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Crockett v. Farmers Insurance Company of Arizona

United States District Court, D. New Mexico

October 5, 2017

JESSICA CROCKETT, Plaintiff,
v.
FARMERS INSURANCE COMPANY OF ARIZONA AND YET TO BE IDENTIFIED EMPLOYEES AND/OR AGENTS OF FARMERS GENERAL INSURANCE COMPANY, Defendants.

          MEMORANDUM OPINION AND ORDER

         THIS MATTER comes before the Court on Farmers Insurance Company of Arizona's (“Defendant's”) Motion for Judgment on the Pleadings (Doc. 3), filed June 16, 2017. Pursuant to 28 U.S.C. § 636(c), the parties have consented to me serving as the presiding judge and entering final judgment. Docs. 6, 7, 8. Having considered the pleadings and briefs of counsel and otherwise being fully advised, the Court finds that Defendant's Motion for Judgment on the Pleadings is well-taken in part and will be granted in part. More particularly, Defendant is entitled to judgment on the pleadings as a matter of law, but the Court will deny its request for sanctions.

         I. BACKGROUND

         On December 14, 2015, Defendant Farmers Insurance Company of Arizona (“Defendant”) issued Policy No. 19414-35-31 (“the Policy”) to Plaintiff and her husband, William Crockett, insuring two of their vehicles. See Doc. 1-2, Ex. A. Both Plaintiff and Mr. Crockett were named insureds on the Policy. See id. The vehicles insured on the Policy were a 2004 Lincoln Aviator (“the Lincoln”) and a 2008 Dodge Caliber (“the Dodge”). See Id. The Policy provided comprehensive liability coverage for both vehicles, UM/UIM[1] bodily injury and UM/UIM property damage coverage for the Lincoln, and only UM/UIM property damage coverage for the Dodge. See Id. Mr. Crockett rejected UM/UIM bodily injury coverage on the Dodge. See Id. at 13-14, 17-18.

         As part of the Policy, Defendant presented Mr. Crockett with its “Auto Insurance Uninsured and Underinsured Motorist Bodily Injury and Uninsured and Underinsured Motorist Property Damage Selection of Limits” form (“Selection Form”) on December 14, 2015, the same day the Policy was delivered to Plaintiff and Mr. Crockett. See Doc. 1-2, Ex. B, at 17-18. Mr. Crockett confirmed his UM/UIM selections by initialing them on the Selection Form. See id. at 18. Specifically, he initialed each of the following selections: (1) $25, 000 per person/$50, 000 per occurrence in UM/UIM bodily injury coverage on the Lincoln; (2) $10, 000 per occurrence in UM/UIM property damage coverage on the Lincoln; (3) a rejection of UM/UIM bodily injury coverage in its entirety on the Dodge; and (4) $10, 000 per occurrence in UM/UIM property damage coverage on the Dodge. Id. The Selection Form also enumerated the premium costs applicable to each available level of coverage for each vehicle. Id. at 19. By signing the selection form, Mr. Crockett acknowledged that he “had Uninsured and Underinsured Motorist Bodily Injury [and] . . . Property Damage Coverage explained to [him]” and that he had “reviewed each of the available coverage limits and the premiums associated with each coverage option.” Id. Additionally, he acknowledged that the selected coverage limits would apply unless he contacted his agent to change his selections. Id.

         Plaintiff now alleges that Mr. Crockett's waiver of UIM coverage was executed without her authority. Doc. 1-2 at 2, ¶ 5. In her Complaint, she references the attached Affidavit of William Richard Crockett III (Mr. Crockett) in which he states that he had no authority from his wife to waive or reduce UM/UIM benefits. See id. Additionally, Mr. Crockett states in his affidavit that Defendant's agent did not explain to him the significance of his rejections of UM/UIM coverage. Id. at 16, ¶ 3.

         II. LEGAL STANDARD

         “After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Judgment on the pleadings will be granted if the moving party clearly establishes that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law. Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA, 442 F.3d 1239, 1244 (10th Cir. 2006), rev'd on other grounds by Magnus, Inc. v. Diamond State Ins. Co., 545 Fed.Appx. 750, 753 (10th Cir. 2013). A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is considered under the same standard of review applicable to a motion made under Rule 12(b)(6). Morris v. City of Colo. Springs, 666 F.3d 654, 660 (10th Cir. 2012). Accordingly, a court reviewing a motion for judgment on the pleadings must accept “all facts pleaded by the non-moving party as true and grant all reasonable inferences from the pleadings in favor of the same.” Park Univ. Enters., 442 F.3d at 1244. Although a court must assume the truth of the properly alleged, or “well-pleaded, ” facts in the complaint, it has no obligation to accept conclusory allegations as true. Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009). Claims dismissed pursuant to a Rule 12(c) motion are dismissed with prejudice. See Pena v. Greffett, 110 F.Supp.3d 1103 (D.N.M. 2015).

         III. ANALYSIS

         A. Motion for Judgment on the Pleadings

         First, Plaintiff maintains that Defendant's Motion for Judgment on the Pleadings should be converted to one for summary judgment, given that Defendant “refers to facts outside of the pleadings.” Doc. 10 at 1. Pursuant to Federal Rule of Civil Procedure 12(d), when “matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). Alternatively, the court has broad discretion to refuse to accept materials outside the pleadings and to resolve the motion without considering them. Lowe v. Town of Fairland, Okla., 143 F.3d 1378, 1381 (10th Cir. 1998). On the other hand, documents referenced in a dispositive motion are considered “part of the pleadings” if the plaintiff referred to them in her complaint and they are “central to her claim.” Venture Assoc. Corp v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993); Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006) (“Exhibits attached to a complaint are properly treated as part of the pleadings for purposes of ruling on a motion to dismiss.”).

         Here, each of the documents referenced in Defendant's motion was both attached to Plaintiff's Complaint and is central to her claims. Compare Doc. 3 with Doc. 1-2. Accordingly, the Court need not convert the subject motion to one for summary judgment or disregard Defendant's references to these documents. Instead, the Court will consider the substance of Defendant's motion as well as the referenced documents under the Rule 12(c) standard.

         Defendant makes the following contentions: (1) its Selection Form met the requirements under New Mexico law for the rejection of UM/UIM coverage; (2) a wife is bound under New Mexico law by her husband's waiver of UM/UIM coverage; (3) Plaintiff has failed to state a claim upon which relief may be granted; (4) Plaintiff's Complaint is “inapposite with public policy”; and (5) Plaintiff's claims are legally frivolous and warrant sanctions under either the New Mexico Declaratory Judgment Act or under Federal Rule of Civil Procedure 11. See Doc. 3. Plaintiff, in contrast, maintains that judgment on the pleadings is improper, because she has raised issues of fact as to whether Mr. Crockett had the authority to reject UM/UIM coverage benefits on Plaintiff's behalf and whether Defendant failed to properly inform Mr. Crockett as to his rejection of UM/UIM coverage. See Doc. 10.

         Under New Mexico law, a rejection of UM/UIM coverage equal to liability limits in an automobile insurance policy must be made in writing and incorporated into the insurance policy in a manner that affords the insured a fair opportunity to reconsider his decision to reject the coverage. Jordan v. Allstate Ins. Co., 245 P.2d 1214, 1217 (N.M. 2010). In other words, when an insured selects UM/UIM coverage of less than his liability limits, as Mr. Crockett did here, that selection must be made on a written form and incorporated into the policy in order to be valid. See id. Further, the insurer must enumerate for the insured the premium charges that correspond to each available level of UM/UIM coverage so that the insured can make an informed decision regarding the rejection of the full amount of coverage to which he is entitled. Soseeah v. Sentry Ins., 808 F.3d 800, 804 (10th Cir. 2015); Jordan, 245 P.3d at 1217. If the insurer does not obtain a valid rejection of UM/UIM benefits, the policy will be reformed to provide UM/UIM coverage equal to her liability limits. See Jordan, 245 P.2d at 1217.

         Here, Plaintiff attached the Selection Form used by Defendant and signed by Mr. Crockett as an exhibit to her Complaint. See Doc. 1-2 at 18-19. In its motion, Defendant maintains that this Selection Form complied with the requirements under New Mexico law. Plaintiff does not suggest otherwise. Yet, despite the use of this otherwise-compliant Selection Form, she insists that Mr. Crockett lacked the authority to reject UM/UIM coverage on ...


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