May 07, 2010 – Lee Gulbransen v. Pregressive Halcyon Insurance Co. d/b/a Progressive Direct, a foreign corporation, and Ian Willis, No. 29,087

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: May 7, 2010
NO. 29,087
LEE GULBRANSEN,
Plaintiff-A ppellant,
V.
PROGRESSIVE HALCYON INSURANCE
COMPANY d/b/a PROGRESSIVE DIRECT,
a foreign corporation, and IAN WILLIS,
Defendants-A ppellees.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Linda M. Vanzi, District J udge

Law Office of LeeAmn Ortiz, LLC
LeeAnn Ortiz

Albuquerque, NM
for Appellant

Simone, Roberts & Weiss, P.A.
Meena H. Allen

Albuquerque, NM

for Appellees

OPINION
VIGIL, Judge.
{1} 	This is another case that requires us to determine whether the insured Plaintiff
validly rejected underinsured motorist (UIM) coverage, and whether such coverage
should therefore be read into Plaintiff’s policy. What makes this case different is that
the question is presented in the context of UIM property damage coverage. For the
reasons that follow, we reverse the district court summary judgment ruling that denies
Plaintiff’s claim for UIM property damage coverage up to policy liability limits of
$50,000.
BACKGROUND
{2} 	Defendant Progressive Halcyon Insurance Company (Progressive) issued an
automobile insurance policy to Plaintiff which, in significant part, provided property
damage liability coverage, for each accident, in the amount of $50,000 and uninsured
motorist (UM) property damage coverage of $25,000. 	The policy provides no
coverage for UIM property damage coverage.
{3} 	The present case was precipitated when Tortfeasor drove her vehicle into two
vehicles owned by persons other than Plaintiff, and then into Plaintiff’s house, causing
actual property damages of $34,939. This did not include other damages such as loss
of use, diminished value, emotional distress, or punitive damages. Tortfeasor’s own

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property damage liability coverage was for $25,000, and Plaintiff and the other two
victims each received a pro rata share of that coverage. Plaintiff’s share was $19,405,
and with Progressive’s consent, Plaintiff settled with Tortfeasor and her insurer for
this amount. Plaintiff’s home insurer then paid for the actual construction costs of
$34,939 to repair the damages to the home and received the entire $19,405 pro rata
share paid by Tortfeasor’s liability carrier. The home insurer did not pay any other
damages.
{4} 	Plaintiff thereafter sought UM and UIM property damage coverage from
Progressive. The district court ruled that Plaintiff is not entitled to any coverage from
Progressive on the basis that there is no UIM coverage for property damage under
either the automotive policy or NMSA 1978, Section 66-5-301 (1983). 	Summary
judgment was granted to Progressive, and Plaintiff appeals.
DISCUSSION
Standard of Review
{5} 	Summary judgment is properly granted when “there are no genuine issues of
material fact and the movant is entitled to judgment as a matter of law.” Self v. United
Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. On appeal, we
review de novo the district court decision to grant summary judgment, Rehders v.
Allstate Insurance Co., 2006-NMCA-058, ¶ 12, 139 N.M. 536, 135 P.3d 237, and

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construe all reasonable inferences in favor of the non-moving party. Montgomery v.
Lomos Altos, Inc., 2007-NMSC-002, ¶ 16, 141 N.M. 21, 150 P.3d 971. Similarly, we
review de novo questions of statutory construction. Cooper v. Chevron U.S.A., Inc.,
2002-NMSC-020, ¶ 16, 132 N.M. 382, 49 P.3d 61.
New Mexico Law Requires That Insurers Offer UIM Coverage for Property
Damage
{6} 	At the outset, we briefly address Plaintiff’s argument that he is entitled to both
UM and UIM coverage—UM coverage because Tortfeasor’s insurance policy
excluded punitive damages under the liability policy and UIM coverage because his
actual damages exceeded the $19,405 pro rata share paid by Tortfeasor’s insurer. We
disagree with Plaintiff’s demarcation between UM and UIM coverage. 	Because
Plaintiff recovered some money from Tortfeasor’s liability policy, but not all of his
claimed damages, his claim is appropriately viewed as a claim for UIM coverage. See
Manzanares v. Allstate Ins. Co., 2006-NMCA-104, ¶¶ 5-6, 140 N.M. 227, 141 P.3d
1281 (characterizing punitive damages as deriving from actual damages for purposes
of UIM coverage, and viewing the plaintiff’s attempt to parse out the punitive
damages portion of her claim from the remainder of her claim as “an overly
semantical distinction unsupported by the language of the statutes, regulations, or case
law”).
{7} 	It is statutorily mandated that insurance companies offer both UM and UIM

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coverage to their insureds. See Arias v. Phoenix Indem. Ins. Co., 2009-NMCA-100,
¶ 7, 147 N.M. 14, 216 P.3d 264, cert. denied, 2009-NMCERT-008, 147 N.M. 395,
223 P.3d 940. In relevant part, Section 66-5-301 provides:
A. 	No motor vehicle or automobile liability policy insuring
against loss resulting from liability imposed by law for bodily injury or
death suffered by any person and for injury to or destruction of property
of others arising out of the ownership, maintenance or use of a motor
vehicle shall be delivered or issued . . . unless coverage is provided
therein or supplemental thereto in minimum limits for bodily injury or
death and for injury to or destruction of property as set forth in Section
66-5-215 NMSA 1978 and such higher limits as may be desired by the
insured, but up to the limits of liability specified in bodily injury and
property damage liability provisions of the insured’s policy, for the
protection of persons insured thereunder who are legally entitled to
recover damages from owners or operators of uninsured motor vehicles
because of bodily injury, sickness or disease, including death, and for
injury to or destruction of property resulting therefrom, according to the
rules and regulations promulgated by, and under provisions filed with
and approved by, the superintendent of insurance.
B. 	The uninsured motorist coverage described in Subsection
A of this section shall include underinsured motorist coverage for
persons protected by an insured’s policy. 	For the purposes of this
subsection, “underinsured motorist” means an operator of a motor
vehicle with respect to the ownership, maintenance or use of which the
sum of the limits of liability under all bodily injury liability insurance
applicable at the time of the accident is less than the limits of liability
under the insured’s uninsured motorist coverage. No motor vehicle or
automobile liability policy sold in New Mexico shall be required to
include underinsured motorist coverage until January 1, 1980.

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{8} 	Progressive asserts that the requirement that insurers offer UIM coverage
extends only to coverage for bodily injury or death and does not extend to UIM
property damage coverage. 	In support of its position, Progressive refers to the
statutory definition of “underinsured motorist” as provided in the second sentence of
Subsection (B), which only mentions coverage for bodily injury and not property
damage. From this, Progressive concludes that an underinsured motor vehicle is one
in which there is inadequate coverage for bodily injury, but not for property damage.
{9} 	Progressive’s view, however, fails to acknowledge the first sentence of
Subsection 	(B), 	which 	provides 	that 	UM 	coverage 	described 	in
Subsection (A) (which includes bodily injury and property damage) shall include UIM
coverage. 	In resolving any conflict between the first and second sentences of
Subsection (B), we are mindful that the requirement that insurers offer UM and UIM
coverage embodies a strong public policy “to expand insurance coverage and to
protect individual members of the public against the hazard of culpable uninsured [and
underinsured] motorists.” 	Arias, 2009-NMCA-100, ¶ 7 (alteration in original)
(internal quotation marks and citation omitted). To view Subsection (B) as limiting
this public policy to bodily injury would ignore the underlying legislative intent to put
the insured in the same position he or she would have been in if the tortfeasor had
liability coverage equal to the UM and UIM protection as provided by the insured’s

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policy. Id. Thus, we conclude that the failure of the Legislature to reference property
damage in its definition of underinsured motorist was necessarily the result of
legislative oversight rather than a limitation on the requirement that insurers offer
UIM property damage coverage. 	See State v. Trujillo, 2009-NMSC-012, ¶ 21, 146
N.M. 14, 206 P.3d 125 (recognizing that if adherence to the literal words of a statute
would lead to “injustice, absurdity or contradiction,” the Court will reject the plain
meaning “in favor of an interpretation driven by the statute’s obvious spirit or reason.”
(internal quotation marks and citation omitted)); Romero v. Dairyland Ins. Co., 111
N.M. 154, 156, 803 P.2d 243, 245 (1990) (holding that “[b]ecause we liberally
interpret the statute in order to implement its remedial purpose, language in the statute
that provides for an exception to [UM] coverage should be construed strictly to protect
the insured” (citation omitted)).
In the Absence of a Valid Rejection of UIM Coverage, the Policy Must Be Read
to Include UIM Coverage Equal to the Amount of Liability Limits in the
Automobile Insurance Policy
{10} 	In light of our conclusion that Progressive was statutorily required to offer
Plaintiff UIM property damage coverage, we next consider the effect of its failure to
do so. Absent an offer of UIM coverage, Plaintiff necessarily had no opportunity to
opt out of and reject UIM property damage coverage. 	See Marckstadt v. Lockheed
Martin Corp., 2010-NMSC-001, ¶ 15, ___ N.M. ___, ___ P.3d ___ (concluding that

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“the insurer may not exclude UM/UIM coverage from an automobile liability policy
unless it has offered it to the insured, and the insured has exercised the right to reject
the coverage” (citation omitted)). And absent a valid rejection, our case law provides
that statutorily mandated UM and UIM coverage must be read into the insurance
policy in amounts equal to the liability limits of the policy. 	See Romero v.
Progressive N.W. Ins. Co., 2010-NMCA-024, ¶¶ 22, 24, 39, ___ N.M. ___, ___ P.3d
___ (holding that insurers are statutorily required to offer UM/UIM coverage up to the
liability limits of the policy and that an insured’s purchase of an amount less than the
liability limit is a rejection of the statutorily available UM/UIM coverage), cert.
granted, 2010-NMCERT-003, ___ N.M. ___, ___P.3d ___; Farmers Ins. Co. of Ariz.
v. Chen, 2010-NMCA-___, ¶ 27, ___ N.M. ___, ___ P.3d ___ (No. 28,859, Jan. 26,
2010) (Vigil, J., dissenting) (stating that where a valid rejection of UM/UIM coverage
has not been obtained by the insurer, such coverage must “be read into the policy at
the liability limits, regardless of the intent of the parties or the fact that a premium has
not been paid”), cert. granted, 2010-NMCERT-___, ___ N.M. ___, ___ P.3d ___ (No.
32,243, Apr. 1, 2010).
{11} 	In the present case, Progressive did not offer Plaintiff UIM coverage, and
Plaintiff thereby made no election to reject such coverage. Because the policy limits
for property damage liability was $50,000, we conclude that the policy should have

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been read to include UIM property damage coverage up to $50,000. 	We cannot
conclude that Plaintiff’s selection of coverage that did not include UIM coverage (and
that included UM coverage in less than the policy limits) somehow amounted to a
valid rejection of statutorily available UM and UIM coverage. 	See generally
Marckstadt, 2010-NMSC-001, ¶¶ 25, 32 (holding that in order to comply with
statutory and regulatory requirements when excluding UM/UIM coverage in an
automobile policy, the insurer must obtain written rejections of such coverage from
the insured and such rejection must “clearly and unambiguously call to the attention
of the insured the fact that such coverage has been waived” (internal quotation marks
and citation omitted)); Jordan v. Allstate Ins. Co., No. 28,638, slip op. at 9 (N.M. Ct.
App. Oct. 29, 2009) (recognizing that a declarations page that does not contain a
specific reference to the rejection of UM/UIM coverage is not sufficient to meet the
requirements for a valid rejection of that coverage), cert. granted, 2010-NMCERT-
003, ___ N.M. ___, ___ P.3d ___.
{12} 	We acknowledge the holding in Pielhau v. RLI Insurance Co., 2008-NMCA-
099, 144 N.M. 554, 189 P.3d 687, cert. quashed, 2009-NMCERT-002, 145 N.M. 705,
204 P.3d 30, which declared the New Mexico UM/UIM statute to be a minimum
liability statute. From this, Progressive advocates any required coverage therefore
needed to be provided only to the minimum statutory limits as set forth in NMSA

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1978, Section 66-5-215 (1983). But as emphasized in our discussion of Pielhau in
Romero, 2010-NMCA-024, ¶ 20, “[t]he lack of a requirement that a policy contain
UM/UIM coverage in a specific amount does not obviate the statute’s unambiguous
requirement that insurers must offer UM/UIM coverage and that they must offer such
coverage at a level equal to the liability limits of the policy.” (Emphasis added.) As
in Romero, we conclude in this case that Pielhau is not controlling.
{13} 	We also acknowledge that our Supreme Court recently accepted certification
from Progressive Northwestern Insurance Co. v. Weed Warrior Services, No. 09-
2000, 2010 WL 565427 (10th Cir. Feb. 11, 2010), the resolution of which may impact
whether, in the absence of a valid rejection, UM/UIM coverage is read into the policy
for the minimum statutory limits, or instead as determined in the present case, for the
policy limits. We further recognize that our Supreme Court recently granted certiorari
to review our related decisions in Romero, Chen, and Jordan. 	However, Romero,
Chen, and Jordan are the latest pronouncements from this Court, and therefore remain
controlling precedent upon which we rely until overruled or reversed by the Supreme
Court. See Arco Materials, Inc. v. Taxation & Revenue Dep’t, 118 N.M. 12, 14, 878
P.2d 330, 332 (Ct. App. 1994), rev’d on other grounds by Blaze Constr. Co. v.
Taxation & Revenue Dep’t, 118 N.M. 647, 884 P.2d 803 (1994).

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On Remand, the District Court Must Decide the Matter of Offsets and the
Impact Our Holding Has on Plaintiff’s “Bad Faith and Extra-Contractual”
Claims
{14} 	The parties also dispute, in the event this Court holds as we have that UIM
property damage coverage should be read into the policy, whether Progressive is
entitled to a statutory offset of amounts of liability coverage received by Plaintiff. See
generally Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 222, 704 P.2d
1092, 1098 (1985) (providing that an insured is entitled to collect “from his
underinsured motorist carrier the difference between his uninsured motorist coverage
and the tortfeasor’s liability coverage or the difference between his damages and the
tortfeasor’s liability coverage, whichever is less”). Because the district court ruled
that Plaintiff was not entitled to any UIM coverage, it did not address the matter of
offsets. In light of our holding that coverage for UIM property damage should be read
into the policy at the policy limits, we remand for the district court to address the
matter of offsets. 	See generally Arias, 2009-NMCA-100, ¶ 20 (remanding for the
district court to consider the issue of offsets).
{15} 	Lastly, apart from a claim for breach of contract based upon the denial of UIM
coverage, Plaintiff also alleged, as collectively referred to before the district court,
“bad faith and extra-contractual claims.” Both parties agreed that these claims are
predicated on whether Plaintiff is entitled to UIM coverage, and the district court

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summary judgment ruling in favor of Progressive on these claims is presumably based
on its determination that Plaintiff is not entitled to such coverage. Given our holding
that Plaintiff is entitled to UIM property damage coverage, we reverse the district
court summary judgment ruling on these claims and remand for further consideration
of these claims, including a consideration of Plaintiff’s claim for punitive damages.
However, we express no opinion on what damages, if any, Plaintiff is entitled to
receive, apart from the actual property damages of $34,939, and, subject to the
consideration of any offsets as previously set forth herein.
CONCLUSION
{16} 	For the reasons discussed above, we hold that the automotive policy should be
viewed as providing UIM property damage coverage in the amount equal to the
policy’s limits for property damage of $50,000. 	We accordingly (1) reverse the
district court summary judgment ruling that Plaintiff is not entitled to such coverage;
(2) reverse the district court summary judgment ruling on Plaintiff’s “bad faith and
extra-contractual claims”; and (3) remand for further proceedings consistent with this
opinion.
{17} 	IT IS SO ORDERED.
________________________________
MICHAEL E. VIGIL, Judge

WE CONCUR:

JONATHANB. SUTIN, Judge

TIMOTHY L. GARCIA, Judge

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