Allstate Ins. Co. v. Orlando

• Decision Date: 11 June 1968
• Citation: 262 Cal.App.2d 858,69 Cal.Rptr. 702
• Court: California Court of Appeals Court of Appeals
• Parties: ALLSTATE INSURANCE COMPANY, a corporation, Plaintiff and Respondent, v. Valerie ORLANDO, Defendant and Appellant. Civ. 31276.

Page 702

69 Cal.Rptr. 702

262 Cal.App.2d 858

ALLSTATE INSURANCE COMPANY, a corporation, Plaintiff and Respondent, v. Valerie ORLANDO, Defendant and Appellant.

Civ. 31276.

Court of Appeal, Second District, Division 5, California.

June 11, 1968.

As Modified on Denial of Rehearing July 9, 1968.

Hearing Denied Aug. 8, 1968.

A. Brian Weinberg, Santa Monica, and Edward L. Lascher, Ventura, for defendant and appellant.

Dougherty, Hansen, Moore & Finley and Henry E. Kappler, Los Angeles, for plaintiff and respondent.

AISO, Associate Justice pro tem. ^*

In a declaratory relief action, the trial court entered a judgment in favor of plaintiff Allstate Insurance Company, a corporation, and against defendant Valerie Orlando declaring that she had no right to recover under the uninsured motorist clause of her father's automobile insurance policy because of her failure to file a timely demand for arbitration under section 11580.2(h) of the Insurance Code. ¹ She appeals from the judgment.

The issues are: (1) Do the provisions of section 11580.2 (h) (hereafter section 'h') apply to a minor's claim upon a policy issued prior to the effective date of said section where the accident occurred after the effective date of the statute? (2) Does the arbitration award constitute a bar to the judicial determination of the first issue?

We have concluded that the first question should be answered, 'yes' and the second question, 'no' for the reasons shortly to be stated.

FACTUAL AND PROCEDURAL BACKGROUND

The material facts are not in dispute. ² In July of 1961, plaintiff Allstate Insurance Company, a corporation, (hereafter Allstate), issued an automobile public liability insurance policy to Vincent Orlando, the father of the defendant Valerie Orlando (hereafter Valerie). It contained an uninsured motorist's clause. At the time the policy was delivered to Vincent Orlando, neither section 11580.2 nor the policy specified time limitations within which the insured had to act. Section 'h' ³ was added by a statutory amendment, ⁴ which became effective September 15, 1961.

On December 20, 1961, Valerie, then 18 years of age (born August 27, 1943) was injured in an automobile accident involving an uninsured motorist. Valerie's status as an insured under her father's policy is conceded.

On October 24, 1962, her attorney wrote to Allstate informing it that he represented the Orlandos and that he was thereby presenting their claim under the uninsured motorist clause of Vincent Orlando's policy.

He, however, did not file Valerie's action against the uninsured motorist in the superior court until January 4, 1963 and did not make on her behalf a 'Demand for Arbitration' until March 27, 1964.

On July 20, 1964, Allstate filed this action for declaratory relief seeking a judicial determination that no cause of action accrued in favor of Valerie because of her failure to demand an arbitration within the period prescribed by section 'h.' The complaint also sought preliminary and permanent injunctions to restrain Valerie from proceeding to arbitration. Valerie's answer was filed November 12, 1964.

The date set for the arbitration hearing was February 8, 1965. By letter dated January 20, 1965, the American Arbitration Association notified Allstate that the arbitration proceedings would not be abated by the pending declaratory relief action unless both parties filed a joint request for abatement. Valerie's counsel refused to join in such request.

On February 2, 1965, Allstate obtained an order to show cause directed to Valerie to show cause on February 5, 1965, why a 'temporary injunction' against her proceeding to arbitration on February 8, 1965 should not issue. On February 5, 1965, a hearing was held, the application for preliminary injunction denied, and the order to show cause discharged. Allstate did not appeal from this order of denial.

Arbitration was finally commenced on April 20, 1965. ⁵ At the threshold of the arbitration hearings, Allstate raised the objection that the arbitrator had no authority to arbitrate because of Valerie's failure to demand arbitration within one year from the date of her accident as required by section 'h.' The arbitrator advised Valerie's counsel that in view of Aetna Cas. & Surety Co. v. Superior Court (1965) 233 Cal.App.2d 333, 43 Cal.Rptr. 476, it might be well to postpone the arbitration proceedings and proceed first with the declaratory relief action in the superior court. Valerie's counsel, however, urged that the arbitration hearings continue. Thereupon, the arbitrator reserved ruling and the hearings continued with Allstate registering an objection and stating that its continued participation was not to be construed as an abandonment of its objection to jurisdiction.

The arbitrator rendered his award on June 8, 1965, finding that he had jurisdiction to determine the issue of the 'statute of limitations,' that Valerie's claim was not barred by the 'statute of limitations' and that she was entitled to recover $4,200 from Allstate. ⁶

On June 28, 1965, Allstate moved (petitioned) the superior court for an order vacating the award. On July 28, 1965 'Motion of Valerie Orlando for order confirming Arbitration Award (second call) Motion to confirm award denied without prejudice to renewal of motion after determination of limitation issue.

Valerie filed a cross-motion for an order confirming the award. On August 19, 1965, the superior court made the following minute order.

'Motion of petitioner for order to vacate Award of Arbitrator (fourth call) Motion to vacate award granted in respect of paragraphs (1) and (2) only, on the ground that the arbitrator did not have jurisdiction to determine the limitation issue. (Aetna Casualty Insurance Co. vs Superior Court, 233 A.C.A. 389) Motion otherwise denied without prejudice to renewal thereof after determination of limitation issue * * *.'

Valerie did not appeal from this order or any part thereof.

This action for declaratory relief was tried to a court on December 28 and 29, 1965. Findings and conclusions of law were filed on February 3, 1966 and judgment was entered on February 7, 1966, declaring, 'Defendant's cause of action was extinguished December 21, 1962 under Paragraph (h) of Section 11580.2 of the Insurance Code in that neither arbitration proceedings were instituted or suit filed on or before that date.' Finding No. 6 was: 'The Court duly granted plaintiff's motion to vacate said award.' Conclusion No. 6 was: 'The arbitration proceedings held at the American Arbitration Association had no force and effect and the assumption of jurisdiction by the arbitrator to adjudicate the Statute of Limitations issue was an idle act that had no force or effect.'

NO CAUSE OF ACTION ACCRUED

Provisions of section 'h,' effective September 15, 1961, may be constitutionally applied to claims arising out of accidents which occurred prior to said effective date under policies issued likewise before said effective date by calculating the one year period from September 15, 1961. (Pacific Indemnity Co. v. Superior Court (1966) 246 Cal.App.2d 63, 70, 54 Cal.Rptr. 470, hearing denied by Supreme Court; Niagara Fire Ins. Co. v. Cole (1965) 235 Cal.App.2d 40, 43--44, 44 Cal.Rptr. 889.) As to claims arising out of accidents occurring subsequent to that date made under a policy issued prior to the effective date of section 'h,' the section can be constitutionally applied by calculating the one year period from the date of the accident. (Key Ins. Exch. v. Biagini (1967) 250 Cal.App.2d 143, 147--148, 58 Cal.Rptr. 408, hearing denied by Supreme Court.)

Neither in the Key Insurance Exchange case nor in Niagara Fire Ins. Co. v. Cole, supra, 235 Cal.App.2d 40, did the policy specify the period within which arbitration was required to be instituted. This was stressed by the appellant in the Niagara case in her counsel's opening brief, but apparently rejected by the court. The uninsured motorist clause was not inserted voluntarily by the insurer, but only because of the statutory injunction compelling its insertion in the policy. The very fact that the provision in the policy here involved was coterminous with the statutory requirement as we shall shortly point out, indicates an intent of the issuer of the policy not to go beyond the statutory requirements. Moreover, in absence of a specific time for performance in the policy, a reasonable period of time can be read into the policy. And the one year period of time has been held to be a reasonable period of time. (Pacific Indemnity Co. v. Superior Court (1966), supra, 246 Cal.App.2d 63, 70).

The rationale of these holdings as to constitutional applications of section 'h' would not appear to be affected whether we characterize the time limitation as a condition precedent to perfecting the accrual of a right or a statute of limitations. (Firemen's Ins. Co. of Newark, N.J. v. Diskin (1967) 255 Cal.App.2d --- ^*, 63 Cal.Rptr. 177.) A reasonable period of time in which to perfect an inchoate or potential cause of action is granted in either case. There is no unconstitutional impairment of a contractual obligation. (City of El Paso v. Simmons (1965) 379 U.S. 497, 508--509, 515, 85 S.Ct. 577, 13 L.Ed.2d 446; Rand v. Bossen (1945) 27 Cal.2d 61, 65, 162 P.2d 457.)

In the recent case of Williams v. Los Angeles Metro. Transit Authority (1968), 68 Cal.2d ---, --- ^**, 68 Cal.Rptr. 297, 301, 440 P.2d 497, 501, our Supreme Court stated, 'Insurance Code section 11580.2, subdivision (h) * * * creates a condition for the preservation of a potential cause of action under an insurance policy and does not fix the time for instituting a civil suit against the insurer after a cause of action has accrued.'

The cases holding that the one year period prescribed by section 'h' within which to file a suit or a demand for arbitration to preserve the potential cause of action applies to minors as well as to adults, therefore, still stand unaffected by...