United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S
MOTION FOR PARTIAL SUMMARY JUDGMENT
C. YARBROUGH UNITED STATES MAGISTRATE JUDGE
MATTER comes before the Court on Defendant Loya
Insurance Company's Motion For Partial Summary Judgment
Regarding Bad Faith And Violations Of The Unfair Claims
Practices Act, filed June 3, 2019. Doc. 71. Defendant Loya
argues that Plaintiff was not legally entitled to receive
payment of any portion of a state jury verdict before the
state court entered a final judgment in that case. Because
bad faith is typically a question for the jury and because
Defendant has not demonstrated that New Mexico bad-faith
insurance law does not apply between the time of a jury
verdict and the final judgment, the Court rejects
Defendant's argument. In the alternative, Defendant
argues that, because it payed Plaintiff prejudgment interest,
Plaintiff was not damaged by any delay in paying this
verdict. The Court likewise rejects this argument because,
assuming Defendant failed to pay the jury verdict for
frivolous and unfounded reasons, prejudgment interest may not
constitute the full measure of damages to Plaintiff or
adequately address the bad faith conduct alleged. Therefore,
the Court DENIES Defendant's Motion For Partial Summary
filed this suit on May 17, 2018 in state court. Doc. 1-1
(“Compl.”). On June 25, 2018, Defendant removed
the case to federal court. Doc. 1. In her Complaint,
Plaintiff contends that she was in a motor vehicle accident
on October 3, 2016. Compl. ¶ 8. According to the
Complaint, the accident was the fault of the other driver,
who fled the scene. Compl. ¶¶ 9-10. Plaintiff made
a claim for Uninsured Insurance Benefits with her auto
insurance company, Defendant Loya. Compl. ¶ 11.
Plaintiff filed suit against Defendant in state court in
February 22, 2017. Compl. ¶ 20. On January 25, 2018, a
jury rendered a verdict in favor of Plaintiff against
Defendant in the amount of $23, 742.82. Compl. ¶¶
45-46. Defendant continued to delay paying the claim even
after the verdict. Compl. ¶ 51. The failure to pay
caused Plaintiff financial hardship. Compl. ¶ 32. The
Complaint brings claims for Breach of Contract, Insurance Bad
Faith, Unfair Insurance Claim Practices, and Unfair Trade
Practices. Doc. 1-1 at 5-9.
to the commencement of discovery, Plaintiff filed a Motion
for Partial Summary Judgment Regarding Bad Faith and
Violations of the Unfair Claims Practices Act, Doc. 8, and on
March 11, 2019 the Court issued its Memorandum Opinion and
Order denying Plaintiff's Motion, Doc. 57. The Court
found that the parties agreed that, on October 3, 2016,
Plaintiff was in a motor vehicle collision involving an
unknown driver who fled the scene, and Plaintiff's
property was damaged as a result. Doc. 57 at 3. Plaintiff
made an Uninsured Motorist (“UM”) claim under her
auto insurance and reported the claim to her insurer.
Id. The Court further found that the parties
disputed the facts surrounding Plaintiff's claim and the
reasons Defendant denied it. Id. at 3-4. Plaintiff
asserted she filed suit in state court because Defendant
denied her claim on the basis that “the damages claimed
did not happen within the policy period, ” even though
the accident was well within the policy period. Id.
at 3. On the other hand, Defendant asserted that Plaintiff
opened two claims for the one accident. Id.
at 3-4. Defendant denied one claim as being outside the
policy limits and never denied the second claim, staying in
communication with Plaintiff about the open claim throughout
mediation and trial. Id.
state-court case went to trial and the jury found Plaintiff
0% at fault and awarded $23, 742.82 in damages on January 25,
2018. Id. at 3. Defendant did not pay the claim
until June 29, 2018. Id. at 3. The parties disputed
whether Plaintiff made multiple requests for payment during
that period. Id. at 3-4. Defendant asserted that it
delayed payment due to advice of counsel pending the
resolution of disputed issues regarding costs, pre- and
post-judgment interest, and a lien from First Recovery Group.
Id. at 4.
Court denied the motion for summary judgment due to this
factual dispute and declined to consider the new arguments
Plaintiff raised in her reply brief. Id. at 6-9.
Most relevant for the present motion, the Court denied
Plaintiff's motion for summary judgment based on the
delay in payment after the jury verdict. The Court found that
“whether defendant committed bad faith in delaying
payment is a question for the jury.” Id. at
the Court denied Plaintiff's motion for summary judgment,
it also rejected some of Defendant's arguments in the
process. Defendant contended that it delayed payment because
no contractual obligation to pay exists in the absence of a
judgment. Id. Defendant also asserted that it was
waiting on its counsel to instruct it “as to how, when
and the amount to pay” in light of “ongoing
issues regarding costs and pre- and post-judgment interest
still being litigated” and the resolution of a medical
services lien. Id. The Court disagreed with
Defendant's reliance on State Farm General Insurance
Co. v. Clifton, 1974-NMSC-081, ¶ 8, 86 N.M. 757,
759, and Hauff v. Petterson, 755 F.Supp.2d 1138,
1147 (D.N.M. 2010), which Defendant cited in support of an
argument that the delay was not bad faith as a matter of law.
Id. at 10-11. The Court explained:
Defendant's asserted reasons for delay in this
case-advice of counsel and the existence of a lien-are
significantly less substantial than the reasons for delay
presented in Clifton. Defendant does not explain why
it could not have, for example, tendered the requested amount
in exchange for an indemnification agreement placing the
responsibility for resolving the lien on Plaintiff.
. . . . [In addition, ] Defendant did not need to take five
months to “investigate” and
“evaluate” this claim. It had already had ample
opportunity to make its investigation before the jury
rendered its verdict, and by its own admission had already
evaluated the claim as worth only the cost of a defense.
the Court concluded that a five-month delay in payment did
not constitute bad faith as a matter of law. Id. at
11. Although the New Mexico Court of Appeals has found that
“unreasonable delay, in bad faith, in making payments
pursuant to the insurance contract” states a claim for
relief, Travelers Ins. Co. v. Montoya,
1977-NMCA-062, ¶ 5, 90 N.M. 556, 557, the Court found
the case unhelpful for purposes of summary judgment because
the court of appeals in that case indicated that a claim for
bad faith “depends on the facts.” Id. at
12. The Court ultimately concluded: “Certainly,
Plaintiff is correct that a delay of any amount, if it is
frivolous or unfounded, can constitute a breach of the
insurer's duty to act honestly and in good faith. NMRA
Civ. UJI 13-1702. But on these facts, a reasonable trial of
fact could resolve the question in favor of either
party.” Doc. 57 at 11.
Defendant's Motion for Partial Summary Judgment
the Court's Memorandum Opinion and Order, Defendant filed
the present motion for partial summary judgment, asking the
Court to again consider the issue of the alleged payment
delay. Defendant elaborates on its argument that, under the
relevant policy, it was required to pay only “damages
which an insured person is legally entitled to recover from
the owner or operator of an uninsured motor vehicle.”
Doc. 71 at 3. Because a jury verdict is not yet a legal
entitlement, Defendant argues that Plaintiff was not
“legally entitled to recover” payment before a
final judgment was entered on the case. Id. at 2-3.
In support of its motion, Defendant presents the following
facts, which are undisputed except where noted.
issued New Mexico Auto Policy No. 62 604581180 to Plaintiff,
which covered a 2002 Dodge Durango. Doc. 71 at 3 ¶ 1;
Doc. 81 at 3. The policy provided Uninsured/ Underinsured
Motorist Coverage and contained the following provision:
Subject to the Limits of Liability, if you pay a premium for
Uninsured/ Underinsured Motorist Bodily Injury Coverage, we
will pay for damages which an insured person is legally
entitled to recover from the owner or operator of an
uninsured motor vehicle or underinsured motor vehicle . . . .
Doc. 71 at 3 ¶ 2; Doc. 81 at 3.
was involved in a motor vehicle accident involving an unknown
driver on October 3, 2016. Doc. 71 at 3 ¶ 3; Doc. 81 at
3. On January 20, 2017, Defendant first learned of a Medicaid
lien in the amount of $169.54 for treatment related to the
October 3, 2016 accident. Doc. 71 at 3 ¶ 4; Doc. 81 at
On September 20, 2017, Defendant received subsequent
correspondence that indicated the lien had not been paid.
Doc. 71 at 4 ¶ 5; Doc. 81 at 3-4.
jury ultimately decided the outcome of Plaintiff's
uninsured motorist claim, awarding Plaintiff $23, 742.82
through a Special Verdict entered on January 25, 2018. Doc.
71 at 4 ¶ 6; Doc. 81 at 3. On January 29, 2018,
Plaintiff's counsel at the time, Richard W. Sutten,
attempted to negotiate a settlement of all of Plaintiff's
claims, including the bad faith claims, the jury verdict, and
costs and prejudgment interest. He offered on behalf of
Plaintiff to waive mandatory post-judgment interest in
exchange for full payment of the verdict and discretionary
prejudgment interest and costs. Doc. 71 at 4 ¶
On January 31, 2018, counsel for Defendant, Leonard R. (Bud)
Grossman, requested an extension to respond to
Plaintiff's offer of settlement on the basis that pending
questions remained regarding Plaintiff's bill of costs
and the statutory limit on prejudgment interest. Id.
¶ 8. On February 7, 2018, Mr. Sutten filed
Plaintiff's Costs Bill with the Court. Id.
¶ 9. On March 27, 2018, Mr. Sutten again indicated that
Plaintiff sought 15% prejudgment interest and Mr. Grossman
questioned the appropriateness of that amount. Id.
¶ 10. Within an hour, Mr. Grossman responded to
Plaintiff, stating the law that governs prejudgment interest
provides for 10%, not 15%. Id. ¶ 11. And, as of
March 27, 2018, Defendant had not been informed if the
Medicaid lien had been resolved. Id. ¶ 12.
not having received any payment as of June 6, 2018, Plaintiff
filed a Motion for Entry of Judgement and other discretionary
awards. Id. ¶ 14. On June 7, 2018, Plaintiff
filed an Amended Costs Bill, which included additional costs
the state court ultimately determined to be nonrecoverable
pursuant to Rule 1-054, NMRA, such as mediation fees.
Id. ¶ 15. On June 22, 2018, Defendant responded
in opposition to Plaintiff's Motion for Entry of
Judgment. Id. ¶ 16. A week later, on June 29,
2018, Defendant paid the amount of the jury verdict.
Id. ¶ 17.
than file a reply in support of her Motion for Entry of
Judgment, Plaintiff notified the state court on July 10,
2018, that the motion was ready to be heard. Id.
¶ 18. The state court held a hearing September 19, 2018
related to the discretionary award of Plaintiff's costs
and interest. Id. ¶ 19. Plaintiff prepared an
order on the proposed form of judgment on October 2, 2018.
Id. ¶ 20. In an October 22, 2018 order, the
state court entered final judgment. Id. ¶ 23.
It also rejected Plaintiff's demand for mediation fees
and for prejudgment interest in excess of the statutory limit
of 10%. Id. ¶¶ 21-22.
Defendant asserts that actions Plaintiff's counsel took
in the underlying state case after the January 25 jury
verdict caused the delay in payment of that verdict.
Defendant's Fact No. 13 states that “Loya was aware
of possible issues including Plaintiff's costs and
interest that would need to be addressed by the Court.”
Id. ¶ 13 (citing Deposition of Jose Bolanos,
Loya Insurance adjuster, Exhibit E, at 17:4-14). Defendant
relies on the deposition testimony of Mr.
who testified first in his capacity as Defendant's
corporate representative under Federal Rule of Civil
Procedure 30(b)(6), and subsequently testified in his
individual capacity as a fact witness. In his capacity as the
corporate representative, he testified as follows:
Q. Regardless of any negotiations, it was Loya's
obligation to pay that verdict, yes?
. . .
A. At that point, no.
Q. Why not?
A. Because there were legal ramifications, things that were
pending still. There could have been an appeal filed. There
could have been motions filed. There could have been court
costs, interests that would need to be addressed.
Doc. 71-5 at 2.
disputes Fact No. 13, citing to the Mr. Bolanos's
testimony in his individual capacity as a fact witness.
During this testimony Mr. Bolanos, who was also the adjustor
responsible for handling Plaintiff's claim before the
state trial took place, explained that he did not immediately
take action to pay the adverse state jury verdict because he
was waiting for direction from Mr. Grossman. Doc. 81-3 at 5.
He further testified that he did not know about any
negotiations between Mr. Sutten and Mr. Grossman. Doc. 81-3
at 5. Defendant argues in reply that Mr. Bolanos' Rule
30(b)(6) testimony does not contradict his fact witness
testimony: “Mr. Bolanos' lack of personal knowledge
as to any particular matter does not mean that Loya also
lacked such knowledge.” Doc. 90 at 2. As set forth
below in more detail, the Court construes these facts in
favor of Plaintiff, the non-moving party.
Plaintiff's Statement of Additional Facts
response to Defendant's motion for partial summary
judgment, Plaintiff provided a number of additional facts.
She first asserts that Mr. Bolanos had no knowledge of any
post-verdict settlement discussions between Mr. Grossman and
Mr. Sutten and that Mr. Grossman did not otherwise advise
Defendant of such discussions. Doc. 81 at 5 ¶¶ 1-2.
Although Plaintiff's counsel, Mr. Sutten, sent
Defendant's counsel an email four days after the jury
verdict demanding payment of the verdict by February 2, 2018,
Mr. Bolanos did not see that email or learn of any settlement
discussions between Mr. Grossman and Mr. Sutten until April
11, 2019, the day before Mr. Bolanos' deposition.
Id. ¶ 3. Thus, none of Mr. Bolanos'
post-verdict claims handling decisions were made as a result
of the post-verdict settlement negotiations. Id. at
6 ¶ 4.
the timing of Defendant's duty to pay the state verdict,
Plaintiff asserts that “Loya's insurance policy
does not require entry of a judgment before payment of a
claim based on a jury verdict.” Id. ¶ 5.
As support, Plaintiff cites the deposition of Chris Bennett,
a Rule 30(b)(6) witness, as follows:
Q. Okay. Is there any portion of that policy where it says a
judgment must be entered to pay a claim on a jury verdict?
A. Not that I'm aware of.
Doc. 81-1 at 3. Although Defendant admits that “the
policy does not say verbatim that a judgment must be entered
to pay a claim, ” it disputes Plaintiff's fifth
asserted fact based on the “legally entitled ...