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Court of Appeal, Fifth District, California.

Delores GARRETSON, Plaintiff and Appellant, v. ALLIED GROUP INSURANCE et al., Defendants and Respondents.

No. F014332.

Decided: February 26, 1992

Perez, Makasian & Williams and Robert Gray Williams, Fresno, for plaintiff and appellant. McCormick, Barstow, Sheppard, Wayte & Carruth, James M. Hurley and David H. Bent, Fresno, for defendants and respondents.


Delores Garretson appeals from the denial of her petition to compel arbitration of an uninsured motorist claim.   She contends the court erred in finding her action was barred by the statute of limitations.   First, she contends her action to compel arbitration did not accrue when she filed a lawsuit against the uninsured motorist under Insurance Code 1 section 11580.2, subdivision (i);  rather, it accrued pursuant to subdivision (f) of that section when she and Allied Group Insurance (Allied) “disagreed” as to the resolution of her claim.   Alternatively, she contends the statute of limitations was equitably tolled due to an understanding between herself and Allied.


Garretson was injured when struck by an uninsured motorist on May 5, 1981, while in the course of her employment.   The car she was driving was insured by Allied.   She pursued a workers' compensation claim and, in addition, on April 21, 1982, filed suit against the uninsured motorist.   Initially, Allied's claims representative denied coverage but, after corresponding with Garretson's counsel, agreed that her claim was covered under the policy.

In September 1983, Garretson received a workers' compensation award.   In November 1983, the Workers' Compensation Appeals Board (WCAB) granted reconsideration of the case.   Supplemental findings issued in December 1984, and the WCAB denied the carrier's request for reconsideration in 1985.   Subsequently, the case was reopened due to Garretson's continuing need for medical treatment.   On March 30, 1989, the case was settled and a compromise and settlement was approved.

On April 28, 1989, Garretson wrote Allied requesting arbitration of her uninsured motorist claim.   Allied replied on May 12, 1989, that they were waiting until advised of the conclusion of her workers' compensation case.   The parties exchanged medical information for several months, but Allied did not respond to the request for arbitration.

In January 1990, Garretson filed a petition to compel arbitration.   Allied's counsel opposed the petition on the ground the request was untimely.   The court denied the petition finding it was barred by Code of Civil Procedure section 337.   The court also found that the doctrine of equitable estoppel did not preclude Allied's reliance on the statute of limitations.


I. When did Garretson's action to compel arbitration accrue?

Section 11580.2 addresses uninsured motorist coverage claims.   Pertinent subdivisions provide:

“(f) The policy ․ shall provide that the determination as to whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof, shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration․   If the insured has ․ rights to benefits ․ under any workers' compensation law, the arbitrator shall not proceed with the arbitration until the insured's physical condition is stationary and ratable.   In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before arbitration may proceed․


“(i) No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless one of the following actions have been taken within one year from the date of the accident:

“(1) Suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction.

“(2) Agreement as to the amount due under the policy has been concluded.

“(3) The insured has formally instituted arbitration proceedings.”

 While the statute does not state when a demand for arbitration must be made after the insured has filed suit against the uninsured motorist, the applicable statute of limitations is the four years provided in Code of Civil Procedure section 337 for actions on contract.  (California State Auto. Assn. Inter–Ins. Bureau v. Cohen (1975) 44 Cal.App.3d 387, 395, 118 Cal.Rptr. 890.)   Further, a claim for arbitration based on an uninsured motorist insurance provision accrues, and the statute of limitations for demanding arbitration begins to run, when one of the contingencies specified in subdivision (i) of section 11580.2 occurs within one year from the date of the accident.  (Ibid.)  Thus, a demand for arbitration must be made within four years of a timely filed suit against the uninsured motorist.

 Garretson filed her action against the uninsured motorist on April 21, 1982, within one year of the date of the accident.   Allied's obligation to arbitrate her claim therefore accrued on that date and her demand for arbitration on April 28, 1989, more than seven years later, was untimely.

Garretson contends the Cohen court, and the trial court, misconstrued section 11580.2, subdivision (i).   She submits the plain language of the subdivision creates a prerequisite to accrual, but does not trigger accrual of the cause of action.   Rather, under section 11580.2, subdivision (f) and the language of her uninsured motorist policy, her cause of action for arbitration accrued when the parties disagreed as to whether she was entitled to damages or the amount thereof;  that is, when there was a breach of the insurance agreement.   We disagree.

First, section 11580.2, subdivision (i) provides, “No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless one of the following actions have been taken within one year from the date of the accident․”   The logical construction of this subdivision is that a cause of action accrues if and when the insured takes one of the enumerated actions.   Further, subdivision (f) provides, “the determination as to whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof, shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration.”   The reasonable interpretation of this language is that if the parties disagree as to entitlement or the amount of damages, the dispute must be resolved by arbitration rather than litigation.   Thus, neither the Cohen court nor the trial court misconstrued the plain language of the statute.

Second, Allied's policy of insurance does not set out a specific period within which a demand for arbitration must be made.   The policy states:

“If we and a covered person disagree whether that person is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle or do not agree as to the amount of damages, either party may make a written demand for Arbitration․” 2

As with section 11580.2, subdivision (f), the reasonable interpretation of this language is as an agreement to arbitrate rather than a statute of limitations for an action to compel arbitration.   Under subdivision (i) of section 11580.2, Allied's contractual obligation to arbitrate Garretson's claim arose when she filed suit against the uninsured motorist regardless of whether the parties disagreed as to coverage or amount at that time.

Third, the fact that abatement of the uninsured motorist claim did not prejudice Allied is not a valid reason to find the limitations period inapplicable.  (Pacific Indem. Co. v. Ornellas (1969) 269 Cal.App.2d 875, 878, 75 Cal.Rptr. 608.)

 Finally, we reject Garretson's contention that the limitations period should be extended because of her workers' compensation case.   Even though section 11580.2, subdivision (f) requires workers' compensation claims to be resolved before arbitration of uninsured motorist claims, the language of this statute does not preclude arbitration before conclusion of the workers' compensation case.   To the contrary, it expressly allows for immediate arbitration in cases where “good cause” is shown.   Moreover, to the extent the statute requires that workers' compensation cases be concluded before arbitration proceeds, it does not preclude filing of a demand for arbitration.   Whether or not it is appropriate to stay arbitration proceedings pending the outcome of a workers' compensation case, the filing of a petition to compel arbitration is not an idle act because such filing protects the insured's claim.

Accordingly, Garretson's failure to request arbitration within the statutory period is fatal to her claim against Allied.

II. Is Allied estopped from asserting the statute of limitations?

Garretson also contends Allied should be equitably estopped from asserting the statute of limitations as a bar to her action because the parties agreed to abate settlement negotiations until her workers' compensation case was resolved.   Not so.

 An estoppel to set up the defense of the statute of limitations arises as a result of some conduct by the defendant, relied on by the plaintiff, which induces the belated filing of the action.   One cannot lull his adversary into a false sense of security which causes his adversary to delay filing his claim and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought.  (Carruth v. Fritch (1950) 36 Cal.2d 426, 433, 224 P.2d 702;  3 Witkin, Cal. Procedure (3d ed. 1985) Actions, § 523, p. 550.)

 An estoppel may arise where the defendant makes representations to the effect that the matter will be settled without suit or where the parties agree suit need not be brought while litigation involving similar issues is pending.  (3 Witkin, Cal. Procedure, Actions, op. cit. supra, §§ 525, 526, pp. 552, 553;  Atlas Finance Corp. v. Kenny (1945) 68 Cal.App.2d 504, 513–516, 157 P.2d 401.)   However, no such representations or agreement is evident in this case.

 The first letter from Allied to Garretson's counsel in 1982 denied coverage.   Garretson's counsel responded, contending there was coverage.   In a letter dated February 16, 1983, Allied agreed there was coverage, “and the only exclusion would be those that are in the policy as you have reviewed regarding inuring to the Workers' Compensation carrier.”   There was no response to this letter.   On May 18, 1983, Allied wrote Garretson's counsel “inquiring as to the status of the medical bills you would like to submit for payment on behalf of your client.”   Again there was no response.   On September 19, 1983, the Allied claims manager wrote Garretson's counsel “again ․ request[ing] the present status of the medical pay and the uninsured motorist claim․”   Once again, there was no response.

Garretson's counsel next communicated with Allied on January 5, 1988, after the four-year statute of limitations for requesting arbitration had run.   He acknowledged their last contact was in 1983 when Allied requested a status report on Garretson's medical bills.   He explained the reason for the delay:  “The reason that we have not been active on this file is the fact that there was a companion Workers' Compensation case that [we] felt needed to be resolved before we could make an intelligent claim under the uninsured motorist provisions of her policy․  [¶ ] At this time, I would like to know how you wish to proceed on this claim․”   Allied did not respond to counsel's letter.

Garretson's counsel next wrote Allied on February 14, 1989, reporting there were issues in the workers' compensation case yet to be resolved.   However, he “would like at this time to work out some resolution on the Uninsured Motorist case․  [¶ ] If this is not possible, I shall wait until the conclusion of the Workers' Compensation case and then make demand for Arbitration.”   Allied did not respond to this letter.   On April 28, 1989, Garretson's counsel wrote Allied, “Since I have received no reply ․ from you to my letters of January 5, 1988, and February 14, 1988 [sic ], regarding this claim I have no alternative but to make the enclosed demand for arbitration.”   Allied replied on May 12, 1989, that they were waiting until advised of the conclusion of Garretson's workers' compensation case.   They “could not formulate a proper position” until the workers' compensation case was concluded.   When they received that information, they would “attempt to reach agreement on a fair settlement of this case.   If that is not possible, we can promptly proceed to arbitration.”

Garretson contends the 1989 letters are evidence that the parties had agreed to abate resolution of her uninsured motorist claim until the workers' compensation proceeding was concluded.   We disagree.

Communication between the parties does not reveal any basis for an estoppel.   During the four years after Garretson filed her complaint against the uninsured motorist while the statute of limitations was running, Allied made no misrepresentations or promises to induce Garretson to delay her request for arbitration.   While Garretson may have “believed [Allied] concurred with her assessment that to demand arbitration while her Workers' Compensation case was pending would be meaningless,” the record is devoid of any evidence that Allied induced that belief.  (Cf. Jackson v. Andco Farms, Inc. (1982) 130 Cal.App.3d 475, 479–480, 181 Cal.Rptr. 815;  Tubbs v. Southern Cal. Rapid Transit Dist. (1967) 67 Cal.2d 671, 678–679, 63 Cal.Rptr. 377, 433 P.2d 169.)   Further, Allied was under no duty to apprise Garretson during that four-year period that it was not waiving its rights under Code of Civil Procedure section 337.  (Lesko v. Superior Court (1982) 127 Cal.App.3d 476, 486, 179 Cal.Rptr. 595.)   Finally, any statements by Allied after the limitations period had run could not be the basis for finding an estoppel to assert the statute of limitations.  (Cf. Jackson v. Andco Farms, Inc., supra, 130 Cal.App.3d at p. 479, 181 Cal.Rptr. 815.)   Even assuming the issue was presented below and preserved for appeal, by denying the petition to compel arbitration the trial court impliedly found Allied's letter of May 12, 1989, did not constitute a waiver of the statute of limitations.   We cannot say that letter, taken together with Allied's prior correspondence, compelled a finding of waiver as a matter of law.


The order appealed from is affirmed, with costs to respondents.


FN1. All statutory references are to the Insurance Code unless otherwise indicated..  FN1. All statutory references are to the Insurance Code unless otherwise indicated.

2.   The policy is not included in the record.   Garretson quotes from the policy in her brief and Allied does not dispute the accuracy of the language.

BEST, Presiding Justice.


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