New Mexico Injury Lawyer Blog
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.
The Court of Appeals of New Mexico recently entered a ruling concerning the obligation of insurance companies to pay punitive damages. In its ruling, the Court of Appeals reversed a judgment entered by the trial court in favor of an insured car owner that provided the insurance company had to pay him $20,000 in punitive damages, in addition to the $10,000 the insurance company had previously paid the insured by way of compensatory damages.