Freeman v. State Farm Mut. Auto. Ins. Co.

CourtUnited States State Supreme Court (California)
Citation121 Cal.Rptr. 477,535 P.2d 341,14 Cal.3d 473
Decision Date30 May 1975
Parties, 535 P.2d 341 Sldney V. FREEMAN, Plaintiff and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Respondent. L.A. 30386.

Page 477

121 Cal.Rptr. 477
14 Cal.3d 473, 535 P.2d 341
Sldney V. FREEMAN, Plaintiff and Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Respondent.
L.A. 30386.
Supreme Court of California,
In Bank.
May 30, 1975.

[14 Cal.3d 476]

Page 479

[535 P.2d 343] Low & Stone, Beverly Hills, Julian Scheiner, Los Angeles, and Howard D. Pilch, Beverly Hills, for plaintiff and appellant.

Spray, Gould & Bowers, Daniel O. Howard and Edmond D. Wade, Los Angeles, for defendant and respondent.

14 CAL.3D 477] BY THE COURT.

In this proceeding to compel arbitration under the uninsured motorist provisions of an insurance policy, the issues are (1) whether the application of the statutory time limitation of Insurance Code section 11580.2, subdivision (i), is a matter for the determination of the court when it hears a petition to compel arbitration under Code of Civil Procedure section 1281.2, or whether it is a matter to be determined by the arbitrator, and (2) whether the petition to compel arbitration was timely in this case. After decision by the Court of Appeal, Second Appellate District, Division Four, affirming an order denying the petition to compel arbitration and an order denying reconsideration, we granted a hearing in this court for the purpose of giving further consideration to the issues raised. Having made a thorough examination of the cause, we have concluded that the opinion of the Court of Appeal prepared by Presiding Justice Files and concurred in by Justices Jefferson and Dunn correctly treats and disposes of the issues involved, and we adopt such opinion as and for the opinion of this court. Such opinion (with appropriate deletions and additions) is as follows: *

1] This is a proceeding to compel arbitration under the uninsured motorist provision of an automobile insurance policy. After a hearing, at which the trial court considered declarations and a portion of a deposition, the court concluded that the petition was barred by the one-year statute of limitations provided in subdivision (i) of Insurance Code section 11580.2. 1 A motion for reconsideration was denied upon the ground that substantially all of the matters asserted therein had been presented at the earlier hearing, or could have been. The petitioner is appealing from the orders denying the petition and the motion for reconsideration. 2 ( )

[14 Cal.3d 478

Historical Facts

The facts upon which we must act are those set forth in the petition to compel arbitration and the declarations and exhibits submitted to the court for the hearings on the petition and the motion for reconsideration. For the purpose of this appeal we make no distinction between the facts adduced for the hearing on the petition and the additional facts offered by petitioner on his motion for reconsideration.

Page 480

[535 P.2d 344] On December 11, 1965, State Farm issued to plaintiff Freeman an automobile policy which was in effect at all material times, and which included uninsured motorist coverage and an arbitration clause as required by subdivision (f) of section 11580.2. On January 28, 1969, petitioner, while driving his vehicle on the Hollywood Freeway, collided with a vehicle operated by Kenneth Morita. Petitioner's attorney concluded that Morita was legally responsible for the accident. There was correspondence between petitioner's attorney and State Farm about a claim for petitioner's medical expense (which State Farm paid) and whether Morita was uninsured. On or before May 15, 1969, petitioner's attorney learned that Morita had liability insurance coverage by State Farm.

On or before November 19, 1969, petitioner filed a civil action against Morita as named defendant. The complaint also named 'Doe' defendants and alleged that 'Does I through V' were sued by fictitious names. No other parties defendant were named or identified. State Farm undertook Morita's defense. On March 20, 1970, petitioner's attorney took Morita's deposition, in which he gave his version of the accident.

According to Morita, he was proceeding in the number two lane of the freeway when he saw a pickup truck with a flat tire in the number one lane. Morita applied his brakes and was struck by a convertible driven by a woman behind him. The impact pushed him toward the number three lane, where he and petitioner collided. Morita testified the woman in the convertible stopped after the accident and talked to a policeman, but Morita did not speak with her or learn her license plate number.

Petitioner's case against Morita was tried before a jury and resulted in a judgment upon a verdict for the defendant.

On September 13, 1972, petitioner made his demand for arbitration under the uninsured motorist coverage of his own policy, and on October [14 Cal.3d 479] 19, 1972, commenced this proceeding in the superior court to compel arbitration, as authorized by Code of Civil Procedure section 1281.2.

The statutory time limitation which was the basis of the trial court's decision reads as follows: 'No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless within one year from the date of the accident: (1) Suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction, or (2) Agreement as to the amount due under the policy has been concluded, or (3) The insured has formally instituted arbitration proceedings.' (Ins. Code, § 11580.2, subd. (i).)

The important threshold question is whether or not the trial court was entitled to consider the time limitation at all. This calls for an examination of the powers and duties of the trial court when confronted with a petition to compel arbitration under an uninsured motorists coverage.

The judicial function: arbitration generally

2] A proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, 347, 182 P.2d 182.)

'3] Arbitration is, of course, a matter of contract, and the parties may freely delineate the area of its application.' (O'Malley v. Wilshire Oil Co. (1963) 59 Cal.2d 482, 490, 30 Cal.Rptr. 452, 458, 381 P.2d 188, 194.) To this should be added that where a statute requires the contract to provide for certain matters, the statute becomes a part of the contract, imposing an arbitration agreement at least as broad as the statutory specifications. (See Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 39--40, 307 P.2d 359.)

Code of Civil Procedure section 1281.2 was drafted by the California Law Revision Commission to prescribe and limit the power of the superior court in passing upon a petition to compel arbitration.

Page 481

[535 P.2d 345] (See 3 Cal. Law Revision Com.Rep. (1961) pp. G 6--7 and G 36--37.) That section provides: 'On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, [14 Cal.3d 480] unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement. . . .' (Code Civ.Proc., § 1281.2.)

The clear purpose and effect of section 1281.2 is to require the superior court to determine in advance whether there is a duty to arbitrate the controversy which has arisen. The performance of this duty necessarily requires the court to examine and, to a limited extent, construe the underlying agreement.

4] It is, of course, possible for the parties to agree that the arbitrator may determine the scope of his authority. 'The arbitrability of a dispute may itself be subject to arbitration if the parties have so provided in their contract.' (McCarroll v. L.A. County, etc., Carpenters (1957) 49 Cal.2d 45, 65, 315 P.2d 322.) Even then, it is necessary for the court to examine the contract to ascertain whether the parties 'have so provided.' (See 6A Corbin on Contracts, § 1444A; cf. Unimart v. Superior Court (1969) 1 Cal.App.3d 1039,

1045, 82 Cal.Rptr. 249.) The judicial function: uninsured motorists arbitration from Aetna to ( ) (Van Tassel)

The statutory requirement for arbitration of uninsured motorist claims is found in subdivision (f) of section 11580.2, which states: 'The policy or an endorsement added thereto shall provide that the determination as to whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof, shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration. . . .'

5] Cases which have analyzed and construed this section have pointed out that the word 'damages' in this section means the damages which the insured is entitled to recover from the uninsured motorist, and that the statute, read literally, requires arbitration of two issues only: (1) whether the insured is entitled to recover against the uninsured motorist and (2) if so, the amount of the damages. (Aetna Cas. & Surety Co. v. Superior Court (1965) 233 Cal.App.2d 333, 43 Cal.Rptr. 476; Fisher v. State Farm Mut. Auto. Ins. Co. (1966) 243 Cal.App.2d 749, 751, 52 Cal.Rptr. 721; Commercial Ins. Co. v. Copeland (1967) 248 Cal.App.2d 561, 564, 56 Cal.Rptr. 794; Pacific Indem. Co. v. Superior Court (1966) 246 Cal.App.2d 63, 67, 54 Cal.Rptr. 470; Farmers Ins. Exch. v. Ruiz (1967) 250 Cal.App.2d 741, 744, 59 Cal.Rptr. 13; Calhoun v. State Farm [14 Cal.3d 481] Mutual Auto. Ins. Co. (1967) 254 Cal.App.2d 407, 413, 62 Cal.Rptr. 177; Campbell v. Farmers Ins. Exch. (1968) 260 Cal.App.2d 105, 110, 67 Cal.Rptr. 175; Pacific Automobile Ins. Co. v. Lang (1968) 265 Cal.App.2d 837, 841, 71 Cal.Rptr. 637; Allstate Ins. Co. v. Shmitka (1970) 12 Cal.App.3d 59, 62, 90...

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178 practice notes
  • Service Employees International Union v. County of Napa, AFL-CI
    • United States
    • California Court of Appeals
    • December 19, 1979
    ...other, such areas. Taylor v. Crane thus gives effect to the established rule iterated by Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 482, 535 P.2d 341, 346, that while there is "A strong policy in favor of enforcing agreements to arbitrate, . . . ......
  • Rosenthal v. Great Western Fin. Securities Corp., No. S050952
    • United States
    • United States State Supreme Court (California)
    • December 12, 1996
    ...State Auto. Assn. (1992) 2 Cal.4th 1035, 1040, 9 Cal.Rptr.2d 381, 831 P.2d 821; Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479, 121 Cal.Rptr. 477, 535 P.2d 341; Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, 347, 182 P.2d 182.) Because actions for specific pe......
  • Cronus Investments v. Concierge Services, LLC, No. B159591.
    • United States
    • California Court of Appeals
    • April 21, 2003
    ...is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473 [121 Cal.Rptr. 477, 535 P.2d 341] Accordingly, equitable principles come into play...." (Weisman v. Johnson (1982) 133 Cal.App.3d 289, 295, 183 Cal.Rp......
  • Ajida Technologies v. Roos Instruments, No. H020311.
    • United States
    • California Court of Appeals
    • March 1, 2001
    ...Co. (1960) 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409; accord, Freeman v. State Farm Mut. 87 Cal.App.4th 542 Auto. Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 535 P.2d 341; Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683, 57 Cal. Rptr.2d The qu......
  • Request a trial to view additional results
179 cases
  • Service Employees International Union v. County of Napa, AFL-CI
    • United States
    • California Court of Appeals
    • December 19, 1979
    ...other, such areas. Taylor v. Crane thus gives effect to the established rule iterated by Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 482, 535 P.2d 341, 346, that while there is "A strong policy in favor of enforcing agreements to arbitrate, . . . ......
  • Rosenthal v. Great Western Fin. Securities Corp., No. S050952
    • United States
    • United States State Supreme Court (California)
    • December 12, 1996
    ...State Auto. Assn. (1992) 2 Cal.4th 1035, 1040, 9 Cal.Rptr.2d 381, 831 P.2d 821; Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479, 121 Cal.Rptr. 477, 535 P.2d 341; Trubowitch v. Riverbank Canning Co. (1947) 30 Cal.2d 335, 347, 182 P.2d 182.) Because actions for specific pe......
  • Cronus Investments v. Concierge Services, LLC, No. B159591.
    • United States
    • California Court of Appeals
    • April 21, 2003
    ...is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473 [121 Cal.Rptr. 477, 535 P.2d 341] Accordingly, equitable principles come into play...." (Weisman v. Johnson (1982) 133 Cal.App.3d 289, 295, 183 Cal.Rp......
  • Ajida Technologies v. Roos Instruments, No. H020311.
    • United States
    • California Court of Appeals
    • March 1, 2001
    ...Co. (1960) 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409; accord, Freeman v. State Farm Mut. 87 Cal.App.4th 542 Auto. Ins. Co. (1975) 14 Cal.3d 473, 481, 121 Cal.Rptr. 477, 535 P.2d 341; Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683, 57 Cal. Rptr.2d The qu......
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