United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
VÁZQUEZ, UNITED STATES DISTRICT JUDGE
MATTER comes before the Court on Defendant
Geico's Opposed Motion to Dismiss Claim for Punitive
Damages [Doc. 15]. The Court, having considered the motion
and relevant law, finds that the motion is well-taken and
will be granted.
January 24, 2014, an automobile accident occurred during
which Leigh Jenke rear-ended Plaintiffs' vehicle.
Id. ¶ 7. Ms. Jenke's insurer, Geico
Indemnity Company, inspected Plaintiffs' vehicle and
concluded that its insured, Ms. Jenke, was at fault and
issued a property damage payment to Plaintiffs. Id.
¶¶ 10, 12. Plaintiffs then provided information to
Geico about their injuries, including medical records and
billings. Id. ¶ 13. Plaintiffs asked Geico to
settle their personal injury claims, but Geico refused.
Id. ¶15, 17. Although the timeline is unclear,
it appears that Geico later offered to settle for an amount
that Plaintiffs viewed as being significantly less than they
were owed. Id. ¶ 33.
September 2015, Plaintiffs filed an action against both Ms.
Jenke and Geico. Id. ¶ 28. Prior to trial, the
parties agreed to mediate. Id. ¶ 34. Plaintiffs
offered to settle for a total of $40, 000.00, but Geico
offered only $16, 000.00, and the mediation subsequently
failed. Id. ¶ 34. At trial, the jury found Ms.
Jenke 100 percent at fault for the accident and awarded
Plaintiffs a combined award of $100, 000.00 in damages.
on August 8, 2017, Plaintiffs filed the instant action
against Geico (“Defendant”) in New Mexico state
court. [Doc. 1]. Defendant removed the action to this Court
on September 8, 2017. Id. In their Complaint,
Plaintiffs allege that, despite determining that its insured
was liable for the accident, Defendant refused to settle
Plaintiffs' personal injury claims or offer reasonable
money to Plaintiffs in order to resolve those claims.
Id. ¶¶ 17-18. According to Plaintiffs,
this refusal was in keeping with Defendants' policy and
practice of refusing to settle and/or alternatively to offer
unreasonably low settlement proposals to persons claiming
injuries arising from low speed auto accidents. Id.
¶¶ 20-21. Citing to the New Mexico Supreme
Court's decision in Hovet v. Allstate Ins. Co.,
89 P.3d 69 (N.M. 2004), Plaintiffs assert that
Defendant's failure to “attempt in good faith to
effectuate prompt, fair and equitable settlement of
Plaintiffs' claims in which liability was reasonably
clear, and Defendant's “intentional pattern and
practice of dishonesty and intimidation of personal injury
claimants involved in low speed collisions, ” violate
the New Mexico Unfair Claims Practices Act
(“UCPA”). Id. ¶¶ 41, 49. Based
on Defendant's alleged violations of the UCPA, Plaintiffs
seek to recover damages against Defendant, “including
punitive damages, attorney's fees, and other
costs.” Id. ¶ 51.
November 11, 2017, Defendant filed the instant motion,
seeking to dismiss Plaintiffs' claims for punitive
damages, arguing that the UCPA only allows recovery of actual
damages. Plaintiffs filed a response in opposition on
December 20, 2017, contending that the intent of the
legislature in drafting the UCPA was to allow for punitive
damages. Defendant's reply followed on December 28, 2017.
Rule 12(b)(6), a Court may dismiss a complaint for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). “The nature of a
Rule 12(b)(6) motion tests the sufficiency of the allegations
within the four corners of the complaint.” Mobley
v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994). When
considering a Rule 12(b)(6) motion, the Court must accept as
true all well-pleaded factual allegations, ignore conclusory
allegations, view the factual allegations in the light most
favorable to the non-moving party, and draw all reasonable
inferences in the plaintiff's favor. Smith v. United
States, 561 F.3d 1090, 1097 (10th Cir. 2009), cert.
denied, 130 S.Ct. 1142 (2010); Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.”
Iqbal, 556 U.S. 662, 678. “[O]nly a complaint
that states a plausible claim for relief survives a motion to
dismiss.” Id. at 679. Dismissal is warranted
where plaintiffs “fail to allege any facts, or
articulate any legal basis” to support their request
for relief. Ambuehl v. Aegis Wholesale, 555
Fed.Appx. 817, 820 (10th Cir. 2014).
moves to dismiss Plaintiffs' punitive damages claims on
the ground that, even if Plaintiffs allegations were proven
to be true, those allegations do not articulate any legal
basis for an award of punitive damages. Specifically,
Defendant argues that Plaintiffs' cause of action arises
only under the UCPA and that, as a matter of law, the UCPA
provides for the recovery of actual damages only. As set
forth herein, the Court agrees.
there were no means for a third-party claimant to bring suit
against an insurance company for unfair practices in the
common law. However, in 1984, the New Mexico Legislature
drafted the UCPA, which gave private parties the right to sue
insurers for unfair practices. That statute provides in
relevant part: “Any person […] who has suffered
damages as a result of a violation of [the UCPA] by an
insurer or agent is granted a right to bring an action in
district court to recover actual damages.” N.M.S.A.
1978, §59A-16-30. Although the language in Section
59A-16-30 is void of any explicit reference to third-party or
private claimants, the New Mexico Supreme Court determined
that, by using the phrase “[a]ny person, ” the
Legislature did not mean to “restrict recovery solely
to first parties, those insured under the policy.”
Hovet, 89 P.3d at 73. “In creating a separate
statutory action, ” the court explained, “the
Legislature had a remedial purpose in mind: to encourage
ethical claims practices within the insurance industry. The
private right of action is one means toward that end.”
Id. In keeping with “the remedial purposes the
Legislature envisioned, ” the Court held that “if
a third party is injured by one of the enumerated unfair
claims practices, that party is no less a ‘person'
falling with the ambit of legislative protection.”
Id. The ruling in Hovet thus provides
third-party claimants, such as Plaintiffs, a basis for
recovery for unfair practices by insurance companies.
parties agree that Plaintiffs' right to recover against
Defendant for its alleged unfair claims practices arises
solely from the UCPA, as made applicable to third parties
under Hovet. The UCPA, by its plain language,
provides that a plaintiff may bring an action “to
recover actual damages.” N.M.S.A. 1978, §
59A-16-30. Despite this plain language, Plaintiffs argue that
recovery under the UCPA is not limited to actual damages, but
rather, that punitive damages are available to them. In
support of this argument, Plaintiffs assert that
“[t]here is nothing in the [UCPA] which indicates
punitive damages are not available, ” and that the
court's reasoning in Hovet supports the
imposition of punitive damages in cases such as this in order
to further the remedial purposes of the statute. Doc. 17 at
4. Plaintiffs also note the language in the UCPA ...