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Trujillo v. State Farm Mutual Automobile Insurance Co.

United States District Court, D. New Mexico

December 9, 2019

CINDY RAE TRUJILLO, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          KIRTAN KHALSA UNITED STATES MAGISTRATE JUDGE

         THIS MATTER is before the Court on Defendant State Farm's Motion for Summary Judgment on Claims of Bad Faith, Violations of the Unfair Insurance Practices Act, § 59A-16-20 NMSA 1997, and Violations of the Unfair Trade Practices Act, §[§] 57-12-1 et seq[.] NMSA 2009 (Doc. 51), filed October 7, 2019. The Court, having considered counsel's arguments, the record, and the relevant law, FINDS that the motion is well taken in part and should be GRANTED IN PART, DENIED IN PART, and TAKEN UNDER ADVISEMENT IN PART as set forth below.

         I. Introduction

         Plaintiff Cindy Rae Trujillo was in an automobile accident on July 11, 2016, and subsequently made a claim for benefits under the uninsured/underinsured motorist (“UM/UIM”) policies issued to her by Defendant State Farm Mutual Automobile Insurance Company. On May 29, 2018, Plaintiff filed suit against Defendant in state court, alleging that Defendant had engaged in various wrongful acts with respect to her claim for benefits. Defendant removed the case to this Court on July 5, 2018, based on diversity of citizenship. In her complaint, Plaintiff asserts claims for breach of contract, insurance bad faith, and violations of the New Mexico Unfair Claims Practices Act, N.M. Stat. Ann. § 59A-16-20 (“UCPA”), [1] and the New Mexico Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 et seq. (“UPA”).[2] (Doc. 1-3 at 1.)

         Defendant filed the summary judgment motion presently before the Court on October 7, 2019. (Doc. 51.) In it, Defendant seeks summary judgment on Plaintiff's insurance bad faith, UCPA, and UPA claims. (Id. at 2.) Plaintiff filed a response in opposition to the motion on October 29, 2019, and Defendant filed a reply in support of it on November 22, 2019. (Docs. 55, 58.)

         II. Facts

         A. Undisputed Material Facts

         The parties do not dispute the following material facts:

         On July 11, 2016, Plaintiff was driving a 2002 Ford Ranger insured by Defendant. (Doc. 51 at 2-3 ¶¶ 1, 7.) As Plaintiff slowed for a red light, a vehicle driven by Michael Rodriguez hit the rear of Plaintiff's vehicle and pushed it into the vehicle in front of her. (Id. at 2 ¶ 2.) The accident caused Plaintiff bodily injuries and damaged her vehicle's front and rear bumpers. (Id. at 3 ¶¶ 4, 10.) However, Plaintiff's vehicle “was able to be driven from the scene of the accident.” (Id. at 3 ¶ 10.)

         Mr. Rodriguez admitted liability for the accident, and his insurer, GEICO, offered to settle Plaintiff's claim against him for policy limits of $25, 000. (Id. at 3 ¶¶ 5, 11.) Plaintiff's counsel asked Defendant to approve the proposed settlement on November 3, 2017, and Defendant did so on November 10, 2017. (Id. at 3 ¶¶ 11, 12.)

         Defendant identified two automobile insurance policies it issued to Plaintiff that included UM/UIM coverage, one on a 1972 Ford F250 and the other on the 2002 Ford Ranger involved in the accident. (Id. at 4 ¶ 15.) Each of these policies provided UM/UIM coverage of $50, 000 per person and $100, 000 per occurrence. (Id.) “Stacking of the available policies would result in a total available UM/UIM coverage in the amount of $75, 000. [$50, 000 x 2 - $25, 000 payment from tortfeasor = $75, 000].” (Id. at 4 ¶ 16.)

         Plaintiff “made a claim for [UIM] benefits under her personal policies” but did not make a “formal demand” for such benefits.[3] (Id. at 3 ¶ 6; id. at 4 ¶ 17.) On November 17, 2017, Defendant extended to Plaintiff's counsel a verbal offer to settle Plaintiff's UIM claim for $2, 000. (Doc. 55 at 3 ¶ 19.) Defendant reiterated this offer in a letter to Plaintiff's counsel dated December 7, 2017. (Id. at 3 ¶ 20.)

         On March 9, 2018, Plaintiff's counsel asked Defendant to waive its right to subrogation, claiming that Plaintiff could not be made whole if she were required to reimburse Defendant for her accident-related medical expenses from her settlement with Mr. Rodriguez and GEICO. (Doc. 51 at 4 ¶ 13.) Defendant agreed not to pursue subrogation for medical payments coverage on March 26, 2018. (Id. at 4 ¶ 14.)

         On April 25, 2018, Defendant again offered to settle Plaintiff's UIM claim for $2, 000. (Doc. 55 at 3 ¶ 22.) Plaintiff did not respond to Defendant's settlement offers. (Doc. 51 at 4 ¶ 17.)

         B. Factual Disputes

         Plaintiff alleges that, when Defendant offered to settle her UIM claim for $2, 000, her accident-related medical bills were $19, 026.71. (Doc. 55 at 3 ¶ 21.) Defendant correctly notes that Plaintiff has produced no evidence to support this allegation. (Doc. 58 at 2; see generally Doc. 55.) Plaintiff also alleges that Defendant did not explain how it determined its settlement offer or valued Plaintiff's claim. (Doc. 55 at 3 ¶ 23.) Defendant disputes this allegation, (Doc. 58 at 2), and points to claim specialist Mark Blasingim's December 7, 2017 letter to Plaintiff's counsel, in which Mr. Blasingim stated:

[i]t is to my understanding that all of [Plaintiff's] medical bills were paid by her healthcare provider, and she has already received $25, 000.00 from the tortfeasor's liability carrier. Based on my information, it appears she has been fully compensated, but I am offering $2, 000.00 as a good faith offer in attempt [sic] to resolve her claim.

(Doc. 51-8 at 1.)

         III. General Legal Standards

         A. Applicable Law in Diversity Cases

         The Court has subject matter jurisdiction over this case due to the parties' diversity of citizenship. 28 U.S.C. § 1332(a); (Doc. 1 at 1-8.) “[I]n a federal diversity action, the district court applies state substantive law-those rights and remedies that bear upon the outcome of the suit- and federal procedural law-the processes or modes for enforcing those substantive rights and remedies.” Los Lobos Renewable Power, LLC v. Americulture, Inc, 885 F.3d 659, 668 (10th Cir.) (citation omitted), cert. denied sub nom. AmeriCulture, Inc. v. Los Lobos Renewable Power, LLC, __ U.S. __, 139 S.Ct. 591 (2018); see also, e.g., Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996) (“Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law.”); Racher v. Westlake Nursing Home Ltd. P'ship, 871 F.3d 1152, 1162 (10th Cir. 2017) (“In diversity cases, the Erie doctrine instructs that federal courts must apply state substantive law and federal procedural law.”).

         A federal court sitting in diversity must apply state substantive law “with the objective of obtaining the result that would be reached in state court.” Butt v. Bank of Am., N.A., 477 F.3d 1171, 1179 (10th Cir. 2007). “The federal court must follow the most recent decisions of the state's highest court, ” and, “[w]here no controlling state decision exists, . . . must attempt to predict what the state's highest court would do.” Wade v. EMCASCO Ins. Co., 483 F.3d 657, 665-66 (10th Cir. 2007). In making this prediction, the court may consider the state's lower court decisions, appellate decisions in other states with similar legal principles, other federal court decisions interpreting the relevant state's law, and “the general weight and trend of authority” in the area of law in question. Id. at 666; accord Bhasker v. Kemper Cas. Ins. Co., 361 F.Supp.3d 1045, 1122- 27 (D.N.M. 2019).

         B. Summary Judgment Standards

         In accordance with the foregoing, although the substantive law of New Mexico governs the Court's analysis of the underlying claims, federal law governs the propriety of granting or denying summary judgment. Kansas Penn Gaming, LLC v. HV Properties of Kansas, LLC, 662 F.3d 1275, 1284 (10th Cir. 2011); Morris v. Travelers Indem. Co. of Am., 518 F.3d 755, 758 (10th Cir. 2008); Stickley v. State Farm Mut. Auto. Ins. Co., 505 F.3d 1070, 1076 (10th Cir. 2007). Under federal law, summary judgment

is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Jones v. Kodak Med. Assistance Plan, 169 F.3d 1287, 1291 (10th Cir. 1999). “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 1188, 1199 (10th Cir. 2016) (quotation marks and brackets omitted). Only material factual disputes preclude the entry of summary judgment. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000).

         “Before the burden shifts to the nonmoving party to demonstrate a genuine issue, the moving party must meet its initial responsibility of demonstrating that no genuine issue of material fact exists and that it is entitled to summary judgment as a matter of law.” Reed v. Bennett, 312 F.3d 1190, 1194 (10th Cir. 2002) (quotation marks omitted); see also Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998) (“The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.”). The movant must

inform[] the district court of the basis for its motion, and identify[] those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

Where the nonmovant bears the burden of persuasion at trial,
[t]he moving party may carry its initial burden either by producing affirmative evidence negating an essential element of the nonmoving party's claim, or by showing that the nonmoving party does not have enough ...

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