GARIBAY v. AETNA CASUALTY SURETY CO

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

Blanca GARIBAY and Michele Betty, Plaintiffs and Appellants, v. AETNA CASUALTY & SURETY CO., Defendant and Respondent.

No. B023448.

Decided: December 23, 1987

Thomas B. Watson & Associates, Los Angeles, and Karen M. Labat, Lawndale, for plaintiffs and appellants. Haight, Dickson, Brown & Bonesteel, Roy G. Weatherup, Michael J. Leahy, and Thomas N. Charchut, Santa Monica, for defendant and respondent.

Plaintiffs appeal from a declaratory judgment entered against them and in favor of defendant insurer decreeing that plaintiffs failed to comply with Insurance Code section 11580.2, subdivision (i)(1), by failing to give defendant notice of action against an uninsured motorist within one year of the date of plaintiffs' accident with the uninsured motorist.

FACTS

The pertinent facts, as presented to the trial court upon written Agreed Statement of Facts, are as follows:  On June 2, 1984, Garibay and her passenger, Betty, sustained bodily injuries and other damages in a collision between Garibay's vehicle and a vehicle operated by William Hilton.   At the time of the accident, Garibay was insured under an automobile liability policy issued by defendant.   The policy provided uninsured motorist coverage as required by Insurance Code section 11580.2.

On June 29, 1984, plaintiffs Garibay and Betty filed an action against Hilton seeking damages for injuries sustained in the collision.   On December 10, 1984, plaintiffs' attorneys received a document from the Department of Motor Vehicles certifying that Hilton was uninsured for the accident.

On November 4, 1985, 17 months after the accident, plaintiffs' attorneys sent a letter to defendant demanding medical payments in the amount of plaintiffs' medical bills and advising defendant that demands for settlement of the uninsured motorist claims would be made as soon as lost earnings were verified.

On January 31, 1986, defendant sent a letter to plaintiffs' attorneys stating it would honor the medical payments claims but would not honor plaintiffs' uninsured motorist claims due to plaintiffs' failure to toll the statute of limitations in Insurance Code section 11580.2.1

In April 1986, plaintiffs filed a complaint for declaratory relief against defendant, alleging that a controversy had arisen concerning whether plaintiffs tolled the statute of limitations in Insurance Code section 11580.2, subdivision (i)(1) so as to be entitled to claim uninsured motorist benefits under the insurance policy.   Plaintiffs contended that section 11580.2, subdivision (i)(1) does not impose any time limit for giving the insurer notice of the suit against the uninsured motorist and such notice may be given at any time after suit has been filed.   The trial court determined that the statute requires notice of suit to be given within one year of the date of the accident and declaratory judgment in defendant's favor was entered accordingly.   Plaintiffs appeal from the judgment.

DISCUSSION

Appellants' sole contention is that the trial court erred in deciding they had not complied with the notice provisions of section 11580.2, subdivision (i)(1).   They contend that the statute is ambiguous and should be construed so as not to subject the giving of notice to the one year requirement.   We agree that there are two possible constructions of the statute.   Under one construction, urged by respondent, the clause “unless within one year” modifies both the clause requiring filing suit and the clause requiring notice to the insurer.   Under the construction urged by appellants, the clause “unless within one year” modifies only the filing suit clause.

The interpretation and applicability of a statute is a question of law requiring an independent determination by the reviewing court, (Sher v. Leiderman (1986) 181 Cal.App.3d 867, 881, 226 Cal.Rptr. 698), and the appellate court is not bound by evidence presented on the question in the trial court.   (Valov v. Tank (1985) 168 Cal.App.3d 867, 873, 214 Cal.Rptr. 546.)   We must ascertain the intent of the legislature so that we may effectuate the purpose of the law;  when a statute is theoretically capable of more than one construction we are obliged to choose that which most comports with the intent of the legislature.  (Curtis v. County of Los Angeles (1985) 172 Cal.App.3d 1243, 1249, 218 Cal.Rptr. 772.)   The purpose sought to be achieved and the evils to be eliminated have an important place in ascertaining the legislative intent;  when two constructions appear possible, the court should favor that which leads to the more reasonable result.  (Cerra v. Blackstone (1985) 172 Cal.App.3d 604, 608, 218 Cal.Rptr. 15.)   Courts may consider the consequences that might flow from a particular interpretation, and construe the statute with a view to promoting rather than defeating its general purpose and the policy behind it.  (Scuri v. Board of Supervisors (1982) 134 Cal.App.3d 400, 407, 185 Cal.Rptr. 18.)

We are aware that Division Two of our district in State Farm Mutual Auto Ins. Co. v. Patton (1987) 194 Cal.App.3d 626, 631, 239 Cal.Rptr. 750, has recently held that the insured must give notice to the insurer of the lawsuit against the uninsured motorist within one year of the accident to preserve his or her claim under the insured motorist provisions of the policy.   We respectfully disagree with that court's construction of the statute and agree with appellants that the only reasonable and proper construction is that the notice provision is not subject to the one year requirement.

We start with the principle that Insurance Code section 11580.2 must be liberally construed to carry out its objective of providing financial protection for injuries caused by uninsured motorists and, as a corollary, any exception or exclusion from uninsured motorist coverage must be strictly construed.  (State Farm Mut. Aut. Ins. Co. v. Lykouresis (1977) 72 Cal.App.3d 57, 61, 139 Cal.Rptr. 827.)   The language in issue creates an absolute prerequisite to the accrual of any cause of action under the Uninsured Motorist law and does not create a conventional statute of limitations.   (United States v. Hartford Accident and Indemnity Co. (9th Cir.1972) 460 F.2d 17, 19;  California State Auto. Assn. Inter–Ins. Bureau v. Cohen (1975) 44 Cal.App.3d 387, 396, 118 Cal.Rptr. 890.)   Thus, the provisions of section 11580.2, subdivision (i)(1) create in reality an exclusion from coverage if certain prerequisites are not met.

In view of the public policy in favor of uninsured motorist coverage (State Farm Mut. Auto. Ins. Co. v. Lykouresis, supra, 72 Cal.App.3d at p. 61, 139 Cal.Rptr. 827), we construe the ambiguous language of the statute liberally in favor of coverage in the situation where, as here, notice of the timely filed suit is given to the insurer in a reasonable period of time after appellants' attorney discovered the uninsured status of the driver, Hilton, even though such notice was given about 17 months after the underlying accident.   Such construction of the statute is consistent with the rule that modifying phrases are to be applied to the words immediately preceding them and are not to be construed as extending to more remote language.  (Tri–County Elevator Co. v. Superior Court (1982) 135 Cal.App.3d 271, 275, 185 Cal.Rptr. 208.)   It is interesting that there is no comma after the modifying phrase “in a court of competent jurisdiction.”   Rather, the entire clause modifying the word “suit” reads as follows:  “․ in a court of competent jurisdiction and notice of such suit has been given the insurer․”  The lack of the comma suggests that the Legislature intended the notice provision not to be parallel or conjunctive to the filing suit provision, but part of the modifying clause.   As part of a modifying clause, it is not subject to the more remote language pertaining to the one year requirement.

We can find in the legislative history provided in the record on appeal no suggestion that the insurance industry was suffering any prejudice by lack of timely notice of a pending suit in cases where a timely suit against the uninsured motorist had been filed by the insured.   The court in State Farm Mutual Auto Ins. Co. v. Patton, supra, 194 Cal.App.3d 626, 631, 239 Cal.Rptr. 750, states that compelling the insured to give notice within one year of the accident that suit has been filed will allow the insurance company to preserve its rights vis-a-vis a subsequent lawsuit against the uninsured motorist by taking steps to insure evidence is preserved and witnesses are interviewed.   Yet, a plaintiff insured would certainly have the same or greater interest in discovery against the uninsured motorist and there is no indication that the intent of the statute was to give the insurer a right to control the prosecution of the case or to intervene in some way in such suit.   A requirement that the insured not only file suit against a tortfeasor but discover whether he is insured or not within one year of the accident is not apparent from any language in the statute.   Adopting the construction of the statute advanced by respondent would result in the situation of insureds, out of an abundance of caution, providing notice to their insurer of every automobile accident suit they file whether discovery of the defendant's status is complete or not.   Thus, the insurer will be duplicating the efforts of its insured in discovery, which may or may not result in a claim under the uninsured motorist coverage.   If, despite the diligent discovery of the insured within that one year period, the status of the defendant's insurance coverage becomes uncertain after that one year period because of some reservation of rights or a declaratory relief action or bankruptcy of the insurer, then it will have been impossible for an insured to comply with the notice provision as construed by respondent herein.   We do not believe the Legislature intended to place the significant burden of such discovery and notification on insureds, nor did it intend the absurd result of cutting off a cause of action before it has a chance to even accrue, such as in the case where uninsured motorist status only occurs after one year of the accident.

The more reasonable interpretation of the statute is that the Legislature only intended that suit be filed within one year of the accident, which will adequately preserve any subrogation rights.   The purpose of the requirement that the insured give notice of such suit is so that the insurer will be able to investigate and act on the insured's uninsured motorist claim in a proper fashion in those cases where the insurer otherwise has not had any prior opportunity to do so.

To read this statute to deny coverage under the policy simply because notice of the underlying suit came after one year of the accident, but when no showing of prejudice due to the delay is made, is to ascribe to the Legislature a hidden motive or object resulting in an exclusion or exception to coverage which does not appear on the face of the statute or in the legislative history provided in our record.   Moreover, because the construction of the statute urged by respondent could lead to absurd or unjust consequences, we do not believe the Legislature intended to make the notice provision subject to the one year requirement.

DISPOSITION

The judgment is reversed.   Appellants to recover costs on appeal.

FOOTNOTES

1.   Insurance Code 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 within one year of the date of the accident:  [¶] (1) Suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction and notice of such suit has been given the insurer․”

LILLIE, Presiding Justice.

THOMPSON and JOHNSON, JJ., concur.