Portillo v. Farmers Ins. Exchange

• Decision Date: 05 November 1965
• Citation: 47 Cal.Rptr. 450,238 Cal.App.2d 58
• Court: California Court of Appeals Court of Appeals
• Parties: Faye Sena PORTILLO, Rosemary Sena Garcia, Martha Sena, a minor, Clara Sena, a minor, Cella Sena, a minor, and Flora Sena, a minor, etc., Plaintiffs and Appellants, v. FARMERS INSURANCE EXCHANGE, Defendant and Respondent. Civ. 390.

Page 450

47 Cal.Rptr. 450

238 Cal.App.2d 58

Faye Sena PORTILLO, Rosemary Sena Garcia, Martha Sena, a minor, Clara Sena, a minor, Cella Sena, a minor, and Flora Sena, a minor, etc., Plaintiffs and Appellants, v. FARMERS INSURANCE EXCHANGE, Defendant and Respondent.

Civ. 390.

District Court of Appeal, Fifth District, California.

Nov. 5, 1965.

Hearing Denied Jan. 12, 1966.

Kane, Canelo & Mash and Thomas J. Kane, Jr., Merced, Cyril Viadro, San Francisco, for appellants.

Kroloff, Brown, Belcher & Smart and Claude H. Smart, Jr., Stockton, Richard G. Logan, Oakland, for respondent.

RALPH M. BROWN, Justice.

This is an appeal by the plaintiffs from a judgment denying them recovery under the uninsured motorists provision of an insurance policy.

Plaintiff Faye Sena Portillo's husband was killed in an automobile accident which occurred more than a year before the effective date of Insurance Code section 11580.2. His car collided with an automobile driven by Turner and another driven by Attebery while Turner and Attebery were engaged in a drag race. Turner had no applicable insurance, being in the Service, and had an 'on base' liability policy covering his automobile only while it was on a military reservation. Attebery, also in the Service, had a policy with 'off base' coverage with limits of $10,000 for the death of one person. This policy excluded coverage while racing, etc., and the carrier, International Automobile Insurance Exchange, denied coverage.

The plaintiffs sued Turner and Attebery and recovered a judgment against both in the sum of $65,000 ¹. Thereafter, the plaintiffs filed an action against Attebery's carrier to recover both the limits of that policy and the excess of the judgment over those limits, on the theory that International Automobile Insurance Exchange had been guilty of bad faith in refusing to settle the wrongful death action within the limits. International settled this judgment by the payment of $23,000, which left an unsatisfied judgment as against Turner to the extent of $42,000. Plaintiffs then brought this action to recover under the uninsured motorist provision of a policy issued by the defendant. The defense was predicated upon the fact that the plaintiffs had failed to obtain the written consent of the defendant to the settlement with International Automobile Insurance Exchange as provided in the policy, and such failure freed the defendant from liability under the uninsured motorist coverage.

The matter was heard on an agreed statement of facts. It was stipulated that the plaintiffs had preserved their right to seek relief under the policy; that the plaintiffs had secured the written consent of the defendant to exhaust their rights against Turner and Attebery in the wrongful death action before bringing this action against the defendant herein. It was not, however, stipulated that the defendant had refused to consent to the settlement, or that the plaintiffs had attempted to procure its consent thereto. At the hearing it was further stipulated that, on the morning set for the first day of trial of the action against International, the plaintiffs' counsel telephoned the defendant's counsel and advised him that the plaintiffs would like to settle the case and asked if the defendant would consider contributing $3,000 to a settlement, which the defendant refused to do; that at that time the plaintiffs were contemplating settlement but had not entered into a settlement; that defendant's counsel understood that the case would go to trial in the event defendant refused to contribute; and the next information he received from the plaintiffs was that they had consummated the settlement.

Plaintiffs appeal from an adverse judgment.

The clause in question refers to an endorsement the pertinent part of which is as follows:

'Exclusions

'This insurance does not apply

'1. * * *

'2. To bodily injury of an insured with respect to which such insured or his representative shall, without the written consent of the Exchange, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor.'

One of plaintiffs' contentions is that they were not required to obtain the defendant's consent to settle with Attebery's carrier, and further, that the defendant could not arbitrarily withhold its consent to the settlement. Plaintiffs refer to Mills v. Farmers Ins. Exchange, 231 Cal.App.2d 124, at pages 128-129, 41 Cal.Rptr. 650, as to the insurer's subrogation rights. It is contended that the reasons invoked in the Mills case do not apply in the case before us because the defendant could not have insisted that the plaintiffs proceed against Attebery or his carrier and that further, the defendant could not complain that more could have been collected than was collected, there being no right of subrogation, and the policy of the defendant would not allow it to proceed against Attebery or his carrier. Furthermore, it is argued that there could be no subrogation to a cause of action arising out of physical injury to a person citing Fifield Manor v. Finston, 54 Cal.2d 632, 7 Cal.Rptr. 377, 354 P.2d 1073, 78 A.L.R.2d 813, and other similar cases.

Plaintiffs also argue that the consent requirement is inapplicable as defendant's consent was required only for a settlement with a person who may be liable for the injury suffered by the insured; it was required only for a settlement made before the liability of the person who may be liable has been established by a judgment; and inasmuch as settlement was made after Attebery's liability had been established by the judgment, without the defendant's full consent, nevertheless, the policy should be construed against the insurance company and no consent should be required in this case.

They also contended that the consent of the defendant was withheld arbitrarily inasmuch as it is claimed that the defendant took the position that it was an all or nothing proposition, and that it was in no way required to give consideration to plaintiffs' chances of prevailing against Attebery's carrier; that therefore,...