Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Delgado v. Liberty Mutual Fire Insurance Co.

United States District Court, D. New Mexico

December 13, 2017




         This matter is before the Court on Liberty Mutual Fire Insurance Company's (“Liberty Mutual”) Second Motion (“Motion”) for Summary Judgment. (Doc. 32). The Motion presents the question of whether Georgia or New Mexico law governs Mr. Delgado's claim for uninsured motorist (“UM”) coverage and whether Liberty Mutual rejected such a claim in bad faith. Having reviewed the motion, briefs, evidence, and relevant law, the Court concludes that the motion should be granted.

         I. BACKGROUND

         This is an insurance coverage dispute arising out of a motor vehicle accident in July 2008. In the course and scope of Mr. Delgado's employment with United Parcel Service Ground Freight, Inc. (“UPS Freight”), he was operating a 2002 International tractor truck with two trailers, traveling eastbound on Interstate 10 near mile marker 6.6 in Hidalgo County, New Mexico. (See Compl. ¶ 7, Doc. 1-3). “[S]uddenly and without warning, a driver (‘phantom driver') … passed him on the left, veered sharply in front of him and cut him off, ” causing Mr. Delgado to suddenly steer to the left to avoid a collision and lose control. (Id. ¶ 8). The tractor truck and trailers overturned. (Id.) Mr. Delgado sued Liberty Mutual, UPS Freight's automobile liability insurer, seeking a declaratory judgment that it is liable for uninsured motorist ("UM") coverage.

         The Policy

         According to Mr. Delgado's Complaint, “Plaintiff and Liberty Mutual were insured and insurer respectively under a valid and binding contract for insurance, policy number A12C21092036028” (“the Policy”). (Id. ¶ 4) Although Mr. Delgado correctly identifies the Policy number, the Policy was in fact between Liberty Mutual and 16 UPS subsidiaries, including UPS Freight. Only a single UPS subsidiary, however, was listed as the named insured on the Policy. (Policy, Doc.32-4 at 2; Def.'s Resp., Doc. 33-4 at 2) That subsidiary is called UPS Supply Chain Solutions, Inc. (“UPS Supply”), and its name and Georgia address appear on the Policy's declarations page. (Policy, Doc. 32-4 at 2) However, an endorsement accompanying the Policy states that “the term Named Insured includes in addition to the person or organization named in Item 1 [i.e. UPS Supply] of the Declarations the following ….” (Def.'s Resp., Doc. 33-4 at 2) The endorsement then lists 16 other UPS subsidiaries, including UPS Freight, Mr. Delgado's employer. (Id.) Thus, the endorsement makes clear that UPS Freight is a named insured on the Policy, even if only UPS Supply's name and Georgia address alone appeared on the declarations page.[1] The Policy covered losses for the period from January 1, 2008 to January 1, 2009. (Def's Sur-Resp., Doc. 69-2 at 4)

         Liberty Mutual first issued the Policy to UPS in 2005. (Pl.'s Interrog. No. 8, Doc. 67-3 at 5-6) Liberty Mutual's practice was to automatically renew the Policy on January 1 of each year. (Chevere Dep. at 93: 15-16, Doc. 69-1 at 9) Also each year Liberty Mutual would assess the risk of insuring UPS. (Id. at 103:20-104:1) UPS, the parent company, was not a named insured on the Policy. (Id. at 82:22-83:1) It had its own separate liability policies with Liberty Mutual. (Id. at 82:18-21) But as a parent company it could purchase insurance on behalf of its subsidiaries, as it did for the 16 subsidiaries covered by the Policy. (Netherly Aff. ¶ 15, Doc. 32-1 at 3) Liberty Mutual delivered the Policy to UPS's headquarters in Georgia.[2]

         The Renewal Agreement

         Throughout February and March 2008, UPS and Liberty Mutual negotiated a “Renewal Agreement” related to the Policy. (Pl.'s Sur-Reply, Doc. 68 at 1 -7) The Renewal Agreement was not a contract for insurance itself. (Chevere Dep. at 40:3-10, Doc 67-1) Rather, its purpose was to outline UPS's and Liberty Mutual's pricing negotiations for various insurance products that Liberty Mutual sold to UPS and its subsidiaries. (Id. at 50:6-9; Doc. 68 at 3) UPS staff negotiated the Renewal Agreement from its offices in Georgia. Patrick Power, UPS's then-Senior Risk Manager, stated in an affidavit that he was personally involved in procuring the Policy while in Georgia. (Power Aff. ¶ 10, Doc. 44-2) He signed paperwork relating to the Renewal Agreement, such as what UPS would post as collateral and how much it would pay Liberty Mutual in premiums. (Pl.'s Sur-Reply, Doc. 67-3 at 2) Once negotiations were closed, another UPS employee named Mike Fenlon, UPS's Director of Risk Management, signed the Renewal Agreement in his Georgia office. (Id.) A few weeks later, in April 2008, Liberty Mutual sent to UPS in Georgia enclosures of various insurance policies that were the subject of the Renewal Agreement, including the Policy at issue. (Id. Doc. 68 at 8-9)

         Liberty Mutual contends that the Renewal Agreement executed the Policy because if UPS had not signed the Renewal Agreement, then Liberty Mutual would have canceled the Policy. (Pl.'s Interrog. No. 3; Doc. 67-3 at 3) However, the record evidence suggests otherwise, indicating instead that Liberty Mutual would automatically renew the Policy on January 1 (whether or not the Renewal Agreement was signed), and provide coverage in the interim while the parties negotiated and finalized the Renewal Agreement. (Chevere Depo. at 66:22-24, 93:11-16, Doc. 69-1) As Jeannette Chevere, a Liberty Mutual underwriter explained, “we go ahead and issue the policy on 1/1 in good faith” because of Liberty Mutual's and UPS's longstanding relationship. (Id. 93:11-16) Consistent with that practice, Liberty Mutual renewed the Policy on January 1, 2008 and then it and UPS signed the Renewal Agreement nearly two-and-a-half months later, in March 2008. (Id.; Def.'s Sur-Reply, Doc. 68 at 7) Ms. Chevere conceded that there was no firm date by which UPS had to sign the Renewal Agreement. (Chevere Depo. at 93:11-16, 94:4-10, Doc. 69-1)

         In other words, Ms. Chevere's conflicting statements reveal that Liberty Mutual would have canceled the Policy if UPS had not signed the Renewal Agreement - but that signing the Renewal Agreement was not necessarily a precondition to providing UPS coverage. These conflicting statements are resolved in Mr. Delgado's favor and the Court thus credits as true Mr. Delgado's contention that the Renewal Agreement did not execute the Policy because Liberty Mutual's practice was to provide UPS coverage under the Policy even if the Renewal Agreement remained unsigned.

         U/M Waiver Forms

         In December 2007, right before the Policy's January 1 effective date, Mr. Power signed UM rejection forms associated with the Policy. (Power Aff. ¶ 7, Doc. 44-2 at 2) Just as UPS could enter into insurance contracts on behalf of the 16 subsidiaries named on the Policy, UPS could reject insurance on their behalf too. (Netherly Aff. ¶ 15, Doc. 32-1 at 3) Mr. Power stated in an affidavit that his job was to reject UM coverage for UPS and its subsidiaries, and in that role he personally signed UM/UIM rejection forms related to the Policy for multiple states, including forms for Georgia and New Mexico. (Power Aff. ¶¶ 7, 13 Doc. 44-2 at 2-3) On the Georgia rejection form, a box is checked next to the statement “I wish to reject Uninsured Motorist Coverage.” (Def.'s Mot., Doc. 32-5 at 2) Mr. Power signed the form in his Georgia office. (Power Aff. ¶ 7, 13 Doc. 44-2 at 2) Although only UPS Supply appeared as the named insured on the UM rejection form, the rejection form was effective as to all subsidiaries on the Policy, including UPS Freight, Mr. Delgado's employer. (Netherly Aff. ¶ 15, Doc. 32-1 at 3)[3]

         On the same day, Mr. Power signed a similar UM rejection form for New Mexico. (Pl.'s Resp., Doc 33-7) Liberty Mutual admitted in a request for admission that its New Mexico UM rejection is not compliant with the New Mexico Supreme Court's decision in Jordan v. Allstate Ins. Co., 2010-NMSC-051, 149 N.M. 162, 245 P.3d 1214 (2010), which requires insurers to provide insureds UM rejection forms that provide insureds different coverage options and their relative costs. (Pl.'s Sur-Reply, Doc. 67-2 at 5) Jordan was decided in 2010, after Mr. Power signed the New Mexico UM rejection form. However, because of Jordan's retrospective application, its requirements would apply to the 2007 waiver.

         In August 2008, after Mr. Delgado's accident but before filing this lawsuit, his lawyer wrote UPS to inquire about UM coverage. (Pl.'s Resp., Doc. 33-2 at 1) UPS's lawyer wrote back that UPS rejected UM coverage, and UPS's lawyer attached a copy of the New Mexico UM rejection that Mr. Power signed. (Id.)


         Mr. Delgado filed suit in March 2015 asserting the following counts against Liberty Mutual and Defendant Farmers Insurance Co. of Arizona (“Farmers”), Mr. Delgado's automobile liability insurer: (III) a declaratory judgment that Defendants are liable for UM coverage; (IV) bad-faith refusal to settle and pay Mr. Delgado's claims; (V) violations of the New Mexico Insurance Code; and (VI) violations of the New Mexico Unfair Practices Act. The Court previously granted Liberty Mutual's first motion for summary judgment (Doc. 31) on Counts V and VI of Mr. Delgado's Complaint, dismissing as time-barred his claims under New Mexico's Insurance Code and Unfair Practices Act. (See Doc. 55)

         Following the parties' briefing of the current Motion, Mr. Delgado filed a motion for discovery and motion for leave to file a surreply, arguing that Liberty Mutual's reply contained new evidence to which Mr. Delgado did not have a fair opportunity to respond or investigate through discovery, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.