Rangel v. Interinsurance Exchange

Decision Date03 December 1992
Docket NumberNo. S023261,S023261
Citation842 P.2d 82,4 Cal.4th 1,14 Cal.Rptr.2d 783
CourtCalifornia Supreme Court
Parties, 842 P.2d 82 Alice Casarez RANGEL, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF The AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Respondent.

Shernoff, Scott & Bidart, Robert K. Scott, Newport Beach, and Marian H. Tully, West Covina, for plaintiff and appellant.

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

Low, Ball & Lynch and Raymond Coates, Redwood City, as amici curiae on behalf of defendant and respondent.

PANELLI, Justice.

We granted review to decide whether an uninsured motorist carrier committed a tortious breach of insurance contract by delaying payment on a claim when the insured's workers' compensation claim arising from the same accident had not yet been resolved. We conclude that there was no breach of duty and reverse the judgment of the Court of Appeal.

I. FACTS AND PROCEDURAL HISTORY

In December 1977, defendant Interinsurance Exchange of the Automobile Club of Southern California (the Exchange) issued an automobile insurance policy to plaintiff Alice Casarez Rangel (Rangel). In February 1978, Rangel was injured by an uninsured motorist in a hit-and-run accident. Rangel filed a claim for uninsured motorist coverage benefits under her policy shortly after the accident and also filed a demand for arbitration of the claim. Additionally, Rangel filed a workers' compensation claim asserting that she had been injured in the course and scope of her employment.

The uninsured motorist provision of Rangel's insurance policy provided for reduction of the loss payable by the amount of workers' compensation benefits received by the insured: "[A]ny loss payable to or for any person shall be reduced by the amount paid and the present value of all amounts payable to such person under any worker's [sic ] compensation or workmen's compensation law, exclusive of non-occupational disability benefits." (Emphasis added.) Furthermore, the arbitration clause of the policy provided for arbitration in certain circumstances: "If the insured ... and the Exchange are in disagreement as to whether any one of them are 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 of such damages which may be owing under this Part, then upon the demand of either, those said matters in disagreement shall be settled by arbitration ...." (Emphasis added.)

The Exchange initially refused to pay Rangel the uninsured motorist benefits, maintaining that under the terms of the coverage, it did not owe Rangel those benefits until her workers' compensation claim had been resolved. On January 25, 1979, Rangel filed a demand for arbitration of her uninsured-motorist claim. However, the American Arbitration Association ordered that the arbitration be held in abeyance while Rangel's workers' compensation proceeding was pending.

In September 1984, more than six years after the uninsured motorist claim was filed, the Exchange paid Rangel $15,000, 1 the maximum amount of the uninsured motorist coverage, contingent upon her execution of a release in full settlement of her uninsured motorist claim. Additionally, with Rangel's consent, the Exchange filed a lien in Rangel's workers' compensation action. 2 The workers' compensation claim was not resolved until May 1986, when Rangel was awarded benefits for both temporary and permanent disability. 3 In September 1985, Rangel filed a complaint for tortious breach of the insurance contract, pleading two causes of action. First, Rangel pled that the Exchange had breached its duty of good faith and fair dealing. Second, Rangel claimed that the Exchange had breached its statutory duties by knowingly committing or performing specified unfair claims settlement practices prohibited by Insurance Code section 790.03, subdivision (h). 4 In its answer, the Exchange denied the material allegations of Rangel's complaint and asserted eight affirmative defenses; among those being that the amount due on Rangel's claim for uninsured motorist coverage was uncertain and could not be determined while Rangel was pursuing her workers' compensation claim.

The Exchange unsuccessfully moved for summary judgment before Judge Deering of the law and motion department. Judge Shatford, a retired judge, was later appointed to determine all pretrial matters and to preside over the trial. The Exchange moved for judgment on the pleadings based on the defense that no duty to pay uninsured motorist benefits arose during the pendency of the workers' compensation proceedings. Judge Shatford granted the motion and Rangel appealed.

The Court of Appeal held that Judge Shatford had jurisdiction to rule on the motion for judgment on the pleadings after Judge Deering denied the motion for summary judgment. 5 The Court of Appeal then determined that an insurer may have a duty to settle an uninsured motorist claim before the pending workers' compensation claim is resolved when a lien on the workers' compensation claim is available. The court determined that a lien was available to the insurer in this case. Therefore, the court reversed the trial court's judgment and held that the complaint stated a cause of action for breach of the insurer's duty of good faith and fair dealing and for violation of the insurer's statutory duties under section 790.03, subdivision (h).

II. IS AN UNINSURED MOTORIST INSURER OBLIGED TO PAY BENEFITS BEFORE A RELATED WORKERS' COMPENSATION CLAIM IS RESOLVED?

The standard of review in a motion for judgment on the pleadings is well settled. The motion is confined to the face of the The insurance contract between Rangel and the Exchange was issued pursuant to section 11580.2. This section requires automobile insurers to offer uninsured motorist coverage with all automobile liability insurance policies ( § 11580.2, subd. (a)(1)), and authorizes the insurer to reduce the loss payable to the insured by "the amount paid and the present value of all amounts payable" under workers' compensation law. ( § 11580.2, subd. (h)(1).) By authorizing a reduction in the loss payable under the uninsured motorist coverage of the policy, the Legislature intended to prevent the insured from recovering twice for the same injury. (Interinsurance Exchange v. Marquez (1981) 116 Cal.App.3d 652, 656-657, 172 Cal.Rptr. 263, citing Waggaman v. Northwestern Security Ins. Co. (1971) 16 Cal.App.3d 571, 579, 94 Cal.Rptr. 170 (Waggaman ); see also California State Auto. Assn. Inter-Ins. Bureau v. Jackson (1973) 9 Cal.3d 859, 869, fn. 13, 109 Cal.Rptr. 297, 512 P.2d 1201.) This court has previously explained that the Legislature's purpose in enacting section 11580.2 was to "shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmen's compensation carrier." (California State Auto. Assn. Inter-Ins. Bureau v. Jackson, supra, 9 Cal.3d at p. 869, 109 Cal.Rptr. 297, 512 P.2d 1201.)

                [842 P.2d 85] pleading under attack, and all facts alleged in the complaint must be accepted as true.  (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 815, 195 Cal.Rptr. 421.)   With these principles in mind, we consider whether the facts alleged in Rangel's complaint were sufficient to state a cause of action
                

In addition to authorizing a reduction in the loss payable, the Legislature provided for arbitration in the event of disagreement over whether the insured is entitled to receive damages and the amount thereof. ( § 11580.2, subd. (f).) The Legislature also provided that such arbitration would be delayed until workers' compensation benefits have been resolved: "If the insured has or may have rights to benefits, other than nonoccupational disability benefits, under any workers' compensation law, the arbitrator shall not proceed with the arbitration until the insured's physical condition is stationary and ratable. In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before the arbitration may proceed. Any demand or petition for arbitration shall contain a declaration, under penalty of perjury, stating whether (i) the insured has a workers' compensation claim; (ii) the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim; and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately." (Ibid., emphasis added.) Thus, in order to prevent double recovery, the Legislature has expressly permitted insurers to delay arbitration of uninsured motorist claims while a workers' compensation claim is pending, in the absence of a showing of good cause. 6

The history of section 11580.2, subdivision (f), confirms the legislative purpose to prevent double recovery. Prior to 1973, although another subsection of the statute provided for reduction of the loss payable in the event of workers' compensation benefits, the provision concerning arbitration did not include the language quoted above. (Compare former § 11580.2, subd. (f), amended by Stats.1972, ch. 952, § 1, p. 1722, with current § 11580.2, subd. (f).) In 1971, the Court of Appeal held the provision permitting deduction of "the present value of all amounts payable" under workers' compensation law inapplicable to cases in which the amount due under workers' compensation had not yet been determined. Thus, the situation as of 1971 was that courts were powerless to prevent an insured from recovering twice for the same injury whenever the workers' compensation award had not yet been...

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