The United States District Court for the District of New Mexico recently handed down an opinion dismissing a claim for punitive damages brought in connection with a personal injury case. The plaintiffs had filed a complaint against the defendant’s insurer after a trial in which the plaintiffs had prevailed. The plaintiffs brought their post-trial complaint in New Mexico state court under the New Mexico Unfair Claims Practices Act (“UCPA”), seeking to recover damages, including punitive damages, attorney’s fees, and other costs. The defendant insurance company removed the case to federal district court and successfully argued that the damages available to the plaintiffs under the UCPA did not include punitive damages.
Allegedly, at the time of the accident that led to the trial, the plaintiffs were in a vehicle that was rear-ended by another vehicle and this caused them to suffer personal injuries and property damage. The driver of the car that collided with the plaintiffs’ car was insured. Her insurance company determined that she was at fault and paid plaintiffs for property damage. The insurer refused to pay for personal injuries that the plaintiffs documented with materials, including medical records and bills. The insurer then offered to settle for an amount that the plaintiffs rejected on the basis that it was less than the amount they believed they were owed. After the plaintiffs filed a lawsuit against the driver of the car and her insurer, the parties engaged in a mediation. The plaintiffs purportedly offered to settle their claims for $40,000 and the insurance company was willing to pay $16,000. No settlement was achieved and the case went to trial. Following the trial the jury found the driver that rear-ended the plaintiffs to be 100% at fault for the car accident and awarded the plaintiffs $100,000.
The plaintiffs then sued the insurance company for refusing to settle their personal injury claims sooner, alleging that this was in keeping with a policy and practice of the insurance company to refuse to settle or offer only unreasonably low settlements to people seeking recoveries for injuries arising from low speed accidents. The plaintiffs based their claims on the UCPA. The insurance company moved to dismiss the punitive damages claim asserted in the plaintiffs’ complaint on the basis that the UCPA allows for recovery of actual damages, but not punitive damages. The plaintiffs asserted that the UCPA did not expressly preclude the award of punitive damages, and pointed to statutory language suggesting recoveries under the UCPA for punitive damages are available in addition to state common law and statutory recoveries.