FROM THE DISTRICT COURT OF SANTA FE COUNTY David K. Thomson,
Bauman, Dow & Stambaugh, P.C. Mark C. Dow Deborah R.
Stambaugh Maria R. Osornio Albuquerque, NM for Appellants.
Guebert Bruckner, P.C. Terry R. Guebert Lawrence A. Junker
Albuquerque, NM for Appellee.
MILES HANISEE, Judge.
At issue in this appeal is whether Defendant State Farm Fire
and Casualty Company breached its duty to defend when it
refused Plaintiff Jenny Dove's request for legal
representation in the underlying lawsuit brought by current
co-Plaintiff David Tapia against her. Because the facts
tended to show that Dove was arguably covered by the policy,
which is the established legal standard in New Mexico, we
hold that Defendant breached its duty to defend. The district
court having concluded otherwise, we reverse.
The following facts underpin the civil action (the primary
action) brought by Tapia against Dove: On August 24, 2007,
Tapia, a Public Service Company of New Mexico employee, was
reading the electrical meter at a residential property in
Santa Fe, New Mexico when he was injured by Dove's
150-pound Bullmastiff dog. Dove had been renting the back
dwelling unit at the property from Betsy Joyce, the owner,
since March 7, 2007. The property consisted of two rental
units: a front main house and Dove's studio unit in back,
each with its own private yard separated by a fence. There
was also a common yard in the front part of the property that
contained large trees and planting beds.
Joyce, who lives in California, utilized the services of
several third parties to manage and maintain the property in
her absence. Gay Nathan-a long-time Santa Fe resident and
retired high school English teacher who had many rental
properties of her own-was primarily responsible for screening
and selecting tenants and collecting rent, activities for
which Joyce compensated her. Nathan also provided Joyce and
Joyce's tenants with a list of various service providers,
such as plumbers, electricians, and exterminators. Nathan was
not responsible for either coordinating or making repairs at
Joyce's property and did not pay service bills on
Joyce's behalf. Nathan also had no involvement in
gardening or maintaining the landscaping at the property.
Joyce hired a gardener to maintain the common yard, including
weeding and watering.
Tenants were responsible for maintaining the private yard
associated with their respective dwelling unit. Tenants were
also free to use the common yard, including tending to the
garden and eating the raspberries and apricots that grew
there. Dove knew that she was allowed to use the common yard
but spent little, if any, time there out of respect for the
privacy of the main house tenants, whose windows faced the
In the summer of 2007, during one of Joyce's visits to
the property, which occurred two times per year, Joyce
noticed that one of the trees in the common yard was not
getting enough water. Joyce asked Dove to water the tree and
"make sure things stayed alive[.]" While
Joyce's primary request was that Dove water the tree,
Dove was also asked to tend to "all the flower beds
around" the common yard. Joyce may have also asked the
tenant in the main house to water the common yard, though
Dove believed "[t]hey had some kind of agreement where
maybe he was doing more maintenance like cleaning . . . the
yard and things like that." Neither Dove nor the other
tenant received payment or a rent reduction for the work they
did in the common yard. At the time that Tapia was injured by
Dove's Bullmastiff on August 24, 2007, Dove was in the
common yard watering plants per Joyce's request.
In April 2010 Tapia sued Joyce and Dove, alleging negligence,
negligence per se, and premises liability, and seeking to
recover damages for the injuries he sustained from Dove's
Bullmastiff. Joyce had a rental dwelling insurance policy
with Defendant (the policy) that covered the property, and
Defendant tendered a defense to Joyce in the primary action
because she was the named insured under the policy. Joyce was
granted summary judgment in April 2012. Dove-who was not
served with Tapia's complaint until March 2011-filed a
pro se answer and motion to dismiss on April 6, 2011. In a
letter to Defendant dated April 28, 2011, Dove requested that
Defendant tender her a defense. On May 9, 2011, Defendant
responded and denied Dove's request because she was not
the named insured and did not "qualify as an insured by
definition under the [r]ental [d]welling [p]olicy owned by .
. . Joyce."
Tapia and Dove eventually entered into a settlement agreement
on May 7, 2012. Under its terms, Tapia's damages were
determined to be $107, 056.03, and Dove agreed to assign
Tapia "all rights, claims and causes of action, together
with the proceeds therefrom which [Dove] has against
[Defendant] for its failure to defend and/or indemnify . . .
Dove" in the primary action. Dove executed the
assignment concurrently with the settlement agreement.
On November 9, 2012, Dove and Tapia filed their third-party
complaint against Defendant, seeking a declaratory judgment
that Defendant breached its duty to defend Dove in the
primary action. Defendant moved for summary judgment, arguing
that Dove was "simply a tenant" and "[t]hus,
[Defendant] correctly concluded [Dove] was excluded from
coverage under [the policy] as a tenant." At the hearing
on Defendant's motion, Defendant argued that Dove could
not be considered a "real estate manager" (and
thereby covered by the policy) based on her limited
maintenance duties as a tenant. Dove and Tapia argued that
the question the district court had to answer was not whether
Dove was, in fact, a real estate manager, but whether the
facts as known to or discoverable by Defendant suggested that
Dove was potentially covered by the policy.
The district court granted Defendant's motion for summary
judgment, finding that Dove was a tenant and "not a
property manager and, thus, she was excluded from coverage