Opinion ID: 3170827
Heading Depth: 3
Heading Rank: 1

Heading: CGL Policy Provisions

Text: Under New Mexico law, parties are free to structure their contractual obligations as they wish, so long as they do not clearly contravene public policy. See First Baptist Church of Roswell v. Yates Petroleum Corp., 345 P.3d 310, 313–14 (N.M. 2015); Nearburg v. Yates Petroleum Corp., 943 P.2d 560, 571 (N.M. Ct. App. 1997) (“Parties to a contract agree to be bound by its provisions and must accept the burdens of the contract along with the benefits.”). Recognizing this general principle, New Mexico courts interpret contractual provisions to effectuate the intent of the parties. See WXI/Z Sw. Malls v. Mueller, 110 P.3d 1080, 1083 (N.M. Ct. App. 2005). effectuate what was really intended by the parties.” Twin Forks Ranch, Inc. v. Brooks, 964 P.2d 838, 841 (N.M. Ct. App. 1998) (internal quotation marks omitted). But the question of the parties’ true intent is a factual matter, best decided by the district court after a full evidentiary hearing. C.R. Anthony, 817 P.2d at 246. Again, the district court should consider this question in the first instance on remand. 8 “[A]nd absent any ambiguity, the court may not alter or fabricate a new agreement for the parties.” Id. (internal quotation marks omitted). Travelers argues the express language of the Policy imposed an obligation on Mr. Christy to inform Travelers he had incorporated his business. To begin, Travelers relies on a provision in the Policy that reads: “This policy contains all the agreements between you and us concerning the insurance afforded.” According to Travelers, this language created an affirmative obligation requiring Mr. Christy to notify Travelers of any changes to his business structure. The district court agreed with Travelers, characterizing this language as a “catch-all” provision that required Mr. Christy to inform Travelers of any changed circumstances. We do not agree with this reading. Nothing in the express language of the provision imposes any obligation on either Mr. Christy or Travelers. Rather, the provision is a standard integration clause, which merges any prior or contemporaneous agreements into the final written contract. See Nakashima v. State Farm Mut. Auto. Ins. Co., 153 P.3d 664, 668 (N.M. Ct. App. 2007); see also 2 David Frisch, Lawrence’s Anderson on the Uniform Commercial Code § 2-202:48 (3d ed.) (“An integration clause is indicative that the parties intended the writing to be the exclusive statement of the parties’ agreement, and will usually be given that effect.”). The sole and unambiguous effect of this provision is to limit the parties’ agreement to the final written contract. There is no obligation-creating language in the clause, and 9 we will not read into the CGL Policy duties not clearly contemplated by the parties.5 See Cont’l Potash, Inc. v. Freeport-McMoran, Inc., 858 P.2d 66, 80 (N.M. 1993) (“Thus, implied covenants are not favored in law, especially when a written agreement between the parties is apparently complete.”). To the extent the integration clause is relevant to the issue of Mr. Christy’s duty, it dictates that any obligation to notify Travelers about the formation of K&D, Inc. must be expressly stated in the Policy. Travelers argues that such an obligation can be found in the provision stating that the Policy is void if an insured commits fraud or “intentionally conceal[s] or misrepresent[s] a material fact.” Travelers argues this language created an affirmative duty for Mr. Christy to inform Travelers of the change in business form. Again, we disagree. This provision states that the CGL Policy is void in the event of fraud or if an insured “intentionally conceal[s] or misrepresent[s] a material fact.” By its plain language, it does not impose a duty requiring Mr. Christy to inform Travelers of changes to his business. It does not expressly impose affirmative obligations on either party. Under this provision, the CGL Policy could be rendered void if Mr. Christy made a material misrepresentation to Travelers. But, as explained below, we 5 In fact, had Mr. Christy wanted to change the Policy to reflect K&D, Inc. as the named insured, this provision would have required him to do so in writing through a suitable endorsement. See Koehlke v. City Street Inn, Inc., No. 2002-A- 0108, 2003 WL 22290888, at –3 (Ohio Ct. App. Sept. 30, 2003) (interpreting identical language to require insured to notify insurer in writing of change from sole proprietorship to corporation if she wished to bring a claim under a theory of liability only available to her if policy was issued to a corporation). That is, the integration clause would have precluded Mr. Christy from unilaterally altering the terms of the Policy simply by forming K&D, Inc. 10 cannot determine at this stage of the proceedings whether Mr. Christy made such a material misrepresentation. As a result, it is uncertain whether this provision of the CGL Policy is implicated. See discussion infra. The district court therefore erred in concluding the language of the CGL Policy imposed an ongoing obligation on Mr. Christy to update Travelers about any changed circumstances related to his business.