Southwest Steel Coil, Inc. v. Redwood Fire & Cas. Ins. Co.

Southwest Steel Coil, Inc. v. Redwood Fire & Cas. Ins. Co.

Opinion

 [***808]   [*722]  CASTILLO, Judge.

 [**1]  Plaintiffs Southwest Steel Coil, Inc., and Calstrip Industries, Inc., (together, Southwest Steel) appeal from the district court's summary judgment order that dismisses Southwest Steel's complaint against Defendants, Redwood Fire & Casualty Insurance Company (Redwood) and Gary Keenan and Keenan & Associates (Keenan) (together, Defendants), for lack of both standing and damages. This case addresses whether potential equitable subrogation rights of an insurer preclude as a matter [****2]  of law any claims that the insured has against another insurer for failure to defend and indemnify. We hold that questions of fact exist regarding whether the insured has potential damages independent of the insurer's subrogation rights and, for this reason, reverse.

I. BACKGROUND

 [**2]  This case arises out of an underlying suit brought against Southwest Steel by the estate of an individual who died while working at Southwest Steel's plant. At the time of the accident, Southwest Steel was insured by both Redwood (for workers' compensation and employer liability) and Fireman's Fund Insurance Company (Fireman's Fund) (for general liability and umbrella coverage). Both Redwood and Fireman's Fund initially declined to defend and indemnify Southwest Steel, resulting in Southwest Steel's suit against both insurers and Keenan, an independent adjuster engaged by Redwood to process workers' compensation claims. Southwest Steel dismissed its suit against Fireman's Fund when Fireman's Fund defended and indemnified Southwest Steel in a settlement with decedent's estate for $ 2,125,000.

 [**3]  In Southwest Steel's second amended complaint against Defendants, Southwest Steel [****3]  pursued its claims for declaratory judgment, breach of contract, bad faith, negligence, and violations of New Mexico's Unfair Practices Act (UPA), NMSA 1978, §§ 57-12-1 to -24 (1967, as amended through 2005), and Unfair Insurance Practices Act, NMSA 1978, §§ 59A-16-1 to -30 (1984, as amended through 2006). The parties moved for summary judgment, disputing generally whether Southwest Steel provided adequate notice to Redwood of decedent's accident and whether decedent was Southwest Steel's employee for purposes of triggering Redwood's policy obligation to defend Southwest Steel and to provide coverage. Apart from the underlying merits, Defendants argued that Southwest Steel suffered no damages because Fireman's Fund defended and indemnified Southwest Steel in decedent's settlement, that Fireman's Fund was the real party in interest, and that consequently, Southwest Steel had no standing to sue.

 [**4]  Southwest Steel appeals the order entered by the district court granting summary judgment in favor of Defendants. Although the district court ruled that two questions of fact existed regarding the employment status of the decedent [****4]  and the adequacy of the notice to Redwood, the two questions became immaterial in this case because the district court determined that Fireman's Fund, which ultimately defended and indemnified  [***809]   [*723]  Southwest Steel, was the real party in interest to pursue any claims based on Redwood's alleged wrongful failure to defend and indemnify. The district court based its grant of summary judgment in Defendants' favor on the conclusion that Southwest Steel lacked standing and did not suffer any damages. Accordingly, the court dismissed Southwest Steel's second amended complaint with prejudice.

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