Opinion ID: 2767550
Heading Depth: 2
Heading Rank: 2

Heading: Reformation Under Jordan

Text: Saveraid next argues that she is entitled to reformation of her UIM coverage limits under Jordan. We disagree. Under the facts of this case, denying Saveraid the ability to reform her UIM coverages does not violate a New Mexico fundamental principle of justice. For insurance policies originating in its state, New Mexico requires that an insured’s UIM coverage limits must equal her liability limits unless the insured waives this requirement in writing as part of the insurance policy delivered to her. Jordan, 245 P.3d at 1217. If an insurer fails to obtain a valid rejection, New stacking, and it did not explicitly forge a nexus between the new standard that it announced and the concept of stacking.” Jaramillo v. Gov’t Emp. Ins. Co., 573 F. App’x 733, 743 (10th Cir. 2014) (unpublished). We conclude that these cases do not change the landscape of anti-stacking policy in the context of choice-of-law analysis in New Mexico. 8 Saveraid asks that we certify this question to the New Mexico Supreme Court. This is unnecessary because New Mexico has already answered this question, as we explained above. -14- Mexico courts will reform the policy to provide UIM coverage that equals the limits of the liability coverage. Id. But Iowa has no such requirement. See Iowa Code §§ 516A.1, 321A.1 (2014). Saveraid’s UIM coverage is less than her liability coverage. Because her policies originated in Iowa, we will apply Iowa law unless reformation under Jordan is a fundamental principle of justice in New Mexico. Saveraid argues that the policy behind Jordan—to protect insureds by requiring the insurer to get an explicit rejection—rises to the level of a fundamental principle of justice in New Mexico. She supports this assertion by noting that Jordan says nothing about “other insurance” clauses or their effect on inter-policy stacking, so Sloan remains good law. But, she claims, Jordan completely changed inter-policy stacking because, according to her interpretation of the case, no matter how unambiguous an anti-stacking provision is, Jordan mandates that UIM coverages on a multi-vehicle policy must be stacked unless the Jordan requirements are met. The district court declined to determine whether the Jordan requirements rise to the level of a fundamental principle of justice in New Mexico. It found that, based on the facts in this particular case, applying Iowa law would not conflict with fundamental New Mexico principles of justice and thus no reformation should occur. We agree. -15- If Iowa law applies, Saveraid would not be entitled to additional UIM coverage. Iowa does not require its insurers to offer policy holders UIM coverage equal to their liability coverage. See Iowa Code §§ 516A.1, 321A.1 (2014). Instead, Iowa merely requires that an insurer provide UIM coverage equal to the statutory minimum of $20,000 for one person, absent a written rejection. See Iowa Code §§ 516A.1, 321A.1 (2014). Saveraid’s UIM coverage already exceeds that statutory minimum under Iowa law. Consequently, she would not be eligible for reformation of her UIM coverage and would not receive additional compensation beyond the $100,000 in UIM benefits State Farm already paid her. If New Mexico law applies, Saveraid also would not be eligible for additional UIM benefits. As previously stated, in New Mexico, an insured is entitled to have her UIM coverage reformed (increased) to equal her liability coverage, absent a legally sufficient rejection pursuant to Jordan. 245 P.3d at 1217. Saveraid’s UIM coverage is less than her liability coverage, so she falls into the category of insureds that Jordan addresses. However, New Mexico’s law governing UIM coverage has a limitation that Iowa law does not, thus prohibiting Saveraid from recovering additional UIM benefits. Under Iowa law, an insured is permitted to recover her UIM benefits until she is fully compensated for her injuries or until her policy limits are exhausted. Am. States Ins. Co. v. Estate of Tollari, 362 N.W.2d 519, 522 (Iowa -16- 1985) (holding that UIM benefits are not decreased by the amount of the underinsured’s liability coverage if the insured’s injuries exceed the limit). In contrast, under New Mexico law, an insured is entitled to UIM benefits only to the extent that her UIM coverage exceeds the underinsured’s liability coverage. Schmick v. State Farm Mut. Auto. Ins. Co., 704 P.2d 1092, 1098 (N.M. 1985). In Schmick, the New Mexico Supreme Court held that an insured’s UIM coverage may be offset by the tortfeasor’s liability coverage. Id. at 1099. For example, imagine the insured has $30,000 in UIM coverage. She gets into a car accident with an underinsured driver, who has $25,000 in liability coverage. The insurer owes her $30,000 (her UIM coverage) minus $25,000 (the tortfeasor’s liability coverage) for a total of $5,000. In this case, even if Saveraid’s UIM benefits were reformed under Jordan to $500,000 (the amount of her liability coverage), that amount would not exceed the liability coverage she received from Hall’s insurance coverage, also $500,000. That liability coverage from Hall would offset Saveraid’s own UIM coverage. 9 Thus, even if New Mexico law governed the policy and the policy was 9 Technically, the $500,000 that Saveraid received from Hall’s liability coverage actually came from her own insurance policy because Hall was covered under her policy as a permissive driver. To explain, insurance policies often include an omnibus clause stating that the word “insured” includes not only the named insured but also any person using the car with the named insured’s permission. When this permissive driver has an accident, the omnibus clause extends liability coverage under the owner’s policy to the driver. See George A. Locke, 18 Am. Jur. Proof of Facts § 1 (3d. ed. 2014). In this case, -17- reformed, Saveraid would not receive additional UIM benefits because they would be offset by the liability coverage she received from Hall’s insurance. Because Saveraid would remain in the same financial position whether or not Jordan applies, we do not have to reach the question of whether Jordan constitutes a fundamental principle of justice in New Mexico. Moreover, Saveraid is attempting to pick and choose the laws from each state that benefit her the most. She would like us to reform her UIM coverage limits under Jordan while asking us to ignore New Mexico’s settled law of deducting liability benefits from her UIM coverage. Such an approach contravenes the intentions behind each state’s laws, and we refuse to engage in such arbitrary lawmaking. In sum, we agree with the district court that Saveraid is not entitled to a reformation of her UIM benefits. Under both Iowa and New Mexico law, she could not recover more money than she already has recovered. Therefore, we decline to decide whether the rule from Jordan constitutes a fundamental principle of justice in New Mexico and reject Saveraid’s contention that she is entitled to reformation of her UIM benefit limits.