A person whose truck was stolen sought compensation in New Mexico state court from his automobile insurer on the basis that the theft constituted property damage under the uninsured motorist provisions of the parties’ contract. The insurance company removed the lawsuit to federal court and filed a motion to dismiss, which the court granted. In arriving at its conclusion that the insured’s case should be dismissed, the court accepted the insurance company’s construction of the uninsured motorist provisions of the contract between the insurance company and its insured.
The federal court deciding the motion to dismiss determined that it was tasked with predicting how New Mexico’s Supreme Court would decide the dispute under New Mexico’s Uninsured Motorist Act. As a decision had not yet been made on the issues at that level, the federal court looked to legislative intent and rulings by other courts. It concluded that the legislative intent was to protect the public from culpable underinsured motorists and that the phrases “injury to or destruction of property” and “property damage” do not ordinarily include theft.
The court observed that the insured plaintiff was correct that the New Mexico Supreme Court had liberally construed New Mexico law in favor of insureds. The court rejected the insured’s position he was covered based on concerns the court expressed, including that accepting the position would in effect add a requirement that the New Mexico legislature could have but purportedly had not enacted – that every automobile liability insurance policy in New Mexico provide coverage for auto theft.