Jolley v. Associated Electric & Gas Insurance Services Ltd.

Summary

The New Mexico Supreme Court answered certified questions concerning whether a third-party claimant may bring a statutory bad-faith claim against a nonmandatory excess liability insurer under the New Mexico Insurance Code. The court held that the third-party cause of action recognized in Hovet for statutorily mandated automobile liability insurance does not extend to the excess policy at issue. The court therefore found the damages question moot.

Holdings

1. A third-party claimant has no statutory cause of action under NMSA 1978, Section 59A-16-30, against an excess liability insurer for failure to settle when the excess policy is not mandated by New Mexico law.
2. The Court did not reach whether underlying litigation costs and contingent attorney fees could be recovered because the absence of a direct cause of action rendered that question moot.

Questions Presented

1. Whether a third-party claimant may bring a statutory bad-faith claim under the New Mexico Insurance Code against an excess liability insurer whose coverage was not mandated by state law.
2. Whether the third party may recover underlying litigation costs and contingent attorney fees as damages if such a cause of action exists.

Disposition

other