MARTIN v. 20TH CENTURY INSURANCE COMPANY

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

Maria Del Rosario MARTIN, et al., Plaintiffs and Appellants, v. 20TH CENTURY INSURANCE COMPANY, Defendant and Respondent.

Civ. 69211.

Decided: March 29, 1984

Merritt L. Weisinger, Los Angeles, for plaintiffs and appellants. Demler & Armstrong, and James P. Spaltro, Long Beach, for defendant and respondent.

STATEMENT OF THE CASE

Maria del Rosario Martin (herein Ms. del Rosario), on behalf of herself and as guardian ad litem for her minor sister Maria Martin, appeals from a judgment entered April 8, 1983, granting a motion for summary judgment in favor of 20th Century Insurance Company (hereinafter 20th Century).

While walking across a parking lot on December 31, 1978, appellants were struck by an automobile owned by two uninsured motorists and operated by one of the owners.   On December 28, 1979, appellants filed a complaint for declaratory relief and for damages for personal injuries.   The cause of action for declaratory relief named 20th Century and California Automobile Assigned Risk Plan (CAARP) as defendants.1

Appellants sought a declaration that the uninsured motorist provision of the assigned risk automobile liability policy issued to Ms. del Rosario by 20th Century was in full force and effect at the time of the accident resulting in injuries to both pedestrians.   20th Century denied uninsured motorist coverage, alleging such coverage had been waived by virtue of an exclusion agreement which formed part of the application for the assigned risk insurance policy.   The application was prepared by an independent insurance agent and was signed by Ms. del Rosario.

On January 19, 1982, pursuant to Code of Civil Procedure section 437c, appellants filed a motion for partial summary judgment against 20th Century on grounds that the “purported waiver of uninsured motorist coverage ․ was without force or effect and that [appellants] were entitled to uninsured motorist coverage ․ on December 31, 1978.”   The motion was denied on February 16, 1982.

On December 10, 1982, 20th Century filed a motion for summary judgment on grounds that (1) there was no uninsured motorist coverage under the policy issued to Ms. del Rosario by 20th Century, (2) there was no agency relationship between 20th Century and the insurance agent whose office prepared the application for insurance through the assigned risk program, (3) there was no negligence or misrepresentation by 20th Century in issuing the assigned risk insurance policy to the insured without uninsured motorist coverage, and (4) 20th Century did not have an affirmative duty to ascertain the validity of the waiver before issuing to Ms. del Rosario the assigned risk automobile insurance policy which excluded uninsured motorist coverage.   20th Century's motion for summary judgment was granted on January 27, 1983.

This appeal is from the judgment of April 8, 1983, entered after the granting of the motion of 20th Century.

FACTS

 The rule of review with respect to summary judgment is that “[s]ummary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor and his opponent does not by affidavit show facts sufficient to present a triable issue of fact.   The affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of summary judgment should be resolved against granting the motion.”  (Slobojan v. Western Travelers Life Ins. Co. (1969) 70 Cal.2d 432, 436–437, 74 Cal.Rptr. 895, 450 P.2d 271;  Zahn v. Canadian Indem. Co. (1976) 57 Cal.App.3d 509, 512, 129 Cal.Rptr. 286.)

For purposes of its motion for summary judgment, 20th Century conceded the following facts:  In May 1978, Ms. del Rosario was involved in an automobile accident.   At that time Ms. del Rosario was uninsured and subsequently received notice from the Department of Motor Vehicles that her driving permit would be suspended unless she provided proof of insurance coverage.   Ms. del Rosario, who spoke Spanish but virtually no English, then went to a local insurance agent, James K. Connor, to obtain the necessary insurance coverage.   Ms. del Rosario was accompanied by her teen-aged sister, Maria Martin.   Neither woman spoke fluent English and no one in Mr. Connor's office spoke fluent Spanish.   At Mr. Connor's office, one of Mr. Connor's employees filled out an assigned risk automobile insurance application and obtained Ms. del Rosario's signature to a waiver of uninsured motorist coverage, without explaining to her the nature of uninsured motorist coverage or the effect of deleting that coverage from the application for insurance.2  The application was then submitted to CAARP.   CAARP approved the application and thereafter assigned the application to 20th Century.   20th Century did issue an insurance policy in accordance with the terms of the application.   The policy did not include uninsured motorist coverage.   After the insurance policy was issued, Ms. del Rosario and her sister were involved in the December 31, 1978, accident with an uninsured motorist.   Ms. del Rosario subsequently filed an uninsured motorist claim which was rejected by 20th Century on grounds that Ms. del Rosario waived such coverage in her application.   Ms. del Rosario then instituted the instant suit.

In a declaration included in the opposition papers to the motion of 20th Century for summary judgment, Ms. del Rosario stated, as to the waiver of uninsured motorist coverage, that “I signed the documents and at that time I believed that I had insurance coverage as was required by law.   At no time was any part of those documents explained to me.   I did not even know what uninsured motorist coverage was or what an uninsured motorist was until my attorney eventually explained this to me after this lawsuit was filed.   At the time I signed the document it was never explained to me in Spanish, nor did I know that I was waiving anything at all, nor did I understand anything in those documents.   I did not understand that by signing that document I was giving up something that the law would otherwise have required and did not understand that by signing this document I would not be covered in the event I was hit by another car that did not have any insurance coverage.   None of this was ever explained to me and all I did was to sign on the line where it was indicated to me to sign.”

The declaration of James K. Connor, the insurance agent, in support of the motion of 20th Century stated, as to the explanation of waiver of uninsured motorist coverage, “5. It has always been standard procedure in my office to explain uninsured motorist coverage to all applicants and to insure that any waiver of UM coverage is done knowingly.  [¶] ․ [¶] 7.   Maria del Rosario Martin did sign the UM coverage waiver and, based upon my standard office policy and the records contained in my file, it is my belief that she did so knowingly.”   Appellants concede in their brief that the insurance agent was not an agent of 20th Century.

The declaration of Gerald M. Kyle, the automobile underwriting manager of 20th Century, submitted in support of the motion for summary judgment, in part provides that “upon receipt of Maria del Rosario Martin's application, 20th Century did not contact the applicant, but merely processed the assigned risk application and issued a policy expressly in accordance therewith.”

ISSUE

The question we face is whether summary judgment was appropriately granted.

DISCUSSION

For reasons discussed below, we conclude that there exists a fact question as to whether there was an effective waiver by Ms. del Rosario of the uninsured motorist coverage required by Insurance Code section 11580.2.3

At the time appellant Ms. del Rosario submitted her application, section 11580.2 provided, in pertinent part:

“(a)(1) No policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle, except for policies which provide insurance in the Republic of Mexico issued or delivered in this state by nonadmitted Mexican insurers, shall be issued or delivered in this state to the owner or operator of a motor vehicle, or shall be issued or delivered by any insurer licensed in this state upon any motor vehicle then principally used or principally garaged in this state, unless the policy contains, or has added to it by endorsement, a provision with coverage limits at least equal to the financial responsibility requirements specified in Section 16056 of the Vehicle Code insuring the insured, his heirs or his legal representative for all sums within such limits which he or they, as the case may be, shall be legally entitled to recover as damages for bodily injury or wrongful death from the owner or operator of an uninsured motor vehicle.   The insurer and any named insured, prior to or subsequent to the issuance or renewal of a policy, may, by agreement in writing, in the form specified in paragraph (2), delete the provision covering damage caused by an uninsured motor vehicle (1) completely, or (2) with respect to a natural person or persons designated by name when operating a motor vehicle.   Either of such deletions by any named insured shall be binding upon every insured to whom such policy or endorsement provisions apply while such policy is in force, and shall continue to be so binding with respect to any continuation, renewal, or replacement of such policy by the named insured, or with respect to reinstatement of such policy within 30 days of any lapse thereof.   A policy shall be excluded from the application of this section if the only coverage with respect to the use of any motor vehicle is limited to the contingent liability arising out of the use of nonowned motor vehicles.

“(2) The agreement specified in paragraph (1) shall be in the following form:

‘The California Insurance Code requires an insurer to provide uninsured motorists coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle.   Such section also permits the insurer and the applicant to delete such coverage completely or with respect to one or more natural persons designated by name when operating a motor vehicle.   Uninsured motorists coverage insures the insured, his heirs, or legal representatives for all sums within the financial responsibility limits which such person or persons are legally entitled to recover as damages for bodily injury, including any resulting sickness, disease, or death, to him from the owner or operator of an uninsured motor vehicle not owned or operated by the insured.’

“Such agreement may contain additional statements not in derogation of or conflict with the foregoing.   The execution of such agreement shall relieve the insurer of liability under this section while such agreement remains in effect.”

The question presented by the facts of the case at bench is whether a waiver of uninsured motorist coverage, where there is a question as to whether the applicant, because of difficulty with the English language, understood what was being waived, satisfies the requirement of section 11580.2 that the insurer and named insured agree in writing to delete such protection.   20th Century contends that, in the assigned risk automobile liability insurance context, an assigned risk insurer may rely on the terms of an application which deletes uninsured motorist coverage and may issue an insurance policy effectively excluding such coverage if the application was prepared solely by the insured and her agent.

The thrust of 20th Century's argument is that the insurer is required only to comply with the statutorily imposed duty to participate in the assigned risk plan.   Further, 20th Century contends that its duty is discharged when it issues a policy to the applicant in accordance with the application submitted to it.   With respect to the requirement of section 11580.2 that the insurer and insured must agree in writing to exclude uninsured motorist coverage, 20th Century urges that “it would be contrary to accepted contract principles, fairness and justice, and serve no public policy to force an insurer, on the one hand, to issue insurance in compliance with the application furnished by an applicant and his agent and approved by CAARP, and then hold the insurer liable for insurance not requested or paid for or issued because of some alleged misunderstanding between the applicant and his agent.”

 The public policy of this state requires an insurer to provide uninsured motorist coverage, even if the policy does not by express terms provide for it and even if no premium for such coverage is charged or collected.  (Hagar v. Elite Ins. Co. (1971) 22 Cal.App.3d 505, 509–510, 99 Cal.Rptr. 423;  Dufresne v. Elite Insurance Co. (1972) 26 Cal.App.3d 916, 921–922, 103 Cal.Rptr. 347;  Bohlert v. Spartan Ins. Co. (1969) 3 Cal.App.3d 113, 118, 83 Cal.Rptr. 515;  Kincer v. Reserve Ins. Co. (1970) 11 Cal.App.3d 714, 90 Cal.Rptr. 94.)   In light of the public policy of this state to foster and encourage the furnishing of uninsured motorist coverage, the automobile financial responsibility law (which includes section 11580.2) “ ‘․ must be liberally construed to foster its main objective of giving “monetary protection to the ever changing and tragically large group of persons who while lawfully using the highways themselves suffer great injury through the negligent use of those highways by others.”  ․’ [Citations.]”  (Borders v. Great Falls Yosemite Ins. Co. (1977) 72 Cal.App.3d 86, 97, 140 Cal.Rptr. 33.)

 The Legislature has, however, “provided a specific method by which the otherwise mandatory uninsured motorist coverage may be excluded.”  (Dufresne v. Elite Insurance Co., supra, 26 Cal.App.3d 916, 922, 103 Cal.Rptr. 347.)   The only means by which uninsured motorist coverage may be excluded from an automobile liability policy is by a written agreement between the insurer and the insured.  “An insurer's attempt to exclude uninsured motorist coverage can be effected only if there has been strict compliance with the provision of the law permitting such exclusion.”  (Id., at p. 922, 103 Cal.Rptr. 347.)

The language of section 11580.2, which permits exclusion of uninsured motorist coverage from an insurance policy, specifies that the exclusion must be in the form of a written agreement between the insurer and the insured.   That provision does not provide that the written agreement may be between the insured and the insured's agent.

Nevertheless, 20th Century argues that an assigned risk insurer may rely on the terms and provisions of an application for an assigned risk automobile insurance policy and issue a policy in accordance therewith.   In support of this argument, 20th Century cites Interinsurance Exchange v. Garrett (1975) 46 Cal.App.3d 368, 120 Cal.Rptr. 216, and Robles v. California State Auto. Assn. (1978) 79 Cal.App.3d 602, 145 Cal.Rptr. 115.   Those cases hold, in part, that the representations of an insurance agent to the insured with respect to the terms of the policy are not binding upon the assigned risk automobile insurer.   In those cases, as here, the evidence showed that the insurer was unknown to the agent and further that the insurer was not named by the agent but by the CAARP manager upon receipt of the application for an assigned risk automobile insurance policy.   20th Century thus urges that any failure of the insurance agent to procure a valid waiver of uninsured motorist coverage from Ms. del Rosario cannot be binding upon or imputed to 20th Century.

Those cases are inapposite for they involve attempts by an insured to utilize statements of someone not the agent of the insurer to bind the insurer.

 It is conceded here that the insurance agent acted only on behalf of Ms. del Rosario and not on behalf of 20th Century.   Contrary to what 20th Century contends, there is a fact question as to whether there exists any meeting of the minds as between Ms. del Rosario and her agent to exclude the otherwise mandatory uninsured motorist coverage from the application for insurance.4

It is also important to note that neither Interinsurance Exchange nor Robles involved waivers of uninsured motorist coverage.   The former concerned the question whether the representations by an independent insurance agent to the insured that the assigned risk automobile insurance policy was to become effective immediately were binding upon the assigned risk insurer.   The latter addressed the question whether the representations by an independent insurance agent to the insured, that the assigned risk automobile insurance policy issued to the insured provided uninsured motorist coverage in Mexico, were binding upon the assigned risk insurer.

In Bohlert v. Spartan Ins. Co., supra, 3 Cal.App.3d 113, 83 Cal.Rptr. 515, the trial court denied the petition of an insured to compel arbitration of his claim under the uninsured motorist coverage of an automobile liability insurance policy issued by the insurer.   The undisputed facts showed that the insured visited the offices of one of the insurer's agents and requested liability coverage for his motorcycle.   The agent filled out an application for insurance which was signed by the insured.   The insured paid the premium on the policy.   The policy excluded uninsured motorist coverage and was not delivered to the insured until after he had been injured by an uninsured motorist, approximately one month after the policy was purchased.

The insured testified that prior to consulting with the insurer's agent he had never applied for any type of insurance.   After obtaining some identifying information from the insured, the agent informed the insured that the coverage he desired would cost $82.   After the insured paid the $82, the agent filled out the application form and requested the insured to sign the form where an “X” was marked.   The insured signed “but was not told to read the form, did not read it before signing, was not given an opportunity to read it and did not receive a copy of it.”  (Bohlert v. Spartan Ins. Co., supra, 3 Cal.App.3d at p. 117, 83 Cal.Rptr. 515.)   The insured further testified that the subject of uninsured motorist coverage was never discussed, that he never told the agent he did not want such coverage and that he was unaware that he was waiving uninsured motorist coverage when he signed the form.

The insurer's agent testified that the insured indicated he wanted the least expensive liability coverage possible and “ ‘that he merely wanted to satisfy the minimum state [financial responsibility] requirements ․ so as to get his [driver's] license.’ ”  (Bohlert v. Spartan Ins. Co., supra, 3 Cal.App.3d at p. 117, 83 Cal.Rptr. 515.)   The insurance agent then completed an application for insurance based on the above information and indicated to the insured the cost of the minimum coverage, as well as what coverage the insured would receive.   The cost of $82 did not include a $25 charge for uninsured motorist coverage.   This computation, excluding the $25 charge, was not communicated to the insured.   The agent also testified that “it was his practice to have an insurance customer sign the form only when the customer had indicated that the coverage was not wanted, and that he had [the insured] sign ‘[i]n view of the fact that ․ [he] ․ wanted no coverage over the necessary to meet minimum State requirements and wanted no additional coverage that would increase his premium.’ ”  (Id., at p. 117, 83 Cal.Rptr. 515.)

At the conclusion of the trial, the insured requested six special findings of fact regarding discussions, if any, of uninsured motorist coverage between the insured and the agent, and whether or not the insured understood that he was waiving uninsured motorist coverage.   The trial court denied the requests for special findings and found in part that there was an agreement in writing to exclude uninsured motorist coverage.   The trial court, therefore, concluded that there was no arbitrable question under the liability policy issued to the insured and entered judgment in favor of the insurer.

In reversing the judgment of the trial court, the Court of Appeal stated, “In the absence of an ‘agreement in writing’ which deletes uninsured motorist coverage as permitted by the controlling statute (Ins.Code, § 11580.2, subd. (a)), a motor vehicle liability policy provides the coverage by operation of law (Aetna Cas. & Surety Co. v. Superior Court (1965) 233 Cal.App.2d 333, 336, 43 Cal.Rptr. 476), irrespective of whether or not the insurer charges a premium for it.  (Eliopulos v. North River Ins. Co. (1963) 219 Cal.App.2d 845, 850, 33 Cal.Rptr. 449.) ․ [¶]  Only an agreement in writing which amounts to an ‘effective waiver’ of uninsured motorist coverage by the insured will exclude it from a liability policy for which he makes application.   [Citation.]  Waiver is the intentional relinquishment of a known right after knowledge of the facts.  [Citations.]”  (Bohlert v. Spartan Ins. Co., supra, 3 Cal.App.3d at p. 118, 83 Cal.Rptr. 515;  fn. omitted.)

The Court of Appeal examined the language of the provision deleting uninsured motorist coverage and concluded, as a matter of law, that the provision of the application deleting uninsured motorist coverage did not, on its face, amount to an effective waiver of uninsured motorist coverage because the language of that provision was ambiguous.

As to the question of whether the insurer, in signing the provision deleting uninsured motorist coverage, “executed an ‘intentional relinquishment of a known right after knowledge of the facts' [citations],” the court held that to be a question of fact, due to the conflicting testimony of the insured and the insurance agent.  (Bohlert v. Spartan Ins. Co., supra, at pp. 119–120, 83 Cal.Rptr. 515.)   Because the trial court refused the request for special findings on that issue, the Court of Appeal was unable to infer that the trial court found adversely to the appellant/insured on that issue.

 The insurance agent in Bohlert was an agent of the insurer.   Here, the insurance agent is conceded to be an agent of the insured.   That distinction does not affect the statutory requirement that there be an agreement in writing between insurer and insured to exclude uninsured motorist coverage.

In her declaration, Ms. del Rosario states that she was unable to read English and that she was never told about uninsured motorist coverage.   She also states that she was never told that by signing the provision deleting uninsured motorist coverage she would be giving up such coverage.

Mr. Connor, the head of the insurance agency visited by Ms. del Rosario, states in his declaration that his office procedure is to explain uninsured motorist coverage to all applicants to insure that any waiver of such coverage is made knowingly.   On the basis of this office procedure, Mr. Connor states that he believes Ms. del Rosario knowingly waived uninsured motorist coverage.

 Because there is a question of fact as to whether there was a meeting of the minds between Ms. del Rosario and her insurance agent to exclude uninsured motorist coverage, and in light of the strong public policy that an automobile insurance policy is to be construed to provide uninsured motorist coverage unless there is an agreement in writing between the insurer and the insured deleting such coverage, we conclude that summary judgment was improperly granted in the case at bar.

DISPOSITION

The judgment is reversed.

APPENDIX A

_

UNINSURED MOTORISTS: COVERAGE WAIVER

TO REJECT SIGN AGREEMENT BELOW

Section 11580.2(a) of the California Insurance Code requires an insurer to provide uninsured motorists coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle. Such Section also permits the insurer and the applicant to delegate such coverage completely or with respect to one or more natural persons designated by name when operating a motor vehicle. Uninsured motorists coverage insures the injured, his heirs, or legal representatives for all sums within the financial responsibility limits which such person or persons are legally entitled to recover as damages for bodily injury, including any resulting sickness, disease, or death, to him from the owner or operator of an uninsured motor vehicle not owned or operated by the insured.

REJECTION AGREEMENT

Pursuant to the authority of Section 11580(a) of the California Insurance Code, the undersigned, a named insured in the liability insurance policy applied for today in the name of /s/ signature and the Company providing the insurance agree as indicated below by ☑ with respect to deletion of uninsured motorists coverage.

☑ 1. Complete deletion of coverage. ☐ 2. Deletion with respect to one or more natural persons designated by name while operating a motor vehicle.

Named person(s)_ Dated theTenth day of Oct 1978.

/s/ signature

Signature of Applicant

/s/ signature

Signature of Agent/Broker

If this agreement is not signed Uninsured Motorists coverage will be afforded. Do not sign this form without reading it.

FOOTNOTES

1.   The second cause of action for personal injuries, naming as defendants the owners and operator of the automobile which struck appellants, is not involved in the instant appeal and is, therefore, not discussed.   CAARP was dismissed by appellants following demurrer by CAARP to the complaint.

2.   The waiver is photocopied in Appendix A to this opinion.

3.   Hereinafter all references are to the Insurance Code, unless otherwise specified.

4.   If Ms. del Rosario had knowingly so agreed with her agent and the application containing such a knowing waiver were acted upon by 20th Century, this would be an agreement between Ms. del Rosario and 20th Century of the kind contemplated by section 11580.2.

AMERIAN, Associate Justice.

KINGSLEY, Acting P.J., and TROOST, J.*, concur.