Opinion ID: 2638540
Heading Depth: 2
Heading Rank: 3

Heading: Other Public-Policy Concerns

Text: {16} Insureds further argue that it would violate the remedial intent of the UM statute to allow Allstate to impose additional expense and delay on them by litigating issues of coverage or damages, rather than submitting these issues to arbitration. Quoting from the Court of Appeals decision in Padilla, Insureds argue that to the extent the insured incurs litigation costs in order to obtain the benefits of uninsured motorist coverage, the value of such coverage is diluted. See Padilla v. State Farm Mut. Auto. Ins. Co., 2002-NMCA-001, ¶ 17, 131 N.M. 419, 38 P.3d 187, modified in part, 2003-NMSC-011, 133 N.M. 661, 68 P.3d 901. Here, Insureds argue, not to compel arbitration would dilute their coverage by depriving them of a more speedy, cost-effective method of resolving UM disputes. {17} We agree with Insureds that the UM statute is designed to protect individuals against the hazard of culpable but uninsured motorists, see Romero v. Dairyland Ins. Co., 111 N.M. 154, 156, 803 P.2d 243, 245 (1990), and to place the insured in the same position as he or she would have been had the tortfeasor had liability insurance, see Padilla, 2003-NMSC-011, ¶ 9. We do not see, however, how Allstate's consensual arbitration provision violates this legislative intent. If the alleged tortfeasor had owned liability insurance, and the alleged tortfeasor's insurer had disputed liability or the extent of the damages, McMillan and Gallegos necessarily would have litigated their claims. Just as in any tort action, the injured party would have the burden of proving duty, breach of duty, proximate cause and damages to a jury, and the alleged tortfeasor would have a fair opportunity to rebut the plaintiff's evidence and to plead affirmative defenses, including comparative negligence. Here, Allstate has disputed the extent of the damages claimed by Insureds and has requested that their respective claims be tried in a court of law. This is nothing more than Insureds could expect had the alleged tortfeasors owned liability insurance. {18} Furthermore, the consensual arbitration provision at issue here does not confer upon the insurer, as State Farm's escape hatch provision did in Padilla, a greater leverage over the insureds in demanding litigation. Unlike Padilla, the insureds under this contract have an equal right of refusal of arbitration, and therefore an equal right of access to the courtroom. The provision operates symmetrically to allow either party to avoid compulsory arbitration. We cannot say that Allstate's consensual arbitration provision, merely by raising the prospect of litigation, puts the insured in a worse position than he or she would have been had the tortfeasor had liability insurance. {19} Insureds argue that we should invalidate the consensual arbitration provision because its hidden purpose is to impose additional expense and delay on the insured through oppressive litigation costs and delay tactics by the insurer. Insureds, however, have advanced no evidence either that Allstate has employed such tactics in this case, or that insurers generally are more likely to employ such tactics in UM cases than in other types of insurance claim disputes. Moreover, effective mechanisms already exist to discourage such behavior. First, a prevailing insured is entitled to recover from the insurer certain costs of litigation pursuant to Rule 1-054(D)(2) NMRA 2003. Second, the trial court has the discretion to award prejudgment interest, an award that ensures that just compensation to the tort victim is not eroded by the dilatory tactics of the tortfeasor. Coates v. Wal-Mart Stores, Inc., 1999-NMSC-013, ¶ 55, 127 N.M. 47, 976 P.2d 999 (quoted authorities and quotation marks omitted); see NMSA 1978, § 56-8-4(B) (1993). In addition, in a recent amendment to the New Mexico Rules of Civil Procedure, if the insurer rejects an offer of settlement made by a claimant prior to litigation, and the claimant obtains a judgment at trial that is more favorable than the offer of settlement, the claimant is entitled to double the amount of costs incurred after the making of the offer. Rule 1-068(A) NMRA 2003. Insureds have not persuaded us that such procedural rules, designed to discourage precisely the conduct they fear, are inadequate in the context of UM litigation.