AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

The New Mexico Public Schools Insurance Authority (the Authority) provided insurance coverage to Moriarty Municipal Schools under policies brokered by Arthur J. Gallagher & Co. (Gallagher) and underwritten by Lloyd’s of London. After an employee embezzled funds, Moriarty sought indemnity for losses under the policies. The Authority denied coverage, leading to arbitration, where it was found liable to Moriarty due to policy terms allegedly negligently drafted by Gallagher (paras 2-5).

Procedural History

• District Court: Dismissed the Authority’s professional negligence claim as barred by the statute of limitations but allowed an amended complaint for indemnity. The amended complaint was also dismissed (paras 6-7).
• New Mexico Court of Appeals, 2007-NMCA-142: Affirmed the dismissal, holding the claim was for professional negligence and barred by the statute of limitations (para 8).

Parties' Submissions

• Plaintiff (Authority): Argued its claim was for indemnification, not professional negligence, and that the statute of limitations began only after the arbitration decision established its liability to Moriarty (paras 1, 9, 14).
• Defendant (Gallagher): Contended the claim was for professional negligence, barred by the four-year statute of limitations, and that indemnity principles did not apply as Gallagher was not liable to Moriarty (paras 1, 7, 26).

Legal Issues

• Did the Authority state a claim for professional negligence or indemnification?
• When did the Authority’s claim accrue for the purpose of the statute of limitations?

Disposition

• The Supreme Court of New Mexico held that the Authority’s claim was for professional negligence, not indemnification, but reversed the dismissal, finding the claim was not barred by the statute of limitations (paras 9, 50).

Reasons

Per Chávez CJ (Serna, Maes, Bosson, and Daniels JJ. concurring):

• Claim Characterization: The Authority’s claim was for professional negligence because it alleged Gallagher breached its duty by negligently drafting the policies, causing the Authority’s liability to Moriarty. Indemnity principles did not apply as Gallagher was not liable to Moriarty (paras 13, 26).

• Accrual of Claim: The Authority’s professional negligence claim accrued when the arbitrator determined its liability to Moriarty in February 2004. The statute of limitations began at that point, not when the policies were drafted or when Moriarty filed its claim (paras 35-42).

• Policy Considerations: Requiring the Authority to sue Gallagher before the arbitration decision would have encouraged premature litigation. The Authority’s claim was timely as it was filed within one year of the arbitration decision (paras 47-48).

• Statute of Limitations: The four-year statute of limitations for professional negligence claims under Section 37-1-4 applied. The Authority’s claim, filed in January 2005, was within this period (paras 34, 43).

The case was remanded to the district court for further proceedings consistent with this opinion (para 50).