Fagundes v. American Internat. Adjustment Co.

• Citation: 3 Cal.Rptr.2d 763,2 Cal.App.4th 1310
• Court: California Court of Appeals Court of Appeals
• Decision Date: 22 January 1992
• Parties: Manuel FAGUNDES, Plaintiff and Appellant, v. AMERICAN INTERNATIONAL ADJUSTMENT COMPANY, Defendant and Respondent. D013385.

Page 763

3 Cal.Rptr.2d 763

2 Cal.App.4th 1310

Manuel FAGUNDES, Plaintiff and Appellant, v. AMERICAN INTERNATIONAL ADJUSTMENT COMPANY, Defendant and Respondent.

D013385.

Court of Appeal, Fourth District, Division 1, California.

Jan. 22, 1992.

Review Denied April 15, 1992.

Law Offices of Irwin M. Zalkin, Irwin M. Zalkin and John D. Pickett, San Diego, for plaintiff and appellant.

Zimmerman and Kahanowitch, P.C., Brian Zimmerman, Robert Cohen and Douglas Lackey, Encino, Chapin, Fleming & Winet and Roger L. Popeney, San Diego, for defendant and respondent.

NARES, Associate Justice.

Manuel Fagundes (Fagundes) appeals from a grant of summary judgment against him and in favor of New Hampshire Insurance Company (New Hampshire) and American International Adjustment Company (AIAC). Fagundes argues that the insurance coverage he purchased was illusory, and triable issues of fact exist

with respect to the extent of that coverage. As there was no material issue of fact, and as New Hampshire and AIAC were correctly determined to be under no legal obligation to Fagundes, we affirm.

BACKGROUND

In 1986 Fagundes applied for minimum-coverage automobile insurance under California's assigned risk plan. Fagundes sought the cheapest possible insurance he could obtain. His application was then assigned at random to New Hampshire. New Hampshire issued Fagundes a policy including uninsured/underinsured motorist coverage of $15,000 per person as required by Vehicle Code section 16056 and Insurance Code section 11580.2, subdivision (n). ¹

The policy explained that New Hampshire would "pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury." An "uninsured motor vehicle" was defined as one having no insurance or having insurance with lower limits for bodily injury liability than required by California law. The policy also reflected California law by providing that any amount otherwise payable would be reduced by all sums "[p]aid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible." ²

After an accident in 1987, Fagundes learned that the other driver carried insurance with a $15,000 minimum limit, which amount Fagundes received. Fagundes also considered raising the limits of his underinsured motorist coverage, but rejected this because the increased coverage would have cost him too much. He thus decided to retain minimum coverage only, as that was all he could afford.

Counsel retained by Fagundes notified AIAC that Fagundes would be making a claim under the underinsurance provisions of the policy, notwithstanding the fact that Fagundes had received $15,000 from the other party's insurance company and had executed a release. AIAC rejected the claim because the other party's policy limits were equal to those of Fagundes, and thus "the underinsured motorist coverage would not apply" and Fagundes's receipt of $15,000 from the other party meant that in any event no sums whatsoever were owed to Fagundes by New Hampshire pursuant to section 11580.2, subdivision (p)(4). ³

Fagundes eventually filed suit against New Hampshire and AIAC, asserting (among many other matters) that policy representations made as to the effect of underinsured motorist coverage are ambiguous, and also that the minimum-limits coverage is illusory so far as the concept of "underinsurance" applies. On motion by AIAC and New Hampshire, summary judgment (which was also urged on a wide variety of issues not necessary to review) was granted on the bases that no triable issue of fact existed, and as a matter of law the uninsured/underinsured motorist coverage issued by New Hampshire was

not illusory. Timely notice of appeal was filed. ⁴

STANDARD OF REVIEW

"A summary judgment may be granted only if no material triable issue of fact exists. The moving parties' affidavits must set forth facts entitling them to a judgment as a matter of law." (Lopez v. McDonald's Corp. (1987) 193 Cal.App.3d 495, 503, 238 Cal.Rptr. 436; Lipson v. Superior Court (1982) 31 Cal.3d 362, 374, 182 Cal.Rptr. 629, 644 P.2d 822.) "Designed to resolve litigation by avoiding needless trials [citation], the purpose for summary judgment 'is to penetrate evasive language and adept pleading and to ascertain, by means of affidavits, the presence or absence of triable issues of fact' [citation]." (Tollefson v. Roman Catholic Bishop (1990) 219 Cal.App.3d 843, 852, 268 Cal.Rptr. 550, quoting Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107, 252 Cal.Rptr. 122, 762 P.2d 46.) Where there are no triable fact issues and the parties' contentions involve questions of law alone, summary judgment is proper. (Lopez v. McDonald's Corp., supra, 193 Cal.App.3d at p. 503, 238 Cal.Rptr. 436; Ferrell v. Southern Nevada Off-Road Enthusiasts, Ltd. (1983) 147 Cal.App.3d 309, 313, 195 Cal.Rptr. 90.)

Consequently, the trial court's role in ruling on a motion for summary judgment is strictly confined to determining whether material triable issues of fact exist, and not to deciding the merits of any of those issues. (Molko v. Holy Spirit Assn., supra, 46 Cal.3d at p. 1107, 252 Cal.Rptr. 122, 762 P.2d 46.) Finally, " '[i]n examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion.' " (Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 851-852, 94 Cal.Rptr. 785, 484 P.2d 953, quoting Stationers Corps. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417, 42 Cal.Rptr. 449, 398 P.2d 785.)

DISCUSSION

California statutes require uninsured/underinsured coverage be offered in automobile liability insurance policies. The policy in this case contained the required coverage, which was described in language clearly expressing the conditions as to which that coverage would be applicable. Appellant thus had a heavy burden to demonstrate ambiguity or illegality which would at least create a triable issue of fact, so as to defeat a motion for summary judgment. We hold that burden was not met.

The California uninsured/underinsured statutes are the "offset" variety, in which the limit payable is reduced by all the amounts received from other sources. Other states have statutes of the "make whole" variety, in which payment of the policy limits in addition to all funds received from any third parties may be necessitated if the insured's damages equal or exceed such amounts. "The California underinsurance scheme focuses on the amount of the tortfeasor's automobile liability policy. Conversely, [other states'] statutes concentrate on the amount of the injured driver's damages. This focus on the tortfeasor's liability restricts the availability of underinsurance coverage even where the injured driver suffers uncompensated damages. Unless the tortfeasor's liability policy is in an amount less than the uninsured motorist policy of the injured driver, underinsurance is not available." (Schmidt, Interpreting the Recently Enacted California Underinsurance Provisions of the Uninsured Motorist Statute (1987) 14 Pepperdine L.Rev. 691, 694-695, fns. omitted.)

A simple observation here is that our Legislature has spoken. If a different statutory scheme is indeed to be preferred, it seems clear that this is a matter for the Legislature alone to accomplish.

As noted above, Fagundes contends that either (1) the underinsured motorist benefits should be interpreted to provide for full excess coverage, or in the alternative (2) the underinsurance coverage offered at the minimum level is illusory. Neither point has merit under existing law.

I. COVERAGE

As another division of this court has held, "underinsured motorist coverage is not the equivalent of full excess coverage. As the statutory scheme is designed, the underinsured motorist carrier gets a dollar-for-dollar credit for all payments by third party tortfeasors to the insureds, whether the insureds are made whole or not. In other words, a carrier providing underinsured motorist benefits never pays the full amount, only the difference between the policy limits and all contributions by all tortfeasors to all insureds." (Malone v. Nationwide Mutual Ins. Co. (1989) 215 Cal.App.3d 275, 277, 263 Cal.Rptr. 499, italics in original.) "We may not rewrite the statute to bring about a contrary result even if that result could be argued to be socially desirable. That is for the Legislature." (Interinsurance Exchange v. Velji (1975) 44 Cal.App.3d 310, 315-316, 118 Cal.Rptr. 596.) Fagundes's argument ignores these principles.

Nor may Fagundes escape application of these settled principles to his case by claiming that the policy language employed by New Hampshire is ambiguous. As our Supreme Court held in a case involving these statutes, "the policy condition is as clear as [the statute] allows," and policy conditions clearly expressing statutory formulas are not ambiguous. (Wagner v. State Farm Mutual Auto. Ins. Co. (1985) 40 Cal.3d 460, 465, 220 Cal.Rptr. 659, 709 P.2d 462.) Any complexity in New Hampshire's policy language only reflects the complexity of the statutes specifying what the coverage must contain and how it is to be applied.

"In the absence of ambiguities, the rights of the parties rest on the insurance contract as written." (Barrett v. Farmers Ins. Group (1985) 174 Cal.App.3d 747, 752, 220 Cal.Rptr. 135.) Once the question of purported ambiguity is put aside, it is clear that as a matter of law Fagundes has no valid claim for payments under the underinsured motorist coverage he purchased. That coverage would only be triggered by an accident involving a vehicle with liability coverage less than that of Fagundes's policy. Here, however, the accident involved a vehicle with equal, rather than...