National Auto. & Cas. Ins. Co. v. Underwood

• Decision Date: 28 August 1992
• Docket Number: Nos. C011141,C012345,s. C011141
• Citation: 9 Cal.App.4th 31,11 Cal.Rptr.2d 316
• Court: California Court of Appeals Court of Appeals
• Parties: NATIONAL AUTOMOBILE & CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Lorrie UNDERWOOD, et al., Defendants and Respondents. NATIONAL AUTOMOBILE & CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Lorrie UNDERWOOD, Defendant and Respondent.

Page 316

11 Cal.Rptr.2d 316

9 Cal.App.4th 31

NATIONAL AUTOMOBILE & CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Lorrie UNDERWOOD, et al., Defendants and Respondents.

NATIONAL AUTOMOBILE & CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Lorrie UNDERWOOD, Defendant and Respondent.

Nos. C011141, C012345.

Court of Appeal, Third District, California.

Aug. 28, 1992.

Dean R. Lueders, Arthur L. Morgan and Halkides & Morgan, Redding, for plaintiff and appellant.

Russell J. Swartz, William L. Meek and Meek and Swartz, Redding, for defendants and respondents.

DAVIS, Associate Justice.

This case concerns an automobile liability insurance policy that excludes coverage for bodily injury to an insured as well as to the residents of the insured's household, and how that exclusion affects injured children of divorced parents.

National Automobile & Casualty Insurance Co. (National) appeals from summary judgments in favor of Bruce Bonner (Bruce) and Lorrie Underwood (Lorrie) and from the denial of its motion for summary judgment. We affirm.

BACKGROUND

On March 23, 1989, Lorrie was involved in an automobile accident that resulted in injuries to her two children who were riding as passengers. Bruce, Lorrie's ex-husband and the children's father, filed suit individually and on the children's behalf against Lorrie. Lorrie's insurance company, National, filed a declaratory relief action against Lorrie and Bruce asserting it had no duty to indemnify or defend Lorrie under her policy. Lorrie's policy excluded coverage for bodily injury to an insured. The policy defined an insured as "the named [i]nsured and any resident of the same household." National claimed the children were excluded under the policy, as they were residents of Lorrie's household.

Lorrie and Bruce divorced in December of 1987. Around the time of the accident, the two of them shared legal and physical custody of their children pursuant to a court-sanctioned custody agreement. The agreement designated Bruce as the children's "primary caretaker." The children usually lived with Bruce and attended school full time in Shasta County. Lorrie lived in Tehama County. The children stayed with Lorrie every other weekend; in addition they spent alternate Thanksgivings, half their Christmas and Easter school vacations, and ten weeks during the summer with her. At the time of the accident, the children were on their Easter vacation and were with Lorrie pursuant to the custody agreement. The children had arrived at Lorrie's residence the day before the accident.

Lorrie lived in a two-bedroom apartment at the time of the accident. The children slept in the second bedroom when they stayed with her. They kept a few personal items at Lorrie's apartment, such as clothes, toys, and toothbrushes. The bedroom which the children used was not decorated in any specific manner and was used for storage in addition to sleeping quarters.

In response to National's declaratory relief action, Bruce moved successfully for summary judgment on the ground that the children were not residents of Lorrie's household at the time of the accident. The court found there were no factual disputes over the living arrangements of the children. Reading the exclusionary clause as a layperson would, the court held this was a situation where the children "resided" with Bruce and were visiting Lorrie at the time of the accident. Accordingly, the court found, as a matter of law, that the children were not "residents" of Lorrie's household and the exclusion therefore did not apply. Additionally, the court reiterated the rule that any ambiguity or uncertainty in an insurance policy should be interpreted against the insurer.

Subsequently, Lorrie and National each moved for summary judgment. Using the reasoning employed on Bruce's motion, the trial court granted Lorrie's motion and denied National's. The appeals from these judgments adverse to National were consolidated by order of this court.

STANDARD OF REVIEW

Summary judgment is proper if there is no triable issue of material fact and the moving party is entitled to summary judgment as a matter of law. (Code Civ.Proc., § 437c.) Summary judgment may not be granted unless the supporting papers show there is no triable issue of material fact. (Safeco Ins. Co. v. Gibson (1989) 211 Cal.App.3d 176, 179-180, 259 Cal.Rptr. 206.) The interpretation of an insurance policy, like any other contract where there is no conflicting extrinsic evidence, is a matter of law for the reviewing court's independent determination. (Cal-Farm Ins. Co. v. TAC Exterminators, Inc. (1985) 172 Cal.App.3d 564, 571, 218 Cal.Rptr. 407.)

APPROPRIATENESS OF SUMMARY JUDGMENT

National argues that because the underlying facts could indicate different possible outcomes, summary judgment is inappropriate. It bases this argument on State Farm Life Ins. Co. v. Pearce (1991) 234 Cal.App.3d 1685, 286 Cal.Rptr. 267. Pearce, however, differs from the case before us; in Pearce factual issues remained for resolution. In the present case the facts are undisputed. The only question here is the legal effect of these facts.

This case is akin to United Services Automobile Assn. v. Baggett (1989) 209 Cal.App.3d 1387, 258 Cal.Rptr. 52, where the court stated that "[i]nterpretation of [an] insurance policy presents a question of law which we answer independently [when] the trial court's interpretation did not depend on conflicting extrinsic evidence." (Id. at p. 1391, 258 Cal.Rptr. 52, emphasis added.) If we were to follow National's argument, any time conflicting inferences could be drawn, summary judgment would be inappropriate, even if no factual dispute was involved. But the California Supreme Court made it clear in Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 44 Cal.Rptr. 767, 402 P.2d 839, that it is only when conflicting inferences arise from conflicting evidence, not from uncontroverted evidence, that a trial court's interpretation of a written instrument is binding. (Id. at p. 866, fn. 2, 44 Cal.Rptr. 767, 402 P.2d 839.) " 'The very possibility of ... conflicting inferences, actually conflicting interpretations, far from relieving the appellate court of the responsibility of interpretation, signalizes the necessity of its assuming that responsibility.' [Citation.]" (Ibid.) As the court in Baggett noted, "[i]t is a question of law whether an insurance policy is ambiguous by virtue of being susceptible to two or more reasonable interpretations." (209 Cal.App.3d at p. 1391, 258 Cal.Rptr. 52.)

Pursuant to these principles, we find that summary judgment was an appropriate

procedure here. Although the inferences drawn from the facts could differ, the facts themselves are undisputed. (Code Civ.Proc., § 437c.)

LIABILITY OF NATIONAL

The pertinent provisions of the National policy are as follows:

"PART I--PROTECTION AGAINST LIABILITY, MEDICAL EXPENSE, UNINSURED MOTORISTS AND ACCIDENTAL DEATH BENEFIT

LIABILITY COVERAGE: The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage, arising out of the ownership, maintenance or use of an owned automobile or a non-owned automobile, and the Company shall defend any suit alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent; ...

"Persons Insured: Under the Liability and Medical Expense Coverages, the following are Insureds:

(1) with respect to an owned automobile,

(A) the named Insured and any resident of the same household, ...

"Definitions: When used with respect to Part I; ...

'insured' means a person or organization described under 'Persons Insured'; ...

"Exclusions: This policy does not apply; ...

"Under the Liability ... Coverage,[ ] ...

(9) to bodily injury to an Insured,...."

In Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 180 Cal.Rptr. 628, 640 P.2d 764, our Supreme Court set forth the established principles we use to interpret insurance policies. "Words used in an insurance policy are to be interpreted according to the plain meaning which a lay[person] would ordinarily attach to them. Courts will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists. [Citations.]

"On the other hand, 'any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer and ... if semantically permissible, the contract will be given such construction as will fairly achieve its object of providing indemnity for the loss to which the insurance relates.' [Citations.] The purpose of this canon of construction is to protect the insured's reasonable expectation of coverage in a situation in which the insurer-draft[er] controls the language of the policy. [Citations.] Its effect differs, depending on whether the language to be construed is found in a clause providing coverage or in one limiting coverage. 'Whereas coverage clauses are interpreted broadly so as to afford the greatest possible protection to the insured [citations], exclusionary clauses are interpreted narrowly against the insurer. [Citations.]' [Citations.] '[A]n insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear. As we have declared time and again, "any exception to the performance of the basic underlying obligation must be ... stated ... clearly to apprise the insured of its effect" [citation]; thus, "the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language." ...' [Citation.]" (30 Cal.3d at pp. 807-808, 180 Cal.Rptr. 628, 640 P.2d 764).

The interpretation of the word "resident" as used in National's policy turns on whether that word is ambiguous in the particular context of children of divorced parents presented here. If "resident" is found to be...