Progressive Choice Ins. Co. v. Cal. State Auto. Ass'n Inter-Insurance Bureau

218 Cal.App.4th 1145

160 Cal.Rptr.3d 662

PROGRESSIVE CHOICE INSURANCE COMPANY, Plaintiff and Respondent,

v.CALIFORNIA STATE AUTOMOBILE ASSOCIATION INTER–INSURANCE BUREAU, Defendant and Appellant.

B242429

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

Filed August 12, 2013

See 2 Witkin, Summary of Cal. Law (10th ed. 2005) Insurance, § 189.

APPEAL from a judgment of the Superior Court of Los Angeles County, Maureen Duffy–Lewis, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC472603)

Morton & Lulofs and William R. Morton, Oakland, for Defendant and Appellant.

Yocis & Cox and Stephen M. Smith for Plaintiff and Respondent.

MANELLA, J.

INTRODUCTION

This case concerns the allocation of an Underinsured Motorist (UIM) loss between two automobile insurance companies. The insured was covered by automobile insurance policies issued by Progressive Choice Insurance Company (Progressive) and California State Automobile Association Inter–Insurance Bureau (CSAA). He was injured in an automobile accident caused by an underinsured motorist. After settling with the underinsured motorist, the insured claimed a $62,500 loss under the UIM provisions of both policies. Progressive paid the entire claim, and sought contribution from CSAA. Progressive contended that under Insurance Code section 11580.2, subdivision (d),¹ the UIM loss should be allocated on a pro-rata basis between the two companies. The trial court agreed, and granted summary judgment in favor of Progressive. CSAA contends the trial court erred, as under section 11580.2, subdivision (c)(2), its policy does not apply because the insured was covered by the Progressive policy; thus, the entire loss should be borne by Progressive. On appeal, Progressive contends CSAA may not rely on section 11580.2, subdivision (c)(2) because the CSAA policy lacked the necessary language to invoke that statutory exclusion. We agree. Absent such statutory exclusion, both insurance policies are implicated, and the mandatory pro-rata allocation of section 11580.2, subdivision (d) applies. Accordingly, we affirm the grant of summary judgment in favor of Progressive.

STATEMENT OF THE FACTS

The parties stipulated to the following facts.

A. Underlying Claims

On March 27, 2006, Benjamin White was injured in a traffic collision, while riding as a passenger in a vehicle being operated by Scott A. Tortora. The party who caused the collision was underinsured. White was insured under two automobile insurance policies. The first policy, issued by Progressive to Tortora, insured the vehicle. It provided underinsured motorist bodily injury coverage with limits of $100,000 for each person. The second policy, issued by CSAA to Benjamin White as the named insured, provided underinsured motorist bodily injury coverage with limits of $50,000 for each person.

White settled with the at-fault driver's automobile insurance company for the policy limit of $25,000. White then made a claim for Underinsured Motorist benefits under the Progressive and CSAA policies. CSAA denied coverage. Progressive paid the sum of $62,500 to White. Progressive demanded that CSAA reimburse Progressive $20,833.33, the pro-rata share of the payment made to White based upon the applicable policy limits of the two policies. CSAA denied any obligation to contribute and reimburse Progressive, arguing that the Progressive policy constituted the sole source of underinsured motorist coverage to White.

B. Progressive Insurance Policy

The Progressive insurance policy provided underinsured motorist coverage under Part III(A) of the policy. It provided: “Subject to the Limits of Liability, if you pay a premium for Uninsured/Underinsured Motorist Bodily Injury Coverage, we will pay for damages, other than punitive or exemplary damages, which an insured person is entitled to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle because of bodily injury: [¶] 1. sustained by an insured person; [¶] 2. caused by accident; and [¶] 3. arising out of the ownership, maintenance, or use of an uninsured motor vehicle or underinsured motor vehicle.”

Under “Exclusions,” the policy stated that “Coverage under this Part III(A) is not provided for bodily injury sustained by any person while using or occupying: ... [¶] ... [¶] 6. a motor vehicle, other than a covered vehicle, if the owner has insurance similar to that provided under this Part III(A).”

Part III(A) also included an “Other Insurance” provision. That provision stated: “If there is other applicable uninsured or underinsured motorist coverage, the damages which an insured person is entitled to recover under this Part III(A) shall be deemed not to exceed the highest limit of any applicable coverage. We will pay only our share of the damages. Our share is the proportion that our Limit of Liability bears to the total of all available coverage limits. Any insurance we provide shall be excess over any other uninsured or underinsured motorist coverage, except for bodily injury to you or a relative when occupying a covered vehicle.”

C. CSAA Insurance Policy

The CSAA insurance policy provided underinsured motorist coverage under Part IV of the policy.² Under “Coverage,” the policy provided: “We will pay damages, other than punitive or exemplary damages, for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. The bodily injury must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle.”

The policy enumerated several exclusions from coverage. It provided: “This coverage does not apply to bodily injury sustained by an injured person:

“(1) while occupying a motor vehicle, other than an insured motor vehicle, owned by any insured person, or leased to any insured person, under a written contract for a period of six months or longer, or through being struck by such a motor vehicle;

“(2) if that person or the representative of that person, without our written consent, makes any settlement or prosecutes to judgment any action against any person who may be legally liable therefor;

“(3) while occupying your auto when used to carry persons or property for a charge....

“Uninsured Motorist Coverage shall not apply to the benefit of any insurer or self-insurer under any workers' compensation or disability benefits law or any similar law or to the direct benefit of the United States, any state or any political subdivision thereof.”

The policy further provided that the coverage limit was “[t]he limits of liability shown in the Declarations.” However, “[i]f a claim is made for bodily injury caused by an underinsured motor vehicle, we will pay only after the limits of bodily injury liability policies applicable to all insured motor vehicles causing the injury have been exhausted by payment of judgments and settlements, and proof of such payment is submitted to us.”

Finally, the policy had an “Other Insurance” provision, which provided:

“With respect to bodily injury to an insured person occupying a motor vehicle not owned by you, the coverage under this Part applies only as excess insurance over any similar insurance available to such insured person and covering such automobile as primary insurance. In this situation this coverage will apply only in the amount by which the limits of liability for this coverage exceeds the limits of liability of such other insurance.

“If there is other similar insurance on a loss covered by this Part, we will pay our proportionate share as our limit of liability bears to the total limits of all applicable similar insurance. But, any insurance for a vehicle you do not own is excess over any applicable similar insurance.”

PROCEEDINGS BELOW

On November 9, 2010, Progressive filed an action for contribution in superior court. In the complaint, Progressive sought reimbursement from CSAA on a pro-rata basis. CSAA filed an answer, generally denying the allegations and asserting that the Progressive policy provided the sole coverage for the insured's UIM claim.

Progressive and CSAA filed competing motions for summary judgment. CSAA contended that under section 11580.2, subdivision (c)(2), its policy provided no UIM coverage to White because the Progressive policy already provided “similar” UIM coverage. Progressive contended it did not provide “similar” UIM coverage because the amount of coverage was different; it provided $100,000 per person, whereas CSAA provided only $50,000 per person. The trial court granted Progressive's motion for summary judgment. On May 29, 2012, judgment was entered in the amount of $20,833.33. CSAA timely appealed.

DISCUSSION

On appeal, Progressive affirmatively disavows the argument that prevailed below—that section 11580.2, subdivision (c)(2) was inapplicable because the Progressive policy was not “similar” to the CSAA policy. Rather, Progressive now contends section 11580.2, subdivision (c)(2) is inapplicable because CSAA failed to include the necessary language to invoke that statutory exclusion in its policy. CSAA concedes that Progressive may change its argument on appeal to assert an issue of law based on undisputed facts. Accordingly, we address only the issue presented to us: whether section 11580.2, subdivision (c)(2) operates to exclude coverage as a matter of law.

A. Statutory UIM Coverage Scheme

Section 11580.2, the uninsured motorist law, creates a statutory scheme to protect “innocent drivers against losses caused by negligent and financially irresponsible motorists.” (State Farm Mut. Auto. Ins. Co. v. Yang (1995) 35 Cal.App.4th 563, 567–568, 41 Cal.Rptr.2d 210.)

Section 11580.2, subdivision (a)(1) provides in pertinent part: “No policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle ... shall be issued ... in this state to the owner or operator of a motor vehicle ... unless the policy contains,...