IN THE DISTRICT COURT FOR THE TWELFTH JUDICIAL DISTRICT

CHRISTINE HOWARD, ET AL.,

Plaintiffs,

V.                                                                                                              

QUALITY EXPRESS INC., ET AL.,

Defendants,

v.

GUARANTY NATIONAL INSURANCE CO.

THIS MATTER came on before the Court on May 26, 1998, for oral argument on the following:

1. Gamishee's Motion to Dismiss filed of record on January 13, 1998;

2. Plaintiffs Response to Motion to Dismiss filed of record on January 30, 1998;

3. Garnishee's Reply in Support of Motion to Dismiss filed of record on February 16, 1998;

4. Plaintiff s Motion for Summary Judgment Against Garnishee filed of record on March 6, 1998;

5. Garnishee's Response to Motion for Summary Judgment filed of record on March 20, 1998; and,

6. Plaintiff=s Reply Brief in Support of Motion for Summary Judgment filed of record on April 2, 1998.

1. The Court has jurisdiction of the parties and the subject matter.

2. On January 15, 1997, the Court granted Plaintiff=s Default Judgment on the issue of liability against the Defendants Quality Xpress, Inc., Rubin Aguirre and Francisco Hernandez.

3. The Court conducted a hearing on August 26, 1997, on the damages issue and assessed damages at $4,919,637.00.

4. A Default Judgment was filed of record on September 3, 1997, granting Plaintiff=s Judgment against the Defendant Quality Xpress, Inc., in the sum of $4,919,637.00.

5. Plaintiffs filed an Application for Writ of Garnishment and Affidavit on November 6, 1997, as to the Garnishee herein. The Writ of Garnishment issued on November 13, 1997. The Garnishee filed an Answer of record on December 8. 1998. A Traverse of Garnishee's Answer was filed of record by Plaintiffs on December 12, 1998.

6. The following facts are undisputed:

A. Guarantee National Insurance Company, Garnishee, issued a liability insurance policy, No. TP-1205665, a commercial automobile trucker's policy, to the Defendant Quality Xpress, Inc., effective November 16, 1995, and for a period of one year ending November 16, 1996.

B. On March 28, 1996, Garnishee mailed to Defendant Quality Xpress, Inc. a Notice of Cancellation, Non-renewal or Change in Policy Limits/Coverage, which stated that the policy would be canceled as of April 10, 1996, at 12:01 A.M. The cancellation was for nonpayment of the insurance premiums.

C. The accident that formed the basis of the causes of action and the Judgment against Quality Xpress, Inc., herein occurred on July 19, 1996.

7. The Court must address the following issues:

A. Whether the claim against the Garnishee is contingent and unliquidated and therefore not subject to garnishment in general;

B. Whether the insurance company's notice of cancellation for nonpayment of premium was insufficient to cancel the policy; and

C. Whether there are genuine issues of material fact.

GARNISHMENT CLAIM IN GENERAL

8. Inasmuch as the Court will be ruling, infra., that the insurance policy was not in effect on the date of the accident, the Court will grant the Motion to Dismiss on the ground that the claim against the garnishee is contingent and unliquidated.

ISSUES CONCERNING INSURANCE COVERAGE

NOTICE OF CANCELLATION

9. The Notice of Cancellation gave Defendant Quality Xpress, Inc., ten (10) days notice. New Mexico law requires ten (10) days notice. See.59A-18-29(A), N.M.S.A., 1978 Comp. Plaintiffs argue that Federal law requires that the Insurer give thirty five (35) days notice. The accident herein occurred approximately three and one half (3 1/2) months [over 100 days] after the issuance of the Notice of Cancellation.

10. The general rule is that a notice of cancellation with a notice period of less than that required by law does not render the notice void, but merely postpones cancellation until the required period has expired.

11. The Court declines to rule, on the basis of the three cases cited by the Plaintiff, that it should apply an exception to the general rule because the policy was obtained for the benefit of third parties.

12. The policy was effectively canceled by the Garnishee on either ten (10) or thirty five (35) days after the issuance of the notice of cancellation for nonpayment of premiums. The accident occurred more than one hundred (100) days after the issuance of the notice of cancellation.

FAILURE TO GIVE NOTICE OF CANCELLATION

13. Garnishee gave no notice to any state or federal regulatory body of the cancellation of the policy issued to Quality Xpress, Inc.

14. The Court will rely upon North River Insurance Co. v. Cy Thompson Agency, Inc., 840 F.2d 839 (lst. Cir.1988).

15. Even if Quality Xpress, Inc., was not excepted from federal regulation because it transported agricultural products:

A. The burden was on Quality Xpress, Inc., to comply with permitting requirements, including those involving the filing of certificates of insurance;

B. Unless and until and insurer signs and authorizes the filing of regulatory forms, it remains outside the regulatory scheme.

16. The notice of cancellation was valid and effective and the insurer was not required, under the facts of this case, to file notice of the notice of cancellation with state or federal regulatory bodies.

17. There was no insurance policy in existence that was issued by the Garnishee on the date of the accident.

PLAINTIFF'S MOTION FOR SUMMARY JUDGEMENT

18. Plaintfff's Motion for Summary Judgement has been mooting by the granting of Garnishee's Motion to Dismiss.

I will direct Ms. Armstrong to prepare an Order accordingly and to submit the same to Mr. Harris for approval as to form. That Order will be due in the Court's Chambers by the close of business on Monday, August 17, 1998, either approved as to form or together with alternative proposed Orders. Pursuant to SCRA 1-052, Findings of Fact and Conclusions of Law are unnecessary on decisions under SCRA 1-012 or 1-056.

ROBERT M. DOUGHTY II
DISTRICT JUDGE

 

cc: Ronald G. Harris, Esq.
Foster, Johnson, Harris & McDonald, LLC
Attorneys at Law
40 First Plaza, N.W., Suite 735 (North)
Albuquerque, NM 87102

Victoria Davis Armstrong, Esq.
Atwood, Malone, Turner & Sabin, P.A.
P.O. Drawer 700
Roswell, NM 88202-0700