Opinion ID: 2521578
Heading Depth: 2
Heading Rank: 3

Heading: Plaintiff's Ambiguity Argument

Text: {22} Although we have set forth the policy language requirements for future stacking cases, we must now determine whether the particular contract at issue in this case effectively limits Plaintiff's right to stack to two, but no more than two coverage limits. We recognize that our holding described above is a new, and not easily foreshadowed, aspect to our jurisprudence on stacking and that it would be inequitable to apply it against Allstate before it has had an opportunity to alter its policy language; for those reasons, we choose to give it a purely prospective application. See Beavers v. Johnson Controls World Servs., 118 N.M. 391, 398, 881 P.2d 1376, 1383 (1994) (listing as factors we consider when deciding to exercise our inherent authority to give our decisions prospective effect whether the rule is new, whether retroactive application would advance or retard the new rule, and whether it would be inequitable to apply the new rule against the parties). To resolve this case, we will instead rely on our traditional ambiguity analysis, as described in Rodriguez. Plaintiff argues: (1) we should, on the basis of Allstate's premium structure, find the limitation-of-stacking clause unenforceable; and (2) the limitation-of-liability clause is ambiguous and therefore unenforceable under our case law. Because of Allstate's premium structure, it is no simple matter for a reviewing court, much less an insured, to determine whether Allstate charges a single premium or multiple premiums. We therefore hold that Allstate's insurance contract fails to meet the requirements set forth in Rodriguez. {23} As the District Court in this case concluded, Allstate charged a multiple-vehicle rate that is less than twice the single vehicle rate. On this basis, Allstate argues that Plaintiff should not be permitted to stack more than two coverages, precisely as the insurance policy now indicates. Plaintiff argues, however, that we should look behind the text and consider Allstate's methods in establishing its premium rates. As noted, when multiple premiums are charged for UM coverage on multiple cars, even in the face of a truly unambiguous limitation-of-liability clause, stacking will be required. In Lopez we suggest that the reasons for such a rule are: (1) it is only fair to give the insured what was paid for, and (2) it would give effect to the reasonable expectation of the insured to allow stacking. For most cases, these two closely related rationales are cumulative; when, however, the policy appears to charge one premium but it is alleged that the one premium contemplates multiple vehicles, then the rationales diverge. If the primary goal is to fulfill the reasonable expectations of the insured, then there is no need to look at anything beyond the language of the policy itself. If, on the other hand, the primary goal is to give insureds what they pay for, then we should, at the very least, be concerned with the actuarial methods used to arrive at the premium and should look behind the policy language itself. Indeed, the parties dispute much regarding how the premiums were calculated in this case and what the primary policy behind our stacking jurisprudence is. For the following reasons, we conclude that we need not resolve which rationale to give primary effect. {24} We are convinced, however, that to resolve this case we should not ignore everything behind the policy language itself. To do otherwise might encourage actuarial ruses, such as has been alleged by Plaintiff, in order to defeat our stated public policy in favor of stacking when multiple premiums are charged. Indeed, if courts followed the suggestion of the Court of Appeals and refused to review the insurer's actuarial methods, Allstate would likely never have amended its policy in response to case law and permitted its customers to stack at least two coverages. Because Allstate did not increase the premium for UM coverage, but rather amended the policy to allow the stacking of up to two coverages, a reasonable inference is that prior to the mandates of the courts in Oklahoma, Allstate insureds may not have been receiving what they paid for. {25} Allstate argues that we have determined that the reasonable expectation of the insured is the guiding policy behind our stacking jurisprudence, and as such any actuarial evidence suggesting that multiple premiums have been paid under the guise of a single premium is irrelevant. In support, Allstate relies on Shope v. State Farm Insurance Co., 1996-NMSC-052, 122 N.M. 398, 925 P.2d 515, where we had to determine whether to apply Virginia law to an UM policy when the insured purchased the contract in Virginia, but the accident occurred in New Mexico. Ordinarily, Virginia law, as the lex loci contractus, would apply unless the application of that law would violate a fundamental public policy of New Mexico. Under Virginia law the insurance contract, which clearly prohibited stacking, would be enforced. In deciding to apply Virginia law, we noted that, although New Mexico public policy favors stacking, our rationale in establishing this policy did not concern fundamental principles of justice, but focused on the expectations of the insured. Id. ¶ 7. Furthermore, [w]hile we interpret New Mexico insurance contracts to avoid repugnancy in clauses that prohibit stacking of coverages for which separate premiums have been paid, this rule is one of contract interpretation that does not rise to the level of a fundamental principle of justice. Id. ¶ 9. {26} We find Shope distinguishable, in that it does not appear that in that case there was any allegation that the premium structure used by the insurer charged multiple premiums under the guise of a single-premium charge. Further, that our policy in favor of stacking is not fundamental for purposes of a choice-of-law analysis does not mean that it is unimportant. {27} Under Rodriguez we suggested that to be truly unambiguous, an insurance contract should, among other things, plainly notif[y] the insured that only one premium has been charged for one insurance coverage. 118 N.M. at 133, 879 P.2d at 765. The contract at issue failed this requirement. A reasonable insured simply cannot determine whether or not one premium has been charged for one insurance coverage. Although the contract purports to charge a single premium for a single coverage, the amendatory endorsement allows the insured to aggregate two coverages. Compounding the ambiguity is the fact that Allstate, in setting its premium, admits that it has factored into its premium calculation the average number of vehicles on all multi-vehicle policies, including those policies insuring three or more vehicles. We read Rodriguez to require a plain and affirmative declaration that the amount charged represents a single premium for a single amount of coverage; unquestionably, this contract has not done so. As such, we hold that it fails to meet the requirements set forth in Rodriguez for a truly unambiguous policy, and that Plaintiff is entitled to stack his four coverages.