Pacific Indem. Co. v. Superior Court In and For City and County of San Francisco

• Decision Date: 02 November 1966
• Citation: 54 Cal.Rptr. 470,246 Cal.App.2d 63
• Court: California Court of Appeals Court of Appeals
• Parties: PACIFIC INDEMNITY COMPANY, Petitioner, v. The-SUPERIOR COURT of the State of California IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent; Kevin LANG, Real Party in Interest. Civ. 23802.

Page 470

54 Cal.Rptr. 470

246 Cal.App.2d 63

PACIFIC INDEMNITY COMPANY, Petitioner, v. The-SUPERIOR COURT of the State of California IN AND FOR the CITY AND COUNTY OF SAN FRANCISCO, Respondent;

Kevin LANG, Real Party in Interest.

Civ. 23802.

District Court of Appeal, First District,

Division 1, California.

Nov. 2, 1966.

Hearing Denied Dec. 27, 1966.

Bronson, Bronson & McKinnon, San Francisco, for petitioner.

Nathan Cohn, San Francisco, for real party in interest.

SULLIVAN, Presiding Justice.

Petitioner seeks a writ of mandate commanding respondent superior court to issue a preliminary injunction enjoining an arbitration proceeding pending the final determination of an action brought by petitioner in the court below.

Prior to September 18, 1960 petitioner issued a policy of automobile insurance to Vaughn Lang, father of real party in interest Kevin Lang, a minor, effective for the period September 18, 1960 to September 18, 1961, together with a 'Family Protection Coverage Endorsement' providing for uninsured motorist coverage as required by the statute then in effect. (See Ins. Code, § 11580.2 as enacted in 1959; see Stats. 1959, ch. 817, § 1, p. 2835.) ¹ On June 18, 1961, while the above policy was in effect, Kevin was allegedly injured by an uninsured motorist.

The parties before us appear to be in agreement that Kevin was an additional insured within the provisions of the policy. It is also undisputed that petitioner received no notice of the alleged accident or of any claim on behalf of Kevin until June 2, 1964, although the policy and endorsement thereof required that notice of any claim be given petitioner 'as soon as practicable.' No demand for arbitration was filed on behalf of Kevin until April 20, 1966 at which time it was filed with the American Arbitration Association (American) by Kevin's attorney. Petitioner alleges on information and belief, and real party does not deny, that the latter has never brought an action against the uninsured motorist. ²

Shortly after real party's demand for arbitration, petitioner brought an action for declaratory and injunctive relief in the court below against Kevin Lang, Vaughn Lang and American seeking a judgment declaring that any cause of action or right to demand arbitration under the policy arising out of the accident of June 18, 1961 was barred because of the failure of Kevin or his father to demand arbitration within the one-year period prescribed by section 11580.2, subdivision (h) as enacted in 1961 and by the failure of said insured to give notice of the claim 'as soon as practicable' as required by the policy. Petitioner's action below also sought preliminary and permanent injunctions staying the arbitration proceedings initiated before American. On June 23, 1966 the trial court denied petitioner's motion for a preliminary injunction and dissolved the temporary restraining order theretofore issued. On June 29, 1966 it made and filed a formal written order to this effect. Although the court's order is silent as to its grounds, petitioner asserts, and it is not disputed, that the court deemed it was prohibited under the authority of Federal Mut. Ins. Co. v. Schermerhorn (1965) 238 Cal.App.2d 900, 48 Cal.Rptr. 325 from enjoining an arbitration proceeding initiated pursuant to the uninsured motorist statute. Petitioner thereupon commenced the instant proceedings.

We must first survey the statutory setting in which the present controversy is cast. Section 11580.2, which was added to the Insurance Code in 1959 (Stats.1959, ch. 817, p. 2835), provided that no policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance or use of a motor vehicle should be issued unless it contained or had added to it by endorsement a provision insuring the named and additional insured for all sums which he would be legally entitled to recover as damages for bodily injury against the owner or operator of an uninsured motor vehicle. Said statute also required a provision in the policy or endorsement '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.' (p. 2837.) However, the statute prescribed no period of limitations during which any such arbitration proceedings should be instituted.

In 1961 the Legislature repealed the above section 11580.2 (Stats.1961, ch. 1189, § 1, p. 2921) and simultaneously re-enacted section 11580.2 (Stats.1961, ch. 1189, § 2, p. 2921) in substantially the same terms although with certain changes and additions. The repeal and re-enactment were effective September 15, 1961. The re-enactment, among other things, added subdivision (h) which provides 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.' (§ 11580.2, subd. (h); see Stats.1961, p. 2924.)

The central issue in this case is whether the court below abused its discretion in denying injunctive relief. Our resolution of this issue rests on a determination of two subsidiary questions: (1) Was the issue as to whether real party's claim was barred by the one-year period of limitations specified in section 11580.2, subdivision (h) one to be decided by the trial court or one to be committed to arbitration? (2) Was real party's right to demand arbitration in fact barred under the provisions of such statute?

The first question appears to be determined by Aetna Cas. & Surety Co. v. Superior Court (1965) 233 Cal.App.2d 333, 43 Cal.Rptr. 476. There the accident giving rise to the claim for damages under the uninsured motorist coverage occurred on October 17, 1962. No action of any kind was taken by the claimant until September 23, 1964, almost two years after the accident, at which time she instituted arbitration proceedings before the American Arbitration Association. The insurer thereupon commenced an action against the claimant seeking a judgment enjoining the arbitration proceedings and declaring that the claimant had no valid cause of action. The trial court sustained the claimant's demurrer and ordered all further proceedings stayed pending determination of the arbitrator. The appellate court, upon the petition of the insurer, issued a peremptory writ of mandate commanding the trial court to vacate its order and overrule the demurrer.

Adverting to the holding in Jordan v. Friedman (1946) 72 Cal.App.2d 726, 165 P.2d 728 that failure to make a timely demand for arbitration constitutes a waiver of the right, the court concluded that such a rule was 'peculiarly applicable' to the uninsured motorist statute when examined as a whole. 'It appears to be the legislative intent that compliance with subdivision (h) is a condition precedent to arbitration as well as to the enforcement of any other right under the policy. Failure to act within this time limit constitutes a waiver of the right to arbitrate, and such waiver may be determined by a court whose jurisdiction is invoked for that purpose.' (233 Cal.App.2d at p. 339, 43 Cal.Rptr. at p. 480.)

The court in Aetna further observed that courts determine facts on the weight of competent evidence and apply the law according to settled principles whereas arbitrators may base their decision upon "broad principles of justice and equity." 'Subdivision (h) (of § 11580.2) is, in effect, a statute of limitations. Such statutes are intended to set controversies at rest by foreclosing consideration thereafter as to the merits of the claim. To reject a strict application of the law in favor of 'broad principles of justice and equity' would make a statute of limitation meaningless.' (P. 340, 43 Cal.Rptr. p. 480.) It therefore concluded that it was the trial court's duty to determine whether the insurer was relieved of any obligation to arbitrate by reason of the claimant's failure to satisfy the conditions precedent imposed by the statute.

We therefore feel that the holding and the rationale of the court in Aetna are applicable to the instant case and we have concluded that the issue of the statute of limitations set forth in subdivision (h) of section 11580.2 was one for judicial determination prior to arbitration. This conclusion, we think, promotes the fundamental plan and purpose of the statute. The issue of the statute of limitations is not one of the arbitrable issues having to do with the liability of the Uninsured motorist to the Insured but relates directly to the liability or obligation of the Insurer to the Insured under the policy and pertinent statute. (§ 11580.2, subds. (a), (e), (h); see Aetna Cas. & Surety Co. v. Superior Court, supra, 233 Cal.App.2d 333, 337, 43 Cal.Rptr. 476; Fisher v. State Farm Mut. Auto. Ins. Co. (1966) 243 A.C.A. 933, 935--936, 52 Cal.Rptr. 721.) Furthermore our conclusion appears to be in harmony with Code of Civil Procedure section 1281.2 which provides for an order by the court compelling arbitration 'if it (the court) determines that an agreement to arbitrate the controversy exists, Unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; * * *' (Emphasis added.)

Federal Mut. Ins. Co. v. Schermerhorn, supra, 238 Cal.App.2d 900, 48 Cal.Rptr. 325, on which the trial court relied in denying injunctive relief, does not persuade us to a different conclusion and, in fact, is not in point at all. In that case Schermerhorn was injured as a result of a collision between the automobile in which she was riding and a truck. There was a dispute as to whether a...