The slip opinion is the first version of an opinion released by the Clerk of the Court 

of Appeals. Once an opinion is selected for publication by the Court, it is assigned 

a vendor-neutral citation by the Clerk of the Court for compliance with Rule 23-

112 NMRA, authenticated and formally published. The slip opinion may contain 

deviations from the formal authenticated opinion.

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _____________

Filing Date: December 18, 2023

No. A-1-CA-39929

D.R. HORTON, INC. and DRH SOUTHWEST

CONSTRUCTION, INC.,

Plaintiffs-Appellants,

v.

TRINITY UNIVERSAL INSURANCE

COMPANY; KEMPER CORPORATION;

MERASTAR INSURANCE COMPANY;

and AMTRUST INSURANCE COMPANY

OF KANSAS, INC. f/k/a TRINITY UNIVERSAL

INSURANCE COMPANY OF KANSAS, INC.,

Defendants-Appellees.

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY

Francis J. Mathew, District Court Judge

Landry & Ludewig, L.L.P.

Stephanie Landry

Glenn R. Smith

Albuquerque, NM

Stalter Law LLC

Kenneth H. Stalter

Albuquerque, NM
for Appellants

Modrall, Sperling, Roehl, Harris & Sisk, P.A.

Jennifer A. Noya

Jeremy K. Harrison

Albuquerque, NM

for Appellees 

Stiff, Garcia & Associates, LLC

John S. Stiff

Edward F. Snow

Albuquerque, NM

for Appellee Amtrust Insurance Company of Kansas

OPINION

WRAY, Judge.

{1} This case involves the intersection of an insurer’s well-established duty to 

defend and an insured’s contractual duties under an insurance policy. In the district 

court, Appellants D.R. Horton, Inc. and DRH Southwest Construction, Inc. 

(collectively, Horton) alleged, in addition to many other claims, that the insurers,

Appellees Trinity Universal Insurance Company (Trinity Universal), Trinity 

Universal Insurance Company of Kansas (Trinity Kansas), and Amtrust Insurance 

Company of Kansas, Inc. (Amtrust) (collectively, Defendants), had a duty to defend 

a series of claims relating to construction defects. We refer to Trinity Kansas and 

Trinity Universal collectively as “Trinity.” The district court concluded that

Defendants suffered substantial prejudice from Horton’s multi-year delay in 

providing notice of the claims to Defendants and granted summary judgment in 
2

Defendants’ favor. Horton appeals the dismissal of its claims as well as a series of

other summary judgment denials and discovery rulings. Despite evidence that 

Horton intentionally delayed notifying Defendants of the claims, contrary to the 

requirements of the insurance policies at issue, Trinity did not defend Horton when 

it received actual notice of a claim that was arguably covered. See Garcia v. 

Underwriters at Lloyd’s, London, 2008-NMSC-018, ¶ 16, 143 N.M. 732, 182 P.3d 

113. As a policy matter, New Mexico law prioritizes the duty to defend over 

potential contract defenses—like the failure to give notice. See id. ¶¶ 18-19; Dove v. 

State Farm Fire & Cas. Co., 2017-NMCA-051, ¶ 15, 399 P.3d 400; State Farm Fire 

& Cas. Co. v. Price, 1984-NMCA-036, ¶¶ 30, 33, 101 N.M. 438, 684 P.2d 524, 

overruled on other grounds by Ellingwood v. N.N. Invs. Life Ins. Co., 1991-NMSC006, ¶ 17, 111 N.M. 301, 805 P.2d 70. Thus, if a jury determines that the insurer 

breached the duty to defend, the insurer “suffers serious consequences,” including 

the loss of certain contract-based defenses—like the insured’s failure to give notice.

Price, 1984-NMCA-036, ¶¶ 32-33. As a result, under New Mexico law, when the 

duty to defend remains in dispute, summary judgment may not be granted on 

defenses that implicate the insured’s breach of the insurance contract provisions. Id.

We therefore reverse the district court’s grant of summary judgment in Defendants’ 

favor based on notice to the insurer. Otherwise, we affirm.

BACKGROUND
3

{2} Horton began the development of subdivisions in 2005, and Vinyard & 

Associates, Inc. (Vinyard) provided Horton with geotechnical consulting services as 

a subcontractor. Horton and Vinyard entered into multiple contracts for this work, 

and under each contract, Vinyard was required to obtain a commercial general 

liability policy that included Horton as an additional insured. Using an insurance 

agency, Berger Briggs Real Estate & Insurance, Inc. (Berger Briggs), Vinyard 

obtained a commercial general liability policy from Trinity Kansas (the CGL Policy) 

and an umbrella policy from Trinity Universal (the Umbrella Policy), with both 

policies (collectively, the Trinity Policies) covering the period between October 28, 

2006 to October 28, 2007. The Trinity Policies include both (1) an obligation for the 

insured to notify the insurer of occurrences, offenses, claims, or suits; and (2) “the 

right and duty” for the insurer to defend the insured against any suit for damages to 

which the insurance applied. 

{3} In 2008, Horton received notice that some subdivision homes could be 

experiencing construction defects. Horton and Vinyard communicated about the 

defects and claims by the homeowners, and Horton involved other subcontractor 

insurers, including Acadia Insurance Company (Acadia) and BITCO General

Insurance Corporation (BITCO). The homeowner complaints began to be filed in 

November 2009 and a large number were eventually made part of a “consolidated 

arbitration.” See Lyndoe v. D.R. Horton, Inc., 2012-NMCA-103, ¶¶ 2-3, 5, 287 P.3d 
4

357 (describing the homeowner complaint litigation at issue in the present case).

Communications continued between Horton and Berger Briggs, Horton and 

Vinyard, and Vinyard and Berger Briggs. Beginning in 2012, two individual 

arbitrators in the homeowner cases determined that Horton did not heed Vinyard’s 

advice. On March 5, 2014, a few months before the first consolidated arbitration 

hearing, the consolidated arbitrator determined that “certain liability findings” from 

the prior two arbitrations, including Horton’s failure to follow Vinyard’s advice,

would have preclusive effect—though for future claims, Horton would be permitted 

to question the relevancy of the specific findings.

{4} After the March 2014 collateral estoppel ruling from the consolidated 

arbitrator and consolidated arbitration hearings held in early June 2014, Acadia 

wrote to Trinity regarding the CGL and Umbrella policies. In letters dated June 23, 

2014, Acadia requested that Trinity contribute to Horton’s defense. Trinity formally 

responded on August 25, 2014, and indicated that Trinity had not previously 

received notice of the claims but an investigation had commenced. Trinity explained

that Horton did not appear to have been added to the policies as an additional 

insured—which had been required under the original contracts between Horton and 

Vinyard—and additionally noted that the homeowner complaints that Acadia had 

provided did not allege fault on Vinyard’s part—only fault by Horton for not heeding 

Vinyard’s recommendations. Trinity requested that Acadia provide information to
5

assist the investigation and coverage analysis—specifically, information that would

demonstrate that Horton was an additional insured or that Vinyard was at fault. 

Trinity wrote to Acadia again on October 1, 2014, November 17, 2014, and on 

February 4, 2015. Having received no response from Acadia, in the February 2015 

letter, Trinity advised Acadia that “Trinity formally denies your request on behalf of 

Acadia Insurance to participate with Acadia in the defense of Horton in the” two 

identified proceedings. Trinity did not contact Vinyard, Berger Briggs, or Horton 

before sending the February 2015 letter denying Horton a defense.

{5} On December 18, 2015, BITCO wrote to Trinity and requested that Trinity 

provide a defense for Horton. Trinity responded on January 6, 2016, and observed

that it had previously requested information from Acadia that was not provided, 

asked BITCO to provide the same information to further a renewed investigation, 

and raised the same concerns about coverage. It appears from the record that, like 

Acadia, BICTO did not respond to Trinity’s requests for more information.

{6} On February 1, 2018—two years removed from the most recent 

correspondence relating to the presence or absence of coverage for Horton under 

Trinity policies and eight years removed from Horton’s first expression of concern 

regarding the claims of homeowners—Horton wrote directly to Trinity’s counsel for 

the first time. In that letter, Horton referenced the 2014 and 2015 letters from Acadia 

and BITCO and argued that Trinity had failed to legitimately respond to those
6

demands for a defense. Trinity responded on June 7, 2018, and though the entire 

letter does not appear to be in the record, the reviewable pages reiterate Trinity’s 

objections to coverage. 

{7} On July 26, 2018, Horton filed suit against Trinity, other insurers who had 

issued policies for different periods of time during the Horton-Vinyard contractual 

relationship (collectively, the Vinyard insurers), and Amtrust, which, as a result of 

an asset purchase, had acquired the policies of Trinity Kansas. This complaint marks 

the start of the litigation currently before this Court. Horton brought multiple claims

directly against Trinity and Amtrust as well as a claim for judgment on an arbitration 

award that Horton had secured against Vinyard for breach of contract. In the claim 

for a judgment, Horton alleged that Defendants must pay what Vinyard owed for the 

breach of contract, because Horton was an additional insured or Vinyard’s 

indemnitee. 

{8} Between October 2020 and May 2021, Horton, Trinity, and Amtrust filed 

twenty motions for summary judgment. In Trinity’s motion for summary judgment 

on Horton’s claim to coverage under the Umbrella Policy (the Umbrella Motion), 

which Amtrust joined, and Trinity’s motion for summary judgment on all claims 

based on Horton’s failure to give timely notice of the homeowner claims as required 

by the Trinity Policies (the Notice Motion), Trinity set forth additional evidence that 

Horton had intentionally not demanded a defense from Trinity. 
7

{9} This information, together with Horton’s explicit requests for a defense from 

Acadia and BITCO, led Trinity to assert in the present case that the only reasonable 

inference to draw was that Horton strategically chose not to pursue a defense from 

Trinity in the early years of the homeowner litigation and therefore failed to give the 

required notice under the Trinity Policies. In relevant part, Horton responded that 

the reasons for not pursuing a defense from Trinity before 2014 were immaterial. At 

the hearings related to Horton’s summary judgment on Trinity’s breach of the duty 

to defend (the DTD Motion), Horton additionally argued, again in relevant part, that

(1) Trinity could not assert Horton’s failure to cooperate as a defense if Trinity had 

breached the duty to defend; and (2) Horton’s reasons for not requesting a defense 

sooner were irrelevant because Horton sought no damages for the period before the 

2014 notice was provided. Horton did not, however, deny that the decision to delay 

pursing a defense from Trinity was strategic.

{10} Of the twenty motions filed (between these parties), the district court granted 

only a portion of the Umbrella Motion and the Notice Motion. The remainder, with 

the exception of four defense motions that were apparently unresolved, were denied. 

Importantly, the district court denied Horton’s DTD Motion for summary judgment 

based on the existence of disputed material facts, and Trinity had not filed a 

competing motion for summary judgment on the duty to defend. In granting Trinity’s

Umbrella Motion, the district court ruled that “summary judgment should be entered 
8

on any [of Horton’s] claim[s] that [it is] entitled to coverage as an additional insured 

under the” Umbrella Policy—but did not grant summary judgment on “extracontractual claims related to the” Umbrella Policy. Regarding the Notice Motion, 

the district court stated that Trinity had made a prima facie showing that it was 

entitled to judgment as a matter of law and ruled that Horton’s response did not meet 

the burden to demonstrate that disputed issues of fact would prevent summary 

judgment on notice. Specifically, the district court determined as a matter of law that 

Horton’s delay over a period of years in giving notice to [Trinity and 

Amtrust] of homeowner claims while engaging in litigation and/or 

arbitration proceedings and settling with homeowners or otherwise 

resolving claims created substantial prejudice to them. . . . Such delay 

relieved [Trinity and Amtrust] of both the duty to defend and the duty 

to indemnify.

Based on this conclusion, the district court dismissed Plaintiffs’ claims against 

Defendants with prejudice. This appeal followed.

DISCUSSION

{11} On appeal, Horton challenges nine of the district court’s summary judgment 

orders and two discovery-related orders. We review only the district court’s grant of 

summary judgment on the Notice Motion and the discovery rulings.

I. The Insured’s Failure to Give Notice as Required by the Insurance 

Contract Is Not an Available Defense to a Claim That the Insurer 

Breached the Duty to Defend
9

{12} We review the “grant of summary judgment de novo.” Dove, 2017-NMCA051, ¶ 10. As we have often explained, “[s]ummary judgment is appropriate where 

there are no genuine issues of material fact and the movant is entitled to judgment 

as a matter of law[,]” with “[a]ll reasonable inferences . . . construed in favor of the 

non-moving party.” Id. (internal quotation marks and citations omitted). Should 

there be “any question as to any issue of material fact, summary judgment is 

inappropriate.” Allsup’s Convenience Stores, Inc. v. N. River Ins. Co., 1999-NMSC006, ¶ 43, 127 N.M. 1, 976 P.2d 1 (internal quotation marks and citation omitted).

While Horton contests the district court’s grant of partial summary judgment on the 

Umbrella Motion and denial of several other motions, its primary challenge is to the 

district court’s dismissal of its claims based on the grant of Trinity’s Notice Motion 

and the corresponding denial of Horton’s DTD Motion. The parties’ arguments 

implicate two seemingly separate lines of authority—the law regarding the duty to 

defend and the law regarding the duty of the insured to give notice, which we pause

our analysis to review.

A. The Duty of Insurers: The Duty to Defend 

{13} In New Mexico, “[t]he duty of an insurer to defend arises from the allegations 

on the face of the complaint or from the known but unpleaded factual basis of the 

claim that brings it arguably within the scope of coverage.” Am. Gen. Fire & Cas. 

Co. v. Progressive Cas. Co., 1990-NMSC-094, ¶ 11, 110 N.M. 741, 799 P.2d 1113.
10

An insurer must defend (1) if a complaint filed “alleges facts potentially within the 

coverage of the policy”; (2) if the facts in the complaint do not clearly assert the facts 

so that the insurer can determine the action does not fall within the coverage of the 

policy (because doubts about coverage are “resolved in the insured’s favor”); or (3) 

“if the insurer is notified of factual contentions or if the insurer could have 

discovered facts, through reasonable investigation, implicating a duty to defend.”

Dove, 2017-NMCA-051, ¶ 11 (internal quotation marks and citations omitted). As 

this Court has explained, “[t]he upshot of our case law in this realm is this: an insurer 

who refuses to defend a covered insured without seeking a judicial determination 

that the alleged insured is not covered under the policy or without a voluntary waiver 

from the insured does so at its peril.” Id. ¶ 14 (citations omitted). We described the 

insurer’s peril as follows: “[A]n insurer who unilaterally refuses to defend 

effectively waives its ability to later challenge the underlying merits as to coverage 

because the ultimate question of coverage is to be properly resolved in the primary 

action in order to protect the interests of the insured and for judicial efficiency.” Id.

¶ 15. The duty to defend “may arise at the beginning of litigation or at some later

stage if the issues are changed so as to bring the dispute within the scope of policy 

coverage.” Am. Gen. Fire & Cas. Co., 1990-NMSC-094, ¶ 11.

{14} In Garcia, our Supreme Court held that “actual notice is sufficient to trigger 

the duty to defend unless the insured affirmatively declines a defense,” 2008-NMSC-
11

018, ¶ 1, and that “for the purposes of determining when an insurer’s duty to defend 

arises, actual notice means notice from any source sufficient to permit the insurer to 

locate and defend its insured.” Id. ¶ 25 (alteration, quotation marks, and citations

omitted). The Court cautioned, however, that the duty to defend need not be 

automatic and stated instead that on receiving actual notice, “the insurer may protect 

its interests simply by contacting the insured to ascertain whether the insurer’s 

assistance is desired[, and i]f the insured indicates that it does not want the insurer’s 

assistance, or is unresponsive or uncooperative, the insurer is relieved of its duty to 

defend.” Id. ¶ 19 (internal quotation marks and citation omitted). While the notice 

received by the Garcia insurer satisfied the new standard for actual notice in the 

context of the duty to defend, the case was nevertheless remanded. Id. ¶¶ 25, 27. 

Fact questions remained about whether the insured “was foregoing a defense from” 

the insurer, id. ¶ 26, because the insurer did not advise the insured that no demand 

had been made and the record contained “ambiguous communications” between the 

insurer and the estate representative, id. ¶¶ 22-23. Our Supreme Court, in remanding, 

determined that “the key inquiry in this case is whether under all the circumstances, 

including the correspondence exchanged between the [estate] and [the insurer], the 

[estate] was foregoing a defense from [the insurer].” Id. ¶ 26 (alterations, quotation 

marks, and citation omitted). Because the inquiry was “fact-driven” and required 

interpretation of “an ambiguous letter,” summary judgment was inappropriate. Id.
12

¶ 26. “Thus, while actual notice presumptively triggers a duty to defend, a jury may 

nevertheless find, when warranted by the facts, that the insured knowingly declined 

a defense, and the duty to defend was therefore not breached.” Id. ¶ 16 (internal 

quotation marks and citation omitted). With this as context, we turn to the insured’s 

contractual obligation to give notice to the insurer.

B. The Duty of an Insured: The Obligation to Give Notice in the Context of 

the Duty to Defend

{15} The Trinity Policies each contain a notice provision, which requires the 

insured to notify the insurer “as soon as practicable” of an occurrence, claim, or suit, 

and the purpose of such a provision “is to enable the insurer to prepare to defend or 

make settlement as it sees fit.” State Farm Mut. Auto. Ins. Co. v. Found. Rsrv. Ins. 

Co., 1967-NMSC-197, ¶ 13, 78 N.M. 359, 431 P.2d 737. The principle is longestablished that “[w]hen an insurance company seeks to avoid its obligations under 

a policy by claiming that the insured materially breached policy provisions, it must 

demonstrate substantial prejudice as a result of the breach.” Price, 1984-NMCA036, ¶ 30. Generally, “substantial prejudice and whether the insurance company and 

the insured acted fairly are . . . questions for a jury.” Id.

{16} In Price, this Court considered intertwined “issues concerning coverage, the 

duty of the insurance company to defend, and cooperation of the insured.” Id. ¶ 1.

The Price insured was involved in a car crash and notified his own insurer. Id.

¶¶ 2, 4. In the lawsuit that followed, the parties reached a settlement. Id. ¶ 9. The 
13

insurer was not a party and did not “participate in or consent to this settlement.” Id.

The insurer filed a declaratory judgment action against the insured, and the district 

court ruled that the insurer had no duty to defend the insured in the car-crash suit 

because the insured did not notify the insurer of the claim or demand a defense. Id.

¶¶ 10, 17. This Court reversed, holding that “[a] jury should decide whether there 

was a sufficient demand to defend and whether [the insurer] failed to defend” as well 

as “issues concerning [the insured]’s failure to cooperate, whether [the insurer] was 

prejudiced by [the insured]’s failure to cooperate, whether the settlement was made 

in good faith and whether it was reasonable in amount.” Id. ¶ 51. Specifically, this 

Court determined that

[t]here is evidence in the record to support an inference that [the 

insurer] knew a suit had been filed, or knew of facts which imposed a 

duty upon it to find out whether litigation involving its insured was 

pending, and that it consciously disregarded the facts and failed to 

defend its insured. The record also contains evidence which, if believed

by a jury, supports [the insurer]’s contention that [the insured] failed to 

cooperate, causing substantial prejudice to the insurer.

Id. ¶ 31. While our Supreme Court in Garcia broadened the acceptable form of 

notice of a claim from what Price required—from a demand by the insured to actual 

notice from any source—Garcia and Price uniformly determine that the “policy of 

encouraging insurers to perform their contractual obligations outweighs any 

requirement that allows insurers to default on their obligation to defend simply 

because the insured did not formally ask the insurer to do what the insurance contract 
14

already requires.” Garcia, 2008-NMSC-018, ¶ 20 (internal quotation marks and 

citation omitted); Price, 1984-NMCA-036, ¶¶ 31-32, 51 (same).

{17} Price and Dove require that if disputed issues of fact exist regarding the 

insurer’s breach of the duty to defend, the question must be submitted to the jury.

Price, 1984-NMCA-036, ¶ 51. Where the duty to defend and the duty to give notice 

are both at issue, disputes of fact involving the duty to defend must be resolved as a 

threshold matter by the fact-finder, because notice-type defenses are unavailable to 

the insurer if the insurer breached the duty to defend. See id. ¶¶ 32-33, 53 

(recommending the use of special verdict forms on the duty to defend issue); Dove, 

2017-NMCA-051, ¶ 15 (outlining the peril of wrongfully denying the duty to 

defend). If the insurer is determined to have “unjustifiably fail[ed] to defend,” the 

insurer “suffers serious consequences” and “becomes liable for a judgment entered 

against the insured and for any settlement entered into by the insured in good faith.” 

Price, 1984-NMCA-036, ¶¶ 32-33. If, however, the fact-finder finds no breach of 

the duty to defend, the insurer may argue notice as a defense—that the insured 

breached the contract by failing to give the insurer timely notice and that the breach 

substantially prejudiced the insurer—to any remaining claims raised by the insured

that are not contingent on the duty to defend findings. Id. ¶ 30; see also State Farm 

Mut. Auto. Ins. Co. v. Fennema, 2005-NMSC-010, ¶ 17, 137 N.M. 275, 110 P.3d 

491 (holding that the insurer must demonstrate substantial prejudice resulting from 
15

an insured’s breach of a consent to settle provision). Regardless, an insurer is not 

defenseless when facing allegations that it has breached the duty to defend. The 

insurer may assert that the claim is not arguably covered by the policy, the insurer 

did not receive actual notice of the claim, the insurer conducted a reasonable 

investigation, or that the insured declined a defense. Garcia, 2008-NMSC-018, 

¶¶ 16, 19; Dove, 2017-NMCA-051, ¶ 11.

C. The Impact of the Duty to Defend on the Present Case

{18} We return now from the abstract to the present case, which like Price, involves 

the duty to defend and the duty to notify, and like Price and Dove, the possibility 

that the insurer, Trinity, waived some defenses if it breached the duty to defend. 

And, as in Price and Garcia, we conclude that because factual disputes remain 

regarding the duty to defend, we must reverse the grant of summary judgment on 

Trinity’s Notice Motion. The district court granted the Notice Motion despite its 

determination that factual issues remained regarding the duty to defend. Pursuant to 

Price, however, any failure by Horton to give notice or to cooperate would be 

defenses lost to Trinity in the event that Trinity breached the duty to defend. See 

Price, 1984-NMCA-036, ¶¶ 31-33. As a result, the district court’s determination that 

disputed facts exist about Trinity’s breach of the duty to defend precluded summary 

judgment on the Notice Motion.
16

{19} Nevertheless, Trinity argues that the district court’s final order on the Notice 

Motion was correct because Trinity had no duty to defend—that the duty to defend 

was not triggered for two reasons. Trinity maintains that the duty to defend was not 

triggered because Horton’s breach of the contractual notice obligation happened first 

in time and it is only “[a]fter an insurer declines to defend, [that] it ‘loses the right’ 

to point to post-denial actions by the insured that would otherwise be a breach of 

policy conditions.” As we have explained, however, New Mexico law requires that 

the duty to defend question be resolved before contract defenses (like compliance 

with contractual notice requirements) can be applied—even though the insured’s 

actions in delaying notice happened before the insured has an opportunity to defend. 

The resulting chronological disconnect is resolved by the insurer’s ability to argue 

in the context of the duty to defend that the insurer did not receive actual notice or 

the insured’s actions demonstrated that the insured intended to decline a defense. 

See Garcia, 2008-NMSC-018, ¶ 1. If the insurer never received actual notice from 

any source that is “sufficient to permit the insurer to locate and defend its insured,” 

the insurer did not breach the duty to defend. See id. ¶ 25 (internal quotation marks 

and citation omitted). If the insured is found to have declined a defense by its actions 

before a defense is denied, there is no breach of the duty to defend. See id. ¶¶ 1, 26. 

We therefore need not strictly limit the analysis to the timing of the parties’ actions, 

but instead leave for the fact-finder to consider the reasonable inferences to be 
17

gleaned from those actions in the context of the duty to defend. See id. ¶ 26; Price, 

1984-NMCA-036, ¶ 31.

{20} Trinity also contends that the duty to defend was not triggered because notice 

under the Trinity Policies was a condition precedent to Trinity performing its 

contractual duties—including providing a defense. A condition precedent, however,

“is generally understood as an event occurring after the formation of a valid contract, 

an event that must occur before there is a right to an immediate performance, before 

there is breach of a contractual duty, and before the usual judicial remedies are 

available.” Rodriguez v. Sanchez, 2023-NMCA-076, ¶ 10, 536 P.3d 543 (alteration, 

internal quotation marks, and citation omitted). If “a contract contains a condition

precedent to performance, the right to enforce the contract does not arise until the 

condition precedent has been fulfilled.” Id. ¶ 12. Other jurisdictions have held as 

Trinity argues, that notice is a condition precedent to coverage. See Philadelphia 

Indem. Ins. Co. v. Genesee Valley Improvement Corp., 834 N.Y.S.2d 802, 803-04 

(App. Div. 2007); E&L Chipping Co. v. Hanover Ins. Co., 962 S.W.2d 272, 278 

(Tex. App. 1998). A dispute of authority remains, see generally 14A Jordan R. Plitt 

et al., Couch on Insurance, § 202:13, Westlaw (database updated Nov. 2023), 

however, and New Mexico has rejected the view that the failure of a party to an 

insurance contract to perform a condition excuses the other party from performance. 

As to this issue, we must adhere to our Supreme Court’s view.
18

{21} Our Supreme Court characterizes insurance contracts as “aleatory,” meaning 

that “one or both parties’ performance is conditional on the happening of a fortuitous 

event.” Jackson Nat’l Life Ins. Co. v. Receconi, 1992-NMSC-019, ¶ 21, 113 N.M. 

403, 827 P.2d 118. A key aspect of an aleatory contract is that the promise of each 

party “is not given in exchange for the prospect of performance of the other party’s 

promise, and actual or prospective nonperformance by one party to the contract does 

not discharge the other.” Id. In Jackson, the policy included an “express condition” 

that the insured’s “health remain, at the time of delivery of the policy, as represented 

in the application.” Id. ¶ 20. Because of the aleatory nature of the contract, however, 

the insured’s failure to perform the promise—to notify the insurer if his health 

changed before delivery of the policy—did not discharge the insurer from 

performing “its aleatory promise to pay [the insured]’s beneficiary the face amount 

of the policy in the event of his death.” Id. ¶ 21. That principle applied to the present 

case dictates that any failure by Horton to give timely notice did not, on its own, act 

as a condition precedent that discharged Trinity’s duty to defend before the duty to 

defend was triggered.

{22} For its part, Horton maintains on appeal that the district court should have 

granted summary judgment in its favor on the DTD Motion and Trinity contends 

that disputed material facts prevented summary judgment on the duty to defend 

because Horton was not arguably covered under the policy. This creates an unusual 
19

posture for our review. The denial of summary judgment to Horton—based on 

disputed issues of fact—is not final and generally not reviewable. See Jones v. City 

of Albuquerque Police Dep’t, 2020-NMSC-013, ¶ 23, 470 P.3d 252 (noting that an 

order denying summary judgment is interlocutory, not final, and “generally not 

immediately appealable”). As we have noted, Trinity filed no cross-motion in the 

district court on the duty to defend and the district court had no opportunity to grant 

such a motion. Thus, the question of factual disputes on the duty to defend, which 

the district court decided warranted a trial, is out of our reach on appeal.1

 

1We note that the district court’s order partially granting Trinity’s Umbrella 

Motion for summary judgment determined that Horton was not covered as an 

additional insured under the Umbrella Policy. It is not clear whether the district court 

denied Horton’s DTD Motion because Horton was not covered by the Umbrella 

Policy and there was therefore no duty to defend, or whether the district court simply 

granted the Umbrella Motion that there was no coverage without any corresponding 

intent to rule on the duty to defend under the Umbrella Policy. The former ruling 

would be reversible, because the duty to defend can exist even in light of a 

subsequent determination of no coverage, see Price, 1984-NMCA-036, ¶¶ 16-17 

(affirming a directed verdict of no coverage but separately considering the duty to 

defend), and the coverage inquiry for the duty to defend is whether the insured was 

arguably or potentially covered. Dove, 2017-NMCA-051, ¶ 16. The latter ruling 

would stand, for the same reason—there may ultimately be no coverage even if there 

was a duty to defend at the time the insurer received notice. We presume the ruling 

simply determined that the Umbrella Policy did not cover Horton as an additional 

insured. See Bounds v. Hamlett, 2011-NMCA-078, ¶ 32, 150 N.M. 389, 258 P.3d 

1181 (“Generally, district court judgments are presumptively correct.”). We 

therefore do not reverse the grant of summary judgment on coverage under the 

Umbrella Policy and do not disturb the district court’s ruling that questions of fact 

precluded summary judgment on the duty to defend.
20

{23} If the jury finds Trinity breached the duty to defend, Trinity “suffers serious 

consequences,” including the “loss of the right to claim that the insured breached the 

policy provisions . . . and the right to claim that the insured did not cooperate.” See 

Price, 1984-NMCA-036, ¶¶ 32-33. In that scenario, any breach of the contractual

notice requirement becomes irrelevant. If, however, the jury finds that Trinity did 

not breach the duty to defend, Trinity’s notice defense would become relevant to any 

other claims Horton may have that are separate from the duty to defend. On appeal, 

Horton argues that its claims were not limited to those “as an insured,” but also 

included judgment-creditor claims relating to the Vinyard Judgment—the arbitration 

award that Horton obtained against Vinyard. Trinity responds that Horton failed to 

preserve the question of whether the grant of the duty to defend motion resolved all 

of the pending claims, and alternatively argues that judgment on all claims was 

appropriate based on Horton’s failure to give notice and the nature of the Vinyard 

Judgment. We conclude that Horton’s argument was sufficiently preserved—the 

district court denied both parties’ separate summary judgment motions related to the 

Vinyard Judgment, which indicates disputes of material fact on the subject. In 

dismissing Horton’s complaint completely, the district court relied on its finding that

“as a matter of law, Horton’s delay over a period of years in giving notice to [Trinity] 

of homeowner claims while engaging in litigation and/or arbitration proceedings and 

settling with homeowners or otherwise resolving claims created substantial 
21

prejudice to them” and that the “delay relieved defendants of both the duty to defend 

and the duty to indemnify.” Thus, the district court determined that summary 

judgment on the notice question also resolved the Vinyard Judgment, despite 

disputed questions of fact on the substance of the claim. Because claims unrelated 

to the duty to defend and the Vinyard judgment claim could survive a fact-finder’s 

determination that Trinity did not breach the duty to defend, we consider Horton’s 

argument that summary judgment on the Notice Motion was inappropriate because

the parties disputed material facts related to prejudice.

{24} Horton presented evidence that notice was timely for the homeowner claims 

that were added after Acadia’s 2014 notice to Trinity, the post-2014 homeowner 

claims were not the same as the earlier homeowner claims, and the consolidated 

arbitrator’s findings did not predetermine later cases. Trinity responds that (1) 

Horton’s intentional failure to tender a defense earlier was inherently prejudicial; 

and (2) Trinity was excluded from any control over or strategy regarding the initial 

homeowner arbitrations, bound by the arbitrators’ findings on the homeowner claims 

such that “Horton’s negligence could no longer be contested,” and would have been 

able to do nothing more than pay fees and judgments. From the evidence presented 

on summary judgment, a reasonable fact-finder could conclude either that Trinity 

was prejudiced by the inability to participate in the early proceedings to shape and 

direct strategy and avoid preclusive findings, as Trinity maintains, or that as Horton 
22

argues, the ongoing future homeowner proceedings were not predetermined by the 

results from the consolidated arbitrations, and Trinity was not prejudiced. See Price, 

1984-NMCA-036, ¶ 51 (recognizing the “jury issues” regarding the insured’s 

cooperation). As a result, the district court’s grant of summary judgment on notice 

must be reversed on this basis as well.

D. The Parties’ Remaining Summary Judgment Arguments

{25} Horton also challenges the district court’s denial of summary judgment related 

to Amtrust’s joinder. The district court denied cross-motions on this issue based on 

disputed questions of fact. We need not address this issue because we remand for 

further proceedings as a result of our ruling on the Notice Motion. On remand, it is 

for the fact-finder to resolve these remaining issues of disputed material fact.

II. We Affirm the District Court’s Discovery Rulings

{26} Because we remand for further proceedings, we address Horton’s challenges 

to the district court’s discovery rulings that occurred close in time to the grant of 

summary judgment. Horton contends that the district court improperly (1) compelled 

Horton to reveal privileged communications regarding Horton’s reasoning for 

allegedly delaying a request for Trinity to defend (the Tender Communications); and 

(2) refused to compel Trinity to reveal information regarding the “claims 

investigation” conducted by Trinity’s outside counsel (the OC Documents). We 

review discovery rulings for abuse of discretion and “[t]o the extent a discretionary 
23

decision is premised on a construction of a privilege, it presents a question of law, 

subject to de novo review.” See Pina v. Espinoza, 2001-NMCA-055, ¶ 12, 130 N.M. 

661, 29 P.3d 1062.

{27} “A client may claim attorney-client privilege to refuse to disclose confidential 

communications between certain persons if the communications were made for the 

purpose of acquiring legal advice for the client.” Santa Fe Pac. Gold Corp. v. United 

Nuclear Corp., 2007-NMCA-133, ¶ 13, 143 N.M. 215, 175 P.3d 309 (citing Rule 

11-503(B) NMRA). Attorney-client privilege has four elements: “(1) a 

communication (2) made in confidence (3) between privileged persons (4) for the 

purpose of facilitating the attorney’s rendition of professional legal services to the 

client.” Id. ¶ 14. The party claiming the privilege has the burden to establish “a 

communication is protected as an exception to the ordinary rule” that “the public has 

a right to every man’s evidence.” Id. ¶ 13 (internal quotation marks and citation 

omitted). With these principles in mind, we consider the Tender Communications 

followed by the OC Documents.

A. Horton Did Not Carry Its Burden to Demonstrate That the Tender 

Communications Were Privileged

{28} In order to investigate Horton’s motives for waiting to request a defense from 

Trinity, Trinity sought discovery and eventually filed a motion to compel. The 

district court granted Trinity’s motion, and on appeal, Horton argues that the district 

court improperly compelled production because (1) Trinity’s request was 
24

insufficiently specific; (2) the requested information was not relevant; (3) the 

information was privileged legal—and not business—advice; and (4) Horton did not 

waive the privilege. Because we conclude that Horton did not meet the burden to 

establish that the documents were privileged, we do not address waiver.

{29} We disagree with Horton’s first contention that Trinity’s motion did not 

“identif[y] the request at issue or the specific documents sought” and did not attach 

the discovery request in contention as required by Rule 1-037 NMRA. See

Albuquerque J. v. Bd. of Educ. of Albuquerque Pub. Schs., 2019-NMCA-012, ¶ 15, 

436 P.3d 1 (“An abuse of discretion occurs when a ruling is clearly contrary to the 

logical conclusions demanded by the facts and circumstances of the case.” (internal 

quotation marks and citation omitted)). Trinity attached the requests for production 

to the motion, as well as portions of Horton’s privilege log, and sought to compel 

Horton to produce a witness to answer questions “that relate[] discretely to the tender 

of defense issues.” The district court noted that Trinity’s requests were “very broad” 

and exercised its discretion to narrow and specify the information sought because 

some of the documents “may be legitimate privileges as asserted.” Because the 

district court narrowed the request, Horton demonstrates no prejudice from any 

failure by Trinity to sufficiently identify the requested information in the motion to 

compel, and the district court did not abuse its discretion in compelling production. 

See Doe v. Roman Cath. Diocese of Boise, Inc., 1996-NMCA-057, ¶ 21, 121 N.M. 
25

738, 918 P.2d 17 (explaining that Rule 1-026(C) NMRA “invests the trial court with 

the authority to reasonably limit discovery; therefore, it is incumbent upon [the 

objecting party] to demonstrate that the limitation constituted an abuse of discretion 

so as to prejudice [the party’s] case”).

{30} As to Horton’s second contention, that the Tender Communications are not 

relevant to the subject matter of the case, we have already determined that disputed 

material facts prevented summary judgment on Trinity’s claim based on Horton’s 

alleged breach of the duty to provide notice, including whether Horton declined a 

defense. Even though the fact-finder might determine that Trinity breached the duty 

to defend, which would put the notice defense out of Trinity’s reach, the information 

“appears reasonably calculated to lead to the discovery of admissible evidence” and 

therefore falls within the “scope of discovery”—provided that the information is 

“not privileged.” See Rule 1-026(B)(1).

{31} Turning to privilege, Horton’s arguments relate to two types of Tender 

Communications: those between Horton’s in-house counsel and outside counsel 

(Counsel Communications) and those between outside counsel and other entities 

(Entity Communications). Horton’s argument regarding Counsel Communications 

relates to Bhandari v. Artesia General Hospital, in which we explained that “[t]he 

privilege protects communications generated or received by an attorney giving legal 

advice but does not protect communications derived from an attorney giving 
26

business advice or acting in some other capacity.” 2014-NMCA-018, ¶ 12, 317 P.3d 

856 (internal quotation marks and citation omitted). Horton points to evidence that 

the Counsel Communications were solely legal. Horton, however, also produced an 

affidavit from in-house counsel stating that “the decisions regarding the tenders of 

the defense of the Underlying Litigations and Arbitrations were a combination of 

business and legal considerations, and the business considerations were integrally 

intertwined with the legal considerations and therefore cannot be discussed without 

disclosing attorney-client privileged information.” Horton argues that any legal 

purpose should shield the communication, but Bhandari forecloses that approach. 

{32} This Court in Bhandari concluded that “a court faced with a situation where 

the primary purpose of a communication is not clearly legal or business advice 

should conclude the communication is for a business purpose, unless evidence 

clearly shows that the legal purpose outweighs the business purpose.” Id. ¶ 18. The 

evidence presented established an admittedly mixed purpose. Horton points to no 

evidence to demonstrate that the legal purpose “clearly” outweighs the business 

purpose. The district court applied the correct legal standard to decide the privilege 

question, and the evidence presented supported the district court’s conclusion that 

Horton did not meet the burden to establish the privilege. Under these circumstances, 

we discern no abuse of discretion. See id. ¶ 9 (reviewing de novo whether the 

appropriate standard for privilege was applied and concluding that the evidence 
27

supported the district court’s determination as to whether the communications were 

business or legal advice).

{33} Horton additionally argues that the Entity Communications were protected by 

the common interest privilege.2 Attorney-client privilege “may be established by 

demonstrating that the communication occurred ‘between the client or client’s 

lawyer and another lawyer representing another in a matter of common interest.’” 

Albuquerque J., 2019-NMCA-012, ¶ 19 (alteration omitted) (quoting Rule 11-

503(B)(3)). Horton points to affidavits that it argues demonstrate an agreement 

between Horton, Acadia, and BITCO regarding “a cooperative and common 

enterprise towards an identical legal strategy” for the homeowner claims. The party 

asserting the common interest privilege, however, must establish a factual basis for 

two additional elements, in addition to an agreement. Id. Assuming that Horton’s 

affidavits establish a preexisting or contemporaneous agreement of the parties, 

Horton does not demonstrate that the agreement reflected a “shared identical legal 

interest” or that the protected communications were each “made during the course 

of a joint defense effort between the resisting party and the third party and in 

furtherance of that effort.” See id. (internal quotation marks and citation omitted). 

 

2Horton refers also to the work product doctrine and the mediation privilege—

two separate protections from discovery with separate analyses and controlling facts. 

We decline to address either as these protections are raised in two sentences without 

application of the cited law, Rule 11-503(B)(3) and NMSA 1978, Section 44-7B-4 

(2007), to the facts of the present case. 
28

As a result, Horton did not meet “the burden of proving all elements of the privilege 

as to each communication claimed to be privileged.” See id.

B. Horton Did Not Meet the Burden to Compel Production of the OC 

Documents

{34} Last, Horton argues that the district court should have compelled Trinity to 

identify the documents that Trinity sent to outside counsel in order to facilitate 

investigation of Acadia’s 2014 notice of claim and to produce unredacted 

communications between Trinity’s adjustors and outside counsel. Horton does not 

appear to contend the OC Documents were not privileged. As a result, Horton once 

again bore the burden to show that either the documents should have been compelled 

or the communications unredacted. See Santa Fe Pac. Gold Corp., 2007-NMCA133, ¶ 25 (placing the burden on the party seeking the documents after a prima facie 

case for privilege is made).

{35} As to the request to identify documents, Trinity notes that it had no list of the 

documents that were provided to outside counsel and the entire claims file was 

produced to Horton. In reply, Horton asserted that the district court should have 

compelled Trinity to “confirm” outside counsel’s testimony that he delivered his file 

to Trinity. We see no prejudice, and therefore no abuse of discretion, in the district 

court’s denial of Horton’s motion to “confirm” outside counsel’s testimony about 

which documents were reviewed. See Doe, 1996-NMCA-057, ¶ 21. 
29

{36} As to the redaction of documents, Horton argues that (1) any privilege 

associated with the communications between Trinity’s adjustors and outside counsel 

was waived because Trinity seeks to rely in good faith on outside counsel’s advice; 

(2) attorney-client privilege does not shield communications that are relevant to the 

insurer’s bad faith; and (3) Horton nevertheless has “substantial need” for the 

material. Trinity, however, has stipulated that it does not intend to assert a relianceon-counsel defense and instead points to retaining counsel only as a step performed 

to investigate. Horton contends that this distinction makes no difference, but because 

Trinity does not intend to justify its decision not to defend by relying on counsel’s 

advice, Trinity has not waived the privilege in this respect. See Pub. Serv. Co. of 

N.M. v. Lyons, 2000-NMCA-077, ¶ 23, 129 N.M. 487, 10 P.3d 166 (requiring 

“offensive or direct use of privileged materials before the party will be deemed to 

have waived its attorney-client privileges”). We are further unpersuaded by the outof-state authority that Horton cites for the proposition that attorney-client privilege

should not prevent discovery in bad faith cases. See, e.g., Boone v. Vanliner Ins. Co., 

744 N.E.2d 154, 211-12 (Ohio 2001) (“The issue before us is whether, in an action 

alleging bad faith denial of insurance coverage, the insured is entitled to obtain, 

through discovery, claims file documents containing attorney-client 

communications and work product that may cast light on whether the denial was 

made in bad faith.”). An insurer’s good faith beliefs regarding coverage have no 
30

bearing on the duty to defend analysis. See Dove, 2017-NMCA-051, ¶ 13 (explaining 

that “a good faith belief” that the insured is not covered “is not a defense to the 

breach of the duty to defend” (internal quotation marks and citation omitted)). We

conversely cannot justify invading the privilege when evidence of the insurer’s good 

or bad faith is not at issue. And truly last, Horton’s reference to a “substantial need” 

invokes an exception to the work product doctrine and not attorney-client 

privilege—the two are distinct and separate. See Santa Fe Pac. Gold Corp., 2007-

NMCA-133, ¶ 38. Horton has not contested that the OC Documents are privileged 

and therefore, we need not consider the separate work product doctrine and its 

exceptions.

{37} Under the facts of the present case and based on the arguments raised on 

appeal, we cannot conclude that the district court abused its discretion by denying 

Horton’s motion to compel the OC Documents.

CONCLUSION

{38} For the reasons stated herein, we affirm in part, reverse in part, and remand 

for further proceedings.

{39} IT IS SO ORDERED.

__________________________________

KATHERINE A. WRAY, Judge

WE CONCUR:
31

_________________________________

J. MILES HANISEE, Judge

_________________________________

GERALD E. BACA, Judge