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

• Decision Date: 20 September 1972
• Docket Number: S.F. 22930
• Citation: 7 Cal.3d 988,500 P.2d 1119,103 Cal.Rptr. 919
• Court: California Supreme Court
• Parties: , 500 P.2d 1119 Bernard ORPUSTAN, Plaintiff and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Respondent. In Bank

Page 919

103 Cal.Rptr. 919

7 Cal.3d 988, 500 P.2d 1119

Bernard ORPUSTAN, Plaintiff and Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Respondent.

S.F. 22930.

Supreme Court of California,

In Bank.

Sept. 20, 1972.

Ollie M. Marie-Victoire, San Francisco, for plaintiff and appellant.

Bledsoe, Smith, Cathcart, Johnson & Rogers, Robert A. Seligson and Lawrence E. Curfman III, San Francisco, for defendant and respondent.

Hutchins, Staiger & Preston, and Frank E. Preston, San Francisco, as amici curiae on behalf of defendant and respondent.

McCOMB, Justice.

Plaintiff appeals from a judgment for defendant following the granting of its motion for summary judgment in an action to compel arbitration under the uninsured motorist provisions of an automobile insurance policy issued to plaintiff by defendant.

The uninsured motorist coverage in the policy conforms to the requirements of Insurance Code section 11580.2. It provides, in statutory terms, that the insurer shall pay all sums which the insured shall become legally entitled to recover as damages for bodily injury from the owner or operator of an uninsured motor vehicle. An uninsured motor vehicle is defined to include a hit-and-run automobile which causes 'bodily injury' to the insured arising 'out of physical contact of such automobile with the insured or with an automobile which the insured is occupying.' 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.'

There is no dispute as to the facts. Plaintiff was injured when his truck went off the highway. He had no recollection of the events or details surrounding the accident. However, an eyewitness testified that plaintiff swerved his truck to avoid hitting an automobile identified only as a 'Rambler'; that the two vehicles came no closer together than three to ten feet; and that there was definitely no contact between them.

Plaintiff filed a claim for his personal injuries with defendant under the uninsured motorist provisions of his policy. Defendant denied liability because the facts did not show 'physical contact' between plaintiff's truck and the 'Rambler.' Plaintiff then sought arbitration under the terms of his policy; defendant declined to arbitrate, and this action ensued. Defendant prevailed on its motion for summary judgment predicated upon the factual absence of the 'physical contact' requirement pursuant to statute and its policy.

The parties recognize that their respective rights and obligations are controlled by Insurance Code section 11580.2 and the policy issued by defendant as mandated by statute.

The arbitration provisions of the policy, in pertinent part, read: 'If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, or do not agree as to the amount payable hereunder, then each party shall, upon written demand of either, select a competent and disinterested arbitrator. The two arbitrators so named shall select a third arbitrator. . . . The arbitrators shall then hear and determine the question or questions so in dispute, and the decision in writing of any two arbitrators shall be binding upon the insured and the company . . .'

The primary point of dispute between the parties is the purport of the arbitration agreement. Plaintiff contends that all disputes arising under the uninsured motorist coverage should be subject to decision by the arbitrator, including the issue of physical contact in relation to the insurer's liability under the policy. (Esparza v. State Farm Mut. Auto. Ins. Co., 257 Cal.App.2d 496, 500--501, 65 Cal.Rptr. 245; American Ins. Co. v. Gernand, 262 Cal.App.2d 300, 304--305, 68 Cal.Rptr. 810; Felner v. Meritplan Ins. Co., 6 Cal.App.3d 540, 543--544, 86 Cal.Rptr. 178.) On the other hand, defendant maintains that it was for the court to decide as a preliminary independent question whether there was physical contact between the unidentified car and the insured's vehicle, and that, absent a judicial finding of such fact, the arbitrator was without jurisdiction to proceed. (Pacific Automobile Ins. Co. v. Lang, 265 Cal.App.2d 837, 842--843, 71 Cal.Rptr. 637; Rodgers v. State Farm Mutual Auto. Ins. Co., 13 Cal.App.3d 641, 645--646, 91 Cal.Rptr. 678.)

It is our opinion that plaintiff's view should prevail in leaving the entirety of the controversy to the determination of the arbitrator. As was said in Esparza v. State Farm Mut. Auto. Ins. Co., supra, 257 Cal.App.2d 496, at page 500, 65 Cal.Rptr. 245, at page 247: 'General rules relative to arbitration and arbitration agreements and proceedings are provided in section 1280 et seq., Code of Civil Procedure. They reflect the strong legislative policy favoring arbitration.' Here the parties' agreement for arbitration of the issues whether the insured 'is legally entitled to recover damages from the owner or operator of an uninsured automobile' appears sufficiently comprehensive to include the subordinate question whether, within the meaning of the policy, the vehicle which caused the accident was an uninsured automobile (which for a hit-and-run automobile requires a finding of physical contact). As was said in Felner v. Meritplan Ins. Co., supra, 6 Cal.App.3d 540, at page 543, 86 Cal.Rptr. 178, at page 180: 'It is for the arbitrators to determine which issues were actually 'necessary' to the ultimate decision.'

To hold otherwise would deprive the insured of the value of arbitration as a speedy remedy under the Uninsured Motorist Coverage statute. (Ins. Code, § 11580.2.) As indicated in Felner, to require that a court preliminarily decide the 'jurisdictional facts' in a case where the insured is 'legally entitled to recover damages from the owner or operator of an uninsured automobile' would have the effect of 'turning a procedure designed to furnish prompt, continuous, expert, and inexpensive resolution of controversy into one carrying all the burdens and delays of civil litigation, overlaid by jurisdictional uncertainty between successive tribunals.' (Felner v. Meritplan Ins. Co., supra, 6 Cal.App.3d at p. 546, 86 Cal.Rptr. at p. 181). The parties contemplated expeditious resolution of disputes between them arising under the uninsured motorist coverage through the medium of arbitration, and all such disputes should be so decided. Cases on which defendant relies for sustaining the limited scope of the arbitrable issues and the necessity for preliminary court hearings on 'jurisdictional facts' are hereby disapproved: Pacific Automobile Ins. Co. v. Lang, supra, 265 Cal.App.2d 837, 71 Cal.Rptr. 637; Rodgers v. State Farm Mutual Auto. Ins. Co., supra, 13 Cal.App.3d 641, 91 Cal.Rptr. 678.

Contingent upon reaching this conclusion as to the propriety of arbitration for settlement of the parties' entire dispute, the parties have requested this court to consider the import of the ...