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  "name": "Suzanne GUEST and The Guest Law Firm, P.C., Plaintiffs-Respondents/Plaintiffs-Petitioners, v. ALLSTATE INSURANCE COMPANY, Defendant-Petitioner/Defendant-Respondent",
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    "judges": [
      "WE CONCUR: CHARLES W. DANIELS, Chief Justice, and PETRA JIMENEZ MAES, Justice.",
      "EDWARD L. CH\u00c1VEZ, Justice (dissenting).",
      "PATRICIO M. SERNA, Justice (joining dissent).",
      "I CONCUR: PATRICIO M. SERNA, Justice."
    ],
    "parties": [
      "Suzanne GUEST and The Guest Law Firm, P.C., Plaintiffs-Respondents/Plaintiffs-Petitioners, v. ALLSTATE INSURANCE COMPANY, Defendant-Petitioner/Defendant-Respondent."
    ],
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      {
        "text": "OPINION\nBOSSON, Justice.\n{1} A jury awarded Plaintiff Suzanne Guest, an attorney, a multi-million-dollar verdict against her former client, Defendant Allstate Insurance Co. The jury found that Allstate had breached its contract to defend and indemnify Guest in a lawsuit that was filed against her and Allstate by a former insured of Allstate. The bulk of Guest\u2019s $1,800,000 compensatory damages award was for ten years worth of future earnings that she claimed Allstate would have paid her in legal fees had it not breached the promise to defend and indemnify her. We affirm the Court of Appeals in holding that the trial court properly submitted the question of liability based on breach of contract to the jury.\n{2} We are persuaded, however, that Guest\u2019s recovery of unearned attorney fees from her former client threatens the essential trust that lies at the core of any attorney-client relationship \u2014 a relationship which ethically is and must be terminable at the discretion of the client. We therefore overturn on public policy grounds the jury\u2019s award of future earnings. We also reverse the Court of Appeals holding that Allstate\u2019s promise to defend and indemnify Guest was not an insurance contract as defined by statute. We affirm in part, reverse in part, and remand for further proceedings.\nBACKGROUND\n{3} This dispute arose out of a 1997 car accident and subsequent attempt by an Allstate insured to collect on a modest uninsured motorist policy. Such humble beginnings sparked a round robin of vitriolic litigation culminating in this, the fifth written appellate opinion since 2007. See Durham, v. Guest, 2009-NMSC-007, 145 N.M. 694, 204 P.3d 19; Guest v. Allstate Ins. Co., 2009-NMCA-037, 145 N.M. 797, 205 P.3d 844; 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. We hope this will be the last word on the matter. We are not optimistic.\n{4} Guest represented Allstate in the resulting dispute with Allstate\u2019s insureds, Jamie Deveney and Travis Durham (the Durhams), in their uninsured motorist claim against Allstate. At that time Guest, a private attorney, performed considerable legal work for Allstate and Allstate insureds that constituted a large percentage of her practice. The Durhams\u2019 claim eventually went to arbitration, where they were awarded $45,000 from Allstate \u2014 -an amount $31,000 more than Allstate\u2019s highest offer. See Durham v. Guest, 2007-NMCA-144, \u00b6 5, 142 N.M. 817, 171 P.3d 756.\n{5} The Durhams then sued Allstate and Allstate\u2019s adjuster, alleging bad faith insurance practices, conspiracy, and fraud. These 2001 claims arose out of a set of internal policies and practices that Allstate had adopted, allegedly to enhance its corporate profits at the expense of its insureds by denying or artificially limiting their claims. Through their attorney, David Berardinelli, the Durhams also took the unusual step of suing Guest for her role as Allstate\u2019s attorney in the arbitration proceedings, alleging violations of the New Mexico Insurance Code, aiding and abetting a violation of fiduciary duty, unjust enrichment, malicious abuse of process, malicious defense, and prima facie tort. Guest v. Berardinelli, 2008-NMCA-144, \u00b6 3, 145 N.M. 186, 195 P.3d 353. Specifically, the Durhams accused Guest of\nmalicious character assassination of the Durhams and of maliciously abusing process to obtain their employment and medical records outside the scope of discovery or in violation of protective orders with the intent to humiliate the Durhams, to cause or threaten them to lose their employment, to extort and intimidate them to give up their rights, and to retaliate against them for not accepting Allstate\u2019s settlement offer.\nId.\n{6} In the fateful act that led to the litigation before us now, Guest demanded that Allstate provide her with a legal defense in the Durhams\u2019 lawsuit and with indemnification in the event of an award in Durhams\u2019 favor against her. Allstate agreed to defend Guest and provided her with an attorney, Stephen Simone, who proposed to file a motion to dismiss on her behalf. Simone explained to Guest that Allstate had decided to take the Durhams\u2019 claims to trial and had agreed to defend her through the conclusion of the matter. He further explained that Guest could choose to have Simone handle her motion to dismiss, or she could opt for separate counsel. Guest chose the latter option, and Allstate hired Stephen Royce to represent her against the Durhams.\n{7} When Allstate notified Guest that Royce would be her attorney, it did so in a letter acknowledging its agreement to provide her with a defense but mentioning nothing about indemnification. Through Royce, Guest repeatedly requested written confirmation of Allstate\u2019s agreement to indemnify her, but Allstate did not respond. The indemnification question did not turn out to be pivotal, however, because the Durhams eventually dismissed their complaint, without prejudice, in late 2001.\n{8} In early 2002, the Durhams filed a second lawsuit, echoing their original claims, but expanding the allegations against both Allstate and Guest. Guest renewed her demand for a defense and indemnification, but this time Allstate refused, suggesting instead that she seek coverage from her own professional liability insurer. Guest was \u201cshocked\u201d by Allstate\u2019s refusal; she viewed Allstate\u2019s promise to defend her as a contract, which was still binding because the new complaint was a continuation of the original lawsuit. Believing Allstate to have breached that contract, Guest became concerned that an ethical conflict was developing that would force her to refrain from accepting any additional legal work from Allstate. Allstate\u2019s referrals amounted to at least 85 percent of Guest\u2019s law practice.\n{9} Guest\u2019s professional liability insurer appointed counsel and began representing her against the Durhams. Guest and her new attorney met with Simone and Allstate and demanded that Allstate honor its obligation to defend and indemnify her. Allstate refused; Guest then returned all but two of her active cases to Allstate. Guest believed that the two cases she retained had advanced so far that Allstate\u2019s insureds would suffer prejudice if she withdrew. Guest also requested that Allstate refrain from sending her any new legal work for at least six months, so that she could evaluate whether she could continue to represent Allstate in the future. Ten days later, Guest again demanded that Allstate honor its promise to defend and indemnify her, but received no response.\n{10} A few months later, the Durhams offered to dismiss the complaint against Guest with prejudice on the condition that Allstate waive its right to remove the case to federal court. Allstate refused, though Simone had previously informed Guest that Allstate never intended to file for removal. Guest testified at trial that Allstate\u2019s refusal to accommodate her dismissal from the Durham proceedings \u2014 based on \u201ca false reason\u201d \u2014 had undermined her trust in Allstate as a client and led her to conclude that she could never represent Allstate again. By Thanksgiving 2002, Guest had completed all of her pending Allstate cases, closed her law practice, and moved to Phoenix, Arizona. At about the same time, the trial court dismissed all of the Durhams\u2019 claims against her except the one for malicious abuse of process.\n{11} Shortly thereafter, in early 2003, Guest\u2019s professional liability insurer went into receivership, leaving her unrepresented. Guest again demanded that Allstate honor its promise to defend and indemnify her, and this time Allstate agreed. In a letter dated March 19, 2003, Allstate denied that it had previously abandoned its agreement to defend and indemnify her, but it agreed to do so now because \u201cthe circumstances surrounding this case and [Guest\u2019s] request [were] unique.\u201d That letter, containing the only written description of Allstate\u2019s agreement to defend and indemnify her, stated: \u201cAllstate is willing to provide to you a defense and indemnification. Indemnification will not be provided for any ultra vires acts, which is consistent with the original defense provided to you.\u201d Allstate gave Guest her choice of counsel, and again she selected Royce.\n{12} Throughout 2003 and early 2004, Guest, the Durhams, and the Durhams\u2019 attorneys, David Berardinelli and Cheryl McLean, engaged in increasingly hostile settlement negotiations regarding Guest\u2019s dismissal. Early in 2003, Guest indicated that she was willing to agree to a zero-dollar, mutual release. However, Guest later reversed her position because of \u201cnew allegations about some pretty horrendous things [Berardinelli] was claiming [she] did____\u201d Guest felt that the new allegations went too far, and she decided that any settlement would be unacceptable if she were required to release the Durhams or Berardinelli from any future lawsuit she might bring against them. \u201cI simply said ... that\u2019s it, I am ... defending myself, the facts are coming out, the truth is coming out, and if it means it goes to the end, it goes to the end.\u201d\n{13} One particular episode reveals the caustic tone of the negotiations as they evolved. In September 2003, the Durhams made a Rule 1-068 NMRA offer of settlement to Guest, seeking to dismiss their claims against her with prejudice for no money in return for a mutual release of liability and a confidentiality order. Guest responded in March 2004 with a letter describing the only conditions under which she would agree to release the Durhams and their attorneys: (1) the agreement must state that \u201cthere were insufficient facts to form a basis for the filing and continued pendency of the complaint,\u201d and (2) the Durhams and their attorneys must sign a $100 bill and present it to Guest along with a letter from the attorneys \u201cacknowledging ... that the $100 [was] inadequate compensation for the damages caused by the lawsuit and its allegations.\u201d\n{14} The Durhams agreed to dismiss Guest with prejudice and pay her $100 in exchange for a mutual release, but they rejected any demand to confess guilt. Guest countered by offering to release only the Durhams if they admitted an absence of good cause for their complaint against her, signed a $100 bill, and gave her a letter explaining that the $100 was merely a symbolic gesture and not sufficient compensation for her damages. The Durhams refused.\n{15} On March 19, 2004, two weeks after Guest\u2019s initial response to this offer of settlement, Allstate informed her that it would begin its own settlement negotiations with the Durhams. Allstate further informed Guest that it would cease funding her defense when it reached a settlement. Allstate explained that it had fully met its obligation to defend and indemnify her because the \u201cAllstate funded defense ... [had] successfully placed [her] in a position where she [could] be dismissed with prejudice from this lawsuit at no cost or future liability to her.\u201d In short, Allstate placed Guest on notice that, if she chose to continue the litigation beyond the date of a settlement agreement between Allstate and the Durhams, she would do so at her own expense.\n{16} Early in August 2004, Allstate and the Durhams reached a tentative agreement, and Allstate informed Guest that a settlement was imminent. Allstate also reiterated that it intended to withdraw Guest\u2019s defense if she abstained from the agreement.\n{17} In reply, Guest explained that Allstate\u2019s promise to defend and indemnify her was \u201cunconditional.\u201d Specifically, \u201cAllstate did not reserve any right[s] to control [her] defense,\u201d and \u201c[n]o ... conditions were placed that the defense provided was conditional on Allstate settling its portion of the case on terms agreeable to it.\u201d Therefore, Guest did not have to accept the zero-dollar, zero-liability offer of settlement because it required her to release \u201cnot only [the Durhams] personally, but also their counsel [Berardinelli], in fact, making that an absolute requirement to any resolution at that point.\u201d Guest concluded that she would view any withdrawal of her defense as a breach of Allstate\u2019s contract. Thereafter, she was unwavering in her refusal to join the settlement.\n{18} By the end of August, Berardinelli informed Allstate that the Durhams would not agree to the settlement because it was \u201cunacceptable in a number of ways.\u201d He specifically cited (1) Allstate\u2019s continued funding of Guest\u2019s defense, and (2) Guest\u2019s refusal to release the Durhams\u2019 attorneys from liability for bringing suit. \u201cGuest remains adamant in using this case as a springboard for continued litigation. Apparently, Allstate is willing to fund Guest\u2019s vendetta against counsel in this case.\u201d Berardinelli refused to agree to the settlement unless Guest agreed to participate. The negotiations had reached an impasse.\n{19} By October 26, 2004, Allstate had made good on its threat and ceased funding Guest\u2019s defense. Without a funding source, Guest assumed the cost of her own defense and hired new attorneys.\n{20} In November 2004, Allstate again invited Guest to join in a settlement with the Durhams and Berardinelli. In a statement, upon which Allstate relied heavily at oral arguments in this appeal, Allstate informed Guest that Berardinelli had \u201csuggested ... that he would not object to language\u201d in a settlement agreement that would allow Guest to \u201cpreserv[e] her claim against the Durhams\u201d and \u201cnot waiv[e] any claim she may have against Ms. McLean or Mr. Berardinelli.\u201d\n{21} Allstate filed a motion to compel settlement, and the trial court held a hearing on the motion on January 28, 2005. At the hearing, Allstate asked the court to compel the Durhams to agree to the terms of a settlement proposal. Allstate clarified that the proposed settlement did not require a dismissal of the Durhams\u2019 remaining claim for malicious abuse of process against Guest and that Allstate did not \u201cintend by [the] settlement to impair any of [Guest\u2019s] rights.\u201d Berardinelli made clear that he and the Durhams also wished to settle, but he expressed his concern that he did not think that a settlement releasing Allstate \u201cas the principal\u201d could leave intact any remaining claims against its agent, Guest. Berardinelli further clarified that he and the Durhams wanted to settle all the claims in the lawsuit, including those against Guest, and that they were willing to release Allstate and Guest from any further liability, this time without a reciprocal release from Guest of the Durhams or their attorneys.\n{22} Guest responded that she did not wish to be a party to any settlement, regardless of its terms. She believed that she had been wronged, and what she wanted was \u201ca finding either by the court or an admission by the Plaintiff through dismissal with prejudice that she should never have been named as a Defendant in this case.\u201d The hearing ended in a stalemate, with Guest refusing to settle, the Durhams refusing to dismiss her, and Allstate refusing to agree to pay for any potential judgment against her. The trial court refused to compel the settlement.\n{23} Guest then filed the present lawsuit against Allstate for damages resulting from Allstate\u2019s breach of its contract to defend and indemnify her. Ultimately, the jury found Allstate hable for breach of contract, breach of its duty of good faith and fair dealing, and prima facie tort. As evidence of damages, Guest demonstrated at trial that she had incurred $73,873 in out-of-pocket expenses and legal fees while defending herself against the Durhams and Berardinelli after Allstate\u2019s withdrawal. She estimated at trial that she would expend at least another $50,000 in appeals relating to the ongoing Durham litigation.\n{24} Guest also put on evidence that she was entitled to a minimum of $2,500,000 in consequential damages for future darnings\u2014 $250,000 per year for ten years \u2014 based on what she likely would have earned if she had been able to continue to represent Allstate and its insureds during that time. Although it was Guest who had terminated the attorney-client relationship, she claimed at trial that, ethically, she was forced to withdraw because Allstate\u2019s breach had placed her in a hostile and incompatible relationship with her former client. After deliberations, the jury awarded Guest $1,842,900 in compensatory damages and $9,000,000 in punitive damages against Allstate. Based on due process grounds, the trial court thereafter reduced the punitive damages award to an amount equal to the compensatory damages award.\n{25} On appeal, the Court of Appeals affirmed the verdict of liability but reversed the award of damages, holding that Guest could not recover any future, unearned fees because her employment relationship with Allstate was at-will. Guest, 2009-NMCA-037, \u00b6\u00b6 51, 56, 145 N.M. 797, 205 P.3d 844. The Court also affirmed the trial judge\u2019s finding that the contract to defend and indemnify Guest was not an insurance contract and, therefore, Guest was not entitled to recover attorney fees incurred in the pursuit of the present action. Id. \u00b6\u00b6 59, 63. The Court of Appeals remanded for a new trial on damages, noting that due process requires an award of punitive damages to be reasonably related to an award of compensatory damages which now had been substantially reduced. Id. \u00b6 58.\n{26} We granted both parties\u2019 separate petitions for writ of certiorari, 2009-NMCERT-004, 146 N.M. 642, 213 P.3d 792, and address the issues raised in both petitions in this consolidated Opinion.\nDISCUSSION\nThe verdict of liability for breach of contract is affirmed.\n{27} Allstate no longer disputes the existence of its contract to defend and indemnify Guest. Instead, Allstate contends that it fully performed its obligations to Guest and, therefore, \u201cthe Court of Appeals erred as a matter of law by failing to dismiss or reject Guest\u2019s contract claim.\u201d (Emphasis omitted.) Specifically, Allstate argues that, as a matter of law, (1) it discharged its obligations under the contract when it negotiated a \u201cno cost, full release settlement\u201d on Guest\u2019s behalf; (2) Guest cannot sue for breach of a contract when she obstructed its performance; and (3) the Court of Appeals\u2019 interpretation of the defense and indemnification agreement is against public policy. We address each argument in turn.\nAllstate did not satisfy all of its contractual obligations by negotiating a \u201cno cost, full release settlement.\u201d\n{28} Allstate renews the argument it made to the Court of Appeals that it fully satisfied its obligations under the contract when it negotiated a \u201cno cost, full release settlement\u201d on Guest\u2019s behalf. See Guest, 2009-NMCA-037, \u00b6 26, 145 N.M. 797, 205 P.3d 844. Allstate claims that it \u201cdischarged its obligation by negotiating a settlement which Guest would not agree to.\u201d Id.\n{29} In response, Guest contends that she had a right to reject Allstate\u2019s offer, and Allstate could not compel her to acquiesce. Guest claims that the \u201cproposed settlement ... was unacceptable to [her] because, among other reasons, it failed to protect her from the enormous damage caused by the allegations and conduct of the Durhams and their counsel, and it required her to release her claims against the Durhams, their counsel, and Allstate.\u201d Without her consent to the proposed settlement, Allstate was obliged to continue with her defense and indemnification.\n{30} In support of its argument, Allstate relies heavily on Teigen v. Jelco of Wisconsin, Inc., 124 Wis.2d 1, 367 N.W.2d 806, 810 (1985), for the proposition that once an insurer negotiates a settlement, \u201c[it] has discharged ... its obligation to [the] insured, ... carried out the terms of its contract, ... fully protected itself and its insured from further exposure, and, therefore, ... has no further contractual duty to defend.\u201d Teigen, and the other authorities cited in Allstate\u2019s brief, maintains that \u201cabsent an express provision to the contrary, an insurer is free to settle a case despite an insured\u2019s request not to do so,\u201d 367 N.W.2d at 810, and that \u201c[o]nee [an] insurer extinguishes the underlying liability, it discharges its duty to defend,\u201d Aetna Cas. & Sur. Co. v. Coronet Ins. Co., 44 Ill.App.3d 744, 3 Ill.Dec. 371, 358 N.E.2d 914, 919 (1976).\n{31} For the reasons that follow, Allstate\u2019s position does not persuade us. Ultimately, as Guest argues in her answer brief, Allstate\u2019s cited authority \u201cdo[es] not stand for the proposition for which [it is] cited.\u201d See also Guest, 2009-NMCA-037, \u00b6\u00b6 26-27, 145 N.M. 797, 205 P.3d 844. The authorities cited by Allstate rely on particular language in the contracts at issue to determine the scope of the insurer\u2019s duty; they do not explore the conditions under which an insurer satisfies its contractual obligations in an open-ended contract to defend and indemnify. Those authorities stand for the proposition that, in the context of defense and indemnification, the terms of the particular contract control the extent of the indemnitor\u2019s obligation, an unremarkable proposition at best.\n{32} In Teigen, for example, the Wisconsin Supreme Court focused on language in the insurance contract which specifically stated that the insurer \u201cshall not be obligated \u2018to defend any suit after the applicable limit of the company\u2019s liability has been exhausted by payment of judgments or settlements.\u2019 \u201d Teigen, 367 N.W.2d at 810 (emphasis omitted); see also Aetna Cas. & Sur. Co., 3 Ill.Dec. 371, 358 N.E.2d at 919 (focusing on policy limits as defined in the automobile liability insurance contract to determine the exposure of the insurer). The presence of this contractual language makes Teigen inapposite to the present case, in which Allstate simply agreed \u201cto provide to [Guest] a defense and indemnification\u201d without any further elaboration or condition.\n{33} We adhere to the rule that, absent contractual language to the contrary, an agreement to defend and indemnify extends to the conclusion of the litigation. See Steven Plitt et al., Insurer\u2019s Duty to Defend: Nature, Commencement, and Termination, in 14 Couch on Insurance 3d \u00a7 200:47 (Supp. 2007) (\u201cGenerally, an insurer\u2019s duty to defend arises out' of a potentially covered claim and lasts until the conclusion of the underlying lawsuit, or until it has been shown that there is no potential for coverage. Wben multiple alternative causes of action are stated, the duty continues until every covered claim is eliminated.\u201d (footnotes omitted)); \u00a7 200:49 (\u201cAn insurer\u2019s duty to defend continues until final resolution of the covered claims. In other words, the duty to defend continues through the appellate process until it can be concluded as a matter of law that there is no basis on which the insurer may be obligated to indemnify the insured.\u201d (footnote omitted)).\n{34} Without clear authority for its position, Allstate essentially asks this Court to imply a term to the contract that would make it more like a formal policy for liability insurance, thereby limiting Allstate\u2019s obligation to Guest. We are no more willing to imply a right to settle without Guest\u2019s consent than we would be to imply any other term limiting Allstate\u2019s obligation to her, such as a policy limit or a punitive damages exemption to the contract. For whatever reason, Allstate placed no limits or conditions on its promise to defend and indemnify Guest, and we will not do so after the fact.\n{35} We find Allstate\u2019s position on this issue particularly troublesome given Guest\u2019s repeated requests for written confirmation of Allstate\u2019s agreement to defend and indemnify her. When Allstate finally did so, it missed the opportunity to define the parameters of its responsibilities. Allstate did not reserve a right to settle the Durhams\u2019 claims against Guest without her consent, nor did it define the terms under which its contractual obligations would be satisfied. In other words, Allstate \u2014 a sophisticated party in the realm of defense and indemnification \u2014 has no one to blame but itself for the situation it now faces. Absent evidence of express contractual language to the contrary, Allstate\u2019s obligations to Guest extend through the end of the litigation \u2014 whether as a result of a final judgment or a settlement that is acceptable to Guest.\nWhether Guest obstructed performance of the contract was for the jury to decide.\n{36} Allstate next argues that Guest\u2019s unreasonable behavior obstructed the performance of its contract. See Nat'l Old Line Ins. Co. v. Brown, 107 N.M. 482, 487, 760 P.2d 775, 780 (1988) (\u201cHe who prevents a thing from being done may not avail himself of the nonperformance which he has himself occasioned; * * * the party thus prevented from discharging his part of the obligation is to be treated as though he had performed it.\u201d (quoting Gibbs v. Whelan, 56 N.M. 38, 42-43, 239 P.2d 727, 730 (1952))).\n{37} Responding, Guest quotes from the Court of Appeals\u2019 opinion in this case that she \u201cdid not prevent Allstate from fulfilling its duty to defend.\u201d Guest, 2009-NMCA-037, \u00b6 28, 145 N.M. 797, 205 P.3d 844. She argues that she was \u201cfully within her rights\u201d in choosing not to agree to a settlement that would have forced her to release her claims against the Durhams, Berardinelli, and Allstate.\n{38} Allstate relies upon this Court\u2019s Opinion in Gibbs. In that case, the plaintiff resigned from a steady job after the defendant contacted him and offered him a' salaried position for at least five years doing field work on an as-needed basis. Gibbs, 56 N.M. at 40, 239 P.2d at 728-29. The plaintiff made himself available to work whenever necessary and performed all work that the defendant asked of him. Id. On many occasions, however, the plaintiff did not work at all because the defendant had not lined up any work for him. Id. Eventually, the plaintiff sued to recover unpaid wages, and the trial court ruled in his favor. Id. at 40-41, 239 P.2d at 728-29. On appeal, this Court affirmed, explaining, \u201cThe defendant having voluntarily failed to line up work for the plaintiff to perform, he will not be permitted to deny liability under their agreement.\u201d Id. at 42, 239 P.2d at 730. When a party \u2014 the plaintiff in Gibbs \u2014 is \u201cprevented from discharging his part of [the] obligation, [he] is to be treated as though he had performed it.\u201d Id. at 42-43, 239 P.2d at 730 (internal quotation marks and citation omitted). But Allstate cannot justify identifying itself with the plaintiff in Gibbs.\n{39} Unlike the defendant in Gibbs, Guest did not prevent Allstate from performing its obligations under the contract. Allstate promised to defend and indemnify Guest, and we agree with the Court of Appeals that \u201cAllstate could have satisfied its contract with Guest by representing her.\u201d Guest, 2009-NMCA-037, \u00b6 28, 145 N.M. 797, 205 P.3d 844. Furthermore, as we explain later in this Opinion, the trial court ruled that a fact question existed as to the intended meaning of the terms \u201cdefend and indemnify,\u201d which the jury answered in Guest\u2019s favor. Consequently, we cannot rule as a matter of law that Guest\u2019s refusal to settle prevented Allstate from continuing to provide a defense and indemnification. Had Allstate specified in the contract that it could satisfy its promise to Guest by negotiating a settlement, Gibbs might support its argument. Absent such contractual language, however, we disagree that, as a matter of law, Guest obstructed performance of the contract.\n{40} At oral argument, Allstate raised a slightly different, but related, contention, suggesting that this Court should bar Guest\u2019s recovery, not because she prevented Allstate\u2019s performance, but because her refusal to settle was in bad faith and unreasonable as a matter of law. As evidence, Allstate argued that Guest\u2019s outrageous demand for a signed $100 bill (1) could have resulted in disciplinary sanctions against her and (2) demonstrated that her refusal to settle was motivated solely by her desire to pursue a personal vendetta against the Durhams and Berardinelli. To affirm the verdict, Allstate argues, would condone Guest\u2019s behavior and \u201cencourage litigation for litigation\u2019s sake.\u201d\n{41} To the extent this issue was raised at trial or in the briefing for this appeal, we agree with the trial court that Guest\u2019s reasonableness in refusing to settle was ultimately for the jury to decide. In response to Allstate\u2019s motion for summary judgment, the trial court held that Guest had created a fact question as to the meaning of the terms \u201cdefend and indemnify\u201d as set forth in the contract, which Allstate does not question on appeal. Specifically, at trial Allstate argued that its promise to \u201cdefend and indemnify\u201d Guest was limited to protecting her from liability. Guest, on the other hand, claimed that she understood the contract to be a broader promise to defend her from harm.\n{42} We agree with the trial court. Because of a factual dispute concerning the definition of these critical terms, Guest\u2019s reasonableness under the contract could only be evaluated in light of the evidence of what the parties intended those terms to mean. See C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 509, 817 P.2d 238, 243 (1991) (\u201cThe question of interpretation of language and conduct (the question of the meaning to be given the words of the contract) is a question of fact where that meaning depends on reasonable but conflicting inferences to be drawn from events occurring or circumstances existing before, during, or after negotiation of the contract.\u201d). After hearing the evidence and being properly instructed, the jury decided this issue in Guest\u2019s favor. Regardless of whether Guest\u2019s conduct may have been sanctionable \u2014 a question far beyond the scope of this appeal- \u2014 the reasonableness of her conduct was properly submitted to the jury under the circumstances of this case.\nPublic policy does not require reversal on liability.\n{43} In its last argument for reversal, Allstate asserts that a ruling in Guest\u2019s favor violates public policy. Allstate argues that affirming the verdict would be contrary to the venerable principle that New Mexico law favors the settlement of lawsuits. Specifically, a ruling in Guest\u2019s favor will create \u201can interminable and untenable indemnity obligation\u201d (emphasis omitted) and \u201cgrant[] an indemnitee the right to unreasonably drag its indemnitor into a quagmire of protracted litigation.\u201d\n{44} We have often repeated the notion that the law favors settlement of cases. See, e.g., Bogle v. Potter, 68 N.M. 239, 246, 360 P.2d 650, 655 (1961). Such a general statement of policy, however, is of little help to Allstate here. Unless Guest acted in bad faith \u2014 -a conclusion rejected by the jury\u2014 Allstate is obligated to perform under a contract in which it retained no unilateral authority to withdraw its defense before the end of the litigation.\n{45} Allstate also urges reversal because this Court, being responsible for drafting and enforcing the rules of professional responsibility for the state\u2019s legal profession, should not reward \u201cvexatious litigation and \u2018shocking\u2019 settlement demands.\u201d We acknowledge that aspects of the settlement negotiations were highly unorthodox, and we do not condone Guest\u2019s behavior in this lawsuit. However, this case is not before us as a disciplinary matter. The jury evaluated the conduct of both parties, and in the jury\u2019s eyes Allstate \u2014 not Guest \u2014 came up wanting. Allstate does not question the jury\u2019s verdict in this appeal, and we reject Allstate\u2019s invitation to transform this proceeding into a referendum on Guest\u2019s behavior.\nHaving proven liability, Guest nonetheless may not recover unearned attorney fees.\n{46} The Court of Appeals held that Guest could not recover future earnings as a matter of law because her relationship with Allstate was at-will. Inasmuch as the Court of Appeals\u2019 opinion could be read to preclude future earnings resulting from any at-will relationship, we agree with Guest that the Court may have spoken too broadly. However, limited to the facts of this case, where an attorney is suing her former client and seeking damages for legal work not performed, we agree with the Court of Appeals that Guest\u2019s future earnings are not recoverable. See Guest, 2009-NMCA-037, \u00b6 56, 145 N.M. 797, 205 P.3d 844 (\u201cWe hold that, based on the specific circumstances presented by this case, future wages or earnings that might have arisen from the relationship that was terminable at will are not recoverable.\u201d (emphasis added)).\nAttorneys may recover only for services actually rendered.\n{47} Nearly a century ago, this Court stated, \u201c[t]he relation of attorney and client is one of the highest trust and confidence, requiring the attorney to observe the utmost good faith towards his client, and not to allow his private interests to conflict with those of his client.\u201d In re Barth, 26 N.M. 93, 126, 189 P. 499, 510 (1920). Ever mindful that worldly pressures and changing conditions may obscure or erode this ideal, this Court, acting as the sole arbiter of a self-governing profession, must ensure that we do not lose sight of every attorney\u2019s essential function: to provide competent, diligent, and loyal representation to every client. See Rule 16-101 NMRA; Rule 16-103 NMRA; Rule 16-107 NMRA committee cmt. [1], These values are our lifeblood, critical to our professional survival. Without them, we put at risk the trust and respect of the public and of our clients \u2014 past, present, and future.\n{48} At the foundation of every attorney-client relationship is the client\u2019s unqualified right to discharge an attorney at any time, with or without cause. Rule 16-116 NMRA committee cmt. [4]; see also 23 Richard A. Lord, Williston on Contracts \u00a7 62:6, at 301-02 (2002) (\u201cMost courts have consistently held that the right of the client to dismiss an attorney is an absolute and essential incident to the attorney-client relationship, since the association is predicated upon mutual trust and respect. This right is unconditional, and may be exercised at any time, whether or not there is just cause for the dismissal.\u201d (footnote omitted)). As the Supreme Court of Minnesota aptly explained, a client\nshould not be forced against his will to employ an attorney upon whose judgment he does not wish to depend and whose advice he feels he cannot follow with confidence. Since the relationship of attorney and client is a confidential one, it must of necessity be based on mutual trust. Forcing such [a] relationship upon the client against his will would not be conducive to an atmosphere of reciprocal confidence.\nState ex rel. Seifert, Johnson & Hand v. Smith, 260 Minn. 405, 110 N.W.2d 159, 167 (1961); see also Rule 16-107 committee cmt. [1] (\u201cLoyalty and independent judgment are essential elements in the lawyer\u2019s relationship to a client.\u201d); Rule 16-106 NMRA committee cmt. [4] (\u201c[T]rust ... is the hallmark of the client-lawyer relationship.\u201d).\n{49} A necessary corollary of the client\u2019s power to discharge an attorney at any time is the general rule that an attorney may collect fees only for services actually rendered, either under contract or principles of quantum meruit. See 1 Robert L. Rossi, Attorney\u2019s Fees \u00a7 3:10, at 3-26 (3d ed. 2002) (\u201cThe clear trend, in both fixed-fee and contingency fee cases, is to not allow recovery for the contract price but rather to generally limit the recovery of an attorney discharged without cause to the reasonable value of the services rendered prior to discharge.\u201d); see also, e.g., Olsen & Brown v. City of Englewood, 889 P.2d 673, 677 (Colo.1995) (holding that an attorney discharged without cause is entitled only to quantum meruit and may not recover fees for services not rendered); Clegg v. USAgencies Ins. Co., 985 So.2d 781, 784 (La. Ct.App.2008) (where attorney was not given the work that was promised, he is only entitled to receive compensation for work actually performed); cf. In re Winston\u2019s Will, 40 N.M. 348, 354, 59 P.2d 904, 907 (1936) (limiting recovery of discharged attorney to \u201cthe fair proportion of the statutory fee as the services performed bears to the whole services contracted to be performed\u201d).\n{50} This rule holds true in a variety of circumstances, irrespective of the reasons for terminating the attorney-client relationship. See, e.g., Calderon v. Navarette, 111 N.M. 1, 2, 800 P.2d 1058, 1059 (1990) (\u201cAs a general rule an attorney may recover the reasonable value of services rendered under a void contract. However, recovery is grounded on a quantum meruit theory, not on the terms of the voided contract.\u201d); see also United States v. 36.06 Acres of Land, 70 F.Supp.2d 1272, 1276-77 (D.N.M.1999) (barring full recovery of contingency fee and otherwise limiting recovery to quantum meruit after attorney withdrew from representation); Cato v. Ark. Mun. League Mun. Health Benefit Fund, 285 Ark. 419, 688 S.W.2d 720, 723-24 (1985) (holding that an attorney was entitled to quantum meruit after the client settled without the attorney\u2019s knowledge); Ambrose v. Detroit Edison Co., 65 Mich.App. 484, 237 N.W.2d 520, 524 (1975) (holding that an attorney working under a contingency-fee agreement was entitled only to quantum meruit for work already done when dismissed); Wilson v. Brooklyn Trust Co., 24 N.Y.S.2d 161, 161 (App. Term 1940) (holding that an attorney may recover the value of his services rendered up to the time of the client\u2019s death).\n{51} Similarly, our Rules of Professional Conduct require an attorney to return any unearned portion of a retainer when an attorney-client relationship has been terminated. Rule 16-116(D) (\u201cUpon termination of representation, a lawyer shall ... refund[ ] any advance payment of fee or expense that has not been earned ....\u201d); see also In re Yalkut, 2008-NMSC-009, \u00b6 26, 143 N.M. 387, 176 P.3d 1119 (per curiam) (\u201c[A] flat fee for future legal services cannot be considered as earned when paid and must be held in trust until earned.\u201d). While there are some exceptions to the general rule, especially concerning in-house counsel serving under an employment contract, they are not relevant here. See, e.g., Crews v. Buckman Labs. Int\u2019l, Inc., 78 S.W.3d 852, 861-62 (Tenn.2002) (holding that an attorney acting as in-house counsel to a corporation may recover damages (e.g. unearned wages) for retaliatory discharge).\n{52} Holding a client liable for work not performed undermines the trust essential to the attorney-client relationship. Although no New Mexico cases are on point, courts in other jurisdictions have relied on this principle in refusing to allow attorneys to collect unearned fees from their clients. For example, in Olsen & Brown v. City of Englewood 889 P.2d 673, 677 (Colo.1995) (en banc), the Colorado Supreme Court held that a discharged attorney could not recover fees for work that he was promised but that he never performed. The court noted that as an attorney, the plaintiff owed the highest fiduciary duty to his client; if the attorney were allowed to collect an unearned fee, the client, in effect, would be punished for exercising its right to terminate. Id. at 675-77; see also Clegg, 985 So.2d at 784 (denying recovery of fees for work not performed because \u201can attorney may not force his continued representation [on] a client\u201d (alteration in original) (internal quotation marks and citation omitted)).\n{53} Guest argues that these cases and authorities are inapposite because they uniformly involve an attorney suing a client for breach of the professional services contract itself, whereas she is suing for breach of a contract for insurance, not employment. Guest did not sue Allstate for wrongfully discharging her; she sued Allstate for breach of Allstate\u2019s contract to defend and indemnify her, an obligation independent of her former retention as Allstate\u2019s attorney. According to Guest, all the evidence presented at trial demonstrates that, but for Allstate\u2019s breach, she would have continued working for Allstate indefinitely. She was happy representing Allstate, and Allstate was satisfied with her performance. Allstate even tried to send her new cases after this lawsuit was pending, which Guest \u2014 not Allstate \u2014 put an end to. Consequently, Guest insists that she is entitled to the fees she would have earned from Allstate far into the future \u2014 ten years as claimed at trial \u2014 had Allstate not breached its contract to defend and indemnify her.\n{54} We acknowledge that Guest\u2019s argument has some force. In another context, we might consider whether an employee in an at-will relationship (other than an attorney-client relationship) may recover future earnings for breach of a collateral agreement with the employer. However, we are not willing to allow recovery where the underlying relationship is between an attorney and her client, especially where the collateral agreement bears some relationship to her employment.\n{55} The nature of the attorney-client relationship demands that the client retain the power to discharge the attorney at any time. As a corollary, we agree with the corresponding rule that an attorney\u2019s damages must be limited to quantum meruit for services actually rendered, not damages for services anticipated but never provided. To permit Guest to recover unearned fees from Allstate would set a dangerous precedent, potentially conditioning or encumbering a client\u2019s absolute right to discharge an attorney. In our judgment, such a result could tarnish the legal profession. This is too high a price for our profession to pay, no matter how deserving Guest\u2019s position might have appeared to the jury in this case.\n{56} To be clear, we are not announcing a rule that categorically precludes an attorney from recovering future earnings under any circumstances. For example, a victim of personal injury who happens to be an attorney might sue the tortfeasor for damages that include lost earnings, a claim upon which we state no opinion herein. We hold only that under circumstances such as these, where a contract arising out of the attorney-client employment relationship gives rise to a claim for breach that effectively negates the continued viability of that relationship, the attorney cannot recover fees for unearned services.\n{57} Guest argues in the alternative that an award of future earnings may be predicated on her separate claims for prima facie tort and breach of the duty of good faith and fair dealing. Because these claims arose out of the same circumstances as her contract claim' \u2014 her employment relationship with Allstate \u2014 our reasoning applies regardless of the theory of liability.\n{58} Turning to the damages in this case, the only evidence supporting the jury\u2019s $1,842,900 compensatory award was Guest\u2019s estimate of her future earnings \u2014 which we hold are barred as a matter of law \u2014 and the cost of defending herself in the underlying Durham lawsuit, which we leave unaltered in this Opinion. At trial, Guest did not present evidence of any outstanding fees that Allstate owed to her for work already performed. Consequently, we limit Guest\u2019s compensatory damages to the amount supported by the evidence for out-of-pocket expenses that Guest incurred in defending herself in the Durham lawsuit up to the time of the trial in this case: a total of $73,873. We add to that figure Guest\u2019s projection of the total cost of her future appeals related to the Durham litigation in the amount of $50,000.\nThe contract to defend and indemnify Guest is an insurance contract.\n{59} In her final point of appeal, Guest argues that the Court of Appeals erred in holding that her defense and indemnification agreement with Allstate is not an insurance contract. She asks this Court to hold as a matter of law that the agreement meets the statutory definition of insurance and to remand the case so that she can present argument and evidence that she is entitled to attorney fees under statute or the common law. See NMSA 1978, \u00a7 39-2-1 (1977) (\u201cIn any action where an insured prevails against an insurer who has not paid a claim on any type of first party coverage, the insured person may be awarded reasonable attorney\u2019s fees and costs of the action upon a finding by the court that the insurer acted unreasonably in failing to pay the claim.\u201d); \u00a7 59A-16-30(B) (1990) (allowing the trial court to award attorneys fees for a willful violation of the Unfair Insurance Practices Act); see also Lieber v. ITT Hartford Ins. Ctr., Inc., 15 P.3d 1030, 1037 (Utah 2000) (stating that under Utah common law, \u201c[attorney fees may be awarded where a breach of the implied covenant of good faith and fair dealing, inherent in every insurance contract, has occurred\u201d).\n{60} Guest asserts that the contract in this case fits New Mexico\u2019s statutory definition of insurance. See NMSA 1978, \u00a7 59A-1-5 (1984) (\u201c\u2018Insurance\u2019 is a contract whereby one undertakes to pay or indemnify another as to loss from certain specified contingencies or perils, or to pay or grant a specified amount or determinable benefit in connection with ascertainable risk contingencies, or to act as surety.\u201d). She maintains that the Court of Appeals wrongly held that the contract in this ease is not an insurance contract by \u201cgrafting\u201d several requirements onto the definition of insurance that were not included by the Legislature. See Guest, 2009-NMCA-037, \u00b6\u00b6 61-63, 145 N.M. 797, 205 P.3d 844 (holding that the contract is not an insurance contract because it does not involve risk distribution or unequal bargaining power). We agree that the Court of Appeals strayed too far from the statutory definition in its analysis.\n{61} We first note that the prior definition of insurance, dating back to 1925, see 1925 N.M. Laws, ch. 135, \u00a7 1, was somewhat circular and formalistic, see NMSA 1978, \u00a7 59-1-1 (1925, as amended through 1984) (defining \u201cinsurance\u201d as \u201cany form of insurance, bond or indemnity contract, the issuance of which is legal in the state of New Mexico\u201d). If the current statute continued to define insurance, more or less, as insurance, we might agree with the Court of Appeals\u2019 analysis, which looked to the common law for those features historically used to determine whether a particular contract is a contract of insurance. See Guest, 2009-NMCA-037, \u00b6\u00b6 60-63,145 N.M. 797, 205 P.3d 844.\n{62} But the current definition, adopted by the Legislature as part of the Insurance Code in 1984, articulates a functional approach, looking to the substance of the contract rather than to its label. See \u00a7 59A-1-5. The Legislature directed and focused our inquiry by specifying the controlling aspects of a contract that make it one of insurance. This definition makes no mention of risk distribution, risk sharing, or unequal bargaining power, the traditional features of insurance on which the Court of Appeals relied to determine that the contract in this case was not an insurance contract. See Guest, 2009-NMCA-037, \u00b6\u00b6 60-63, 145 N.M. 797, 205 P.3d 844. Rather, for this contract to be one of insurance, the definition simply requires that Allstate agreed to \u201cindemnify [Guest] as to loss from certain specified contingencies or perils.\u201d Section 59A-1-5. That is precisely what Allstate agreed to do \u2014 to pay a judgment if the Durhams prevailed in their claims against Guest.\n{63} Allstate argues, however, that the statutory definition of insurance, if applied literally, would encompass an array of contracts which are not ordinarily considered to be insurance according to the commonly understood meaning of the term. See 1 Erie Mills Holmes & Mark S. Rhodes, Appleman on Insurance, 2d \u00a7 1.3, at 16 (1996) (\u201cIn most states where \u2018insurance\u2019 (or the term \u2018contract of insurance\u2019) is defined by statute, the definitions are usually brief, cryptic and unsatisfactory.....Such overbroad definitions are not useful and may cause many commercial relationships erroneously to constitute insurance.\u201d). We agree with Allstate in principle. To characterize as insurance every contract that contains an indemnity agreement of some sort would bring a multitude of everyday commercial contracts under the purview of the Insurance Code, NMSA 1978, \u00a7\u00a7 59A-1-1 to 59A-59-4 (1984, as amended), and obligate the parties to comply with a host of statutory requirements and regulations. See, e.g., \u00a7 59A-5-10 (requiring any person who \u201ctransacts] insurance\u201d to obtain a certificate of authority from the superintendent of insurance). We agree that the Legislature did not intend such an overly broad result. Consequently, we will look beyond the plain language of the statute to clarify its intended scope.\n{64} As evidenced by our insurance statute, the concept of indemnity is central to any definition, but a promise to indemnify, by itself, is not enough. See 1 Steven Plitt et al., Couch on Insurance Sd \u00a7 1:7, at 1-19 (rev. ed. 2009) (\u201cWhile a policy of insurance ... is essentially a contract of indemnity, not all contracts of indemnity are insurance contracts; rather, an insurance contract is merely one type of indemnity contract.\u201d). For example, we recently considered an indemnity provision buried in the fine print of an equipment rental contract to determine whether the promise of indemnity was void as against public policy. See United Rentals Nw., Inc. v. Yearout Mech, Inc., 2010-NMSC-030, \u00b6\u00b6 1, 8, 148 N.M. 426, 237 P.3d 728 (holding that an equipment rental contract is a construction contract such that the indemnity provision was unenforceable). Experience teaches that this kind of indemnity clause is common in the commercial setting and is often a boiler-plate feature of a contract of adhesion. Not even Guest argues that such a provision, clearly incidental to the primary aim of the contract, should subject the parties to the rigors of the Insurance Code. See Castleberry v. Goldome Credit Corp., 418 F.3d 1267, 1273 (11th Cir.2005) (\u201cWhen assumption of risk is only collateral to a contract that has a principal purpose other than risk shifting, the contract is not a contract of insurance.\u201d).\n{65} Our own caselaw provides an appropriate limiting principle to what would otherwise be an overly inclusive definition of insurance. In New Mexico Life Insurance Guaranty Ass\u2019n v. Moore, 93 N.M. 47, 48, 596 P.2d 260, 261 (1979), this Court was asked to determine if a group of health maintenance organizations (HMOs) were \u201cengaged in \u2018health insurance\u2019 so as to subject them to New Mexico\u2019s Life Insurance Guaranty Act.\u201d Moore held that the HMOs were not insurers under the Guaranty Act because their \u201c \u2018principal object and purpose\u2019 \u201d was to provide member-paid services \u2014 not to provide indemnity. 93 N.M. at 50-51, 596 P.2d at 263-64.\n{66} The \u201cprincipal object and purpose\u201d test was first announced in Jordan v. Group Health Ass\u2019n, 107 F.2d 239 (D.C.Cir.1939), and as in Moore the test was used to determine whether a group health plan was insurance or a service contract. The test directs a court to consider \u201cnot ... whether risk is involved or assumed, but ... whether that or something else to which it is related in the particular plan is its principal object and purpose.\u2019\u201d Id. at 248 (emphasis added). This approach has been followed in several other jurisdictions to determine whether particular contracts constitute insurance. See, e.g., Truta v. Avis Rent A Car Sys., Inc., 193 Cal.App.3d 802, 238 Cal.Rptr. 806, 812-13 (1987) (holding that the collision damage waiver provision in an automobile rental contract did not constitute insurance because the principal object and purpose of the contract was automobile rental), superseded by statute as stated in Schnall v. Hertz Corp., 78 Cal. App.4th 1144, 93 Cal.Rptr.2d 439 (2000); Kinkaid v. John Morrell & Co., 321 F.Supp.2d 1090, 1100 (N.D.Iowa 2004) (holding that a provision in a contract for the sale of hogs deducting a small percentage of the sale price in exchange for the assumption of the risk of the death of the hogs after their purchase was not insurance because the provision was incidental to the primary object and purpose of the contract); Allen v. Burnet Realty, LLC, 784 N.W.2d 84, 89 (Minn. Ct.App.2010) (holding that an indemnification plan offered by a realty company to its associates was not insurance because it was merely part of a contract that had the principal object and purpose of selling real estate).\n{67} As one treatise explains the application of the test, \u201c[i]n the final analysis, many analysts will ... ask one question: What is the principal object of the contract? Is it indemnity, or is it something else? If the principal object of the contract is indemnity, the contract constitutes \u2018insurance\u2019 and is therefore within the scope of state regulation.\u201d Robert H. Jerry, II, 1 New Appleman on Insurance Law Library Edition \u00a7 1.03[3][b], at 1-27 to -28 (Jeffery E. Thomas & Francis J. Mootz, III eds., 2009). We find this analysis persuasive \u2014 especially given the emphasis on indemnity in our statutory definition of insurance.\n{68} We are persuaded that this contract between Allstate and Guest is the type that the Legislature intended to characterize as insurance, even though, as Allstate points out, it lacks an insurance contract\u2019s formal characteristic of adhesion and its components of paid premiums, a formal policy, and issued claims. When Allstate agreed to defend and indemnify Guest, it clearly assumed the risk of her losses resulting from the Durham lawsuit. More importantly, the promise to defend and indemnify her was not a collateral agreement intended to induce Guest to enter into a larger contract with Allstate. Guest\u2019s defense and indemnification was the exclusive purpose of the contract. This contract meets our statutory definition of insurance because its \u201cprincipal object and purpose\u201d is to indemnify Guest in the event of an adverse judgment in the Durham litigation.\n{69} Under these circumstances \u2014 where the only purpose of this agreement was to shift Guest\u2019s risk to Allstate in the event she became liable to the Durhams \u2014 we believe that the Legislature intended its definition of insurance to apply literally. When an entity such as Allstate \u2014 no stranger to the requirements of the Insurance Code \u2014 enters into an agreement with the sole purpose of assuming the risk of another party, it is providing insurance.\n{70} 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\u2019s legal theories for the recovery of her fees have merit and to consider the evidence accordingly-\n{71} As a final matter, Allstate does not challenge and we do not disturb the jury\u2019s 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\u2019s 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 Opinion.\nCONCLUSION\n{72} We affirm the Court of Appeals with respect to Allstate\u2019s liability for breach of contract, and we affirm on other grounds its denial of Guest\u2019s unearned fees. We reverse the Court of Appeals\u2019 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.\n{73} IT IS SO ORDERED.\nWE CONCUR: CHARLES W. DANIELS, Chief Justice, and PETRA JIMENEZ MAES, Justice.\nEDWARD L. CH\u00c1VEZ, Justice (dissenting).\nPATRICIO M. SERNA, Justice (joining dissent).\n. Guest also briefed and argued several issues related to our caselaw concerning the availability of consequential damages in a claim for breach of contract, including the continued viability of the so-called \"tacit agreement\u201d rule of foreseeability discussed by the Court of Appeals in this case. Guest, 2009-NMCA-037, \u00b6 153, 145 N.M. 797, 205 P.3d 844; see also Camino Real Mobile Home Park P'ship v. Wolfe, 119 N.M. 436, 446, 891 P.2d 1190, 1200 (1995) (adopting the \"tacit agreement\u201d rule of foreseeability). We do not reach these arguments because we decide this matter on other grounds.",
        "type": "majority",
        "author": "BOSSON, Justice."
      },
      {
        "text": "CH\u00c1VEZ, Justice,\ndissenting.\n{74} It is undisputed that Allstate obtained the Durhams\u2019 offer to dismiss Guest from the lawsuit with prejudice, without her having to contribute a single penny, and without compromising whatever claim(s) Guest believed she had against the Durhams and their attorneys. Having secured this promise, there simply was nothing more for Allstate to defend against or indemnify but for the additional undisputed fact that Guest refused to accept the Durhams\u2019 offer. Because Allstate reasonably fulfilled its gratuitous promise to Guest, I respectfully dissent.\n{75} The sum total of Allstate\u2019s gratuitous promise to Guest was as follows: \u201cAllstate is willing to provide to you a defense and indemnification. Indemnification will not be provided for any ultra vires acts, which is consistent with the original defense provided to you.\u201d The majority acknowledges that this promise was not a policy of insurance, a premium was not paid, a formal claim on a policy was not made, and this was not a contract of adhesion. Majority op. \u00b6 67. However, despite clear evidence that this was an isolated, case specific promise to indemnify, made after the lawsuit was filed, the majority concludes the promise was an insurance contract allowing Guest to pursue attorney fees under Utah common law or the following statutes.\nSee NMSA 1978, \u00a7 39-2-1 (1977) (\u201cIn any action where an insured prevails against an insurer who has not paid a claim on any type of first party coverage, the insured person may be awarded reasonable attorney\u2019s fees and costs of the action upon a finding by the court that the insurer acted unreasonably in failing to pay the claim.\u201d); \u00a7 59A-16-30(B) (1990) (allowing the trial court to award attorney\u2019s fees for a willful violation of the Unfair Insurance Practices Act); see also Lieber v. ITT Hartford Ins. Center, Inc., 15 P.3d 1030, 1037 (Utah 2000) (stating that under Utah common law, \u201c[attorney fees may be awarded where a breach of the implied covenant of good faith and fair dealing, inherent in every insurance contract, has occurred\u201d).\nMajority op. \u00b6 58. I agree with the Court of Appeals\u2019 logical conclusion, based on its reasonable risk distribution analysis, that the promise was not an insurance contract. See Guest v. Allstate Ins. Co., 2009-NMCA-037, \u00b6\u00b6 59-65, 145 N.M. 797, 205 P.3d 844. In addition, it seems clear from reading the Insurance Code as a whole that the Legislature was contemplating more than an isolated indemnification agreement in defining \u201cinsurance contract.\u201d Reference is made to insurance policies throughout the Insurance Code. See, e.g., NMSA 1978, \u00a7 59A-16-20 (1984) (amended 1994); NMSA 1978, \u00a7 59A-18-2 (1984); NMSA 1978, \u00a7 59A-19-1 (1984); and other statutory citations too numerous to list. NMSA 1978, Section 39-2-1 (1977) refers to first party coverages. NMSA 1978, Section 59A-16-30 (1990) limits itself to Article 16 insurance policies and practices.\n{76} Even more disquieting than the majority\u2019s conclusion that Allstate\u2019s gratuitous promise to indemnify is an insurance contract is, having labeled it an insurance contract, the majority refuses to interpret the promise using reasonable insurance contract principles. For example, regarding a duty to settle under an insurance contract, we have stated that \u201c[a] liability insurance company has a duty to timely investigate and fairly evaluate the claim against its insured, and to accept reasonable settlement offers within policy limits.\u201d UJI 13-1704 NMRA. When discussing a good-faith obligation to settle, we have said that \u201cgood faith does impose upon the insurer the duty to settle whenever practicable.\u201d Dairyland Ins. Co. v. Herman, 1998-NMSC-005, \u00b6 13, 124 N.M. 624, 954 P.2d 56. \u201cThe insurer\u2019s good-faith evaluation of the costs and benefits of settlement is generally accorded deference.\u201d Id. \u00b6 14. It seems clear from our precedent that if a claimant makes a reasonable offer which allows the insurer to eliminate any risk that the insured will have to pay money out of his or her own pocket, the insurance company must accept the offer and pay it. Id. \u00b6\u00b6 14, 15. We have also made it clear that \u201c[t]he obligation to deal fairly and honestly rests equally upon the insurer and the insured.\u201d Modisette v. Found Reserve Ins. Co., 77 N.M. 661, 666, 427 P.2d 21, 25 (1967).\n{77} Instead of incorporating these well-established principles into what they conclude is an insurance contract, the majority gives Allstate\u2019s gratuitous promise the most expansive interpretation imaginable. Under the majority analysis, Allstate\u2019s isolated promise to indemnify means that Allstate has to win on the merits at all costs, and if it fails to win after exhausting all trial and appellate court arguments, it must pay all damages, attorney fees, and costs on Guest\u2019s behalf. I do not agree with this broad interpretation of Allstate\u2019s gratuitous promise because it is unreasonable and antithetical to the aforementioned New Mexico insurance jurisprudence. Allstate should have been able to conclude the litigation as long as Guest did not have to pay any money or give up her potential claim against the Durhams and their attorneys. This is precisely what would have happened except for the fact that Guest obstructed the settlement.\n{78} Allstate\u2019s attorney sent a letter dated November 19, 2004 to Guest\u2019s attorney, Faith Reyes. The letter reads:\nDear Ms. Reyes:\nI received a telephone call from David Berardinelli concerning settlement of this matter. Mr. Berardinelli stated that he would have no objection to including Suzanne Guest on the form of release that I had originally prepared. Enclosed please find a copy of my draft settlement agreement and release of all claims which I had originally forwarded to Mr. Berardinelli months ago. I could insert Suzanne Guest into this document as a released party and also add a sentence that no money is being paid on her behalf.\nMr. Berardinelli suggested that in the form of the motion and order of dismissal of these claims, that he would not object to language whereby Suzanne Guest is preserving her claim against the Durhams and is not waiving any claim that she may have against Ms. McLean or Mr. Berardinelli. Does Suzanne want to be a part of this release? I had previously made this proposal to Mr. Royce which was rejected. Does Suzanne want to reconsider?\nPlease let me know as soon as possible her position.\n{79} These terms were stated on the record during a January 28, 2005 hearing to compel settlement. Although Guest continued to refuse to be included in the settlement, Berardinelli acknowledged that, for all practical purposes, if he dismissed Allstate, he was dismissing their agent. While he discussed the possibility of keeping his claim against Guest alive, months earlier he agreed to release her. As he explained to the judge:\nMy clients want this case over with. They are willing to accept the $35,000 as full payment of all their claims against Allstate and its agents. My real problem is that I don\u2019t think we can settle with Allstate as the principal, and not effectively release all of the agents who are acting within the course and scope of their duties for Allstate in the course of this action. And I brought that up with Mr. Simone [Allstate\u2019s lawyer], and I told him \u2014 we had gone back and forth and back and forth on a form of release. I finally told him, \u201cMr. Simone, I really don\u2019t think there\u2019s any effective way for us to save our claims against Suzanne Guest, not that we want to, if we\u2019re giving you a full and complete release for everything that you\u2019re responsible for either derivatively or directly. Therefore, we want to dismiss this case pursuant to the settlement.\u201d\nAlong with dismissing the lawsuit against both Allstate and Guest, Berardinelli made clear both his and his client\u2019s willingness to stipulate that Guest \u201cdid not pay any monies, and we\u2019re not asking her for a release.\u201d Seemingly baffled by Guest\u2019s refusal to settle under these terms, the court inquired of her attorney how it is that Guest is prejudiced \u201cif she doesn\u2019t have to sign a release.\u201d In response, Guest\u2019s attorney stated, \u201cThe point is, Judge, that she was brought in as a Defendant to this case. She does not want to be a part of the settlement. She can either be dismissed with prejudice, or we can continue this litigation and file \u2014 .\u201d\n{80} The judge followed up with this question: \u201cBut isn\u2019t the reason she doesn\u2019t want to be part of a settlement because she\u2019d be concerned that that would take away her right to sue? And I think what the Plaintiffs are saying is no.\u201d At this point, the reason for Guest\u2019s refusal to settle was stated by her lawyer. \u201cNot solely, Judge, not solely. Yes, she wants a right to sue. She also wants a judgment of this Court dismissing her with prejudice on the merits; not because she\u2019s a party to a settlement.\u201d Exasperated, the court finally denied the motion to compel the settlement, stating \u201cI don\u2019t think you\u2019ve got a settlement. It\u2019s just too crazy \u2014 well, I won\u2019t comment any further.\u201d\n{81} Allstate clearly positioned the case to eliminate any risk that Guest would have to (1) pay any money out of her pocket as a result of the pending litigation, or (2) give up her potential lawsuit against the plaintiffs and their attorneys. The proposed release and the order dismissing the case against Guest with prejudice would have included specific language noting that Guest did not pay any money for the settlement and no money was being paid on her behalf. The release also would have contained specific language stating that the claims were disputed and that Guest was not admitting liability. Securing a dismissal of the case against Guest, with prejudice, without her having to pay a single penny, with a statement that she did not contribute to the settlement and the settlement was not an admission of any liability, but still preserving her right to sue was a masterful fulfillment of Allstate\u2019s promise to defend and indemnify. It should be clearly noted that Allstate made a gratuitous promise to defend and indemnify Guest, not a promise to prosecute Guest\u2019s claim against the Durhams and their attorneys. Guest remained at liberty to sue for what she thought was a clear liability case against the Durhams and their attorneys. She could have pursued her lawsuit without exposing herself to liability or Allstate to additional liability and unnecessary expense.\n{82} Guest\u2019s reference, during the January hearing, to a Rule 1-041 NMRA dismissal with prejudice on the merits, must have been a reference to a Rule 1-041(B) dismissal. Under this provision, assuming the action is tried to the court without a jury, after the plaintiff rests, the defendant may seek a dismissal of the case on the ground that the plaintiff is not entitled to relief based on the evidence and law. In this case, Allstate could not guarantee a victory on the merits.\n{83} Guest obstructed Allstate from performing its obligation and should not be able to sue claiming breach. See Nat\u2019l Old Line Ins. Co. v. Brown, 107 N.M. 482, 487, 760 P.2d 775, 780 (1988). A party to a contract who prevents the performance by the other party to the contract may not sue for breach of performance. Smith v. McKee, 116 N.M. 34, 37, 859 P.2d 1061, 1064 (1993). These are important principles overlooked in the majority Opinion. I would find for Allstate as a matter of law.\n{84} For the foregoing reasons, I respectfully dissent.\nI CONCUR: PATRICIO M. SERNA, Justice.\n. If Utah common law is relevant, then perhaps we should analyze what constitutes an insurance contract under Utah law. However, I fail to see how Utah common law is at all relevant. In New Mexico we follow the American rule, which provides that, in the absence of statute, court rule, or contractual agreement, the prevailing party will not normally receive attorney fees. New Mexico Right to Choose/NARAL v. Johnson, 1999-NMSC-028, 127 N.M. 654, 986 P.2d 450; Schroeder v. Mem\u2019l Med. Ctr., 1997-NMSC-046, \u00b6 6, 123 N.M. 719, 945 P.2d 449. Guest does not claim that she is entitled to attorney fees based on contract or court rule.",
        "type": "dissent",
        "author": "CH\u00c1VEZ, Justice,"
      }
    ],
    "attorneys": [
      "Modrall, Sperling, Roehl, Harris & Sisk, P.A., Jennifer A. Noya, Albuquerque, NM, Kirkland & Ellis, L.L.P., Richard C. Godfrey, Andrew A. Kassof, Chicago, IL, for Petitioner/Respondent.",
      "Tucker Law Firm, P.C., Steven L. Tucker, Santa Fe, NM, The Guest Law Firm, P.C., Suzanne Guest, Phoenix, AZ, for Respondents/Petitioners."
    ],
    "corrections": "",
    "head_matter": "2010-NMSC-047\n244 P.3d 342\nSuzanne GUEST and The Guest Law Firm, P.C., Plaintiffs-Respondents/Plaintiffs-Petitioners, v. ALLSTATE INSURANCE COMPANY, Defendant-Petitioner/Defendant-Respondent.\nNos. 31,602, 31,603.\nSupreme Court of New Mexico.\nOct. 25, 2010.\nModrall, Sperling, Roehl, Harris & Sisk, P.A., Jennifer A. Noya, Albuquerque, NM, Kirkland & Ellis, L.L.P., Richard C. Godfrey, Andrew A. Kassof, Chicago, IL, for Petitioner/Respondent.\nTucker Law Firm, P.C., Steven L. Tucker, Santa Fe, NM, The Guest Law Firm, P.C., Suzanne Guest, Phoenix, AZ, for Respondents/Petitioners."
  },
  "file_name": "0074-01",
  "first_page_order": 100,
  "last_page_order": 117
}