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Progressive Casualty Insurance Co. v. Vigil

Supreme Court of New Mexico

February 12, 2018

PROGRESSIVE CASUALTY INSURANCE COMPANY, Plaintiff-Respondent,
v.
NANCY COLLEEN VIGIL and MARTIN VIGIL, Defendants-Petitioners.

         ORIGINAL PROCEEDING ON CERTIORARI Alan M. Malott, District Judge

          Santillanes & Neidhardt, P.C. Janet Santillanes Olivia Neidhardt Albuquerque, NM James T. Roach Albuquerque, NM for Petitioners.

          O'Brien & Padilla, P.C. Daniel J. O'Brien Albuquerque, NM Horvitz & Levy LLP Andrea M. Gauthier Lisa Perrochet Burbank, CA for Respondent.

          OPINION

          PETRA JIMENEZ MAES, Justice

         {¶1} This case arises from a dispute between insureds, Nancy Colleen Vigil and her stepson Martin Vigil, and their insurance company, Progressive Casualty Insurance Company, as to whether the Vigils' policy was in force at the time of a November 4, 2002, car accident. The parties' dispute has thus far been the subject of two jury trials and two appeals to the Court of Appeals. See Progressive Cas. Ins. Co. v. Vigil, 2015-NMCA-031, 345 P.3d 1096 (Progressive II), cert. granted, 2015-NMCERT-003; Progressive Cas. Ins. Co. v. Vigil, Nos. 28, 023, 28, 393, mem. op. (N.M. Ct. App. Aug. 18, 2009) (non-precedential) (Progressive I). In this opinion we limit our review to the propriety of two evidentiary rulings that the district court made prior to the second trial. The Court of Appeals held that the district court erred by excluding evidence at the second trial of (1) a previous judge's summary judgment ruling that the Vigils lacked coverage on the date of the accident, a ruling that had been reversed in Progressive I; and (2) Progressive's payment of $200, 000 under the Vigils' policy to settle third-party claims while this litigation was pending. See Progressive II, 2015-NMCA-031, ¶¶ 15, 24. We reverse the Court of Appeals and hold that the district court acted within its discretion to exclude the evidence under Rule 11-403 NMRA, which permits the district court to "exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." We remand to the Court of Appeals to address the remaining issues that Progressive raised on appeal. See Progressive II, 2015-NMCA-031, ¶ 27.

         I. BACKGROUND

         {¶2} At about 1:30 a.m. on November 4, 2002, Martin Vigil was driving a vehicle listed on his parents' Progressive insurance policy when an accident occurred that resulted in the death of one passenger and serious injuries to another. Progressive filed a declaratory judgment action, seeking a ruling that the Vigils lacked coverage at the time of the accident. Progressive asserted that the Vigils' policy expired at 11:59 p.m. on November 3, 2002, about ninety minutes before the accident occurred, and lapsed until 10:29 a.m. on November 4, 2002, about nine hours after the accident occurred. The Vigils counterclaimed, requesting a declaration of coverage and asserting bad faith and other claims against Progressive.

         {¶3} While the parties' respective claims were pending, the Vigils were sued by an injured passenger and by the estate of the deceased passenger. Progressive settled these third-party claims by paying the policy limits for liability of $100, 000 to each claimant. Progressive made the settlement payments under a reservation of its right to obtain full reimbursement from the Vigils if it was later determined that the Vigils lacked coverage at the time of the accident.

         A. The First Trial: Progressive Obtains Favorable Summary Judgment Rulings on the Coverage and Bad Faith Claims and Favorable Jury Verdicts on the Remaining Claims

         {¶4} Prior to the first trial, Progressive filed a motion for partial summary judgment on the issue of insurance coverage. Progressive argued that the Vigils' insurance policy lapsed on November 3, 2002, due to the Vigils' failure to make a timely premium payment and that the policy was not in force when the accident occurred on November 4, 2002. In response, the Vigils argued that they timely made a payment that was due on October 15, 2002, which provided continuous coverage through November 15, 2002. The district court granted Progressive's motion, finding that there was "no genuine issue as to any material fact on coverage and Progressive is entitled to judgment, as a matter of law, that the Vigils [did] not have insurance coverage for the November 4, 2002, accident." The district court also granted partial summary judgment in favor of Progressive on the Vigils' claim that Progressive acted in bad faith by failing to provide coverage. As a result of these partial summary judgment rulings, the jury at the first trial did not consider the issues of insurance coverage or bad faith failure to provide coverage. The jury issued verdicts in favor of Progressive on the Vigils' remaining claims and on Progressive's claim for reimbursement of the $200, 000 it paid to settle third-party claims.

         B. Progressive I: The Court of Appeals Holds That the District Court Erred by Granting Summary Judgment on Coverage and Bad Faith and Remands for a New Trial on Those Claims

         {¶5} The Vigils appealed. The Court of Appeals held that the district court erred by granting partial summary judgment on the issue of insurance coverage. Progressive I, Nos. 28, 023, 28, 393, mem. op. at 2. The Court of Appeals explained that extrinsic evidence outside the four corners of the Vigils' insurance policy revealed an ambiguity concerning whether the Vigils had coverage on the date of the accident. Id. at 7-8. The Court of Appeals concluded that "a jury after hearing all the evidence could reasonably and properly conclude that the Vigils were entitled to coverage under their policy." Id. at 12. The Court of Appeals (1) reversed the partial summary judgment rulings on coverage and bad faith failure to provide coverage, (2) vacated the award of reimbursement and costs to Progressive, and (3) remanded this case to the district court for a new trial on coverage, the Vigils' bad faith claim, and Progressive's reimbursement claim. Id. at 13.

         C. The Second Trial: The Vigils Obtain a Favorable Summary Judgment Ruling on Progressive's Reimbursement Claim and Favorable Jury Verdicts on the Coverage and Bad Faith Claims

         {¶6} On remand this case was assigned to a different district court judge. The parties filed numerous pretrial motions, seeking to limit the claims and evidence submitted to the jury at the second trial. The district court granted partial summary judgment in favor of the Vigils on Progressive's reimbursement claim, ruling as a matter of law that Progressive had no right to seek reimbursement under the terms of the Vigils' insurance policy. The district court held pretrial motion hearings on August 16, 2011, and September 27, 2011, to address additional pending motions. The hearings culminated in an order in limine that prohibited the parties from introducing evidence or making any reference before the jury about (1) any ruling made by a prior judge in the case, (2) Progressive's payment of $200, 000 to settle liability claims, (3) Progressive's reimbursement claim against the Vigils, or (4) the seriousness of the accident or the injuries incurred.

         {¶7} The case proceeded to trial on the issues of insurance coverage and bad faith, and the jury found in favor of the Vigils on both claims. The jury awarded the Vigils $37, 000 in compensatory damages and $11.7 million in punitive damages. The district court entered a final judgment and awarded the Vigils an additional $40, 725 in contract damages and approximately $1.4 million in attorney's fees and $35, 000 in costs.

         D. Progressive II: The Court of Appeals Holds that the District Court Erred by Excluding Evidence Relevant to the Vigils' Bad Faith Claim and Remands for a New Trial on Bad Faith

         {¶8} In the second appeal, Progressive argued that the district court erred by excluding evidence of the prior summary judgment ruling that the Vigils lacked coverage for the accident and evidence that Progressive had paid $200, 000 to settle third-party claims. Progressive also asserted that (1) the district court erred by granting summary judgment in favor of the Vigils on Progressive's reimbursement claim, (2) erroneous district court rulings individually and cumulatively deprived Progressive of a fair trial, (3) the award of compensatory and punitive damages to Martin Vigil should be reversed for insufficient evidence, (4) the punitive damages are unconstitutionally excessive, and (5) the award of attorney's fees should be reversed.

         {¶9} The Court of Appeals affirmed the verdict in favor of the Vigils on the issue of insurance coverage, noting that Progressive had not challenged the finding of coverage. Progressive II, 2015-NMCA-031, ¶¶ 2, 23. The Court of Appeals also affirmed the district court's grant of summary judgment on Progressive's reimbursement claim, reasoning that the claim was moot due to Progressive's failure to challenge the verdict on coverage. Id. ¶ 23. But the Court of Appeals reversed the verdict and judgment finding that Progressive acted in bad faith, holding that the district court erred by excluding evidence of (1) the prior summary judgment ruling concerning coverage, and (2) Progressive's payment of $200, 000 to settle third-party claims. Id. ¶¶ 2, 15, 24. The Court of Appeals explained that both categories of evidence were relevant to whether Progressive acted in bad faith. Id. ΒΆΒΆ 15, 24. The Court of Appeals also vacated the award of attorney's fees and costs, reasoning that the award should be "redetermined after the bad faith proceedings ...


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