A bizarre uninsured motorist claim
From a recent opinion of the Court of Appeals we learn that late one night Matthew Haygood was walking down a sidewalk somewhere in New Mexico. As he passed a certain house he heard the door fly open. He looked up to see a man running out, straight toward him, waving a gun! The man with the gun “accused Haygood of breaking into his car and told Haygood he kept drugs in the car.” After making that startling declaration, the man “pistolwhipped Haygood in the face and pushed him into the car.”
This is all straight from the deadly serious opinion of a court of law. And yet repeating it makes me want to step in front of the camera like Graham Chapman’s colonel character in the old Monty Python TV show, shutting down a skit because it’s getting too silly.
If you stored something valuable in your car, and thought you had caught someone in the act of stealing it, would you rush out to tell him he’s looking in the right place? Would you then violently push him toward the hiding place rather than dragging him away? “Stop, thief! You’re getting warmer … warmer …”
Still, that was Haygood’s story. The next thing that happened wasn’t comical at all. The gun went off and Haygood was shot in the back.
Before going any further, I should emphasize that neither Haygood nor the car owner ever faced criminal charges in association with the incident, according to online court records. In New Mexico, a person is allowed to use “reasonable and necessary” force to defend property.
After recovering from the gunshot wound, Haygood did something that might not seem like an obvious next move. He filed a claim with his car insurance company, USAA. You see, the vehicle in which the shooting occurred was uninsured. Haygood’s policy with USAA included uninsured motorist coverage, which protected him against injuries arising out of the “ownership, maintenance or use” of uninsured motor vehicles. Haygood reasoned that because he suffered an injury inside an uninsured motor vehicle, therefore USAA should pay up.
The first adjuster assigned to the claim recommended coverage. But that adjuster retired and Haygood’s claim was reexamined by others in the company, one of whom put a caustic note in the file: “I don’t know that a jury would award damages to a car thief who is shot while stealing a car.” (Haygood wasn’t charged with car theft.) Ultimately, USAA denied the claim. Haygood sued, seeking payment of the claim and damages for insurance bad faith.
During litigation, the lawyers for Haygood and USAA stipulated that Haygood was shot inside the car, and he was inside it only because the owner pushed him in. When lawyers “stipulate” to facts, they agree to treat them as true regardless of their relationship to reality. A stipulation artificially removes a distracting factual dispute, setting it to one side so the lawyers can focus on legal issues instead. In effect, USAA told Haygood, “Even if your story is true, you still lose.”
When the parties stipulate to all the important facts in a case, there’s no need for the judge to bring in a jury to figure out what happened. Instead, the judge can skip straight to the final stage of litigation, the delivery of judgment. The judgment entered after such a summary proceeding, called a summary judgment, has the same legal force as a judgment entered after a trial.
The district judge hearing Haygood’s case — Shannon Bacon, since promoted to the state Supreme Court — granted summary judgment in favor of USAA. She reasoned, and the Court of Appeals agreed, that USAA properly denied the claim because uninsured motorist coverage extends only to the normal use of a motor vehicle, not all uses. In Haygood’s case, the car was merely the setting of the shooting, and that wasn’t enough to establish coverage.
Judge Bacon further concluded that because Haygood wasn’t entitled to an insurance payout, USAA couldn’t have violated its duty to investigate and evaluate his claim in good faith. Here, however, the Court of Appeals disagreed.
In New Mexico, all insurance companies owe a duty of good faith to their customers. The governing jury instruction equates good faith with fairness and honesty. The duty to treat policyholders fairly and honestly doesn’t depend on the merits of a claim. It certainly doesn’t depend on anyone’s hunch about the degree of sympathy a hypothetical jury is likely to show a disappointed claimant. The Court of Appeals sent the case back for trial on the issue of insurance bad faith. USAA’s handling of the claim may have created liability where none existed before.