Mary Ruth ESCOBEDO, Plaintiff and Appellant, v. ESTATE OF Danny G. SNIDER, Defendant and Respondent.
Mary Ruth Escobedo appeals from a judgment entered in favor of defendant, Estate of Danny G. Snider (Snider), in an action for wrongful death arising out of an airplane crash in which Snider and appellant's daughter, Jeannie Escobedo, were killed. Appellant sought recovery under an aircraft policy issued by National Aviation Underwriters, Inc. (National). Notwithstanding repeated notices by the carrier that the policy would be “canceled” if the renewal premium was not paid, the trial court ruled that the policy had “expired” before the crash because Snider did not pay the renewal premium. Public Utilities Code section 24361 provides that a noncommercial aircraft policy remains in force and effect until the insurer or its insured mails a cancellation notice to the California Department of Aeronautics, a division of the Department of Transportation.1 Here, no notice was mailed to the department. A case decided subsequent to the trial court's ruling compels reversal of the judgment.
In 1990, Snider owned and maintained a Piper airplane at the Oxnard airport. Pursuant to a rental agreement with the Ventura County Department of Airports (County), Snider had to purchase liability insurance and furnish County a certificate of insurance. Snider purchased a non-commercial aircraft policy from National with $100,000 bodily injury coverage. The policy stated that it was effective October 11, 1990, “until canceled, ” and contained the following endorsement: “We agree: [¶] ․ [t]o mail 30 days prior written notice to addressee if we cancel this policy․” (Emphasis added.) County was listed as the “addressee” on the endorsement.
Snider renewed the policy in 1991 but failed to pay the annual premium in 1992. On September 12, 1992, National mailed a premium notice warning Snider that the policy would be “canceled” if payment was not received by October 12, 1992. On October 13, 1992, it mailed a second notice that stated: “As noted on your premium due notice, your payment was due on 10/12/92. Since no payment was received, your policy was canceled as of that date. (Emphasis added.) Moreover, your policy will be reinstated with no lapse in coverage, if a payment of $328.42 is received by 10/27/92.” (Emphasis added.)
On October 30, 1992, Snider and his passenger, Escobedo, were killed when the Piper airplane crashed.
Trial Court Proceedings
Appellant filed suit against Snider's estate. National denied coverage on the theory that the policy was “canceled” before the airplane crash. The parties waived jury and submitted the coverage issue to the trial court based on a statement of stipulated facts. National stipulated that it did not send a cancellation notice to the California Department of Transportation or the County before the airplane crash.
The trial court ruled that “the policy had expired on October 12, 1992 for nonpayment of premium.” (Emphasis added.) It stated that “[t]he contentions of plaintiff that the policy continued in force after the date due for premium payment through a failure to comply with the Uniform Aircraft Financial Responsibility Act (Public Utilities Code § 24230 et seq.) and/or failure to provide the County of Ventura with 30 days notice of cancellation has been considered and rejected.”
Uniform Aircraft Financial Responsibility Act
We scrutinize the policy in the context of the Uniform Aircraft Financial Responsibility Act (UAFRA). (§ 24230, et seq.) In construing insurance contracts, doubts, uncertainties, and ambiguities arising out of the policy language are construed in favor of the insured to protect the insured's reasonable expectation of coverage. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 912, 226 Cal.Rptr. 558, 718 P.2d 920.) “When statutory language is clear and unambiguous, there is no need for construction and courts should not indulge in it. [Citations.]” People v. Overstreet (1986) 42 Cal.3d 891, 895, 231 Cal.Rptr. 213, 726 P.2d 1288.)
Appellant asserts that the policy remained in force and effect because National failed to mail a cancellation notice to the Department of Aeronautics. We are compelled to agree. Section 24361, which is part of UAFRA, states: “No insurance policy meeting the requirements of Section 24350 shall be canceled unless 30 days' prior notice is given to the department by either the insured or the insurance company.”
The purpose of UAFRA is to establish minimum standards for aircraft financial responsibility. (§ 24410; Franks v. Amelia Reid Aviation (1985) 163 Cal.App.3d 1207, 1209, 210 Cal.Rptr. 127.) “Following any mishap involving an aircraft the act requires the Department of Aeronautics to fix the amount of security needed to satisfy any judgment that may be rendered. [Citation.] An owner may avoid meeting the requirement for security payment by obtaining a liability insurance policy concerning the aircraft. [Citation.]” (National Ins. Underwriters v. Carter (1976) 17 Cal.3d 380, 387, 131 Cal.Rptr. 42, 551 P.2d 362.)
UAFRA further provides that an insurer may exclude coverage for nonpaying passengers. (Pub.Util.Code, § 24351, subd. (c); Franks v. Amelia Reid Aviation, supra, 163 Cal.App.3d 1207, 1209, 210 Cal.Rptr. 127.) National's policy, however, specifically provided coverage for passengers such as Escobedo. “[I]n the absence of any general declaration of public policy mandating coverage of ‘permissive users' for aircraft, we discern no reason to interfere with the parties' full freedom to contract for coverage on any terms not specifically prohibited by statute. [Citations.]” (National Ins. Underwriters v. Carter, supra, 17 Cal.3d 380, 388, 131 Cal.Rptr. 42, 551 P.2d 362.)
National asserts that section 24361 does not apply because the policy “expired” before the accident. We disagree. Under the caption, “CONFORMITY WITH STATE LAWS,” the policy states: “If this policy conflicts with the laws of the state in which it is issued, it is amended to conform to the laws of that state.” We must presume that National was aware of UAFRA when it sold the policy. Before it could cancel the policy, section 24361 required that a cancellation notice be mailed to the Department of Aeronautics.
National could not bypass the notice requirement by claiming, months after the crash, that the policy had “expired.” Where, as here, the Legislature requires that a cancellation notice be mailed to a regulatory agency before the policy is canceled, general principles concerning “expiration” of the policy have no efficacy. Our Supreme Court so held in Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4th 389, 400–401, 48 Cal.Rptr.2d 159, 906 P.2d 1341.
Although no reported case has discussed section 24361, “․ strict compliance with the terms of contractual requirements for notice of cancellation is essential to effect a valid policy cancellation. [Citation.] Similarly, compliance with a statutory mandate regarding transmittal of cancellation notices is required as well. [Citation.]” (Lee v. Industrial Indemnity Co. (1986) 177 Cal.App.3d 921, 924–925, 223 Cal.Rptr. 254.)
Where an insurer issues a policy for a noncommercial aircraft, UAFRA provides that coverage is continuous and uninterrupted until the insurer or its insured sends a cancellation notice to the Department of Aeronautics. Although National's liability may seem unfair, section 24361 has been extant since 1968. National could have limited its exposure by simply mailing a cancellation notice to the Department of Aeronautics. (E.g., Transamerica Ins. Co. v. Tab Transportation, Inc., supra, 12 Cal.4th 389, 401, 48 Cal.Rptr.2d 159, 906 P.2d 1341, [insurer must comply with section 3634 notice requirement irrespective of insured's purchase of replacement insurance]; Fireman's Fund Ins. Co. v. Allstate Ins. Co. (1991) 234 Cal.App.3d 1154, 1165–1166, 286 Cal.Rptr. 146 [insurance policy issued to highway carrier remained in force and effect until cancellation notice sent to Public Utilities Commission pursuant to section 3634].)
National relies upon Insurance Code section 660 et seq. and argues that automobile insurance policies expire as a matter of law whenever the insured fails to pay a renewal premium. (See, Fujimoto v. Western Pioneer Ins. Co. (1978) 86 Cal.App.3d 305, 313, 150 Cal.Rptr. 88 [automobile policy lapsed two days before accident for failure to pay premium].) Insurance Code section 660 governs automobile insurance policies, not aircraft insurance policies. Insurance Code section 660 states in pertinent part: “As used in this chapter: [¶] (a) ‘Policy’ means an automobile liability, automobile physical damage, or automobile collision policy, or any combination thereof․” The public policy objectives set forth in the Motor Vehicle Financial Responsibility Act (Veh.Code, § 16000 et seq.) do not apply to aircraft policies written under UAFRA. (National Ins. Underwriters v. Carter, supra, 17 Cal.3d 380, 386–388, 131 Cal.Rptr. 42, 551 P.2d 362; Fireman's Fund Ins. Co. v. Superior Court (1977) 75 Cal.App.3d 627, 633–634, 142 Cal.Rptr. 249.)
Insurance Code section 11584 provides: “No policy of insurance issued or delivered in this state covering any loss, expense or liability arising out of the ownership, maintenance, or use of an aircraft shall ․ deny coverage which the insured is obligated to provide according to law.” National could not terminate the policy until a notice of cancellation was mailed to the Department of Aeronautics.
National argues that the UAFRA was not intended to protect passengers, but “ground victims otherwise unable to foresee or guard against risk of loss or injury due to small aircraft in flight․” (Franks v. Amelia Reid Aviation, supra, 163 Cal.App.3d 1207, 1209, 210 Cal.Rptr. 127.) The argument is not persuasive. National sold a policy that provided bodily injury coverage for Snider's passengers. The policy was in effect on October 12, 1992, when the first premium notice was sent, and remained in effect until a 30 day cancellation notice was mailed to the Department of Aeronautics.
The judgment is reversed with costs to appellant.
1. All statutory references are to the Public Utilities Code unless otherwise stated.
YEGAN, Associate Justice.
STEVEN J. STONE, P.J., and GILBERT, J., concur.