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Teague-Strebeck Motors Inc. v. Chrysler Insurance Co.3/8/1999
able mental state to be entitled to punitive damages. Our Supreme Court's recent decision in Allsup's Convenience Stores, Inc. v. The North River Insurance Co., 1999-NMSC- 006, 46, ___ N.M. 976 P.2d 1, supports this view. We assume that the district court used the term "evil nature" as a synonym for "evil motive."
{73} The district court did not abuse its discretion. We affirm the denial of punitive damages.
IX. CONCLUSION
{74} We affirm the district court's order permitting Mills-Strebeck to be added as a party plaintiff. We affirm the award of damages for bad faith handling of the GKLL coverage but remand for modification of that portion of the judgment to award post-judgment interest at the rate of fifteen percent per year. We also affirm the district court's denial of Mills-Strebeck's claims for damages under the Unfair Practices Act and for punitive damages. With respect to Mills-Strebeck's claim of damages for property loss, we reverse and remand for a determination by the district court regarding whether Mills-Strebeck had an insurable interest in the dealership property at the time of the fire. If Mills- Strebeck did not have an insurable interest, the district court must amend the judgment to eliminate all damages except those arising out of the claim for bad faith in handling the GKLL coverage. If the district court determines that Mills-Strebeck had an insurable interest in the property, it should then calculate the extent of that interest in conformity with the analysis set forth in this opinion. Mills- Strebeck's damages for such property loss should be limited to the actual value of the property, rather than the replacement cost, and post-judgment interest on the damages should be set at eight and three- quarters percent per year.
{75} IT IS SO ORDERED.
HARRIS L HARTZ, Judge
WE CONCUR:
MICHAEL D. BUSTAMANTE, Judge
M. CHRISTINA ARMIJO, Judge
ORDER ON MOTION FOR REHEARING
BUSTAMANTE, Judge.
{76} All parties have requested rehearing on various aspects of our opinion filed March 8, 1999. After due consideration, we have determined to deny the requests. However, one aspect of the motions-- addressing the proper standard for granting punitive damages in insurance-bad-faith cases--requires extended Discussion. Rather than revise the opinion, we have opted to respond in this separate published Order.
{77} Teague-Strebeck and Mills-Strebeck (Plaintiffs) assert that the opinion misapprehends New Mexico law regarding punitive damages in the context of insurance bad faith. Plaintiffs remind us that our Supreme Court has just recently stated that "bad faith . . . is a culpable mental state." Allsup's Convenience Stores, Inc. v. North River Ins. Co., 1999-NMSC-006, 53, ___ N.M. ___, 976 P.2d 1. Based on that statement--and earlier cases including language to the same effect-- Plaintiffs argue that "New Mexico law clearly provides for punitive damages in insurance cases based solely on bad faith," and that it is improper to require anything in addition as a prerequisite to awarding punitive damages. See Jessen v. National Excess Ins. Co., 108 N.M. 625, 627, 776 P.2d 1244, 1246 (1989) ("Bad faith supports punitive damages upon a finding of entitlement to compensatory damages."); United Nuclear Corp. v. Allendale Mut. Ins. Co., 103 N.M. 480, 485, 709 P.2d 649, 654 (1985) ("To assess punitive damages for breach of an insurance policy there must be evidence of bad faith or malice in the insurer's refusal to pay the claim.").
{78} In essence, Plaintiff's position is that conduct sufficient to support bad faith compensatory damage
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