April 30, 2014 – Sheryl Wilkeson v. State Farm Mutual Automobile Insurance Company, No. 32,779

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: __________
Filing Date: April 30, 2014
NO. 32,779
SHERYL WILKESON,
Plaintiff-Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Nan G. Nash, District Judge
Barnhill Law Office, L.L.C.
Lynn A. Barnhill
Albuquerque, NM
for Appellant
Guebert Bruckner P.C.
Don Bruckner
Christopher J. DeLara
Albuquerque, NM
for Appellee

OPINION
WECHSLER, Judge.
{1} 	We address in this appeal the viability of an anti-stacking provision in a
California automobile insurance policy when the accident giving rise to an uninsured
motorist claim occurred in New Mexico. The provision is valid and enforceable under
California law. In Shope v. State Farm Insurance Co., 1996-NMSC-052, 122 N.M.
398, 925 P.2d 515, our Supreme Court held that an anti-stacking provision valid in
another state was a question of contract interpretation governed by the law of the other
state and not a matter of fundamental interests so as to require application of New
Mexico public policy. This case is governed by Shope, and we affirm the ruling of the
district court dismissing the claim for additional coverage.
FACTS
{2} 	Plaintiff Sheryl Wilkeson and Defendant Paul Baca were involved in an
automobile accident in Albuquerque, New Mexico. Baca was uninsured, and Plaintiff
was a named insured on an automobile insurance policy issued by Defendant State
Farm Mutual Automobile Insurance Company (State Farm) that covered the car
Plaintiff was driving. Plaintiff also was a named insured on a separate State Farm
policy that covered another vehicle. Separate premiums were paid. At the time of the
accident, Plaintiff owned homes in both California and New Mexico, but resided in

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New Mexico. Both policies were issued to Plaintiff while she resided in California,
and the policy covering the car in the accident, the only policy of record, lists her
California address. Plaintiff did not know whether she informed State Farm that she
had moved to New Mexico before the accident. She did not change the location of her
policy from California to New Mexico until after the accident.
{3} 	Both policies provided uninsured motor vehicle coverage, subject to limits of
liability of $50,000 per person and $100,000 per accident. They provided that the
“limits of liability are not increased because . . . more than one vehicle [or person] is
insured under [the] policy[.]” They further stated:
If uninsured motor vehicle coverage for bodily injury is available to an
insured from more than one policy provided by us or any other insurer,
the total limit of liability available from all policies provided by all
insurers shall not exceed the limit of liability of the single policy
providing the highest limit of liability. This is the most that will be paid
regardless of the number of policies involved, persons covered, claims
made, vehicles insured, premiums paid or vehicles involved in the
accident.
PROCEDURAL BACKGROUND
{4} 	The claims against Baca were settled, and he was dismissed from the case. State
Farm thereafter filed a motion for summary judgment, stating that it had paid Plaintiff
the liability limit of $50,000 under the policy. It argued that the policy did not permit
the stacking of uninsured motorist benefits and that the district court should apply
Shope and dismiss the complaint. 	Plaintiff responded with a cross-motion for

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summary judgment. She contended that Shope did not apply because California law
conflicted with New Mexico law and public policy and that the district court should
apply New Mexico law. After conducting a hearing, the district court granted State
Farm’s motion, denied Plaintiff’s counter-motion, and dismissed the complaint.
Plaintiff appeals.
CHOICE OF LAW
{5} 	Generally, in determining the appropriate law to apply when an accident occurs
in one state and an insurance contract has been entered in another, the law of the place
of the accident applies to determine the plaintiff’s right to recover from the negligent
party, and the law of the place of the contract, the lex loci contractus, applies to
interpret the terms of the contract. State Farm Auto. Ins. Co. v. Ovitz, 1994-NMSC-
047, ¶ 8, 117 N.M. 547, 873 P.2d 979; Demir v. Farmers Texas Cnty. Mut. Ins. Co.,
2006-NMCA-091, ¶ 7, 140 N.M. 162, 140 P.3d 1111. Thus, in this case, New Mexico
law would apply concerning issues of negligence and damages, and California law
would govern as to issues pertaining to the insurance policies, including the scope of
the language limiting Plaintiff’s ability to stack uninsured motorist coverages. The
parties do not dispute that, under California law, Plaintiff would not be able to stack
the coverages in the policies.

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{6} 	The selection of the choice of law as between the right to recover and the law
of the contracting state, however, does not fully resolve the analysis when there is an
issue of conflicting public policies. In this regard, even though the forum state would
be otherwise required to apply the law of the other state, if that law were so conflicting
with the public policy of the forum state, it could properly apply its law rather than the
law of the other state. Demir, 2006-NMCA-091, ¶ 8. Plaintiff makes this argument
in this case. She asserts that notwithstanding the law of California as the place of the
contract, which would recognize the liability limitation of her policies, New Mexico’s
public policy favoring stacking requires this Court to apply that public policy as
opposed to the California law. She raises a question of law that we address under de
novo review. See Miera v. State Farm Mut. Auto. Ins. Co., 2004-NMCA-059, ¶ 6, 135
N.M. 574, 92 P.3d 20 (“The question of whether application of the law to undisputed
facts supports summary judgment in a case seeking to benefit from [uninsured
motorist] coverage is a question we review de novo.”).
CONFLICTING STATE POLICIES
{7} 	Stacking is the “recovery of damages under more than one policy, endorsement
or coverage by placing one . . . upon another and recovering from each in succession
until either all . . . damages are satisfied or until the total limits of all policies,
endorsements, coverages, etc. are exhausted[.]” 	Lopez v. Found. Reserve Ins. Co.,

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1982-NMSC-034, ¶ 7, 98 N.M. 166, 646 P.2d 1230 (internal question marks and
citation omitted), holding modified on other grounds by Montano v. Allstate Indem.
Co., 2004-NMSC-020, 135 N.M. 681, 92 P.3d 1255. As relevant to this case, it is the
aggregating of uninsured motorist coverages. Montano, 2004-NMSC-020, ¶ 2.
{8} 	In New Mexico, stacking is “a judicially-created doctrine” that has arisen in
cases in which our Supreme Court has needed to determine whether insurance policy
limitations of liability provisions restrict or permit stacking. 	Id. ¶ 17. 	In Sloan v.
Dairyland Ins. Co., 1974-NMSC-019, ¶¶ 3, 6, 86 N.M. 65, 519 P.2d 301, our Supreme
Court permitted the stacking of uninsured motorist benefits from two separate policies
owned by the same individual when the policy contained limitations if other insurance
was available to the insured. In Lopez, after determining that the limitation provision
of the policy was ambiguous concerning separate premiums for uninsured motorist
coverage on two vehicles, the Court applied Sloan to coverage of two vehicles within
the same insurance policy. 	Lopez, 1982-NMSC-034, ¶ 10. 	The Court’s rationale,
which also applies to the circumstances of multiple policies, was that uninsured
motorist coverage covers an insured rather than a vehicle, that stacking would fulfill
the reasonable expectations of the insured, and that, depending on the facts, separate
premiums would justify stacking. Id. ¶¶ 16-18.

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{9} 	Since these initial cases, our Supreme Court has consistently upheld the
availability of stacking, as against policy language excluding it, as a matter of public
policy when the insured has paid multiple premiums. See Montano, 2004-NMSC-020,
¶ 23. 	The Court has generally found an ambiguity in the limitation provision that
would give rise to judicial construction. 	See id. ¶ 1 (stating that the Court “never
upheld an anti-stacking clause in [uninsured motorist] policies because . . . [of] either
an ambiguity in the policy or the payment of multiple premiums”). But see Jimenez
v. Found. Reserve Ins. Co., 1988-NMSC-052, ¶ 9, 107 N.M. 322, 757 P.2d 792
(holding an anti-stacking provision to be clear and unambiguous). 	As a general
matter, the public policy expressed by our Supreme Court clearly favors stacking
when interpreting provisions in an insurance contract that limit it. 	Montano, 2004-
NMSC-020, ¶¶ 15, 17 (recognizing the public policy in favor of stacking); id. ¶¶ 23,
27 (stating that “when multiple premiums are charged for [uninsured motorist]
coverage on multiple cars, even in the face of a truly unambiguous limitation-of-
liability clause, stacking will be required[,]” but concluding that the plaintiff was
entitled to stack because of an ambiguity concerning the basis for the premium);
Rodriguez v. Windsor Ins. Co., 1994-NMSC-075, ¶ 1, 118 N.M. 127, 879 P.3d 759
(stating that New Mexico has “a strong judicial policy, rooted in this state’s uninsured

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motorists insurance statute, favoring stacking” (citation omitted)), modified on other
grounds by Montano, 2004-NMSC-020.
{10} 	California does not have the same public policy. Its insurance code specifically
permits that stacking may be precluded, providing:
[T]he policy or endorsement may provide that if the insured has
insurance available to the insured under more than one uninsured
motorist coverage provision, any damages shall not be deemed to exceed
the higher of the applicable limits of the respective coverages, and the
damages shall be prorated between the applicable coverages as the limits
of each coverage bear to the total of the limits.
Cal Ins. Code § 11580.2(d) (2006). The parties agree that the California insurance
code has been interpreted to prohibit stacking.
APPLICABILITY OF SHOPE
{11} 	Our Supreme Court in Shope addressed the choice of law analysis to be applied
when New Mexico law on stacking differs from the law in the state where the contract
was formed. 	In that case, our Supreme Court considered whether to apply New
Mexico’s public policy favoring stacking of coverage in underinsured motorist cases
rather than a Virginia law that permitted stacking of insurance coverage “unless clear
and unambiguous language in the policy” prevented it. Shope, 1996-NMSC-052, ¶¶
6, 7. The language of the policy clearly and unambiguously prevented stacking. Id.
¶ 6. Our Supreme Court explained the analysis necessary to determine the choice of
law to be applied as one that balances competing policies. Id. ¶ 9. On the one hand

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is “the policy of New Mexico . . . to interpret insurance contracts according to the law
of the place where the contract was executed.” 	Id. 	On the other, is “public policy
favoring a different interpretation.” Id. The Court held that, in order to overcome the
New Mexico policy of interpreting insurance contracts under the law of the place
where the contract was executed, “there must be a countervailing interest that is
fundamental and separate from general policies of contract interpretation.” Id. It held
that stacking of insurance coverage was “a question of contract interpretation, not one
of fundamental interests,” and applied Virginia law. Id. ¶¶ 9, 10.
{12} 	Plaintiff argues that this Court should not follow Shope for two reasons—(1)
it is distinguishable from this case, and (2) subsequent cases, State Farm Mutual
Automobile Insurance Co. v. Ballard, 2002-NMSC-030, 132 N.M. 696, 54 P.3d 537,
and Demir, indicate that the application of California’s law “will result in a violation
of fundamental principles of justice.” We discuss Plaintiff’s argument in turn.
Distinguishing Shope
{13} 	Plaintiff contends that this case is different from Shope with regard to the law
of the state of the contract. According to Plaintiff, in Shope, both New Mexico and
Virginia permitted stacking unless clear and unambiguous language in the policy
prevented it. Plaintiff reasons that “[p]ublic policy was not truly implicated because
Virginia’s laws did not conflict with those of New Mexico, unlike the laws of

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California” in the present case. We cannot agree that the difference between Virginia
and California law distinguishes Shope from this case. The important teachings of
Shope are that (1) we will apply the law of the place where the contract was executed
unless the law of another relevant state has a countervailing fundamental interest
separate from contract interpretation principles and (2) the question of stacking is one
of contract interpretation only.
Subsequent Cases
{14} 	Since Shope, both our Supreme Court and this Court have decided cases that
addressed whether another New Mexico public policy should trump its policy of
applying the law of another state where an automobile insurance contract was
executed. Plaintiff argues that these cases are more analogous to this case than Shope
and demonstrate that the countervailing New Mexico policy should also be followed
in this case.
{15} 	In Ballard, a Georgia resident executed an insurance policy in Georgia that
contained a family step-down provision that precluded liability for bodily injury to a
household family member unless intra-familial tort liability did not apply, in which
event, liability would be limited to the amount required by law. 2002-NMSC-030,
¶¶ 3-4. The insured’s daughter was injured in a single-car accident in New Mexico.
Id. ¶ 2. The insurer, acknowledging that intra-familial tort immunity was invalid in

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New Mexico, sought a declaration that recognized the policy limitation and limited
its liability to the amount required under the New Mexico Mandatory Financial
Responsibility Act, NMSA 1978, §§ 66-5-201 to -39 (1978, as amended through
2013) (NMMFRA). 	Ballard, 2002-NMSC-030, ¶¶ 6-7. 	Our Supreme Court, in
analyzing whether to apply the law of Georgia, the state of contract execution,
discussed its decision in Estep v. State Farm Mutual Automobile Insurance Co., 1985-
NMSC-069, 103 N.M. 105, 703 P.2d 882, in which it “reiterated the abandonment of
the common law rule of interspousal immunity” as an “archaic precept.” 	Ballard,
2002-NMSC-030, ¶ 11 (internal quotation marks and citation omitted). It emphasized
that an exclusion based on the archaic rule violated not only the NMMFRA but also
the New Mexico policy of protecting innocent accident victims. 	Id. 	The Court
applied the analysis of Shope and held, on balance, that the rule that required applying
the law of the state of contract execution should give way because family exclusion
provisions such as those in the Georgia policy, “whether limiting or completely
excluding benefits based on familial status, violate public policy and fundamental
principles of justice.” Ballard, 2002-NMSC-030, ¶¶ 15, 18.
{16} 	Demir involved a Texas insurance policy that, in conformance with Texas law,
required physical contact for recovery of uninsured motorist benefits. 2006-NMCA-
091, ¶¶ 2-3. This Court acknowledged that Texas law would apply unless, as set out

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in Shope, it “would result in a violation of fundamental principles of justice of New
Mexico.” 	Demir, 2006-NMCA-091, ¶ 8 (internal quotation marks and citation
omitted). This Court analyzed that issue applying Ballard and Sandoval v. Valdez,
1978-NMCA-016, ¶¶ 19, 23, 91 N.M. 705, 580 P.2d 131, in which we applied New
Mexico law to a Colorado insurance contract that limited the insured’s time to sue to
one year from the date of an accident. Demir, 2006-NMCA-091, ¶¶ 18, 20, 23. We
stated in Demir that, although the public policy at issue may not have risen to the level
of a fundamental principle of justice, it nevertheless implicated a substantial public
policy. 2006-NMCA-091, ¶ 23. We held that Texas law did not apply because the
exclusion of uninsured motorist coverage for accidents not involving physical contact
violated New Mexico public policy protecting accident victims, as expressed in the
NMMFRA. Id. ¶ 23.
{17} 	Plaintiff argues, using the language of Demir, that this case also implicates the
“ ‘substantial public policy’ of protecting innocent accident victims.” 	She cites
Montano, in which our Supreme Court, in adopting a new approach that requires an
insurer to “obtain written rejections of stacking in order to limit its liability based on
an anti-stacking provision[,]” reiterated the public policy in favor of stacking when
an insured has paid separate premiums. 	Montano, 2004-NMSC-020, ¶¶ 9, 19.
Significantly, however, Montano is not a choice of law case; it concerned issues of

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contract interpretation with respect to the availability of stacking. 	See id. ¶ 28
(concluding that the insurance contract at issue did not satisfy existing requirements
to exclude stacking and requiring insurers in the future to obtain written rejections of
stacking). 	Shope specifically addressed such cases, indicating that “[w]hile we
interpret New Mexico insurance contracts to avoid repugnancy in clauses that prohibit
stacking of coverages for which separate premiums have been paid, this rule is one of
contract interpretation that does not rise to the level of a fundamental principle of
justice.” 	1996-NMSC-052, ¶ 9. 	Further, Montano specifically addressed Shope,
distinguishing it in part by stating “that our policy in favor of stacking is not
‘fundamental’ for purposes of a choice-of-law analysis does not mean that it is
unimportant.” 	Montano, 2004-NMSC-020, ¶ 26. 	We agree with that analysis.
Although there is an important public policy favoring stacking that, as in the line of
cases stemming from Sloan and Lopez and as stated in Montano, may outweigh
conflicting concerns within the same or related insurance policies, it does not alter the
New Mexico policy to interpret insurance contracts according to the law of the place
where the contract is executed. Shope, 1996-NMSC-052, ¶ 9.
{18} 	Additionally, the cases upon which Plaintiff relies, Ballard and Demir, are not
stacking cases, and we consider the public policies involved in those cases to carry
greater weight when balanced against the policy to interpret insurance contracts

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according to the law of the contracting state. Ballard considered the interest involved
to concern fundamental principles of justice because of the archaic nature of intra-
familial tort immunity. 	2002-NMSC-030, ¶¶ 10-11. 	In Demir, the single-car
exclusion would have foreclosed any action for relief, and this Court expressed that
such an exclusion had greater significance than the policy favoring stacking. 2006-
NMCA-091, ¶ 22. Indeed, stacking is still a benefit that an insured can reject. 	See
Montano, 2004-NMSC-020, ¶ 19 (allowing written rejection of stacking in future
cases).
{19} 	Plaintiff also argues, citing Lopez, that she paid separate premiums for the
coverage of the two policies, and, therefore, fairness would indicate that she be
permitted to stack the coverages. See Lopez, 1982-NMSC-034, ¶ 18 (“[I]t is only fair
that the insured be permitted to stack the coverages for which he has paid.”). Lopez,
of course, is not a choice of law case. 	In Shope, our Supreme Court rejected the
argument that “the law of the place where the accident occurred should govern [the]
analysis of [the insureds’] expectations of stacking[.]” 1996-NMSC-052, ¶ 8.
CONCLUSION
{20} 	We affirm the district court’s grant of summary judgment dismissing Plaintiff’s
claim for additional coverage.

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{21} 	IT IS SO ORDERED.
________________________________
JAMES J. WECHSLER, Judge
WE CONCUR:
________________________________
MICHAEL D. BUSTAMANTE, Judge
________________________________
CYNTHIA A. FRY, Judge