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Dockery v. Allstate Insurance Co.

United States District Court, D. New Mexico

January 6, 2020

LAURENT DOCKERY and ODILIA DOCKERY, Plaintiffs,
v.
ALLSTATE INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. BRACK, SENIOR U.S. DISTRICT JUDGE.

         THIS MATTER is before the Court on Plaintiffs' Partial Motion for Summary Judgment Regarding Uninsured Motorist Property Damage Coverage for Punitive Damages, filed May 16, 2019 (Doc. 14), and Defendant's Motion for Summary Judgment, filed May 27, 2019 (Doc. 16).

         Plaintiffs' two vehicles were stolen by unknown tortfeasors. The cars were recovered but suffered physical damage. Plaintiffs received compensatory compensation from their insurer, Allstate Insurance Company, for loss of use and physical damage to the vehicles. Plaintiffs now seek payment from their Uninsured Motorist Coverage for punitive damages against the unknown tortfeasors. The parties filed cross-motions for summary judgment. Defendants argue that punitive damages are not recoverable from Uninsured Motorist Coverage because (1) the tortfeasors are unknown and (2) the vehicles are not uninsured vehicles. For the reasons stated below, the Court DENIES Plaintiffs' partial Motion for Summary Judgment (Doc. 14) and GRANTS Defendant's Motion for Summary Judgment (Doc. 16).

         I. Factual Background

         Plaintiffs' 2014 Dodge Dart and 2016 Volkswagen Passat were stolen by unknown tortfeasors sometime on March 5 or March 6, 2017. (Doc. 16 at 2 ¶ 1.) Both vehicles were insured by Allstate (Policy No. 829505005). (Id. ¶ 2.) The vehicles were taken by unknown tortfeasors who did not have Plaintiffs' permission to take them. (Doc. 19 at 4 ¶ 2.) They were recovered with significant property damage. (Id. ¶ 3.)

         Plaintiffs' claims for the theft of the vehicles and their contents, loss of use, diminution of value, storage, towing value, repairs, and for Allstate's handling of the underlying property loss were resolved at a pre-litigation mediation with Allstate on April 17, 2018. (Doc. 16 at 2 ¶ 3.) Plaintiffs' claims in this case arise out of their claim for punitive damages under their uninsured motorist (“UM”) coverage and Allstate's handling of those punitive damages claims. (Id.) The policy provided auto collision insurance for Plaintiffs' vehicles, which paid for “direct and accidental loss to your insured auto . . . from a collision.” (Id. ¶ 4.) The policy also provided comprehensive insurance that covered loss caused by theft as well as auto theft insurance that paid for “direct and accidental loss to your insured auto caused by theft or larceny.” (Id.) Allstate asserts they paid for the theft under the comprehensive coverage. The comprehensive and collision provisions included coverage for auto theft. (Doc. 14-2 at 5 (“We will pay for direct and accidental loss to your insured auto caused by theft or larceny.”).) The comprehensive insurance under the Allstate policy does not cover punitive damages. (Doc. 19 at 5 ¶ 10.)

         The policy's UM coverage for property damage is as follows:

We will pay damages that an insured person is legally entitled to recover from the owner or operator of an uninsured auto because of property damage. The property damage must be caused by an accident and arise out of the ownership, maintenance or use of an uninsured auto.

(Doc. 16 ¶ 5.) The policy defines an insured auto as “a motor vehicle described on the Policy Declarations.” (Id. ¶ 6.) The policy defines an uninsured auto, in relevant part, as “a motor vehicle which has no property damage liability bond or policy in effect at the item of the accident, ” or “a motor vehicle covered by a property damage liability bond or policy which doesn't provide at least minimum financial security requirements specific in the financial responsibility law of New Mexico.” (Id. ¶ 7.) However, the policy also provides that an “uninsured auto is not: (1) a motor vehicle which is insured for Liability Coverage under Part 1 of this policy.” (Id. ¶ 8.) Plaintiffs' vehicles are listed as insured under Part 1. (Id.) The UM coverage also excludes property damage that is paid by other insurance. (Id. ¶ 9.) The policy provided liability coverage for an insured person, which it defines as a named insured or any other person getting into an insured vehicle only “with [an insured's] permission.” (Doc. 19 ¶ 5.)

         Following the settlement, Allstate agreed to “continue to adjust Laurent Dockery's and Odilia Nino's separate claims for the punitive damages” stemming from the two thefts. (Id. ¶ 7.) Allstate acknowledged that “some portion [of the settlement funds of $45, 000.00] is for compensatory damages as a basis for punitive damages.” (Id. at 5 ¶ 8.) The settlement agreement does not mention the coverage under which the settlement would be paid. (Id. ¶ 9.) Allstate chose to pay the damages under the comprehensive coverage. (Id.) In a letter sent on May 23, 2018, Allstate denied Plaintiffs' punitive damages claims because (1) the vehicles were insured at the time of the thefts; and (2) the identify of the tortfeasors is unknown. (Id. ¶¶ 11, 12.)

         Plaintiffs assert the following claims:

Count I: Breach of Contract
Count II: Contractual Benefits
Count III: Declaratory Action for Punitive Damages and Stacked Coverage
Count IV: Unfair Insurance Claim ...

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