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 case arose from a January 1997 car accident in which the Plaintiff, a minor at the time, suffered injuries. The Plaintiff's mother, the named policyholder, notified the Defendant insurance company on the day of the accident. The at-fault driver, insured by another company, carried minimum liability coverage. After settling with the at-fault driver for less than the alleged damages, the Plaintiffs preserved their underinsured motorist (UIM) claim against the Defendant. Subsequent negotiations between the parties failed to resolve the UIM claim, leading to this legal action (paras 4-5).
Procedural History
- District Court, Santa Fe County: Denied the Defendant's motion for summary judgment, granted the Plaintiffs' motion for summary judgment, and ordered arbitration of the UIM claim (para 2).
Parties' Submissions
- Defendant: Argued that the six-year statute of limitations for contract actions began to run either on the date of the accident or at the end of the policy's 30-day notification period, making the Plaintiffs' claim time-barred. The Defendant also contended that the insurance policy supported this interpretation (paras 9, 12, and 17).
- Plaintiffs: Asserted that the statute of limitations began to run only upon a breach of the insurance contract, such as a refusal to arbitrate or denial of the UIM claim. They argued that their claim was timely filed within six years of any such breach (paras 9-10).
Legal Issues
- When does the six-year statute of limitations for contract actions begin to accrue on a UIM claim? (para 2)
Disposition
- The Court of Appeals affirmed the district court's decision, holding that the Plaintiffs' claim was not time-barred and that arbitration of the UIM claim was properly ordered (para 21).
Reasons
Per Castillo J. (Fry and Robinson JJ. concurring):
The Court held that the statute of limitations for UIM claims begins to run upon a breach of the insurance contract, not on the date of the accident or other earlier events. This approach aligns with New Mexico case law and public policy, which treat UIM claims as contract-based actions. The Court rejected the Defendant's argument that the accident date or the policy's 30-day notification period triggered the limitations period, emphasizing that a breach, such as a refusal to arbitrate, is necessary to create a justiciable controversy (paras 3, 9-11, and 15).
The Court reasoned that tying the limitations period to the date of the accident would be unfair to insured parties, as the extent of damages and the tortfeasor's underinsured status may not be immediately apparent. Additionally, the Court noted that the Defendant could protect itself by including clear and reasonable time limitations in the insurance policy (paras 15-16, 18).
Applying this rule, the Court found that the Plaintiffs' action was timely filed within six years of any potential breach of the insurance contract. The record showed that negotiations over the UIM claim were ongoing during the limitations period, and no breach occurred until after those negotiations failed (paras 19-20).