Barrett v. Farmers Ins. Group

• Decision Date: 28 October 1985
• Court: California Court of Appeals Court of Appeals
• Parties: Paul BARRETT and Sara Gentry, a minor, By and Through her Guardian ad Litem, Ethel Farr, Plaintiffs and Appellants, v. FARMERS INSURANCE GROUP, et al., Defendants and Respondents. Civ. B009443.

Page 135

220 Cal.Rptr. 135

174 Cal.App.3d 747

Paul BARRETT and Sara Gentry, a minor, By and Through her Guardian ad Litem, Ethel Farr, Plaintiffs and Appellants, v. FARMERS INSURANCE GROUP, et al., Defendants and Respondents.

Civ. B009443.

Court of Appeal, Second District, Division 2, California.

Oct. 28, 1985.

Review Denied Jan. 16, 1986.

Brahm, Rudorfer & Rosenthal by Neal R. Rosenthal, Tarzana, for plaintiffs and appellants.

Cooper, Monkman, Sanborn & Brown by James B. Sanborn, Pasadena, for defendants and respondents.

COMPTON, Associate Justice.

The sole issue on this appeal is whether several uninsured motorist coverages issued by the same insurance company to the same insured may be "stacked" or pyramided so that the benefits under the policies are payable in an amount exceeding the limits of any one of the separate uninsured motorist coverages.

The essential facts are not in dispute. In March 1981, plaintiffs Paul Barrett and Sara Gentry sustained serious injuries when their motorcycle collided with an automobile driven by one La Preal Bauer. Each plaintiff subsequently recovered $25,000, the maximum coverage available under the liability policy insuring Bauer's vehicle.

At the time of the accident, Barrett, the driver of the motorcycle, was a resident of his parents' household. In January 1981, Barrett's stepfather, John Jansen, had purchased three automobile policies from defendant Farmers Insurance Exchange (Farmers), separately insuring the motorcycle and two other family owned vehicles. The policies contained uninsured motorist provisions with coverage limits of $15,000 per person and $30,000 per accident. These sums were in compliance with the requirements of this state's Financial Responsibility Law. ¹ Separate premiums were paid on each policy.

Gentry later recovered an additional $15,000 from Farmers under Barrett's liability coverage as permissive user of the motorcycle. Farmers then paid plaintiffs a total of $30,000 under the uninsured motorist provision covering the motorcycle. Believing they had been inadequately compensated, both plaintiffs asserted claims of $15,000 each under the policies of insurance covering the two family owned vehicles not involved in the accident. When Farmers' refused coverage, plaintiffs instituted this suit for declaratory relief. Following a trial on the issue of liability, the court found no justification for "stacking" the policies and denied the relief sought. Plaintiffs appeal contending they are entitled to collect $30,000 ($15,000 on each policy) as a result of being in an accident with an "underinsured" motorist. We disagree and thus affirm the judgment dismissing the action.

Each of the three policies of insurance contained a condition captioned "Other Insurance" which was printed in capital letters in boldface type. That clause provided in pertinent part: "If the insured has other similar insurance available to him, any damages shall be deemed not to exceed the higher of the applicable limits of the respective coverages and such damages shall be prorated between such coverages in such proportion as each coverage bears to the total of such limits." The policies further provided: "With respect to any occurrence, accident or loss to which any other insurance policy or policies issued to the insured by the company also apply, no payment shall be made hereunder which, when added to any amount paid or payable under such other insurance policy or policies, would result in a total payment to the insured or any other persons in excess of the highest applicable limit of liability under any one such policy."

Prior to the accident, Farmers mailed to the Jansen family a notification that in the event they had uninsured motorist coverage and were involved in an accident where "the bodily injury limits carried by the owner or operator of the other vehicle are less than the unpaid bodily injury damages you are legally entitled to, your uninsured motorist coverage will make up the difference, up to its limits." Upon discovering that the foregoing endorsement was incomplete, Farmers notified their insureds that the clause was to be modified as follows: "If your policy includes uninsured motorist coverage and you are in an accident where the bodily injury limits carried by the owner or operator of the other vehicle are less than the unpaid bodily injury damages you are legally entitled to, your uninsured motorist coverage will make up the difference, up to its limits, less the amount of coverage available to the other party." The underlined phrase constitutes the only change made by the amendment to the original endorsement.

Plaintiffs contend, of course, that the change in the endorsement created an ambiguity that entitles them to "stack" the coverage provided by the uninsured motorist provisions contained in each of the three policies issued by Farmers.

At the core of the dispute is the interpretation and application of the language found in the original policy and the subsequent endorsements. We therefore analyze the pertinent provisions in light of certain basic principles which guide the interpretation of insurance contracts in general.

" 'The fundamental rule of construction applicable to contracts of insurance requires the enforcement of a contract according to the intention of the parties as demonstrated by the language employed, read, and considered as a whole. The instrument is to be construed in a manner which gives a reasonable meaning to all its provisions in a natural, reasonable and practical manner, having reference to the risk and subject matter and...