SHOPE V. STATE FARM INS. CO., 1996-NMSC-052,
122 N.M. 398, 925 P.2d 515
CHARLES P. SHOPE, individually and as
personal
representative of the Estate of JOSEPH SHOPE,
Plaintiff-Appellee,
vs.
STATE FARM INSURANCE COMPANY, Defendant-Appellant.
SUPREME COURT OF NEW MEXICO
1996-NMSC-052, 122 N.M. 398, 925 P.2d 515
APPEAL FROM THE DISTRICT COURT OF
BERNALILLO COUNTY. Diane Dal Santo, District Judge.
Motions for Rehearing filed September
19, 1996, denied October 4, 1996. Released for Publication October 4, 1996.
Guebert & Yeomans, P.C., Terry R.
Guebert, Don Bruckner, Albuquerque, NM, for Appellant.
David L. Plotsky Law Office, David L.
Plotsky, Albuquerque, NM, for Appellee.
RICHARD E. RANSOM, Justice. WE CONCUR:
GENE E. FRANCHINI, Justice, PAMELA B. MINZNER, Justice
AUTHOR: RICHARD E. RANSOM
{1} State Farm
Insurance Company appeals from a summary judgment, on stipulated facts,
granting uninsured motorist benefits to its insured, Charles P. Shope, whose
son Joseph was killed by an uninsured motorist in Albuquerque, New Mexico. The
district court found that the insurance contract
{*399}
between the parties was a Virginia contract that should be interpreted
under Virginia law. However, the court concluded that application of Virginia
law to provisions in the insurance contract so as to deny the stacking of
uninsured motorist coverage would violate New Mexico public policy. We agree
with the trial court that Virginia law governs the contract in this case.
Because we do not believe that application of Virginia law would violate New
Mexico public policy, we reverse.
{2} The Shopes lived
in Albuquerque prior to August 1991. Then, Marlene Shope moved from Albuquerque
to Virginia where she registered to vote and opened a checking account into
which her two disability checks were directly deposited. Her husband Charles
moved to Virginia in June 1992 with most of the couple's belongings. He
likewise opened a savings account in Virginia and began to have his disability
check directly deposited there. In January 1993 both Marlene and Charles
obtained Virginia driver's licenses. Joseph moved from Albuquerque to Virginia
in February 1993 to live with his parents.
{3} In July 1992 the
Shopes purchased a home and two automobiles in Virginia. At that time they
purchased insurance covering both automobiles from a State Farm Insurance agent
in Virginia. The policy provided that each vehicle had uninsured motorist
coverage of $ 100,000 per person for bodily injury. This insurance policy
included Endorsement 6520.7 Uninsured Motorist Insurance (Virginia), which
provided in part as follows:
III. Limits of Liability.
Regardless of the number of . . .
(
4) motor vehicles to which this insurance applies,
(a) if the schedule or declarations indicate split
limits of liability, the limit of liability for bodily injury stated as
applicable to "each person" is the limit of the company's liability
for all damages because of bodily injury sustained by one person as the result
of one accident.
{4} The Shope family
decided to move back to New Mexico, and on January 2, 1994, they moved into an
apartment in Albuquerque. Administration of the State Farm Insurance policy was
not transferred to New Mexico and the premiums continued to be paid from
Marlene's account in Virginia. On January 15 Joseph was struck and killed by an
uninsured motorist as he walked on a street in Albuquerque. Charles claims to
be entitled to wrongful-death damages against the uninsured motorist in excess
of $ 200,000, and that he consequently is entitled to the stacked uninsured
motorist benefits of $ 200,000 under his policy.
{5} In
State Farm
Mutual Insurance Co. v. Conyers, 109 N.M. 243,
784 P.2d 986 (1989), this
Court applied the law of the state where an insurance contract was made, not
the law of the state where insureds resided and where an accident occurred. The
Conyers purchased insurance on one automobile while they lived in New Mexico.
Later, while they lived in California, they purchased automobile insurance for
at least one other car from the same State Farm agent in New Mexico. The
Conyers then moved to Nevada where an accident occurred. The insurer sought, in
accordance with New Mexico law,
e.g., Schmick v. State Farm Mut. Auto. Ins.
Co., 103 N.M. 216, 223,
704 P.2d 1092, 1099 (1985), to offset against its
underinsured motorist liability the amount received by the insured from the
tortfeasor's insurer. This Court held that "the policy of New Mexico's law
governing a contract of insurance applied for and issued in this state . . . on
a vehicle at least assumed to be located here and owned by an individual who
declared his residence as being here, seems to us to weigh more heavily than
any possibly countervailing policy that would underlie applicability of Nevada
law."
Conyers, 109 N.M. at 247-48, 784 P.2d at 990-91. We concluded
that under either the rule of lex loci contractus or the principles of
Restatement (Second) Conflict of Laws, New Mexico rather than Nevada law should
be applied.
{6} Under Virginia
law, stacking of insurance coverage is permitted unless clear and unambiguous
language in the policy prevents it.
Goodville Mut. Casualty Co. v. Borror,
221 Va. 967, 275 S.E.2d 625, 627 (Va. 1981);
USAA Casualty Ins. Co. v.
Alexander, {*400} 248 Va. 185, 445
S.E.2d 145, 148 (Va. 1994). The Shopes' insurance contract clearly and
unambiguously prevents stacking. The Limits of Liability provide that
"regardless of the number of . . . motor vehicles to which this insurance
applies . . . the limit of liability for bodily injury . . . applicable to
'each person' is the limit of the company's liability for all damages because
of bodily injury sustained by one person as the result of one accident."
The parties agree that under Virginia law the Shopes may not stack.
{7} State Farm
correctly points out that in
United Wholesale Liquor Co. v. Brown-Forman
Distillers Corp., 108 N.M. 467,
775 P.2d 233 (1989), we applied Kentucky
rather than New Mexico law to a franchise dispute, holding that the application
of Kentucky law did "not violate some fundamental principle of
justice."
Id. at 471, 775 P.2d at 237. While New Mexico public
policy does favor the stacking of coverage in underinsured motorist cases,
Jimenez
v. Foundation Reserve Ins. Co., 107 N.M. 322, 324-25,
757 P.2d 792, 794-95
(1988) ("Insurance policy clauses that prohibit stacking are particularly
repugnant to public policy when the injured insured has paid separate premiums
for underinsured/uninsured motorist coverage on each vehicle."), our
rationale in establishing this policy did not concern fundamental principles of
justice, but focused on the expectations of the insured. "Because case law
in this jurisdiction repeatedly has stated the public policy which allows
uninsured/underinsured motorist coverage to be stacked when separate premiums
are paid for additional coverage, an insured may reasonably expect to stack
coverage."
Id. at 325, 757 P.2d at 795. The Shopes, as Virginia
residents purchasing a home, cars, and insurance in Virginia, should have
expected that the laws of Virginia would be applied to their various
transactions.
{8} The Shopes argue
that the law of the place where the accident occurred should govern our
analysis of their expectations of stacking, relying on
State Farm Automobile
Ins. Co. v. Ovitz, 117 N.M. 547,
873 P.2d 979 (1994). In that case this
Court considered whether the law of Hawaii or of New Mexico applied when a New
Mexico resident covered by an insurance contract executed in New Mexico was
injured in an accident in Hawaii. We held that "in certain respects, the
law of both states applies."
Ovitz, 117 N.M. at 549, 873 P.2d at
981.
Ovitz and State Farm entered into the insurance
contract in New Mexico. Thus, the law of New Mexico governs the interpretation
of the contract. However, the rights and liabilities of persons injured in
automobile accidents are determined under the laws of the state where the
accident happened.
Id. (citations omitted). As a no-fault state, Hawaii
has abolished tort liability arising from motor vehicle accidents occurring in
that state. Id. at 548, 873 P.2d at 980. Ovitz sued his insurer for
uninsured motorist benefits to cover non-economic losses unrecoverable under
Hawaiian law. The insurance contract, however, provided that the insured must
be "'legally entitled to collect' damages in order to receive benefits
under the uninsured motorist provision." Id. at 550, 873 P.2d at
982. Because the insured was not "legally entitled to collect"
noneconomic damages under Hawaiian law, we found that the insured could not
collect uninsured motorist benefits for non-economic loss.
{9} The Shopes and
State Farm entered into a contract in Virginia. We have stated that the policy
of New Mexico is to interpret insurance contracts according to the law of the
place where the contract was executed. While we interpret New Mexico insurance
contracts to avoid repugnancy in clauses that prohibit stacking of coverages
for which separate premiums have been paid, this rule is one of contract
interpretation that does not rise to the level of a fundamental principle of
justice. Rules of contract interpretation are, of course, matters of public
policy. Generally, when we determine a contract dispute by choosing to apply
the law of the place where the agreement was executed, we do so in
contravention of another jurisdiction's public policy favoring a different
interpretation. To overcome the rule favoring the place where a contract is
executed, there must be a countervailing interest that is fundamental and
separate from general policies of contract interpretation.
Despite the strength of the judicial policy . . . as
discussed in, e.g., Jimenez, 107 N.M. at 324-26, 757 P.2d at 794-96, it
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.
As we explained in Allstate Ins. Co. v. Stone, 116
N.M. 464, 863 P.2d 1085 (1993), concerning the "repugnancy" of
irreconcilable exclusionary language, "when 'an exclusionary clause simply
nullifies the grant' of coverage, this Court will 'refuse to apply the clause
that deprives the insured of the insurance coverage which the insured
reasonably understood was afforded by the policy.'" Id. at 467, 863
P.2d at 1088 (quoting Federal Ins. Co. v. Century Fed. Sav. & Loan
Ass'n., 113 N.M. 162, 169, 824 P.2d 302, 309 (1992)). In Stone, we
held that when the clear and unambiguous language purporting to preclude
stacking is irreconcilable with the apparent grant of coverage the exclusionary
language is given no effect. Id. Whether stacking is proper is thus a
question of contract interpretation, not one of fundamental interests, and
therefore governed by Virginia law. For these reasons we reverse.
RICHARD E. RANSOM, Justice
GENE E. FRANCHINI, Justice
PAMELA B. MINZNER, Justice