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Schwartz v. State Farm Mutual Automobile Insurance Co.

United States District Court, D. New Mexico

April 15, 2019



         THIS MATTER comes before the Court upon Defendant's Motion to Certify Questions to the New Mexico Supreme Court, filed November 30, 2018 (Doc. 37). Having reviewed the parties' pleadings and the applicable law, the Court finds that Defendant's Motion to Certify is not well-taken and, therefore, is DENIED.


         This putative class action arises out of a dispute over “underinsured motorist coverage” in an automobile policy. NMSA § 66-5-301 (“‘underinsured motorist' means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage.”). Plaintiff alleges that Defendant misrepresented to her and similarly situated putative class members the extent of “underinsured motorist” coverage when purchased at the minimum amount of $25, 000. She also alleges that underinsured motorist coverage at the minimum amount is illusory.

         While Plaintiff was stopped at a red light on Academy Boulevard in Albuquerque, New Mexico, the tortfeasor attempted to slip between her and another stopped car, crashing into both. She received $25, 000 in compensation for bodily injury from the tortfeasor's minimum liability policy. Because she alleges her damages were in excess of $25, 000, she allegedly sought benefits from her own uninsured and underinsured motorist coverage from her insurance company, Defendant State Farm. Her policy with Defendant included the statutory minimum amount of uninsured and underinsured coverage, $25, 000. Defendant allegedly denied coverage according to the insurance policy and New Mexico law, because the amount received from tortfeasor's minimum liability insurance was offset against Plaintiff's $25, 000 underinsured policy. See generally Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 704 P.2d 1092 (N.M. 1985) (explaining statutory offset in NMSA § 66-5-301). Defendant claims to have paid under the underinsured motorist provisions for property damage, but Plaintiff alleged that Defendant denied underinsured motorist coverage for bodily injury.

         There are now six other putative class actions in this district asserting similar claims against various insurers. Martinez et al. v. Progressive Preferred Insurance Company, 19-cv-04 (Ritter, J.); Palmer v. State Farm Mutual Automobile Insurance Company et al., 19-cv-301 (Brack, J.); Bhasker v. Kemper, et al., No. 1:17-cv-00260 (Browning, J.); Thaxton v. GEICO et al., No. 18-cv-306 MV-KK (Vazquez, J.); Apodaca v. Young America Insurance Co. et al., No. 1:18-cv-00399-RB-JHR (Brack, J.); Crutcher v. Liberty Mutual Ins. Co. et al., No. 1:18-cv-00412-JCH-KBM (Herrera, J.).

         While this motion to certify was being briefed, United States District Judge Judith Herrera in Crutcher v. Liberty Mut. Ins. Co. et al., 1:18-cv-412 (JCH/KBM) certified, and the New Mexico Supreme Court accepted, the following question:

Under N.M. Stat. Ann. § 66-5-301, is underinsured motorist coverage on a policy that offers only minimum UM/UIM limits of $25, 000 per person/$50, 000 per accident illusory for an insured who sustains more than $25, 000 in damages caused by a minimally insured tortfeasor because of the offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, and, if so, may insurers charge a premium for that non-accessible underinsured motorist coverage?

(the “certified question”). Notably, the certified question is substantially similar to the question that Defendant originally sought to certify. Doc. 37. Defendant argued that resolution of this question - whether underinsured motorist coverage offered at the minimum level is illusory - would likely resolve many of legal issues in this case. After certification by Judge Herrera, however, Defendant sought in its reply brief to certify two supplemental questions:

Is the UIM component of U Coverage illusory or an unfair or deceptive practice where: (a) the statutory offset required by Schmick is disclosed in the U Coverage policy language and (b) the UIM component is not limited to a comparison of the coverage limits of the insured and the tortfeasor, but also looks to the amount actually paid to the insured by the tortfeasor's insurer?

Doc. 45, at 8.


         “Whether to certify a question of state law to the state supreme court is within the discretion of the federal court.” Armijo v. Ex Cam Inc., 843 F.2d 406, 407 (10th Cir.1988). The New Mexico Supreme Court “may answer a question of law certified to it by a court of the United States ... if the answer may be determinative of an issue in pending litigation in the certifying court and there is no controlling appellate decision, constitutional provision or statute of this state.” N.M. Stat. § 39-7-4. A federal court “will not trouble our sister state courts every time an arguably unsettled question of state law comes across our desks. When we see a reasonably clear and principled course, we will seek to follow it ourselves.” Pino v. United States, 507 F.3d 1233, 1236 (10th Cir. 2007). A federal court will certify a question where it “(1) may be determinative of the case at hand and (2) is sufficiently novel that [the court] feel[s] uncomfortable attempting to decide it without further guidance.” Id.

         I. Question certified by Judge Herrera is likely to resolve substantial issues in this case.

         The New Mexico Supreme Court's answer to Judge Herrera's certified question is likely to resolve substantial issues in this case and provide a clear and principled course for this Court to ...

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