a
requirement that a policy contain UM/UIM coverage in a specific amount does not
obviate the statute’s unambiguous requirement that insurers must offer UM/UIM
coverage and that they must offer such coverage at a level equal to the
liability limits of the policy.
See Section 66-5-301.
{21} Progressive also
urges a different interpretation of the statute based on its view of the
legislative history associated with the uninsured motorist statute. We do not
find this argument persuasive. New Mexico does not have a state-sponsored
system of recording legislative history, and our Supreme Court has long-held
that legislative history is not persuasive in determining legislative intent.
“It is the policy of New Mexico courts to determine legislative intent
primarily from the legislation itself. . . . If the intentions of the
Legislature cannot be determined from the actual language of a statute, then we
resort to rules of statutory construction, not legislative history.”
Regents
of Univ. of N.M. v. N.M. Fed’n of Teachers,
1998-NMSC-020, ¶ 30,
125 N.M.
401,
962 P.2d 1236 (citation omitted).
{22} The Legislature’s
objectives are not met by requiring insureds to be sufficiently aware of their
statutory rights to request the additional UM/UIM coverage the statute
provides. The only way to ensure that the Legislature’s intent is implemented
is to require insurers to affirmatively offer such coverage to their insureds.
Therefore, we read the statute to require insurers to
offer UM/UIM
coverage up to the level of the liability limits of an automobile insurance
policy.
New Mexico Law Requires
Rejection of UM/UIM Coverage
{23} Progressive next
argues that the Romeros did not reject UM/UIM coverage when they purchased
UM/UIM coverage in an amount less than the liability limits of the Policy.
Progressive claims that because the Romeros purchased some UM/UIM coverage,
they could not have rejected UM/UIM coverage. Again, we disagree.
{24} We have determined
above that New Mexico’s uninsured motorist statute requires insurers to offer
UM/UIM coverage of not less than the minimum amount statutorily required and up
to the level of the liability coverage contained within the policy. It
logically follows that when an insured purchases UM/UIM coverage either in an
amount less than their liability coverage or declines UM/UIM coverage
altogether, the insured has rejected some or all of the available UM/UIM
coverage. The amount of UM/UIM coverage the insured has rejected is equal to
the difference between the amount of UM/UIM coverage purchased, if any, and the
amount of liability coverage purchased.
{25} This analysis is consistent
with the
Romero Court’s assessment that the Legislature intended for the
uninsured motorist statute to expand insurance coverage in New Mexico, and in
order to meet the Legislature’s objective, the statute must be liberally
interpreted and strictly construed to protect the insured.
Romero, 111
N.M. at 156, 803 P.2d at 245. Our Supreme Court went on to state that
any
rejection of UM/UIM coverage must be knowingly and intelligently made.
Id.
{26} In the present case,
the Policy contained liability limits of $100,000 but UM/UIM limits of only
$50,000. Therefore, the Romeros rejected $50,000 of the UM/UIM coverage, which
they were entitled to purchase under the statute. The amount rejected is the
difference between the liability limits of the Policy and the Romeros’ selected
UM/UIM coverage.
New Mexico Requirements for a
Valid Rejection of UM/UIM Coverage
{27} Progressive next
argues that even if it was required to offer UM/UIM coverage up to the
liability limits of the Policy, and the Romeros’ purchase of lesser coverage
was a rejection, then the declarations page of the Policy provided the Romeros
with sufficient information regarding their coverage to meet New Mexico’s
statutory and regulatory requirements for a valid rejection. We are not persuaded.
{28} Section 66-5-301(C)
of the UM/UIM statute permits an insured to reject the UM/UIM coverage defined
in sub-sections A and B of that statute. In
Romero, our Supreme Court
stated that such a rejection must satisfy the applicable regulations promulgated
by the superintendent of insurance. 111 N.M. at 156, 803 P.2d at 245. These
regulations include
13.12.3.9 NMAC (11/30/01), which requires that “[t]he
rejection of the provisions covering damage caused by an uninsured or unknown
motor vehicle as required in writing by the provisions of Section 66-5-301 . .
. must be endorsed, attached, stamped or otherwise made a part of the policy of
bodily injury and property damage insurance.”
13.12.3.9 NMAC.
{29} The
Romero Court
further interpreted the regulation to require that the rejection “clearly and
unambiguously call to the attention of the insured the fact that such coverage
has been waived[,]” and to ensure that the insured has “affirmative evidence of
the extent of coverage” sufficient to permit the individual to reconsider
rejection at a later date.
Romero, 111 N.M. at 156, 803 P.2d at 245.
“Providing affirmative evidence of the rejection of the coverage comports with
a policy that any rejection of the coverage be knowingly and intelligently
made. Any individual rejecting such coverage should remain well informed as to
that decision.”
Id.
{30} We agree with the
district court’s finding that the Romeros did not make a valid rejection of
UM/UIM coverage in accordance with these guidelines. The Policy did not contain
any affirmative evidence of the amount of UM/UIM coverage rejected by the
Romeros. Nothing in the Policy would clearly and unambiguously call attention
to the fact that a portion of the UM/UIM coverage available under the UM
statute had been waived.
{31} The declarations
page of the Policy lists the amount of liability and UM/UIM coverage purchased
under the Policy. It does not contain a notification that UM/UIM coverage could
be increased to equal the liability limits of the Policy, nor does it contain
any indication that the insured has rejected an amount of UM/UIM coverage that
they have a statutory right to purchase. Without this information, the
declarations page does not meet the objective, defined by the Court in
Romero,
of providing affirmative evidence of rejection sufficient for the insured to
reconsider the decision to reject some or all UM/UIM coverage at a later date
and of keeping the insured well informed of that decision.
{32} Our Supreme Court
has strictly interpreted UM/UIM rejection requirements. In
Romero, the
Court held that “the rejection of uninsured motorist coverage was invalid and
ineffective as a matter of law” where (1) the rejection was contained in a
signed insurance application but the application was not attached to the
policy, (2) the insured was never given a copy of the application containing
the rejection, and (3) the policy declarations sheet made no mention of the
rejection of UM/UIM coverage.
Romero, 111 N.M. at 157, 803 P.2d at 246.
The Court particularly noted that the declarations page of the policy was
insufficient as a rejection because it did not contain “any endorsement,
rejection, or exclusion of uninsured motorist coverage.”
Id. at 159, 803
P.2d at 248.
{33} Similarly, in
Kaiser,
our Supreme Court held that a rejection of UM/UIM coverage was invalid where
the copy of the insurance policy the insured received did not contain a copy of
the rejection, even though the insured had knowingly and intentionally signed a
rejection of that coverage during the application process.
1996-NMSC-050, ¶¶
10, 17. The Court reiterated that the purpose of the insurance regulations was
to permit people to reconsider their insurance coverage by providing them with
“affirmative evidence of the extent of coverage for
future reference.”
Id.
¶ 10.
{34} This Court recently
reaffirmed this line of reasoning in
Arias v. Phoenix Indem. Ins. Co.,
2009-NMCA-100,
147 N.M. 14,
216 P.3d 264,
cert. denied, 2009-NMCERT-008,
___ N.M. ___, ___ P.3d ___ (No. 31,864, Aug. 20, 2009), where we held that even
though the insured signed a rejection of UM/UIM coverage as part of her application
for insurance and received a copy of the application at that time, the
rejection was still invalid because the application and rejection were not part
of the actual insurance policy received by the insured and therefore did not
comply with the regulations.
Id. ¶ 1.
{35} In
Marckstadt v.
Lockheed Martin Corp.,
2008-NMCA-138, ¶¶ 21-24,
145 N.M. 90,
194 P.3d 121,
cert.
granted, 2008-NMCERT-010, 145 N.M. 524, 201 P.3d 855, this Court declined
to require a signed rejection where “the insured maintains that he or she never
doubted whether UM coverage had been rejected.” Progressive points to this case
for the general proposition that a signed rejection is not necessary to uphold
the validity of a rejection of UM/UIM coverage. However,
Marckstadt did
not announce a general principle but was instead a narrow holding, limited to
the specific facts of that case.
See id. ¶ 24 (“We emphasize that our
holding today is limited to the facts of this case.”).
{36} The facts in
Marckstadt
differ significantly from the case at hand. In
Marckstadt, the
person seeking to enforce the UM/UIM coverage was not the insured but a third
party.
Id. ¶ 5. The insured in
Marckstadt specifically stated
that it believed it had validly rejected UM/UIM coverage,
id., as
opposed to the Romeros, who state that they did not understand they were
rejecting UM/UIM coverage up to their liability limits when they accepted the
Policy with lower UM/UIM coverage.
{37} Marckstadt is
further distinguished by the fact that, in
Marckstadt, the insured’s
copy of the policy contained an endorsement specifically rejecting the
questioned UM/UIM coverage,
id. ¶ 22, whereas in the current case, the
Policy does not contain any indication that the UM/UIM coverage was rejected.
Finally, in
Marckstadt, the insurer subsequently obtained a signed
rejection of that coverage from the insured and delivered a copy of that
rejection to the insured as part of its policy.
Id. The Court in
Marckstadt
noted that its analysis might have been different if there had been a question
about the authenticity of the endorsement or if the insured had not maintained
that it had always believed it had rejected UM/UIM coverage under the policy.
Id.
¶ 24. Based on the significant differences between the two cases, we conclude
that the holding in
Marckstadt does not apply to the present case.
{38} Where an insured has
not executed a valid rejection of UM/UIM coverage, our Supreme Court has
directed that UM/UIM coverage will be read into the policy.
Romero, 111
N.M. at 157, 803 P.2d at 246. The legislative purpose of the statute is to
provide uninsured motorist coverage “in every automobile liability policy
unless the insured has knowingly and intelligently waived such coverage.”
Id.
at 156-57, 803 P.2d at 245-46. “For that reason uninsured motorist coverage
will be read into an insured’s liability policy when a rejection of such
coverage does not comply with [the] regulations.”
Id. at 157, 803 P.2d
at 246. The Court went on to state that this is true “regardless of the intent
of the parties or the fact that a premium has not been paid.”
Id. at
155, 803 P.2d at 244.
{39} We hold that
Progressive did not obtain a valid rejection of UM/UIM coverage from the
Romeros; therefore, the district court was correct in reading UM coverage at
the liability limits into the Policy.
Insurance Policies and the Law
of Contracts
{40} Progressive urges us
to apply the law of contracts to the Policy in question and enforce the
contract as written. Progressive cites to
Thompson v. Occidental Life Ins.
Co.,
90 N.M. 620, 621,
567 P.2d 62, 63 (Ct. App. 1977), for the proposition
that “[a]n insurance policy is a contract and is generally governed by the law
of contracts, and the rights and duties of the parties are to be determined by
its terms.” However, our Supreme Court has stated that language in an
automobile insurance policy “is controlling only when not in conflict with
public policy, as promulgated by the uninsured motorist statute and applicable
regulations.”
Romero, 111 N.M. at 159, 803 P.2d at 248. Using this
guidance, the Policy in question cannot be enforced as written because we find
Progressive’s failure to offer UM/UIM coverage at the Policy’s liability limits
to be in conflict with public policy as expressed by the UM statute and our
Supreme Court’s interpretation of that statute.
Coverage Offered Versus Benefit
Paid
{41} Finally, Progressive
argues that it actually paid more than the $100,000 liability limits of the
Policy when it paid stacked UM/UIM coverage of $150,000. We find this argument
without merit. The amount of UM/UIM coverage Progressive is required to offer
its insureds by Section 66-5-301(A) and the amount of benefits Progressive is
required to pay out under the terms of the Policy are separate and distinct
requirements.
{42} Progressive was
required under Section 66-5-301(A) to offer the Romeros UM/UIM up to the level
of the liability coverage contained within the Policy—in this case, $100,000.
The terms of the Policy permit “stacking” of UM/UIM coverage for each covered
vehicle. Stacking results in the amount of UM/UIM coverage being multiplied by
the number of vehicles covered under the policy.
See Montano v. Allstate
Indem. Co.,
2004-NMSC-020, ¶ 4,
135 N.M. 681,
92 P.3d 1255. Had the Policy
contained UM/UIM coverage equal to the liability limits, the terms of the
Policy would have entitled the Romeros to UM/UIM coverage equal to the
liability limit of $100,000, stacked for each of the three covered vehicles,
resulting in a total UM/UIM benefit of $300,000.
{43} Progressive only
complied with the terms of the Policy when it stacked the UM/UIM benefit it
paid to the Romeros. It did not meet the requirements of Section 66-5-301(A)
that it provide UM/UIM coverage up to the liability limits of the Policy.
{44} For the reasons set
forth above, we affirm the district court’s order granting summary judgment in
favor of the Romeros.
MICHAEL D. BUSTAMANTE, Judge
Topic Index for Romero v. Progressive Northwestern
Insurance Co., No. 28,720
IN-PC Primary, Secondary or Other
Coverage
IN-RI Regulation of Insurance
IN-UM Uninsured or Underinsured
Motorist