Meritplan Ins. Co. v. Woollum

• Decision Date: 14 October 1975
• Citation: 52 Cal.App.3d 167,123 Cal.Rptr. 613
• Court: California Court of Appeals Court of Appeals
• Parties: MERITPLAN INSURANCE COMPANY, Plaintiff and Respondent, v. David WOOLLUM, Defendant, Naomi Woollum, Defendant and Appellant. Civ. 46271.

Page 613

123 Cal.Rptr. 613

52 Cal.App.3d 167

MERITPLAN INSURANCE COMPANY, Plaintiff and Respondent, v. David WOOLLUM, Defendant Naomi Woollum, Defendant and Appellant.

Civ. 46271.

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

Oct. 14, 1975.

Rehearing Denied Nov. 10, 1975.

Ghitterman, Schweitzer & Herreras and William A. Herreras, Ventura, for defendant and appellant.

Stockdale, Peckham, Estes, Ramsey, Lawler & Iorillo and John E. Stockdale, Los Angeles, for plaintiff and respondent.

THOMPSON, Associate Justice.

This appeal from a judgment in declaratory relief construing the exclusion provisions of an automobile insurance policy presents the constantly recurring issue of whether the particular exclusion clause is 'plain, clear and conspicuous' so as to be effective, or is 'ambiguous' so as not to deny coverage. Noting that a flood of prior decisional law establishes only that ambiguity lies in the eyes of the beholder and that the vision of judicial beholders differs, we seek the guidance of an unclear body of law previously applied in situations similar to that involved in the case at bench. Aware that the continued vitality of this opinion probably depends upon whether beholder Justice Matthew Tobriner (No) or beholder Justice Raymond Sullivan (Yes) is able to command a majority of his other colleagues on the California Supreme Court (see e.g., State Farm Mut. Auto. Ins. Co. v. Jacober, 10 Cal.3d 193, 110 Cal.Rptr. 1, 514 P.2d 953; Schwalbe v. Jones, 14 Cal.3d 1, 120 Cal.Rptr. 585, 534 P.2d 73, rehearing granted), we conclude that the exclusion clause here considered meets the test of 'plain, clear and conspicuous.'

The case at bench reaches us on what is in effect an agreed statement of facts. Meritplan Insurance Company issued an automobile policy to David Woollum covering an automobile standing in his name alone. The policy limits are $15,000. Consisting of a 16 page foldover form, the policy on page one states, under the heading 'Part I--Liability,' that Meritplan agrees: 'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . bodily injury . . . sustained by any person . . . arising out of the ownership . . . or use of the owned automobile . . ..'

On page one under a subheading 'Persons Insured,' the policy provides: 'The following are insureds under Part I . . . with respect to the owned automobile: (1) the named insured, (2) any other person using such automobile with the permission of the named insured . . ..' On page two of the policy, under the subheading 'Definitions: Under Part I,' it states: "(N)amed insured' means the individual named in the declarations and also includes his spouse, if a resident of the same household; ( ) 'insured' means a person or organization described under 'persons insured'; ( ) 'relative' means a relative of the named insured or spouse who is a resident of the same household and not temporarily residing . . . elsewhere; provided neither he nor his spouse owns a private passenger automobile.'

On page three under the subheading 'Exclusions,' the policy provides: 'This policy does not apply under Part I: ( ) to bodily injury to (1) the spouse or any parent, son, or daughter of the insured, or (2) the named insured.'

While the policy was in effect, David Woollum's wife, Naomi, was injured while riding as a passenger in an automobile registered in David's name and driven by him. Naomi sued David for her injuries. Meritplan undertook defense of the action. It was stipulated that Meritplan would pay Naomi the policy limit if she prevailed in a parallel declaratory relief action which is the case at bench.

Agreeing to the existence of the policy provisions stated here and that there is no other evidence relevant to interpretation of the instrument, Meritplan, on the one hand, and Naomi and David, on the other, each moved for summary judgment seeking a declaration of the policy. Meritplan contended that the exclusion clause of the policy barred coverage for injury to Naomi. David and Naomi contended that the policy afforded coverage for injury to Naomi while a passenger in the automobile driven by David. The parties agreed that David is the only person designated by name as an insured in the policy declaration and that Naomi is David's spouse and a resident of the same household. The trial court held for Meritplan, and this appeal by Naomi followed.

Naomi contends: (1) the exclusionary clause of the Meritplan policy is not conspicuous, plain and clear and is reasonably susceptible of an interpretation by which it does not exclude Naomi from its coverage; (2) if the clause is construed to exclude Naomi, it is against public policy; and (3) if it is so construed, the construction creates a class of people wholly unprotected against injuries sustained in vehicle accidents.

Exclusionary Clause

Coverage clauses of an insurance policy are construed broadly, resolving all ambiguity in favor of coverage. Exclusionary clauses are interpreted narrowly, resolving all ambiguity against exclusion. (Gray v. Zurich Insurance Co., 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168; Mid-Century Ins. Co. v. Hauck, 35 Cal.App.3d 293, 110 Cal.Rptr. 707.)

The clause of the policy covering the obligation of the insured to pay damages because of bodily injury sustained by 'any person,' liberally construed, includes the obligation of the insured, David, to pay damages for injury to his wife, Naomi. (State Farm Mut. Auto. Ins. Co. v. Jacober, supra, 10 Cal.3d 193, 200, 110 Cal.Rptr. 1, 514 P.2d 953.) Difficulty in the case at bench lies in determining whether a narrow construction of the exclusionary clause excludes injury to Naomi from the ambit of the Meritplan policy.

Clauses of an automobile insurance policy similar to those which are here relevant were considered by the Court of Appeal in Farmers Ins. v. Frederick, 244 Cal.App.2d 776, 53 Cal.Rptr. 457. In Frederick, the insurance covered liability 'which the insured becomes legally oblig(ated) to pay because of . . . bodily injury to any person, . . . arising out of the ownership' of the described vehicle. The policy included a section stating: 'Definition of 'Named Insured' and 'Insured' . . . ( ) If the Insured named . . . is an individual, the term 'named insured' includes his spouse if a resident of the same household; ( ) The unqualified word 'insured' includes . . . the named insured and his relatives (and any permissive user); ( ) The term 'the Insured' is used severally and not collectively, but the inclusion herein of more than one insured shall not increase the limits of . . . liability.' The policy included a section entitled 'Exclusions' stating: 'This policy does not apply . . . (t)o bodily injury to the Insured or any member of the family of the insured residing in the same household as the insured.'

Frederick, the insured specifically named in the policy, permitted Edwards to drive the insured vehicle while Frederick rode in it. Both were injured in an accident. In a declaratory relief action, the insurance carrier claimed that the exclusionary clause exempted it from liability to Frederick on the policy.

With a dissenting opinion, Division Two of the Second Appellate District of the Court of Appeal held that the exclusion clause did not apply. It reasoned: '(If the insurance company) by the exclusion meant to include within its operative effect injuries to the named insured even though some other insured was driving, the language of the exclusion must be such as to leave no doubt that the definition of 'insured' is not merely for contractual convenience, but that the named insured can never recover under the policy, or recover only in certain situations, irrespective of who drives.' (244 Cal.App.2d at p. 782, 53 Cal.Rptr. at p. 461.) From that reasoning, the Frederick court concluded that the policy language excluded only the person driving the vehicle at the time of injury and resident members of his family. (244 Cal.App.2d at p. 783, 53 Cal.Rptr. 457.)

Similar policy language again reached the Court of Appeal in Farmers Ins. Exch. v. Geyer, 247 Cal.App.2d 625, 55 Cal.Rptr. 861. There a wife was injured when she fell out of a truck driven by her husband. A policy with an insuring clause similar to that involved in Frederick covered the truck. Husband was the specifically named insured. The policy provided, under the heading 'Definition of Named Insured': 'If the insured named in . . . the Declarations is an individual, the term 'named insured' includes his spouse if a resident of the same household.' A segment of the policy entitled 'Exclusion Under Part I' reads: 'This policy does not apply . . . to the liability of any insured for bodily injury to (a) any member of the same household of such insured . . . or (b) the named insured.' (247 Cal.App.2d at p. 628, 55 Cal.Rptr. at p. 863.)

Division One of the First Appellate District of the Court of Appeal held that the exclusionary clause of the policy was enforceable so that the injured wife, as a named insured, could not recover. In reaching that result, the court relied in part upon the dissenting opinion in Frederick. (247 Cal.App.2d at p. 630, 55 Cal.Rptr. 861.)

Geyer was followed by Farmers Ins. Exch. v. Brown, 252 Cal.App.2d 120, 60 Cal.Rptr. 1. In Brown, a wife was killed while riding in an automobile owned by her and her husband and driven by him. The automobile was covered by a policy with an insuring clause similar to that in Frederick and Geyer. The exclusionary clause of the policy states that the policy 'does not apply '. . . to the liability of any insured for bodily injury to . . . the named insured. '' The definition section of the policy states: 'If the insured named . . . is an individual, the term 'named insured' includes his spouse if a resident of the same household.' (252 Cal.App.2d at p. 121, 60 Cal.Rptr. at p. 2.) Only the husband was...