Court Opinion

ID: 6472519
Source: CourtListenerOpinion
Date Created: 2022-06-26 14:24:00.840632+00
Date Added: 2024-06-11T09:11:37.487215
License: Public Domain

VIGIL, Judge (dissenting). {50} I dissent from the holding of the majority that when Plaintiff submitted the claim for payment of her medical bills to Mountain States, this automatically triggered an affirmative obligation upon Mountain States to provide her with notice of the terms of the underinsurance policy. Having breached this duty, the majority concludes, Mountain States is estopped from enforcing the consent-to-settle provision of the policy. This asserted duty has no basis in tort, contract, or public policy. {51} Underinsurance coverage is purchased to insure against damages caused by a negligent motorist who is insured, but does not have sufficient insurance to provide for full compensation. It operates as if the negligent motorist had a liability policy up to the full amount of the underinsurance policy. Plaintiff was a beneficiary of the underinsurance policy issued by Mountain States only because her daughter-in-law purchased the coverage for her own benefit, and the benefit of anyone else who was in her car and injured by an underinsured, negligent motorist. In insurance parlance, Plaintiff was a Class 2 insured. See Konnick, 103 N.M. at 114-15, 703 P.2d at 891-92. Plaintiff did not purchase the underinsurance coverage in this case, and she was not a named insured. Until the accident occurred, she was a complete stranger to the policy, and she became an insured only because she was a passenger in her daughter-in-law’s vehicle, which had underinsurance coverage issued by Mountain States when the accident occurred. Her status as a Class 2 additional insured does not of itself relieve Plaintiff from complying with the consent to settle provision of the policy. However, the majority concludes that she is excused because Mountain States did not automatically provide her with notice of the terms of the underinsurance policy when she submitted the claim for payment of her medical bills. {52} Plaintiff was a passenger in a vehicle owned and driven by her daughter-in-law when they were rear ended by another vehicle on March 2, 2000, causing Plaintiff personal injuries. Both vehicles were insured: the vehicle occupied by Plaintiff was insured by Mountain States, and the vehicle which struck them was insured by Farmers. Plaintiff knew that her daughter-in-law’s vehicle was insured. On June 2, 2000, she went to the local insurance agency where the policy was purchased, seeking payment of her medical bills which were approximately $7000, and on June 30, 2000, Plaintiff received a check from Mountain States in the amount of $5000, which was the limit of its medical pay coverage. Although Plaintiff knew her daughter-in-law’s vehicle was insured, she did not ask her daughter-in-law or son for a copy of the Mountain States policy, and she did not ask the local agent for a copy of the policy when she filed the medical payment claim. {53} Plaintiff also hired an attorney in June 2000, to represent her in connection with the accident. In fact, when Plaintiff received the $5000 payment from Mountain States under its medical pay coverage, she was already represented by counsel. However, he did not inquire of Mountain States what other coverages might be available to Plaintiff. On June 17, 2002, Plaintiffs attorney wrote Farmers enclosing her medical bills to date which were in excess of $16,000. He concluded by stating, “I am in the process of ascertaining my client’s current medical status, i.e. whether she has reached maximum medical improvement. When I have learned the answer to this question, I will send you a settlement offer.” Plaintiffs attorney then filed a personal injury suit against the driver of the car which rear-ended her and against Farmers on August 26, 2002. Plaintiffs medical bills eventually totaled slightly less than $27,000, and on January 30, 2003, Plaintiff and her attorney agreed to accept $30,000 in full and final settlement of her claim against the driver of the car which struck her, “conditioned upon our receipt of documentation confirming the policy limits in this matter.” On March 4, 2003, with her attorney’s approval, Plaintiff accepted the policy limits of coverage provided by the Farmers policy in the amount of $30,000. Plaintiff and her attorney therefore knew that the driver insured by the Farmers policy was underinsured before they settled. Plaintiffs attorney did no investigation to determine whether any coverage for Plaintiffs injuries was available from the vehicle she occupied when she was injured, because he relied on the police report which said there was no insurance coverage on the vehicle occupied by Plaintiff. On the other hand, Plaintiff had personal knowledge that her daughter-in-law was insured by Mountain States (at least for the medical pay coverage), so she could not reasonably rely on the police report that the vehicle she occupied at the time of the accident had no insurance coverage. {54} The real question presented by this case is whether Plaintiffs failure to comply with the consent to settle provision of the underinsurance policy is excused. Under the circumstances, I conclude it was not. “[I]t is settled law that an additional insured’s ignorance of the policy provisions will excuse his failure to satisfy its requirements only if the lack of knowledge is reasonable under all the circumstances.” Burke v. Liberty Mut. Ins. Co., 201 A.D.2d 773, 607 N.Y.S.2d 483, 484 (N.Y.App.Div.1994). In a similar vein, Kippen v. Farm Bureau Mutual Insurance Co., 421 N.W.2d 483, 486 (N.D.1988) states, “[A] beneficiary’s ignorance of the existence of an insurance policy, which is not due to his own negligence or fault, excuses his failure to provide notice of claim to the insurer within the time period set by the policy.” (quoting Finstad v. Steiger Tractor, Inc., 301 N.W.2d 392, 395 (N.D.1981)). Finally, Ferrando v. Auto-Owners Mutual Insurance Co., 98 Ohio St.3d 186, 2002-Ohio-7217, 781 N.E.2d 927, at ¶ 98 states: Where coverage is sought by an additional insured, that is, by a person who is not the named insured under the policy * * * the most common reason for failure of such additional insured to give timely notice to the named insured’s insurer is that the additional insured was not aware of the fact that he was covered under the policy issued to the named insured. Courts have generally held that where an additional insured’s ignorance of coverage is understandable, and where notice is given promptly after the additional insured becomes aware of possible coverage, even a long period of delay is excusable * * *. However, courts place limits on their liberality with respect to excusing delayed notice by holding generally that ignorance of coverage is no excuse where the additional insured failed to exercise due diligence in investigating possible coverage, a caveat which is usually invoked where the facts are such that the additional insured should have looked into the matter of coverage sooner than he did. (quoting Job A. Sandoval, Annotation Timeliness of Notice of Accident by Additional Insured, 47 A.L.R.3d 199, § 2[a] at 202 (1973)). {55} The foregoing authorities recognize that an insured has some responsibility to learn what coverage is available to her, and what the terms of that coverage are. I conclude that Plaintiffs failure to learn of the existence of the terms of the underinsurance coverage that was available to her was unreasonable and unjustified in light of the undisputed material facts. Plaintiff knew that the vehicle she occupied at the time of the accident was insured by her daughter-in-law with Mountain States. Plaintiff did not ask her daughter-in-law what the policy provisions were. Plaintiff filed a medical pay claim directly with Mountain States, and did not ask the agent whether other provisions of the policy provided her with coverage for the accident. Plaintiff hired counsel to represent her in connection with the accident in plenty of time for him to request and obtain copies of the pertinent policy provisions from Mountain States. See Willey, 1999-NMCA-137, ¶ 19 (stating that the insured’s reliance on a document describing the insurance coverage “would no longer be reasonable once he retained an attorney and the attorney had a reasonable time to request a copy of the [p]olicy from [the insurance company].”). {56} The covenant of good faith and fair dealing would require Mountain States to provide Plaintiff or her attorney with full and accurate information concerning the pertinent policy provisions if the information had been requested, and its failure to provide the information would result in an estoppel preventing Mountain States from relying on the policy requirements. However, the majority goes much further, and imposes an additional, affirmative duty upon the insured to provide the information to Plaintiff without being asked to, simply because a medical pay claim is filed. I do not equate submitting a medical payment claim with a request to be provided with notice of the terms of any underinsurance provisions which may apply. Mountain States had no duty to speak because merely submitting a claim for reimbursement of medical expense does not of itself equate with notice that another driver is underinsured. See Mosley v. Magnolia Petroleum Co., 45 N.M. 230, 247, 114 P.2d 740, 751 (1941) (stating that to constitute an estoppel by silence there must not only be a duty to speak but also a reliance on the silence). Finally, I would hold that under the undisputed material facts of this case, Plaintiff must bear the consequences of failing to comply with the consent to settle provision of the policy. Since the majority concludes otherwise, I respectfully dissent.