Guest v. Allstate Ins. Co.

542 P.3d 768

2024-NMCA-022

Christopher GUEST, as Personal Representative of the Estate of Suzanne R. Guest, Deceased, Plaintiff-Appellee/Cross-Appellant,

v.ALLSTATE INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee.

No. A-1-CA-38700

Court of Appeals of New Mexico.

Filing Date: June 12, 2023

Certiorari Denied, January 17, 2024, No. S-1-SC-39997

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY, Raymond Z. Ortiz, District Court Judge

Wilson Law Firm, P.C., Alan R. Wilson, Albuquerque, NM, for Appellee

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Jennifer A. Noya, Albuquerque, NM, Dentons US LLP, Richard L. Fenton, Chicago, IL, for Appellant

OPINION

HENDERSON, Judge.

{1} Defendant Allstate Insurance Co. (Allstate) appeals the district court’s judgment on remand awarding Plaintiff Suzanne Guest and The Guest Law Firm, P.C. (collectively, Guest) $3,445,093.66 in attorney fees and costs, and $1,842,900 in punitive damages.¹ This case comes to us after proceedings were held in district court on remand from our New Mexico Supreme Court. Allstate raises numerous claims of error concerning the remand proceedings, including the propriety of the attorney fees and costs award, the calculation of punitive damages, and the imposition of compound interest. Because we hold that the district court followed our Supreme Court’s mandate on attorney fees and costs, and Guest, who was an attorney at times acting pro se, was properly awarded attorney fees for her own time litigating this matter, we affirm in part. However, the district court failed to follow the mandate on punitive damages and impermissibly awarded compound interest, and so we reverse in part, and remand for further proceedings consistent with this opinion.²

BACKGROUND

{2} Guest was an attorney who represented Allstate in a lawsuit brought by its insureds. See Guest v. Allstate Ins. Co. (the Durham litigation), 2010-NMSC-047, ¶ 4, 149 N.M. 74, 244 P.3d 342. After that case was arbitrated, the same insureds sued Allstate for bad faith insurance practices, conspiracy, and fraud. Id. ¶ 5. The insureds also sued Guest for her role as Allstate’s attorney. Id.; see Durham v. Guest (the Allstate litigation), 2009-NMSC-007, ¶ 5, 145 N.M. 694, 204 P.3d 19. The Allstate litigation began in 2005, when Guest sued Allstate for failing to honor its agreement to defend and indemnify her in the Durham litigation. The facts underlying this and related lawsuits have been described in five other reported appellate opinions, so we will not repeat them in detail. See Durham, 2009-NMSC-007, 145 N.M. 694, 204 P.3d 19; Guest, 2010-NMSC-047, 149 N.M. 74, 244 P.3d 342; Guest v. Allstate Ins. Co., 2009-NMCA-037, 145 N.M. 797, 205 P.3d 844, rev’d in part on other grounds by, 2010-NMSC-047, 149 N.M. 74, 244 P.3d 342; Guest v. Berardinelli, 2008-NMCA-144, 145 N.M. 186, 195 P.3d 353; Durham v. Guest, 2007-NMCA-144, 142 N.M. 817, 171 P.3d 756, rev’d on other grounds by 2009-NMSC-007, 145 N.M. 694, 204 P.3d 19.

{3} The upshot is that Guest succeeded in holding Allstate liable—a jury awarded her $1,842,900 in compensatory damages and $9,000,000 in punitive damages, based on Allstate’s breach of contract, breach of its duty of good faith and fair dealing, and prima facie tort. Guest, 2010-NMSC-047, ¶¶ 23-24, 149 N.M. 74, 244 P.3d 342. On due process grounds, the district court reduced the punitive damages award to match the compensatory damages award. Id. ¶ 25. The district court also denied Guest’s post-trial request for attorney fees and costs, which was based on NMSA 1978, Section 39-2-1 (1977) and NMSA 1978, Section 59A-16-30(B) (1990), because it concluded her agreement with Allstate was not an insurance contract. See Guest, 2010-NMSC-047, ¶ 25, 149 N.M. 74, 244 P.3d 342.

{4} In the most recent appellate decision in this case, Guest, 2010-NMSC-047, 149 N.M. 74, 244 P.3d 342, our Supreme Court affirmed the jury’s breach of contract verdict, reduced Guest’s compensatory damages based on public policy grounds, and determined that her agreement with Allstate was, in fact, an insurance contract. Id. ¶¶ 34 -35, 42, 44, 58, 68. The Court accordingly issued a limited remand stating,

We do not decide whether Guest is actually entitled to attorney fees because that issue is not properly before us. We only hold that the contract in this case is an insurance contract, and we remand to the trial court to consider whether Guest’s legal theories for the recovery of her fees have merit and to consider the evidence accordingly.

As a final matter, Allstate does not challenge and we do not disturb the jury’s finding that Guest is entitled to punitive damages. The sole remaining issues for the trial court on remand are whether Guest should recover her legal fees and whether Guest’s punitive damages award is constitutionally reasonable given the reduction of her compensatory damages in this appeal. We consider all other issues raised on appeal to be resolved by this [o]pinion.

We affirm the Court of Appeals with respect to Allstate’s liability for breach of contract, and we affirm on other grounds its denial of Guest’s unearned fees. We reverse the Court of Appeals’ ruling that the agreement to defend and indemnify Guest is not an insurance contract and remand the matter to the trial court for proceedings consistent with this opinion.

Id. ¶¶ 70-72.

{5} On remand, the parties disagreed over the scope of our Supreme Court’s mandate and what further proceedings were required. Allstate, which had now paid Guest’s reduced compensatory damages award, sought broader proceedings on remand where it could discover evidence regarding attorney fees and put on expert testimony. In contrast, Guest argued that Allstate was not permitted to defend against her claimed fees—Allstate was required simply to pay what she demanded. Moreover, she asserted that our Supreme Court reinstated the jury’s original punitive damages award. Although both parties submitted competing forms of judgment on the mandate, the district court entered its own. That judgment substantially mirrored the language in our Supreme Court’s opinion.

{6} Pursuant to the judgment on the mandate, the district court issued a scheduling order that set deadlines for discovery and a hearing. The district court’s scheduling order largely adopted Allstate’s plan for broader proceedings, where it envisioned a three-day hearing, fact discovery, expert witnesses, and depositions. Thereafter, the parties exchanged significant discovery, including disclosure of multiple experts, and engaged in extended motions practice. After several discovery disputes, in August 2012, the district court finally held the hearing on remand.

[1] {7} Neither party directs us with any specificity to the events that transpired during the five-day hearing on remand. We emphasize that the Rules of Appellate Procedure require parties to provide this Court with specific citations to the record related to all pertinent issues. See Rule 12-318(A)(3)-(4). Failure to meet this requirement is always problematic, but it is especially problematic where, as here, the appeal is complex and based on a voluminous record.³ When the hearing concluded, the parties subsequently submitted competing proposed findings of fact and conclusions of law. The district court entered its own findings of fact and conclusions of law four years later, in September 2016. Both parties moved to amend the district court’s order. Nearly three years later, on April 19, 2019, the district court issued its second, and final amended findings of fact and conclusions of law.

{8} In broad strokes, the district court concluded that Guest could recover her attorney fees and costs because Allstate’s conduct in refusing to defend and indemnify her was done willfully under Section 59A-16-30(B). Alternatively, the district court also concluded that attorney fees and costs were recoverable under Section 39-2-1 because Guest was owed first-party insurance coverage and Allstate acted unreasonably by maintaining that it had no contract with her. In total, the district court found that Guest had incurred $3,321,220.66 in recoverable attorney fees and costs, including $93,005.86 in expert costs. These fees and costs were incurred throughout Guest’s litigation saga in this case; they included her own fees from times when she was without representation, as well as four other law firms’ fees. Finally, the district court concluded that the $1,842,900 punitive damages award was constitutionally reasonable. This conclusion was made based not only on Guest’s reduced compensatory damages, but also in reference to the new attorney fees and costs award. After a number of Guest’s post-judgment motions attacking the district court’s findings of fact and conclusions of law were denied, Allstate timely appealed.

DISCUSSION

{9} Allstate raises a myriad of issues—an approach that detracted from the efficacy of its briefing, especially because Allstate organized its presentation of several issues in a confusing fashion and omitted discussion of important facts and law. Cf. Rio Grande Kennel Club, 2008-NMCA-093, ¶ 55, 144 N.M. 636, 190 P.3d 1131 ("[W]e encourage litigants to consider carefully whether the number of issues they intend to appeal will negatively impact the efficacy with which each of those issues can be presented."). We summarize Allstate’s arguments here, along with our disposition, and then discuss in turn those arguments that we believe warrant further explanation.

{10} First, Allstate attacks the district court’s jurisdiction on remand. Allstate contends that the district court exceeded our Supreme Court’s mandate by (a) allowing further discovery and holding an evidentiary hearing on Guest’s attorney fees based on unpled theories for recovery, and (b) evaluating the constitutionality of Guest’s punitive damages award by comparing it against her compensatory damages and the new attorney fees and costs award. We reject Allstate’s first argument, but agree...