Amica Mutual Ins. Co. v. Campbell

Filed 9/29/06 Amica Mutual Ins. Co. v. Campbell CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

Appellants Jaclyn Campbell and Jennifer Arias contend that Amica Mutual Insurance Company (Amica) did not establish that an automobile insurance policy it issued to their mother and stepfather excluded from coverage any indemnification where their stepfather was the driver in a single vehicle accident that caused their mother’s death. We disagree and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants’ mother, Wendy Kuehl Lombardi, and stepfather, J. Richard Lombardi, were killed in a single car accident. Appellants filed an action for wrongful death against their stepfather’s estate pursuant to Probate Code section 552, under which recovery is limited to the available insurance that covers the defendant.[1] (Prob. Code, § 554.)

Amica filed this action below seeking a declaration that the automobile and personal excess liability insurance policies it issued to the Lombardis did not provide coverage for the daughters’ claim, because the policies excluded indemnity for bodily injury to an insured.[2] The trial court agreed with Amica and held that it had no duty to defend or indemnify the stepfather’s estate in the underlying action. Appellants timely appealed.

DISCUSSION

The primary automobile liability policy issued by Amica to the Lombardis contains the following language: “We do not provide Liability Coverage for any insured for bodily injury to you or any family member whenever the ultimate benefits of that indemnification accrue directly or indirectly to you or any family member.”[3] Insurance Code section 11580.1, subdivision (c)(5), first enacted in 1970, permits this “named insured” exclusion to be included in an automobile liability insurance policy issued in California.

Insurance Code section 11580.1, subdivision (c)(5) provides that insurers may exclude from coverage: “Liability for bodily injury to an insured or liability for bodily injury to an insured whenever the ultimate benefits of that indemnification accrue directly or indirectly to an insured.” A named insured exclusion is not considered to be contrary to public policy, and section 11580.1 reflects a rational legislative determination to leave the scope and availability of insurance up to the contracting parties. (Farmers Ins. Exchange v. Cocking (1981) 29 Cal.3d 383, 387-388, 390 (Cocking).) Appellants argue that because Amica’s policy language does not exactly mimic the wording of the statute, the exclusion is ineffective and must be narrowly construed so as to provide coverage for their claims arising from their mother’s death.[4]

In Farmers Ins. Exch. v. Brown (1967) 252 Cal.App.2d 120, 121 (Brown), this court applied an exclusion for “ ‘liability of any insured for bodily injury to . . . the named insured’ “ to defeat a claim for wrongful death brought by the adult children of the insured’s deceased spouse.[6] There, the children argued the exclusion could only preclude recovery for their mother’s injuries while she was alive, but could not be applied against her heirs. They argued that use of the term “injury” in the statute authorizing the exclusion did not permit exclusion of liability for death. We recognized that the children’s cause of action for wrongful death was distinct from any claim their mother might have had for her own bodily injuries.[7] (Id. at p. 122.) But we rejected their argument. Such a construction of the statute “would permit an insurer to exclude coverage for any injury to an assured, however permanent and crippling, but would bar such exclusion if the injury resulted in death. That construction unjustifiably assumes a legislative illiberality to the maimed, in contrast to an oddly inconsistent concern for adult heirs of the dead.” (Id. at p. 123.) “Absent any conceivable reason for distinction, it is reasonable to conclude that the Legislature meant to authorize policy exclusion of liability for death as well as for injury.” (Ibid.)

Two cases followed this court’s ruling in Brown that wrongful death claims brought by the heirs of an insured came within the exclusion for claims arising from “ ‘bodily injury to the named insured.’ “ (Farmers Ins. Exchange v. Stratton (1983) 145 Cal.App.3d 612, 616; Interinsurance Exchange v. Campbell (1986) 187 Cal.App.3d 242, 247 (Campbell.) Stratton concluded: “Common sense dictates that the Brown reasoning is sound. There is nothing to indicate that Cocking would sanction the incredible position that the family of a ‘named insured’ who has become crippled by an accident should be ‘punished’ because he has inconsiderately failed to die.” (Stratton, supra, at p. 616.) In Campbell, the appellants urged the court to reject Brown because it was said to be “an artifact of earlier years before emergence of strict interpretations of policy exclusions.” (Campbell, supra, at p. 245.) But the Campbell court followed Brown and Stratton, even though it did not agree with their reasoning, because the industry had relied upon those decisions to determine policy language and fix rates. The Campbell court concluded that “an ordered jurisprudence suggests the conflict should be reviewed by higher authority.”[8] (Id. at p. 247.)

The statutory authorization for the named insured exclusion reflects the same persistent vitality as the cases that apply it. It has been authorized in some form since its inclusion in the motor vehicle financial responsibility law when the Vehicle Code was revised in 1959. (Stats. 1959, ch. 3, § 16454, p. 1649.) In 1970, authorization for the named insured exclusion in automobile liability insurance policies was added to the Insurance Code in section 11580.1, subdivision (c)(5). (Stats. 1970, ch. 300, § 4, p. 574.) Substantially all automobile liability policies issued in this state contain some variant of the named insured exclusion. (Schwalbe v. Jones (1976) 16 Cal.3d 514, 521, fn. 9.)

In 1982, the Legislature amended Insurance Code section 11580.1, subdivision (c)(5) to clarify that a named insured exclusion could exclude coverage for claims asserted in cross-complaints for indemnity. (Stats. 1982, ch. 736, § 3, p. 2932; California State Auto. Assn. Inter-Ins. Bureau v. Bourne (1984) 162 Cal.App.3d 89, 93 & fn. 2; State Farm Mut. Auto Ins. Co. v. Vaughn (1984) 162 Cal.App.3d 486, 488-489.) They did so by adding the following language to the statute: “or liability for bodily injury to an insured whenever the ultimate benefits of that indemnification accrue directly or indirectly to an insured.” (Italics omitted.) Appellants agree that “[a]t least two judicial decisions recognized that the statutory revisions had no effect upon the insurer’s right to exclude coverage for claims arising from bodily injuries to insureds,” citing Bourne and Vaughn. The Amica policy tracks much of the language of the 1982 amendment. But because the policy does not mimic the exact words of the statute, appellants urge that we give a different construction to a commonly understood exclusion.

They argue that “[a]s the drafter of the policy, the insurer is responsible for establishing exclusions to coverage ‘in clear and unmistakable language’ “ and that “[a]ny ambiguity or uncertainty must be resolved in favor of the insured.” But these general rules do not apply when the wording in question originates with the Legislature. In such cases, the language “must be construed to implement the intent of the Legislature and should not be construed strictly against the insurer . . . .” (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 684; citing Interinsurance Exchange v. Marquez (1981) 116 Cal.App.3d 652, 656; and Ichthys, Inc. v. Guarantee Ins. Co. (1967) 249 Cal.App.2d 555, 558; see also Darrah v. California State Automobile Assn. (1968) 259 Cal.App.2d 243, 247.) The addition of the “ultimate benefits“ language at issue here “says nothing more than that the exclusion applies whenever the injuries to an insured are at issue.” (California State Auto. Assn. Inter-Ins. Bureau v. Bourne, supra, 162 Cal.App.3d at p. 93, fn. 3.) Because the 1982 statutory amendment was intended merely to clarify that the exclusion should apply to a claim presented in a cross-complaint, an issue not presented here, we will give the same language in the Amica policy the same effect, and will not apply it to limit the effectiveness of the named insured exclusion. The rule expressed in Brown applies and excludes coverage of appellants’ claim.

We reject appellants’ argument for the same policy reason we articulated in Brown. Not only would appellants’ construction of the Amica policy favor claimants of the dead and disregard the needs of the maimed or injured, it would be ineffective to prevent recovery by adult children but exclude recovery in cases brought by young children living in their mother’s household at the time of her death. The result urged by appellants makes no sense, and we will not interpret or construe the Amica policy to reach an absurd result. (Cf. Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 807.)

Appellants contend Brown is distinguishable because the policy in question did not contain the additional “ultimate benefits” language that is added to the exclusion involved in this case. But the policy construed in Brown involved the statutory language as it existed before the 1982 amendment, just as the language of the Amica policy involves the statutory language as amended in 1982. The cases on which appellants rely are also distinguishable. In National Auto. & Cas. Ins. Co. v. Underwood (1992) 9 Cal.App.4th 31, 40-41, the court concluded an exclusion for bodily injury to an insured was not applicable to the claim of minor children who resided primarily with their divorced father.[9] In Farmers Ins. Exchange v. Teachers Ins. Co. (1980) 101 Cal.App.3d 804, 810, the driver was a permissive user and the policy did not exclude claims for bodily injury to an insured.

Appellants also argue that Brown should be overruled because claims arising from the death of an insured do not come within the statutorily-authorized exclusion for “bodily injury to an insured.” But Insurance Code section 11580.06, subdivision (c) specifies that “[t]he term ‘bodily injury’ shall include sickness or disease, including death resulting therefrom.” Also, as we stated in footnote 4, ante, Amica’s automobile insurance policy provides: “ ‘Bodily injury’ means bodily harm, sickness or disease, including death that results.” Since Brown, courts have applied and given effect to such language. (See California State Auto. Assn. Inter-Ins. Bureau v. Antonelli (1979) 94 Cal.App.3d 113, 118.) We decline to overturn a principle that has been settled and relied upon for several decades. (See Campbell, supra, 187 Cal.App.3d at p. 247.)

DISPOSITION

The judgment is affirmed.

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Siggins, J.

We concur:

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McGuiness, P.J.

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Pollak, J.

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[1] Appellants are the natural adult daughters of Wendy Lombardi, and did not reside in the Lombardis’ household.

[2] In the declaratory relief action, Amica named appellants as defendants, along with the Estate of J. Richard Lombardi. To avoid confusion in this appeal, our references to appellants include the sisters, but not the estate of their stepfather.

[3] Amica also issued a personal excess liability policy to the Lombardis. We agree with the parties that the language of the automobile policy determines the outcome of this case, and we will not undertake any analysis of the excess policy.

[4] Appellants do not claim the exclusion is ineffective under current law because the policy language excludes only bodily injury and not death. Bodily injury is defined in Amica’s automobile liability policy to include “death that results.”

[5] The policy defines family members as “resident[s] of [the insured’s] household.” Thus, appellants would not be considered family members because they were not living with the insured, and the exclusion would not apply.

[6] At the time of the Brown decision, the exclusion was authorized by Vehicle Code section 16454, which provided “that a ‘motor vehicle liability policy need not cover any liability for injury to the assured.’ [Citation.]” (Brown, supra, 252 Cal.App.2d at p. 122.)

[7] Judge Salsman filed a dissent in Brown, concluding the exclusion authorized by statute should be confined to claims brought by the insured, and should not be extended to “the wholly separate and independent claims of the decedent’s heirs.” (Brown, supra, 252 Cal.App.2d at p. 125.)

[8] The Supreme Court denied review in Campbell, just as it declined to review Brown and Stratton.

[9] The policy at issue in Underwood defined the term “insured” to include “ ‘any resident of the same household.’ “ (National Auto. & Cas. Ins. Co. v. Underwood, supra, 9 Cal.App.4th at p. 35.)