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Sanchez v. Essentia Insurance Co.

Court of Appeals of New Mexico

October 7, 2019

MARTIN SANCHEZ, Individually and as Personal Representative for the ESTATE OF CLIFFORD SANCHEZ; PHIL SANCHEZ; and STEVEN SANCHEZ, Individually, Plaintiffs-Appellants,
v.
ESSENTIA INSURANCE COMPANY; and HAGERTY INSURANCE AGENCY, LLC, Defendants-Appellees, and JOSE LUJAN and GILBERT SANCHEZ, Defendants, and CENTRAL MUTUAL INSURANCE COMPANY, Defendant-in-Intervention.

          APPEAL FROM THE DISTRICT COURT OF TAOS COUNTY Francis J. Mathew, District Judge.

          Atler Law Firm, P.C. Timothy J. Atler Albuquerque, NM Cruz Law Office, LLC Ernestina R. Cruz Taos, NM Sanchez Law Firm Dennis T. Sanchez Taos, NM for Appellants

          Rodey Dickason Sloan Akin & Robb PA Jocelyn Drennan Mark Mowery Albuquerque, NM for Appellee Hagerty Insurance Agency, LLC

          Modrall Sperling Roehl Harris & Sisk PA Tiffany Roach Martin Michelle A. Hernandez Albuquerque, NM for Appellee Essentia Insurance Company

          OPINION

          ZACHARY A. IVES, Judge.

         {¶1} Plaintiffs Phil Sanchez (Phil), Steven Sanchez, and Martin Sanchez, individually and as the personal representative of the Estate of Clifford Sanchez, sued Defendants Essentia Insurance Company and Hagerty Insurance Agency, LLC for denying uninsured and underinsured motorist (UM/UIM) coverage for the accidental death of Phil's son Clifford. The district court granted Defendants' motion for summary judgment, concluding that Phil had validly rejected UM/UIM coverage. On appeal, Plaintiffs argue, among other things, that Phil's rejection was not valid because Defendants waited over seven months to incorporate the rejection into his insurance policy. Because we agree with Plaintiffs that Defendants' delay deprived Phil of a fair opportunity to reconsider his decision to reject coverage, we reverse without reaching Plaintiffs' other arguments.

         BACKGROUND

         {¶2} The pertinent facts are undisputed. On July 20, 2010, Phil and his son Philip visited Defendant Hagerty's website to purchase automobile insurance for Phil's classic cars, a 1964 Ford Galaxie and a 1956 Ford Truck. Philip was assisting Phil, who did not use a computer or the Internet and did not attend to his personal affairs or pay his own bills because of his age. Phil and Philip selected UM/UIM coverage in the amount of $100, 000 per person and $300, 000 per accident for bodily injury and $10, 000 per accident for property damage. The cost of this coverage was fourteen dollars per month.

         {¶3} On August 14, 2010, Phil signed a new coverage selection form rejecting all UM/UIM coverage. More than seven months later, on March 25, 2011, Defendants sent Phil a policy declarations form, which stated that Phil had rejected UM/UIM coverage for bodily injury but had purchased such coverage for property damage. The declarations form did not specify either the levels of coverage available or the premiums associated with each level of coverage. Over the next six months, Defendants sent Phil various documents, including renewal offers and policy declarations forms, indicating that he had rejected UM/UIM bodily injury coverage. {4} On October 12, 2011, Phil's son Clifford, an insured under Phil's policy, was killed in an accident during an elk hunting excursion in Taos County. After Defendants denied UM/UIM coverage for damages related to Clifford's death, Plaintiffs sued, asserting that the denial was improper. Defendants moved for summary judgment, arguing that Phil had validly rejected UM/UIM coverage. After full briefing and a hearing, the district court granted Defendants' summary judgment motion. Plaintiffs appeal.

         DISCUSSION

         {¶5} Plaintiffs argue that the district court entered summary judgment for Defendants based on a legal error. Specifically, Plaintiffs contend that Phil's rejection of UM/UIM coverage is invalid because Defendants deprived him of a fair opportunity to reconsider his decision to reject coverage by failing to provide him with a policy incorporating the rejection until over seven months after he had signed the rejection form. We agree.

         {¶6} "Summary judgment is properly granted when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Arias v. Phoenix Indem. Ins. Co., 2009-NMCA-100, ¶ 6, 147 N.M. 14, 216 P.3d 264. We review the district court's summary judgment ruling de novo. Romero v. Philip Morris Inc., 2010-NMSC-035, ¶7, 148 N.M. 713, 242 P.3d 280.

         {¶7} NMSA 1978, Section 66-5-301 (1983) governs UM/UIM coverage in New Mexico. Subsections (A) and (B) of the statute require insurance companies to "include in automobile policies UM/UIM coverage ranging from the minimum statutory limits ... up to the limits of liability coverage contained in a policy." Arias, 2009-NMCA-100, ¶7 (citation omitted). The purpose of this requirement "is to put the insured in the same position he or she would have been in if the tortfeasor had liability coverage equal to the UM/UIM protection as provided by the insured's policy." Id. The requirement thus "embodies a strong public policy to expand insurance coverage and to protect individual members of the public against the hazard of culpable uninsured and underinsured motorists." Id. (alteration, internal quotation marks, and citation omitted). Consistent with this public policy, Subsection (C) allows an insured to reject the UM/UIM coverage described in Subsections (A) and (B) only if the rejection "satisfies] the regulations promulgated by the superintendent of insurance." Arias, 2009-NMCA-100, ¶ 8.

         {¶8} Interpreting Section 66-5-301 and the applicable insurance regulations, our Supreme Court has held that a rejection of UM/UIM coverage is valid only if the insurer meets four "workable requirements" designed to ensure that rejections are the product of "realistically informed choice[s]" by insureds. Jordan v. Allstate Ins.Co.,201 ...


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