George v. Automobile Club of S. Cal.

Decision Date28 March 2012
Docket NumberNo. B229287.,B229287.
Citation135 Cal.Rptr.3d 480,11 Cal. Daily Op. Serv. 14914,201 Cal.App.4th 1112,2011 Daily Journal D.A.R. 17795
CourtCalifornia Court of Appeals Court of Appeals
PartiesAndrew GEORGE, Plaintiff and Appellant, v. AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA et al., Defendants and Respondents.


Browne George Ross, Browne Woods George, Michael A. Bowse and Ira Bibbero, Los Angeles, for Plaintiff and Appellant.

Luce, Forward, Hamilton & Scripps and John T. Brooks, San Diego, for Defendants and Respondents.



Plaintiff and appellant Andrew George filed a class action complaint against his automobile insurer, challenging its alleged practice of identifying a specified amount as a vehicle's “Actual Cash Value” (in plaintiff's case, $25,000) in the insurance policy but then refusing to pay that amount in the event of a total loss, instead paying the fair market value of the car at the time of the loss. Plaintiff relied primarily on the declarations page of the policy but also alleged parol evidence supported his interpretation of the policy. The trial court considered the parol evidence allegations and found they were insufficient as a matter of law to show the parties intended the policy to pay plaintiff $25,000 in the event of a total loss. The court sustained the insurer's demurrer to plaintiff's first amended complaint without leave to amend, finding it “clear and unambiguous” that the policy called for payment of the fair market value (or actual cash value, as that phrase is commonly understood) up to a limit of $25,000. We affirm the judgment.


In December 2007, plaintiff obtained a policy of insurance covering his 1960 Ford Thunderbird from defendant Interinsurance Exchange of the Automobile Club. 1 The car was stolen in January 2009 and never recovered, so plaintiff sustained a total loss. After plaintiff notified defendant of the loss, defendant determined the “actual cash value” of the car was $13,227, and paid plaintiff $12,997 (after applying the $250 deductible).

Plaintiff sued defendant, asserting the policy required defendant to pay $25,000 in the event of a total loss of the car, without regard to the fair market value of the car at the time of the loss. According to plaintiff, the policy declarations page “identifies a dollar amount agreed upon by the Defendants and the insured for ‘Actual Cash Value’ in connection with the insured vehicle.” In plaintiff's case, “that identified amount was $25,000 for his 1960 Ford Thunderbird.” Plaintiff alleges that defendant's “actual cash value” policies, such as his, “in defining the ‘actual cash value’ of the insured automobile were intended to be and were valued policies within the meaning of [Insurance] Code [section] 412.” (Under the Insurance Code, a policy is either “open or valued” (Ins.Code, § 410); a valued policy is “one which expresses on its face an agreement that the thing insured shall be valued at a specified sum” ( id.,§ 412), and an open policy “is one in which the value of the subject matter is not agreed upon, but is left to be ascertained in case of loss” ( id., § 411).)

The relevant insurance policy provisions are these.

First, the declarations page of the policy shows the coverages (liability, medical, physical damage, and uninsured motorist) and the limits of liability for each area of coverage. The coverage that applies to plaintiff's loss, the physical damage coverage, limits the insurer's liability to paymentof the “Actual Cash Value unless otherwise stated, less deductible.” The declarations page describes the categories of physical damage coverage, including comprehensive and collision, with limits of liability of $25,000 in each case, with a deductible of $250. Thus, the declarations page looks like this, in pertinent part:

                ¦COVERAGES LIMITS OF LIABILITY                                               ¦
                ¦[Other coverages and limits omitted]                                        ¦
                ¦Physical Damage (Actual Cash Value unless otherwise stated, less deductible)¦
                ¦                     ¦         ¦                   ¦
                ¦                     ¦Vehicle 1¦[Vehicle 2 omitted]¦
                ¦Comprehensive        ¦$25,000  ¦                   ¦
                ¦(Less Deductible)    ¦$ 250    ¦                   ¦
                ¦Collision            ¦$25,000  ¦                   ¦
                ¦(Less Deductible)    ¦$ 250    ¦                   ¦
                ¦Car Rental Expense   ¦         ¦                   ¦
                ¦(Per Day)            ¦NA       ¦                   ¦

Second, the policy provisions on physical damage describe the limits of liability for a loss other than a total loss as follows: “In the event of: [¶] (1) loss to an insured automobile described in the declarations, we will pay the actual cash value of the damaged or stolen vehicle, the limit of liability stated in the declarations or the amount necessary to repair or replace the vehicle, whichever is least; ...” (Emphasis omitted.)

Third, the policy provisions specify the limits of liability for the total loss of an insured automobile as follows: “In the event of total loss to an insured automobile described in the declarations for which a limit of liability is stated, we will pay the actual cash value up to the limit stated in the declarations for that automobile. The loss will be reduced by the applicable deductible.” (Emphasis omitted.)

Fourth, the policy provides an appraisal option in the event of a total loss: “If after a total loss ..., the amount of loss cannot reasonably be established, either you or we can request in writing that the amount of loss be determined by appraisal.” (Emphasis omitted.) The policy describes the procedure and states, “The appraisers shall then establish the amount of loss subject to our limit of liability.”

In his first amended complaint, plaintiff alleged that [a]ctual cash value,’ as used in the Policy, is intended to mean and means the cash value agreed upon by defendants and the insured at the time the Policy is issued, as reflected in the Policy Declarations Page.” This interpretation, plaintiff alleges, is also supported by extrinsic evidence. The extrinsic evidence “includes, but is not limited to” defendant's assessment of actual cash value through its inspection during the application process, and the increase in premiums demanded as “Actual Cash Value” increased.

The complaint alleged that during the application process, defendant required an inspection, during which defendant assessed “the physical and mechanical condition of the vehicle to evaluate its ‘Actual Cash Value.’ Defendant's premiums were based on the “Actual Cash Value,” and [t]he higher the ‘Actual Cash Value,’ the higher the premiums.” “The term actual cash value is defined for each insured vehicle on the Declarations Page following inspection of each vehicle.” Plaintiff “procured and paid premiums for an insurance policy designating $25,000 for ‘actual cash value’ in connection with the insured automobile.”

Based on these allegations, plaintiff's first amended complaint alleged causes of action for breach of contract, tortious breach of the implied covenant of good faith and fair dealing, declaratory relief, fraud, unfair and fraudulent business practices under the Business and Professions Code, and rescission based on unilateral mistake of fact.

The trial court sustained defendant's demurrer to the first amended complaint without leave to amend.2 The court observed that the contract “was clear on its face that the limit on insurer liability is the actual cash value of the vehicle unless otherwise stated. And it's clear and unambiguous that one is paid the actual cash value up to a limit of 25 thousand dollars.”

Judgment was entered and this appeal followed.


Plaintiff's principal contention is that the trial court erred when it concluded the insurance contract was “clear on its face.” Plaintiff contends the court was required, as a matter of law, to credit his allegations that extrinsic evidence “renders the insurance contract at issue here ambiguous”—that is, his “allegation that extrinsic evidence supports his construction of the Policy ... is enough, by itself, to require that Defendants' demurrer be overruled.” We conclude plaintiff misconstrues the law as it applies to the complaint in his case.

1. The Law

Our review is de novo. ( Hervey v. Mercury Casualty Co. (2010) 185 Cal.App.4th 954, 960, 110 Cal.Rptr.3d 890( Hervey ).) A demurrer admits all facts properly pleaded, but not contentions, deductions or conclusions of law or fact. ( Ibid.) We determine whether the complaint states facts sufficient to constitute a cause of action, and whether there is a reasonable probability the complaint could have been amended to so state. ( Id. at pp. 960–961, 110 Cal.Rptr.3d 890.)

The usual rules of contract interpretation apply to insurance policies. (See AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821–822, 274 Cal.Rptr. 820, 799 P.2d 1253.) The mutual intention of the parties at the time of contracting governs interpretation, and “is to be inferred, if possible, solely from the written provisions of the contract.” ( Ibid.) “The ‘clear and...

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