A-1-CA-36158 | Omnilex

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Court of Appeals of New Mexico
Filed 9/5/2019 9:09 AM

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: Court of Appeals of New Mexico
Filed 9/5/2019 9:09 AM
Filing Date: September 5, 2019 | [=
~
No. A-1-CA-36158 Mark Reynolds
MATTHEW HAYGOOD,
Plaintiff-A ppellant,
Vv.
UNITED SERVICES AUTOMOBILE

ASSOCIATION and HEIDI HAWKEN,
Defendants-Appellees.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
C. Shannon Bacon, District Judge

The Law Offices of Rachel E. Higgins
Rachel E. Higgins

Mary L. Higgins

Albuquerque, NM

Wray and Girard, P.C.
Katherine A. Wray
Albuquerque, NM

for Appellant

Rodey, Dickason, Sloan, Akin & Robb, P.A.
Leslie McCarthy Apodaca

Albuquerque, NM

for Appellees

OPINION

ATTREP, Judge.

41}. Plaintiff Matthew Haygood appeals the district court’s grant of summary
judgment, dismissing his claims for breach of contract, breach of the implied
covenant of good faith and fair dealing, insurance bad faith, unfair insurance
practices, and unfair trade practices against insurer United Services Automobile
Association (USAA) and claims examiner Heidi Hawken (collectively, Defendants).
Haygood initiated the lawsuit after he was denied uninsured motorist coverage by
USAA for injuries he sustained during an assault occurring in and around an|.
uninsured motor vehicle parked outside a residence. Applying the coverage test
adopted by our Supreme Court in Britt v. Phoenix Indemnity Insurance Co., 1995-
NMSC-075, 120 N.M. 813, 907 P.2d 994, to the stipulated facts, the district court
determined Haygood’s injuries had not arisen from the use of the uninsured motor
vehicle. The district court therefore concluded Haygood was not entitled to coverage
under the policy and dismissed all of his claims, concluding each was predicated on
coverage. We conclude the district court did not err in determining Haygood was not
entitled to coverage, and we accordingly affirm the district court’s dismissal of the
coverage-based claims. The district court, however, erred in concluding Haygood’s

bad faith claim depended entirely on the presence of coverage. We accordingly

reverse the district court’s dismissal of Haygood’s bad faith claim premised on

Defendants’ investigation and evaluation of the claim and remand for further
proceedings.

BACKGROUND

{23 We draw the background from the facts stipulated by the parties in the
summary judgment briefing. Late one night, Haygood was walking on the sidewalk
near the house of the assailant, Kyle Cordova. As Haygood passed Cordova’s house,
he heard the door slam and saw Cordova running toward him, brandishing a gun.
Cordova accused Haygood of breaking into his car and told Haygood he kept drugs
in the car. Cordova then “pistol-whipped” Haygood in the face and pushed him into
the car. Haygood resisted, but at some point in the scuffle, he was shot in the back.
In recounting the course of events, Haygood recalled feeling blood on his face and
laying on the ground outside the car by the time he heard the gunshot. But for
purposes of summary judgment, the parties stipulated the shooting occurred while
Haygood was actually inside the vehicle. There was no evidence that the car was
turned on, running, or driven before, during, or after the assault.

3} At the time of the assault, Cordova’s car was uninsured, and Haygood sought
uninsured motorist coverage from USAA, his insurer, for the injuries he sustained.
The uninsured motorist portion of his policy provided that the insurer “will pay
damages which a covered person is legally entitled to recover from the owner or

operator of an uninsured motor vehicle” because of injury or damage sustained

and/or caused by an accident. The policy further specified that “[t]he owner’s or
operator’s liability for these damages must arise out of the ownership, maintenance
or use of the uninsured motor vehicle.”

{4 The initial claims examiner recommended coverage, concluding Haygood’s
injuries had likely arisen out of use of the car if the shooting occurred inside the
vehicle. After the first claims examiner retired, Hawken examined the claim. In-
house counsel suggested to Hawken the determination turned on where the shooting
had occurred and instructed Hawken to seek more information. Hawken and USAA
continued to investigate. Eventually, without uncovering additional evidence of
where exactly the shooting had occurred, USAA denied the claim, concluding
Haygood’s injuries had not arisen out of use of the car. Within the claim file,
however, in-house counsel wrote, “I don’t know that a jury would award damages
to a car thief who is shot while stealing a car. Ifhe was simply outside the car looking
in and was shot, then the shooting isn’t essential to the use of the vehicle. I
recommend informing the attorney that we will need more information about the
loss.”

{5} Haygood filed a lawsuit, alleging Defendants breached the insurance contract
by failing to provide coverage, breached the implied covenant of good faith and fair
dealing, engaged in insurance bad faith, violated NMSA 1978, Section 59A-16-20

(1997) of the New Mexico Unfair Insurance Claims Practices Act (UIPA), NMSA

1978, §§ 59A-16-1 to -30 (1984, as amended through 2019), and violated portions
of the New Mexico Unfair Practices Act (UPA), NMSA 1978, §§ 57-12-1 to -26
(1967, as amended through 2019). Defendants moved for summary judgment,
contending that, regardless of where the gunshot occurred, Haygood’s injuries had
not arisen out of use of the uninsured vehicle, The district court agreed, concluding
that Cordova’s use of the gun constituted an intervening act breaking any causal link
between use of the car and Haygood’s injuries and that the use of the car under the
circumstances was not the kind of “normal use” required for coverage under relevant
case law. The district court then concluded Haygood’s claims all depended on the
presence of coverage, and, as a result, dismissed each of his claims with prejudice.
Haygood brought this appeal.

DISCUSSION

{6} | Haygood contends the district court erred in imposing a normal use
requirement because New Mexico’s statutory provision relating to uninsured
motorist insurance, NMSA 1978, § 66-5-301(A) (1983), and the related policy
language, impose only a requirement of use for coverage and makes no mention of
normal use. Haygood adds that even if normal use is required, the district court erred
in concluding the car was not put to a normal use and Cordova’s battery was an act

of independent significance breaking any causal connection between use of the car

and Haygood’s injuries. Finally, Haygood argues the district court erred in
concluding his claim of bad faith depended entirely on coverage.

1. Standard of Review

{We review de novo the question of whether the application of law to
undisputed facts supports a summary judgment determination regarding uninsured
motorist coverage. Miera v. State Farm Mut. Auto. Ins. Co., 2004-NMCA-059, J 6,
135 N.M. 574, 92 P.3d 20. We view the facts in the light most favorable to a trial on
the issues, id., examining the whole record for any evidence generating a dispute as
to any material fact, Rummel v. Lexington Ins. Co., 1997-NMSC-041, 7 15, 123 N.M. |
752, 945 P.2d 970. We review any questions of law de novo. Martin v. W. Am. Ins.
Co., 1999-NMCA-158, J 11, 128 N.M. 446, 993 P.2d 763.

Il. The Britt Analysis |

{33 Britt established the framework to determine whether uninsured motorist.
coverage extends to the victim of an intentional tort, such as Haygood. 1995-NMSC-
075, 4 1. Examining policy language largely identical to Haygood’s and the|
uninsured motorist statute, Section 66-5-301, Britt explained that both require an
insurer to “indemnify the insured for damages that arise out of the use of an
uninsured motor vehicle,” so long as the insured is “legally entitled to recover from

the owner or operator of the uninsured vehicle.” 1995-NMSC-075, 4 9 (internal

quotation marks omitted). Britt considered whether and when an injury might “arise

out of the use of’ an uninsured motor vehicle, and we thus direct our attention to this
inquiry, as the parties have done. /d. (internal quotation marks omitted).

{9} Britt involved a situation where one vehicle rear-ended another in a minor
collision. Jd. { 2. After the collision, a passenger from the rear vehicle exited,
approached the forward vehicle, and stabbed a passenger in the forward vehicle
through an open window. /d. The attacker was never identified and the injured
passenger sought uninsured motorist coverage, contending the injuries had arisen |
from the use of the rear, uninsured vehicle. Jd. JJ 2-3.

410} In examining that contention, Britt observed that other courts had “developed
a method of analysis for determining whether intentional conduct and its resulting
harm arises out of the use of an uninsured vehicle.” /d. J 15. Britt adopted that
analysis, requiring consideration of the following: (1) whether a sufficient causal
connection exists between the use and the harm, which “requires that the vehicle be
an active accessory in causing the injury”; (2) “whether an act of independent
significance [has] broke[n] the,causal link”; and (3) “whether the use to which the
vehicle was put was a normal use of that vehicle.” Jd. (internal quotation marks and
citation omitted). Only after answering each question favorably for the insured,
might a court determine that the causal connection required by statutory and policy
language has been established and that coverage exists. See id. J] 15-17 (outlining

three-part inquiry, noting “court must consider” normal use, and remanding for

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examination of question of whether act of independent significance had occurred).
Our cases since Britt have not modified the Britt analysis. See, e.g., Crespin v. Safeco
Ins. Co. of Am., 2018-NMCA-068, 9f 1, 17, 33, 429 P.3d 968 (applying Britt and
affirming lack of coverage for sexual assault occurring in a house some time after
vehicle was used to transport the victim to the house); Miera, 2004-NMCA-059,
{| 11 (applying Britt and its progeny to wrongful death claim arising from incident
between occupants of two vehicles and remanding); Barncastle v. Am. Nat'l Prop.
& Cas. Co., 2000-NMCA-095, {ff 2, 6, 129 N.M. 672, 11 P.3d 1234 (applying Britt
as “controlling authority” to incident involving shooting of driver by passenger of
other, uninsured vehicle); Farmers Ins. Co. of Ariz. v. Sedillo, 2000-NMCA-094,
{{ 2, 4-6, 129 N.M. 674, 11 P.3d 1236 (applying Britt as “controlling authority” to
incident involving injuries caused by uninsured driver).

Hit. Britt Concluded “Normal Use” Is Required

{114} Haygood first argues it was error for the district court to consider the “normal
use” of the vehicle in its coverage determination. While Haygood acknowledges the
Britt analysis, he nevertheless devotes substantial attention to the argument that
neither our uninsured motorist statute nor the policy language at issue makes
mention of:normal use. But as noted, Britt adopted a three-part analysis to determine

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whether harm “ ‘arise[s] out of the use of an uninsured motor vehicle’ ” under the

uninsured motorist statute and related policy language. 1995-NMSC-075, ¥ 9

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(quoting § 66-5-301). Haygood ignores the fact that Britt directs the district court to
consider normal use in this determination. Jd. § 15. Moreover, Britt gave no hint that |
its three-part analysis only applies to particular cases and gave no suggestion the use
question was to be evaluated differently in certain circumstances. See id. fff 15-16.
We thus have applied the Britt analysis and asked the normal use question multiple
times since Britt. See, e.g., Miera, 2004-NMCA-059, ff 11, 15; Barncastle, 2000-
NMCA-095, § 11. We remain bound by our Supreme Court’s precedent and by its
interpretation of the uninsured motorist statute and uninsured motorist policy
language identical in relevant respects to that at issue here. See Alexander v.
Delgado, 1973-NMSC-030, { 10, 84 N.M. 717, 507 P.2d 778 (holding that the Court
of Appeals is bound by Supreme Court precedent); see also GTE Sw. Inc. v. Taxation
& Revenue Dep’t, 1992-NMCA-024, ¥ 14, 113 N.M. 610, 830 P.2d 162 (“[W]e are
bound by our [S]Jupreme [C]ourt’s interpretation of statutory language.”). We
therefore conclude the district court did not err in examining whether the use of the
vehicle here was a normal use.

IV. The District Court Did Not Err in Determining There Was No Coverage

{123 Haygood next contends that the district court erred in its application of the
Britt factors in finding no coverage. Because the Britt analysis requires that each of
its three questions be answered in the insured’s favor before coverage may be found,

we focus on the use question here as its resolution is largely dispositive. See Britt,

1995-NMSC-075, J 16 (concluding two questions may have been answered in the
insured’s favor but observing third was dispositive and remanding for
reconsideration). For the reasons that follow, we conclude the district court did not
err in determining Haygood failed to identify a normal use sufficiently causally
connected to his injuries and, as such, concluding coverage was not warranted.

413}. Here, Haygood identified two separate uses potentially connected to his
injuries and maintains both are normal uses. First, he contends his restraint against
and inside the vehicle was a normal use. Second, he argues storage of belongings in
a vehicle is a normal use, and Cordova’s apparent storage of contraband here may
have had some connection to the assault. Britt gave limited guidance regarding
normal use. Under Britt, use for transportation satisfies the requirement, whereas use
of a parked car as a platform for an object or weapon does not. Jd. { 15. The case
Britt cited for this proposition—Continental Western Insurance Co. v. Klug, 415
N.W.2d 876, 878 (Minn. 1987)}—offered an even narrower conception of the kind
of use required, suggesting coverage might only arise when a car is used for
“transportation purposes.” Britt, 1995-NMSC-075, { 15; see also Travelers Indem.
Co. v. Auto World of Orangeburg, Inc., 511 §.E.2d 692, 699 (S.C. Ct. App. 1999)
(“Significantly, neither vehicle was being used for transportation at the time of the
attack[.]”). Other courts require use of a car “as a vehicle.” Travelers Ins. Co. v.

LaClair, 463 $.E.2d 461, 464 (Va. 1995). And others recognize the use requirement

may encompass a broader range of uses when a vehicle has a specialized nature or
function and is to be used as something more than merely a means of transportation.
See Chavez v. Ariz. Sch. Risk Retention Tr., Inc., 258 P.3d 145, 147 (Ariz. Ct. App.
2011) (“[W]hen ‘a vehicle is intended to be used as more than a means of
transportation, it is a specialized vehicle and its use may depend on the nature of the
owner’s business and the specialized nature and function of the vehicle involved.”
(internal quotation marks and citation omitted)).

414}. Haygood devotes the bulk of his argument to his first contention that Cordova
used the car to confine him (and shield him from any observers) during the assault
and that this was a normal use of the vehicle. In determining whether this use meets
the normal use requirement, we note, as Britt did, that our “uninsured motorist statute
was intended to expand insurance coverage and to protect individual members of the
public against the hazard of culpable uninsured motorists.” Britt, 1995-NMSC-075,
{ 11 Gnternal quotation marks and citation omitted). Nothing in the stipulated facts
suggests Cordova was acting as a motorist. See Klug, 415 N.W.2d at 878-79
(concluding assailant used vehicle for “motoring purposes” because he “used his car
not only to maneuver himself into a position to harm [victim] but also to maneuver
[victim] into a position from which [victim] could be harmed”); Huynh v. Til.
Farmers Ins. Co., 421 N.W.2d 390, 392 (Minn. Ct. App. 1988) (concluding parked

car in which injury occurred “was not being used as a motor vehicle at the time of

the accident”). The stipulated facts do not indicate the confinement here depended
on or involved any transportation or other operation of the vehicle. See Britt, 1995- |
NMSC-075, { 15 (observing “transportation would be a normal use”); Barncastle,
2000-NMCA-095, 4 11 (noting that the car “was put to its normal use” because
“[t]he car was used to drive alongside the victim to assault him” (alteration, internal
quotation marks, and citation omitted)); see also Mason v. Celina Mut. Ins. Co., 423
P.2d 24, 25 (Colo. 1967) (en banc} (concluding sitting in car did not meet use
requirement); Chock v. Gov’t Emp. ’s Ins. Co., 81 P.3d 1178, 1183 (Haw. 2003) (“At
the time of the shooting, the cars were not being used for transportation purposes,
but rather were parked.”). Nor do the stipulated facts support some specialized
purpose or feature of the vehicle was involved. See Chavez, 258 P.3d at 147
(observing that the qualifying use of a vehicle “may depend on the nature of the
owner’s business and the specialized nature and function of the vehicle involved”
(internal quotation marks and citation omitted)). Nothing, in short, supports an
inference that the kind of injury-facilitating use at issue here, wholly in the absence
of some transportation-, motoring-, or operation-related purpose, presented the kind
of hazard for which our uninsured motorist statute was designed to offer protection.

See Britt, 1995-NMSC-075, § 15 (noting use of a parked car as a gun rest was not a

use contemplated by the uninsured motorist statute). We thus agree with the district

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court that the use of the car to briefly confine Haygood during the assault was not a
normal use that would trigger coverage under the insurance policy.

415} Haygood next contends that Cordova used the car to store drugs, that using a
car to store belongings is clearly a normal use, and that the storage was sufficiently
connected to his injuries to satisfy Britt’s use requirement. Given the stipulated facts,
we have the same concerns about this use as we did with the first—i.e., nothing
suggests this use involved or depended on transportation, operation, or a specialized
feature of the vehicle, and nothing suggests Cordova was acting as a motorist. We
recognize, nonetheless, that motorists frequently store belongings in vehicles, and
we recognize that storage, under certain circumstances, may present a qualifying use
sufficiently causally connected to an injury to satisfy Britt’s use requirement. See,
e.g., State Farm Ins. Co. v. Bell, 39 F. Supp. 3d 1352, 1354, 1358 (D.N.M. 2014)
(concluding a dog bite injury from a dog sitting in a parked car arose while car “was
being put to its normal use” because the owner was using the car to transport the
dog); Quarles v. State Farm Mut. Auto. Ins. Co., 533 So. 2d 809, 812 (Fla. Dist. Ct.
App. 1988) (“The presence of the permanently attached gun rack in [the owner’s]
pickup truck established a significant causal connection between the use of the
pickup truck and the accidental discharge of the shotgun.”); cf, e.g., Kern v. Auto
Owners Ins. Co., 526 N.W.2d 409, 412 (Minn. Ct. App. 1995) (concluding that the

use of a truck to transport construction materials was normal use, not merely for

storage, even where materials blew from the truck while parked, causing injury to a
passerby).

416} Here, however, regardless of whether the storage of drugs presents a
qualifying use, the stipulated facts do not permit a determination that the storage was
sufficiently connected to Haygood’s injuries. Britt guides our conclusion. The Court
in Britt observed the vehicle’s use for transportation may have been sufficiently
causally connected to the injury only if the driver of the rear car were found to have
collided with the forward car to facilitate the later attack. 1995-NMSC-075, ¢ 16. On
the. other hand, had the intent to attack developed independently of the collision, the
attack would have severed any connection between the injury and the earlier
qualifying use of the vehicle. Jd. Applying these principles here, nothing in the
record suggests the use of the car as storage facilitated Cordova’s assault and nothing
suggests Cordova even contemplated the assault in engaging in this use. See id
(noting intentional tort will generally sever connection between use and injury unless
prior use facilitated tort). Instead, the stipulated facts compel our conclusion that the
district court correctly determined Cordova’s assault, coming as it did after and
independent of the car’s use for storage, severed any causal connection between the
storage and Haygood’s injuries. See id.

4177 We conclude neither use identified here constituted a “normal use”

sufficiently causally connected to Haygood’s injuries. The district court thus did not

err in determining as a matter of law that Haygood’s injuries did not arise from the
use of the uninsured vehicle and that Haygood’s uninsured motorist policy did not
cover his injuries. As a result, we affirm the district court’s grant of summary
judgment on Plaintiff's uninsured motorist claims for breach of contract and breach
of the implied covenant of good faith and fair dealing.' Likewise, because Haygood
concedes his claims under UIPA and UPA were predicated on coverage, we also
affirm the grant of summary judgment on these claims.

Vv. The District Court Erred in Part in Dismissing Haygood’s Bad Faith
Claim ,

8} Haygood finally contends that regardless of whether he was entitled to
coverage, he might still have prevailed on his bad faith claim relating to Defendants’
investigation and evaluation of his claim. The district court disagreed and granted
summary judgment on the bad faith claim, explaining that New Mexico law
appeared to foreclose such claims in the absence of coverage. Based on our review

of the law, we agree with Haygood on this point.

1The parties agreed in their summary judgment briefing that Haygood’s claim
for breach of the implied covenant of good faith and fair dealing depended on the
existence of coverage. Defendants reiterated that position at the motions hearing,
and Haygood did not object. The district court adopted that reasoning and having
found no coverage, dismissed Haygood’s claim for breach of the implied covenant
of good faith and fair dealing. The parties on appeal have not addressed whether this
claim may have been viable regardless of coverage, and thus we give no
consideration to that possibility here. See, e.g., State v. Garnenez, 2015-NMCA-022,
q 15, 344 P.3d 1054 (“We will not address arguments on appeal that were not raised
in the brief in chief and have not been properly developed for review.”).

4193 Asa general rule, an insurer may deny coverage without exposure to a claim
of bad faith failure to pay as long as it has reasonable grounds for the denial. Am.
Nat'l Prop. & Cas. Co. v. Cleveland, 2013-NMCA-013, J 13, 293 P.3d 954.
Reasonable grounds will generally follow from reasonable investigation, and we
have explained that an insurer is justified in taking reasonable time and measures to
investigate before determining whether coverage is to be extended. Jd. The
investigation need not be perfect, but it must be “reasonably appropriate under the
circumstances.” /d. (internal quotation marks and citation omitted). Where an insurer
fails to make an adequate investigation, its coverage position is unfounded, and it
thus may be liable for bad faith denial of a claim. /d.; see also UJI 13-1702 NMRA
(providing that denial for frivolous or unfounded reasons is bad faith).

{20} Atthe same time, our Court in O’Neel v. USAA Insurance Co., 2002-NMCA-
028, 131 N.M. 630, 41 P.3d 356, explained that a record may “contain[] evidence to
support a finding of bad faith ... based on conduct separate from [the insurer’s]
refusal to pay[.]” Jd. J 9. Evidence of an excessive or unnecessarily invasive claim
investigation, for example, might give rise to a claim of bad faith investigation
regardless of the ultimate coverage determination. See id. And while O’Neel
involved a situation in which the jury awarded the insured’s claim in part, contrary
to Defendants’ contentions, there is nothing in O’Neel that appears to limit its bad

faith analysis to cases where coverage is established. See id. J] 3, 5-11. Indeed, the

jury instructions given in O’Neel made that clear. The instructions allowed the
insured to establish bad faith by proving any of the following: the insurer’s “reasons
for refusing to pay were unfounded or frivolous,” the insurer “did not act reasonably
... to conduct a fair investigation,” or the insurer “did not act reasonably . . . to
conduct a fair evaluation of [the] claim.” Jd. J 11. We concluded there was ample
evidence that allowed the jury to find bad faith, regardless of whether the insured
was ultimately justified in refusing to pay the full amount. Jd. Thus, in O’Neel, we
established that bad faith claims may be based on conduct other than a refusal to pay.
See id.; see also Progressive Cas. Ins. Co. v. Vigil, 2018-NMSC-014, § 24, 413 P.3d
850 (citing O’Nee/ with approval).

21}. Here, Haygood has advanced two distinct theories of bad faith. His first theory
is simply that USAA exhibited bad faith in failing to pay a covered claim. This
theory is unavailing because, as Defendants point out, we have regularly recognized
that claims of bad faith failure to pay cannot “arise unless there is a contractual duty
to pay under the policy[,]” and we have concluded Haygood has not established
coverage in this case. Charter Servs., Inc. v. Principal Mut. Life Ins. Co., 1994-
NMCA-007, 9 17, 117 N.M. 82, 868 P.2d 1307. Thus, to the extent Haygood’s bad.

faith claim depended on the existence of coverage, the district court did not err in

dismissing it.

223 Haygood’s second theory of bad faith, however, does not appear to be
predicated on coverage. Instead, he contends Defendants “intentionally delayed the
coverage decision, intentionally failed to fairly evaluate the claim, and dishonestly
handled the claim to [their] advantage.”? Haygood presented a variant of this
argument to the district court and, as factual support therefor, advanced evidence
that USAA’s in-house counsel attempted to develop a conflicting account of the
events and extended the investigation as a result, had suggested Hawken pursue
various unsupported leads, and had eventually concluded USAA should deny
coverage because Haygood made for an unsympathetic plaintiff. Defendants
accepted these factual allegations as undisputed for purposes of summary judgment,
steadfastly maintaining, as they do now on appeal, that Haygood could have no claim
for bad faith in the absence of coverage. As we explained in O’Neel, however, a bad |
faith claim need not depend on the existence of coverage. 2002-NMCA-028, 11

(concluding conduct other than refusal to pay may support bad faith claim); see also

To support his contention that the district court erred in dismissing the bad
faith claim, Haygood additionally relies on the doctrine of “mend the hold”—which
provides that a party cannot give a reason for conduct and then “after litigation has.
begun, put his conduct on another and different consideration”—pointing to the fact
that USAA changed its reasons for denying coverage over time. See Irwin vy.
Sovereign Camp of Woodmen of the World, 1910-NMSC-023, 4, 15 N.M. 365, 110
P. 550. Because we reverse in part the district court’s dismissal of Haygood’s bad
faith claim on other grounds, we need not address the applicability of this doctrine
here.

Vigil, 20.18-NMSC-014, J 24 (citing O’Neel with approval for proposition “that a
finding of bad faith may be based on conduct separate from refusal to pay”).

23} We note, as we did in O’Neel, that Haygood might establish bad faith in a
variety of ways—whether by proving Defendants failed to deal fairly in handling the
claim, failed to conduct a fair investigation, or failed to fairly evaluate coverage,
among other possibilities. See O’Neel, 2002-NMCA-028, {J 10-11 (noting the
record supported finding of bad faith where there was evidence that the investigation
was untethered to terms of the insurance policy and where the investigation was
extended “without justification or support”); see also Vigil, 2018-NMSC-014, 4 24
(noting absence of fair dealing may support bad faith); UJI 13-1702 (setting forth
theories of untimely and unfair investigation, unreasonable delay in notification,
timely evaluation, and timely payment, among others). The facts Defendants have
conceded here for purposes of summary judgment, coupled with reasonable
inferences drawn therefrom, might, given a fuller consideration of the record,
support a trial on the merits of Haygood’s bad faith claim premised on Defendants’
investigation and evaluation. See Zamora v. St. Vincent Hosp., 2014-NMSC-035,
q 9, 335 P.3d 1243 (“drawing all reasonable inferences in support of a trial on the
merits” in reviewing grant of summary judgment).

4; Accordingly, we conclude the district court misinterpreted New Mexico law

when it foreclosed entirely Haygood’s bad faith claim in the absence of coverage.

We, however, do not speculate as to what the district court may have done in the
absence of this error. See Rummel, 1997-NMSC-041, 4 16 (“[W]hen the [district]
court’s grant of summary Judgment is grounded upon an error of law, the case may
be remanded so that the issues may be determined under the correct principles of
law.”); Archuleta v. Lacuesta, 1999-NMCA-113, § 17, 128 N.M. 13, 988 P.2d 883
(remanding for reconsideration of summary judgment where the district court had
not given “full consideration” to potential independent ground presented by the
parties). Such an inquiry is necessarily fact-dependent, which this Court is not well-
situated to evaluate in the first instance, particularly in the absence of briefing from
Defendants on the matter. See Freeman vy. Fairchild, 2018-NMSC-023, § 35, 416
P.3d 264 (counseling against undertaking “fact-dependent inquiry” on appeal);
Elane Photography, LLC v. Willock, 2013-NMSC-040, { 70, 309 P.3d 53 (“We will
not... guess at what a party’s arguments might be.” (alteration, internal quotation
marks, and citation omitted)). We therefore remand to the district court for
determination of whether Haygood has made a showing sufficient to overcome
Defendants’ summary judgment motion on his bad faith claim premised on
Defendants’ investigation and evaluation.

CONCLUSION

25} We affirm the district court’s grant of summary judgment determining

Haygood was not entitled to coverage and dismissing Haygood’s claims for breach

—

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of contract, breach of the implied covenant of good faith and fair dealing, violations
of UIPA and UPA, and bad faith based on failure to pay a covered claim. We reverse
the district court’s grant of summary judgment dismissing Haygood’s claim of bad
faith premised on Defendants’ investigation and evaluation, and we remand for

further proceedings consistent with this opinion.

— L: ATTREP, Judge

26} ITISSO ORDERED.

WE CONCUR:

JULIE ’ de Ct. lag

JAMES Js WECHSLER, Judge Pro Tempore

September 5, 2019- Matthew Haygood v. United Services Automobile Association, No. A-1-CA-36158

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