Bhasker v. Kemper Cas. Ins. Co.
This text of 284 F. Supp. 3d 1191 (Bhasker v. Kemper Cas. Ins. Co.) is published on Counsel Stack Legal Research, covering District Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on the Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15) ("MTD"). The Court held a hearing on July 24, 2017. The primary issues are: (i) whether New Mexico's filed rate doctrine bars Plaintiff Helen Bhasker's negligence claims, claims under New Mexico's Unfair Practices Act,
*1194FACTUAL BACKGROUND
Bhasker contends that, "[b]ased on the information provided by the Defendant," she agreed to "pay a six-month premium for the State of New Mexico mandated minimum automobile bodily injury and uninsured/underinsured motorist coverage." First Amended Class Action Complaint for Breach of Statutory, Common law, and Contractual Duties ¶ 30, at 5, filed March 23, 2017 (Doc. 12)("Complaint"). According to Bhasker, her insurance policy features: (i) liability coverage on one vehicle for $25,000.00 per person and $50,000.00 per accident, per vehicle; and (ii) underinsured coverage on one vehicle for $25,000.00 per person and $50,000 per occurrence, per vehicle. See Complaint ¶¶ 42-43, at 7 (citing Coverage for 1995 Lexus LS 500 4D at 1 (Doc. 12-2)). Bhasker asserts that Financial Indemnity did not "fully inform" her that "a purchase of 25/50 underinsured coverage, when triggered by a crash with a tortfeasor who has 25/50 bodily injury liability limits, will result in a payment of premium for which no payment of benefits will occur ...." Complaint ¶ 48, at 8.
Bhasker avers that, on June 24, 2015, she was driving eastbound on I-40 in Albuquerque, New Mexico, when another driver, Stephanie Martinez, "failed to stop for the traffic in front of her vehicle" and struck Bhasker's car in the rear, causing "serious bodily injuries and other damages." Complaint ¶¶ 12-14, at 2-3. Bhasker asserts that Martinez "was an underinsured motorist at the time of the collision" as Bhasker's insurance policy and New Mexico law define the term. Complaint ¶ 17, at 3. Bhasker contends that she "received the full extent of liability coverage carried by Ms. Martinez," which was $25,000.00. Complaint ¶ 18, at 3. Bhasker asserts that after the accident, Financial Indemnity provided a certified copy of a document summarizing her policy. See Complaint ¶ 38, at 6 (citing New Mexico Personal Auto Application at 1-4 (Doc. 12-1)("Policy Application")). Bhasker contends that the "certified copy of the [Policy Application] materially misrepresented the terms of [its] underinsured [motorist] coverage and did not contain clear, unambiguous language regarding the effects of New Mexico's underinsured coverage offset laws." Complaint ¶ 39, at 6. Furthermore, Bhasker contends that the Policy Application's language is "deceptive and clearly ambiguous in that it states that the applicant may purchase underinsured coverage in excess of the bodily injury coverage limits, which is the opposite of the legislative intent" of
did not alert [her], nor make clear to the ordinary and similarly situated insured, the fact that the New Mexico offset law drastically and materially diminished payment of benefits arising from a covered occurrence under the policy.... Specifically, there is virtually no possible underinsured minimum limits claim available to the Plaintiff and other similarly situated members of the class.
Complaint ¶ 43, at 7. Bhasker avers that, when she, "through counsel, demanded Defendant provide [her] with underinsured benefits that Defendant solicited and for which the Plaintiff paid a premium," Financial Indemnity denied her claim for underinsured benefits. Complaint ¶ 44, at 7.
Bhasker further contends that Financial Indemnity has "written direct premium automobile insurance to thousands of New Mexico residents and, from 2010-12-14, wrote direct premiums" around the United States totaling $1.09 billion. Complaint ¶ 22, at 4.
*1195PROCEDURAL BACKGROUND
Bhasker originally brought this case in the Second Judicial District Court, County of Bernalillo, State of New Mexico. See Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties, filed in the Second Judicial District Court, County of Bernalillo, State of New Mexico (filed in state court on December 30, 2016), filed in federal court February 24, 2016 (Doc. 1-1)("State Complaint"). Financial Indemnity removed the action to federal court on February 24, 2017. See Notice of Removal, filed February 24, 2017 (Doc. 1). Financial Indemnity removed the case pursuant to the Class Action Fairness Act,
1. The Complaint.
A few weeks later, Bhasker filed her Complaint on March 23, 2017. In her Complaint, Bhasker argues that Financial Indemnity2
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JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on the Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15) ("MTD"). The Court held a hearing on July 24, 2017. The primary issues are: (i) whether New Mexico's filed rate doctrine bars Plaintiff Helen Bhasker's negligence claims, claims under New Mexico's Unfair Practices Act,
*1194FACTUAL BACKGROUND
Bhasker contends that, "[b]ased on the information provided by the Defendant," she agreed to "pay a six-month premium for the State of New Mexico mandated minimum automobile bodily injury and uninsured/underinsured motorist coverage." First Amended Class Action Complaint for Breach of Statutory, Common law, and Contractual Duties ¶ 30, at 5, filed March 23, 2017 (Doc. 12)("Complaint"). According to Bhasker, her insurance policy features: (i) liability coverage on one vehicle for $25,000.00 per person and $50,000.00 per accident, per vehicle; and (ii) underinsured coverage on one vehicle for $25,000.00 per person and $50,000 per occurrence, per vehicle. See Complaint ¶¶ 42-43, at 7 (citing Coverage for 1995 Lexus LS 500 4D at 1 (Doc. 12-2)). Bhasker asserts that Financial Indemnity did not "fully inform" her that "a purchase of 25/50 underinsured coverage, when triggered by a crash with a tortfeasor who has 25/50 bodily injury liability limits, will result in a payment of premium for which no payment of benefits will occur ...." Complaint ¶ 48, at 8.
Bhasker avers that, on June 24, 2015, she was driving eastbound on I-40 in Albuquerque, New Mexico, when another driver, Stephanie Martinez, "failed to stop for the traffic in front of her vehicle" and struck Bhasker's car in the rear, causing "serious bodily injuries and other damages." Complaint ¶¶ 12-14, at 2-3. Bhasker asserts that Martinez "was an underinsured motorist at the time of the collision" as Bhasker's insurance policy and New Mexico law define the term. Complaint ¶ 17, at 3. Bhasker contends that she "received the full extent of liability coverage carried by Ms. Martinez," which was $25,000.00. Complaint ¶ 18, at 3. Bhasker asserts that after the accident, Financial Indemnity provided a certified copy of a document summarizing her policy. See Complaint ¶ 38, at 6 (citing New Mexico Personal Auto Application at 1-4 (Doc. 12-1)("Policy Application")). Bhasker contends that the "certified copy of the [Policy Application] materially misrepresented the terms of [its] underinsured [motorist] coverage and did not contain clear, unambiguous language regarding the effects of New Mexico's underinsured coverage offset laws." Complaint ¶ 39, at 6. Furthermore, Bhasker contends that the Policy Application's language is "deceptive and clearly ambiguous in that it states that the applicant may purchase underinsured coverage in excess of the bodily injury coverage limits, which is the opposite of the legislative intent" of
did not alert [her], nor make clear to the ordinary and similarly situated insured, the fact that the New Mexico offset law drastically and materially diminished payment of benefits arising from a covered occurrence under the policy.... Specifically, there is virtually no possible underinsured minimum limits claim available to the Plaintiff and other similarly situated members of the class.
Complaint ¶ 43, at 7. Bhasker avers that, when she, "through counsel, demanded Defendant provide [her] with underinsured benefits that Defendant solicited and for which the Plaintiff paid a premium," Financial Indemnity denied her claim for underinsured benefits. Complaint ¶ 44, at 7.
Bhasker further contends that Financial Indemnity has "written direct premium automobile insurance to thousands of New Mexico residents and, from 2010-12-14, wrote direct premiums" around the United States totaling $1.09 billion. Complaint ¶ 22, at 4.
*1195PROCEDURAL BACKGROUND
Bhasker originally brought this case in the Second Judicial District Court, County of Bernalillo, State of New Mexico. See Class Action Complaint for Breach of Statutory, Common Law, and Contractual Duties, filed in the Second Judicial District Court, County of Bernalillo, State of New Mexico (filed in state court on December 30, 2016), filed in federal court February 24, 2016 (Doc. 1-1)("State Complaint"). Financial Indemnity removed the action to federal court on February 24, 2017. See Notice of Removal, filed February 24, 2017 (Doc. 1). Financial Indemnity removed the case pursuant to the Class Action Fairness Act,
1. The Complaint.
A few weeks later, Bhasker filed her Complaint on March 23, 2017. In her Complaint, Bhasker argues that Financial Indemnity2 "failed to act honestly and in good faith when it solicited and sold superfluous and illusory minimal limits underinsured motorist coverage to their insureds (in whole or in part)" in violation of New Mexico law, "and/or they denied claims for the benefits of that coverage." Complaint ¶ 1, at 1. Bhasker contends that, "[b]asically, there is no such thing as 'minimum limits underinsured motorist coverage.' " Complaint ¶ 1, at 1. Bhasker asserts that she "brings this action on her own behalf, and on behalf of the many insured around the state who have been deceived by [Financial Indemnity's] practices." Complaint ¶ 4, at 2. Bhasker contends that, before the accident, she had "properly paid a premium for automobile coverage under the Financial Indemnity Company auto insurance policy," and, therefore, "had a reasonable expectation" that she carried underinsured motorist coverage for "$25,000.00 each person and $50,000.00 each accident." Complaint ¶ 19, at 3.
Next, Bhasker asserts that the Supreme Court of New Mexico "established that underinsured coverage is superfluous when the tortfeasor and the injured driver both carry the statutory minimum of liability and underinsured coverage." Complaint ¶ 23, at 4 (citing Progressive Northwestern Ins. Co. v. Weed Warrior,
Bhasker then asserts that Financial Indemnity's insurance agents told her that *1196she "must be insured for the state mandated minimum automobile bodily injury insurance coverage of $25,000.00 per person and $50,000.00 per accident." Complaint ¶ 26, at 4. Bhasker also avers that Financial Indemnity used an "incorrect and inappropriate form from another state," which "included ambiguous language that Plaintiff could purchase underinsured coverage in excess of her selected liability coverage limits." Complaint ¶ 27, at 4 (citing Policy Application at 1-4).
Bhasker alleges that Financial Indemnity "misrepresented to [her] that she would benefit from underinsured coverage when they knew, or should have known, that the coverage was meaningless," and that Financial Indemnity made these misrepresentations "knowingly and willfully, with the intent to deceive and induce the Plaintiff in purchasing underinsured coverage." Complaint ¶ 29, at 5.
Bhasker contends that Financial Indemnity breached its duty to "fully inform Plaintiff what the monthly premiums would be for the next available tier of coverage." Complaint ¶ 33, at 5. Bhasker states that she paid a $80.00 premium for bodily injury coverage and $54.00 for uninsured/underinsured ("UM/UIM") coverage for a total of $134.00 "for minimal combined coverage," and that a "purchase of higher limits, for example, at a premium of $201 would yield a disproportionate underinsured indemnification to premium ratio of 308/1, when compared to the purchase of minimal combined coverage for virtually no underinsured indemnification." Complaint ¶ 34, at 5-6.
Bhasker argues that the Policy Application violated New Mexico law, because it "failed to state that underinsured coverage is illusory in the event of a covered occurrence ... involving a minimally insured driver." Complaint ¶ 32, at 5. Bhasker also asserts that Financial Indemnity breached its duty to "act fairly, honestly, and in good faith" when it (i) "failed to fully inform Plaintiff of illusory underinsured coverage with a disproportionate premium/indemnification ratio when compared to the next tier of available coverage"; and (ii) "materially misrepresent[ed] the terms of underinsured coverage." Complaint ¶ 35, at 6.
Bhasker alleges that, by "fail[ing] to offer their insured sufficient information and knowledge regarding the superfluous, illusory, and deceptive coverage," Financial Indemnity violated the New Mexico Unfair Practices Act,
Bhasker then asserts that, because Financial Indemnity has deceived many other New Mexicans in the same way as it deceived her, the action is "properly maintainable *1197as a class action pursuant to Rule 1-023 NMRA." Complaint ¶¶ 53-54, at 9. Bhasker proffers a class definition:
All persons (and their heirs, executors, administrators, successors, and assigns) who, in the prior six years from the date of filing of this complaint, were a policyholder and/or insured, of a Motor Vehicle Policy issued by defendant where that policy did not and does not provide underinsured coverage paid for by the policyholder, and sold and solicited by the defendant, due to the application of an offset as set forth in NMSA 66-5-301, otherwise known as the New Mexico offset law or being a "difference state".... Excluded from the Class are all present or former officers and/or directors of Defendant, the "Referees" for purposes of the Evaluation Appeal process set forth below, Class Counsel and their resident relatives, and Defendant's counsel of record and their resident relatives.
Complaint ¶¶ 54-55, at 9.
Bhasker then enumerates specific claims. See Complaint ¶¶ 65-109, at 13-21. First, Bhasker argues that Financial Indemnity was negligent, because Financial Indemnity breached its duty to ensure that she and other class members "would be offered and obtain the maximum benefit of underinsured coverage and would not be sold underinsured coverage." Complaint ¶ 66, at 13. See Complaint ¶¶ 65-70, at 13-14. Moreover, Bhasker asserts that it was "reasonably foreseeable" that the underinsured coverage was, "in large part," illusory and that a "reasonably prudent insurance company exercising ordinary care" would not sell illusory coverage. Complaint ¶ 68, at 14. Bhasker contends that Financial Indemnity's negligence means that it is liable for actual damages as well as punitive damages for its actions that were "willful, reckless and wanton, and in bad faith." Complaint ¶¶ 67-70, at 14.
Second, Bhasker argues that Financial Indemnity violated the UPA.3 See Complaint ¶¶ 71-75, at 14-16. She argues that Financial Indemnity "failed to deliver the quality or quantity of services," because (i) Financial Indemnity did not provide sufficient information to "fully inform a reasonably prudent person charged with the task of purchasing underinsured insurance, which Plaintiff was under the reasonable belief that such coverage existed"; and (ii) did not pay benefit claims. Complaint ¶ 73, at 15.
Third, Bhasker alleges that Financial Indemnity violated the UIPA. See Complaint ¶¶ 76-96, at 16-17. Bhasker contends that Financial Indemnity violated its "duties of good faith, fair dealing, and the accompanying fiduciary obligations." Complaint ¶ 80, at 16. Specifically, Bhasker asserts that Financial Indemnity: (i) misrepresented its policy's terms; (ii) did not disclose material facts; (iii) took advantage of Bhasker's lack of knowledge and experience; (iv) committed negligence per se by violating its statutory duties under the UIPA; (v) did not "acknowledge and act reasonably and promptly to Bhasker's communications regarding her claims, in violation of N.M. Stat. Ann. § 59A-16-20(B)"; (vi) did not "adopt and implement reasonable standards for the prompt investigation and processing" of Bhasker's claims, in violation of N.M. Stat. Ann. § 59A-16-20(C) ; (vii) did not "properly affirm and pay the coverage for claims" within a reasonable period of time, in violation of N.M. Stat. Ann. § 59A-16-20(D) ; (viii) did not act in good faith to promptly and fairly settle Bhasker's claims, in violation of N.M. Stat. Ann. § 59A-16-20(E) ; (ix) compelled Bhasker to sue Financial Indemnity because Financial Indemnity offered "substantially less (i.e. nothing)" than the amount owed to Bhasker, in violation *1198N.M. Stat. Ann. § 59A-16-20(G) ; and (x) did not promptly explain why it denied her claims, in violation of N.M. Stat. Ann. § 59A-16-20(N). Complaint ¶¶ 83-94, at 17-18. Bhasker contends that she and other class members are entitled to attorneys' fees and costs pursuant to N.M. Stat. Ann. § 59A-16-30, plus actual damages. See Complaint ¶ 96, at 18.
Fourth, Bhasker asserts that Financial Indemnity breached their contract by not providing underinsured coverage or, alternatively, by improperly denying underinsured benefit claims. See Complaint ¶¶ 91-95, at 18-19. Bhasker contends that she and other class members are entitled to "actual damages, including but not limited to, underinsured coverage in an amount equal to liability limits and may be entitled to payment of underinsured benefits, or payment of additional underinsured benefits accordingly and to damage to Plaintiff and the Class in an amount to be proven at trial." Complaint ¶ 95, at 19.
Fifth, Bhasker asserts that Financial Indemnity breached their contract, and the covenant of good faith and fair dealing. See Complaint ¶¶ 96-102, at 19-20. Bhasker contends that Financial Indemnity breached the implied covenant of good faith and fair dealing by, e.g., denying coverage, not investigating her claim promptly, and refusing to resolve her claim. See Complaint ¶ 100(a)-(f), at 20.
Sixth, Bhasker seeks injunctive relief preventing Financial Indemnity from continuing practices that violate the duties, contractual, and legal obligations" owed to her and the class, Complaint ¶ 104, at 21, and a declaratory judgment that "establish[es] the respective rights and obligations of the parties with respect to the claims set forth herein," Complaint ¶ 108, at 21.
Seventh, Bhasker argues that the Court should award punitive damages, because Financial Indemnity acted in "willful, wanton, and in reckless disregard" of Bhasker's and the proposed class' rights. Complaint ¶ 109, at 21.
Bhasker concludes by summarizing her requests:
A. Certifying this action as a class action pursuant to Rule l-023(A) & (B) NMRA;
B. Awarding compensatory damages to the Plaintiff and the Class for the damages done to them by Defendant in an amount to be proven at trial;
C. Awarding punitive damages to the Plaintiff and the Class in an amount sufficient to punish Defendant for their willful and wanton conduct, and to deter them, and others similarly situated, from such conduct in the future in an amount to be proven at trial;
D. Awarding the Plaintiff and the Class damages from Defendant as a result of its violations of UIPA, in an amount to be determined at trial and for attorneys' fees and costs;
E. Awarding treble damages in accordance with the UPA which will deter Defendant and others from such unfair trade practices and wrongful conduct in the future and will punish them or the conduct set forth in this Complaint;
F. Granting a declaratory judgment that establishes the rights and obligations of the parties with respect to the claims set forth herein;
G. Granting injunctive relief as may be deemed proper by the Court to require *1199Defendant to desist in the wrongful actions described herein;
H. Awarding the Plaintiff and the Class their costs and expenses incurred in this actions, including reasonable attorneys' fees, experts' fees, and costs; and
I. Granting such other and further relief as the Court deems just and proper.
Complaint at 22.
2. The Motion to Dismiss.
In the MTD, Financial Indemnity moves to dismiss the Complaint. See MTD at 1. Financial Indemnity argues that the filed rate and voluntary payments doctrines bar Bhasker's claims. See MTD at 1. Financial Indemnity also asserts that Bhasker's illusory coverage argument is "simply wrong" as a matter of law, "because minimum limits underinsured motorists coverage does provide tangible benefits to those who choose it." MTD at 1.
Financial Indemnity asserts that the filed rate doctrine bars Bhasker's claims. See MTD at 3. Financial Indemnity characterizes Bhasker's claims as challenging rates Financial Indemnity charged for UIM coverage such that her "theory is, simply stated that Defendant charged her a premium for UIM coverage that was 'illusory.' " MTD at 3. Financial Indemnity argues that, because her Complaint is "premised on her 'unlawful premium' theory, all her claims run afoul of the filed rate doctrine." MTD at 3.
According to Financial Indemnity, New Mexico's filed rate doctrine "provides that 'any filed rate-that is, one approved by the governing regulatory agency-[is] per se reasonable and unassailable in judicial proceedings brought by ratepayers.' " MTD at 3 (quoting Coll v. First Am. Title Ins. Co.,
Financial Indemnity contends that the filed rate doctrine applies "regardless of the label plaintiffs may attach to the underlying allegedly wrongful conduct," which means that courts will apply the doctrine "even where plaintiffs allege fraud or other illegal activity." MTD at 4 (citing Montana-Dakota Utilities Co. v. Northwestern Public Serv. Co.,
Financial Indemnity asserts that an Alabama state court "faced an 'illusory' UIM coverage claim similar to Plaintiff's claim here" and determined that the filed rate doctrine barred the claim. MTD at 5 (citing Alabama Mut. Ins. Corp. v. City of Fairfield,
*1200the plaintiffs' claims "implicated the reasonableness of the filed rates." MTD at 6 (citing Korte v. Allstate Ins. Co.,
Financial Indemnity asserts that, in New Mexico, an insurer must " 'file with the superintendent rates and supplementary rate information prior to their use in New Mexico.' " MTD at 6 (quoting N.M. Stat. Ann. § 59A-17-9(A)(2)(a) ). Financial Indemnity contends that the statute's purpose is to " 'promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory, and to protect policy holders and the public against the adverse effects of excessive, inadequate or unfairly discriminatory rates.' " MTD at 6 (quoting N.M. Stat. Ann. § 59A-17-3 ).
Financial Indemnity contends that "[t]he Insurance Code makes it clear that the Superintendent of Insurance has exclusive authority over challenges to filed rates." MTD at 7 (citing N.M. Stat. Ann. § 59A-17-26, -34). Financial Indemnity asserts that the New Mexico Insurance Code "leaves no doubt that the New Mexico Legislature did not intend that the premiums charged by insurers could be collaterally attacked," yet "that is precisely what Plaintiff is attempting to do here." MTD at 7. Financial Indemnity contends that, if Bhasker's claims are "permitted to stand," the Court would have to "make an independent determination of the propriety of rate filings with the Insurance Department, and would undermine the exclusive authority vested in the Superintendent of Insurance to determine the propriety of insurance rates." MTD at 8.
Financial Indemnity also contends that Bhasker's claims "fail pursuant to the voluntary payments doctrine." MTD at 8. Financial Indemnity asserts that it is a " 'well established rule that payments voluntarily made with full knowledge of all material facts cannot be recovered back in absence of fraud or duress.' " MTD at 8 (quoting Rabbit Ear Cattle Co. v. Frieze,
[a]s a matter of law, Plaintiff was presumed to know the law, clearly in the public domain, regarding New Mexico's UIM offset provision [and] she cannot now be heard to complain that she was misled into paying premiums based on Defendant's supposedly failing to tell her about New Mexico's offset law or its effect on her UIM coverage.
MTD at 13.
Financial Indemnity then addresses Bhasker's contention that she had a "reasonable expectation" that she had UIM coverage of $25,000.00 for each person and $50,000 for each accident. MTD at 13. Financial Indemnity asserts that the "reasonable expectations doctrine simply does not come into play in the face of clear and unambiguous policy language." MTD at 13-14 (citing Sheldon v. Hartford Ins. Co.,
Next, Financial Indemnity contends-contrary to Bhasker's allegation that Financial Indemnity's insurance-policy application should have "advise[d] her what the monthly premiums would be for the next available tier of coverage or list[ed] corresponding levels of coverage," MTD at 15-that New Mexico requires that "corresponding premium levels be disclosed only where the policy holder rejects UM/UIM coverage equal to the bodily injury liability limits or altogether." MTD at 15 (citing Jordan v. Allstate Ins. Co.,
Financial Indemnity contends that, as a matter of law, Bhasker's insurance coverage was not illusory, because there are "several situations in which minimum limits UIM coverage has value for New Mexico policyholders." MTD at 16. First, Financial Indemnity asserts that an Idaho state court held that "UIM coverage equal to minimum bodily injury liability limits was not illusory, even if no vehicle covered by a policy issued in the state could satisfy the definition of an underinsured motor vehicle," because, "if the tortfeasor was a driver with an out-of-state policy with lower bodily injury minimum limits than in the policy state, the policyholder could recover the difference as to those limits." MTD at 17 (citing Vincent v. Safeco Ins. Co. of Am.,
Second, Financial Indemnity argues that policyholders with minimum limits UIM coverage "policyholders will be paid, even if they have minimum limits UIM coverage, where there are multiple injured parties in an accident, such that no single policyholder will recover the entirety of the tortfeasor's liability limit." MTD at 18 (citing Showman v. Busser, No. 311141,
Financial Indemnity asserts that the coverage is not, as a matter of law, illusory, because the "above cases show there is no question that minimum limits UIM coverage has value for New Mexico policyholders." MTD at 19. Financial Indemnity notes, however, that "some courts have reached the opposite conclusion." MTD at 19-20 (citing Hardy v. Progressive Specialty Ins. Co.,
Next, Financial Indemnity addresses Bhasker's argument that the Supreme Court of New Mexico "established that UIM coverage is 'superfluous' when the insured and tortfeasor both have the statutory minimum level of coverage." MTD at 20 (quoting Complaint ¶ 23, at 4). Financial Indemnity contends the case which Bhasker cites for this proposition- Weed Warrior -does not support Bhasker. See MTD at 20. Financial Indemnity asserts that the Supreme Court of New Mexico considered only whether "elect[ing] to take UM/UIM coverage for less than the general policy liability limits constitute[s] a rejection under the New Mexico uninsured motorist *1203statute." MTD at 20 (quoting Weed Warrior,
held only that New Mexico insurers had to offer UM/UIM coverage up to the bodily injury liability limits of the subject policy. Here, of course, there is no dispute that this was done, since Plaintiff chose UM/UIM limits equal to her bodily injury liability limits. Nothing in Weed Warrior , though, in any way prohibited an insured from purchasing minimum limits UM/UIM coverage, or deemed such coverage illegal.
MTD at 21. Financial Indemnity asserts that the Supreme Court of New Mexico "had no occasion to consider or address all the situations in which minimum limits UM/UIM coverage does in fact have value." MTD at 21.
Financial Indemnity then asserts that a California state court ruled that, when an insurer offers minimum limits underinsured coverage that is consistent with applicable law, "there can be no argument that the coverage is 'illusory.' " MTD at 21 (citing Fagundes v. Am. Internat. Adjustment Co.,
Next, Financial Indemnity addresses Bhasker's contention that Financial Indemnity allegedly charged excessive premiums for underinsured motorist coverage that Financial Indemnity did not, in the end, provide. See MTD at 22. Financial Indemnity asserts that this argument "is negated by her own Complaint allegation and exhibits." MTD at 22. Financial Indemnity contends that Bhasker's policy documents shows that Financial Indemnity charged her a single premium for combined uninsured motorist ("UM") and underinsured coverage. See MTD at 22. Financial Indemnity then argues:
Under New Mexico law, rates must be charged based on the insurers' loss history. See, e.g., N.M. Stat. Ann. § 59A-17-7 ("In determining whether rates comply with the rate standards, the following criteria shall be applied: A. due consideration shall be given to past and prospective loss and expense experience within and without this state[.]"); N.M. Stat. Ann. § 59A-17-6 ("Rates are inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the line, kind or class of business to which they apply."). Taking Plaintiff's Complaint allegations that Defendant rarely, if ever, pays under minimum limits UIM coverage as true, then by definition the portion of the rate for the combined UM/UIM coverage that is attributable to UIM, as opposed to UM, coverage would be minimal based on a minimal loss payment history. So, again taking Plaintiff's Complaint allegations as true, Defendant cannot, as a matter of law, be collecting excessive premiums for UIM coverage that has an allegedly small or "illusory" value. And that analysis only further underscores why, as fully discussed above, the filed rate doctrine also bars Plaintiff's claims.
MTD at 22-23.
3. The Response.
Bhasker responds to Financial Indemnity's MTD. See Plaintiff's Response and Memorandum of Law in Opposition to Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed May 23, 2017 (Doc. 18)("Response"). Bhasker argues that the filed rate doctrine does not apply to her claims. See Response at 3. Bhasker acknowledges that she paid a premium "for illusory coverage," but her Complaint concerns "disputed contractual coverage, misrepresentations *1204to sell coverage, and failure to properly advise Plaintiff as to the impact of her choice." Response at 3. Bhasker contends that "[s]uch conduct is separate from any regulatory framework or the setting of rates." Response at 3. Bhasker asserts that the United States District Court for the Southern District of Illinois determined that the filed rate doctrine "was wholly inapplicable to claim of illusory UIM coverage" where the plaintiff alleges deception and fraud. Response at 4 (citing Keeling v. Esurance Ins. Co., No. 10-0835-DRH,
Bhasker asserts that the same analysis should apply in this case, because she alleges that, "based on fraudulent and deceptive behavior by the insurer, the coverage provided was a sham," and New Mexico law "precludes an insurer from retaining premiums on an insurance contract where the policy is illegal." Response at 4 (citing Forrest Currell Lumber Co. v. Thomas,
Next, Bhasker contends that the voluntary payment doctrine does not apply to her claims. See Response at 5. Bhasker asserts that the voluntary payment doctrine is "not a legally adequate affirmative defense to claims of unfair and deceptive business practices." Response at 5 (citing Deere Constr., LLC v. Cemex Constr. Materials Florida, LLC,
*1205Response at 7 (citing Indoor Billboard/Washington, Inc. v. Integra Telecom of Washington, Inc.,
Bhasker then asserts that, on the few occasions on which New Mexico courts have considered the voluntary payment doctrine, they have "simply not recognized or applied the voluntary payment doctrine outside the context of restitution claims and clearly never in the context of a bar to a statutory cause of action." Response at 7-8 (citing Aetna Life Ins. Co. v. Nix,
Next, Bhasker asserts that her illusory-coverage claims is viable. See Response at 8. Bhasker contends that she "believed that she was purchasing valuable coverage," but "was led to purchase ... worthless and illusory [coverage] since the insurer would never incur liability under the policy." Response at 8-9 (citing Pompa v. Am. Family Mut. Ins. Co.,
In other jurisdictions where the limits of the tortfeasor's liability coverage and the claimants' underinsured motorist coverage limits are the same, and where the state law determines a claimant's status as underinsured solely by considering the contractual limits of liability rather than the damages sustained, courts have recognized that under the principle of illusory coverage, or under the reasonable expectations of the claimant, UIM coverage may be activated.
Response at 9.
Bhasker contends that "different jurisdictions define and apply UIM coverage differently," with some jurisdictions "compar[ing] the damages sustained by the insured to the limits of coverage under the tortfeasor's policy," Response at 9-10 (citing Brainard v. Trinity Universal Ins. Co.,
Next, Bhasker considers Financial Indemnity's argument that the contract is not illusory, because, in New Mexico, it is possible that an out-of-state driver may have liability insurance with lower limits than those New Mexico mandates. See Response at 15. Bhasker argues that this argument is unreasonable as a matter of law, because New Mexico courts "have already decided that a New Mexico insured with only $25,000 in UM/UIM coverage does not , in fact, carry underinsured coverage." Response at 15 (citing Weed Warrior Services,
even if a tortfeasor has an out-of-state liability policy with lower bodily injury liability minimum limits than those required in New Mexico, there is always the possibility that the tortfeasor's policy will contain an out-of-state coverage clause which will provide liability limits in an amount equal to the liability limits imposed by New Mexico's Mandatory Financial Responsibilities Act[,N.M. Stat. Ann. § 66-5-201 ]. See, for example, Bristol West Ins. Co. v. Wawanesa Mut. Ins. Co. ,570 F.3d 461 , 463-64 (1st Cir. 2009) ). The effect of such a clause would be to increase the out-of-state tortfeasor's liability limits to the minimum amount required in New Mexico, namely, $25,000. In such an instance, a New Mexico resident with minimum UIM limits would not be able to recover the benefits of his or her UIM coverage in an auto accident with an out-of-state driver.
Response at 15 (emphasis in original).
Bhasker then considers Financial Indemnity's argument that the coverage is not illusory, because there are some instances in which the policy holder may recover benefits. See Response at 16-17. Bhasker argues that Financial Indemnity's "hypothetical and remote" examples do not negate the coverage's "illusory nature." Response at 16 (citing Hardy v. Progressive Specialty Ins. Co.,
*1207Next, Bhasker argues that her reasonable expectations "are of paramount importance when considering what benefits an insured is entitled to under the terms of an insurance policy." Response at 18 (citing Rummel v. Lexington Ins. Co.,
Bhasker concludes that she has
pled facts which, if taken as true and viewed in the light most favorable to the Plaintiff, suffice to evidence her entitlement to relief for her claims against Defendant for negligence, violation of the New Mexico Unfair Trade Practices Act, violation of the New Mexico Unfair Insurance Practices Act, breach of contract, breach of the covenant of good faith and fair dealing, and for punitive damages. Both of Defendant's affirmative defenses must fail as a matter of law and Bhasker has shown that the underinsured coverage she purchased must be considered illusory. Accordingly, Defendant's Motion to Dismiss must be denied in its entirety and the matter permitted to proceed.
Response at 20-21.
4. The Reply.
Financial Indemnity replies to Bhasker's response. See Reply in Support of Defendant's Motion to Dismiss First Amended Complaint, filed June 6, 2017 (Doc. 20)("Reply"). Financial Indemnity first argues that the filed rate doctrine bars Bhasker's claims. See Reply at 1. Financial Indemnity disputes Bhasker's contention that her claims are " 'separate from any regulatory framework or the setting of rates.' " See Reply at 1 (quoting Response at 3). Financial Indemnity argues that "clear authority" in the United States Court of Appeals for the Tenth Circuit and in other United States Courts of Appeals hold that the filed rate doctrine "applies regardless of the label used to describe the claims, including where fraud or other illegal activity is alleged." Reply at 1. Financial Indemnity contends that the Tenth Circuit, applying New Mexico law, "rejected the same type of 'fraudulent activity' argument Plaintiff asserts here, upholding dismissal, based on the filed rate doctrine, of plaintiffs' claims against the insurer defendants of conspiracy and bribery." Reply at 1-2 (citing Coll v. First Am. Title Ins. Co.,
*1208Reply at 2 (quoting
Plaintiff claims she "paid a premium of $80 for bodily injury coverage and $54 for un-and-underinsured coverage for a total of $134 for minimal combined coverage. A purchase of higher limits, for example, at a premium of $201 would yield a disproportionate underinsured indemnification to premium ratio of 308/1, when compared to the purchase of minimal combined coverage for virtually no underinsured indemnification." (Compl., ¶ 34.) Plaintiff calculates her "disproportionate underinsured indemnification to premium ratio" as follows: "$25,000.00/$81=308," and states "the Plaintiff would be indemnified up to $25,000.00 in underinsured coverage with a purchase of the next tier of available coverage of $50,000.00 per person/$100.000.00 per accident after the offset." (Id, n. 5 & n. 6.) If, as Plaintiff maintains, she is not challenging insurance rates, her Complaint would not allege, as it plainly does, that Defendant has charged a disproportionate premium for minimum limits UIM coverage, or set forth calculations regarding that alleged wrongful premium, and it certainly would not seek a class-wide refund of supposedly improperly collected minimum limits UIM premiums. Put simply, on the face of the Complaint Plaintiff herself has injected "unlawful premiums" as a damages element in this case, alleging she and the class overpaid for worthless coverage. She is thus necessarily challenging the rate she was charged, which is precisely what the filed rate doctrine prevents.
Reply at 3-4.
Financial Indemnity also argues that Bhasker's reliance on Keeling v. Esurance Ins. Co., No. 10-0835,
Financial Indemnity asserts that all of Bhasker's claims "fail based on the voluntary payments doctrine." Reply at 5. Financial Indemnity contends that Bhasker cites no cases, and makes no arguments, contradicting Financial Indemnity's assertions "that the voluntary payments doctrine applies-including where fraud is alleged -where, as here, the plaintiff knew or could have easily learned of the law underlying the basis for the disputed charge." Reply at 6 (citing Chris Albritton Const. Co. v. Pitney Bowes Inc.,
Financial Indemnity argues that Bhasker's claims fail because the policy coverage is not illusory as a matter of law. See Reply at 8. Financial Indemnity contends that, although Bhasker cites to cases holding that the coverage is illusory, Bhasker "cannot avoid the clear majority of cases [that Financial Indemnity] cited ... which have rejected Plaintiff's 'illusory' coverage argument." Reply at 8 (citing Hallihan v. Progressive Direct Ins. Co., No. 315CV01068NJRSCW,
As these cases show, there are in fact situations in which minimum limits UIM coverage provides tangible benefits for New Mexico policyholders, including where: (a) the tortfeasor had an out-of-state policy with lower bodily injury liability minimum limits than in the policy state; (b) there are multiple injured parties in an accident, such that no single policyholder will recover the entirety of the tortfeasor's liability limit; and (c) the insured receives less than the tortfeasor's *1210policy limits due to a contractual exclusion for punitive damages, and the insurer offsets the full amount of the tortfeasor's liability limits.
Reply at 8. Financial Indemnity argues that "the cases holding minimum limits UIM coverage is not 'illusory' are better reasoned" and "most of the cases Plaintiff cites ... are either factually distinguishable or failed to consider all the scenarios where the coverage does indeed provide valuable benefits to insured (most notably the punitive damage scenario based on New Mexico's unique law in that regard)." Reply at 8 (citing Smith v. Auto-Owners Ins. Co.,
Next, Financial Indemnity argues that Bhasker's contention that she "has paid excessive premiums and received nothing in return" ignores that, as a matter of law, Financial Indemnity can "charge rates based on its loss history." Reply at 10 (citing MTD at 24). Financial Indemnity asserts that Bhasker's policy documents show that she has combined UM and UIM coverage for which she paid a single premium, and "[t]aking Plaintiff's Complaint allegations that Defendant rarely, if ever, pays under minimum limits UIM coverage as true, the portion of the combined UM/UIM coverage premium attributable to UIM coverage would, of necessity, be miniscule." Reply at 10. Financial Indemnity contends that this fact "wholly negates Plaintiff's theory that Defendant has collected excessive premiums for UIM coverage with an allegedly 'illusory' value." Reply at 10.
Financial Indemnity also disputes Bhasker's contention that the Supreme Court of New Mexico, in Weed Warrior , has already determined that a New Mexico insured with only $25,000.00 in UM/UIM coverage does not carry underinsured coverage. See Reply at 10-11. Financial Indemnity asserts that, in that case, the Supreme Court of New Mexico "simply did not hold that minimum limits UIM coverage is impermissibly illusory"; instead, the Supreme Court "held only that New Mexico insurers had to offer UM/UIM coverage up to the bodily injury liability limits of the subject policy." Reply at 10-11. Financial Indemnity asserts that Bhasker "chose UM/UIM limits equal to her bodily injury liability limits." Reply at 11. Financial Indemnity contends that nothing in Weed Warrior "prohibits an insured from purchasing minimum limits UM/UIM coverage, or deems such coverage illegal." Reply at 11.
Next, Financial Indemnity considers Bhasker's "reasonable expectations" arguments, and contends that Bhasker "cannot escape the cases holding that this doctrine simply does not come into play in the face of clear and unambiguous policy language." Reply at 11 (citing *1211Sheldon v. Hartford Ins. Co.,
5. The Hearing.
The Court held a hearing on July 24, 2017. See Hearing Transcript (taken July 24, 2017) (Doc. 34)("Tr."). Financial Indemnity began by arguing that there are three reasons why the Court should grant its MTD. See Tr. at 3:6-7 (Hanover). First, Financial Indemnity argued that Bhasker "is challenging the amount of the premium that she was charged for her minimum limits UIM coverage, and this challenge is barred by the Filed Rate Doctrine." Tr. at 3:8-12 (Hanover). The Court asked whether New Mexico courts have ever "squarely adopted" the filed rate doctrine, Tr. at 3:13-14 (Court), and Financial Indemnity answered that it "can't cite to a New Mexico state court case that's adopted it [but] I will say that I'm not aware of any state that has ever rejected the filed rate doctrine," Tr. at 3:21-24 (Hanover). Financial Indemnity stated that Montana "is the only state I can think of that hasn't formally adopted [the filed rate doctrine] but they have not rejected it either." See Tr. at 4:2-7 (Hanover).
The Court asked Financial Indemnity: "[I]f you had an illusory contract in which you did not have anything being sold, do you think the Supreme Court of New Mexico would say ... the filed rate doctrine-that it's never adopted-is going to bar a claim for that?" Tr. at 4:8-13 (Court). Financial Indemnity stated that it did not know, but conceded that it would be unlikely that the Supreme Court of New Mexico would bar such a claim based on the filed rate doctrine. See Tr. at 5:7-9 (Hanover). Financial Indemnity asserted, nonetheless, that the UM/UIM coverage in this case is not illusory. See Tr. at 4:14-16 (Hanover).
The Court then asked Financial Indemnity about Coll v. First American Title Insurance Co. See Tr. at 5:10-14 (Court). Financial Indemnity explained that the Tenth Circuit held that "any filed rate that is one approved by the governing regulatory agency is, per se, reasonable and unassailable in judicial proceedings brought by ratepayers." Tr. at 6:24-7:4 (Hanover). Financial Indemnity asserted that the filed rate doctrine's purpose is "to preserve the role of regulatory bodies in approving rates and maintaining markets and keeping courts out of the ratemaking process." Tr. at 7:4-8 (Hanover). Financial Indemnity asserted that, in New Mexico, there is a "comprehensive rating scheme" for insurance rates: "Section 17.9 of the Insurance Code requires insurers to file the rates with the Superintendent of Insurance ... prior to using them." Tr. at 7:9-13 (Hanover). Financial Indemnity asserted that Section 17.12 "requires insurers to charge only the rates that are lawfully in effect as provided in the insurance rate regulation laws, and the Superintendent of Insurance has exclusive authority over any challenges to fixed rates." Tr. at 7:13-17 (Hanover). Financial Indemnity asserted that, under New Mexico's Insurance Code, any "aggrieved person" has the right to a hearing before the Superintendent of Insurance. Tr. at 7:23-25 (Hanover). Financial Indemnity concluded that "this comprehensive scheme leaves no doubt that the New Mexico Legislature did not intend for the premiums charged by insurers to be collaterally *1212estopped, and that's exactly what the plaintiffs are alleging here with their illusory coverage theory." Tr. at 8:1-6 (Hanover). Financial Indemnity stated:
The plaintiff specifically alleged that the premium that she paid for her UM/UIM coverage was too high. She calculates the ratios for minimum limits and for higher limits, with the contention that the premium actually charged to the plaintiff was excessive. The plaintiff uses the phrase that there was "a disproportionate premium/indemnification ratio." These are exactly the kinds of matters that have been entrusted to the Superintendent of Insurance to regulate.
....
Once a rate has been submitted to the regulator and it's appropriate to be used, that is the only rate that the carrier is permitted to charge, and any allegations about representations about the rate are estopped by virtue of the doctrine.
Tr. at 8:7-9:6 (Hanover)(quoting Complaint ¶¶ 34-35, at 5-6).
The Court asked how there are claims in New Mexico and in other states for illusory insurance contracts, given that the filed rate insurance doctrine would seem to preclude those claims. See Tr. at 9:7-12 (Court). Financial Indemnity answered that a "majority [of jurisdictions] have found that coverage was not illusory, and a minority have found that coverage is illusory." Tr. at 9:13-16 (Court). Financial Indemnity argued that the cases that have found coverage to be illusory can be separated into two categories:
Some of them, such as the Hoglund[ v. Secura Insurance, 176 Wis.2d [265] at500 N.W.2d 354 (Ct. App. 1993),] case from the Wisconsin Court of Appeals, and the Smith versus Auto-Owners case from the Alabama Supreme Court, simply found that minimum limits UM/UIM coverage is completely worthless. And so they found where it's valueless, therefore, that the coverage was illusory. They didn't consider any of the circumstances where it could be worthwhile. The other category are cases like Glazewski[ v. Allstate Ins. Co.,126 Ill.App.3d 401 , [81 Ill.Dec. 349 ]466 N.E.2d 1151 ,] from Illinois, as well as Hardy[ v. Progressive Specialty Ins. Co.,315 Mont. 107 ,67 P.3d 892 (2003),] from Montana, and Pristavec[ v. Westfield Ins. Co.,184 W.Va. 331 ,400 S.E.2d 575 (1990) ]. In these circumstances the courts did consider at least one circumstance where the coverage could have some value. In some of the cases they did not consider all the circumstances. But they just came to a conclusion that, notwithstanding these circumstances, the coverage was too remote or had no value in any event.
Tr. at 9:19-10:11 (Hanover). The Court asked how courts "[got] around the filed rate doctrine in concluding there was claim for an illusory contract," and Financial Indemnity responded that, in "pure coverage" cases-i.e., when the question is exclusively whether there is coverage in a certain circumstance-the filed rate doctrine does not necessarily apply. Tr. at 10:12-22 (Court, Hanover). Financial Indemnity added that this case is not a "pure coverage" case. Tr. at 10:23-24 (Hanover). The Court asked whether the cases reflecting the "minority position" were distinguishable from this case. Tr. at 10:25-11:2 (Court). Financial Indemnity responded that, among the minority cases, some were unclear whether the issue was "purely coverage." Tr. at 11:3-7 (Hanover). Financial Indemnity argued that, in this case, certain clues indicate that this is not a "purely coverage" question, e.g., because the "putative class definition includes everyone that has the coverage, without regard to whether or not they've had any claim," and because Bhasker "is challenging *1213the proportionality and amount of the premium that was charged for coverage that they believe to have been either completely or nearly worthless." Tr. at 11:8-17 (Hanover).
The Court then asked Bhasker whether she thought that the Tenth Circuit "has correctly read New Mexico as adopting the filed rate doctrine." Tr. at 13:5-7 (Court). Bhasker replied that she believed that New Mexico has already adopted the filed rate doctrine. See Tr. at 13:8-12 (Bhasker)5 . The Court asked Bhasker how she can "get around the Tenth Circuit application of that particular case," and Bhasker responded that "the way you get around it is to focus on the relief Plaintiff seeks," and, in the Tenth Circuit case, "the relief they were seeking was to adjust the rates." Tr. at 13:16-19 (Bhasker). The Court asked: "[I]f you're asking for a refund of premiums, you are asking for some premiums back." Tr. at 13:22-24 (Court). Bhasker answered that she "has not specifically requested that we receive a refund of the rates." Tr. at 14:2-6 (Bhasker). Bhasker asserted that she seeks "remedies that are available for the misleading and unconscionable trade practice ... [which] include actual damages, punitive damages, attorney fees." Tr. at 14:10-13 (Bhasker). The Court wondered whether, to award damages to Bhasker, it would have to determine that the premiums were unlawful, and therefore "run into the filed rate doctrine." Tr. at 14:14-20 (Court). Bhasker answered that "the term 'unlawful premium' was first published by the defendant" and that "[n]owhere in our complaint have to we alleged that there was an unlawful premium." Tr. at 14:21-24 (Bhasker). The Court asked whether Bhasker's reference to " 'illusory uninsured coverage with a disproportionate premium identification ratio, when compared to the next tier of available coverage' " in her Complaint alleged an unlawful premium. Tr. at 14:25-15:5 (Court)(quoting Complaint ¶ 35, at 6). Bhasker responded that
this description of the ratio and the next tier is to provide an example of the illusory nature of this coverage, and if the Court believes that this example is alleging that the rates are not fair, we would request that ... there would be a chance to amend the complaint to clear up this type of language.
Tr. at 15:6-13 (Bhasker).
Bhasker then argued that this case is distinct from the Tenth Circuit's Coll v. First American Title Insurance Co., because, in that case, "the filed rate was applicable to preclude damages for restitution, unjust enrichment, and disgorgement of the excessive amounts charged for title insurance," but, in this case, Bhasker seeks "the underinsured motorist benefits and any other damages the Court deems fair," but not restitution or unjust enrichment. Tr. at 15:18-24 (Bhasker).
Next, Bhasker argued that the Supreme Court of Alabama determined in Peachtree Casualty Insurance v. Sharpton,
Bhasker asserted that the Court has previously determined that the UIPA "is founded in a tort cause of action." Tr. at 17:1-8 (Bhasker, Court)(citing Guidance Endodontics, LLC v. Dentsply Int'l, Inc.,
The Court asked whether Bhasker would agree that the "vast majority of cases that ... are similar to yours have held that the filed rate doctrine blocks these types of claims." Tr. at 17:19-22 (Bhasker). Bhasker answered that she would not agree with that statement, but added that "I would agree that the vast majority of cases Defendant has cited [holds that the filed rate doctrine] blocks claims wherein the plaintiff are seeking rate adjustments." Tr. at 17:23-1 (Bhasker). The Court asked whether Bhasker could identify a case in which a plaintiff brought an illusory insurance claim, and the court discussed the filed rate doctrine and explained how they were allowing the claim to go forward despite the doctrine. See Tr. at 18:2-6 (Bhasker). Bhasker stated that the Alabama Supreme Court case, Peachtree Casualty Insurance v. Sharpton,
The Court gave Financial Indemnity another opportunity to address the filed rate doctrine issue. See Tr. at 18:22-23 (Court). Financial Indemnity stated that
I believe it's disingenuous for Plaintiff to argue that they're not seeking any return of premium, when they broadly define the class to include people who have no claims whatsoever. It's difficult to figure out what possible damages would be there if there is no allegation to get premium back. Although the plaintiff has styled causes of action for ... violation of the Unfair Trade Practices Act or Unfair Insurance Practices Act, there is no factual conduct that's alleged that could possibly constitute any violations of those acts, because there is no dispute that the terms of the policy disclosed the minimum UIM coverage limits; disclosed the terms of those coverages; that the plaintiff was on notice about New Mexico law with respect to the offset provision. And nothing in the complaint suggests anything improper or fraudulent about that.
Tr. at 18:24-19:17 (Hanover).
The Court then switched to the voluntary payment doctrine. See Tr. at 19:21 (Court). Financial Indemnity began by arguing that, in New Mexico, "payments which are voluntarily made, with full knowledge of facts, cannot be recovered, in absence of fraud or duress." Tr. at 19:22-25 (Hanover). Financial Indemnity argued *1215that Bhasker knew the policy's terms, "was constructively on notice of New Mexico, and may have been actually on notice." Tr. at 20:8-12 (Hanover). Moreover, Financial Indemnity argued, Bhasker "paid her premium voluntarily," and there are "no well-pleaded facts about any fraud or any duress." Tr. at 20:11-13 (Hanover). Financial Indemnity asserts that Bhasker's argument that Financial Indemnity was "somehow required to affirmatively advise about the effect of New Mexico's offset law is not supported by any case law or other authority, nor does it preclude the application of the Voluntary Payments Doctrine." Tr. at 20:13-18 (Hanover). Financial Indemnity contends that Bhasker has not proffered any facts indicating circumstances under which the reasonable expectations doctrine should apply even in the face of clear policy language, nor is there anything in the pleadings indicating Bhasker got anything other than what she sought to purchase. See 20:25-21-14 (Hanover).
Financial Indemnity next argues that the "only context in which New Mexico courts have required additional disclosure requirements have been where a policyholder rejects UM/UIM coverage limits in the same amount as the liability limit, which is not the situation here [because Bhasker] actually purchased the coverage limits." Tr. at 21:20-25 (Hanover).
Financial Indemnity also asserts that, although Bhasker correctly states that New Mexico courts have applied the voluntary payment doctrine only to cases relating to restitution, "there is no case that suggests that they wouldn't apply it more broadly than restitution." Tr. at 22:3-9 (Hanover).
The Court let Bhasker respond on the voluntary payment doctrine issue. See Tr. at 22:12-13 (Court). Bhasker began by returning to the filed rate doctrine question, stating that the case Sewell v. Safeco Ins. Co. of America, No. CIV 06-0150,
One way is to follow the Supreme Court's decision in Progressive v. Weed Warrior, wherein they list steps in how to fully inform the insured onto what they're buying. The other way is to reform the contract, and that's through statutory interpretation. But, nonetheless, if you apply Progressive v. Weed Warrior steps, defendant will not be required to change their rates.
Tr. at 24:20-25:4 (Bhasker).
The Court gave Financial Indemnity another chance discuss the voluntary payment doctrine. See Tr. at 25:9-10 (Court).
*1216Financial Indemnity argued that Progressive v. Weed Warrior does not apply to this case:
In [ Weed Warrior ] the plaintiff had affirmatively selected UM/UIM limits that were lower than the liability limits. And ... the plaintiff contended that this constituted a rejection of coverage. And as a rejection of UM coverage, it was subject to the New Mexico requirements for affirmative statements about rejecting UM coverage. These statements were allegedly not provided, and therefore, they claimed that the rejection was improper. So that they had never actually rejected coverage, and they should have the full limits up to the liability limits. The Supreme Court agreed with them. So the way that they reformed those policies was that they gave the plaintiffs coverage up to the full level of liability.
Here, there is no issue about any rejection, and the plaintiffs in the putative class already have the same UM/UIM limits as the liability limits. So if you're not trying to refund some sort of premium for allegedly illusory coverage, I'm hard-pressed to think about what you could possibly give them in terms of additional coverage. There is no allegation about any limits. We would just be engaging in sheer speculation as to what the plaintiff or the putative class may or may not have done if they had read their policy or thought about New Mexico law, or decided that the coverage was not worth a sufficient amount for them.
Tr. at 25:11-26:18 (Hanover).
Financial Indemnity then identified "three circumstances where the minimum limits UIM coverage does have value here": (i) "where the tortfeasor is an out-of-state driver who may have statutory limits lower than [is required in] New Mexico"; (ii) "where there are multiple injured parties, such that no one of them can recover the full amount of the tortfeasor's liability limits"; and (iii) "where the tortfeasor's policy limits contractually limits any payments for punitive damages judgments." Tr. at 26:19-27:6 (Hanover). Financial Indemnity contended that, "if we accept ... that [the minimum limits UIM coverage is] worth something," the question becomes how much is that coverage worth, and who should decide. Tr. at 27:7-18 (Hanover). Financial Indemnity asserted that it is the Superintendent of Insurance's job to determine insurance policies' worth. See Tr. at 27:14-18 (Hanover). Financial Indemnity then argued that, because Bhasker paid one premium for combined underinsured and uninsured coverage, and insurers are allowed to set rates based on their loss history, it "may be that only a miniscule portion" of the combined premium "related to the UIM portion versus the UM portion." Tr. at 27:19-28:20 (Hanover). Financial Indemnity explained that
those are all facts that we don't have here, but the point is that it doesn't really matter where those facts come out, because it's not the Court's job to figure out whether or not [the premium] was too much, too little, or just right. That's the job of the Superintendent of Insurance under the filed rate doctrine.
Tr. at 28:21-29:2 (Hanover).
The Court then switched to the illusory coverage issue. See Tr. at 29:16-19 (Court). Bhasker listed several major New Mexico cases discussing the doctrine: Weed Warrior,
Bhasker then began discussing the Supreme Court of New Mexico case Schmick v. State Farm Mutual Auto Insurance Company,
Financial Indemnity returned to the podium and began discussing Bhasker's misleading sales practices allegations. See Tr. at 33:1-3 (Hanover). Financial Indemnity asserted that Bhasker's Complaint "is devoid of any allegations about the process or method of representations that were made to Plaintiff by Financial Indemnity Company in the sales process." Tr. at 33:3-7 (Hanover). Financial Indemnity asserted that the reason why the Complaint does not make allegations of misleading sales process is because she purchased the policy from an independent agent, who is no longer a party to the case. See Tr. at 33:9-17 (Hanover). Financial Indemnity contended that Bhasker asserts that "there should have been additional disclosures" by Financial Indemnity, but Bhasker "provides no legal justification for why any such disclosures were mandated in the sales process." Tr. at 33:18-34:3 (Hanover).
LAW REGARDING RULE 12(b)(6)
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a court to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true." Mobley v. McCormick,
A complaint need not set forth detailed factual allegations, yet a "pleading that *1218offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action' " is insufficient. Ashcroft v. Iqbal,
To survive a motion to dismiss, a plaintiff's complaint must contain sufficient facts that, if assumed to be true, state a claim to relief that is plausible on its face. See Twombly,
"[P]lausibility" in this context must refer to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs "have not nudged their claims across the line from conceivable to plausible." The allegations must be enough that, if assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief.
Robbins v. Oklahoma,
Although affirmative defenses must generally be pled in the defendant's answer, not argued on a motion to dismiss, see Fed. R. Civ. P. 8(c), there are exceptions. First, a defendant can argue an affirmative defense on a motion to dismiss where the defendant asserts an immunity defense-the courts handle these cases differently than other motions to dismiss. See Robbins v. Oklahoma,
*1219The plaintiff may counter this motion with an assertion that a different statute of limitations or an equitable tolling doctrine applies to bring the suit within the statute. The Tenth Circuit has not clarified whether this assertion must be pled with supporting facts in the complaint or may be argued in response to the motion. Cf. Kincheloe v. Farmer,
LAW REGARDING DIVERSITY JURISDICTION AND ERIE
Under Erie Railroad Co. v. Tompkins,
LAW REGARDING THE UIPA
The New Mexico Legislature passed the UIPA, N.M. Stat. Ann. § 59A-16-20, "to regulate trade practices in the insurance business and related businesses," including "practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices." N.M. Stat. Ann. § 59A-16-2. N.M. Stat. Ann. § 59A-16-4 proscribes certain misrepresentations that relate to insurance transactions, including "misrepresent[ing] the benefits, advantages, conditions or terms of any policy." N.M. Stat. Ann. § 59A-16-4. N.M. Stat. Ann. § 59A-16-5 forbids "untrue, deceptive or misleading" advertisements that relate to insurance. N.M. Stat. Ann. § 59A-16-5. N.M. Stat. Ann. § 59A-16-8 makes actionable certain falsifications of insurance records and the circulation of "any false statement of the financial condition of an insurer." Various provisions in the UIPA proscribe discrimination in relation to insurance transactions. See, e.g., N.M. Stat. Ann. §§ 59A-16-11 to-13.2. N.M. Stat. Ann. § 59A-16-19 prohibits anti-competitive insurance practices "resulting or tending to result in unreasonable restraint of, or monopoly in, the business of insurance." N.M. Stat. Ann. § 59A-16-19.
The UIPA imposes liability for a laundry list of unfair insurance claims practices, including the following:
A. misrepresenting to insureds pertinent facts or policy provisions relating to coverages at issue;
B. failing to acknowledge and act reasonably promptly upon communications with respect to claims from insureds arising under policies;
C. failing to adopt and implement reasonable standards for the prompt investigation and processing of insureds' claims arising under policies;
D. failing to affirm or deny coverage of claims of insureds within a reasonable time after proof of loss requirements under the policy have been completed and submitted by the insured;
E. not attempting in good faith to effectuate prompt, fair and equitable settlements of an insured's claims in which liability has become reasonably clear;
F. failing to settle all catastrophic claims within a ninety-day period after the assignment of a catastrophic claim number when a catastrophic loss has been declared;
G. compelling insureds to institute litigation to recover amounts due under policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds when such insureds have made claims for amounts reasonably similar to amounts ultimately recovered;
H. attempting to settle a claim by an insured for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising *1225material accompanying or made part of an application;
I. attempting to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of, the insured, his representative, agent or broker;
J. failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made;
K. making known to insureds or claimants a practice of insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
L. delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
M. failing to settle an insured's claims promptly where liability has become apparent under one portion of the policy coverage in order to influence settlement under other portions of the policy coverage;
N. failing to promptly provide an insured a reasonable explanation of the basis relied on in the policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; or
O. violating a provision of the Domestic Abuse Insurance Protection Act.
N.M. Stat. Ann. § 59A-16-20. N.M. Stat. Ann. § 59A-16-30 provides a right of action for violations of the UIPA. See N.M. Stat. Ann. § 59A-16-30. The UIPA allows for attorney's fees to prevailing parties. See N.M. Stat. Ann. § 59A-16-30. The Honorable Bruce D. Black, United States District Judge for the District of New Mexico, has concluded that a plaintiff failed to plausibly plead a UIPA claim:
Dr. Yumukoglu alleges generally that Provident's conduct "violates one or more of the provisions of Section 59A-16-20 NMSA 1978 (1984)," the section of the New Mexico Unfair Insurance Practices Act that prohibits unfair claims practices. Dr. Yumukoglu does not specify which of the fifteen provisions of this section he feels Provident has violated, and after a review of the statute, the Court cannot perceive which subsection could have been violated under the fact alleged. At the very least, Dr. Yumukoglu has failed to comply with the pleading requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires that a civil complaint set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Here, it is not clear either what Dr. Yumukoglu is claiming or to what relief he is entitled under § 56A-16-20. Dr. Yumukoglu's claim appears, like his claim for breach of the duty of good faith and fair dealing, to be based on Provident's alleged bad faith in terminating his disability benefits. As discussed above, the Court finds that Provident's decision to terminate Dr. Yumukoglu's benefits did not amount to bad faith. Provident's motion for summary judgment on Plaintiff's claim for statutory violation is granted.
Yumukoglu v. Provident Life & Accident Ins. Co.,
ANALYSIS
The Court concludes that: (i) the filed rate doctrine does not bar Bhasker's claims, because the Supreme Court of New Mexico would not apply the filed rate doctrine to bar claims against insurers for unfair or deceptive business practices; (ii) Bhasker's claims are well-pleaded even if the underinsured motorists insurance is not illusory; and (iii) the voluntary payment doctrine does not bar Bhasker's claims because she alleges that she did not know all the material facts. Accordingly, the Court denies the MTD.
I. THE FILED RATE DOCTRINE DOES NOT BAR EITHER BHASKER'S OR THE PROPOSED CLASS' CLAIMS.
The Court concludes that the Supreme Court of New Mexico would not expand its filed rate doctrine to cases where, as here, a consumer alleges that an insurer misrepresents material facts about a policy when making the sale. Although some courts in other jurisdictions apply the filed rate doctrine to bar claims against insurers and claims brought under consumer protection statutes, the Court determines that the Supreme Court of New Mexico would allow such suits to proceed. In making this decision, the Court fully recognizes how dutifully and broadly other states have applied the doctrine to bar claims implicating approved fees of all types. The Court concludes, nonetheless, that its ruling is the correct one in New Mexico's case, given that (i) the New Mexico Legislature expressly permits such suits; (ii) New Mexico case law gives no indication that the Supreme Court of New Mexico would expand its filed rate doctrine beyond the public utilities context to bar consumer protection claims against insurers; (iii) the Tenth Circuit's decision in Coll v. First Am. Title Ins. Co. does not require the Court to bar such claims; and (iv) other jurisdiction's rulings do not persuade the Court that the Supreme Court of New Mexico would bar such claims.
A. NEW MEXICO'S CASE LAW DOES NOT SUGGEST THAT THE SUPREME COURT OF NEW MEXICO WOULD EXPAND ITS FILED RATE DOCTRINE TO LIMIT CONSUMERS' SUITS AGAINST INSURERS FOR MISREPRESENTING THEIR POLICIES.
New Mexico courts have considered the filed rate doctrine only a handful of times and have never barred a plaintiff's misrepresentation claims against an insurer. In In re Comm'n Investigation Into 1997 Earnings of U S W. Commc'ns, Inc., a telephone company challenged the New Mexico State Corporation Commission's order effecting an interim reduction in the company's rates. See
*1227
Three years later, the Supreme Court of New Mexico upheld a state district court's decision to apply the filed rate doctrine to damage claims challenging telephone rates for calls made from correctional facilities. See Valdez v. State,
The filed rate doctrine is a doctrine that allows for "any 'filed rate'-that is, one approved by the governing regulatory agency-[to be] per se reasonable and unassailable in judicial proceedings brought by ratepayers." Miranda v. Michigan,141 F.Supp.2d 747 , 757 (E.D. Mich. 2001) (quoting Wegoland Ltd. v. NYNEX Corp.,27 F.3d 17 , 18 (2d Cir.1994) ). As the district court noted in its ruling, "[t]he heart of the filed rate doctrine is not that the rate mirrors a competitive market, nor that the rate is reasonable or thoroughly researched, it is that the filed rate is the only legal rate." Daleure v. Kentucky,119 F.Supp.2d 683 , 689 (W.D.Ky. 2000). The policy behind the filed rate doctrine is to prevent price discrimination and to preserve the role of agencies in approving rates and to keep courts out of the rate-making process. Arsberry v. Illinois,117 F.Supp.2d 743 , 744 (N.D.Ill. 2000).... In light of the history behind the filed rate doctrine, we believe that this Court "should think deeply before avoiding its application without good reason." [ Daleure v. Commonwealth of Kentucky,119 F.Supp.2d at 689 . ] In New Mexico, the New Mexico Public Regulation Commission (NMPRC) regulates intrastate calls. NMSA 1978, § 63-9A-8(A) (1987). The NMPRC has exempted inmate telephone services from several of its regulations and has authorized the rates at issue. We hold that under the filed rate doctrine these rates are legal and that Plaintiffs' claims for damages, restitution, or imposition of a constructive trust were properly dismissed by the district court.
Valdez v. State,
A few years later, the Court of Appeals of New Mexico determined that the filed rate doctrine did not preclude the plaintiff's claims against the Public Service Company of New Mexico ("PNM"), because its rates were not "filed rates" pursuant to the filed rate doctrine when a Public Service Commission staffer "merely reviewed" a contract containing the rates looking for glaring problems, and there was "nothing to indicate that the Commission approved of the specific amount to be rebated" to the plaintiff. Summit Properties, Inc. v. Pub. Serv. Co. of New Mexico,
The Connection Fees under the 1990 Contract were set not for public benefit, but for the private benefit to Summit in rebating its costs for the Facilities. PNM, in breaching the contract, prevented Summit from recovering its *1228costs. The 1990 Contract involves matters of private concern between Summit and PNM, and therefore the Commission does not have exclusive jurisdiction over the matter.
Those three cases represent New Mexico courts' entire filed rate doctrine discussions. To summarize, the Supreme Court of New Mexico determined that the filed rate doctrine did not prevent the Supreme Court of New Mexico from enforcing the New Mexico State Corporation Commission's interim rate reduction for telephone services, see In re Comm'n Investigation Into 1997 Earnings of U S W. Commc'ns, Inc.,
B. COLL V. FIRST AMERICAN TITLE INSURANCE DOES NOT DICTATE HOW THE COURT SHOULD RULE IN THIS CASE.
Financial Indemnity argues that the Tenth Circuit, in Coll v. First American Title Insurance Co., determined that, under New Mexico law, there is no fraud exception to the filed rate doctrine, see Reply at 2 (citing
In Coll v. First American Title Insurance Co., a proposed class comprising New Mexicans who purchased title insurance in New Mexico sued titled insurance companies and various state agencies "alleg[ing] generally that the Title Insurance Act violates numerous New Mexico constitutional and statutory provisions precluding price fixing and the creation of monopolies, and that the Insurer Defendants conspired with the insurance superintendent to establish *1229a premium rate that is unreasonably high."
The Tenth Circuit concluded that New Mexico's "pervasive regulation of title insurance differs significantly from its regulation of other types of insurance under its general insurance code" in that the Insurance Code encourages competition among insurers to produces rates " 'that are not excessive, inadequate, or unfairly discriminatory.' " Coll v. First Am. Title Ins. Co.,
Given that the Tenth Circuit's analysis is focused on the Title Insurance Act and its differences from the Insurance Code in general, the Court concludes its holding in Coll v. First American Title Insurance Co. speaks to the narrow issue of the filed rate doctrine's applicability to Title Insurance Act, and does not bind the Court with any holding vis-à-vis the car insurance industry.9
*1230C. NOTWITHSTANDING THE FILED RATE DOCTRINE'S APPLICATION IN OTHER JURISDICTIONS, THE COURT CONCLUDES THAT THE SUPREME COURT OF NEW MEXICO WOULD NOT APPLY THE FILED RATE DOCTRINE TO BAN THE PLAINTIFFS' CLAIMS.
Many states apply the filed rate doctrine to bar consumer-protection claims against insurers. The Court concludes, however, that New Mexico would not apply the filed rate doctrine in this case, because: (i) New Mexico has signaled an intent to allow such claims by creating a private right of action against insurers for UIPA misrepresentation claims; and (ii) the burden that the doctrine would impose on defrauded consumers is substantial compared to the doctrine's underwhelming benefits in this context.
As discussed above, New Mexico adopted the filed rate doctrine in the public utilities context to bar, most notably, claims that telephone rates are too high. See Valdez v. State,
One major factor counseling against the filed rate doctrine's application here is New Mexico Legislature's creation of a private right of action for consumers against that engage in misleading business practices. See N.M. Stat. Ann §§ 59A-16-4, -30. The UIPA's "Misrepresentation, false advertising of policies" provision states:
No person shall make, publish, issue or circulate any estimate, illustration, circular, statement, sales presentation or comparison which:
A. misrepresents the benefits, advantages, conditions or terms of any policy;
B. misrepresents the premium overcharge commonly called dividends or share of the surplus to be received on any policy;
C. makes any false or misleading statement as to dividends or share of surplus previously paid on any policy;
D. is misleading or a misrepresentation as to the financial condition of any person, or as to the reserve system upon which any life insurer operates;
*1231E. uses any name or title of any policy or class of policies misrepresenting the true nature thereof;
F. misrepresents any policy as being shares of stock; or
G. fails to disclose material facts reasonably necessary to prevent other statements made from being misleading.
N.M. Stat. Ann. § 59A-16-4(A)-(G). The UIPA also gives individuals a private right of action for damages to "[a]ny person covered by Chapter 59A, Article 16 NMSA 1978 who has suffered damages as a result of a violation of that article by an insurer or agent." N.M. Stat. Ann. § 59A-16-30. New Mexico law, thus, contemplates individuals like Bhasker bringing claims against insurers regarding misrepresentations of policies.
Out-of-state case law does not compel the Court to reach a contrary conclusion. First, some of the to which Financial Indemnity cites for the proposition that the filed rate doctrine applies "regardless of the label used to describe the claims, including where fraud or other illegal activity is alleged," Reply at 1, are inapposite, because they involve allegations that the defendant either committed fraud against a regulatory commission or altered policy terms for existing policy holders, see Crumley v. Time Warner Cable, Inc.,
Second, the filed rate doctrine has critics even though many state courts have applied it to bar claims against insurers under consumer-protection statutes. See Richardson v. Standard Guar. Ins. Co.,
Many courts have argued that the filed rate doctrine's scope is limited. See, e.g., Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc.,
The [approved] tariff does not govern ... the entirety of the relationship between the common carrier and its customers. For example, it does not affect whatever duties state law might impose on petitioner to refrain from intentionally interfering with respondent's relationships with its customers by means other than failing to honor unenforceable side agreements, or to refrain from engaging in slander or libel, or to satisfy other contractual obligations. The filed rate doctrine's purpose is to ensure that the filed rates are the exclusive source of the terms and conditions by which the common carrier provides to its customers the services covered by the tariff. It does not serve as a shield against all actions based in state law.
Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc.,
I would not rely on a legal fiction known as the "filed rate doctrine" to dismiss plaintiff's consumer protection claims. I also believe that the public policy behind the Consumer Fraud Act (Act) argues in favor of allowing those claims to proceed to trial.
....
I would not apply a legal fiction whose days, according to some courts, are numbered. I recognize that for close to one hundred years, the filed rate doctrine has served to protect communications companies from suit, even in the face of fraud. The doctrine's future, however, is dim at best.
....
[T]he Act has been hailed as "one of the strongest consumer protection laws in the nation[.]" Governor's Press Release for Assembly Bill No. 2402, at 1 (June 29, 1971). "The history of the Act is one of constant expansion of consumer protection." Gennari v. Weichert Co. Realtors ,148 N.J. 582 , 604,691 A. 2d 350 (1997). The Act is remedial in nature and, for that reason, "[c]ourts have emphasized that like most remedial legislation, the Act should be construed liberally in favor of consumers." Cox v. Sears Roebuck & Co. ,138 N.J. 2 , 15,647 A. 2d 454 (1994). When assessing individual claims, courts must remain "mindful that the Act's provision authorizing consumers to bring their own private action is integral to fulfilling the [statute's] legislative *1233purposes[.]" Id. at 16,647 A. 2d 454 . In sum, allowing plaintiff's claim to proceed would be consistent with the Act's uninterrupted history of expanding consumer protection in these circumstances.
Weinberg v. Sprint Corp.,
Meanwhile, a handful of courts have declined to apply the filed rate doctrine to consumer claims against insurers. The United States District Court for the District of New Jersey determined that the Supreme Court of Ohio would not apply its filed rate doctrine to a claim against an insurer. See Clark v. Prudential Ins. Co. of Am., No. CIV. 08-6197,
Another federal district court predicting a state's high court would not apply the filed rate doctrine to bar consumer claims against insurers in Hanson v. Acceleration Life Ins. Co., No. CIV A3-97-152,
Many other courts support the proposition that a company committing fraud should not avoid liability under the filed rate doctrine. See Adamson v. WorldCom Commc'ns, Inc.,
Given New Mexico's consumers' rights protections-including an express private cause of action for insurers' unfair business practices-the Court doubts that the Supreme Court of New Mexico would consider the filed rate doctrine's purposes more important than protecting its consumers' rights.12 The filed rate doctrine is meant to keep courts from interfering with the ratemaking process and to ensure that similarly situated individuals pay the same rates for the same services. See In re Comm'n Investigation Into 1997 Earnings of U S W. Commc'ns, Inc.,
*1235It is difficult to imagine the Supreme Court of New Mexico shielding insurers from virtually any liability claim alleging deceptive practices in the face of an expressly created private right of action for such claims simply to ensure that courts never bump up against an approved insurance rate.13 Therefore, the Court concludes that the Supreme Court of New Mexico would join the courts that have permitted consumers' claims to proceed against insurers for unfair and deceptive business practices. See Clark v. Prudential Ins. Co. of Am.,
D. EVEN IF NEW MEXICO APPLIED THE FILED RATE DOCTRINE TO CONSUMER-PROTECTION CLAIMS AGAINST INSURERS, BHASKER AND THE PROPOSED CLASS MAY, NONETHELESS, SEEK PREMIUM-BASED DAMAGES, BECAUSE THE SUPREME COURT OF NEW MEXICO WOULD DETERMINE THAT THE MINIMUM-LIMIT UIM COVERAGE IS ILLUSORY.
In the previous subsection, see supra I.D., the Court determined that New Mexico's filed rate doctrine does not apply to Bhasker's claims. If, however, the Court determined that the filed rate doctrine applied, the Court would still not dismiss this case, because the Court can think of damages theories that might get around the filed rate doctrine. For instance, Bhasker and the proposed class would be able to seek premiums-based damages, because the Supreme Court of New Mexico would find the UIM coverage illusory.
The Court conducts the following analysis by applying the filed rate doctrine's rules and principles to determine whether premium-based claims could work in this case. One reason for the filed rate doctrine is to prevent courts from doing a regulatory agency's job by deciding whether a rate for a particular insurance plan is too high, and, if so, by how much. See Valdez v. State,
In this case, however, the Court would not need to step outside its purview by evaluating an insurance policy's true value, because the Supreme Court of New Mexico would conclude that the UM/UIM coverage that Bhasker purchased is illusory. See Keeling v. Esurance Ins. Co., No. 10-0835-DRH,
Bhasker asserts that Financial Indemnity's UIM coverage is illusory. See Response at 8-9;
(a) the tortfeasor had an out-of-state policy with lower bodily injury liability minimum limits than in the policy state;
(b) there are multiple injured parties in an accident, such that no single policyholder will recover the entirety of the tortfeasor's liability limit; and
(c) the insured receives less than the tortfeasor's policy limits due to a contractual exclusion for punitive damages, and the insurer offsets the full amount of the tortfeasor's liability limits.
Reply at 8. Financial Indemnity argues that, although these scenarios are rare, they are possible, and therefore provide at least some value. See Reply at 9-10. If the UIM has some value, Financial Indemnity asserts, "it's not the Court's job to figure out whether or not [the rate paid] was too much, too little, or just right, [because] that's the job of the Superintendent of Insurance under the Filed Rate Doctrine." Tr. at 28:21-29:2 (Hanover).
*1237Although the Court is receptive to the argument that the rare scenarios where a policyholder would benefit from a policy suggests that the policy has at least some value, the Court predicts that the Supreme Court of New Mexico would see it another way. In Weed Warrior, the Supreme Court of New Mexico considered whether purchasing UM/UIM insurance "in an amount less than the policy liability limits constitutes a rejection of the maximum amount of UM/UIM coverage permitted" under
In the Mandatory Financial Responsibility Act, the Legislature determined that $25,000 insurance coverage for injury or death per accident is an adequate amount of coverage. See § 66-5-215(A)(1). Section 66-5-301(A) requires that same amount of coverage for UM coverage. Read together, an uninsured motorist is one who does not carry the statutory minimum for liability coverage, or $25,000, and injury caused by such a driver would be covered by the injured individual's UM coverage.... If the tortfeasor carried the statutory minimum of liability insurance and the injured driver carried the statutory minimum of UM/UIM coverage, the injured driver would have no recourse for injuries suffered over the minimum amount of $25,000. The injured driver, though in theory having purchased UIM coverage, would in fact have purchased only UM coverage.... An insured carries UIM coverage only if the UM/UIM limits on her or his policy are greater than the statutory minimum of $25,000.15
Weed Warrior,
In so holding, the Court discounts the possibility that UIM benefits may pay out in the rare instances in which the insured carries only the minimum $25,000 UM/UIM coverage, such as if the tortfeasor carries the minimum liability coverage but must split that amount between multiple claimants. In light of this omission, the Court predicts that the Supreme Court of New Mexico would deem Financial Indemnity's UIM coverage illusory when its UM/UIM coverage is not greater than $25,000.00. Because the UIM coverage is illusory, the proposed class would not be *1238challenging the filed rates if they can separate the premiums paid for UM and UIM, and, therefore, the filed rate doctrine does not preclude the proposed class' claims.
In conclusion, the Court decides that, even if the filed rate doctrine applies to the plaintiffs' claims, the Supreme Court of New Mexico would conclude that: (i) the UIM coverage is illusory; and (ii) because the UIM coverage would be illusory, the plaintiffs may seek premium damages without challenging the filed rates-and, thus, ask the Court to determine a reasonable rate-because the illusory UIM coverage would be worth zero dollars.16
II. BHASKER'S CLAIMS ARE WELL-PLEADED EVEN IF THE UIM COVERAGE IS NOT ILLUSORY.
Financial Indemnity contends that Bhasker's claims fail as a matter of law, because her UIM coverage was not, as Bhasker asserts, illusory. See Reply at 8-9. According to Financial Indemnity, the UIM coverage is not illusory, because there are a few scenarios over which the UIM coverage would provide coverage. See Reply at 8. Financial Indemnity's arguments on this point are unavailing, because Bhasker need not prove that the UIM coverage is "illusory" to succeed on her claims. For starters, Bhasker's references to "illusory" coverage indicates that she uses the term loosely. In her Complaint, she alleges that Financial Indemnity sold her "illusory" UIM coverage. Complaint ¶¶ 1, 46, 66, 68, at 1, 7, 13-14. She also alleges that the UIM coverage is illusory "in part," Complaint ¶ 67, at 14, and "illusory in the event of a covered occurrence, as in this case, involving a minimally insured driver," Complaint ¶ 32, at 5. Her inconsistent use of "illusory" is a good clue that her claims are not based on legal theories in which the coverage's "illusory" nature is an element necessary to prove.17 Rather, Bhasker seems to be arguing, generally, that her UM/UIM policy did not cover what she thought it would, in which case the UIM coverage was illusory in the sense that it appeared to be something it was not. According to her Complaint, she believes her policy's UIM component is worth nothing or close to nothing. Consequently, even if the Court agreed with Financial Indemnity that the policy's UIM coverage has some value, that designation would not foreclose Bhasker's claims that Financial Indemnity misled her about what the UM/UIM policy covered.
III. THE VOLUNTARY PAYMENT DOCTRINE DOES NOT BAR THE PLAINTIFFS' CLAIMS, BECAUSE THEY ALLEGE THEY DID NOT HAVE FULL KNOWLEDGE OF MATERIAL FACTS, AND DO NOT SEEK RESTITUTION.
New Mexico's voluntary payment doctrine bars plaintiffs from recovering payments made voluntarily and with full knowledge of the material facts, unless the plaintiff was the victim of fraud or under duress. See *1239Rabbit Ear Cattle Co. v. Frieze,
A. BHASKER AND THE PROPOSED CLASS ALLEGE THAT THEY WERE NOT IN FULL KNOWLEDGE OF MATERIAL FACTS REGARDING THEIR UM/UIM COVERAGE.
Bhasker alleges that Financial Indemnity gave her an "incorrect and inappropriate form from another state, [which] included ambiguous language that Plaintiff could purchase underinsured coverage in excess of her selected liability limits." Complaint ¶ 27, at 4. Bhasker submits several documents in support: (i) Bhasker's insurance application summarizing her policy, see Policy Application at 1-2 (Doc. 12-1); and (ii) a form that Bhasker signed that features a one-paragraph description of UM/UIM coverage, see New Mexico Auto Supplement at 1 (Doc. 12-1)("Policy Form"). That UM/UIM description reads:
Under New Mexico Insurance Law (NMSA 1978 sec. 66-5[-]301), we are required to provide Uninsured and Underinsured Motorist coverage up to the Bodily Injury and Property Damage liability limits provided in this policy. Uninsured/Underinsured Motorist bodily injury protects the name insured, resident relatives and occupants of uninsured vehicle if any of those persons sustain bodily injury in an accident for which the owner or operator of the motor vehicle that is legally liable, either does not have insurance, is a hit and run vehicle, or has insurance in an amount less than the limit of your Uninsured Motorist Coverage. If selected, Uninsured/Underinsured Motorist limits must be the same for all the vehicles on the policy, and no less than the limits of your bodily injury liability limits. You have the right to reject such coverage, stack the coverage for bodily injury, or select higher limits of your bodily injury and property damage limits. If you choose to add together the limits of your coverage (stack) for each vehicle listed on the policy, your premium will be higher.
Policy Form at 1 (emphasis added). Bhasker alleges that Financial Indemnity "failed to state that the underinsured coverage is illusory in the event of a covered occurrence, as in this case, involving a minimally insured driver." Complaint ¶ 33, at 5. Bhasker asserts that "[a] purchase of higher limits, for example, at a premium of $201 would yield a[n] ... underinsured indemnification to premium ration of 308/1, which compared to the purchase of minimal combined coverage for virtually no underinsured indemnification." Complaint ¶ 34, at 6. Bhasker alleges that Financial Indemnity "failed to act fairly, honestly, and in good faith when dealing with the Plaintiff [by] fail[ing] to fully inform Plaintiff of illusory underinsured coverage with a disproportionate premium/indemnification ratio when compared to the next tier of available coverage and to not materially misrepresent the terms of underinsured coverage." Complaint ¶ 35, at 6.
Bhasker also asserts that Financial Indemnity misled the proposed class in the same way. See Complaint ¶ 52, at 9 (stating *1240that, "[u]pon information and belief, all underinsured applications and insurance policies issued by the Defendant to New Mexico policyholders are uniform in all respects material to the claims brought herein"); Complaint ¶ 73, at 15 (alleging that Financial Indemnity "failed to deliver the quality or quantity of services applied for and purchased by Plaintiff and other insured" by not providing sufficiently clear "applications and policies"); Complaint ¶ 83, at 17 (alleging that Financial Indemnity "misrepresented the terms of the policy sold and provided to Plaintiff and other insureds"); Complaint ¶ 93, at 19 (stating that Financial Indemnity "failed to provide underinsured coverage and/or denied underinsured claims for benefits to Plaintiff and other members of the Class").
The Court, in its motion to dismiss analysis, must accept all facts as true. Bhasker has asserted facts supporting her allegations that Financial Indemnity misled her and the proposed class when selling them UM/UIM coverage. Consequently, the Court will not block her claims under the voluntary payment doctrine, because it is plausible that neither she nor the proposed class paid for UM/UIM coverage with full knowledge of material facts.
B. BHASKER AND THE PROPOSED CLASS DO NOT SEEK RESTITUTION.
The voluntary payment doctrine typically bars only claims for restitution. See Shaw v. Marriott Int'l, Inc.,
Financial Indemnity urges the Court to expand the voluntary payment doctrine to preclude damage claims, arguing that that "there is no case that suggests that [New Mexico courts] wouldn't apply [the voluntary payment doctrine] more broadly than restitution." Tr. at 22:3-9 (Hanover). Financial Indemnity, however, provides no authority or substantive argument convincing the Court that the Supreme Court of New Mexico would expand the voluntary payment doctrine to bar damage claims. The voluntary payment doctrine traditionally relates only to restitution. See *1241Shaw v. Marriott Int'l, Inc.,
IT IS ORDERED that the requests in the Defendant's Motion to Dismiss First Amended Complaint and Memorandum of Law in Support, filed April 28, 2017 (Doc. 15), are denied.
Related
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