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

• A passenger, referred to as A, was involved in a vehicle collision resulting in $500,000 in damages. The vehicle A was in was hit by another driven by C, who had liability coverage of $100,000. A had underinsured motorist (UIM) coverage through multiple policies: $100,000 as a primary insurer because the vehicle A was in was insured by XYZ Insurance Co., and $175,000 through secondary insurers due to A being a named insured on those policies. The legal question revolves around whether the primary or secondary insurers should receive an offset for the $100,000 liability coverage from C, the tortfeasor (paras 2-3).

Procedural History

• State Farm filed an action on June 17, 2010, seeking a declaratory judgment on how UIM statutory offsets should be applied between primary and secondary insurers. The district court found the holdings in Tarango and Jones could not be reconciled and ruled that the primary insurer was entitled to the statutory offset. State Farm appealed, and the Court of Appeals certified two questions to the Supreme Court (paras 5-6).

Parties' Submissions

• Appellant State Farm Mutual Automobile Insurance Company: Argued for clarification on the application of UIM statutory offsets between primary and secondary insurers, seeking a declaratory judgment to resolve inconsistencies in case law (para 5).
• Defendant-Appellees (Safeco Insurance Company, New Mexico Municipal League and New Mexico Self Insurers’ Fund, Hallmark Insurance Company, and Geico General Insurance Company): Participated in cross-motions for summary judgment, implicitly defending the district court's application of the statutory offset to the primary insurer (para 5).
• Defendant-Appellant Farmers Insurance Company of Arizona: Joined State Farm in seeking appellate review, indicating disagreement with the district court's ruling.

Legal Issues

• Whether the Court of Appeals’ opinion in Jones conflicts with the Supreme Court’s opinion in Tarango regarding the application of statutory UIM offsets between primary and secondary insurers.
• Whether the statutory UIM offset should be applied initially in favor of the primary or secondary insurer (para 6).

Disposition

• The Supreme Court found that the Court of Appeals' holding in Jones conflicts with its opinion in Tarango.
• It held that the primary UIM insurer must pay up to its policy limits before a secondary UIM insurer is required to pay UIM benefits, and the statutory offset for a tortfeasor’s liability coverage is contained within the formula for computing the underinsurance benefits due an insured (para 20).

Reasons

• Per EDWARD L. CHÁVEZ, Justice, with concurrence from PETRA JIMENEZ MAES, Chief Justice, RICHARD C. BOSSON, Justice, CHARLES W. DANIELS, Justice, and BARBARA J. VIGIL, Justice:
  The Court clarified that the primary insurer is responsible for paying its policy limits before secondary insurers are required to contribute, rejecting the approach that would allow primary insurers to be absolved of liability through statutory offsets. This decision aligns with the principle that the insurer of the vehicle involved in the accident should bear the initial responsibility for UIM benefits, consistent with the rationale in Tarango and its progeny. The Court overruled the Court of Appeals’ opinion in Jones to the extent that it conflicted with this holding, emphasizing the need for a straightforward application of UIM benefits that does not permit an insured to receive more than their damages or policy limits, minus the tortfeasor’s liability payment (paras 14-19).