       IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: __________

Filing Date: April 30, 2014

Docket No. 32,779

SHERYL WILKESON,

       Plaintiff-Appellant,

v.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

       Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Nan G. Nash, District Judge

Barnhill Law Office, L.L.C.
Lynn A. Barnhill
Albuquerque, NM

for Appellant

Guebert Bruckner P.C.
Don Bruckner
Christopher J. DeLara
Albuquerque, NM

for Appellee

                                        OPINION

WECHSLER, Judge.

{1}    We address in this appeal the viability of an anti-stacking provision in a California
automobile insurance policy when the accident giving rise to an uninsured motorist claim
occurred in New Mexico. The provision is valid and enforceable under California law. In
Shope v. State Farm Insurance Co., 1996-NMSC-052, 122 N.M. 398, 925 P.2d 515, our
Supreme Court held that an anti-stacking provision valid in another state was a question of

                                             1
contract interpretation governed by the law of the other state and not a matter of fundamental
interests so as to require application of New Mexico public policy. This case is governed
by Shope, and we affirm the ruling of the district court dismissing the claim for additional
coverage.

FACTS

{2}     Plaintiff Sheryl Wilkeson and Defendant Paul Baca were involved in an automobile
accident in Albuquerque, New Mexico. Baca was uninsured, and Plaintiff was a named
insured on an automobile insurance policy issued by Defendant State Farm Mutual
Automobile Insurance Company (State Farm) that covered the car Plaintiff was driving.
Plaintiff also was a named insured on a separate State Farm policy that covered another
vehicle. Separate premiums were paid. At the time of the accident, Plaintiff owned homes
in both California and New Mexico, but resided in New Mexico. Both policies were issued
to Plaintiff while she resided in California, and the policy covering the car in the accident,
the only policy of record, lists her California address. Plaintiff did not know whether she
informed State Farm that she had moved to New Mexico before the accident. She did not
change the location of her policy from California to New Mexico until after the accident.

{3}     Both policies provided uninsured motor vehicle coverage, subject to limits of liability
of $50,000 per person and $100,000 per accident. They provided that the “limits of liability
are not increased because . . . more than one vehicle [or person] is insured under [the]
policy[.]” They further stated:

       If uninsured motor vehicle coverage for bodily injury is available to an
       insured from more than one policy provided by us or any other insurer, the
       total limit of liability available from all policies provided by all insurers shall
       not exceed the limit of liability of the single policy providing the highest
       limit of liability. This is the most that will be paid regardless of the number
       of policies involved, persons covered, claims made, vehicles insured,
       premiums paid or vehicles involved in the accident.

PROCEDURAL BACKGROUND

{4}      The claims against Baca were settled, and he was dismissed from the case. State
Farm thereafter filed a motion for summary judgment, stating that it had paid Plaintiff the
liability limit of $50,000 under the policy. It argued that the policy did not permit the
stacking of uninsured motorist benefits and that the district court should apply Shope and
dismiss the complaint. Plaintiff responded with a cross-motion for summary judgment. She
contended that Shope did not apply because California law conflicted with New Mexico law
and public policy and that the district court should apply New Mexico law. After conducting
a hearing, the district court granted State Farm’s motion, denied Plaintiff’s counter-motion,
and dismissed the complaint. Plaintiff appeals.


                                               2
CHOICE OF LAW

{5}     Generally, in determining the appropriate law to apply when an accident occurs in
one state and an insurance contract has been entered in another, the law of the place of the
accident applies to determine the plaintiff’s right to recover from the negligent party, and the
law of the place of the contract, the lex loci contractus, applies to interpret the terms of the
contract. State Farm Auto. Ins. Co. v. Ovitz, 1994-NMSC-047, ¶ 8, 117 N.M. 547, 873 P.2d
979; Demir v. Farmers Texas Cnty. Mut. Ins. Co., 2006-NMCA-091, ¶ 7, 140 N.M. 162, 140
P.3d 1111. Thus, in this case, New Mexico law would apply concerning issues of negligence
and damages, and California law would govern as to issues pertaining to the insurance
policies, including the scope of the language limiting Plaintiff’s ability to stack uninsured
motorist coverages. The parties do not dispute that, under California law, Plaintiff would
not be able to stack the coverages in the policies.

{6}      The selection of the choice of law as between the right to recover and the law of the
contracting state, however, does not fully resolve the analysis when there is an issue of
conflicting public policies. In this regard, even though the forum state would be otherwise
required to apply the law of the other state, if that law were so conflicting with the public
policy of the forum state, it could properly apply its law rather than the law of the other state.
Demir, 2006-NMCA-091, ¶ 8. Plaintiff makes this argument in this case. She asserts that
notwithstanding the law of California as the place of the contract, which would recognize
the liability limitation of her policies, New Mexico’s public policy favoring stacking requires
this Court to apply that public policy as opposed to the California law. She raises a question
of law that we address under de novo review. See Miera v. State Farm Mut. Auto. Ins. Co.,
2004-NMCA-059, ¶ 6, 135 N.M. 574, 92 P.3d 20 (“The question of whether application of
the law to undisputed facts supports summary judgment in a case seeking to benefit from
[uninsured motorist] coverage is a question we review de novo.”).

CONFLICTING STATE POLICIES

{7}     Stacking is the “recovery of damages under more than one policy, endorsement or
coverage by placing one . . . upon another and recovering from each in succession until
either all . . . damages are satisfied or until the total limits of all policies, endorsements,
coverages, etc. are exhausted[.]” Lopez v. Found. Reserve Ins. Co., 1982-NMSC-034, ¶ 7,
98 N.M. 166, 646 P.2d 1230 (internal question marks and citation omitted), holding modified
on other grounds by Montano v. Allstate Indem. Co., 2004-NMSC-020, 135 N.M. 681, 92
P.3d 1255. As relevant to this case, it is the aggregating of uninsured motorist coverages.
Montano, 2004-NMSC-020, ¶ 2.

{8}     In New Mexico, stacking is “a judicially-created doctrine” that has arisen in cases
in which our Supreme Court has needed to determine whether insurance policy limitations
of liability provisions restrict or permit stacking. Id. ¶ 17. In Sloan v. Dairyland Ins. Co.,
1974-NMSC-019, ¶¶ 3, 6, 86 N.M. 65, 519 P.2d 301, our Supreme Court permitted the
stacking of uninsured motorist benefits from two separate policies owned by the same

                                                3
individual when the policy contained limitations if other insurance was available to the
insured. In Lopez, after determining that the limitation provision of the policy was
ambiguous concerning separate premiums for uninsured motorist coverage on two vehicles,
the Court applied Sloan to coverage of two vehicles within the same insurance policy.
Lopez, 1982-NMSC-034, ¶ 10. The Court’s rationale, which also applies to the
circumstances of multiple policies, was that uninsured motorist coverage covers an insured
rather than a vehicle, that stacking would fulfill the reasonable expectations of the insured,
and that, depending on the facts, separate premiums would justify stacking. Id. ¶¶ 16-18.

{9}     Since these initial cases, our Supreme Court has consistently upheld the availability
of stacking, as against policy language excluding it, as a matter of public policy when the
insured has paid multiple premiums. See Montano, 2004-NMSC-020, ¶ 23. The Court has
generally found an ambiguity in the limitation provision that would give rise to judicial
construction. See id. ¶ 1 (stating that the Court “never upheld an anti-stacking clause in
[uninsured motorist] policies because . . . [of] either an ambiguity in the policy or the
payment of multiple premiums”). But see Jimenez v. Found. Reserve Ins. Co., 1988-NMSC-
052, ¶ 9, 107 N.M. 322, 757 P.2d 792 (holding an anti-stacking provision to be clear and
unambiguous). As a general matter, the public policy expressed by our Supreme Court
clearly favors stacking when interpreting provisions in an insurance contract that limit it.
Montano, 2004-NMSC-020, ¶¶ 15, 17 (recognizing the public policy in favor of stacking);
id. ¶¶ 23, 27 (stating that “when multiple premiums are charged for [uninsured motorist]
coverage on multiple cars, even in the face of a truly unambiguous limitation-of-liability
clause, stacking will be required[,]” but concluding that the plaintiff was entitled to stack
because of an ambiguity concerning the basis for the premium); Rodriguez v. Windsor Ins.
Co., 1994-NMSC-075, ¶ 1, 118 N.M. 127, 879 P.3d 759 (stating that New Mexico has “a
strong judicial policy, rooted in this state’s uninsured motorists insurance statute, favoring
stacking” (citation omitted)), modified on other grounds by Montano, 2004-NMSC-020.

{10} California does not have the same public policy. Its insurance code specifically
permits that stacking may be precluded, providing:

       [T]he policy or endorsement may provide that if the insured has insurance
       available to the insured under more than one uninsured motorist coverage
       provision, any damages shall not be deemed to exceed the higher of the
       applicable limits of the respective coverages, and the damages shall be
       prorated between the applicable coverages as the limits of each coverage bear
       to the total of the limits.

Cal Ins. Code § 11580.2(d) (2006). The parties agree that the California insurance code has
been interpreted to prohibit stacking.

APPLICABILITY OF SHOPE

{11}   Our Supreme Court in Shope addressed the choice of law analysis to be applied when

                                              4
New Mexico law on stacking differs from the law in the state where the contract was formed.
In that case, our Supreme Court considered whether to apply New Mexico’s public policy
favoring stacking of coverage in underinsured motorist cases rather than a Virginia law that
permitted stacking of insurance coverage “unless clear and unambiguous language in the
policy” prevented it. Shope, 1996-NMSC-052, ¶¶ 6, 7. The language of the policy clearly
and unambiguously prevented stacking. Id. ¶ 6. Our Supreme Court explained the analysis
necessary to determine the choice of law to be applied as one that balances competing
policies. Id. ¶ 9. On the one hand is “the policy of New Mexico . . . to interpret insurance
contracts according to the law of the place where the contract was executed.” Id. On the
other, is “public policy favoring a different interpretation.” Id. The Court held that, in order
to overcome the New Mexico policy of interpreting insurance contracts under the law of the
place where the contract was executed, “there must be a countervailing interest that is
fundamental and separate from general policies of contract interpretation.” Id. It held that
stacking of insurance coverage was “a question of contract interpretation, not one of
fundamental interests,” and applied Virginia law. Id. ¶¶ 9, 10.

{12} Plaintiff argues that this Court should not follow Shope for two reasons—(1) it is
distinguishable from this case, and (2) subsequent cases, State Farm Mutual Automobile
Insurance Co. v. Ballard, 2002-NMSC-030, 132 N.M. 696, 54 P.3d 537, and Demir, indicate
that the application of California’s law “will result in a violation of fundamental principles
of justice.” We discuss Plaintiff’s argument in turn.

Distinguishing Shope

{13} Plaintiff contends that this case is different from Shope with regard to the law of the
state of the contract. According to Plaintiff, in Shope, both New Mexico and Virginia
permitted stacking unless clear and unambiguous language in the policy prevented it.
Plaintiff reasons that “[p]ublic policy was not truly implicated because Virginia’s laws did
not conflict with those of New Mexico, unlike the laws of California” in the present case.
We cannot agree that the difference between Virginia and California law distinguishes Shope
from this case. The important teachings of Shope are that (1) we will apply the law of the
place where the contract was executed unless the law of another relevant state has a
countervailing fundamental interest separate from contract interpretation principles and (2)
the question of stacking is one of contract interpretation only.

Subsequent Cases

{14} Since Shope, both our Supreme Court and this Court have decided cases that
addressed whether another New Mexico public policy should trump its policy of applying
the law of another state where an automobile insurance contract was executed. Plaintiff
argues that these cases are more analogous to this case than Shope and demonstrate that the
countervailing New Mexico policy should also be followed in this case.

{15}   In Ballard, a Georgia resident executed an insurance policy in Georgia that contained

                                               5
a family step-down provision that precluded liability for bodily injury to a household family
member unless intra-familial tort liability did not apply, in which event, liability would be
limited to the amount required by law. 2002-NMSC-030, ¶¶ 3-4. The insured’s daughter
was injured in a single-car accident in New Mexico. Id. ¶ 2. The insurer, acknowledging
that intra-familial tort immunity was invalid in New Mexico, sought a declaration that
recognized the policy limitation and limited its liability to the amount required under the
New Mexico Mandatory Financial Responsibility Act, NMSA 1978, §§ 66-5-201 to -39
(1978, as amended through 2013) (NMMFRA). Ballard, 2002-NMSC-030, ¶¶ 6-7. Our
Supreme Court, in analyzing whether to apply the law of Georgia, the state of contract
execution, discussed its decision in Estep v. State Farm Mutual Automobile Insurance Co.,
1985-NMSC-069, 103 N.M. 105, 703 P.2d 882, in which it “reiterated the abandonment of
the common law rule of interspousal immunity” as an “archaic precept.” Ballard, 2002-
NMSC-030, ¶ 11 (internal quotation marks and citation omitted). It emphasized that an
exclusion based on the archaic rule violated not only the NMMFRA but also the New
Mexico policy of protecting innocent accident victims. Id. The Court applied the analysis
of Shope and held, on balance, that the rule that required applying the law of the state of
contract execution should give way because family exclusion provisions such as those in the
Georgia policy, “whether limiting or completely excluding benefits based on familial status,
violate public policy and fundamental principles of justice.” Ballard, 2002-NMSC-030, ¶¶
15, 18.

{16} Demir involved a Texas insurance policy that, in conformance with Texas law,
required physical contact for recovery of uninsured motorist benefits. 2006-NMCA-091,
¶¶ 2-3. This Court acknowledged that Texas law would apply unless, as set out in Shope,
it “would result in a violation of fundamental principles of justice of New Mexico.” Demir,
2006-NMCA-091, ¶ 8 (internal quotation marks and citation omitted). This Court analyzed
that issue applying Ballard and Sandoval v. Valdez, 1978-NMCA-016, ¶¶ 19, 23, 91 N.M.
705, 580 P.2d 131, in which we applied New Mexico law to a Colorado insurance contract
that limited the insured’s time to sue to one year from the date of an accident. Demir, 2006-
NMCA-091, ¶¶ 18, 20, 23. We stated in Demir that, although the public policy at issue may
not have risen to the level of a fundamental principle of justice, it nevertheless implicated
a substantial public policy. 2006-NMCA-091, ¶ 23. We held that Texas law did not apply
because the exclusion of uninsured motorist coverage for accidents not involving physical
contact violated New Mexico public policy protecting accident victims, as expressed in the
NMMFRA. Id. ¶ 23.

{17} Plaintiff argues, using the language of Demir, that this case also implicates the “
‘substantial public policy’ of protecting innocent accident victims.” She cites Montano, in
which our Supreme Court, in adopting a new approach that requires an insurer to “obtain
written rejections of stacking in order to limit its liability based on an anti-stacking
provision[,]” reiterated the public policy in favor of stacking when an insured has paid
separate premiums. Montano, 2004-NMSC-020, ¶¶ 9, 19. Significantly, however, Montano
is not a choice of law case; it concerned issues of contract interpretation with respect to the
availability of stacking. See id. ¶ 28 (concluding that the insurance contract at issue did not

                                              6
satisfy existing requirements to exclude stacking and requiring insurers in the future to
obtain written rejections of stacking). Shope specifically addressed such cases, indicating
that “[w]hile we interpret New Mexico insurance contracts to avoid repugnancy in clauses
that prohibit stacking of coverages for which separate premiums have been paid, this rule
is one of contract interpretation that does not rise to the level of a fundamental principle of
justice.” 1996-NMSC-052, ¶ 9. Further, Montano specifically addressed Shope,
distinguishing it in part by stating “that our policy in favor of stacking is not ‘fundamental’
for purposes of a choice-of-law analysis does not mean that it is unimportant.” Montano,
2004-NMSC-020, ¶ 26. We agree with that analysis. Although there is an important public
policy favoring stacking that, as in the line of cases stemming from Sloan and Lopez and as
stated in Montano, may outweigh conflicting concerns within the same or related insurance
policies, it does not alter the New Mexico policy to interpret insurance contracts according
to the law of the place where the contract is executed. Shope, 1996-NMSC-052, ¶ 9.

{18} Additionally, the cases upon which Plaintiff relies, Ballard and Demir, are not
stacking cases, and we consider the public policies involved in those cases to carry greater
weight when balanced against the policy to interpret insurance contracts according to the law
of the contracting state. Ballard considered the interest involved to concern fundamental
principles of justice because of the archaic nature of intra-familial tort immunity. 2002-
NMSC-030, ¶¶ 10-11. In Demir, the single-car exclusion would have foreclosed any action
for relief, and this Court expressed that such an exclusion had greater significance than the
policy favoring stacking. 2006-NMCA-091, ¶ 22. Indeed, stacking is still a benefit that an
insured can reject. See Montano, 2004-NMSC-020, ¶ 19 (allowing written rejection of
stacking in future cases).

{19} Plaintiff also argues, citing Lopez, that she paid separate premiums for the coverage
of the two policies, and, therefore, fairness would indicate that she be permitted to stack the
coverages. See Lopez, 1982-NMSC-034, ¶ 18 (“[I]t is only fair that the insured be permitted
to stack the coverages for which he has paid.”). Lopez, of course, is not a choice of law case.
In Shope, our Supreme Court rejected the argument that “the law of the place where the
accident occurred should govern [the] analysis of [the insureds’] expectations of stacking[.]”
1996-NMSC-052, ¶ 8.

CONCLUSION

{20} We affirm the district court’s grant of summary judgment dismissing Plaintiff’s claim
for additional coverage.

{21}   IT IS SO ORDERED.

                                               _____________________________________
                                               JAMES J. WECHSLER, Judge

WE CONCUR:

                                              7
____________________________________
MICHAEL D. BUSTAMANTE, Judge

____________________________________
CYNTHIA A. FRY, Judge




                                   8
