May 23, 2019- State Farm Mutual Automobile Insurance Company v. Farmers Insurance Company of Arizona, No. A-1-CA-36055

1 	IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 	STATE FARM MUTUAL AUTOMOBILE
3 INSURANCE COMPANY,
4 	Plaintiff/Cross-Defendant/Appellant,
5 v. 	No. A-1-CA-36055
6 FARMERS INSURANCE COMPANY
7 OF ARIZONA,
8 	Defendant/Cross-Plaintiff/Appellee.
9 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
10 Alan M. Malott, District Judge
11 	Miller Stratvert P.A.
12 Todd A. Schwarz
1_3 Luke A. Salgan~k
14 Albuquerque, NM
15 	for Appellant
16 O'Brien & Padilla, P.C.
17 Daniel J. 0 'Brien
18 Kerri L. Allensworth
19 Albuquerque, NM
20 for Appellee
21
22 DUFFY, Judge.
MEMORANDUM OPINION
23 	{l} 	Plaintiff State Farm Mutual Automobile Insurance Company (State Farm)
24 appeals the district court's order granting summary judgment in favor of Defendant
25 Farmers Insurance Group of Arizona's (Farmers). We affirm.
Court of Appeals of New Mexico
Filed 5/23/2019 10:15 AM

1 BACKGROUND
2 {2} 	The relevant facts are undisputed. Nathaniel Rodriguez (Passenger) was a
3 passenger in a vehicle driven by Luis Castro (Driver), and was severely injured when
4 Driver drove "over a dip in the road, lost control of the vehicle, and wrecked into a
5 utility box." Driver was insured by State Farm with a policy that provided liability
6 coverage in the amount of $250,000 per person/$500,000 per occurrence. The State
7 Farm policy also provided uninsured/underinsured motorist (UM/UIM) coverage in
8 the amount of $250,000, but contained a contractual offset provision that allowed
9 State Farm to reduce any UM/UIM coverage by the amount paid in liability
10 coverage. Passenger, through his parents, had insurance coverage through Farmers,
11 	which provided UM/UIM coverage in the total amount of $90,000 through three
12 stacked policies.
13 	{3} 	After the accident, State Farm tendered its liability policy limit of $250,000
14 to Passenger. The parties agree that Passenger's damages were at least $340,000, but
15 	State Farm and Farmers could not agree about whether an additional amount was
16 	owed to Passenger under the UIM coverage provid~d by either the State Farm or the
17 Farmers policies, or about which carrier should receive the offset for the $250,000
18 	liability proceeds already paid by State Farm. State Farm paid an additional $90,000
19 in UIM coverage to Passenger and obtained an assignment from his family to pursue
20 a declaratory judgment action against Farmers to adjudicate these issues.
2

1 {4} 	State Farm sued Farmers and moved for summary judgment, arguing that it
2 was entitled as a matter of law to contractual and statutory offsets for its $250;000
3 liability payment and that Farmers was required to reimburse State Farm for the
4 $90,000 UIM payment it made to Passenger. Farmers responded and filed a cross-
5 motion for summary judgment, arguing that pursuant to Samora v. State Farm Mut.
6 Auto. Ins. Co., 1995-NMSC-022, 119 N.M. 467, 892 P.2d 600, its $90,000 in UIM
7 coverage was entirely offset by State Farm's $250,000 liability payment and,
8 therefore, it owed no UIM benefits to Passenger. The district court determined that
9 Samora controlled and entered summary judgment in favor of Farmers. State Farm
10 appeals.
11 	STANDARD OF REVIEW
12 {5} 	The parties do not dispute the underlying facts in their cross-motions for
13 	summary judgment. We review the district court's grant of summary judgment de
14 novo. Salas v. Mountain States Mut. Cas. Co., 2009-NMSC-005,, 12, 145 N.M.
15 	542, 202 P.3d 801. "Summary judgment is only appropriate where there are no
16 genuine issues of material fact and the movant is entitled to judgment as a matter of
17 law." Garcia v. Underwriters at Lloyd's, London, 2008-NMSC-018,, 12, 143 N.M.
18 	732, 182 P.3d 113 (internal quotation marks and citation omitted). "All reasonable
19 inferences from the record are construed in favor of the non-moving party." Id
3

1 DISCUSSION
2 	{6} 	In this appeal, State Farm asks us to clarify, in the context of a single-vehicle ·
3 accident, how to apply contractual and statutory offsets against its liability payment
4 to determine the total UIM coverage available to Passenger, if any. Our Supreme
5 Court addressed these very questions more than twenty years ago in Samora, but
6 State Farm claims that "insurance companies in New Mexico have been uncertain
7 as to the application of statutory and contractual offsets" in the wake of our Supreme
8 Court's more recent decision in State Farm Mut. Auto. Ins. Co. v. Safeco Ins. Co.,
9 2013-NMSC-006, 298 P.3d 452. Safeco, however, is consistent with Samora, and
10 together these cases provide clear instruction on how to analyze the dispositive
11 	question in this appeal: whether an injured party has a UIM claim.
12 {7} 	"[I]n evaluating whether [Passenger] has a UIM claim, [this Court] must
13 	detennine both the tortfeasor's liability limits and the insured's total UIM coverage,
14 which may include multiple stacked policies." Safeco Ins. Co., 2013-NMSC-006,
15 	~ 8. The first step in this process is determining Passenger's status under each policy.
16 See Samora, 	i995-NMSC-022, ~ 5. Passenger was a Class I insured under his
17 Farmers policy and had $90,000 in total UIM coverage. See id. (defining Class I
18 	insured). Passenger was a Class II insured under Driver's State Farm policy "by
19 virtue of [his] passenger status in an insured vehicle." Id. (intem~l quotation marks
4

1 and citation omitted). Driver had $250,000 in total liability coverage and $250,000
2 in UM/UIM coverage subject to a contractual offset.
3 	{8} 	The contractual offset in the State Farm policy is enforceable and operates to
4 offset any UIM coverage by the amount of liability benefits State Farm paid to
5 Passenger~ See id. 18 (upholding a Class II insurer's contractual offset "under which
6 UIM coverage was offset by the amount paid under the liability portion of the
7 policy"); Mountain States Mut. Cas. Co. v. Martinez, 1993-NMSC-003, 1 3, 115
8 N.M. 141, 848 P.2d 527 (holding that the contractual liability offset provision in a
9 negligent host driver's insurance policy is enforceable and not against public policy
10 such that a guest passenger is not permitted to recover under both the liability and
11 	underinsured motorist provisions). Because the amount of the liability payment is
12 equal to the amount of UIM coverage available under the State Farm policy and
13 	Passenger received the full liability benefit, no UIM benefits are available to
14 Passenger under the State Farm policy. Therefore, Passenger's only UIM coverage
15 	arises under his Farmers' policy in the amount of $90,000-the total coverage
16 available for purposes of evaluating whether Passenger has a UIM claim.
17 {9} 	Both Safeco and Samora instruct us that our next-and, in this case, final-
18 	step is to apply the statutory offset found in NMSA 1978, Section 66-5-301(B)
19 (1983) by subtracting the liability benefit from the total UIM coverage to determine
20 whether Driver is an underinsured motorist. Safeco Ins. Co., 2013-NMSC-006, 114,
5

1 8-9 (stating that if the total of the UIM coverage exceeds the tortfeasor~ s liability
2 limits, the tortfeasor is an underinsured motorist); Samora, 1995-NMSC-022, 1 13
3 (holding that the Class I insurer is entitled to offset of its UIM coverage, pursuant to
4 Section 66-5-301(B) by subtracting the amount of the liability payment and, after
5 applying that formula, finding that the negligent driver was not underinsured). Our
6 Supreme Court discussed the purpose of the statutory offset in Samora, saying:
7
8
9
10
11
12
13
14
15
16
17
18
Section 66-5-301(8) defines an 'underinsured motorist' . . . 	[and the
Court] 	interpreted 	the 	statutory 	definition 	of 	'underinsured' 	as
inherently 	including 	an 	offset 	equal 	to 	the 	tortfeasor' s 	liability
coverage. Specifically, [the Court] noted that because Section 66-5-
301(B) limits the insured's recovery to the 	amount 	of uninsured
motorist coverage purchased for his or her benefit-assuming the
insured's damages exceed the amount of that coverage-a person will
be underinsured only when the aggregate of the insured's uninsured
motorist coverage reduced by the tortfeasor's liability coverage is
greater than zero. Thus offset is required to ensure that the insured does
not receive payment from his or her insurer greater than the coverage
purchased.
19 	1995-NMSC-022, 110 (internal quotation marks and citation omitted). In Samora,
20 just as in this case, the only UIM coverage available to the injured passenger came
21 	from the passenger's own Class I UIM coverage, and our Supreme Court held that
22 the Class I insurer was entitled to the statutory offset. Id. 1 13. Safeco states that
23 	when multiple UIM policies are available, the statutory offset is subtracted from the
24 total stacked UIM coverage amount to determine the limit of the UIM recovery.
25 	Safeco Ins. Co., 2013-NMSC-006, 14. Applying the statutory offset in accordance
26 with Samora and Safeco, Passenger's UIM coverage-$90,000 from three stacked
6

1 Farmers policies-does not exceed the $250,000 in liability coverage available from
2 the State Farm policy. Therefore, Driver is not underinsured pursuant to Section 66-
3 5-301(B), and Passenger is not entitled to any UIM benefit. The district court
4 correctly entered summary judgment in favor of Farmers.
5 CONCLUSION
6 	{10} 	For the foregoing reasons, we affirm the district court.
7 {11} 	IT IS SO ORDERED.
8
9 WE CONCUR:
12 ~~~----1,G,~==t=~..;:::::..~~
13 	ZACHAR
7