AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• A Public Service Company of New Mexico employee was injured by a Bullmastiff dog while reading the electrical meter at a residential property. The dog belonged to a tenant of the property, who had been asked by the property owner to water plants in the common yard. The tenant sought defense under the property owner's insurance policy with State Farm Fire and Casualty Company, which was denied on the basis that the tenant did not qualify as an insured under the policy (paras 2-7).

Procedural History

• District Court of Santa Fe County: The court found that the tenant was not a property manager and thus excluded from coverage under the insurance policy, granting summary judgment in favor of State Farm Fire and Casualty Company (para 9).

Parties' Submissions

• Third-Party Plaintiffs-Appellants (Tenant and Injured Employee): Argued that the district court needed to determine not whether the tenant was factually a real estate manager, but whether the facts suggested that the tenant was potentially covered by the policy (para 8).
• Third-Party Defendant-Appellee (State Farm Fire and Casualty Company): Contended that the tenant was "simply a tenant" and thus correctly excluded from coverage under the policy as she did not qualify as a "real estate manager" based on her limited maintenance duties (para 8).

Legal Issues

• Whether State Farm Fire and Casualty Company breached its duty to defend the tenant in the underlying lawsuit by refusing her request for legal representation based on the assertion that she did not qualify as an insured under the policy (para 1).

Disposition

• The Court of Appeals reversed the district court's decision, holding that State Farm Fire and Casualty Company breached its duty to defend the tenant as the facts suggested she was arguably covered by the policy (para 25).

Reasons

• Per J. MILES HANISEE, with concurrence from LINDA M. VANZI and M. MONICA ZAMORA, the court reasoned that insurance companies are obligated to defend when the complaint alleges facts potentially within the coverage of the policy. The court found that the tenant's activities, requested by the property owner, potentially placed her within the policy's coverage as a "real estate manager." The court determined that the insurance company did not undertake a reasonable investigation into the facts that could have implicated a duty to defend. The refusal to defend was based on a unilateral determination without seeking a judicial ruling, which constituted a breach of the duty to defend. The court emphasized that the insurer's duty to defend depends not on whether the insured was actually covered but whether there was potential coverage under the policy (paras 10-24).