Suarez v. Life Ins. Co. of North America

• Decision Date: 13 December 1988
• Docket Number: No. B030111,B030111
• Citation: 254 Cal.Rptr. 377,206 Cal.App.3d 1396
• Court: California Court of Appeals Court of Appeals
• Parties: Pat G. SUAREZ, Plaintiff and Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA et al., Defendants and Respondents.

Page 377

254 Cal.Rptr. 377

206 Cal.App.3d 1396

Pat G. SUAREZ, Plaintiff and Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA et al., Defendants and Respondents.

No. B030111.

Court of Appeal, Second District, Division 7, California.

Dec. 13, 1988.

Litt & Stormer, Barrett S. Litt, Pegine E. Grayson and Karen L. Black, Los Angeles, for plaintiff and appellant

Adams, Dugue & Hazeltine, Margaret Levy and Cheryl A. De Bari, Los Angeles, for defendants and respondents.

LILLIE, Presiding Justice.

Plaintiff, Pat Suarez, appeals from summary judgment in favor of defendants Life Insurance Company of North America (LICNA) and Times Mirror Company (Times) in plaintiff's action based on LICNA's denial of benefits to plaintiff under an accidental death and dismemberment policy issued to him by LICNA and advertised in defendant Times' newspaper, the Los Angeles Times.

FACTUAL AND PROCEDURAL BACKGROUND

In October 1982 plaintiffs's father, Bien Suarez, saw in the Los Angeles Times an advertisement for "Los Angeles Times Subscriber Accident Insurance" underwritten by LICNA and offered for a premium of $12 per year. The advertisement read in part: "Times Subscriber Accident Insurance is a plan of accidental death and dismemberment insurance covering freeway drivers, travelers and commuters, and those who enjoy many of Southern California's great outdoor and sports activities.... This plan covers loss of life, loss of sight, and loss of limbs as the result of an accident or a felonious assault on you...." Mr. Suarez filled out an application for the advertised insurance on behalf of plaintiff and plaintiff signed the application. Mr. Suarez submitted the application and paid the premium. In November 1982 plaintiff became insured under LICNA's "Accidental Death and Dismemberment Policy" which included coverage of $100,000 for "loss of two or more members" sustained in a motor vehicle accident on a freeway. The policy set forth the following definitions: " 'Member' means hand, foot or eye. 'Loss' means, with regard to hand or foot, actual severance through or above the wrist or ankle joints; with regard to eye, entire and irrecoverable loss of sight."

On November 24, 1984, while the policy was in effect, plaintiff's spinal cord was injured in an automobile accident on the Ventura Freeway. As a result of the injury plaintiff was paralyzed from the waist down losing the use of both of his legs; however, neither his legs nor his feet were severed from his body.

Plaintiff's father handled all of the family's insurance records. When he received the LICNA policy he filed it away without reading it. Plaintiff neither saw the advertisement nor learned of the policy until after his accident.

In December 1984 plaintiff notified LICNA of the accident. LICNA provided him with a claim form but the form was not completed and returned because in March 1985 plaintiff's father was told by one of LICNA's claims analysts that plaintiff's injury was not covered under the policy unless his legs were severed from his body in the accident. In October 1985 counsel retained by plaintiff sent LICNA a letter constituting a claim for $100,000 under the policy. LICNA denied the claim.

Plaintiff filed a complaint stating three causes of action: breach of insurance contract, breach of covenant of good faith and After answering the complaint LICNA moved for summary judgment or, in the alternative, summary adjudication of issues. The Times joined in the motion. In support of the motion defendants presented copies of the advertisement and the accidental death and dismemberment policy as well as evidence of facts recited above.

                fair dealing, and fraud. 1  All three causes of action were directed against LICNA while only the third (fraud) was directed against the Times.  The latter cause of action alleged that the accident insurance advertisement in the Los Angeles Times represented to the public that said insurance covered loss of the use of limbs because of injuries sustained in a freeway accident;  said representation was false in that the coverage was intended by LICNA to be limited to injuries resulting in death or actual dismemberment of limbs;  the policy purchased by plaintiff was not as represented by defendants and plaintiff was injured as a result of such misrepresentation
                

Plaintiff opposed the motion. His opposition included the following evidence: The declaration of Edward Finegan, a professor of linguistics, expressed the opinion that neither the advertisement nor the policy is clear or unambiguous regarding the limitation of coverage to accidental injuries resulting in complete physical separation of a limb from the body; it is a semantically permissible and reasonable construction of both the advertisement and the policy that the insurance provided covers the loss of use of one's limbs; a significant number of readers of average intelligence would attach the foregoing interpretations to the advertisement or the contract. In his declaration Joseph Aoun, also a professor of linguistics, stated that based on the advertisement in the Los Angeles Times he purchased a LICNA policy; the advertisement led him to believe the policy covered loss of use of a limb as well as loss of the limb by its actual severance from the body. The declarations of Joe Phillips and Barbara Paull, both of whom had experience as insurance claims adjusters, stated that it was general practice in the insurance industry to honor policy claims based on an insured's reasonable understanding of coverage generated by ambiguous or misleading promotional material. The declaration of plaintiff's father stated that on reading the insurance advertisement in the Los Angeles Times he thought the subject policy covered loss of ability to use one's limbs; he had no idea when he purchased the policy that benefits would be paid only if arms or legs were actually severed from the body. In his declaration plaintiff, too, expressed the belief that the phrase "loss of limbs" includes loss of the use of one's limbs.

Defendants objected to the foregoing evidence. The objections were noticed for hearing at the time of the hearing on motion for summary judgment.

The trial court granted the motion for summary judgment and sustained defendants' objections to each of the six declarations submitted by plaintiff in opposition to the motion. The minute order so ruling stated in part: "I find nothing ambiguous about the advertisement or the policy or the definitions. Obviously, I have read the declarations which I have ruled inadmissible.... [p ].... I have concluded that the 'loss of limb' and 'dismemberment' terms of the advertisement and policy do not reasonably lend themselves to the construction offered by plaintiff...."

Summary judgment was entered in favor of defendants and against plaintiff. This appeal followed.

DISCUSSION

I BREACH OF CONTRACT AND BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING

Where, as here, no triable issue of fact is presented and the sole remaining question is one of law, it may appropriately be determined on a motion for summary judgment. (Neinstein v. Los Angeles Dodgers, Inc. (1986) 185 Cal.App.3d 176, 179, 229 Cal.Rptr. 612.) Construction of an insurance policy is a matter of law where the underlying facts are not in dispute. (Northbrook Excess & Surplus Ins. Co. v. Coastal Rescue Systems Corp. (1986) 182 Cal.App.3d 763, 767, 227 Cal.Rptr. 639.) On appeal the appellate court is not bound by the trial court's interpretation of the policy but must make its own independent interpretation. (Cal-Farm Insurance Co. v. TAC Exterminators, Inc. (1985) 172 Cal.App.3d 564, 571, 218 Cal.Rptr. 407; Economy Lumber Co. v. Insurance Co. of North America (1984) 157 Cal.App.3d 641, 645, 204 Cal.Rptr. 135.)

Plaintiff contends the policy is ambiguous regarding the extent of coverage and such ambiguity must be resolved against the insurer (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168) by construing the policy to provide coverage for loss of the use of a limb as well as severance of limb from body. We do not agree.

An insurance policy provision is ambiguous when it is capable of two or more constructions both of which are reasonable. Whether the language in a contract is ambiguous is a question of law. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 912, 226 Cal.Rptr. 558, 718 P.2d 920.) In construing the language of an insurance policy a court should give the words used their plain and ordinary meaning, unless the policy clearly indicates to the contrary. When the language is clear a court should not give it a strained construction to impose on the insurer a liability it has not assumed. (St. Paul Fire & Marine Ins. Co. v. Superior Court (1984) 161 Cal.App.3d 1199, 1202, 208 Cal.Rptr. 5.) An insurance company has the right to limit the coverage of a policy issued by it and the plain language of the limitation must be respected. (National Union Fire Ins. Co. v. Estate of Meyer (1987) 192 Cal.App.3d 866, 872, 237 Cal.Rptr. 632.) "Although we construe all provisions, conditions, or exceptions that tend to limit liability strictly against the insurer [citation], strict construction does not mean strained construction. [Citations.] We may not, under the guise of strict construction, rewrite a policy to bind the insurer to a risk that it did not contemplate and for which it has not been paid. [Citation.]" (Safeco Ins. Co. v. Gilstrap (1983) 141 Cal.App.3d 524, 532-533, 190 Cal.Rptr. 425.)

Applying these principles to the policy at issue, it is clear no coverage for loss of use of limbs, as opposed to loss of limbs by severance from the body, is provided. The policy furnished coverage of $100,000 for "loss of two or more members" in a freeway accident, defined "member" as hand, foot or eye and--most significantly--defined "loss" with regard to hand or foot as "actual severance through or above the wrist...