Articles Posted in Insurance Companies

In a recent case, an insurance company brought an action in a New Mexico state court, the Second Judicial District Court, County of Bernalillo, seeking a declaration that its insured was not entitled to uninsured/underinsured (UM/UIM) coverage for any injuries or other damages resulting from a 2015 car accident.  The insured filed an answer and also asserted a counterclaim for personal injuries, to recover uninsured motorist benefits, for insurance bad faith and for violations of the Unfair Claims Practices Act.

People who have suffered personal injuries following a New Mexico car accident will often prefer to proceed with litigation in New Mexico state courts in the hopes of advancing a case past motion practice and towards trial.  Insurance companies will often prefer to proceed in federal courts, where they hope to bring successful motions to dismiss or for summary judgment, and avoid trial.  In this case, the insurance company filed a notice of removal, seeking to invoke the federal court’s jurisdiction and the insured driver successfully challenged the removal, resulting in the case being remanded to New Mexico state court.

The declaratory judgment by the insurance company and counterclaim by the insured driver arose from a four-car collision that occurred in Albuquerque, New Mexico.  Allegedly a vehicle struck the car in front of it, causing a series of collisions until ultimately the insured’s car, which was the front vehicle in the chain, was struck from behind.  The driver who caused the accident allegedly fled the scene and it was unknown whether that driver had liability insurance.  The insured driver filed a claim under his insurance company policy for personal injuries and damages related to the collision, which his insurance company denied on the basis that he had rejected UM/UIM coverage.

Typically contracts are enforced as per their terms.  In a case decided by the U.S. District Court for the District of New Mexico, the court held that an insurance policy provision limiting a plaintiff’s time to bring an action to three years from the date of her New Mexico vehicle accident was unenforceable.  At issue was a claim under an insurance policy issued by an Ohio insurance agent to a driver who lived in Ohio at the time the policy was issued to her.  A few months later the driver was involved in a car accident in Taos, New Mexico.  She settled with the insurer of the driver of the other car involved in the accident and then submitted a claim for underinsured motorist coverage to her insurer.  Based on a provision of the insurance policy, her insurer took the position the claim was untimely because it had been brought more than three years after the date of the accident with respect to which insurance benefits were claimed.

The driver then sued her insurer in New Mexico state court, bringing a complaint for declaratory judgment, breach of contract and negligence.  The defendant insurance company removed the insured plaintiff’s action to federal court.  The parties filed cross motions for declaratory judgment, which the court construed as motions for summary judgment on the plaintiff’s claim for declaratory judgment.

The plaintiff’s chief argument was that the three year time to sue provision for UM claims in the insurance contract violated New Mexico public policy, thereby precluding application of Ohio law and rendering the provision invalid and unenforceable.  She sought application of New Mexico’s six year statute of limitations for asserting UM claims.  The defendant sought application of the three year limit under Ohio law, arguing it did not violate New Mexico public policy.

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.

A plaintiff injured in a New Mexico car accident who sues to recover damages for personal injuries often can assert causes of action based on multiple theories of recovery.  Under some circumstances, a defendant can successfully move to bifurcate the causes of action.  The consequences will depend on what stage the litigation is in when bifurcation is sought and can result, for example, in the litigation being split up so that discovery proceeds with respect to one or more causes of action while being stayed with respect to other causes of action.

In a recent case, the plaintiff asserted causes of action against an insurance company, which included breach of the underinsured motorist coverage provisions of the contract he had entered into with the insurance company that provided him car insurance, plus alleging bad faith.  The insurance company filed a successful motion to bifurcate the cause of action for denial of underinsured motorist coverage under the insurance contract from extra-contractual causes of action, and to stay discovery with respect to all extra-contractual causes of action.

The plaintiff had filed a lawsuit in the Twelfth Judicial District for Lincoln County, New Mexico.  He alleged that a teenager had driven her parents’ car into his truck while talking on her cell phone after rolling through a stop sign, and that this resulted in his truck spinning on two wheels and sustaining severe damage.  The plaintiff also alleged that he suffered grave injuries, which necessitated evaluation and treatment of his chest, hip, back and neck at the Lincoln County Medical Center.  Continue reading

Insurance companies sometimes try to change the forum for lawsuits filed against them or their insureds as part of their litigation strategy.  A common strategy is to try to remove a lawsuit filed by plaintiffs against them in state court to federal court and then make a motion to dismiss in order to try to stop the case from proceeding through the discovery process and to trial.

Federal courts are courts of limited jurisdiction and are restricted from adjudicating, for example, state law claims asserted by citizens of one state against citizens of another state.  In a recent case, an insurance company removed a state court lawsuit against it, its law firm, and one of the attorneys working for the law firm from state court, where the insureds had filed it, to federal court.

The insureds had filed suit in New Mexico state court, alleging causes of action including violations of the Trade Practices and Frauds Article (TPFA) of the New Mexico insurance code, stemming from interactions with the lawyers acting for the insurance company.  They alleged that they believed themselves to be victims of a profit-maximizing scheme designed to coerce them to settle for a fraction of what their insurance claims were worth arising from the stealing and burning of a van and the removal of tools and equipment from the van.

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