2023 New Mexico Statutes › Chapter 59A - Insurance Code › Article 16 - Trade Practices and Frauds › Section 59A-16-30 - Private right of action.

Any person covered by Chapter 59A, Article 16 NMSA 1978 who has suffered damages as a result of a violation of that article by an insurer or agent is granted a right to bring an action in district court to recover actual damages. Costs shall be allowed to the prevailing party unless the court otherwise directs. The court may award attorneys' fees to the prevailing party if:
A. the party complaining of the violation of that article has brought an action that he knew to be groundless; or
B. the party charged with the violation of that article has willfully engaged in the violation.
The relief provided in this section is in addition to remedies otherwise available against the same conduct under the common law or other statutes of this state; provided, however, that the Workers' Compensation Act [Chapter 52, Article 1 NMSA 1978] and the New Mexico Occupational Disease Disablement Law provide exclusive remedies.
History:
Laws 1984, ch. 127, § 296.1; 1990 (2nd S.S.), ch. 2, § 91.
ANNOTATIONS
Cross references.
— For New Mexico Occupational Disease Disablement Law,
see
52-3-1 NMSA 1978 and notes thereto.
No cause of action if insurance is nonmandatory.
— A third-party claimant does not have a statutory bad faith cause of action against an excess liability insurer for failure to settle an underlying suit, pursuant to the New Mexico Insurance Code, where the excess liability insurance policy between the insurer and the insured is not mandated by New Mexico law.
Jolley v. Associated Elec. & Gas Ins. Servs. Ltd.
, 2010-NMSC-029, 148 N.M. 436, 237 P.3d 738.
Where the decedent died as a result of an explosion and fire caused by the collision of the decedent's vehicle with an unprotected natural gas wellhead; the owner of the gas well had an excess reimbursement insurance policy; the owner rejected the decedent's estate's offer of settlement; the estate obtained a judgment against the owner for compensatory and punitive damages in an amount that substantially exceeded the amount of the estate's settlement offer; the estate sued defendant for failure to make a good faith effort to settle the estate's lawsuit; and the excess liability policy was not required by any New Mexico law, the decedent's estate did not have a bad faith cause of action against the insurer.
Jolley v. Associated Elec. & Gas Ins. Servs. Ltd.
, 2010-NMSC-029, 148 N.M. 436, 237 P.3d 738.
Judgment rule.
— Damages in insurance bad faith actions are determined by the judgment rule which does not require the insured to make payment as a precondition to the insurers' liability. A bad faith insurer is liable regardless of whether its insured has paid, can pay or must pay an excess judgment.
Dydek v. Dydek
, 2012-NMCA-088, 288 P.3d 872.
Where the injured spouse was severely injured when the driving spouse attempted to pass on a blind curve and collided head-on with another vehicle; the injured spouse was awarded personal injury damages of $2.8 million dollars against the driving spouse; the policy limits of the driving spouse's liability insurance policy was $100,000; the driving spouse was awarded excess damages of $2.7 million dollars against the driving spouse's insurer for bad faith; and the injured spouse agreed not to enforce the personal injury judgment against the driving spouse personally, the insurer was liable for the excess judgment.
Dydek v. Dydek
, 2012-NMCA-088, 288 P.3d 872.
The private right of action is a statutory cause of action
and is not founded on or related to any common law liability or contractual obligation.
Martinez v. Cornejo
, 2009-NMCA-011, 146 N.M. 223, 208 P.3d 443, cert. denied, 2009-NMCERT-001, 145 N.M. 655, 203 P.3d 870.
Attorney fees incurred by an employee in a mandamus action
to compel the employee's governmental employer to appoint independent defense counsel to defend the employee pursuant to the Tort Claims Act are not recoverable by the employee under the Insurance Code.
Paz v. Tijerina
, 2007-NMCA-109, 142 N.M. 391, 165 P.3d 1167.
Reservation of rights against insurer in settlement agreement.
— The absence of a judicial determination of fault or liability is an absolute bar to a third party claim against an insurer and the reservation in a settlement agreement with an insured of a claim against the insured's insurer does not create any rights against the insurer.
King v. Allstate Ins. Co.
, 2007-NMCA-044, 141 N.M. 612, 159 P.3d 261, cert. denied, 2007-NMCERT-004, 141 N.M. 568, 158 P.3d 458.
Actual notice of a claim against the insured
triggers the duty to defend even if the insured has not given notice of the claim to the insurer.
Garcia v. Underwriters at Lloyd's London
, 2007-NMCA-042, 141 N.M. 421, 156 P.3d 712,
aff'd
, 2008-NMSC-018, 143 N.M. 732, 182 P.3d 113.
Legislature intended
to create a remedy for third-party claimants.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
The text of this section leaves no impression that the legislature intended to deny a remedy to third-party claimants.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Legislative purpose.
— In creating a separate statutory action, the legislature had a remedial purpose in mind.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
In choosing the words "any person" the legislature did not mean to restrict recovery
solely to first parties, those insured under the policy.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Private right of action for third parties
who are victims of automobile accidents is consistent with a statutory scheme that was intended to benefit both insureds and third-party claimants.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
A private right of action for third-party claimants enforces the policy of the Insurance Code, which is to promote ethical settlement practices within the insurance industry.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Sufficient evidence to support insurer's denial of benefits in third-party claim.
— Where the district court's finding that defendant's blood alcohol content was nearly double the New Mexico threshold for a presumption of intoxication was based on improperly admitted evidence, the district court's determination that defendant was under the influence of alcohol at the time of the accident was upheld where other properly admitted evidence showed that defendant was drinking on the evening of the accident, that emergency medical personnel smelled alcohol on defendant's person at the scene of the accident, a medical record that was properly admitted indicated that defendant had a blood alcohol level of .26, and an expert in traumatic brain injuries testified that defendant's blood alcohol level "would be an intoxicating level." The evidence supported reasonable inferences that defendant was under the influence of alcohol when he left a liquor establishment on his all terrain vehicle, and that consequently defendant's driving ability was impaired, and that defendant's alcohol use was a cause of the accident.
Brawley v. Board of Regents
, 2016-NMCA-037, cert. denied.
Third-party claimant may not sue both insured and insurer
in the same lawsuit.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Claimant will not even have an action under 59A-16-20 E
NMSA 1978, unless and until there has been a judicial determination of the insured's fault and the amount of damages awarded in the underlying negligence action.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Exclusion of attorneys.
— The private right of action under the Insurance Code is limited by statute to violations by insurance companies and their agents; attorneys are not included.
Hovet v. Allstate Ins. Co.
, 2004-NMSC-010, 135 N.M. 397, 89 P.3d 69.
Reliance on deceptive conduct.
— Consistent with a national trend to interpret consumer protection statutes, like the Unfair Insurance Practices Act, such that plaintiffs need not prove reliance, and consistent with the absence of language in the act requiring reliance, a plaintiff need not allege or prove that she relied on defendant's purported deceptive conduct in order to recover under the act.
Smoot v. Physicians Life Ins. Co.
, 2004-NMCA-027, 135 N.M. 265, 87 P.3d 545.
Proof of link required.
— While it is true that the Unfair Insurance Practices Act requires proof of a casual link between conduct and loss, there is nothing in the language of the act requiring proof of a link between conduct and purchase or sale.
Smoot v. Physicians Life Ins. Co.
, 2004-NMCA-027, 135 N.M. 265, 87 P.3d 545.
Arbitration clause barred.
— Regulation mandating arbitration clause in title insurance contract is in conflict with 57-12-10 NMSA 1978 and this section; therefore, plaintiff in suit against title company may have statutory claims heard in a court of law.
Lisanti v. Alamo Title Ins. of Tex.
, 2001-NMCA-100, 131 N.M. 334, 35 P.3d 989,
aff'd
, 2002-NMSC-032, 132 N.M. 750, 55 P.3d 962.
Because 59A-16-30 and 57-12-10 NMSA 1978 provide for judicial actions on claims of unfair insurance and trade practices, a regulation, NMAC 13.14.18.14, which requires mandatory arbitration in title insurance policy disputes, is unenforceable because it violates the landowner's right to a trial by jury, as guaranteed by N.M. Const. art. II, § 12, in his action against a title insurance company asserting the above-stated claims and because the rights created by the statutes prevail over the regulation.
Lisanti v. Alamo Title Ins.
, 2002-NMSC-032, 132 N.M. 750, 55 P.3d 962, cert. denied, 537 U.S. 1193, 123 S. Ct. 1288, 154 L. Ed. 2d 1027 (2003).
Groundless claims.
— Plaintiffs are subject to fee sanctions if they have brought suit knowing they can present no legal argument to support the claim, or knowing they cannot come forth with the appropriate factual predicate to support their theory.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
This section expresses the clear legislative intent that in order for plaintiffs to be sanctioned with attorneys' fees it must be shown they subjectively knew at the time the suit was filed that the complaint was groundless. Under the appropriate circumstances, however, the filing of an amended complaint may constitute the bringing of an action, and, if done with knowledge that its allegations provided no grounds to prevail, may subject the plaintiff to sanctions.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
A claim is groundless if the allegations in the complaint, although sufficient to survive a motion to dismiss for failure to state a claim, are not in good faith discoverable through litigation.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
The determination of whether a suit is groundless from the outset should not turn on a pleading that may be inartfully drafted or facts that may not have been available when the pleadings were filed so that certain allegations could not be made.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
Dismissal prior to a trial on the merits is not dispositive of the issue of groundlessness.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
Remand for an evidentiary hearing was appropriate, where factual questions remained as to whether a city knew that its third-party suit against an insurer was groundless.
City of Farmington v. L.R. Foy Constr. Co.
, 1991-NMSC-067, 112 N.M. 404, 816 P.2d 473.
Jury verdict supports award of fees.
— Insured's entitlement to attorney's fees was established by the factual determinations implicit in the jury's award of punitive damages.
O'Neel v. USAA Ins. Co.
, 2002-NMCA-028, 131 N.M. 630, 41 P.3d 356, cert. denied, 131 N.M. 737, 42 P.3d 842.
Award of fees and costs.
— Where plaintiff, a construction business that conducts, among other things, roof repair, including "torch-down" roofing, a technique which uses a flaming torch to heat and seal tar paper onto a roof, purchased a general commercial liability insurance policy through an insurance broker, who was authorized to sell insurance products supplied by defendant, an insurance company, and where defendant transmitted to the broker a copy of the insurance policy, which specifically precluded coverage for damages caused by torch-down roofing, and where plaintiff, unaware of the exclusion, submitted a claim for coverage after a fire occurred at a home while plaintiff was performing torch-down roofing, and where defendant denied plaintiff's insurance claim relying on the torch-down roofing exclusion, and where the district court granted defendant's motion for summary judgment on the grounds that plaintiff had reasonable notice of the torch-down roofing exclusion as a matter of law and awarded costs to defendant, the district court did not abuse its discretion in awarding costs and fees where it affirmatively explained, in a detailed twelve-page order, its reasons for awarding fees and costs in a manner that was not contrary to logic or reason.
OR&L Const. v. Mountain States Mut. Cas. Co.
, 2022-NMCA-035.
Insured's request for apportioned attorneys' fees rejected.
— In an action involving a question of whether an insurer who had a subrogated interest in the insured's settlement was required to pay a proportionate share of the insured's attorney fees incurred in settling the claim, evidence supported the finding that the insurer's conduct was reasonable and did not violate this section because the issue had not been previously addressed by the courts and was open to legitimate debate.
Amica Mut. Ins. Co. v. Maloney
, 1995-NMSC-059, 120 N.M. 523, 903 P.2d 834.
Federal diversity jurisdiction.
— In unfair trade practices action, federal court did not err in assuming diversity jurisdiction based on amount in controversy of $50,000 (now $75,000), where treble damages sought were $41,028.51 and the plaintiff sought reasonable attorney's fees and costs.
Miera v. Dairyland Ins. Co.
, 143 F.3d 1337 (10th Cir. 1998).
Law reviews.
— For annual survey of New Mexico commercial law, see 16 N.M.L. Rev. 1 (1986).
For annual survey of New Mexico law of torts, see 16 N.M.L. Rev. 85 (1986).
For annual survey of New Mexico insurance law, 19 N.M.L. Rev. 717 (1990).
For note, "Workers' Compensation Law - Bad Faith Refusal of an Insurer To Pay Workers' Compensation Benefits: Russell v. Protective Insurance Company," see 20 N.M.L. Rev. 757 (1990).
For note and comment, "A Third-Party Claimant Becomes an Insured: Hovet v. Allstate and the Expanding Right to Sue under New Mexico's Insurance Code," see 35 N.M. L. Rev. 651 (2005).
Am. Jur. 2d, A.L.R. and C.J.S. references. —
Award of attorneys' fees in actions under state deceptive trade practice and consumer protection acts, 35 A.L.R.4th 12.
Liability insurance: excess carrier's right of action against primary carrier for improper or inadequate defense of claim, 49 A.L.R.4th 304.
Emotional or mental distress as element of damages for liability insurer's wrongful refusal to settle, 57 A.L.R.4th 801.
Liability insurance: third party's right of action for insurer's bad-faith tactics designed to delay payment of claim, 62 A.L.R.4th 1113.
Policy provision limiting time within which action may be brought on the policy as applicable to tort action by insured against insurer, 66 A.L.R.4th 859.
Pre-emption by Longshore and Harbor Workers' Compensation Act (33 USCS § 901 et seq.) of state law claims for bad-faith dealing by insurer or agent of insurer, 90 A.L.R. Fed. 723.