Adams v. Explorer Ins. Co.

• Decision Date: 28 February 2003
• Docket Number: No. B154273.,B154273.
• Citation: 132 Cal.Rptr.2d 24,107 Cal.App.4th 438
• Court: California Court of Appeals Court of Appeals
• Parties: Timothy Brian ADAMS, Plaintiff and Appellant, v. EXPLORER INSURANCE COMPANY, Defendant and Respondent.

132 Cal.Rptr.2d 24

107 Cal.App.4th 438

Timothy Brian ADAMS, Plaintiff and Appellant, v. EXPLORER INSURANCE COMPANY, Defendant and Respondent.

No. B154273.

Court of Appeal, Second District, Division 1.

February 28, 2003.

Bleau, Fox & Associates, Thomas P. Bleau, Los Angeles, and Gennady L. Lebedev, Beverly Hills, for Plaintiff and Appellant.

Selman-Breitman, Alan B. Yuter and Meka Moore, Los Angeles, for Defendant and Respondent.

SPENCER, P.J.

INTRODUCTION

In this case, which involves a dispute regarding the effectiveness of a notice of cancellation of an automobile insurance policy due to nonpayment of premiums, plaintiff Timothy Brian Adams appeals from the summary judgment entered in favor of defendant Explorer Insurance Company. We affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND¹

Explorer Insurance Company (Explorer) issued plaintiff a new personal automobile insurance policy, number EBU165202700, with an effective date of December 27, 1998. The declarations page of the policy reveals that the policy was issued for a period of one year. At its inception, the policy listed three vehicles, a 1992 Chevrolet Camaro, a 1988 Chevrolet Blazer and a 1998 Chevrolet Suburban, to which the coverage afforded by the policy applied. The policy provided coverage for bodily injury, property damage and uninsured motorist bodily injury. It also provided comprehensive and collision coverage.

Plaintiffs policy premium was to be paid in nine monthly installments. A billing notice dated January 4, 1999 showed that plaintiffs first monthly installment was due on January 26, 1999. Plaintiff routinely was late in making his payments.

On May 11, 1999, plaintiffs 1992 Camaro was stolen. Plaintiff reported the loss to Explorer.

By July 6, 1999, Explorer had not received plaintiffs June installment. On that day, Explorer issued plaintiff a notice of cancellation. The notice listed the reason for cancellation as nonpayment of premiums and specified the amount due as $288.08. The cancellation was to be effective July 19, 1999 at 12:01 a.m. The notice also contained an offer to "reinstate your policy, without any lapse in coverage, if the amount shown above is mailed to the Explorer Insurance Company and post marked prior to 07/19/99...." Explorer mailed this notice of cancellation to plaintiff on July 7. Plaintiff did not recall seeing the notice of cancellation.

South Coast Auto Insurance Mktg. (South Coast) is an authorized insurance broker and agent for Explorer. On July 13, 1999, plaintiff, through South Coast, submitted an "Endorsement Request" asking Explorer to add to policy EBU165202700 a 1997 GMC C1500 and a 1999 Chevrolet Suburban and to delete plaintiffs 1998 Chevrolet Suburban and 1992 Chevrolet Camaro. Above the signature line of the endorsement request, the following printed statement appears: "I, the undersigned acknowledge and agree that if for any reason my policy is not active, the above endorsement is null and void. In addition, the endorsement being done is subject to acceptance by insurance company(ies) in accordance with their underwriting guidelines." Directly under this printed statement, plaintiff wrote, "I have read and understand the above." His signature followed.

The endorsement request form indicates that the endorsement was "[t]elebound" on July 13, 1999 at 11:25 p.m. A payment due date of July 27, 1999 also was listed.

Johnny Kafieh (Kafieh) was the South Coast sales representative who helped plaintiff with his endorsement request. Kafieh telephoned an Explorer "telebind phone number ... to get a binder number." Kafieh was unable to "zap[ ]" the endorsement request through the computer. According to Kafieh, "[endorsement requests are not zapable." They have to be processed manually. Only new business is "zapable" from South Coast to Explorer via the computer. During his meeting with Kafieh, plaintiff paid South Coast $252. Kafieh could not recall if he told plaintiff that his $252 payment was for an excess policy rather than his endorsement request. Kafieh normally would not have given such an explanation.

On July 15, 1999, Explorer sent plaintiff a "Premium Recap" setting forth a summary of his payments. Plaintiffs total premium was listed as $2,415.39 with an explanation that "[y]our policy change resulted in a premium adjustment of $-442.00 which is included in the `Total Premium' amount shown." The document further noted that plaintiff had paid premiums totaling $1,729.08 and that his unpaid balance was $686.31. The $442 adjustment resulted from the deletion of plaintiffs stolen Camaro.

An amended declarations page effective June 22, 1999 listed plaintiffs 1988 Chevrolet Blazer and 1998 Chevrolet Suburban as the insured vehicles. The amended declaration therefore reflected the deletion of plaintiffs stolen Camaro.

As of July 19, 1999, Explorer had not received plaintiffs delinquent payment. In a "Cancellation Memo" dated July 20, 1999, Explorer advised plaintiff that his automobile insurance policy had been cancelled effective July 19, 1999. The memorandum contained a reinstatement offer that provided, "Subject to company approval, we may reinstate your policy with a lapse in coverage if payment of $186.67 is received by 08/04/99." (Italics added.) The $186.67 listed as due on the cancellation memorandum was $101.41 less than the $288.08 reflected as due on the July 6 notice of cancellation. This difference represented a manual adjustment of the premium. Stated otherwise, it was a credit for a premium payment plaintiff had made for the Camaro before Explorer declared it a total loss.

On August 1, 1999, an Explorer underwriting assistant received plaintiffs July 13, 1999 endorsement request. Learning that plaintiffs policy had been cancelled, the assistant did not process the request. Rather, she made a notation that the changes would have to be processed at a later time if the policy subsequently was reinstated.

In ascertaining the premium amount due, plaintiff always relied on what his mail said. Explorer did not receive a payment from plaintiff by the August 4, 1999 deadline specified in the July 20 cancellation memorandum. Plaintiff therefore remained uninsured.

On August 12, 1999, plaintiff was involved in an automobile accident with an uninsured motorist. He was driving his 1997 GMC at the time. Plaintiff sustained property damage and personal injuries as a result of the accident.

On August 13, 1999, one day after plaintiffs accident and well after the August 4 deadline for reinstating plaintiffs policy with a lapse in coverage, Explorer received plaintiffs premium payment via money order in the amount of $186.67. Plaintiffs payment arrived in an envelope postmarked August 12,1999. A postage meter date of August 2, 1999, which had been imprinted with the postage meter at plaintiffs workplace, also appeared on the envelope. The money order itself bore the handwritten date "8-2-99."

On August 17, 1999, Explorer generated a "Reinstatement Notice," thanking plaintiff for resuming his automobile insurance coverage and reinstating his policy. Explorer reinstated plaintiffs policy effective August 13, 1999 in accordance with its custom and practice of reinstating coverage one day after the postmark date on the envelope containing the payment required for reinstatement. A declarations page generated upon reinstatement continued to list plaintiffs 1988 Chevrolet Blazer and 1998 Chevrolet Suburban as the insured vehicles. It did not reflect the changes made to the policy by virtue of plaintiffs July 13, 1999 endorsement request, in that the endorsement request was not processed by Explorer until August 30, 1999.

After his accident, plaintiff submitted an insurance claim to Explorer under the uninsured motorist provisions of his policy. Explorer denied the claim. Inasmuch as plaintiffs accident occurred after July 19, 1999, when his policy lapsed due to nonpayment of premium, and before August 13, when it was reinstated, Explorer concluded there was no coverage for the accident.

On August 30, 1999, Explorer finally processed plaintiffs July 13 endorsement request. Plaintiffs 1997 GMC and his 1999 Suburban had been effectively insured, however, from July 13, 1999 until the policy was cancelled for nonpayment of premium on July 19.

Following the denial of his insurance claim, plaintiff filed this action seeking compensatory and punitive damages against Explorer. In a first amended complaint filed on May 12, 2000, plaintiff alleged against Explorer causes of action for breach of contract, breach of the covenant of good faith and fair dealing, fraud, and unfair business practices.² Explorer subsequently filed a motion for summary judgment against plaintiff. The trial court granted the motion on July 25, 2001, ruling as follows: "When plaintiff added and deleted two vehicles on July 13, 1999, such constituted an endorsement to his existing policy, regardless that the transmittal used the word `telebound'. Plaintiff obviously did not rely on the alleged comments of the agent, as he ultimately sent in $186 as a late premium. The fact that plaintiff cannot recall receiving the notice of cancellation does not create a triable issue of material fact. [Citation.]" Thereafter, judgment in favor of Explorer and against plaintiff was entered. This appeal followed.

CONTENTIONS

Plaintiff contends triable issues of material fact exist with regard to whether Explorer's July 6, 1999 notice of cancellation was effective and whether a new notice of cancellation should have been issued before coverage for the 1997 GMC could be cancelled.

Plaintiff also contends that Explorer failed to meet its burden of proving that the "new" coverage for the 1997 GMC was cancelled effectively after it was issued.

There is no merit to these contentions. The undisputed evidence discloses that plaintiff had no automobile insurance on the day of his accident. The trial court therefore properly granted...