AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• On March 19, 2006, Christine Sandoval and Melissa Carter were involved in an automobile accident with Shawna Chavez, who was driving while intoxicated. As a result, Sandoval and Carter incurred medical expenses, lost wages, and pain and suffering. They sought compensatory and punitive damages from Mid-Century Insurance Company, which insured Chavez's vehicle but excluded punitive damages from liability coverage. They also filed a UIM claim against Farmers Insurance Company of Arizona, seeking $30,000 each in punitive damages, alleging Chavez was underinsured with respect to punitive damages (paras 2-4).

Procedural History

• District Court of Bernalillo County, Theresa M. Baca, District Judge: Granted Farmers Insurance Company of Arizona's motion for summary judgment and denied Defendants' motion (para 5).

Parties' Submissions

• Farmers Insurance Company of Arizona: Argued that Defendants were entitled to UIM benefits in the amount of $5000 each, calculated by offsetting the policy limits of Defendants’ UIM coverage by the policy limits of the Mid-Century policy (para 4).
• Defendants (Christine Sandoval and Melissa Carter): Claimed that the offset must be based on the amount of money actually received by Defendants in settlement of their claims, rather than the liability limits of the Mid-Century policy (para 4).

Legal Issues

• Whether an insurer is entitled to offset an injured insured’s award of underinsured motorist (UIM) benefits by a tortfeasor’s liability policy limits when the insured receives an amount less than policy limits due to a contractual exclusion for punitive damages (para 1).

Disposition

• The Court of Appeals of New Mexico reversed the judgment of the district court, limiting Farmers' offset to the amount of liability proceeds actually received by Defendants under the Mid-Century policy (para 22).

Reasons

• Per WECHSLER, Judge (CELIA FOY CASTILLO, Chief Judge, MICHAEL D. BUSTAMANTE, Judge concurring): The court concluded that the insurer’s offset is limited to the amount of money actually received by the insured from the tortfeasor, in light of the remedial purpose of NMSA 1978, Section 66-5-301 (1983). This decision was based on the statute's intent to assure that insured motorists entitled to compensation will receive at least the sum certain in underinsurance coverage purchased for their benefit, to the extent other available insurance proceeds from responsible underinsured tortfeasors do not equal or exceed the amount of coverage purchased. The court found support for its conclusion in precedent and emphasized that contractual exclusions that conflict with the mandatory requirements of Section 66-5-301 are void. The court also noted that creating a special rule for punitive damages, as opposed to compensatory damages, would be illogical and could lead to absurd results contrary to legislative intent (paras 7-21).