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Certiorari Denied, August 13, 2010, No. 32,512

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2010-NMCA-082

Filing Date: May 7, 2010

Docket No. 29,087

LEE GULBRANSEN,

Plaintiff-Appellant,

v.

PROGRESSIVE HALCYON INSURANCE

COMPANY d/b/a PROGRESSIVE DIRECT,

a foreign corporation, and IAN WILLIS,

Defendants-Appellees.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Linda M. Vanzi, District Judge

Law Office of LeeAnn 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
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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 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 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
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{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 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
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until January 1, 1980.

{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 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-NMSC001, ¶ 15, 147 N.M. 678, 228 P.3d 462 (concluding that “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
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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 Nw. Ins. Co., 2010-NMCA-024, ¶¶ 22, 24, 39, 148 N.M.

97, 230 P.3d 844 (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-031, ¶ 27, 148 N.M. 151, 231 P.3d 607 (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 ___. 

{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 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 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
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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). 

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 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
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claims”; and (3) remand for further proceedings consistent with this opinion. 

{17} IT IS SO ORDERED.

____________________________________

MICHAEL E. VIGIL, Judge

WE CONCUR:

____________________________________

JONATHAN B. SUTIN, Judge

____________________________________

TIMOTHY L. GARCIA, Judge

Topic Index for Gulbransen v. Progressive Halcyon Ins. Co., Docket No. 29,087

AE APPEAL AND ERROR

AE-RM Remand

AE-SR Standard of Review 

CP CIVIL PROCEDURE

CP-SJ Summary Judgment

IN INSURANCE

IN-MV Motor Vehicle Insurance

IN-UM Uninsured or Underinsured Motorist

ST STATUTES

ST-IP Interpretation