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New Mexico State Case Summaries

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Stiff, Keith & Garcia Case Summaries

Our representative clients include Allstate, State Farm, MetLife, Federal Express Companies, State of New Mexico Risk Management, New Mexico Public School Insurance Authority, Liberty Mutual, Comcast, and Fred Loya Insurance. 

Civil Case Summaries January through April 2012

04/11/2013
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NMDLA Civil Case Summaries

January – April 2012

State Court Opinions

By John S. Stiff, Esq., Ann L. Keith, Esq., and Nels D. Orell, Esq.
Stiff, Keith & Garcia, LLC – Albuquerque

 

Workers’ Compensation/Attorney Fees

NM Bar Bulletin – January 18, 2012
Vol. 51, No. 3

Rivera v. Flint Energy and Liberty Mutual Ins. Co.
No. 30,020 (N.M. Ct. App., filed October 24, 2011)

A worker appealed a Workers’ Compensation Judge’s (WCJ) apportionment of Worker’s attorney fees equally between the worker and his employer, who was insured by Liberty Mutual.  The worker argued that the Workers’ Compensation Act obligated the employer to pay the worker’s attorney fees when he recovered more at trial than he had previously offered to take in settlement. The Court of Appeals held that the worker’s settlement offer failed to comply with the Workers’ Compensation Act, affirming the WCJ’s apportionment. 

The worker’s settlement offer was faxed to the employer’s attorneys, and stated, “[w]e would agree to settle as follows[,]” and listed eight factors comprising a proposed settlement.  The letter concluded, “[p]lease review the information and offer I have given you and contact me.”  The employer did not accept worker’s offer and the case went to trial.  The award was in excess of the offer stated in the letter to the Employer.  The worker then filed an application for attorney fees under NMSA 1978 Section 52-1-54(F)(2003), which allows recovery of attorney fees if the offer is made pursuant to the statute, for an amount less than is awarded at trial, and is rejected by the employer.  The WCJ denied the request because the letter did not “provide sufficient specificity or adhere sufficiently to the statute” to trigger the statutes’ fee-shifting provisions, and apportioned the worker’s attorney fees equally between the worker and employer.  The Court of Appeals did not suggest that offers sufficient to allow fee-shifting need to follow any specific format to be effective, but at a minimum, if a party intends to invoke the provisions of Section 52-1-54(F), the document conveying the offer must refer to the statute explicitly or address each of its material requirements, including that if the offer is accepted a judgment is to be entered against Employer.

Summary Judgment/Contractors and Subcontractors/Duty to Defend

NM Bar Bulletin – January 25, 2011
Vol. 51, No. 4

Windham v. L.C.I.2, Inc.
No. 29,609 (N.M. Ct. App., filed November 8, 2011)

The memorandum opinion filed in this case on September 28, 2011 was withdrawn, and this opinion was substituted in its place. 

The City of Taos hired L.C.I.2 to build a structure over a swimming pool.  L.C.I.2 subcontracted with the Plaintiff’s employer, Newt & Butch, to install the roof on the structure.  Under the subcontract, Newt & Butch agreed to indemnify L.C.I.2. and L.C.I.2 was listed as an additional insured under Newt & Butch’s general liability policy.  The plaintiff, an employee of Newt & Butch, fell through the roof and into the empty swimming pool.  He sued L.C.I.2 claiming it was negligent in failing to provide coverings of the cutouts for the skylights and in failing to implement, communicate, monitor, and enforce safety rules which would have prevented the accident.   L.C.I.2 denied liability and demanded a defense and indemnification from Newt & Butch’s insurer.  The insurer accepted the defense under a reservation of rights to not defend or indemnify L.C.I.2 for any damages arising out of its individual negligence.   The Court held that L.C.I.2 is an “additional insured” under Newt & Butch’s policy “with respect to liability arising out of Newt & Butch’s ongoing operations performed for LC.I.2.”  Applying City of Albuquerque, Plaintiff’s allegations against L.C.I.2 “arise out of” Newt & Butch’s installation of the roof on the structure; therefore, the insurer had a duty to defend L.C.I.2 regardless of L.C.I.2’s ultimate liability to the plaintiff.

New Mexico Human Rights Act

NM Bar Bulletin – February 1, 2012
Vol. 51, No. 5

Lobato v. N.M. Environment Department
No. 32,917 (N.M. S.Ct., filed December 14, 2011

Upon certification from the United States District Court for the District of New Mexico, the Supreme Court was asked to answer two questions on whether the New Mexico Department of Labor’s Charge of Discrimination form fairly and adequately allows a claimant to exhaust administrative remedies and preserve the right to pursue judicial remedies for individual liability claims under the New Mexico Human Rights Act (NMHRA).   The Court held that the Charge of Discrimination form is so misleading that exhaustion of administrative remedies in the circumstances of this case is not required.

The plaintiff filed two complaints and one amended complaint with the EEOC, charging his employer, the New Mexico Environment Department, with discrimination in violation of Title VII of the Civil Rights Act.  He filed his administrative complaints using the NM Department of Labor, Human Rights Division’s (NMHRD) official Charge of Discrimination form.  Submitting the form to either the EEOC or the NMHRD constitutes filing with both agencies, as noted on the form directly above the signature line.  According to the form’s instructions, Plaintiff was required to name the “Employer, Labor Organization, Employment Agency, Apprenticeship Committee, or State or Local Government Agency” he believed discriminated against him, provide the entity’s address and phone number and explain the “Particulars” of his charge.  Nothing on the NMHRD Charge of Discrimination form instructed Plaintiff to add any identification of individual agency employees involved in the alleged discrimination.  Plaintiff then filed a complaint in federal court stating that his EEOC complaints had been processed to conclusion.  He named as defendants the NM Environment Department and multiple department employees.  The individually named defendants filed a motion to dismiss arguing that individuals are not subject to liability under the Civil Rights Act, and that Plaintiff did not exhaust his NMHRA administrative remedies, preserving his right to sue any individual defendant not specifically identified in his original NMHRD Charge of Discrimination forms.

The Court held that in these limited circumstances, because the Plaintiff relied on the administrative procedures he was instructed to follow, and that reliance on the instructions threatened to deny him the statutory remedies to which he is entitled, the requisite administrative exhaustion of the NMHRA should not be required in order for him to pursue his judicial remedies under the statute.

The Court advised that the NMHRD should revise its Charge of Discrimination forms to instruct filers in plain language to include the names and addresses of any individuals involved. 

Arbitration

NM Bar Bulletin – February 8, 2012
Vol. 51, No. 6

Strausberg v. Laurel Healthcare Providers, LLC
No. 29,238 (N.M. Ct. App., filed November 4, 2011)

The district court granted Defendant’s motion to compel arbitration under a nursing home mandatory arbitration agreement.  The Court of Appeals reversed the decision because a party who seeks to compel arbitration has the burden to prove the existence of a valid agreement to arbitrate.  In this case, the district court shifted the burden to the Plaintiff to prove that the agreement was invalid.  This shifting of the burden of proof resulted in reversible error.  The Court held that when a nursing home relies upon an arbitration agreement signed by a patient as a condition for admission to the nursing home, and the patient contends that the arbitration agreement is unconscionable, the nursing home has the burden of proving that the arbitration agreement is not unconscionable.

Choice of Law/Arbitration

NM Bar Bulletin – February 15, 2012
Vol. 51, No. 7

Flemma v. Halliburton Energy Services, Inc.
No. 29,933 (N.M. Ct. App., filed November 17, 2011)

An employee of Halliburton was terminated allegedly for voicing opposition to a proposed location for a new Halliburton facility.  He sued, claiming wrongful and retaliatory discharge.  Defendants appealed the district court’s refusal to compel arbitration.  The Court of Appeals reversed holding that 1) under Texas law, there was sufficient evidence of the plaintiff’s acceptance of and assent to a contractual arbitration program; 2) the differences between Texas and New Mexico law in terms of the evidence required to prove acceptance and assent are insufficient to overcome application of the place-of-contract-formation rule on public policy grounds, thus the arbitration agreement should be enforced under the law of the state where the contract was formed, in this case Texas; and 3) under Texas law, the arbitration agreement was not illusory and was therefore supported by consideration.

Workers’ Compensation

NM Bar Bulletin – February 29, 2012
Vol. 51, No. 9

Schultz v. Pojoaque Tribal Police Dept.
No. 38,508 (N.M. Ct. App., filed December 6, 2011)

In this wrongful death case, a worker drowned while rescuing a child who had fallen into the Rio Grande River near Pilar, New Mexico.  At the time of his death, the worker was an off-duty police officer with the Pojaoque Tribal Police Department.  His widow filed a workers’ compensation complaint for medical and survivor benefits fourteen months after his death.  The WCJ denied her claims, determining that the complaint was barred by the statute of limitations and that, even if the complaint had been timely filed, his death did not arise out of his employment.

The Court of Appeals affirmed that the widow’s complaint was not timely filed and was therefore barred by the one year statute of limitations under the Workers’ Compensation Act, and did not address whether his death arose out of and in the course of his employment.  The one-year limitations period began to accrue on the date of the worker’s death.

Insurance Bad Faith

NM Bar Bulletin – February 29, 2012
Vol. 51, No. 9

Financial Indemnity Co. v. Cordoba
No. 30,417 (N.M. Ct. App., filed December 20, 2011)

In this workers’ compensation case, the trial court dismissed the defendant’s counterclaim against his insurer.  The Court of Appeals held that the district court misconstrued and misapplied Rules 11-408 and 1-012(B)(6) NMRA, and dismissal of the counterclaim was inappropriate.   The Court states that Rule 11-408 is not designed or intended to preclude admission of evidence of settlement negotiations in an insurance coverage dispute when the settlement negotiations are offered not to prove coverage or amount, but are offered to prove wrongful conduct such as bad faith or unfair practices during the claim investigation and upon denial of the claim.

The defendant was injured in an accident when he was a passenger in a company-owned truck.  Worker’s compensation paid his lost wages and medical bills.  He then sought payment from his own insurer, plaintiff, under the UM/UIM coverage of his policy and requested the limit for bodily injury.  After unsuccessful settlement negotiations, the insurer filed a declaratory judgment action as to whether the policy covered the claim, and if so, in what amount.   The defendant filed a counterclaim alleging that the insurer had breached its contract, violated New Mexico law, and acted in bad faith.  The defendant alleged that the insurer had acknowledged coverage because they made two settlement offers.  The Court held that the references to settlement negotiations were not linked with proving the amount of the claim, but were for “another purpose” allowed under Rule 11-408, and the case was remanded.

Attorneys Fees

NM Bar Bulletin – March 15, 2012
Vol. 51, No. 11

Palenick v. City of Rio Rancho
No. 30,136 (N.M. Ct. App., filed November 17, 2011)

The New Mexico Attorney General informed the City of Rio Rancho that its termination of the City Manager violated the Open Meetings Act.  The City, in a meeting eleven months after the termination, passed a resolution attempting to retroactively cure the violation.  The City Manager sued to enforce the Act and for debt and money due under the employment agreement (breach of contract) for the period between the initial termination and the later-attempted cure.  The district court dismissed the claim to enforce the act because it lacked subject matter jurisdiction.  On the breach of contract claim, the court determined that the City violated the Act, but nevertheless held against the plaintiff on his breach of contract claim, holding that the City’s cure in the later meeting of its prior action applied retroactively, resulting in an effective earlier termination.  The court also held that the plaintiff’s acceptance of severance benefits immediately after his termination constituted a waiver of his breach of contract claim.

The Court of Appeals held that the district court erred in determining that the City’s last resolution retroactively rectified, ratified, and approved the invalid earlier action taken in violation of the Act, thereby making the termination valid and effective.  The Court also held that plaintiff’s acceptance of severance benefits did not constitute a waiver of his right to salary and benefits pursuant to his employment agreement, and remanded the case for further proceedings on whether Plaintiff is entitled under the employment agreement to salary and benefits for any period following his initial termination, and if so, for a determination of how much he is entitled to receive.  However, the Court also held that the plaintiff was not entitled to attorney fees or costs under the Act.

Insurance Contracts and Monthly Installments/Parol Evidence Rule

NM Bar Bulletin – March 21, 2012
Vol. 51, No. 12

Nellis v. Farmers Insurance Company of Arizona
No. 29,295 (N.M. Ct. App., filed September 20, 2011)

In a class action against Farmers, the Court of Appeals addressed whether fees incurred in making monthly premium payments were themselves premium, undisclosed in the policy, and whether the policy allowed imposition of the fee, whatever its nature.  On cross-motions for summary judgment, the district court held for the class finding: (1) service charge was not part of the insurance contract because the invoices sent by the company handling monthly payments were not delivered with the policies; (2) an empty space next to the word “Fees” on the declarations page meant there were no “fees associated” with the policy; and (3) that the service charges constituted “premium” because (a) they could not be installment fees since the policy issued was for only one month without the necessity of a continuing obligation to make installment payments, (b) Farmers could cancel a policy for failure to pay the service charge, indicating the service charge was consideration for the insurance contract, and (c) the service charge had the effect of increasing the cost of the insurance and therefore constituted premium.

The Court of Appeals reversed the district court.  First, the Court of Appeals held that the installment payment fees were not premiums because they are associated with the privilege of paying in installments instead of a lump sum.  Paying in installments, the Court found, equated to a separate enforceable agreement regarding the mode of premium payment, and the service charges were merely designed to cover the additional costs of the monthly mode of payment.  Second, the reference to the installment plan in the issued policy was only inserted because plaintiffs elected to pay in such a manner, and that the insurer’s agreement to forgo a lump sum payment, in exchange for the insureds’ payment of the additional costs, constituted consideration.  Finally, the Court held that the parol evidence rule did not prevent enforcement of the installment plan, entered before the policy was issued, because the installment agreement was either: (1) a separate agreement dealing with the payment of premium and accompanying monthly service charges; or (2) a separate agreement that is actually part of a larger comprehensive arrangement between the parties that should be construed together.

Appellate Procedure

NM Bar Bulletin – March 21, 2012
Vol. 51, No. 12

Wakeland v. N.M. Department of Workforce Solutions
No. 31,031 (N.M. Ct. App., filed September 27, 2011)

In this case, petitioner sought unemployment compensation benefits after being fired from her job.  Workforce Solutions denied petitioner benefits, and she appealed as of right to the district court, which affirmed the denial of her benefits.  Believing that she was entitled to an appeal as of right to the Court of Appeals, petitioner filed a notice of appeal in the district court and a docketing statement in the Court of Appeals.  Petitioner failed to file a petition for writ of certiorari, which is required when seeking discretionary review.  The Court of Appeals found that New Mexico courts “have not been stringent about the form and content requirements of documents filed in an effort to seek appellate review, so long as the information provided in the non-conforming document is adequate to convey the basic intent of the party filing the document.”

The liberal policy for accepting documents that are deficient as to form or content, allows an appellate court to accept a docketing statement, or other non-conforming document, in lieu of a petition for certiorari.  For a deficient or non-conforming document to be acceptable it must still substantially comply with Rule 12-505, and contain enough information to enable the Court of Appeals to assess whether the issues raised meet one of the four criteria for granting a petition for writ of certiorari pursuant to Rule 12-505(D)(2)(d).  However, the timeliness requirement of Rule 12-505(C) is strictly applied and tardily filed appeals will only be excused if the “stringent unusual circumstances standard” can be met.  The Court found petitioner’s filing untimely, and denied the non-conforming petition, because “[s]imply being confused or uncertain about the appropriate procedure for seeking review is not the sort of unusual circumstance beyond the control of a party that will justify an untimely filing.”

Unfair Practices Act/Award of Attorney Fees

NM Bar Bulletin – March 28, 2012
Vol. 51, No. 13

Atherton v. Gopin,
No. 29,850 (N.M. Ct. App., filed January 19, 2012)

Plaintiff prevailed under the Unfair Practices Act (UPA), entitling them to an award of attorney fees, pursuant to NMSA 1978, Section 57-12-10(C).  In awarding fees, the district court applied the “lodestar” method which is “ordinarily used in statutory fee-shifting cases because it provides adequate fees to attorneys who undertake litigation that is socially beneficial.”  Under the “lodestar” method, “the court determines a fee that approximates a reasonable hourly rate multiplied by the number of hours reasonably incurred in the representation.”  The district court determined fees using the “lodestar” method; however, it determined it was precluded from granting Plaintiff’s request to apply a multiplier to the fees, which it deemed limited to class actions and common fund cases.  The Court of Appeals held that the UPA contains no limitation on awards of attorney fees, that multipliers may be necessary to ensure rights can be enforced under the UPA, and that district courts may apply a multiplier to the lodestar value. 

Additionally, the Court of Appeals held that: (1) federal cases interpreting federal fee-shifting statutes are not binding on a state court’s interpretation of UPA; (2) omission from the settlement language of a demand for a multiplier did not waive Plaintiff’s right to ask for a multiplier where it was noted fees would be litigated if no agreement was reached; and (3) that it would not decide whether application of a multiplier would have been an abuse of discretion because the district did not apply a multiplier. 

Dramshop Liability/Jury Instructions

NM Bar Bulletin – April 11, 2012
Vol. 51, No. 15

Estate of Gutierrez v. Meteor Monument, LLC
No. 32,436 (N.M. S. Ct., filed February 22, 2012)

Plaintiffs prevailed in an action involving liability for the sale or service of alcohol to an allegedly intoxicated patron/employee subsequently involved in a lethal automobile accident.  After the Court of Appeals reversed on several issues, the Supreme Court granted certiorari to review the evidence necessary to establish liability under the Dramshop Act, and whether the appropriate jury instructions were given.  To establish liability under the Dramshop Act a plaintiff must prove the licensee “(1) sold or served alcohol to a person who was intoxicated; (2) it was reasonably apparent to the licensee that the [patron]…was intoxicated; and (3) the licensee knew from the circumstances that the [patron]…was intoxicated.”  NMSA 1978, § 41-11-1(A).  Plaintiff had been unable to show who, individually, sold the alcohol to the patron and the Court of Appeals held that without such evidence Plaintiff could not establish Defendant knew the patron/employee was intoxicated.

The Supreme Court held that (1) identification of the server was not essential, and (2) the circumstantial evidence was sufficient for a jury to find it was reasonably apparent to Defendant that the patron/employee was intoxicated at the time he was last served.  The “reasonably apparent” prong of the Dramshop Act was found to impose an objective standard, which does not require that the server be identified because it is not based on “what the actual server subjectively perceived about the patron’s level of intoxication.”  The objective standard looks to whether one “knew or should have known” the patron was intoxicated.  Additionally, because the Dramshop Act is based on an objective standard, “circumstantial evidence at a time other than the time of service may be sufficient to prove what a server should have known regarding the level of the patron’s intoxication at the time the patron was served.”

Finally, Defendant argued that the jury instruction regarding scope of employment, which it requested, should not have been given.  The Court held that Defendant not only requested the complained of jury instruction, but failed to raise the issue in moving for judgment as a matter of law notwithstanding the verdict and for a new trial.  Where a party invites error and subsequently complains about the very error, a new trial will not be granted because it “would subvert the orderly and equitable administration of justice.”

Appellate Procedure/Administrative Appeals

NM Bar Bulletin – April 18, 2012
Vol. 51, No. 16

Mascarenas v. City of Albuquerque
No. 30,123 (N.M. Ct. App., filed February 7, 2012)

Plaintiff appealed the district court’s affirmation of the personnel board’s finding of just cause for her termination, and the dismissal of her suit against the city alleging wrongdoing regarding her termination.  The district court dismissed Plaintiff’s civil complaint as being barred by res judicata and collateral estoppel based on the finding of just cause.  The Court of Appeals affirmed because Plaintiff did not file a timely petition for writ of certiorari regarding the personnel board’s decision, and found no error in applying res judicata and collateral estoppel as a bar to relitigating the factual predicates of the civil suit.

Plaintiff filed a notice of appeal pursuant to Rule 12-201(A)(2) NMRA challenging the dismissal of the civil complaint; however, she failed to file a petition for writ of certiorari seeking review of the district court’s affirmation in the administrative appeal.  Plaintiff’s docketing statement, filed sixty days after entry of the district court’s order, was the first time it became apparent the affirmation of the personnel board’s determination was also being challenged.  The Court of Appeals accepted the docketing statement as a non-conforming petition for writ, under Wakeland and Audette; however, the Court of Appeals held it lacked jurisdiction because the petition was untimely.

The Court of Appeals also affirmed that the civil complaint against the city was barred by res judicata and collateral estoppel.  Res judicata precluded the breach of implied contract claim because the personnel board had jurisdiction over it and had addressed the issues raised the claim.  Collateral estoppel barred Plaintiff’s FMLA and due process claims because the personnel board found, and the district court affirmed, factual findings that negated the allegations, and both parties had a full and fair opportunity to litigate the issues before the personnel board.

Surety and Performance Bonds/Pre- and Post-Judgment Interest

NM Bar Bulletin – April 25, 2012
Vol. 51, No. 17

State of New Mexico ex rel. v. Liberty Mutual Insurance Company
No. 30,068 (N.M. Ct. App., filed October 7, 2011)

Plaintiff sought payment for materials, provided for a construction project, subject to a bond for which Defendant was the surety.  Plaintiff was awarded the cost of the materials and prejudgment interest, and was denied attorney fees and post-judgment interest at a rate of 18%.  Defendant appealed alleging Plaintiff could not recover absent proof of actual delivery and incorporation into the project, that notice was faulty under the Little Miller Act, NMSA 1978, Section 13-4-18 to -20, and that prejudgment interest was entered in error.  Plaintiff cross-appealed claiming error in not awarding attorney fees and post-judgment interest at 18%.

The Court of Appeals held that there is no bright-line rule that a subcontractor must prove materials supplied for a project were actually delivered and incorporated into the project.  The district court concluded that Plaintiff supplied the materials for the project, and the Court of Appeals held that sufficient because “requiring the supplier to trace specific materials after they have left his control may often place upon him an impossible burden of proof even when the items involved were in fact consumed.”

The Little Miller Act contains several requirements for notice of a claim: (1) written notice must be served on the contractor; (2) the notice must state the amount of the claim with substantial accuracy; (3) the invoice must be served on the contractor within ninety days of the last provided material; (4) the notice must be served by registered mail in an envelope; and (5) the notice must be addressed to the contractor at any place the contractor maintains an office or conducts business, or the contractor’s residence.  Defendant raised several contentions regarding the timeliness of notice, that notice was sent by certified, not registered, mail, and that notice was sent to a post office box.  The Court of Appeals reviewed the district court’s findings and held that it could be reasonably inferred, based on the liberal construction of the act to protect suppliers of materials, that the notice provisions were substantially complied with.  Additionally, addressing Defendant’s complaints regarding timeliness of notice to the City, the court found no evidence or argument that any prejudice resulted to the parties or the City and that no reversible error occurred in permitting Plaintiff to pursue claims against Defendant absent the City’s presence.

The award of prejudgment interest at a rate of 18% was also upheld.  NMSA 1978, Section 56-8-5 provides that interest shall not be collected at a rate more than 15%; however, it also provides that the parties may agree to a higher rate.  Where the contract provides for a higher rate of interest, the parties, and a supplier to the contracting parties, may be awarded interest consistent with the contractually agreed upon rate.  Finally, the Court held that attorney fees are awardable where the contract provides for the award of fees incurred in endeavoring to collect amounts due and unpaid, and that the contract provision at issue was broad enough to provide for an award of post-judgment interest for the same reasons prejudgment interest was available at the rate provided by the contract.

Workers’ Compensation Act/Executive Employee Affirmative Election

NM Bar Bulletin – April 25, 2012
Vol. 51, No. 17

Jackson Construction, Inc. v. Smith
No. 30,454 (N.M. Ct. App., filed February 15, 2012)

In this matter, the Court of Appeals addressed whether a construction company whose sole employee is its owner, president and board member, must procure workers’ compensation insurance even though he has affirmatively exempted himself from coverage under the Act.  In reviewing whether the owner of JCI was an “employer” under the Act, the court held that since the president indicated he was the sole “employee,” executive “employee,” and signed his affirmative election form defining himself as a “worker” under the act, that the company employed at least one person and was subject to the Act.  Further, the Court found that an executive employee is sufficient to bring a company within the definition of “employer” under the Construction Industry provision of the Act.  Such an interpretation does not lead to absurd results, the Court held, because construction is an inherently dangerous activity and there are circumstances where a general contractor could be liable to a subcontractor’s employee either through contract or “constructively.”

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