Citations
- 361 F. Supp. 3d 1045
Full opinion text
James O. Browning, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on the Defendant's Motion for Judgment on the Pleadings and Memorandum of Law in Support, filed April 4, 2018 (Doc. 58)("MJP"). The Court held a hearing on August 10, 2018. The primary issues are: (i) whether Defendant Financial Indemnity Company is entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits underinsured motorist ("UIM") coverage; and (ii) whether, as a matter of law, Financial Indemnity can be liable to Plaintiff Helen Bhasker for extracontractual or punitive damages. The Court concludes that: (i) Financial Indemnity is not entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits UIM coverage, because Bhasker has alleged that Financial Indemnity's business practices misled and deceived not only herself but also proposed class members who purchased greater-than-minimum-limits UIM coverage; and (ii) Financial Indemnity can be liable to Bhasker for extracontractual and punitive damages, at this stage in the proceedings, because Bhasker has alleged that Financial Indemnity's decision to sell illusory UIM coverage was willful or reckless. Although the Court will not dismiss Bhasker's claims on behalf of proposed class members who purchased greater-than-minimum-limits UIM coverage, the Court predicts that the Supreme Court of New Mexico would conclude that higher-than-minimum limits UIM coverage has value, because New Mexico's statutory offset provision is in accord with New Mexico public policy. The Court therefore permits Bhasker's claims on behalf of proposed class members to proceed on the theory that Financial Indemnity misled her and a class of insureds who, like Bhasker, purchased UIM coverage believing that they would receive the full UIM coverage reflected on their declarations pages, whether minimum limits or some greater figure. Accordingly, the Court denies the MJP.
FACTUAL BACKGROUND
Bhasker contends that, "[b]ased on the information provided by the Defendant," she agreed to "pay a six-month premium for the State of New Mexico mandated minimum automobile bodily injury and uninsured/underinsured motorist coverage." First Amended Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties ¶ 30, at 5, filed March 23, 2017 (Doc. 12)("Complaint"). According to Bhasker, her insurance policy features: (i) liability coverage on one vehicle for $25,000.00 per person and $50,000.00 per accident, per vehicle; and (ii) underinsured coverage on one vehicle for $25,000.00 per person and $50,000.00 per occurrence, per vehicle. See Complaint ¶¶ 42-43, at 7 (citing Coverage for 1995 Lexus LS 500 4D at 1 (dated May 14, 2015), filed March 23, 2017 (Doc. 12-2) ). Bhasker asserts that Financial Indemnity did not "fully inform" her that "a purchase of 25/50 underinsured coverage, when triggered by a crash with a tortfeasor who has 25/50 bodily injury liability limits, will result in a payment of premium for which no payment of benefits will occur ...." Complaint ¶ 48, at 8.
Bhasker avers that, on June 24, 2015, she was driving eastbound on I-40 in Albuquerque, New Mexico, when another driver, Stephanie Martinez, "failed to stop for the traffic in front of her vehicle" and struck Bhasker's car in the rear, causing "serious bodily injuries and other damages." Complaint ¶¶ 12-14, at 2-3. Bhasker asserts that Martinez "was an underinsured motorist at the time of the collision" as Bhasker's insurance policy and New Mexico law define the term. Complaint ¶ 17, at 3. Bhasker contends that she "received the full extent of liability coverage carried by Ms. Martinez," which was $25,000.00. Complaint ¶ 18, at 3. Bhasker asserts that, after the accident, Financial Indemnity provided a certified copy of a document summarizing her policy. See Complaint ¶ 38, at 6 (citing New Mexico Personal Auto Application at 1-4 (dated July 14, 2011), filed March 23, 2017 (Doc. 12-1)("Policy Application") ). Bhasker contends that the "certified copy of the [Policy Application] materially misrepresented the terms of [its] underinsured [motorist] coverage and did not contain clear, unambiguous language regarding the effects of New Mexico's underinsured coverage offset laws." Complaint ¶ 39, at 6. Furthermore, Bhasker contends that the Policy Application's language is "deceptive and clearly ambiguous in that it states that the applicant may purchase underinsured coverage in excess of the bodily injury coverage limits, which is the opposite of the legislative intent" of N.M. Stat. Ann. § 66-5-301 and New Mexico case law. Complaint ¶ 40, at 6. Bhasker contends that Financial Indemnity's Policy Application
did not alert [her], nor make clear to the ordinary and similarly situated insured, the fact that the New Mexico offset law drastically and materially diminished payment of benefits arising from a covered occurrence under the policy.... Specifically, there is virtually no possible underinsured minimum limits claim available to the Plaintiff and other similarly situated members of the class.
Complaint ¶ 43, at 7. Bhasker avers that, when she, "through counsel, demanded Defendant provide [her] with underinsured benefits that Defendant solicited and for which the Plaintiff paid a premium," Financial Indemnity denied her claim for underinsured benefits. Complaint ¶ 44, at 7. Bhasker further contends that Financial Indemnity has "written direct premium automobile insurance to thousands of New Mexico residents and, from 2010-2014, wrote direct premiums" around the United States totaling $1.09 billion. Complaint ¶ 22, at 4.
PROCEDURAL BACKGROUND
Bhasker originally brought this case in the Second Judicial District Court, County of Bernalillo, State of New Mexico. See Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties, filed in the Second Judicial District Court, County of Bernalillo, State of New Mexico (filed in state court on December 30, 2016), filed in federal court February 24, 2016 (Doc. 1-1)("State Complaint"). Financial Indemnity removed the action to federal court on February 24, 2017. See Notice of Removal, filed February 24, 2017 (Doc. 1). Financial Indemnity removed the case pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"), because "this is a putative class action with more than 100 putative class members that seeks to recover more than $5,000,000.00." Notice of Removal at 1.
Financial Indemnity filed a Motion to Dismiss. See Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15)("MTD"). In the MTD, Financial Indemnity argues that the filed rate and voluntary payments doctrines bar Bhasker's claims. See MTD at 1. Financial Indemnity also asserts that Bhasker's illusory coverage argument is "simply wrong" as a matter of law, "because minimum limits underinsured motorists coverage does provide tangible benefits to those who choose it." MTD at 1. The Court held a hearing on July 24, 2017. See Hearing Transcript (taken July 24, 2017) (Doc. 34).
The Court filed a Memorandum Opinion and Order ("MOO") denying Financial Indemnity's requests in the MTD. See Memorandum Opinion and Order, filed January 10, 2018 (Doc. 48); Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d 1191, 1191 (D.N.M. 2018) (Browning, J.). Specifically, the Court concluded that: (i) the filed rate doctrine does not bar Bhasker's claims, because the Supreme Court of New Mexico would not apply the filed rate doctrine to bar claims against insurers for unfair or deceptive business practices; (ii) Bhasker's claims are well-pled even if the UIM insurance is not illusory; and (iii) the voluntary payment doctrine does not bar Bhasker's claims, because she alleges that she did not know all the material facts. See MOO at 56; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1226.
1. The MJP.
In the MJP, Financial Indemnity, pursuant to rule 12(c) of the Federal Rules of Civil Procedure, moves for the entry of an order granting Financial Indemnity partial judgment on the pleadings as to two of Bhasker's claims: "1. Defendant is entitled to judgment as a matter of law as to all claims for insureds who have non-minimum limits underinsured motorist ... coverage; and 2. Defendant cannot, as a matter of law, be liable to Plaintiff for extra-contractual or punitive damages." MJP at 1. Financial Indemnity asserts that, although the Court, in its MOO, denied Financial Indemnity's MTD, the MOO reflects that all Bhasker's claims "are premised on the theory that the minimum limits UIM coverage at issue in this case is 'illusory.' " MJP at 1. Financial Indemnity further asserts that the Court should hold that Bhasker is not entitled, as a matter of law, to the extracontractual or putative damages that she seeks, because Financial Indemnity "certainly had a reasonable basis for enforcing the offset as it did, and for believing its minimum limits UIM coverage was neither illusory nor otherwise unlawful." MJP at 2.
Financial Indemnity argues that "[t]his Court's Order indicates clearly that the illusory coverage claim raised by this case applies to minimum limits UIM coverage, not where any level of UIM limits above the minimum is at issue." MJP at 4. Financial Indemnity cites language from the Court's MOO which emphasizes, for example, that Bhasker's UIM insurance is illusory and that, because of New Mexico's offset law, "there is virtually no possible underinsured minimum limits claim available" to Bhasker and "other similarly situated members of the class." MJP at 4 (quoting MOO at 3; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1194 )(emphasis in MJP). Financial Indemnity summarized Bhasker's illusory insurance coverage theory: "when the tortfeasor's minimum bodily injury liability limits, which would be at least $25,000/$50,000, are offset against the insured's minimum $25,000/$50,000 UIM limits, the injured insured would have paid a premium for which no payment of benefits will occur once the offset is applied." MJP at 4-5. Financial Indemnity argues that this theory does not apply outside the minimum limits UIM context, because, for example, "if the insured has UIM limits of $50,000, $100,000 or any amount greater than $25,000, and the tortfeasor has $25,000 in bodily injury liability limits and that amount is offset, the injured insured will recover UIM benefits where the damages exceed the tortfeasor's limits." MJP at 5 (emphasis in MJP).
Financial Indemnity further asserts that the Court should limit Bhasker's illusory coverage theory to insureds with minimum limits UIM coverage, because Progressive Northwest Insurance Co. v. Weed Warrior Services, 2010-NMSC-050, 149 N.M. 157, 245 P.3d 1209 (" Weed Warrior"), which, according to Financial Indemnity, Bhasker "primarily relie[s]" for her illusory coverage theory, does not contemplate insureds with greater than minimum limits UIM coverage. See MJP at 5. Hence, according to Financial Indemnity, Weed Warrior confirms that
the problem of "illusory" UIM coverage arises, if at all, only in connection with minimum limits UIM coverage -- i.e. , where an injured insured's minimum UIM limits of $25,000 are offset by a tortfeasor's $25,000 bodily injury liability limits. It would not arise in cases involving UIM coverage limits above the minimum -- e.g. , where an insured's $50,000 or $100,000 UIM limits (or any amount above $25,000) are only partially offset by a tortfeasor's $25,000 bodily injury liability limits.
MJP at 6.
Financial Indemnity adds that the Court "would directly contravene the purpose of New Mexico's UM/UIM statute" if the Court permits Bhasker to apply her theory beyond the minimum limits UIM coverage context, because the Supreme Court of New Mexico has stated that § 66-5-301's purpose "is to assure that, in the event of an accident with an underinsured vehicle, an insured motorist entitled to compensation will receive at least the sum certain in underinsurance coverage purchased for his or her benefit," and that the UIM insurer must satisfy the difference only "[t]o the extent the amount of other available insurance proceeds from responsible underinsured tortfeasors does not equal or exceed the amount of coverage purchased. " MJP at 7 (quoting Farmers Ins. Co. of Arizona v. Sandoval, 2011-NMCA-051, ¶ 13, 149 N.M. 654, 253 P.3d 944, 948 (emphasis in MJP only) ). According to Financial Indemnity, these cases demonstrate that "the purpose of the UIM statute and offset provision is to make the injured insured whole up to the level of UIM coverage he or she has purchased." MJP at 7. Financial Indemnity suggests that the Supreme Court of New Mexico in Fasulo v. State Farm Mutual Automobile Insurance Co., 1989-NMSC-060, ¶ 15, 108 N.M. 807, 780 P.2d 633, 637, offers further support for this position when it concluded: "Regardless of the number of underinsured tortfeasors at fault, the legislature intended that the injured party's underinsurance recovery should be limited to the amount of UIM coverage purchased, less available liability proceeds." MJP at 8 (quoting Fasulo v. State Farm Mut. Auto. Ins. Co., 1989-NMSC-060, ¶ 15, 108 N.M. 807, 780 P.2d at 637 ). Similarly, Financial Indemnity asserts, § 66-5-301(B) mandates offset "to ensure that the insured does not receive payment from his or her insurer greater than the coverage purchased. " MJP at 8 (quoting Samora v. State Farm Mut. Auto. Ins. Co., 1995-NMSC-022, ¶ 10, 119 N.M. 467, 892 P.2d 600, 603 (emphasis in MJP only) ). Financial Indemnity also asserts that federal courts have reached the same conclusion regarding New Mexico's UM/UIM statute. See MJP at 8 (citing Ortiz v. Safeco Ins. Co. of Am., 207 F.Supp.3d 1216, 1219 (D.N.M. 2016) (Lynch, M.J.)("[The] purpose of New Mexico's UM/UIM statute is to expand such coverage in New Mexico to protect the public from damages caused by uninsured or underinsured motorists by putting the insured in the same position as if the tortfeasor had liability insurance.") ). According to Financial Indemnity, these cases show that the purpose of New Mexico's UIM statute, with its express offset provision, "is to put the insured in the same position as he or she would have been had the tortfeasor had liability insurance coverage in the amount of UIM coverage purchased by the insured." MJP at 8. Hence, Financial Indemnity alleges:
If Plaintiff's "illusory" UIM coverage approach were adopted beyond the minimum UIM limits context, and the offset provision could therefore not be applied, that would defeat the whole purpose of the statute. It would create a windfall for insureds by requiring UIM insurers to put the insured in a better position than he or she would have been had the tortfeasor had liability insurance coverage. It would also result, in contravention of the statute's purpose, in insureds receiving UIM payments in amounts greater than the coverage they purchased.
MJP at 8-9 (emphasis in MJP).
According to Financial Indemnity, that New Mexico law offsets the first $25,000.00 of coverage should not result in Financial Indemnity's penalization, regardless whether that provision aggrieves insureds. See MJP at 9. Financial Indemnity adds that, even in jurisdictions where courts have held that minimum limits UIM coverage is illusory, "these same courts have rejected the theory that UIM coverage above the statutory minimum limits is illusory." MJP at 9 (emphasis in MJP). For example, contends Financial Indemnity, the Supreme Court of Wisconsin in Taylor v. Greatway, Insurance Co., 245 Wis.2d 134, 628 N.W.2d 916 (2001), rejected the argument that the insured's coverage was illusory because of a reducing clause which, when applied, meant that the insured "could never recover $25,000 of the $50,000 in UIM coverage under each policy, due to the requirement ... that drivers have at least $25,000 in liability insurance," and instead stated that the tortfeasor's vehicle was not underinsured, because the tortfeasor and the insured had equal liability and UIM coverage limits of $50,000.00. MJP at 9 (quoting Taylor v. Greatway, Ins. Co., 628 N.W.2d at 919 ). Financial Indemnity adds that the Supreme Court of Wisconsin distinguishes Taylor v. Greatway, Insurance Co. from cases where minimum limits UIM coverage is involved when it states that in the minimum limits context "there was no possibility ... that the insured driver could recover under her UIM policy because the policy defined an underinsured vehicle as a vehicle with liability limits less than the limits of the UIM coverage and because [the insured] had a UIM coverage limit of $25,000," which was the minimum amount for liability insurance that the law required. MJP at 9-10 (quoting Taylor v. Greatway, Ins. Co., 628 N.W.2d at 923 ). For the same proposition, Financial Indemnity refers the Court to DeGrand v. Motors Ins. Corp., 903 F.2d 1100, 1103 n.2 (7th Cir. 1990) ("[U]nderinsurance would not be illusory to drivers who purchase underinsured motorist coverage in an amount greater than the minimum amount of uninsured motorist coverage required by law."). Financial Indemnity concludes by arguing that, "even if minimum limits UIM coverage is considered 'illusory,' UIM coverage above the minimum limits would not be ... because the insured will recover UIM coverage where the tortfeasor has liability coverage in excess of the statutory minimum." MJP at 10.
Financial Indemnity next turns to its argument that the Court should not permit the factfinder to consider extracontractual damages and begins by reciting the New Mexico legal standard for awarding such damages: "the existence of 'willful, wanton, malicious, reckless, oppressive, fraudulent or in bad faith' conduct." MJP at 10 (quoting Obenauf v. Frontier Fin. Grp., Inc., 785 F.Supp.2d 1188, 1225 (D.N.M. 2011) (Browning, J.); and citing Gallup Med Flight, LLC v. Phoenix Ins. Co., No. CV 16-01197 KG/KBM, 2018 WL 344956, at *2 (D.N.M. Jan. 9, 2018) (Gonzales, J.); NMRA, Civ. UJI 13-1827 ). Financial Indemnity contends that punitive damages are not available when a defendant's conduct "is neither willful, wanton, nor in bad faith." MJP at 11 (citing Obenauf v. Frontier Fin. Grp., Inc., 785 F.Supp.2d at 1226 ; Ensey v. Ozzie's Pipeline Padder, Inc., No. CIV 08-0801 JAP/CG, 2009 WL 10665015, at *10 (D.N.M. Oct. 6, 2009) ( Parker, J.), aff'd, 446 F. App'x 977 (10th Cir. 2011) ; Bevan v. Valencia, No. CIV 15-73 KG/SCY, 2017 WL 5054703, at *5 (D.N.M. Nov. 2, 2017) (Gonzales, J.) ). Financial Indemnity asserts that the Court may not award punitive damages "where, as here, a defendant has a justifiable basis for its conduct," MJP at 11 (citing Lite Cookies Ltd. v. Tassy & Assocs., Inc., No. CV 08-1172 BB/WDS, 2011 WL 13162088, at *3 (D.N.M. Sept. 1, 2011) (Black, J.)("[I]ntentional breach of contract by itself is not enough to support an award of punitive damages.... Plaintiff must show that Defendant's acts were without justification.") ), and "where, as here, the applicable area of law is unsettled," MPJ at 12 (citing Equal Emp't Opportunity Comm'n v. Flambeau, Inc., 846 F.3d 941, 948 (7th Cir. 2017) ("An employer's or its attorney's disagreement with EEOC guidance does not by itself support a punitive damages award, at least where the guidance addresses an area of law as unsettled as this one."); McCann v. Coughlin, 698 F.2d 112, 127 (2d Cir. 1983) ("Given the unsettled state of the law on this issue ... we decline to find that the district court's decision not to award McCann punitive damages was an abuse of discretion.").
Financial Indemnity further asserts that, "where, as here, the insurer had a legitimate basis for disputing the claim," courts have refused to award punitive damages, even for erroneous coverage determinations. MJP at 12-13 (citing United Nuclear Corp. v. Allendale Mut. Ins. Co., 1985-NMSC-090, ¶ 17, 103 N.M. 480, 709 P.2d 649, 654 ("[S]ince there were legitimate questions regarding the amount of [the insured's] claimed damages ... we cannot say that [the insurer's] failure to pay [the insured's] claim was malicious or in bad faith .... Thus, we determine that the trial court's award of $25 million in punitive damages was erroneous."); T.G.S. Transp., Inc. v. Canal Ins. Co., 216 F. App'x 708, 708 (9th Cir. 2007) ; Crenshaw v. MONY Life Ins. Co., No. 02CV2108-LAB RBB, 2004 WL 7094011, at *8 (S.D. Cal. May 3, 2004) (Bruns, J.)("[I]f there is a proper basis to dispute coverage, even an erroneous denial of a claim in breach of the insurer's contract will not by itself support tort liability .... Only the damages flowing from the breach of contract ... are at issue.").
Financial Indemnity contends that the Court in its MOO recognized that "this was an issue of first impression in New Mexico" and that numerous courts have held that a limits offset in these circumstances is not unlawful. MJP at 13-14. Hence, Financial Indemnity asserts that, although the Court predicted that the Supreme Court of New Mexico would conclude that the minimum limits UIM coverage in this case is illusory, the Court is correct when it states that it "is receptive to the argument that the rare scenarios where a policyholder would benefit from a policy suggests that the policy has at least some value." MJP at 13-14 (citing MOO at 74; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1237 ). Financial Indemnity then discusses several cases where courts have concluded that minimum limits UIM coverage is not illusory, thereby suggesting, according to Financial Indemnity, that Financial Indemnity had a reasonable basis for its position that minimum limits UIM coverage provides value, "and therefore did not act with the requisite animus to allow for a valid extra-contractual or punitive damages claim." MJP at 14. For example, according to Financial Indemnity, the Supreme Court of Idaho in Vincent v. Safeco Insurance Co. of America, 136 Idaho 107, 29 P.3d 943 (Idaho 2001), held that UIM coverage equal to minimum bodily injury liability limits was not illusory, even if no vehicle covered by a policy issued in the state could satisfy the definition of an underinsured motor vehicle, because, if the tortfeasor was a driver with an out-of-state policy with lower bodily injury liability minimum limits than in the state policy, the policyholder could recover the difference as to those limits. See MJP at 14 (citing Vincent v. Safeco Ins. Co. of Am, 29 P.3d at 948 ). A further example is seen in Meridian Mutual Insurance Co. v. Richie, 544 N.E.2d 488 (Ind. 1989), asserts Financial Indemnity, because there the Supreme Court of Indiana concluded that underinsured automobiles could include "vehicles from other states which require lesser amounts than does Indiana of liability insurance, so that conceivably [the insured] could have benefitted from his underinsured motorist coverage.... Consequently, the policy ... does not violate the public policy against illusory coverage." MJP at 15 (quoting Meridian Mut. Ins. Co. v. Richie, 544 N.E.2d at 489-90 ).
Financial Indemnity asserts that additional support for its position -- that it had a reasonable basis to believe that minimum limits UIM coverage is not illusory -- is seen in cases where courts have found that minimum limits UIM coverage provides value "where there are multiple injured parties in an accident, such that no single policy holder will recover the entirety of the tortfeasor's liability limit." MJP at 15-16 (citing Showman v. Busser, No. 311141, 2013 WL 6037161, at *4 (Mich. Ct. App. Nov. 14, 2013) ("Although the policy limits equal the statutory minimum in Michigan, the insurance policy in question still provides underinsured motorist benefits ... when the tortfeasor's liability insurance is reduced to less than $20,000 by payments to other injured persons other than resident relatives."); Hallihan v. Progressive Direct Ins. Co., No. 315CV01068NJRSCW, 2016 WL 4617243, at *6 (S.D. Ill. Sept. 6, 2016) (Rosenstengel, J.)("[T]he Court concludes that Progressive's minimum UIM coverage is not illusory. There are certainly circumstances where a claimant may recover less than the minimum liability limits from the at-fault driver; the insured is then entitled to seek the difference, up to the UIM policy limits, from Progressive.") ).
Financial Indemnity avers that a third scenario where a minimum limits policy has at least some value occurs when the insured receives less than the tortfeasor's policy limits because of a contractual exclusion for punitive damages, in which case, under New Mexico law, the insurer may not offset the full amount of the tortfeasor's liability limits. MJP at 16 (citing Farmers Ins. Co. of Arizona v. Sandoval, 2011-NMCA-051, ¶ 13, 149 N.M. 654, 253 P.3d at 946 ). In addition, argues Financial Indemnity, because Bhasker paid a single premium for combined UM and UIM coverage, and because, under New Mexico law, rates must be charged based on the insurer's loss history, see MJP at 17 (citing N.M. Stat. Ann. § 59A-17-7 ("In determining whether rates comply with the rate standards ... due consideration shall be given to past and prospective loss and expense experience within and without this state[.]"); N.M. Stat. Ann. § 59A-17-6 ("Rates are inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the line, kind or class of business to which they apply."), the portion of the rate for the combined UM/UIM coverage that is attributable to UIM coverage would be minimal, according to Bhasker's theory, based on a minimal loss payment history, see MJP at 17. Hence, Financial Indemnity contends, it cannot, as a matter of law, be collecting excessive premiums for UIM coverage that has an allegedly small or "illusory" value. MJP at 17. Moreover, Financial Indemnity maintains that the UM portion of the combined coverage "certainly" has value even at minimum limits. MJP at 17. Finally, an insured can recover minimum limits UIM benefits, contends Financial Indemnity, when he or she has stackable UIM coverage and multiple vehicles. See MJP at 17.
Financial Indemnity concludes by arguing that the above caselaw and potential minimum limits recovery scenarios prove that its coverage position in enforcing its minimum limits UIM offset was, as a matter of law, reasonable. See MJP at 17. Thus, avers Financial Indemnity, because it "had solid grounds, particularly in this case of first impression," for its position that its limits offset was valid, which "is the antithesis of the willful, wanton, bad faith or fraudulent conduct necessary to warrant extra-contractual or punitive damages," the Court should grant it judgment on the pleadings as to all Bhasker's extracontractual and punitive damage claims. MJP at 18.
2. The MJP Response.
Bhasker responds to Financial Indemnity's MJP. See Plaintiff's Response and Memorandum of Law in Opposition to Defendant's Motion for Judgment on the Pleadings and Memorandum in Support, filed April 4, 2018 (Doc. 59)("MJP Response"). Bhasker argues that the Court should deny the MJP, because "it is duplicative of defendant's previous motion or raises factual issues inappropriate for a motion under Rule 12(c), issues about which plaintiff has not yet had an opportunity to conduct discovery." MJP Response at 1. Bhasker summarizes her theory of the case, i.e., that Financial Indemnity deceptively solicited and sold UIM coverage in amounts equal to the statutory minimum limits liability coverage without properly advising her that such UIM coverage under New Mexico law was illusory. See MJP Response at 1-2 (citing Complaint ¶¶ 1, 43, 46, 48, at 1, 7-8). Bhasker asserts that she "brings this action on her own behalf, and on behalf of the many insured around the state who have been deceived by Defendant's practices," MJP Response at 2 (quoting Complaint ¶ 4, at 2)(alteration in MJP Response), because, according to Bhasker, Financial Indemnity "committed the same unfair and/or deceptive practices, omissions of material fact, wrongful failures to provide UIM, wrongful denials of claims for UIM benefits, and/or breaches of the implied covenant of good faith and fair dealing" against other New Mexico policyholders or insureds, MJP Response at 2 (citing Complaint ¶ 53, at 9).
According to Bhasker, in its MOO, the Court not only concluded that Bhasker's claims were well-pled, see MJP at 2 (citing MOO at 76; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1237 ), but also "implicitly found that underinsured motorist coverage at minimal and higher limits is illusory when it stated that, 'the Supreme Court of New Mexico would join Montana and West Virginia in determining that the UIM coverage is illusory,' " MJP Response at 2 (quoting MOO at 75 n.15; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1237 n.15 ). Hence, Bhasker contends, appropriate relief may include a punitive damages award. See MJP at 2.
Bhasker further contends that the MJP is premature, because it moves the Court to rule on Bhasker's claims pertaining to the proposed class before the Court rules on class certification. See MJP Response at 2-3. According to Bhasker, only when the Court certifies a class, "which includes individuals who purchased UIM coverage at higher limits," may Financial Indemnity litigate its claim that Bhasker's illusory coverage theory does not apply to insureds with greater than minimum limits UIM coverage. MJP Response at 4. Bhasker contends that, because such claims are not presently before the Court, Financial Indemnity "now serves to waste the Court's time" with a motion duplicative of the MTD, which the Court denied. MJP Response at 4. Nonetheless, Bhasker asserts that the putative class members who purchased UIM coverage at higher limits deserve relief, and intends, through information gleaned from her discovery requests, "to satisfy 'the district court's requirement that [it] must undertake a rigorous analysis' to satisfy itself that a putative class meets the applicable Rule 23 requirements." MJP at 4 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 345, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) (" Wal-Mart") ).
Bhasker next insists that the MOO and relevant caselaw support her allegations that non-minimum limits UIM coverage is illusory and that the MJP is incorrect in stating that no courts have concluded that UIM coverage levels above minimum limits are illusory. See MJP Response at 5. According to Bhasker, the MOO cites caselaw which concludes that "UIM coverage at higher limits of $100,000.00 and $50,000.00, respectfully, to be illusory because of an offset that went against the interests of public policy." MJP Response at 5 (emphasis in MJP Response)(citing Pristavec v. Westfield Ins. Co., 184 W.Va. 331, 400 S.E.2d 575 (1990) ; Hardy v. Progressive Specialty Ins. Co., 315 Mont. 107, 67 P.3d 892 (2003) ; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1236 n.15 ). That the MOO cites Pristavec v. Westfield Insurance Co. and Hardy v. Progressive Specialty Insurance Co. indicates that the Court "implicitly recognized" that Bhasker's illusory coverage theory applies to higher limits. MJP Response at 5 (citing MOO at 75 n.15; Bhasker v. Kemper Cas. Ins. Co., 284 F.Supp.3d at 1237 n.15 ("[T]he Supreme Court of New Mexico would join Montana and West Virginia in determining that UIM coverage is illusory.") ).
Bhasker quotes heavily from Pristavec v. Westfield Ins. Co. to support her assertion that non-minimum limits UIM coverage is illusory:
We believe underinsured motor vehicle status is required, but we believe that, despite the literal meaning of the definitional part of the statute in isolation, the unmistakable spirit of the statute as a whole provides for such status when the amount of the tortfeasor's motor vehicle liability insurance actually available to the injured person in question is less than the amount of damages sustained by the injured person, regardless of whether such liability insurance limits actually available are less than the underinsured motorist coverage limits.
MJP Response at 5-6 (quoting Pristavec v. Westfield Ins. Co., 400 S.E.2d at 577 ). Bhasker contends that further support for her illusory coverage theory is in the Supreme Court of West Virginia's discussion of the legislative intent behind that state's UIM statute:
we will not ascribe to the legislature an intent to "shortchange" the public by an overly restrictive definition of an "underinsured motor vehicle." An overly restrictive definition of that term would be one which is inconsistent with the preeminent public policy of the statute as a whole, specifically, the full compensation of the injured party for his or her damages not compensated by a negligent tortfeasor, up to the limits of the underinsured motorist coverage. Some well established rules of statutory construction support our holding on legislative intent under the underinsured motorist statute.
MJP Response at 5-6 (quoting Pristavec v. Westfield Ins. Co., 400 S.E.2d at 581 ). Bhasker adds that the Supreme Court of West Virginia recognized that West Virginia's UM/UIM statute was remedial in nature and that a remedial statute "must be construed liberally to effect its purpose." MJP Response at 6 (citing Pristavec v. Westfield Ins. Co., 400 S.E.2d at 581 ).
Bhasker asserts that, in Hardy v. Progressive Specialty Insurance Co., the Supreme Court of Montana concluded that UIM coverage at higher limits, in that case $50,000.00, is illusory, because "the offset provision, as well as the definition of underinsured motorist, violate Montana public policy because they create an ambiguity regarding coverage, render coverage that Progressive promised to provide illusory, and defeat the insured's reasonable expectation." MJP Response at 6 (quoting Hardy v. Progressive Specialty Ins. Co., 67 P.3d at 897 ). Bhasker insists that the Supreme Court of Montana is in accord with the Supreme Court of West Virginia when the former states:
When we look at an insurance contract for purpose and intent we examine the contract as a whole, giving no special deference to any specific clause. The terms and words used in an insurance contract are to be given their usual meaning and construed using common sense. Any ambiguity in an insurance policy must be construed in favor of the insured and in favor of extending coverage. An ambiguity exists where the contract, when taken as a whole, is reasonably subject to two different interpretations. Whether an ambiguity exists is determined through the eyes of a consumer with average intelligence but not trained in the law or insurance business.
MJP Response at 6-7 (quoting Hardy v. Progressive Specialty Ins. Co., 67 P.3d at 895-96 ). Bhasker requests that the Court apply "the same logical analysis" to this case, because, according to Bhasker, Financial Indemnity applied § 66-5-301's offset in the same manner under similar statutory language. MJP Response at 7. Moreover, Bhasker asserts that New Mexico caselaw states that § 66-5-301 is a remedial statute and recognizes the reasonable expectations doctrine. See MJP Response at 7 (citing Rummel v. Lexington Ins. Co., 1997-NMSC-041, ¶ 22, 123 N.M. 752, 945 P.2d 970, 977 ; Romero v. Dairyland Ins. Co., 1990-NMSC-111, ¶ 5, 111 N.M. 154, 803 P.2d 243, 245 ; Computer Corner, Inc. v. Fireman's Fund Ins. Co., 2002-NMCA-054, ¶ 13, 132 N.M. 264, 46 P.3d 1264, 1268 ; Jordan v. Allstate Ins. Co., 2010-NMSC-051, ¶ 24, 149 N.M. 162, 245 P.3d 1214, 1221 ).
Bhasker contends that Financial Indemnity has not identified "any logical explanation, reasoning or case law" to support its argument that the Court should distinguish between insureds with minimum limits coverage and insureds with non-minimum limits UIM coverage. MJP Response at 7. According to Bhasker, Financial Indemnity benefits at insureds' expense each time it applies a "Schmick offset" to prevent insureds from receiving their purchased UIM coverage's "the full dollar value." MJP Response at 7. For this reason, asserts Bhasker, the UIM coverage at higher limits is equally illusory to the insured who, because of the Schmick v. State Farm Mut. Auto. Ins. Co., 1985-NMSC-073, ¶ 28, 103 N.M. 216, 704 P.2d 1092 (" Schmick"), offset, cannot enjoy the higher UIM benefits they thought they had purchased. See MJP Response at 7-8.
Bhasker contends that a rule 12(c) motion is inappropriate "where, as here," the Complaint displays disputed issues of material fact. MJP Response at 8. In this case, maintains Bhasker, one such disputed issue is that insureds with non-minimum limits UIM coverage did not receive benefits for which they paid and, thus, reasonably expected. See MJP Response at 8. According to Bhasker, because her policy application evidences that she reasonably expected UIM benefits, contains inaccurate statements of New Mexico insurance law, and fails to inform her about the Schmick offset, she is entitled, through discovery, to obtain similar documents, testimony, and admissions from Financial Indemnity, so that a jury may decide if Financial Indemnity's business practices misled and deceived the proposed class in the same manner. See MJP Response at 8. According to Bhasker, the disputed issue of material fact is whether Financial Indemnity "knew or should have known that the sale of illusory UIM coverage at higher limits would harm putative class members." MJP Response at 8. Moreover, adds Bhasker, the jury must determine whether Financial Indemnity's alleged misleading and deceptive business practices breach the covenant of good faith and fair dealing, given that Bhasker intends to prove that Financial Indemnity was consciously aware of its misleading and deceptive practices, and nevertheless proceeded with deliberate disregard for the potential harm to the proposed class members that purchased non-minimum limits UIM coverage. See MJP Response at 8.
Bhasker asserts that additional material facts in dispute include the punitive damages question, resolution of which is premature, according to Bhasker, because discovery is ongoing and because Financial Indemnity has not responded to most of Bhasker's discovery requests. See MJP Response at 9. Moreover, adds Bhasker, because the Complaint's allegations assert that Financial Indemnity knew of and failed to avoid the harm that selling "illegal coverage in New Mexico these many years" caused insureds, punitive damages are appropriate pursuant to the Supreme Court of New Mexico's "reckless disregard" definition. MJP Response at 9 (quoting Paiz v. State Farm Fire & Cas. Co., 1994-NMSC-079, ¶ 26, 118 N.M. 203, 880 P.2d at 308 (defining "reckless disregard," for punitive damages purposes, as "when the defendant knows of potential harm to the interests of the plaintiff but nonetheless utterly fails to exercise care to avoid the harm").
Bhasker next contends that the cases which Financial Indemnity cites in the MJP do not support its position that Bhasker has failed to plead conduct that could support a punitive damages award. See MJP Response at 9. Bhasker asserts, for example, that Farmers Insurance Co. of Arizona v. Sandoval considers only how a third-party tortfeasor's aggravating conduct affects a claim for UIM coverage -- and not whether such coverage is illusory -- because the insured in that case did not dispute the contractual offset. See MJP at 9 (citing Farmers Ins. Co. of Arizona v. Sandoval, 2011-NMCA-051, ¶ 4, 149 N.M. 654, 253 P.3d at 946 ). Farmers Insurance Co. of Arizona v. Sandoval supports Bhasker's theory that the sale of illusory coverage is against public policy, contrary to New Mexico law, and contrary to § 66-5-301's legislative intent, contends Bhasker, because the Court of Appeals of New Mexico in that case stated: "Because we liberally interpret [ § 66-5-301 ] in order to implement its remedial purpose, language in the statute that provides for an exception to uninsured coverage should be construed strictly to protect the insured." MJP Response at 9-10 (quoting Farmers Ins. Co. of Arizona v. Sandoval, 2011-NMCA-051, ¶ 4, 149 N.M. 654, 253 P.3d at 946 ). Similarly, argues Bhasker, the Supreme Court of New Mexico in Fasulo v. State Farm Mutual Automobile Insurance Co. does not consider the illusory nature of the UIM coverage purchased, as Financial Indemnity asserts, because the insured in that case sought a declaratory judgment to obtain $100,000.00 in UIM coverage when the insured paid for only $75,000.00, excluding any offset. See MJP Response at 10 (citing Fasulo v. State Farm Mut. Auto. Ins. Co., 1989-NMSC-060, ¶ 3, 108 N.M. 807, 780 P.2d at 634 ).
In addition, charges Bhasker, Financial Indemnity errs when it states that § 66-5-301 has an "express offset provision," MJP Response at 10 (quoting MJP at 8), because, according to Bhasker, the Supreme Court of New Mexico recognizes that the statute does not expressly authorize an offset when it states: "While our statute does not specifically provide that the insured's underinsured motorist liability insurance is to be offset by the tortfeasor's liability coverage as do the statutes of other states ... such an offset is inherent in our statutory definition of underinsured motorist." MJP Response at 10 (quoting Schmick, 1985-NMSC-073, ¶ 28, 103 N.M. 216, 704 P.2d at 1099 ). "This matters because defendant insists that its insureds are charged to read and understand New Mexico case law in the same manner lawyers and members of the Supreme Court of New Mexico would," which, Bhasker contends, "goes against established New Mexico case law that protects the rights of consumer laymen." MJP Response at 10 (citing Rummel v. Lexington Ins. Co., 1997-NMSC-041, ¶ 22, 123 N.M. 752, 945 P.2d at 977 ). Bhasker contends that Financial Indemnity errs further when it states that, should the Court consider UIM coverage at higher limits, the insured will receive a windfall, because "as demonstrated in Pristavec and Hardy , higher limits may be considered illusory when the insureds UIM limits are equal or less than the bodily injury limits." MJP Response at 11 (citing Pristavec v. Westfield Ins. Co., 400 S.E.2d at 577 and Hardy v. Progressive Specialty Ins. Co., 67 P.3d at 894 ). Bhasker asserts that these cases stand for the proposition that the reasonable expectation of an insured with non-minimum limits UIM coverage is not met, in the same manner as an insured with minimal limits, and that applying a Schmick offset "similarly shortchange[s]" an insured with higher limits, "except that they may be shortchanged for even more premium money lost and even more benefits denied." MJP Response at 11.
Bhasker asserts that her Complaint is well-pled, that it includes facts sufficient to support a plausible claim for punitive damages, and that the Court should not dismiss her punitive damage claims "[a]t this early stage of litigation," because, according to Bhasker, the Court must consider her allegations as true, "including factual allegations that the defendant was willful or reckless in its decision to continue to sell illusory coverage to consumers in this state." MJP Response at 11-12. Bhasker argues that, because Financial Indemnity alone possesses information regarding whether it knew that it was violating New Mexico consumer protections laws, the Court should postpone ruling on punitive damages questions while discovery is ongoing. See MJP Response at 12. Bhasker contends that the Court's MOO concludes that she "properly and sufficiently pled that defendant acted in bad faith," and that Financial Indemnity may present its defense to such allegations at trial and after class certification. MJP Response at 12 (citing United Nuclear Corp. v. Allendale Mut. Ins. Co., 1985-NMSC-090, ¶ 16, 103 N.M. 480, 709 P.2d 649, 654 ("To assess punitive damages for breach of an insurance policy there must be evidence of bad faith or malice in the insurer's refusal to pay the claim.") ). Bhasker further contends that, contrary to Financial Indemnity's assertions that the law is unsettled and that extracontractual damages are therefore unavailable, "underinsured motorist law in New Mexico on how to properly inform an insured is well-settled and consistent with longstanding principles." MJP Response at 12. For example, Bhasker asserts that the Supreme Court of New Mexico established that, to properly inform an insured, insurers must "meaningfully incorporate[ ]" into an insured's policy the insured's rejection of UM/UIM coverage equal to the liability limits and that insurers must provide the insured with the premium charges corresponding to each available coverage. MJP Response at 12-13 (citing Jordan v. Allstate Ins. Co., 2010-NMSC-051, ¶ 16, 149 N.M. 162, 245 P.3d at 1219 ). Bhasker adds that the Supreme Court of New Mexico has determined that such disclosure requirements "will enable the insured to make an informed decision about the level of UM/UIM coverage he or she wants to purchase and can afford and will minimize uncertainty and litigation with regard to the coverage that the insured has obtained." MJP at 13 ( Jordan v. Allstate Ins. Co., 2010-NMSC-051, ¶ 16, 149 N.M. 162, 245 P.3d at 1219 ). According to Bhasker, Jordan v. Allstate Insurance Co. requires Financial Indemnity to disclose that it rarely pays UIM claims, and that, therefore, a jury could find that Financial Indemnity's "lack of disclosure ... was indeed intentional, reckless, and worthy of the imposition of punitive damages." MJP Response at 13.
Bhasker maintains that Financial Indemnity is "well aware" that the UIM coverage it sells at minimum and higher limits is illusory, because "numerous" courts have concluded that UIM coverage nearly identical to the coverage that Financial Indemnity offers is illusory in jurisdictions where Financial Indemnity does business. MJP at 13 (citing Pristavec v. Westfield Ins. Co., 400 S.E.2d at 577 ; Hardy v. Progressive Specialty Ins. Co., 67 P.3d at 894 ; Glazewski v. Coronet Ins. Co., 108 Ill.2d 243, 91 Ill.Dec. 628, 483 N.E.2d 1263 (1985) ("Underinsured coverage in the minimum limits ... is indeed illusory because it would never be payable when recovery is sought from another Illinois resident. Furthermore, it would not be payable ... where the at-fault driver is insured in other states which have financial responsibility limits equal to or greater than ... Illinois."); Hoglund v. Secura Ins., 176 Wis.2d 265, 500 N.W.2d 354, 357 (Wis. Ct. App. 1993) ("Because the insured had paid a premium for a benefit that would never be available, the court found the coverage illusory and contrary to public policy.") ).
Bhasker contends that Financial Indemnity violated the "special duty" that arises from a "superior knowledge of insurance law over ... insureds," the existence of which requires Financial Indemnity to "fully and properly inform" its insureds about the Schmick offset. MJP Response at 14 (citing N.M. Stat. Ann. § 57-12-2(E)(1) ; Weed Warrior, 2010-NMSC-050, ¶ 13, 149 N.M. 157, 245 P.3d at 1213 (citing Computer Corner, Inc., 2002-NMCA-054, ¶ 7, 132 N.M. 264, 46 P.3d 1264 ("[W]e will not impose on the consumer an expectation that she or he will be able to make an informed decision as to the amount of UM/UIM coverage desired or required without first receiving information from the insurance company.") ) ). Given that the Supreme Court of New Mexico decided Schmick in 1985, Bhasker asserts that Financial Indemnity "has benefited from its superior knowledge for over 33 years and counting but has nevertheless continued to sell illusory coverage in this state." MJP Response at 14.
Bhasker concludes that the Court should not preclude her punitive damages claim while discovery is ongoing, because discovery may produce evidence that Financial Indemnity knew that it "would never have to pay out on the vast majority of the UIM claims situations" given New Mexico's status as an offset state, and, thereafter, "proceeded with deliberate disregard for the potential harm and detriment to Helen and putative class members." MJP Response at 14. Such conduct, asserts Bhasker, "is precisely the sort of information, which, if presented to a jury, could lead to an award of punitive damages." MJP Response at 14.
3. The MJP Reply.
Financial Indemnity replies to Bhasker's MJP Response. See Reply in Support of Defendant's Motion for Partial Judgment on the Pleadings, filed May 1, 2018 (Doc. 61)("MJP Reply"). Financial Indemnity argues that, in Schmick, the Supreme Court of New Mexico expressly held that § 66-5-301 entitles insurers, in the UIM context, to offset the tortfeasor's liability limits payments. MJP at 1 (citing Schmick, 1985-NMSC-073, ¶ 28, 103 N.M. 216, 704 P.2d at 1099 ). Should the Court rule that Financial Indemnity cannot offset the tortfeasor's liability limits payments where the UIM coverage limits exceed the statutory minimum "and thus indisputably provide a potential monetary benefit to the policyholder," asserts Financial Indemnity, the Court would "eviscerate Schmick. " MJP Reply at 1. Financial Indemnity contends that, because the Court in its MOO recognizes that its mandate in this case is to ascertain what the Supreme Court of New Mexico would conclude, see MJP at 1 (citing MOO at 46-47), the Court should interpret Schmick as requiring the Court to grant the MJP with respect to non-minimum limits UIM coverage, which, according to Financial Indemnity, is the conclusion that the Supreme Court of New Mexico would reach, see MJP Reply at 2. Financial Indemnity charges that Bhasker knows that the Supreme Court of New Mexico would rule in Financial Indemnity's favor and that Bhasker argues that the MJP is premature merely to postpone such a ruling. See MJP at 2. Financial Indemnity contends, however, that Bhasker has put her illusory-coverage-at-all-levels theory "squarely before the court," and, in doing so, made the issue ripe for decision, given that Financial Indemnity "has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." MJP Reply at 2 (quoting Newsome v. The GEO Grp., Inc., No. CIV 12-0733 MCA/GBW, 2014 WL 12796733, at *1 (D.N.M. Jan. 22, 2014) (Wormuth, M.J.), report and recommendation adopted, No. CIV 12-0733 MCA/GBW, 2014 WL 12796748 (D.N.M. Apr. 8, 2014) (Armijo, J.)(citation and internal quotation omitted) ). Financial Indemnity asserts that, in Schmick, the Supreme Court of New Mexico
addressed two questions: (1) "whether New Mexico's UIM laws allow an insured to stack two UIM policies for purposes of determining the tortfeasor's underinsured status"; and (2) "whether underinsured motorist benefits are calculated by subtracting the amount of the tortfeasor's liability coverage from the amount of the insured's uninsured motorist coverage or whether the underinsurance benefits due equal the amount of uninsured motorist coverage purchased for the insured's benefit in addition to the amount of liability insurance proceeds available from the tortfeasor."
MJP Reply at 2 (quoting Schmick, 1985-NMSC-073, ¶ 6, 103 N.M. 216, 704 P.2d at 1094 ). The Supreme Court of New Mexico explains, according to Financial Indemnity, that the intent behind New Mexico's UIM scheme is "to put an injured insured in the same position he would have been in had the tortfeasor had liability coverage in an amount equal to the uninsured/underinsured motorist protection purchased for the insured's benefit." MJP Reply at 3 (quoting Schmick, 1985-NMSC-073, ¶ 10, 103 N.M. 216, 704 P.2d at 1095 ). Financial Indemnity quotes extensively from Schmick to support its proposition that insurers must reduce or "offset" UIM benefits by the amount of liability insurance that the insured receives from the tortfeasor:
The state of being underinsured exists when the aggregate of the insured's uninsured motorist coverage reduced by the tortfeasor's liability coverage is greater than zero. Hence, offset is required. Our statute limits the insured's recovery to the amount of uninsured motorist coverage purchased for the insured's benefit; that amount will be paid in part by the tortfeasor's liability carrier and the remainder by the insured's uninsured motorist insurance carrier.
MJP at 3 (quoting Schmick, 1985-NMSC-073, ¶ 28, 103 N.M. 216, 704 P.2d at 1099 ). Hence, the Court should reject Bhasker's theory, asserts Financial Indemnity, because to conclude otherwise, i.e., to apply Bhasker's illusory coverage theory to higher limits UIM coverage, would mean that insurers could not offset the first $25,000.00 in UIM coverage, which "turns Schmick on its head." MJP at 3.
Financial Indemnity characterizes Bhasker's assertion that the Court's MOO supports her position that the first $25,000.00 in UIM coverage is illusory even at non-minimum limits as "wholly without merit," because, although Financial Indemnity concedes that the Court accepted Bhasker's theory as true for MTD purposes, "nothing in the Court's Order can even remotely be construed to apply to non-minimum limits UIM coverage." MJP Reply at 4. Rather, according to Financial Indemnity, the Court's MOO "leaves no doubt" that the ceiling of Bhasker's illusory coverage theory is capped at minimum limits, "not where any level of UIM limits above the minimum is at issue." MJP Reply at 4 (emphasis in MJP Reply)(citing MOO at 2 ("Bhasker and the proposed class could still seek premium-based damages, because the Supreme Court of New Mexico would determine that the UIM coverage was illusory in light of little coverage it provides. " (emphasis in MJP Reply) ) ). Financial Indemnity adds that the Court properly characterizes Bhasker's theory when the Court quotes from the portion of Bhasker's Complaint which states that "there is virtually no possible underinsured minimum limits claim available to the Plaintiff and other similarly situated members of the class." MJP at 4 (emphasis in MJP) (quoting MOO at 3 (quoting Complaint ¶ 43, at 4) ) ). Financial Indemnity adds that further portions of Bhasker's Complaint emphasize that her theory applies to only minimum limits. See MJP Reply at 4 (citing Complaint ¶ 1, at 1 ("Basically, there is no such thing as 'minimum limitsunderinsured motorist coverage. ' " (emphasis in MJP) ); id. ¶ 23, at 4 ("[U]nderinsured coverage is superfluous when the tortfeasor and the injured driver both carry the statutory minimum of liability and underinsured coverage. " (emphasis in MJP) ) ). The Court's reasoning in its MOO, therefore, according to Financial Indemnity, was restricted to the minimum limits UIM coverage context. See MJP Reply at 4-5.
Financial Indemnity contends that Bhasker's MJP Response ignores Financial Indemnity's point that Weed Warrior, which compelled the Court, according to Financial Indemnity, to deny the MTD as to minimum limits UIM coverage, concerns only minimum limits situations. See MJP Reply at 5 (citing MOO at 74-75). Hence, Financial Indemnity maintains, the MOO's Weed Warrior citations emphasize that the illusory UIM coverage problem arises, "if at all," only where a tortfeasor's bodily injury liability limits offset completely an insured's minimum limits UIM coverage. MJP Reply at 5 (citing Weed Warrior, 2010-NMSC-050, ¶ 10, 149 N.M. 157, 245 P.3d at 1213 ("An insured carries UIM coverage only if the UM/UIM limits on her or his policy are greater than the statutory minimum of $25,000. " (emphasis in MJP) ).
Financial Indemnity alleges that Bhasker does not address the caselaw which shows that, even in jurisdictions where courts have held that minimum limits UIM coverage is illusory, courts have rejected her theory that UIM coverage is illusory at higher than minimum limits. See MJP Reply at 5. To support this proposition, Financial Indemnity cites to Taylor v. Greatway Insurance Co., for example, wherein the Supreme Court of Wisconsin states:
Taylor's UIM coverage limit in each of her policies issued by American Family is $50,000. Hermanson's $50,000 liability coverage limit is equal to, not less than, Taylor's $50,000 UIM coverage limit in each policy. The vehicle driven by Hermanson is not an underinsured vehicle as defined by American Family's policies. Taylor is therefore not entitled to UIM coverage under her policies with American Family.
MJP Reply at 5-6 (quoting Taylor v. Greatway Ins. Co. 628 N.W.2d at 921 ). According to Financial Indemnity, the above quotation distinguishes Taylor v. Greatway Insurance Co. from minimum limits UIM coverage cases when considered alongside the Supreme Court of Wisconsin's assertion that, in the minimum limits context, "there was no possibility ... that the insured driver could recover under her UIM policy because the policy defined an underinsured vehicle as a vehicle with liability limits less than the limits of the UIM coverage," whereas Taylor had "a UIM coverage limit ... greater than the minimum amount of liability coverage required.... As a result, it is possible for another driver to have a liability coverage limit less than Taylor's UIM coverage limit and, therefore, satisfy the American Family policy definition of underinsured vehicle." 628 N.W.2d at 923. Financial Indemnity also cites to DeGrand v. Motors Insurance Corp., wherein the United States Court of Appeals for the Seventh Circuit concludes that "underinsurance would not be illusory to drivers who purchase underinsured motorist coverage in an amount greater than the minimum amount of uninsured motorist coverage required by law." MJP Reply at 6 (citing DeGrand v. Motors Ins. Corp., 903 F.2d at 1103 n.2 ).
Financial Indemnity disputes Bhasker's contention that Pristavec v. Westfield Insurance Co. is persuasive, because, according to Financial Indemnity, New Mexico and West Virginia use different methods to determine whether a motorist is underinsured. See MJP Reply at 6. Financial Indemnity avers that determining whether a vehicle is "underinsured" under West Virginia law requires comparing the tortfeasor's liability coverage limit with the injured insured's total damages and not with the insured's UIM coverage limit, see MJP Reply at 6 (citing Pristavec v. Westfield Ins. Co., 400 S.E.2d at 582-83 ("This Court holds that underinsured motorist coverage is activated ... when the amount of such tortfeasor's motor vehicle liability insurance actually available to the injured person ... is less than the total amount of damages sustained ... regardless of the comparison between such liability insurance limits actually available and the underinsured motorist coverage limits."), whereas New Mexico determines whether a motorist is underinsured by comparing the tortfeasor's liability coverage limit with the total amount of UIM coverage limits available to the injured insured, see MJP Reply at 6 (citing Schmick, 1985-NMSC-073, ¶ 28, 103 N.M. 216, 704 P.2d at 1099 ). Hence, asserts Financial Indemnity, the Court has no basis to conclude that the Supreme Court of New Mexico would follow West Virginia's approach to determining whether a motorist in underinsured. See MJP Reply at 7.
Additionally, Financial Indemnity disputes Bhasker's contention that Hardy v. Progressive Specialty Insurance Co. is persuasive, because, Financial Indemnity contends, in that case, which involved an insured who argued that $25,000.00 of his $50,000.00 UIM coverage was illusory because of his insurer's offset provision, the Supreme Court of Montana concluded that the offset provision violates Montana public policy and is therefore unenforceable. See MJP Reply at 7-8 (citing 67 P.3d at 897 ("[T]he offset provision, as well as the definition of underinsured motorist, violate Montana public policy because they create an ambiguity regarding coverage, render coverage that Progressive promised to provide illusory, and defeat the insured's reasonable expectation."). Unlike the Supreme Court of Montana, avers Financial In