Updates on Insurance Coverage, Construction Defect
and Commercial Auto Law Developments
in Arizona and New Mexico
Greetings from Evans & Co. with another Case Notes summary of important developments in the courts where we practice. We write this month with updates on construction defect, insurance coverage litigation, and commercial auto law in the states of Arizona and New Mexico, which we last briefed about four months ago.  

Please recall that our past Case Notes are archived at and we would be pleased to bring current the decisions on which we've reported previously, at your request.
The Arizona Supreme Court provides guidance on the meaning of a contract provision awarding attorneys’ fees to an undefined “prevailing party” which may or may not mean the same as “successful party” under Arizona statute.  If you thought that an offer of judgment in an amount greater than what the plaintiff recovers at trial, insulates your defendant from an attorneys’ fee award, think again. The trial was a great success but because of attorneys’ fees, the outcome, run through the interpretive process, was nearly a debacle. The case also underscores Arizona courts proclivity for accepting enormous fee bills (here $775,000 for a $10,000 plaintiff’s verdict) without meaningful vetting. This outcome can be avoided by better drafting!
We digest an Arizona Court of Appeals case which underscores that a claimant has a right to but one UM/UIM policy limit. In the Federal Court system, applying Arizona law, we present a case were “reasonable expectations” of the insured did not overcome a policy exclusion for physical abuse claims, including failure to report physical abuse.
Another federal district court case, applying Arizona law, is particularly instructive holding an estoppel to deny insurance coverage (which otherwise would have been properly denied) because the insurer obtained the facts needed to deny, through assigned defense counsel for the insured. It appears that the insurer did not set up a “firewall” claim system, to segregate data that was privileged and was obtained from the insured or from defense counsel (properly communicated to a “defense adjustor”) from information obtained through public sources, or appropriate legal inquiry, for coverage analysis (properly to a “coverage adjustor”).  
Turning to New Mexico cases, we digest two Federal District Court cases, applying New Mexico law, which limit procedural options for insurers sued for bad faith. In one case a UM/UIM insurer, was sued for policy proceeds, and for bad faith in the adjustment of the claim. The insurer moved to bifurcate, hoping to try the coverage case first and the bad faith case only if the first went bad. But the motion was denied, keeping full pressure on the insurer to settle or accept the outcome of the trial on all issues including bad faith. The second case follows suit.
In a third bad faith case under New Mexico law, the federal court interprets that six-year statute of limitations on such actions, holding that negotiations over UM/UIM benefits within those six years made a very late declaratory judgment action, timely filed.
Click here for our Case Notes for both states (25 pages).
Click here for Arizona only (15 pages).
Click here for New Mexico only (11 pages).
Click here to go to the Evans & Co. law firm website for firm information and access to prior case digests.

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