On March 24, 2023, a New Mexico committee proposed significant changes for the jury instructions on bad faith. These proposed changes attempt to drastically alter the existing instructions provided to a jury tasked with deciding claims of bad faith against an insurance company. The proposed changes include the complete removal of an affirmative defense, adding language to committee commentary (which will create unnecessary confusion about the existence of a cause of action which does not exist in New Mexico), and potentially shifting the burden of proof from the plaintiff to the defendant insurance company.[i]

It is incumbent on lawyers as officers of the court to challenge and object to inaccurate or biased proposals to alter jury instructions.  A small team of defense lawyers took on this fight to preserve the jury instructions for bad faith in a fair and accurate way to remain consistent with existing law.[ii] Proudly included on the team was Tyson & Mendes’ Managing Partner in New Mexico, Amy Headrick. Ms. Headrick worked alongside Meena H. Allen (Allen Law Firm, LLC); Courtenay L. Keller, Taryn M. Kaselonis (Riley Keller Aldrete Gonzales); Jennifer A. Noya, Sonya R. Burke (Modrall, Sperling, Roehl, Harris & Sisk, P.A.); and, Alicia Santos (O’Brien & Padilla, P.C.).

Despite the limited amount of time to review the enormity of the proposed changes to the bad faith jury instructions, the team reviewed the proposed changes and provided their objections to the New Mexico Supreme Court.[iii]  The team formally submitted them on April 24, 2023.[iv]

Removal of Affirmative Defense

The UJI Committee proposed a complete deletion and removal of the affirmative defense contained in NM UJI 13-1710 (“Affirmative defense; policyholder’s dishonesty”) without any explanation or citation supporting why the affirmative defense should be removed and withdrawn.[v]  The team objected, submitting comment on how the attempt to exclude this affirmative defense would ignore well-established case law in New Mexico. In New Mexico, the obligation to deal fairly and honestly rests equally upon the insurer and the insured, and the New Mexico Supreme Court has acknowledged the availability of this affirmative defense to claims of bad faith when a plaintiff acts dishonestly with the intent to deceive the defendant.[vi]  The team further commented that the deletion of affirmative defenses, without any change in the law justifying such removal, is not an impartial decision.[vii]

Breach of Fiduciary Duty Comment

The UJI Committee proposed adding language to the committee commentary for an instruction in NM UJI 13-1708 (“Breach of fiduciary duty”) where the instruction simply states, “No instruction drafted.”[viii] The previous committee commentary was limited to one sentence, simply stating, “While the relationship between insurer and insured imposes a fiduciary obligation on the insurer to deal with the insured in good faith in matters pertaining to performance of an insurance contract, no cause of action, apart from the action for bad faith, exists for the breach of this duty.” (emphasis added).[ix]

The UJI Committee proposed deleting the existing committee commentary and replacing it with several paragraphs discussing fiduciary duties in insurance relationships and including the proposed comment, “New Mexico has not yet expressly recognized a separate cause of action for breach of fiduciary duty in the insurance bad faith context.” (emphasis added).[x]  The team objected to the change, stating it would be inappropriate to include language about how New Mexico has not yet expressly recognized such a cause of action, and misleading in the proposed UJI Committee commentary suggesting the trial court may decide whether a fiduciary duty was owed for a claim that does not exist.[xi]

Use Notes

Significant changes were proposed to the Use Notes contained in NM UJI 13-1715, (“Indemnification”). The UJI Committee proposed a deletion of the term “proximate cause” in the Use Notes, where the instruction would only be used if the defendant insurance company acted in bad faith and such bad faith conduct was the proximate cause of a judgment against the plaintiff.  The team objected to the deletion of the proximate cause language and the additional language proposed by the UJI Committee in the Use Notes. According to the team, the amended language presupposes and assumes the insurer acted in bad faith for the wrong reasons:

• because there was a judgment against their insured, and
• because the changes would remove the plaintiff’s burden of proving the carrier acted in bad faith and shift the burden of proof from the plaintiff to the insurance carrier.[xii]

Conclusion

The team worked together and acted quickly to review and analyze proposed jury instruction changes to Chapter 17 of the Uniform Jury Instructions – Civil on Bad Faith within the short thirty-day time period to provide objections to the New Mexico Supreme Court. Not only did the team analyze the significant amendments to the jury instructions, the use notes, and previous committee commentary sections in that short time, but they also reviewed the voluminous number of appellate cases cited in the existing jury instructions and proposed amendments. By acting quickly and in concert to protect the integrity of the instructions provided to jurors in bad faith cases, the team fought to keep the instructions accurate and unbiased in the interest of achieving justice for all.

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Sources

[i] See Bad Faith and Coverage Defense Counsels’ Objections to Proposed Revisions to Uniform Jury Instructions – Civil Proposal 2023-018.

[ii] “The Seven”: Meena H. Allen of Allen Law Firm, LLC; Jennifer A. Noya and Sonya R. Burke of Modrall, Sperling, Roehl, Harris & Sisk, P.A.; Amy Headrick of Tyson & Mendes; Alicia Santos of O’Brien & Padilla, P.C.; Courtenay L. Keller and Taryn M. Kaselonis of Riley Keller Alderete Gonzales.

[iii] Id.

[iv] Id.

[v] NM UJI 13-1710; See Bad Faith and Coverage Defense Counsels’ Objections to Proposed Revisions to Uniform Jury Instructions – Civil Proposal 2023-018.

[vi] See Modisette v. Foundation Reserve Ins. Co., 1967-NMSC-094, ¶ 17, 77 N.M. 661, 427 P.2d 21; See Medina v. Foundation Reserve Ins. Co., Inc., 1994-NMSC-016, 117 N.M. 163, 870 P.2d 125.

[vii] See Bad Faith and Coverage Defense Counsels’ Objections to Proposed Revisions to Uniform Jury Instructions – Civil Proposal 2023-018.

[viii] See NM UJI 13-1708

[ix] Id.

[x] Proposed Revisions to UJI 13-1708 NMRA (dated 03/24/23).

[xi] See Bad Faith and Coverage Defense Counsels’ Objections to Proposed Revisions to Uniform Jury Instructions – Civil Proposal 2023-018.

[xii] Id.