State Farm Mut. Auto. Ins. Co. v. Messinger

• Decision Date: 18 July 1991
• Citation: 283 Cal.Rptr. 493,232 Cal.App.3d 508
• Court: California Court of Appeals Court of Appeals
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Respondent, v. George E. MESSINGER, et al., Defendants and Appellants. Civ. C008817.

Page 493

283 Cal.Rptr. 493

232 Cal.App.3d 508

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Plaintiff and Respondent,

v. George E. MESSINGER, et al., Defendants and Appellants.

Civ. C008817.

Court of Appeal, Third District, California.

July 18, 1991.

Lynn Hubbard, Law Offices of Lynn Hubbard, Chico, for defendants and appellants.

William O. Morris, J. Martin McAllister, McDonald, Saeltzer, Morris, Creeggan & Waddock, Sacramento, for plaintiff and respondent.

DAVIS, Associate Justice.

INTRODUCTION

In this insurance coverage dispute, George and Diana Messinger (the Messingers) appeal from a summary judgment in favor of State Farm. This dispute arose out of a two-car collision after the Messingers sought to recover under their automobile underinsurance policy with State Farm payment of damages not covered by the tortfeasor's liability policy. The Messingers alleged that the tortfeasor was underinsured as defined in their insurance policy and that they were each entitled to the full coverage under the policy minus the amounts already paid by the tortfeasor. State Farm denied their underinsurance claim. On appeal, the Messingers contend there are two triable issues of fact: (1) whether the tortfeasor was underinsured as defined in both State Farm's policy and the proper subdivisions of Insurance Code section 11580.2; and (2) whether State Farm's denial of underinsurance coverage violated the liability coverage requirements of Insurance Code section 11580.2, subdivision (a)(1). (Further references to undesignated sections are to the Insurance Code.) We affirm the summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On November 2, 1986, Georgette Sehn and Diana Messinger were passengers in a car driven by George E. Messinger. Their car was travelling in Butte County when it collided with a car driven by John Lee Ballard. As a result of the collision, the two Messingers and Sehn were injured.

At the time of the accident, George Messinger had an automobile insurance policy with State Farm. The policy contained bodily injury limits for uninsured/underinsured motorist coverage in the amounts of $100,000 per person and $300,000 per accident.

The tortfeasor, John Lee Ballard, carried bodily injury liability insurance on his vehicle with an aggregate single limit of $300,000. Ballard's policy was issued by Aetna Casualty & Surety Company (Aetna).

Shortly after the accident, the Messingers and Sehn made a claim against Ballard's Aetna policy. Aetna settled with the Messingers and Sehn for the full amount of the policy ($300,000). Aetna paid $290,000 to Sehn and $5,000 each to the Messingers. The Messingers and Sehn agreed to this distribution. In this settlement, the Messingers and Sehn were represented by the same attorney. Through that attorney, they notified State Farm in writing of the terms of the settlement and requested State Farm's permission to settle.

The Messingers sought State Farm's permission in accordance with the terms of their underinsured motorist coverage which required such action in order to protect their underinsured motorist claim. State Farm responded that it did not believe its permission was necessary to the settlement since the Messingers and Sehn were not entitled to underinsured motorist benefits under the State Farm policy. State Farm informed the Messingers' attorney that Ballard's car was not an "underinsured motor vehicle" because it was insured for a $300,000 limit which was the same amount of insurance carried on the Messingers' car. Nevertheless, State Farm gave the Messingers and Sehn "permission" to settle but stated it was not consenting to or approving the proposed distribution of proceeds.

When State Farm continued to deny coverage, the Messingers filed suit. State Farm in turn filed a declaratory relief action and then moved for summary judgment, relying on the definition of an underinsured car and the set-off provisions for compensation received by the insured from the tortfeasor's liability policy. The trial court granted the summary judgment, and the Messingers filed a timely notice of appeal.

DISCUSSION

This case involves the interpretation of an insurance policy and certain statutes in the context of stipulated facts. As such, the case presents questions of law which we review de novo on appeal. (State Farm Fire & Casualty Co. v. Lewis (1987) 191 Cal.App.3d 960, 963, 236 Cal.Rptr. 807; Rudd v. California Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 951-952, 268 Cal.Rptr. 624; 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, §§ 241-242, pp. 246-247.) A motion for summary judgment is an appropriate procedure by which to determine such issues of law. (6 Witkin, Cal. Procedure (3d ed. 1985) Proceedings Without Trial, § 277, p. 578; Burke Concrete Accessories, Inc. v. Superior Court (1970) 8 Cal.App.3d 773, 774-775, 87 Cal.Rptr. 619.)

1. Is There Underinsurance Coverage Here?

The first issue we consider is whether the Messingers' underinsurance coverage even applies to the collision involving Ballard.

In California, the applicability of underinsurance coverage is governed by section 11580.2, subdivision (p), which states that such coverage "applies only when bodily injury ... is caused by an underinsured motor vehicle." Consistent with section 11580.2, subdivision (p), the Messingers' insurance policy with State Farm provides that underinsurance coverage applies only if bodily injury damages are caused by an "underinsured motor vehicle."

Section 11580.2, subdivision (p)(2), defines "underinsured motor vehicle" as follows: " 'Underinsured motor vehicle' means a motor vehicle that is an insured motor vehicle but insured for an amount that is less than the uninsured motorist limits carried on the motor vehicle of the injured person." ¹ Consistent with section 11580.2, subdivision (p)(2), the Messingers' insurance policy defines "underinsured motor vehicle" as a "land motor vehicle, the ownership, maintenance, or use of which is: [p] (1) Insured or bonded for bodily injury liability at the time of accident, but [p] (2) the limits of liability are less than the limits of liability of this coverage."

The meaning of such words is clear. Underinsurance coverage does not apply unless the tortfeasor's vehicle is an underinsured motor vehicle. An underinsured motor vehicle, by definition, is a vehicle insured for an amount that is less than the uninsured/underinsured motorist limits carried by the injured person. Thus, if the tortfeasor is insured for an amount equal to or greater than the uninsured/underinsured limits of the injured person, that person never gets to collect any underinsurance coverage. This is the type of scenario we have in this case.

The tortfeasor (Ballard) was insured for a limit of $300,000 for all injuries arising out of an accident. The Messingers had uninsured/underinsured limits of $100,000 for injuries to one person and $300,000 for all injuries arising out of an accident. By simply comparing Ballard's limits ($300,000) with the Messingers' limits ($300,000), it is clear that Ballard's car was not an underinsured motor vehicle as defined by the Insurance Code and the Messingers' insurance policy. Ballard's car was insured for an amount equal to the uninsured/underinsured coverage the Messingers carried, and therefore not "an amount less than the uninsured/[underinsured] motorist limits carried" by the Messingers. (§ 11580.2, subd. (p)(2); emphasis added.) Accordingly, the Messingers' underinsurance coverage--drafted in language conforming to section 11580.2, subdivision (p)(2)--was never triggered and they were never entitled to collect any underinsurance amount from State Farm. (Elwood v. Aid Ins. Co. (9th Cir.1989) 880 F.2d 204, 207-208; and see Rudd v. California Casualty Gen. Ins. Co., supra, 219 Cal.App.3d at p. 955, fn. 8, 268 Cal.Rptr. 624.)

The Messingers rely on two provisions in their policy to argue that their underinsurance coverage was not triggered until they received payment from Ballard, the tortfeasor, at which time it could be determined that Ballard's payments to them were below their per person underinsurance limits.

Specifically, these two provisions define the extent of State Farm's liability pursuant to underinsurance coverage as follows: (1) "If the damages are caused by an underinsured motor vehicle, there is no coverage until: [a] The limits of liability of all bodily injury liability bonds and policies that apply have been used up by payment of judgments or settlements to other persons; or [b] Such limits of liability or remaining part of them have been offered to the insured in writing."; and (2) "The amount of coverage is shown on the declarations page under 'Limits of Liability--U--Each Person, Each Accident.' Under 'Each Person' is the amount of coverage for all damages due to bodily injury to one person. ... Under 'Each Accident' is the total amount of coverage, subject to the amount shown under "Each Person", for all damages due to bodily injury to two or more persons in the same accident ... [p] If the damages are caused by an underinsured motor vehicle, the most we will pay will be the lesser of: (a) The difference between the limits of liability of this coverage and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury; or (b) The difference between the amount of the insured's damages for bodily injury, and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury." (Emphasis in original.)

In essence, the Messingers argue that the policy provision stating when underinsurance coverage takes effect (policy provision (1) above; [premised upon section 11580.2, subd. (p)(3) ] ) dictates that their underinsurance coverage was not "triggered" until Ballard's insurer had paid its policy limits. According to the Messingers, when the last dollar was paid under the...