       IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _____________

Filing Date: February 24, 2014

Docket No. 32,426

EDWARD LUCERO, JR. and
ELAINE LUCERO,

       Plaintiffs-Appellants,

v.

NORTHLAND INSURANCE COMPANY,

       Defendant-Appellee,

APPEAL FROM THE DISTRICT COURT OF McKINLEY COUNTY
Louis E. DePauli, Jr., District Judge

The Vargas Law Firm, LLC
Ray M. Vargas, II
Albuquerque, NM

O’Connell Law LLC
Erin B. O’Connell
Albuquerque, NM

Law Offices of Geoffrey R. Romero
Geoffrey R. Romero
Albuquerque, NM

for Appellants

Montgomery & Andrews P.A.
Kevin M. Sexton
Sean E. Garrett
Albuquerque, NM

for Appellee

                                    OPINION

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FRY, Judge.

{1}      In this case, we consider whether an insurance policy’s limit of liability or anti-
stacking clause restricts liability coverage to the limits applicable to only one of two covered
vehicles involved in the same accident. A tractor and a trailer, each insured with liability
limits of $1 million, were negligently operated by the insured’s employee and collided with
a vehicle being driven by Plaintiff Edward Lucero, Jr. The district court granted summary
judgment to Defendant insurer, holding that the insurance policy limited liability coverage
for both the tractor and the trailer to $1 million. We disagree and determine that the anti-
stacking clause conflicts with the liability coverage provisions of the policy and that this
ambiguity requires us to interpret the policy in favor of the insured. We therefore reverse
and remand with instructions to the district court to enter summary judgment declaring the
liability limits to be $2 million—$1 million for each covered vehicle involved in the
accident.

BACKGROUND

The Accident

{2}     The relevant facts in this case are undisputed for purposes of the motions for
summary judgment. As alleged in Plaintiffs’ complaint, Davis Foghorn negligently operated
a tractor and trailer for Harold Hamilton and Jay B. Hamilton d/b/a H & J Hamilton
(collectively referred to as Hamilton) and caused a collision with a vehicle operated by
Plaintiff Edward Lucero, Jr. Mr. Lucero was injured in the accident, and Plaintiff Elaine
Lucero, his wife, also alleged that she sustained damages resulting from the accident.

The Insurance Policy

{3}    Defendant issued an insurance policy to Hamilton that was in effect at the time of the
accident, and both the tractor and the trailer involved in the accident were listed as scheduled
vehicles under the policy. The declarations page of the policy states, in relevant part:

       This policy provides only those coverages where a charge is shown in the
       premium column below. Each of these coverages will apply only to those
       “autos” shown as Covered “Autos.”

While the declarations page shows one premium amount of $24,665 for liability coverage
on the covered autos, which are collectively represented by the symbol “46,” Form T-434
of the policy lists the covered autos separately and shows a separate premium charge in
connection with each tractor or trailer. The declarations page also shows, next to the symbol
“46”—collectively representing all of the covered vehicles listed on Form T-434—combined
bodily injury and property damage liability coverage with limits of liability in the amount
of “$1 [million] each ‘accident’.”


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{4}    The policy explains the liability coverage provided as follows:

       We will pay all sums an “insured” legally must pay as damages because of
       “bodily injury” or “property damage” to which this insurance applies, caused
       by an “accident” and resulting from the ownership, maintenance or use of a
       covered “auto”.

The policy also includes a provision purportedly limiting the insurance provided:

       Regardless of the number of covered “autos”, “insureds”, premiums paid,
       claims made or vehicles involved in the “accident”, the most we will pay for
       the total of all damages . . . combined, resulting from any one “accident” is
       the Limit of Insurance for Liability Coverage shown in the Declarations.

We refer to this provision as the anti-stacking clause because the concept of stacking
involves the aggregation of policy limits applicable to multiple insured vehicles and because
this provision seeks to preclude such aggregation. See Sanchez v. Herrera, 1989-NMSC-
073, ¶ 12, 109 N.M. 155, 783 P.2d 465 (“Stacking involves adding the maximum coverage
under one policy to the maximum of a second policy until the insured’s damages are fully
compensated or his or her combined policy limits are exhausted.”).

The Lawsuit

{5}     Plaintiffs sued Foghorn, who was the driver of the tractor-trailer, Foghorn’s
employers, and Defendant for damages resulting from the accident and for a declaratory
judgment that Defendant “is required to extend liability coverage in a minimum amount of
$2 [million], or $1 [million] per vehicle.” Defendant counterclaimed for a declaratory
judgment that “the limits of liability for this accident are $1 [million].” Plaintiffs and
Defendant filed cross-motions for summary judgment on the issue of the policy limits
available under the policy. During the briefing process, the parties jointly moved for
dismissal of all claims against all defendants other than Defendant Northland, and the district
court accordingly entered a stipulated order of dismissal. Thus, the only issue remaining in
the lawsuit was the amount of liability coverage provided by the policy. Plaintiffs and
Defendant stipulated that Plaintiffs’ damages exceed $2 million, and Defendant tendered the
undisputed $1 million in coverage1.

{6}     Among other contentions, Plaintiffs argued in their motion for summary judgment
that the tractor and trailer were two separate vehicles, that the policy unambiguously
provided $1 million in liability coverage for each vehicle involved in an accident, and that


       1
         We assume that the insureds under the policy, the Hamiltons and their company,
assigned their rights under the policy to Plaintiffs. Thus, Plaintiffs stand in the shoes of the
insured.

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the anti-stacking clause was inapplicable because Plaintiffs are not seeking classic stacking
of coverages but, rather, the coverage purchased by the insured for each vehicle involved.
In its motion for summary judgment, Defendant contended in relevant part that the policy
unambiguously limited liability coverage to $1 million per accident and that, if there were
any doubt about this, the anti-stacking clause in the policy established that only one liability
coverage in the amount of $1 million would be available for any single accident.

{7}    The district court granted Defendant’s motion for summary judgment, relying in large
part on the Florida case of Auto-Owners Insurance Co. v. Anderson, 756 So. 2d 29 (Fla.
2000). The court stated that “the limiting language in [Defendant’s] policy clearly and
unambiguously explains that [the] liability coverage is limited to $1 million ‘regardless’ of
the number of covered vehicles involved in the crash. This finding renders the issue of
whether the tractor and trailer are separate vehicles irrelevant.” This appeal followed.

DISCUSSION

1.     Standard of Review

{8}     The parties do not dispute the material facts for purposes of this appeal, and the
propriety of the summary judgment in favor of Defendant presents a question of law that we
review de novo. Slack v. Robinson, 2003-NMCA-083, ¶ 7, 134 N.M. 6, 71 P.3d 514. The
interpretation of an insurance policy and the determination of whether a policy is ambiguous
are questions of law. Id. ¶ 8.

{9}     We consider the policy as a whole to determine the intent of the parties. Id. If the
language of the policy is clear and unambiguous, we apply the terms without construction
or interpretation. Id. On the other hand, if a policy provision is ambiguous, “it will usually
be construed against the insurance company as the drafter of the policy.” Id. “Ambiguities
arise when separate sections of a policy appear to conflict with one another, when the
language of a provision is susceptible to more than one meaning, when the structure of the
contract is illogical, or when a particular matter of coverage is not explicitly addressed by
the policy.” Ponder v. State Farm Mut. Auto. Ins. Co., 2000-NMSC-033, ¶ 11, 129 N.M.
698, 12 P.3d 960 (alteration, internal quotation marks, and citation omitted).

2.     Plaintiffs’ Arguments

{10} Plaintiffs make three primary arguments in support of their contention that the district
court misinterpreted the insurance policy. First, they maintain that the policy’s plain
language provides $1 million in liability coverage for each covered vehicle involved in an
accident and, consequently, because two covered vehicles were involved in this accident,
Defendant must pay up to $2 million for damages sustained in the accident. They argue that
the anti-stacking clause is inapplicable because this is not a stacking case in the established
sense of the term, which means combining the coverage of vehicles not involved in the
accident at issue. Second, Plaintiffs contend that if the anti-stacking clause does apply in

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this case, it is ambiguous because it does not indicate that there is no coverage for two
covered vehicles that are involved in the same accident. Thus, they maintain, the ambiguity
must be construed in their favor and against the drafter, Defendant. Third, they argue that
the district court’s interpretation of the anti-stacking clause violates New Mexico public
policy, which requires each licensed vehicle in the state to have its own liability coverage.
Because we agree with Plaintiffs’ first two arguments, we need not address the third.

{11} The policy provides $1 million in coverage for each covered vehicle, and the tractor
and trailer involved in this accident were separately covered vehicles. Because both the
tractor and the trailer were involved in the same accident, Defendant’s limits of liability are
$2 million. The anti-stacking provision is inapplicable because the circumstances in this
case do not constitute stacking in the ordinary sense of the term. In addition, even if the anti-
stacking provision arguably applied in this case, it conflicts with the liability coverage
provision of the policy, which means that it is ambiguous. We therefore construe the
provision in favor of Plaintiffs so that it gives effect to the insured’s reasonable expectations.

3.      The Policy Provides $1 Million in Coverage for Each Vehicle Involved in the
        Accident

{12} A review of the policy in this case establishes that the insured intended to purchase,
and Defendant intended to provide, $1 million in liability coverage for each covered vehicle
the insured owned. As previously noted, in the section describing liability coverage, the
policy states, “We will pay all sums an ‘insured’ legally must pay as damages because of
‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’
and resulting from the ownership, maintenance or use of a covered ‘auto’.” The policy then
defines “[i]nsured” as “You for any covered ‘auto’.” The policy, through reference to three
different sections, defines “[c]overed ‘[a]utos’” as the vehicles represented by the symbol
“46,” which stands for eleven specifically identified vehicles, including both the tractor and
the trailer involved in the accident. A premium is listed next to the number of each
specifically listed vehicle.

{13} It is clear that the insured in this case is legally obligated to pay damages, per the
parties’ stipulation, because of bodily injury caused by an accident resulting from the
ownership or use of the tractor and the trailer operated by the insured’s employee. Reading
the sections of the policy together, these circumstances fit the definition of what Defendant
agreed in the policy to pay in liability coverage. As for the amount of coverage Defendant
is obliged to pay, the declaration page states that “[e]ach of these coverages will apply only
to those ‘autos’ shown as Covered ‘Autos.’” (Emphasis added.) Under this statement, the
declarations page shows the symbol “46,” representing the specifically listed “Covered
‘Autos’,” and the amount of “$1,000,000 each ‘accident’.” It follows that each vehicle
involved in an accident that is a “Covered ‘Auto’” carries $1 million in liability coverage.
As a result, Defendant is obligated to provide $1 million in coverage for the tractor involved
in the accident and $1 million in coverage for the trailer involved in the same accident, for
a total of $2 million in coverage.

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{14} Defendant asserts two primary arguments against this interpretation of the policy.
First, it maintains that New Mexico and federal law dictate that a tractor and trailer operated
in tandem constitute one vehicle. Second, it contends that the anti-stacking provision of the
policy expressly precludes aggregating more than one vehicle’s liability coverage. We are
not persuaded.

a.      The New Mexico Motor Carrier Act and Federal Law Do Not Dictate That a
        Tractor and Trailer in Combination Constitute One Vehicle

{15} Defendant relies on the definition of “motor vehicle” in the New Mexico Motor
Carrier Act, NMSA 1978, §§ 65-2A-1 to -40 (2003, as amended through 2013). The version
in effect at the time of this litigation defined motor vehicle as “a vehicle, machine, tractor,
trailer or semitrailer propelled or drawn by mechanical power and used on a highway in the
transportation of property or persons, but does not include a vehicle, locomotive or car
operated exclusively on rails.” Section 65-2A-3(DD) (2005). Defendant claims that because
the semitrailer involved in this accident is not “‘propelled or drawn by mechanical power’
without first being attached to a tractor, it is not, by itself, a ‘motor vehicle’ under New
Mexico law.”

{16} We reject this argument for two reasons. First, Section 65-2A-3(DD) (2005) appears
to define a trailer as a motor vehicle because it is “drawn by mechanical power and used on
a highway in the transportation of property or persons.” (Emphasis added.) Nothing in the
language suggests that a tractor and trailer that are connected to each other constitute one
motor vehicle. Second, the Motor Vehicle Act was enacted “to foster the development,
coordination and preservation of a safe, sound and adequate motor carrier system.” Section
65-2A-2. It does not appear to place any limitations on the terms of liability insurance
contracts, and the express terms of the policy in question define a trailer as an “[a]uto.”

{17} Defendant also relies on a federally mandated endorsement to the policy, which
defines a “[m]otor [v]ehicle” as “a land vehicle, machine, truck, tractor, trailer, or semitrailer
propelled or drawn by mechanical power and used on a highway for transporting property,
or any combination thereof.” (Emphasis added.) Defendant maintains that the italicized
language establishes that, “while the trailer may qualify as a separate vehicle when not
connected to a tractor, it becomes a single motor vehicle when combined with a tractor.” We
disagree with this strained interpretation of the endorsement’s language. A reasonable
reading of the language is that each tractor and trailer is a motor vehicle for purposes of the
endorsement and that a combination of a tractor and trailer is also a motor vehicle. Nothing
in this language changes the terms of the policy itself.

b.      The Anti-Stacking Clause Does Not Apply Under These Circumstances

{18} We are equally unpersuaded by Defendant’s argument that the anti-stacking
provision in the policy precludes the payment of $1 million for each covered vehicle
involved in this accident. This is because Plaintiffs are not seeking “stacking” as that term

                                                6
is generally understood.

{19} Cases from other jurisdictions have defined “stacking” as the “combining or
aggregating [of] the policy limits applicable to more than one vehicle where the other
vehicles are not involved in the accident.” Progressive Premier Ins. Co. of Ill. v. Kocher ex
rel. Fleming, 932 N.E.2d 1094, 1098 (Ill. App. Ct. 2010) (emphasis added); see Anderson,
756 So. 2d at 35 (“Stacking of coverages occurs when coverage from vehicles not involved
in the accident is sought to be added to the coverage for the vehicle involved in the
accident.”). Although New Mexico cases have not strictly defined stacking as applying to
vehicles not involved in the accident at issue, they have applied stacking only to cases
having those circumstances. See Ponder, 2000-NMSC-033, ¶ 10 (“Stacking refers to an
insured’s attempt to recover damages in aggregate under more than one policy or one policy
covering more than one vehicle until all damages either are satisfied or the total policy limits
are exhausted.” (internal quotation marks and citation omitted)). In other words, our courts
have applied stacking of all covered vehicles’ medical payments coverages and
uninsured/underinsured motorist (UM/UIM) coverages in circumstances where only one
covered vehicle was involved in the accident. See, e.g., Rodriguez v. Windsor Ins. Co.,
1994-NMSC-075, ¶¶ 1, 3, 20, 118 N.M. 127, 879 P.2d 759 (allowing stacking of all
UM/UIM coverages, including coverages on vehicles not involved in the accident), modified
on other grounds by Montano v. Allstate Indem. Co., 2004-NMSC-020, 135 N.M. 681, 92
P.3d 1255; Vigil v. Cal. Cas. Ins. Co., 1991-NMSC-050, ¶¶ 1-3, 112 N.M. 67, 811 P.2d 565
(allowing stacking of medical payments coverages, including coverages on vehicles not
involved in the accident). And in the only New Mexico case addressing the stacking of
liability coverages, the question before the Court was whether an insured driving a non-
owned rental car could aggregate the liability coverages on all of his insured vehicles, none
of which were involved in the accident. See Slack, 2003-NMCA-083, ¶¶ 2-5. We are
therefore satisfied that stacking involves the aggregation of coverages applicable to vehicles
not involved in the accident in question, which is not what Plaintiffs seek in the present case.
See 12 Steven Plitt, et al., Couch on Insurance § 169:109 (3d ed. 2013) (“Recovery may also
be had under multiple policies or multiple vehicle liability coverages under rationales other
than stacking, primarily where the insured can be found negligent as to the operation of each
vehicle insured.”(emphasis added)). Where an insured seeks full liability coverage for each
insured vehicle involved in the same accident, “[it] is not a true stacking case in the
traditional sense.” Kocher, 932 N.E.2d at 1101.

{20} Instead of seeking stacking, Plaintiffs seek the enforcement of the intent of their
specific contract and a determination that it provides liability coverage for both covered
vehicles involved in the accident. When the policy is read as a whole, it is clear that the
insured intended to purchase $1 million in coverage for every listed vehicle in the event that
the vehicle was involved in an accident and if it was ultimately determined that the insured
operator of the vehicle was responsible for damages. It is equally clear that Defendant
intended to preclude stacking—the aggregation of coverages applicable to vehicles not
involved in the accident in question. But the policy language used to prevent stacking does
not apply to covered vehicles that are both involved in an accident. Certainly, if the

                                               7
operators of two covered vehicles were responsible for two different accidents, the insured
and Defendant would expect there to be $1 million in liability coverage for each vehicle.
Therefore, it does not make sense that the parties would expect there to be only $1 million
in coverage if the two covered vehicles were involved in the same accident and if the
operator of each vehicle was partially responsible for any resulting damages. See Slack,
2003-NMCA-083, ¶ 24 (explaining that “liability coverage follows the vehicle”).

{21} In any event, if the anti-stacking clause is read to preclude liability coverage on one
of the covered vehicles involved in this accident, then the clause conflicts with the liability
coverage provisions of the policy. This leads us to a discussion of ambiguity in the policy.

c.     Applying the Anti-stacking Clause to the Circumstances of This Case Creates
       an Ambiguity in the Policy That Must Be Construed in Favor of the Insured

{22} A policy provision is ambiguous “when separate sections of a policy appear to
conflict with one another.” Ponder, 2000-NMSC-033, ¶ 11 (internal quotation marks and
citation omitted). There is conflict in this policy because, on the one hand, the liability
coverage provisions state that each covered vehicle is entitled to $1 million in coverage, and,
on the other hand, the anti-stacking clause (if interpreted as Defendant urges) eliminates the
$1 million in liability coverage applicable to one of the covered vehicles involved in the
accident. The declarations page describes the liability coverage provided. It refers to a
separate listing of covered autos, which in turn shows a separate premium paid for each
listed vehicle, and each listed vehicle is provided $1 million in coverage. The anti-stacking
clause, interpreted as advocated by Defendant, eliminates all liability coverage available to
one of the two vehicles involved in the accident. We are unable to give effect to the anti-
stacking clause under this interpretation without eviscerating the liability coverage for one
of two insured vehicles. Thus, the policy is ambiguous.

{23} “[T]he insurer has the responsibility of issuing an intelligible policy. If the insurer
issues an ambiguous policy, the ambiguities are construed against the insurer.” Rodriguez,
1994-NMSC-075, ¶ 14. “[T]he test is not what the insurer intended its words to mean, but
what a reasonable person in the insured’s position would have understood them to mean.”
Id. ¶ 12 (internal quotation marks and citation omitted). Under the circumstances of this
case, a reasonable person in the insured’s position would have understood the policy to
provide $1 million in liability coverage for each covered vehicle that is involved in an
accident if the operator of each vehicle is found to be responsible for damages. Such a
reasonable person could not have anticipated that the mere happenstance of two covered
vehicles being involved in the same accident would result in the complete elimination of
liability coverage on one of the vehicles.

{24} We are not persuaded by the out-of-state authority relied on by Defendant. In our
view, the courts in those cases faced different factual scenarios or they failed to appreciate
the inherent conflict between an anti-stacking clause and liability coverage provisions. See,
e.g., Shamblin v. Nationwide Mut. Ins. Co., 332 S.E.2d 639, 645 n. 8 (W.Va. 1985) (rejecting

                                              8
argument for aggregation of liability coverages because “[t]he [insured’s] argument that two
of his vehicles, not just one, were ‘involved in the accident’ is . . . not established factually
and is invalid as a matter of law because only one vehicle was involved in the collision”);
State Auto Ins. Co. v. Stinson, 1998 WL 124051, *5 (6th Cir. 1998) (reading anti-stacking
clause in isolation from the rest of the policy and rejecting the argument that the insureds
reasonably expected that each vehicle would be individually covered because the insurer
“should not be required to pay twice simply because it collected two premiums”).

{25} We are equally unpersuaded by the district court’s reliance on the Anderson case.
The court in Anderson referred in dicta to anti-stacking clauses similar to that in the present
case and suggested that such clauses expressly prohibit the aggregation of liability coverages
for two insured vehicles involved in the same accident. 756 So. 2d at 36. This suggestion
was dicta because the court actually held that the anti-stacking clause before it (which was
worded somewhat differently from the clause in the case before us) was ambiguous and,
therefore, that the covered tractor and trailer involved in the accident were each entitled to
coverage in the amount of the limits of liability. Id. at 31, 35. Thus, the holding in Anderson
actually supports the aggregation of liability coverages when two covered vehicles are
involved in the same accident.

{26} The district court seized upon the dicta in Anderson to support its grant of summary
judgment to Defendant. We are not persuaded to rely on this aspect of Anderson for three
reasons: (1) we believe that the anti-stacking clause in the policy at issue here was intended
to address the aggregation of coverages on vehicles not involved in the accident in question,
which is not the factual scenario in this case; (2) the anti-stacking clause in this case conflicts
with the liability coverage portions of the policy; and (3) we see no reason to give inordinate
deference to dicta in an opinion of the Florida Supreme Court.

{27} We conclude that the reasonable expectations of the insured under this policy were
that it would provide $1 million in liability coverage for each covered vehicle involved in
an accident, even if it was the same accident. We therefore reverse summary judgment in
favor of Defendant and remand with instructions to the district court to enter summary
judgment in favor of Plaintiffs.

CONCLUSION

{28} For the foregoing reasons, we reverse the summary judgment in favor of Defendant
and remand for proceedings consistent with this Opinion.

{29}    IT IS SO ORDERED.

                                                 ______________________________________
                                                 CYNTHIA A. FRY, Judge

WE CONCUR:

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____________________________________
TIMOTHY L. GARCIA, Judge

____________________________________
J. MILES HANISEE, Judge




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