State Farm Mutual Automobile Insurance Company v. Ballard

Carol Ballard’s (defendant) friend Robert Evans was driving Ballard and her three children through New Mexico when they were in a one-car accident. Evans and Ballard’s daughter, Erika, were killed. Ballard and her other two children, Carla and Chaz, were injured. New Mexico residents were not involved or injured. Carla’s serious injuries required treatment for several months at a hospital in New Mexico, followed by outpatient care for nearly two years. The county paid hospital costs pursuant to a legally mandated indigent fund. Ballard had car insurance with limits of $100,000 per person and $300,000 per accident. The Georgia-issued State Farm Mutual Automobile Insurance (State Farm) (plaintiff) policy contained no choice-of-law provision. The policy contained a step-down provision: for injuries resulting to family members, there was no coverage at all if intra-familial tort immunity applied or, if intra-familial tort immunity did not apply, the policy limits were substituted with the minimum limits of liability required by state law. State Farm recognized that intra-familial immunity is invalid in New Mexico and paid according to the minimum amount of coverage under the New Mexico Mandatory Financial Responsibility Act. State Farm paid $17,000 for medical benefits plus liability coverage capped at $50,000. State Farm filed in federal court seeking a declaratory judgment that the policy limited liability to $50,000. Ballard argued that New Mexico law applied, under which a familial-exclusion provision was invalid. The federal court certified to the New Mexico Supreme Court the question of whether New Mexico law applied to interpret a step-down provision to a Georgia car-insurance policy.