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Hawley v. Farm Bureau Property & Casualty Insurance Co.

United States District Court, D. New Mexico

September 30, 2019

JOHN HAWLEY, Plaintiff,



         This matter comes before the Court on Defendant Farm Bureau Property & Casualty Insurance Company’s Motion for Partial Summary Judgment [Doc. 1');">17], filed November 2, 201');">18, in which it requests that the Court grant summary judgment in its favor and dismiss Plaintiff John Hawley’s Complaint with prejudice. [See id., p. 1');">17].[1');">1" name="FN1');">1" id="FN1');">1">1');">1] Pursuant to 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73(b), the parties have consented to the undersigned Magistrate Judge to conduct dispositive proceedings in this matter, including entry of final judgment. [Docs. 6, 7, 8]. Having considered the relevant law and the parties’ submissions, the Court grants Farm Bureau’s Motion.


         Plaintiff Hawley was injured in an automobile collision with an underinsured tortfeasor. After receiving the full limits of the tortfeasor’s liability coverage, Hawley turned to his own insurer, Defendant Farm Bureau, to recover underinsured motorist benefits. Having insured six vehicles with Farm Bureau, Hawley sought to stack his UM/UIM coverage. However, prior to the accident, he had rejected intra-policy stacking of his UM/UIM coverage in a written document. As such, Farm Bureau only paid Hawley the undisputed coverage, the value of one of his vehicles’ UM/UIM coverage.

         Hawley now argues that his rejection of stacked UM/UIM coverage was invalid as a matter of New Mexico law, and asks this Court to reform his policy to provide for coverage he rejected and for which he paid no premium. The Court denies his claim as a matter of law. As the Court reads New Mexico law, Hawley was free to reject UM/UIM coverage, and, because UM/UIM coverage is not tied to a particular vehicle, Farm Bureau’s all-or-nothing offer of stacked coverage was permissible. Farm Bureau’s Motion will be granted.

         II) ISSUES

         At issue is whether Defendant Farm Bureau failed to properly inform Hawley of his full options for stacking UM/UIM coverage under his policy. That question raises another: whether Farm Bureau was required to offer a “per vehicle” premium cost for stacking UM/UIM coverage.


         The relevant policy covered Plaintiff Hawley’s October 27, 201');">15, accident, and was issued to Hawley and his wife Amy. [Doc. 1');">17, p. 4, ¶ 1');">1, p. 8, ¶¶ 22-24; Doc. 1');">18, p. 2, ¶ 1');">1, p. 4, ¶¶ 22-24]. The Policy provided bodily injury liability coverage of $1');">100, 000.00 per person and $300, 000.00 per occurrence for the Hawleys’ six vehicles and corresponding UM/UIM bodily injury coverage equal to the liability limits. [Doc. 1');">17, p. 4, ¶¶ 2-3; Doc. 1');">18, p. 2, ¶¶ 2-3]. However, pursuant to Endorsement PKNM.EV009.041');">12, completed and signed by Hawley on January 4, 201');">13, Hawley rejected stacked UM/UIM coverage. [Doc. 1');">17, pp. 5-7, ¶¶ 6-1');">17; Doc. 1');">18, p. 3, ¶¶ 6-1');">17].

         After his accident with the tortfeasor, Hawley received the bodily injury liability limits of $25, 000.00 afforded by the tortfeasor’s policy with State Farm. [Doc. 1');">17, p. 8, ¶ 23; Doc. 1');">18, p. 4, ¶ 23]. Farm Bureau paid Hawley the remaining undisputed non-stacked UM coverage limits of $75, 000.00 available under the Policy after applying an offset for the $25, 000.00 paid by State Farm. [Doc. 1');">17, p. 8, ¶ 24; Doc. 1');">18, p. 4, ¶ 24]. At issue is whether Hawley’s rejection of stacked UM/UIM coverage was invalid as a matter of law, entitling him to judicial reformation of his policy to provide a total UIM limit of up to $600, 000.00. [Doc. 1');">17, p. 8, ¶ 25; Doc. 1');">18, p. 4, ¶ 25]. Pertinent here, the Selection/Rejection Form employed by Farm Bureau provided the costs of non-stacked coverage, side-by-side, to the costs of stacked UM/UIM coverage. [Doc. 1');">17, p. 6, ¶ 1');">13; Doc. 1');">18, p. 3, ¶ 1');">13]. [See also Doc. 1');">17-1');">1, p. 1');">1]:

         (Image Omitted)

         Notably, the policy premiums presented on the Selection/Rejection form were either for Non-stacked UM coverage or Stacked UM coverage; they did not break down nor offer stacking on a per-vehicle basis. [Doc. 1');">17-1');">1, p. 1');">1].

         The next page of the form contains representations that Hawley agreed to, as well as Section II, which permitted him to request or reject intra-policy stacking:

         (Image Omitted)

         [Doc 1');">17-1');">1, p. 2; Doc. 1');">17, pp. 6-7, ¶ 1');">16; Doc. 1');">18, p. 3, ¶ 1');">16]. As shown above, Hawley checked the second box, rejecting Intra-Policy Stacked UM Coverage. [Doc. 1');">17, p. 7, ¶ 1');">17; Doc. 1');">18, p. 3, ¶ 1');">17]. The primary question presented is whether Farm Bureau’s Selection/Rejection form complied with New Mexico law so that it prevents stacked UM/UIM coverages in this case.


         In this diversity action, the Court applies the substantive law of New Mexico to the legal questions at issue. See Patterson v. Powder Monarch, LLC, 926 F.3d 633, 637 (1');">10th Cir. 201');">19). Thus, the Court must follow the most recent decisions of New Mexico’s Supreme Court. Id. Where no controlling decision exists, the Court must attempt to predict what the New Mexico Supreme Court would do, “seeking guidance from decisions rendered by lower courts in the relevant state, appellate decisions in other states with similar legal principles, district court decisions interpreting the law of the state in question, and the general weight and trend of authority in the relevant area of law.” Id. (quoting Wade v. EMCASCO Ins. Co., 483 F.3d 657, 666 (1');">10th Cir. 2007)). The Court is also bound by the Tenth Circuit’s “own prior interpretations of state law … unless an intervening decision of the state’s highest court has resolved the issue.” Id. (quoting Kokins v. Teleflex, Inc., 1');">1 F.3d 1');">1290');">621');">1 F.3d 1');">1290, 1');">1295 (1');">10th Cir. 201');">10)).

         Under Federal Rule of Civil Procedure 56(a): “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmoving party, and a fact is material when it might affect the outcome of the suit under the governing substantive law.” Bird v. W.Valley City, 832 F.3d 1');">11');">188, 1');">11');">199 (1');">10th Cir. 201');">16). Only material factual ...

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