Allstate Ins. Co. v. Shmitka

• Citation: 90 Cal.Rptr. 399,12 Cal.App.3d 59
• Court: California Court of Appeals
• Decision Date: 19 October 1970
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff and Respondent, v. Richard SHMITKA, Defendant and Appellant. Civ. 35377.

Page 399

90 Cal.Rptr. 399

12 Cal.App.3d 59

ALLSTATE INSURANCE COMPANY, Plaintiff and Respondent, v. Richard SHMITKA, Defendant and Appellant.

Civ. 35377.

Court of Appeal, Second District, Division 4, California.

Oct. 19, 1970.

Braslow & Oria and Jeffrey K. Oria, Sherman Oaks, for defendant and appellant.

Grogan & Hogan and Stephen J. Grogan, Los Angeles, for plaintiff and respondent.

KINGSLEY, Associate Justice.

Defendant appeals from a judgment in favor of an automobile insurance carrier, rendered in a declaratory relief action brought against him by the carrier. For the reasons set forth below, we affirm the judgment.

STATEMENT OF THE FACTS

On December 31, 1966, defendant Richard Shmitka was injured while riding in an automobile owned and operated by his friend Steven Swanson when it collided with another vehicle. Clarence Shmitka, the father of Richard, owned automobile insurance policy 4262415--6--19 issued by respondent Allstate Insurance Company, covering five described automobiles, wherein five insurance extension certificates were issued, each bearing uninsured motorist coverage of $10,000, and each separately paid for. This insurance policy was in full force and effect at the time of the accident and under its terms Richard was entitled to coverage since he resided in his father's household at the time of the accident.

Pursuant to such coverage and the terms of the subject policy, Richard filed a claim against respondent with the American Board of Arbitration as outlined in Section II of the same policy.

Before the arbitrator reached a decision, but after both parties introduced evidence, Allstate Insurance Company filed suit for declaratory relief to determine the extent of the policy coverage under the uninsured motorist section, and further obtained an injunction restraining the arbitration proceedings pending determination of the subject suit.

The trial court found that Allstate Insurance Company did not submit the issue of insurance or the amount of the policy limit to the arbitrator. It further found and held that the maximum coverage available to Richard was $10,000.

Pursuant to such findings, judgment was entered in favor of plaintiff and respondent, Allstate Insurance Company, permanently enjoining the arbitration of uninsured motorist policy limits, declaring that the maximum coverage available to defendant and appellant is $10,000, and dissolving the pending injunction so that the arbitration proceedings between the parties might proceed to a decision not inconsistent with the trial court's determination.

ISSUES ¹

On this appeal, defendant contends: (1) that the five extension certificates entitle him to a cumulative recovery under all such certificates, to a total of $50,000; and (2) that, in any event, the carrier had, prior to the interruption of the arbitration by the preliminary injunction voluntarily submitted the issue of the extent of liability to the arbitrator, thereby barring it from now contending that that issue is not arbitrable.

Defendant contends: (1) that whether or not the issue of extent of coverage had been submitted by it to arbitration was a question of fact as to which the trial court's determination is conclusive; and (2) that, on the merits, it is liable only to the extent of $10,000, if at all.

I

Since a determination in favor of defendant on the second of his contentions as above set out would require a reversal of the judgment, we consider it first. For the reasons hereinafter stated, we affirm the judgment as to that issue.

Ordinarily, '(a)n insurance clause which repeats the language of subdivision (e) of section 11580.2 without material change (the pre-1968 code) requires arbitration solely of the issues relating to liability of the uninsured motorist to the insured, and it excludes therefrom the determination of the amount of money which the insurance company must pay * * *.' (Farmers Ins. Exch. v. Ruiz (1967) 250 Cal.App.2d 741, 744, 59 Cal.Rptr. 13, 16; Commercial Ins. Co. of Newark, New Jersey v. Copeland (1967) 248 Cal.App.2d 561, 564--565, 56 Cal.Rptr. 794; see also Campbell v. Farmers Ins. Exch. (1968) 260 Cal.App.2d 105, 67 Cal.Rptr. 175.) Code language is, in fact, repeated in the arbitration clause of the policy so that the general rule that arbitration can reach only issues of liability is in effect in the case at bar. Yet, if the parties submit additional issues to arbitration, the general rule does not apply.

That the parties may voluntarily submit to arbitration issues other than those compelled by the statute and the policy is, by now, well settled. (O'Malley v. Petroleum Maintenance Co. (1957) 48 Cal.2d 107, 308 P.2d 9; Campbell v. Farmers Ins. Exch., Supra (1968) 260 Cal.App.2d 105, 67 Cal.Rptr. 175; Fidelity & Cas. Co. of New York v. Dennis (1964) 229 Cal.App.2d 541, 40 Cal.Rptr. 418.) And, once a non-statutory issue has voluntarily been submitted to arbitration, a party may not unilaterally withdraw that issue. (Gerard v. Salter (1956) 146 Cal.App.2d 840, 844, 304 P.2d 237.)

However, the courts will not infer a voluntary submission of a non-statutory issue in the absence of a clear showing that the parties so intended, either by actual litigation or argument of the issue, as in Dennis, or by some other unambiguous conduct. (Campbell v. Farmers Ins. Exch., Supra (1968) 260 Cal.App.2d 105, 67 Cal.Rptr. 175; Key Ins. Exch. v. Biagini (1967) 250 Cal.App.2d 143, 58 Cal.Rptr. 408.)

In support of his contention, defendant cites us to portions of the transcript of the hearing before the arbitrator. We cannot say that the trial court was wrong in interpreting those proceedings as showing nothing more than that defendant consistently tried to introduce the issue of extent of coverage and that the carrier's counsel, with equal consistency, objected to all offers of evidence on that issue. ² On the record before us, we hold that the trial court correctly decided that the issue of the extent of coverage had not been submitted to arbitration and that, therefore, that issue was before the trial court for determination. We affirm so much of the judgment as so determined.

II

We turn, thus, to consider whether or not the trial court correctly decided, on the merits, that the carrier's maximum liability is $10,000 rather than $50,000. We conclude that it did.

Subdivision (a) of section 11580.2 of the Insurance Code, as it read at the times herein applicable, required that uninsured motorist coverage be included to protect the insured in every automobile liability insurance policy. Subdivision (b) defines the 'insured' as the named insured or spouse or relatives living in the household Or any other person 'while in or upon or entering into or alighting from an insured motor vehicle'; insured motor vehicle is defined as 'the motor vehicle described in the underlying insurance policy.' (Ins.Code, § 11580.2, subd. (b).)

It is evident that (prior to the 1968 amendment) Any insured member of the household would at all times be insured regardless of whether all of the household's autos were expressly covered. In other words, the question might be asked, why did Mr. Shmitka need five extension certificates upon which he paid five separate premiums if his son was to be insured for the same amount of coverage had he purchased insurance for one car only? The defendant answers this question by saying that the 'floating' nature of the uninsured motorist coverage leads to the inescapable conclusion that five 'floating' policies are therefore five times as good. In interpreting the statutory language, however, defendant neglects the clear language of the code which, in addition to defining 'insured' as the named insured and the relatives in his household, also includes persons 'entering into or alighting from an insured motor vehicle.' Thus, we answer the question of the necessity of five premiums as the trial court did; namely, the additional premiums represent payments for the extra risks taken on by the insurance company. Not only does the language of the code make such risks mandatory by creating uninsured motorist liability to Anyone that might ride in any of Clarence Shmitka's five cars, but the record clearly reflects that this was the intent of the insurance company. It was stipulated at trial that if an official of Allstate Insurance Company were called as a witness, he would testify that insurance companies, including respondent, 'regularly charge a basic uninsured motorist premium for one car and additional premiums for such coverage for each additional car covered by a given policy for the reason that the insurer's risk increases with each additional insured car; that the annual premium of.$7.00 charged for the first car and the annual premium of $6.00 charged for each additional car were the standard rates then applicable to the Subject Policy; * * *' In light of this stipulation, together with the language of the Insurance Code, defendant's contention that five premiums could Only mean a $50,000 coverage and not a $10,000 coverage is not persuasive. This is Not to say that the insurance company could not have intended to insure appellant for $50,000, but that there is sufficient evidence to support the contrary intention, as well as a clear justification for such intent in the Insurance Code.

We now turn to a discussion of applicable case law which may shed light upon the parties' intentions.

In the case of Lopez v. State Farm Fire & Cas. Co. (1967) 250 Cal.App.2d 210, 58 Cal.Rptr. 243, the policy in question contained a provision which denied recovery to a resident of the household who owned an automobile not insured by the defendant. The insured's father was such a person, and, while on foot, was struck and killed by a vehicle driven by an uninsured motorist. The insurance company denied recovery on the basis of the exclusionary clause. The Court of Appeal in the first district held that such an exclusion did Not amount to...