Ponce v. Butts

720 P.2d 315, 104 N.M. 280
CourtNew Mexico Court of Appeals
DecidedApril 29, 1986
Docket8795
StatusPublished
Cited by14 cases

This text of 720 P.2d 315 (Ponce v. Butts) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ponce v. Butts, 720 P.2d 315, 104 N.M. 280 (N.M. Ct. App. 1986).

Opinion

OPINION

GARCIA, Judge.

Michael Butts, (Butts) driver of a vehicle insured by State Farm Mutual Automobile Insurance Company (State Farm), collided with a vehicle in which plaintiff, Longinia Ponce, was a passenger. Plaintiff was injured as a result of the accident; she sought, and received medical care on October 31, 1983, the day of the accident.

Three days after the accident, Edward Streit, a claims adjuster for State Farm, met with plaintiff and obtained a “Patient’s Consent” which indicated that plaintiff would be willing to discuss the accident, make a statement, and, if satisfied, agree to a settlement. One week thereafter, on November 10th, plaintiff and her husband signed an “Agreement and Release” in exchange for which State Farm was to pay certain sums of money.

In March of 1984, plaintiff filed suit against Butts and State Farm. In her complaint, she asserted that Butts failed to yield the right-of-way, and that as a proximate cause of his negligence, plaintiff was injured. Plaintiff also contended that State Farm fraudulently induced her to sign the Release.

Defendants moved for summary judgment on the negligence and fraud claims, asserting that there were no material issues of fact and that defendants were entitled to judgment as a matter of law. Defendants submitted the adjuster’s affidavit and referred to portions of the depositions of plaintiff and her husband. Plaintiff filed a response in opposition and also filed counter-affidavits. At our request, the depositions relied upon during summary proceedings have been filed with this court.

The district court denied the motion for summary judgment. Thereafter, State Farm filed a separate motion to dismiss the fraud claim, pursuant to NMSA 1978, Civ. P.Rule 12(b)(6) (Repl.Pamp.1980), for failure to state a claim. The trial court denied this motion as well.

The trial court certified for interlocutory appeal issues raised by the denial of summary judgment and the refusal to dismiss. In their application for interlocutory review as to the trial court’s denial of summary judgment, defendants raised three sub-points: (1) plaintiff’s deposition testimony eliminates any genuine issue as to whether State Farm misrepresented the nature of the release; (2) plaintiff may not set aside the release on the grounds that her injuries turned out to be more serious than she had originally thought them to be; (3) plaintiff failed to meet her burden of showing that evidence could be produced which would establish fraudulent misrepresentation on the part of State Farm’s agent.

Defendant State Farm’s application for interlocutory review as to the trial court’s refusal to dismiss the fraud claim, pursuant to Civ.P.Rule 12(b)(6), presented the question of whether a person who executes a release of an unliquidated tort claim should have a cause of action for fraud against the insurance company who prepared the release. We granted defendants’ application for interlocutory appeal. Questions raised by defendants in their brief-in-chief, but not certified by the trial court or considered in granting this interlocutory appeal, will not be considered by this court. MRC Properties, Inc. v. Gries, 98 N.M. 710, 652 P.2d 732 (1982).

We first discuss the initial question of what constitutes a valid release in New Mexico. Next, we examine defendants’ assertion that plaintiff failed to meet her burden of showing a material issue as to defendants’ misrepresentation. Finally, we determine whether a cause of action exists in New Mexico for the fraudulent procurement of a release of an unliquidated tort claim.

VALIDITY OF THE RELEASE

The definition of a valid release relied upon by defendants in this case is contrary to the policy and established judicial construction of the New Mexico Release Act, NMSA 1978, Sections 41-1-1 to -2 (Repl. Pamp.1982).

Defendants argue that any misrepresentation by State Farm’s agent in the procural of plaintiff’s consent form or release is irrelevant so long as a mechanical compliance with the provisions of the Act is established. According to defendants, because plaintiff failed to disavow the Release within fifteen days of her discharge from the hospital, the validity of the release cannot be attacked.

We reject this argument. Prior to the adoption of the Act, a release procured by fraud, undue influence, mutual mistake or coercion was void. Mitschelen v. State Farm Mut. Auto. Ins. Co., 89 N.M. 586, 555 P.2d 707 (Ct.App.1976). The adoption of the Act did not eliminate the releasor’s right to void a fraudulently procured release; rather, it expanded the injured party’s remedies. Id.

In examining the state’s public policy relative to releases in a workmen’s compensation case, we have stated: “[T]he policy of our law is to favor amicable settlement of claims without litigation when the agreements are fairly secured, are without fraud, misrepresentation, or overreaching, and when they are supported by consideration.” Ratzlaff v. Seven Bar Flying Service, Inc., 98 N.M. 159, 646 P.2d 586 (Ct.App.1982); see also Quintana v. Motel 6, Inc., 102 N.M. 229, 693 P.2d 597 (Ct.App. 1984).

Defendants’ argument that misrepresentation is essentially immaterial flies in the face of the Act’s public policy which grants protection to injured individuals. Acceptance of defendants’ argument would sanction a practice whereby an unscrupulous adjuster could employ any fraudulent, coercive, or deceitful means to procure a settlement. Once the injured party had signed the release or agreement, failure to disavow within the statutory period, irrespective of the injured party’s knowledge of his own victimization, would allow the insurance company to reap the benefit of the agent’s improper conduct. Such practices are not condoned in New Mexico. The Act requires fair and impartial conduct by the insurer. Mitschelson v. State Farm Mut. Auto. Ins. Co.

We hold, in accordance with the public policy of the Act and previous decisions interpreting this policy, that any settlement procured by the fraud, artifice or overreaching of the insurer’s agent, is subject to rescission even if not disavowed in a timely fashion, pursuant to Section 41-1-KB).

We agree with defendants’ argument that the Release cannot be set aside on the ground that plaintiff’s injury was more serious than originally believed. A release cannot be set aside for mistake as to the severity of a known injury. Quintana v. Motel 6, Inc. The fact that we do not dispute this legal precept may not provide much comfort to defendants. Simply because a release cannot be set aside on this ground does not prevent it from being set aside for another valid reason.

SUMMARY JUDGMENT

In their points one and three, defendants essentially deny that plaintiff made a showing, sufficient to avoid summary judgment, on the issue of the company’s misrepresentation.

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Bluebook (online)
720 P.2d 315, 104 N.M. 280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ponce-v-butts-nmctapp-1986.