October 10, 2019- Old Republic Insurance Company v. Eclipse Aviation Corporation, No. A-1-CA-36614

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO	1
OLD REPUBLIC INSURANCE COMPANY,	2
Plaintiff-Appellee/Cross-Appellant,	3
v. 	No. A-1-CA-36614	4
ECLIPSE AVIATION CORPORATION,	5
Defendant-Appellant/Cross-Appellee.	6
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY	7
Denise Barela Shepherd, District Judge	8
Rodey, Dickason, Sloan, Akin & Robb, P.A.	9
Jeffrey M. Croasdell	10
Tyler M. Cuff	11
Albuquerque, NM	12
for Appellee	13
Durham, Pittard & Spalding, LLP	14
Rosalind B. Bienvenu	15
Justin R. Kaufman	16
F. Leighton Durham, III	17
Morgan A. McPheeters	18
Santa Fe, NM	19
Frost Brown Todd, LLC	20
Bryan P. Rose	21
Dallas, TX	22
for Appellant	23
Court of Appeals of New Mexico
Filed 10/10/2019 9:43 AM

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MEMORANDUM OPINION	1
BOGARDUS, Judge.	2
{1} 	In this case, we review the final judgment of the district court: (1) finding in	3
favor of Plaintiff Old Republic Insurance Company (Old Republic) on claims of	4
negligence and breach of contract against Defendant Eclipse Aviation Corporation	5
(Eclipse); and (2) awarding Old Republic prejudgment interest on the damages	6
derived from those claims. Eclipse, challenging Old Republic’s right as subrogee to	7
bring some of the claims against it, appeals the district court’s final judgment and	8
the court’s denial of Eclipse’s motion to alter, amend, or reconsider the judgment	9
(motion 	for reconsideration). Old 	Republic, too, appeals the final judgment,	10
challenging certain aspects of the prejudgment interest award. We consolidated the	11
appeals for review. Concluding that Old Republic had a right of subrogation to bring	12
the contested claims and that Old Republic did not preserve the prejudgment interest	13
issue, we affirm.	14
BACKGROUND	15
{2} 	Old Republic’s claims against Eclipse arose from an incident in which hail	16
damaged two aircraft it insured. The first, registered as N187EA and referred to	17
throughout this opinion as “the N187EA,” was insured by Old Republic under a	18
contract with Texas Aviation Sales & Leasing (Texas Aviation). The second aircraft	19
was also insured by Old Republic, but under a contract with Valley Hope	20

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Association (Valley Hope). Old Republic alleged in its complaint that both aircraft	1
were damaged while in Eclipse’s possession.	2
{3} 	After the hailstorm, Texas Aviation and Valley Hope filed claims with Old	3
Republic. Old Republic paid Valley Hope for repairs to its aircraft. For repairs to the	4
N187EA, Old Republic made a payment to the order of three entities: Texas	5
Aviation; Air Corp, Inc. (Air Corp); and Amegy Bank.	6
{4} 	According to the pretrial order, the identity of the aircraft, the company	7
insuring them, and the insured under each insurance contract constituted the only	8
undisputed facts before trial. Meanwhile, there were thirty-two contested facts and	9
fourteen contested legal issues. Notably, the parties did not identify as contested	10
issues for trial (1) ownership of the N187EA; or (2) Old Republic’s right to bring	11
the action as subrogee.	12
{5} 	During the bench trial, however, the N187EA-ownership and subrogation-	13
right issues surfaced because of statements made by a witness, Craig Ireland, for Old	14
Republic. Ireland stated that Air Corp—not Texas Aviation—was the registered	15
owner of the N187EA. Ireland explained that Air Corp and Texas Aviation were	16
subsidiaries of another entity, the Wikert Group (Wikert), and that Texas Aviation’s	17
“sole purpose” with regard to the N187EA was to procure insurance for it. Ireland	18
further testified that, at the time of the hailstorm, he was the executive vice president,	19

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chief financial officer, and treasurer of Wikert and also the chief financial officer	1
and treasurer of Texas Aviation.	2
{6} 	Ireland’s statement about N187EA ownership was in conflict with Old	3
Republic’s original and amended complaints, which stated that the damaged aircraft	4
were “owned by” Valley Hope and Texas Aviation, respectively.1
5
{7} 	After hearing Ireland’s testimony that Air Corp owned the N187EA, Eclipse’s	6
view of part of the case changed: Eclipse asserted that Old Republic lacked standing	7
to bring the N187EA-related claims. Eclipse moved for judgment as a matter of law,	8
arguing that such standing was lacking because an insurer in a subrogation action,	9
in this case, Old Republic, “need[s] an assignment from the owner of the aircraft” to	10
pursue claims and, based on Ireland’s testimony, Texas Aviation was not the owner	11
of the N187EA, but rather Air Corp was. Eclipse went on to argue that the proof of	12
loss statement entered into evidence by Old Republic showed what Eclipse	13
characterized as a purported assignment of the claims by Ireland as treasurer of	14
Texas Aviation, and that there was no assignment of the claims by Air Corp. Eclipse	15
1 Other 	evidence 	introduced 	additional 	uncertainty 	about 	the 	N187EA
ownership. The sworn proof of loss statement entered into evidence without
objection, which Old Republic asserts it submitted to Eclipse during discovery,
states that “sole and unconditional” ownership is in Texas Aviation, as the insured,
but also lists as exceptions to such ownership—exceptions defined as “any interest,
mortgage or otherwise”—Air Corp and Amegy Bank. Amegy Bank, according to
Ireland, held the note on the N187EA.

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concluded that without an assignment of the claims by the N187EA’s owner, Air	1
Corp, to Old Republic, Old Republic could not assert them.	2
{8} 	The district court denied Eclipse’s motion and ultimately found Eclipse liable	3
for the damage to both aircraft. After trial, Eclipse moved to reconsider, maintaining	4
that Old Republic lacked standing. The court also denied that motion. At no time did	5
the court enter a finding of fact regarding N187EA ownership or one regarding the	6
relationships among Wikert, Texas Aviation, and Air Corp, nor did it enter a	7
conclusion of law regarding Old Republic’s right to bring the action.	8
{9} 	Eclipse now appeals both the final judgment and the denial of its motion for	9
reconsideration. Eclipse contends that Old Republic had no right to bring the	10
N187EA-related claims against it. Old Republic also appeals the final judgment,	11
challenging the accrual rate and start date of the prejudgment interest awarded. We	12
consider each issue in turn.	13
DISCUSSION	14
I. 	Old Republic Had a Subrogation Right to Bring the N187EA-Related	15
Claims	16
{10} 	Implicit in the district court’s finding of Eclipse’s liability with respect to the	17
N187EA and in the court’s denial of Eclipse’s post-judgment motion is the	18
recognition of Old Republic’s right to bring the action under the doctrine of	19
subrogation, an equitable remedy. See Sunnyland Farms, Inc. v. Cent. N.M. Elec.	20

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Coop., Inc., 2013-NMSC-017, ¶ 46, 301 P.3d 387 (characterizing subrogation as an	1
equitable remedy). This right constitutes the standing required for Old Republic to	2
bring its N187EA-related claims. Cf. Liberty Mut. Ins. Co. v. Salgado, 2005-NMCA-	3
144, ¶ 23, 138 N.M. 685, 125 P.3d 664 (recognizing that, absent a claim for	4
subrogation, an insurer lacks standing to maintain a third-party claim against a	5
tortfeasor).	6
{11} 	“Ordinarily, we review a [district] court’s exercise of its equitable powers for	7
abuse of discretion. However, the question of whether the district court is permitted	8
to exercise its equitable powers is a question of law, which is reviewed de novo.”	9
Sunnyland Farms, 2013-NMSC-017, ¶ 46 (alterations, emphasis, internal quotation	10
marks, and citations omitted). Here we consider the legal question of whether Old	11
Republic had a subrogation right with respect to the N187EA-related claims;	12
accordingly, our review is de novo. If we determine that Old Republic had the right,	13
then Old Republic had the standing that Eclipse contends it lacked.	14
{12} 	In essence, Eclipse argues that the defect in Old Republic’s right to bring the	15
N187EA-related 	claims 	stems 	from 	Texas 	Aviation’s 	non-ownership 	of 	the	16
N187EA. This is apparent both in Eclipse’s failure to raise the subrogation issue in	17
the pretrial order (before Eclipse recognized the possibility of such non-ownership)	18
and also in its briefing on appeal. Even if we assume, as Eclipse does and as Old	19

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Republic appears not to dispute, that Air Corp owned the N187EA,2 we disagree	1
with Eclipse that such ownership—and the absence of an assignment of rights by	2
Air Corp to Old Republic—defeats Old Republic’s N187EA-related claims. We	3
reach this conclusion based on the subrogation doctrine’s broad principles and	4
purpose.	5
{13} 	Subrogation is “the working out of an equitable adjustment” between an	6
insured, a tortfeasor, and an insurer “by securing the ultimate discharge of a debt by	7
the person who in equity and good conscience ought to pay it.” 16 Lee R. Russ &	8
Thomas F. Segalla, Couch on Insurance § 222:8, at 222-30 (3d ed. 2005); accord	9
Amica Mut. Ins. Co. v. Maloney, 1995-NMSC-059, ¶ 8, 120 N.M. 523, 903 P.2d 834	10
(“The doctrine of subrogation is founded upon . . . equitable principles, for the	11
purpose of accomplishing the substantial ends of justice.”).	12
Accordingly, subrogation’s 	purpose has been 	described 	from the	13
perspective of the insured, the tortfeasor, and the insurer, often in terms	14
of the effect on the other parties or in combination. . . . From the	15
perspective of the tortfeasor, . . . a wrongdoer who is legally responsible	16
for the harm should not receive the windfall of being absolved from	17
liability . . .; since the insured has already been paid for his or her harm,	18
the liability of the third person should now inure for the benefit of the	19
insurer. And from the perspective of the insurer, . . . subrogation has	20
the objective of reimbursing the insurer for the payment which it has	21
made. . . . [I]t is only equitable and just that the insurer should be	22
reimbursed for its payment to the insured, because otherwise either the	23
insured would be unjustly enriched by virtue of a recovery from both	24
2 See Footnote 1.

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the insurer and the third party, or in the absence of such double recovery	1
by the insured, the third party would go free notwithstanding the fact	2
that he or she has a legal obligation in connection with the damage.	3
16 Russ & Segalla, supra, § 222:8, at 222-30 to -33 (footnotes omitted); accord	4
Quality Chiropractic, PC v. Farmers Ins. Co. of Ariz., 2002-NMCA-080, ¶ 21, 132	5
N.M. 518, 51 P.3d 1172 (stating that subrogation was developed with the intent to	6
avoid unjust enrichment).	7
{14} 	The doctrine of subrogation is “liberally applied for the protection of its	8
natural beneficiaries who are insurers which have paid losses caused by a third	9
party.” 16 Russ & Segalla, supra, § 222:9, at 222-34. “Because of its broad equitable	10
foundation, it is said that subrogation is to be applied without regard to technicality.”	11
Id.	12
{15} 	Contrary to these principles, Eclipse’s assertions about subrogation reflect a	13
technical, rigid application of the doctrine with regard to Old Republic. For one	14
thing, Eclipse posits that Air Corp did not assign any right to Old Republic to bring	15
the N187EA-related claims. But this point is immaterial because our law does not	16
require formal assignment of the claim by the insured for an insurer to bring an action	17
as subrogee. Rather, New Mexico law recognizes “equitable subrogation,” which	18
arises by operation of law upon payment by the insurer to the insured. See, e.g.,	19
Amica Mut. Ins. Co., 1995-NMSC-059, ¶ 8; Health Plus of N.M., Inc. v. Harrell,	20
1998-NMCA-064, ¶ 12, 125 N.M. 189, 958 P.2d 1239; see also Bennett Truck	21

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Transp., LLC v. Williams Bros. Const., 256 S.W.3d 730, 733 (Tex. App. 2008)	1
(dismissing under principles of equitable subrogation the defendant’s argument that,	2
because 	the 	plaintiff 	neither 	owned 	the 	damaged 	property 	nor 	received 	an	3
assignment of rights from the property owner, the plaintiff lacked standing to bring	4
suit); 16 Russ & Segalla, supra, § 222:55, at 222-95 to -96 (observing that no formal	5
assignment to an insurer is required under equitable subrogation); see generally	6
George E. Harris, A Treatise on the Law of Subrogation: Legal, Equitable and	7
Conventional § 607 at 409-10 (1889) (summarizing the concepts of equitable	8
subrogation). Under the doctrine of equitable subrogation, “when an insurer pays the	9
claim of its insured under the insured’s policy, it is deemed to be subrogated . . . to	10
recovery of its payments against the person who caused the loss.” Amica Mut. Ins.	11
Co., 1995-NMSC-059, ¶ 8 (internal quotation marks and citation omitted).	12
{16} 	This doctrine controls here because it is undisputed that all the necessary	13
elements are present: (1) Old Republic made a payment under Texas Aviation’s	14
policy covering the N187EA; (2) the terms of the policy required the payment; and	15
(3) the reason for the payment was the infliction of damage for which the district	16
court found Eclipse legally responsible. Having paid the claim for damage to the	17
N187EA, Old Republic is deemed subrogated and may recover its payment against	18
Eclipse.	19

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{17} 	Eclipse draws a different conclusion based on non-ownership by Texas	1
Aviation of the N187EA and on related assertions that (1) the payment by Old	2
Republic to Texas Aviation was invalid under the insurable interest doctrine; 3 and	3
(2) the corporate identities of Wikert, Texas Aviation, and Air Corp had not been	4
established as so unified as to recognize that any of the entities imputed its interest	5
in the N187EA-related claims to another. Eclipse applies the insurable interest	6
doctrine to argue that, as the named insured on the policy covering the N187EA,	7
Texas Aviation had no insurable interest in the aircraft and hence suffered no injury	8
when it was damaged. Therefore, Eclipse continues, Old Republic—as the insurer	9
standing in the shoes of and having only the rights of Texas Aviation—failed to	10
demonstrate the injury required to bring the N187EA-related claims. Eclipse’s	11
corporate identity argument is that Old Republic failed to show under principles of	12
the alter ego doctrine4 that Air Corp’s injury passed to Texas Aviation by virtue of	13
3 As relevant here, the doctrine provides that one may collect under an
insurance policy only if the person has an “insurable interest,” Teague-Strebeck
Motors, Inc. v. Chrysler Ins. Co., 1999-NMCA-109, ¶ 19, 127 N.M. 603, 985 P.2d
1183, overruled on other grounds by Sloan v. State Farm Mut. Auto. Ins. Co., 2004-
NMSC-004, ¶ 6, 135 N.M. 106, 85 P.3d 230, which is defined as “any actual, lawful
and substantial economic interest in the safety and preservation of the subject of the
insurance free from loss, destruction, pecuniary damage or impairment.” NMSA
1978, § 59A-18-6(B) (1984).
4 “Alter ego” is defined as “[a] corporation used by an individual or a
subservient corporation in conducting personal business, the result being that a court
may impose liability on the individual or subservient corporation by piercing the
corporate veil when someone dealing with the corporation is the victim of fraud,
illegality, or injustice. Alter Ego, Black’s Law Dictionary (11th ed. 2019).

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the relationships among Wikert and its subsidiaries, Texas Aviation and Air Corp.	1
We reject these arguments for two reasons.	2
{18} 	First, the potential for harm to arise by deeming Old Republic the proper party	3
with respect to the N187EA-related claims, given the possible lack of identity	4
between the insured and the N187EA owner, is slight. Eclipse identifies the potential	5
harm as the risk of duplicative lawsuits: “If an insurer can sue a third party tortfeasor	6
without obtaining a valid subrogation of claims from the party that suffered the	7
actual injury, the tortfeasor is open to multiple duplicative lawsuits[.]” As a general	8
proposition, that might be so—but it is not plausible here. To test the theory, we	9
assume that Air Corp is the true owner of the claims. A second, duplicative lawsuit	10
would materialize were Air Corp to later file a complaint against Eclipse for damage	11
arising from the hailstorm incident. But this outcome is unlikely, as Air Corp has no	12
damages. Although the parties at times dispute who performed the work, Eclipse	13
acknowledges in its answer to Old Republic’s amended complaint that the hail-	14
damaged N187EA was indeed repaired. And Air Corp did not incur the cost of that	15
repair; rather, Old Republic did.	16
{19} 	The fact that any loss to Air Corp was cured is essential as we consider the	17
broader picture of this case and explain the second reason for rejecting Eclipse’s	18
conclusion. What remains after the hailstorm incident is this: Air Corp and Texas	19
Aviation have no outstanding injury or loss; in contrast, Old Republic is left with an	20

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unreimbursed expenditure incurred for the purpose of making the N187EA’s owner	1
whole; and Eclipse, meanwhile, has been found liable for the hail damage to the	2
N187EA. To adopt Eclipse’s view would leave Old Republic unreimbursed for its	3
payment and allow Eclipse to go free in the face of its fault. Such a consequence	4
clashes with the subrogation doctrine’s purpose of distributing parties’ gains and	5
losses to promote equity. See Amica Mut. Ins. Co., 1995-NMSC-059, ¶ 8. Given the	6
underlying purposes of subrogation, including that it is intended for the benefit of	7
insurers that have compensated their insureds for the harm caused by third parties,	8
16 Russ & Segalla, supra, § 222:9, at 222-34, the equitable adjustment of obligations	9
effected by recognizing Old Republic’s subrogation right with respect to the	10
N187EA claims is appropriate. Because we conclude that the district court correctly	11
recognized Old Republic’s subrogation right, we affirm the court’s final judgment	12
insofar as Eclipse challenges it.	13
{20} 	For the same reasons, we affirm the district court’s denial of Eclipse’s motion	14
for reconsideration. We review the denial of such a motion for an abuse of discretion.	15
See Deaton v. Gutierrez, 2004-NMCA-043, ¶ 9, 135 N.M. 423, 89 P.3d 672. “[E]ven	16
when we review for an abuse of discretion, our review of the application of the law	17
to the facts is conducted de novo. Accordingly, we may characterize as an abuse of	18
discretion a discretionary decision that is premised on a misapprehension of the	19
law.” N.M. Right to Choose/NARAL v. Johnson, 1999-NMSC-028, ¶ 7, 127 N.M.	20

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654, 986 P.2d 450 (alteration, internal quotation marks, and citations omitted).	1
Eclipse’s motion for reconsideration raised only one issue: that of Old Republic’s	2
standing to bring the N187EA-related claims. As discussed, the establishment of a	3
subrogation right constitutes standing, and the question of that establishment is one	4
of law that we review de novo. See Sunnyland Farms, 2013-NMSC-017, ¶ 46. In its	5
motion, Eclipse simply elaborated on the reasons for its position. Having already	6
concluded that the district court did not err in implicitly recognizing Old Republic’s	7
right of subrogation to bring the N187EA-related claims, we also conclude that the	8
court did not abuse its discretion in denying Eclipse’s motion for reconsideration.	9
II. 	Old Republic Did Not Preserve the Prejudgment Interest Issue	10
{21} 	Old Republic appeals the final judgment’s award of prejudgment interest	11
accruing at a rate of 10 percent per year beginning on the date Old Republic filed its	12
original complaint. Essentially, Old Republic argues that the district court erred in	13
applying NMSA 1978, Section 56-8-4 (2004) in its prejudgment interest ruling	14
rather than NMSA 1978, Section 56-8-3 (1983). According to Old Republic, Section	15
56-8-3 entitles it to prejudgment interest accruing at a rate of 15 percent per year	16
beginning on the dates it paid Valley Hope’s and Texas Aviation’s claims.	17
{22} 	Eclipse argues that Old Republic did not preserve this issue for review. We	18
agree.	19

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{22} 	Rule 12-321(A) NMRA provides, “[t]o preserve an issue for review it must	1
appear that a ruling or decision by the district court was fairly invoked. If a party has	2
no opportunity to object to a ruling or order at the time it is made, the absence of an	3
objection does not thereafter prejudice the party.” “[O]n appeal, [a] party must	4
specifically point out where, in the record, the party invoked the court’s ruling on	5
the issue. Absent that citation to the record or any obvious preservation, we will not	6
consider the issue.” Crutchfield v. N.M. Dep’t of Taxation & Revenue, 2005-NMCA-	7
022, ¶ 14, 137 N.M. 26, 106 P.3d 1273.	8
{23} 	In violation of Rule 12-318(A)(4) NMRA, Old Republic does not include in	9
its brief in chief “a statement explaining how the issue was preserved in the court	10
below” with a citation to the transcript of proceedings. Rule 12-318(A)(4). In its	11
reply, Old Republic states that the issue was “squarely preserved,” but cites only one	12
portion of the transcript to support its contention.	13
{24} 	We reviewed the portion of the transcript that Old Republic cites in support	14
of its claim that it preserved this issue, as well as surrounding pages, to ascertain	15
whether Old Republic fairly invoked a decision by the district court to apply Section	16
56-8-3 instead of Section 56-8-4. In so doing, we considered whether Old Republic	17
lacked the opportunity to object to the court’s application of Section 56-8-4.	18
{25} 	Toward the end of trial, before the district court ruled on the merits of the case,	19
Old Republic informed the court that two statutes allow an award of prejudgment	20

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interest: Section 56-8-3 and Section 56-8-4. When the court asked for clarification,	1
Old Republic attempted to explain the difference between the two. After Eclipse	2
finished its closing arguments, the court announced that it found in favor of Old	3
Republic on its breach of contract claims. The court then awarded Old Republic	4
prejudgment interest “at 10 percent” accruing “from the date of the filing of the	5
complaint.” Old Republic confirmed that Section 56-8-4 was the statute authorizing	6
an award of interest accruing from that point in time. The parties then debated the	7
issue of when the interest should begin to accrue, and the court ruled that it would	8
be from the date of the original complaint’s filing. Following some brief requests by	9
the parties for clarification on the prejudgment interest ruling, the court recessed,	10
and the trial ended.	11
{26} 	Markedly, in the time after it knew fully of the court’s ruling and before trial	12
ended, Old Republic did not object to the district court’s prejudgment interest rulings	13
or highlight any impropriety in the court’s treatment of Section 56-8-4 as controlling.	14
Only now on appeal does it contend that prejudgment interest for a breach of contract	15
claim should have been awarded under Section 56-8-3. Old Republic had a fair	16
opportunity to alert the district court to what Old Republic now claims was the	17
court’s application of the wrong statute, but it did not do so. We conclude that Old	18
Republic did not “fairly invoke[] a ruling of the trial court on the same grounds	19
argued in the appellate court.” Woolwine v. Furr’s, Inc., 1987-NMCA-133, ¶ 20, 106	20

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N.M. 492, 745 P.2d 717. Because of that failure, we will not review this issue. See	1
Crutchfield, 2005-NMCA-022, ¶ 14.	2
{27} 	Therefore, we affirm the district court’s final judgment with regard to the	3
award of prejudgment interest.	4
CONCLUSION	5
{28} 	We affirm.	6
{29} 	IT IS SO ORDERED.	7
_____________________________	8
KRISTINA BOGARDUS, Judge	9
WE CONCUR:	10
______________________________	11
J. MILES HANISEE, Chief Judge	12
______________________________	13
ZACHARY A. IVES, Judge	14