New Mexico Federal Court Grants Driver’s Motion to Remand Dispute with Insurance Company to State Court

In a recent case, an insurance company brought an action in a New Mexico state court, the Second Judicial District Court, County of Bernalillo, seeking a declaration that its insured was not entitled to uninsured/underinsured (UM/UIM) coverage for any injuries or other damages resulting from a 2015 car accident. The insured filed an answer and also asserted a counterclaim for personal injuries, to recover uninsured motorist benefits, for insurance bad faith and for violations of the Unfair Claims Practices Act.

People who have suffered personal injuries following a New Mexico car accident will often prefer to proceed with litigation in New Mexico state courts in the hopes of advancing a case past motion practice and towards trial. Insurance companies will often prefer to proceed in federal courts, where they hope to bring successful motions to dismiss or for summary judgment, and avoid trial. In this case, the insurance company filed a notice of removal, seeking to invoke the federal court’s jurisdiction and the insured driver successfully challenged the removal, resulting in the case being remanded to New Mexico state court.

The declaratory judgment by the insurance company and counterclaim by the insured driver arose from a four-car collision that occurred in Albuquerque, New Mexico. Allegedly a vehicle struck the car in front of it, causing a series of collisions until ultimately the insured’s car, which was the front vehicle in the chain, was struck from behind. The driver who caused the accident allegedly fled the scene and it was unknown whether that driver had liability insurance. The insured driver filed a claim under his insurance company policy for personal injuries and damages related to the collision, which his insurance company denied on the basis that he had rejected UM/UIM coverage.

The insurance company filed suit in state court to achieve a declaration that its insured’s rejection of UM/UIM coverage was binding and enforceable. After the insurance company filed a notice of removal to federal court, the insured challenged the basis for the removal.

First, the insured driver asserted that the insurance company was not a defendant with removal rights, as it was the plaintiff in the litigation having initiated the case with a petition seeking a declaratory judgment with respect to its liability. The court agreed, rejecting the insurance company’s argument that it was the “true defendant” because the “mainspring of the proceedings” was the insured driver’s intention to be covered by uninsured motorist proceeds. Next, the court rejected the insurance company’s attempt to bifurcate claims so that it would be able to litigate the insured driver’s claims in federal court after the declaratory judgment action in state court concluded. The court reasoned that the insurance company was trying to bifurcate claims in order to create a basis for federal court jurisdiction. While the court ruled in favor of the insured driver on these two points, the court declined to award him attorneys fees and costs on the basis that the insurance company improperly removed the case from state court.

If you or a loved one was injured in an accident, there may be grounds for an award of damages from parties including insurance companies. An award of monetary damages can assist people who are injured and their families with the medical costs, lost wages, and pain and suffering caused by accidents. To understand more about your case, call New Mexico car accident lawyer Matthew Vance at the Law Office of Matthew Vance, P.C. We provide a free consultation and can be reached at (505) 242-6267 or online.

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