Calfarm Ins. Co. v. Wolf

• Decision Date: 30 January 2001
• Docket Number: No. C033885.,C033885.
• Citation: 86 Cal.App.4th 811,103 Cal.Rptr.2d 584
• Court: California Court of Appeals Court of Appeals
• Parties: CALFARM INSURANCE COMPANY, Plaintiff and Appellant, v. Daniel WOLF, Defendant and Respondent.

103 Cal.Rptr.2d 584

86 Cal.App.4th 811

CALFARM INSURANCE COMPANY, Plaintiff and Appellant, v. Daniel WOLF, Defendant and Respondent.

No. C033885.

Court of Appeal, Third District.

January 30, 2001.

Horvitz & Levy, Peter Abrahams, Encino, Nina E. Scholtz; Lewis, D'Amato, Brisbois & Bisgaard, Richard L. Antognini and Claudia J. Robinson, Sacramento, for Plaintiff and Appellant Calfarm.

Law Offices of Lynn Hubbard, III, Lynn Hubbard, Chico, for Defendant and Respondent Daniel Wolf.

DAVIS, Acting P.J.

Insurance Code section 11580.2 (section 11580.2), in part, governs insurance companies in providing uninsured motorist coverage (UMC). Subdivision (c)(2) of section 11580.2 authorizes an insurer to exclude UMC for bodily injury of its insured if the insured is in, upon, entering into, or alighting from, a motor vehicle that is not described in the insured's auto policy and the owner of that vehicle "has insurance similar to that provided in this section."

We conclude that where the insured has $100,000 in UMC and the owner of the non-described vehicle has $30,000 in UMC the owner does not have "insurance similar to that provided in this section." Consequently, the exclusion authorized by subdivision (c)(2) of section 11580.2 does not apply, and we affirm the judgment. (In referring to this statutory language, we will refer to the insured as the injured insured and to the owner as owner.)

BACKGROUND

On January 10, 1997, defendant Daniel Wolf (Wolf) was a passenger in a car driven by Richard Morgan (Morgan). They were rear-ended by an uninsured drunk driver going approximately 50 miles per hour. Morgan had UMC through State Farm Insurance Company, with a coverage limit of $30,000. The limit amount was paid to Wolf.

Wolf had UMC through plaintiff Cal-Farm Insurance Company (CalFarm), with a coverage limit of $100,000 per person. Wolf made a UMC claim under his Cal-Farm policy. CalFarm and Wolf disputed whether Wolfs UMC applied, and Cal-Farm filed a declaratory relief action to resolve the coverage dispute.

The trial court ruled in Wolfs favor in a summary judgment motion on the issue of coverage. This appeal ensued. (Wolf and CalFarm had previously arbitrated the issue of damages in binding arbitration. The arbitrator awarded Wolf $120,000 in damages, subject to a "reduction for amounts paid by other insurance[ ]"; the arbitrator found the "credit that CalFarm is entitled to receive is $36,064.00 leaving a net recovery to Mr. Wolf of $83,936.00." The arbitration award was expressly made subject to determination of the coverage dispute. As the arbitrator explained, "[T]he Court's ruling will be dispositive on the issue of coverage. If no coverage exists, [Wolf] has received all he will for this accident. If coverage does exist, then the findings herein would be binding upon the parties.")

DISCUSSION

Two subdivisions of section 11580.2 are pertinent here, subdivisions (c)(2) and (d) (hereinafter, subdivisions (c)(2) and (d), or section 11580.2(c)(2) and (d)). They state respectively:

"(c) The insurance coverage provided for in this section [including UMC] does not apply either as primary or as excess coverage:

"...........................

"(2) To bodily injury of the insured while in or upon or while entering into or alighting from a motor vehicle other than the described motor vehicle if the owner thereof has insurance similar to that provided in this section.

"(d) Subject to paragraph (2) of subdivision (c), the [UMC] policy or endorsement may provide that if the insured has insurance available to the insured under more than one uninsured motorist coverage provision, any damages shall not be deemed to exceed the higher of the applicable limits of the respective coverages, and the damages shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits."

Pursuant to section 11580.2(c)(2), Wolfs UMC policy with CalFarm contains the following exclusion (which we will refer to as Exclusion 2b):

"2. Exclusions

"This insurance [UMC] does not apply either as primary or as excess coverage to:

".........................

"b. Bodily injury of an insured while occupying

[defined in accord with section 11580.2(c)(2) as "while in or upon or entering into or alighting from"] a motor vehicle other than a motor vehicle specifically described in the Declarations as a covered auto you own, if the owner thereof has uninsured motorists insurance which applies to that motor vehicle."

Pursuant to section 11580.2(d), Wolfs UMC policy with CalFarm contains the following provision (which we will refer to as Provision 6):

"6. Other Uninsured Motorists Insurance

"Subject to paragraph b. of 2. Exclusions in this endorsement, if an insured has insurance available under any other uninsured motorist coverage provision of any other policy, any damages shall not be deemed to exceed the higher of the applicable limits of the respective coverages and the damages shall be prorated between the applicable coverages as the limits of each coverage bear to the total of all available limits."

Thus, Exclusion 2b and Provision 6, respectively, do not mirror the language of section 11580.2(c)(2) and (d). Exclusion 2b has deleted subdivision (c)(2)'s key term "similar" so that if the owner has "any" UMC— regardless of coverage limits— Exclusion 2b applies and the injured insured cannot look to his own UMC. Provision 6 specifies, "if an insured has insurance available under any other uninsured motorist coverage provision of any other policy," in place of subdivision (d)'s phrase, "if the insured has insurance available to the insured under more than one uninsured motorist coverage provision."

Section 11580.2 specifies the minimum in UMC that an insurer can offer.¹ The insurer is free to offer more in the way of UMC, but cannot offer less.² Our concern is with the section 11580.2(c)(2) phrase "similar to that provided in this section." If the term "similar" refers simply to "type" of coverage (i.e., refers simply to the owner having any UMC, assuming mandatory statutory minimum limits are met), then Exclusion 2b accords with section 11580.2. But if the term "similar" also encompasses "amount" of coverage (i.e., also refers to the owner having UMC of similar or greater policy limits), then Exclusion 2b, in this case, impermissibly offers less than what section 11580.2 requires an insurer to offer. The issue before us is what the phrase "similar to that provided in this section" in subdivision (c)(2) means, in the context presented here of widely disparate UMC limits of $30,000 on the owner's policy and $100,000 on the injured insured's.

This issue is one of statutory interpretation. Our objective in interpreting a statute is to ascertain and effectuate legislative intent.³ In determining intent, we look first to the statute's words.⁴ If those words are clear, there is no need for construction.⁵ "`When the language is susceptible of more than one reasonable interpretation, however, we look to a variety of extrinsic aids,'" including the object to be achieved, the evil to be remedied, public policy, the statutory scheme of which the statute is a part, and legislative history.⁶

The section 11580.2(c)(2) phrase "similar to that provided in this section" can be reasonably interpreted to encompass the type of coverage provided. However, it can also be reasonably interpreted to encompass the amount of coverage provided. Since the phrase is ambiguous, we will turn to extrinsic aids.

We first examine the object to be achieved, the evil to be remedied, and public policy. "[S]ection 11580.2 is a remedial statute enacted for the purpose of forcing insurers to make available coverage by which insureds can protect themselves from the menace of uninsured motorists. Ambiguous language in the statute must be given a construction that advances, not thwarts, its remedial purpose."⁷

Construing the term "similar" in section 11580.2(c)(2) to encompass similar "amount" of coverage advances the remedial purpose of protection from the uninsured motorist menace, a menace that has grown in recent times with the high cost of auto insurance. It also assures that UMC will be provided in an amount at least similar to the injured insured's UMC.

Limiting the term "similar" to the "type" of coverage thwarts this remedial purpose by providing UMC only in the amount the owner has purchased, which, as in this case, may be much lower than the injured insured's UMC.

Furthermore, as noted, section 11580.2 was enacted to force insurers to make UMC available; the Legislature wanted to encourage the purchase of this coverage.⁸ All auto liability policies issued in California must contain UMC with certain minimum limits, but an insurer and an insured may agree to waive this coverage.⁹ Limiting an injured insured to the owner's much lower UMC limits would discourage its purchase by making such coverage less attractive to the injured insured.

"[O]ne of the most basic tenets of insurance/contract law [is] that the insured should get that which []he bargained for."¹⁰ "This is why courts interpret the uninsured ... provisions in a manner `[which] places [the insured] in the same position [ ]he would have been in had [ ]he been driving [his] own vehicle when the accident occurred.'"¹¹

Wolf paid UMC premiums for $100,000 per person and $300,000 per accident. He was an auto passenger involved in an accident with a liable uninsured motorist. According to CalFarm, under section 11580.2(c)(2), Wolfs $100,000 in UMC is unavailable because the owner had UMC for $30,000. Under this view of section 11580.2(c)(2), Wolf does not "get that which [ ]he bargained for."¹²

It is said that, "`"the purpose of the uninsured motorist statute is not to make all drivers whole from accidents with uninsured drivers, but to make sure that [they] are protected to the extent that they would have been protected had the driver at fault carried the...