Rangel v. Interinsurance Exchange of Auto. Club of Southern California, B047799

• Decision Date: 28 August 1991
• Docket Number: No. B047799,B047799
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 233 Cal.App.3d 1073, 10 Cal.App.4th 472, 4 Cal.App.4th 1730 233 Cal.App.3d 1073, 10 Cal.App.4th 472, 4 Cal.App.4th 1730 Alice Casarez RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.

Page 131

285 Cal.Rptr. 131

Previously published at 233 Cal.App.3d 1073, 10 Cal.App.4th 472, 4 Cal.App.4th 1730

233 Cal.App.3d 1073, 10 Cal.App.4th 472, 4 Cal.App.4th 1730

Alice Casarez RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.

No. B047799.

Court of Appeal, Second District, Division 3, California.

Aug. 28, 1991.

Review Granted Dec. 19, 1991.

Shernoff, Scott & Bidart, Robert K. Scott and Marian H. Tully, Claremont, for plaintiff and appellant.

Gilbert, Kelly, Crowley & Jennett, James B. Crowley, Clifford H. Woosley and Michael I.D. Mercy, Los Angeles, for defendant and respondent.

DANIELSON, Associate Justice.

Alice Casarez Rangel (plaintiff) appeals from a judgment in favor of Interinsurance Exchange of the Automobile Club of Southern California (defendant) based on the grant of the latter's motion for judgment on the pleadings.

We reverse the judgment.

ISSUE PRESENTED

The pivotal issue presented by this appeal is whether Insurance Code section 11580.2 (section 11580.2) authorizes an insurer, at its option, to await the final resolution of its insured's workers' compensation claim before carrying out its duties to investigate and to settle the insured's claim for uninsured motorist benefits.

We decide this issue adversely to the insurer.

PROCEDURAL AND FACTUAL STATEMENT

On September 5, 1985, plaintiff ¹ filed a complaint for tortious breach of insurance contract against defendant, pleading two causes of action, for (1) breach of the duty of fair dealing and good faith, and (2) breach of its statutory duties by knowingly committing or performing specified unfair claims settlement practices prohibited by Insurance Code section 790.03, subdivision (h). ²

The complaint alleged: On or about December 5, 1977, defendant issued plaintiff an automobile insurance policy, number J22021 34 (policy); a copy of which was attached as Exhibit "A". On or about February 11, 1978, plaintiff sustained severe injuries as the result of a hit and run accident caused by an uninsured motorist. On or after February 11, 1978, plaintiff filed a claim for uninsured motorist coverage benefits under the policy, based on her injuries.

It further alleged: Defendant initially refused to pay the uninsured motorist benefits on the ground that her employer's workers' compensation carrier was liable for her medical expenses. On September 6, 1984, more than six years after notice of that claim, defendant admitted its liability to plaintiff under the policy and issued a draft payable to plaintiff in the sum of $15,000 contingent upon her execution of a release in full settlement and agreement for a lien to be filed in plaintiff's workers' compensation action.

The essence of the complaint is defendant's alleged failure promptly to investigate plaintiff's claim under the policy and its alleged delay of about six years before settling and paying her claim in the amount of $15,000, the policy limits, despite the fact that liability was reasonably clear as early as February, 1978.

In its answer, filed October 8, 1985, defendant generally denied the material allegations of the complaint and asserted eight affirmative defenses, including one based on the contention that the validity of plaintiff's claim for uninsured motorist coverage could not have been determined while plaintiff was pursuing her workers' compensation claim.

The Motion for Summary Judgment

On January 27, 1988, defendant filed a motion for summary judgment, which was accompanied by a separate statement of undisputed facts, on the ground, inter alia, that, as a matter of law, it had no duty to pay plaintiff any uninsured motorist benefits until after her workers' compensation claim was determined. Defendant argued that under section 11580.2, subdivision (h), and the contract between them, which essentially paralleled the language of section 11580.2, defendant was entitled to deduct the amount of the workers' compensation benefits to be paid plaintiff from any uninsured motorist benefits it might owe her.

Mark E. Benson, defendant's attorney, pointed out in his declaration that in her January 25, 1979, demand for arbitration under the rules of the American Arbitration Association plaintiff declared under penalty of perjury that her workers' compensation claim had not proceeded to Findings and an award because her medical condition was not yet stationary and permanent.

In his declaration Jerry Hendricks (Hendricks), defendant's claim adjuster, stated: On or about April 20, 1979, plaintiff's then attorneys told him that plaintiff was prosecuting a claim for workers' compensation benefits concurrent with her claim for uninsured motorist benefits. On February 8, 1984, plaintiff's new attorney, Mr. Koszdin, informed Hendricks that plaintiff's appeal of the workers' compensation decision was progressing very slowly.

Based on the fact that there could be "a possible excessive delay" before the workers' compensation case could be resolved, defendant decided to issue plaintiff uninsured motorist benefits for the policy limit, less the lien amount her original attorneys had imposed. A draft in the sum of $10,000 was issued to plaintiff on September 6, 1984, and a draft in the sum of $5,000 was issued payable to plaintiff and her original attorneys, Sroloff and Biren.

Hendricks further stated: Defendant executed a request and claim for a lien in the workers' compensation action on July 19, 1984. ³ The reason given for such request and claim for lien was: "Payment of uninsured motorist claim for which offset pursuant to [Insurance Code section] 11580.26 is claimed."

He pointed out that on August 7, 1985, the Workers' Compensation Appeals Board issued its opinion and finding of fact that plaintiff's injury arose in the course of her employment. ⁴

On February 11, 1988, plaintiff filed a separate statement of undisputed fact and opposition to the motion. In sum, plaintiff argued that under Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452, 113 Cal.Rptr. 711, 521 P.2d 1103 an insurer owes its insured a duty of good faith and fair dealing not to merely sit back and await the outcome of the insured's workers' compensation claim before deciding whether or not it owes the insured benefits under the policy.

In his declaration Robert K. Scott, plaintiff's attorney, stated that defendant had continually delayed the processing and arbitration of plaintiff's uninsured motorist claim on the basis that she was seeking workers' compensation benefits for the accident. He pointed out that although plaintiff still had not obtained a workers' compensation award six years after the accident, defendant nonetheless paid the uninsured motorist policy limits.

On February 26, 1988, Judge Deering found certain facts to be undisputed but denied defendant's motion for summary judgment on the ground that there was a triable issue of fact as to whether defendant's delay in paying plaintiff uninsured motorist benefits breached its duty of good faith to plaintiff. The court pointed out that, as in Silberg, supra, defendant could have paid plaintiff's uninsured motorist claim and obtained a lien on any workers' compensation benefits award to plaintiff.

On March 18, 1988, Judge Deering granted defendant's motion for leave through April 1, 1988 to file a petition for a writ of mandate regarding the denial of its motion for summary judgment. ⁵ Defendant never filed the petition.

Appointment of All-Purpose Judge

On August 9, 1989, Judge Henry W. Shatford, a retired judge, was appointed as of that date to act as a temporary judge in all pre-trial issues and motions and to preside over the trial of the matter.

Plaintiff's Trial Brief

On August 14, 1989, plaintiff filed her trial brief. She took position that defendant acted in bad faith by retaining her uninsured motorist benefits for many years during which time plaintiff "desperately needed those monies for her medical care and treatment."

The Motion for Judgment on the Pleadings

Prior to trial, defendant filed a document entitled "NOTICE OF SECOND MOTION FOR JUDGMENT ON THE PLEADINGS...." ⁶

Defendant asserted that it was entitled to judgment because plaintiff could not establish that defendant breached any duty to pay plaintiff uninsured motorist benefits since such duty did not arise until after the workers' compensation claim had been resolved.

Defendant further argued that Judge Shatford should grant the motion, for the reason that Judge Deering's "reliance on [Silberg, supra,] was erroneous as a matter of law, because that case did not involve any uninsured motorist coverage question...."

In its opposition plaintiff argued that the substance of the motion had already been determined by the court's prior ruling on the motion for summary judgment and that no new evidence, argument, or issues were presented which would justify reexamination of such ruling.

Plaintiff further argued that at trial she would prove that defendant had all the information necessary to enable it to pay plaintiff uninsured motorist benefits in 1978 rather than six years later, which was a fact defendant's own in-house counsel, Annette Mann (Mann), had acknowledged. In support plaintiff attached as Exhibit B a copy of Mann's memorandum to Hendricks dated April 2, 1984.

In the memorandum Mann stated: "Our documentation regarding claimant's injury is incomplete in that we only have information through 1980, but even up to that date, it appears she received extensive medical care, including neurologists, orthopedists, psychiatrists and she claims she had not been able to work since the accident. Her testimony regarding her injuries, disabilities and ongoing problem is set forth in my deposition review dated December 11, 1979...."

Mann further stated: "In the instant situation, it appears that [plaintiff] could possibly establish good cause for proceeding with the uninsured ...