Sharp v. Automobile Club of Southern Cal.

• Decision Date: 17 March 1964
• Docket Number: Nos. 26693,26858,s. 26693
• Citation: 225 Cal.App.2d 648,37 Cal.Rptr. 585
• Court: California Court of Appeals Court of Appeals
• Parties: Frank SHARP, Plaintiff, Appellant and Cross-Respondent, v. AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Interinsurance Exchange of the Automobile Club of Southern California, Defendants, Respondents and Cross-Appellants. Civ.

Page 585

37 Cal.Rptr. 585

225 Cal.App.2d 648

Frank SHARP, Plaintiff, Appellant and Cross-Respondent, v. AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Interinsurance Exchange of the Automobile Club of Southern California, Defendants, Respondents and Cross-Appellants.

Civ. Nos. 26693, 26858.

District Court of Appeal, Second District, Division 4, California.

March 17, 1964.

As Amended on Denial of Rehearing April 8, 1964.

Hearing Denied May 13, 1964.

Frank R. Saletri, Los Angeles, for plaintiff, appellant and cross-respondent.

Gilbert, Thompson & Kelly, and Jean Wunderlich, Los Angeles, for defendants, respondents, and cross-appellants.

BURKE, Presiding Justice.

For some years prior to May 23, 1959, plaintiff, Frank Sharp, ¹ had purchased automobile liability insurance from defendant the Automobile Club of Southern California. ²

On or about May 20, 1959, the renewal of plaintiff's policy came up for discussion between plaintiff and Jerry E. Davis, sales representative of the Automobile Club. Plaintiff's account of the negotiations is that Davis told him that the 'medical pay coverage' of the policy, which covered plaintiff and members of his household to the limit of $5,000 for any and all reasonable expenses incurred for medical care and treatment as a result of an automobile accident, applied whether or not there might be other valid and collectible insurance. This representation as to the effect of other insurance was denied by Davis but the conflict must be resolved in favor of plaintiff.

On or about May 23, 1959, plaintiff renewed his policy with the Automobile Club.

Prior to January 1, 1958, it had been the policy of the Automobile Club to pay medical claims to its insureds although full payment had already been made by a prepaid medical plan. On that date this practice was changed on the basis of a decision of the Appellate Department of the Superior Court of Los Angeles County. (Bertolino v. Republic Indemnity Co., Civ., A.L.A. 9250.) From the decision in the above case, counsel for the Automobile Club reasoned that an insured who is the beneficiary of a prepaid medical plan, similar to Kaiser-Permanente (involved in Bertolino), Blue Cross of California Physicians' Service, does not 'incur' medical expenses for injuries arising out of an automobile accident to the extent that such expenses are paid by the agency. Thus, as to such amounts, since the insured under the Club policy incurs no liability, the Club has no obligation to the insured therefor.

On November 1, 1959, plaintiff's daughter suffered injuries in a traffic accident. As a result, a medical bill of $1,321 was incurred. At the time of the accident plaintiff's daughter was insured for medical expense with California Physicians' Service (C. P.S.). Plaintiff's daughter received a check from C.P.S. which she induced her treating physician to endorse back to her for her personal living expenses, with the understanding that, when the Automobile Club would pay this same bill under her father's policy, she would pay the physician out of the remittance.

For more than a year plaintiff exerted every effort to get the Automobile Club to pay the medical bills as they were presented but its employees procrastinated, repeatedly promised that payment would be forthcoming, but nothing was done. Finally, after doctors and others threatened action against plaintiff, plaintiff filed a claim with the Automobile Club for $1,321, the full amount of plaintiff's medical expense. The Club refused to pay more than the difference between the payments made by C.P.S. and the sum just mentioned, which difference amounted to $134.78.

Plaintiff then instituted the present action to recover the full amount of $1,321 together with exemplary damages. Plaintiff's complaint is in three counts. The first and second counts are on the policy. The third count alleges that the Automobile Club represented through its agent (Jerry E. Davis) that the full amount of medical bills would be paid up to the limits stipulated in the policy, even though there was other insurance covering the same medical bills; that this representation was fraudulent because at that time the practice of the Automobile Club was not to pay medical expenses when they had already been paid by other insurers and that there was no intention to fulfill the representation and promise of the agent, which amounts to fraud entitling the plaintiff to punitive damages.

After a jury trial, a verdict was returned in plaintiff's favor for $1,321 for actual damages and $27,000 punitive damages for fraud, oppression and malice in inducing the plaintiff to enter into the contract of insurance. Defendants then moved for a new trial upon the grounds, among others, that excessive damages were awarded and that such were given under the influence of passion and prejudice; and, also upon the insufficiency of the evidence to justify the verdict. After argument, the court caused to be entered the following minute order:

'The court is of the opinion that exemplary damages are allowable in this case. However, the court is of the opinion that the exemplary damages are grossly excessive and must have been the result of passion or prejudice. Accordingly, the motion for a new trial is granted unless on or before March 7, 1962, plaintiff files herein a written consent to the reduction of the award for exemplary damages to the sum of $1500.00, on the ground of the insufficiency of the evidence to justify the verdict for exemplary damages. If such written consent is filed within the time herein provided, the motion for a new trial will be denied automatically.'

No remission having been filed by plaintiff, the order granting a new trial became effective and the present appeal followed. Pursuant to Rule 3(a) of the California Rules of Court, defendants have taken a precautionary cross-appeal from the judgment entered in favor of plaintiff. The conclusion which we reach as to plaintiff's appeal makes it unnecessary to consider the cross-appeal and it is dismissed.

The right of a court to grant a new trial unless the recipient of a damage award consents to a reduction is too firmly established to be open to question. (Dorsey v. Barba (1952) 38 Cal.2d 350, 240 P.2d 604; See also 53 A.L.R. 783-792; 95 A.L.R. 1166-1168.) Secondly, an order granting a new trial on the ground of insufficiency of the evidence will not be disturbed on appeal if there is evidence to support the position of the trial court. (Bates v. Howard (1894) 105 Cal. 173, 178, 38 P. 715.) This same rule also holds true where the new trial is granted because of excessive damages (Koyer v. McComber (1938) 12 Cal.2d 175, 182, 82 P.2d 941; Hughes v. Hearst Publications, Inc. (1947) 79 Cal.App.2d 703, 705, 180 P.2d 419); or where the trial court deems the verdict for punitive damages to be excessive. (Griswold v. Hollywood Turf Club (1951) 106 Cal.App.2d 578, 583, 235 P.2d 656)

A review of the evidence discloses that there was evidence to support the...