STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff and Respondent, v. Mildred SMITH, Defendant and Appellant.
This appeal is from a judgment in declaratory relief in favor of the plaintiff insurance carrier holding that the family exclusion clause of an automobile insurance policy is effective to deny coverage for defendant Austin T. Smith in regard to the bodily injury liability claim of his wife, defendant Mildred Smith. The court declared that the insurer did not have a duty to defend or indemnify Austin T. Smith. Defendant appeals from the judgment. We hold that the statutory classification violates the equal protection guarantees of the state and federal Constitution in that the disparate treatment accorded by the statute is not rationally related to a realistic legislative purpose.
The facts of the case are undisputed. State Farm Mutual Automobile Insurance Company, hereinafter referred to as State Farm, issued an automobile insurance liability policy to Austin T. Smith in his name only covering a 1972 Oldsmobile owned by him and his wife, Mildred T. On February 9, 1973, during the policy period, Mildred T. Smith suffered bodily injuries resulting from an automobile accident which occurred while she was riding as a passenger in the insured Oldsmobile. At the time of the accident Austin T. and Mildred T. Smith were husband and wife, residing in the same household. Mildred T. Smith filed suit against her husband who was driving the vehicle, alleging that his negligent operation was the cause of the accident. On March 26, 1976, Austin T. Smith was granted summary judgment, the court holding that California Vehicle Code section 17158 (the “guest” statute) precluded an owner-passenger from recovering for bodily injuries sustained in an automobile accident. An appeal was taken and while pending the Supreme Court of the State of California decided Cooper v. Bray (1978) 21 Cal.3d 841, 148 Cal.Rptr. 148, 582 P.2d 604, which held Vehicle Code section 17158 unconstitutional. Subsequent to the Cooper v. Bray, supra, decision the case of Mildred T. Smith v. Austin T. Smith was remanded to the trial court for further proceedings in view of that decision. Thereafter, State Farm commenced its action for declaratory relief to obtain a judicial determination of the family exclusion clause of the automobile liability insurance policy issued to Austin T. Smith.
The pertinent portions of the State Farm Insurance policy which have application to this case provide:
COVERAGE A BODILY INJURY LIABILITY
“To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
“A. Bodily injury sustained by other persons . . . caused by accident arising out of ownership, maintenance or use . . . of the owned motor vehicle . . .”
The Definition section of the policy provides:
“Insured the unqualified word ‘insured’ includes:
“1. The named insured, and
“2. If the named insured is a person or persons, also includes his or their spouse . . .”
“The Exclusion section of the policy provides:
“THIS INSURANCE DOES NOT APPLY UNDER:
“(h) Coverage A, to bodily injury to any insured or member of the family of an insured residing in the same household as the insured.”
The exclusion clause of the State Farm policy is authorized by California Insurance Code section 11580.1(c) which states in pertinent part:
“C. In addition to any exclusion as provided in paragraph (3) of subdivision (b), the insurance afforded by any such policy of automobile liability insurance to which subdivision (a) applies may, by appropriate policy provision, be made inapplicable to any or all of the following:
“. . .
“(5) Liability for bodily injury to an insured.”
Mildred contends (1) that the exclusionary clause of the State Farm policy contravenes the public policy of the State of California and violates the equal protection clauses of the state and federal Constitutions; (2) California Insurance Code section 11580.1 is in violation of the equal protection clause of the state and federal Constitutions to the extent that it permits the exclusion.
Two recent cases1 which have considered the constitutionality of the family exclusion clause, section 11580.1 of the Insurance Code are of interest. Both of these cases have held that the statute is constitutional. In each case the court has sustained the statute relying on the policies and rationale articulated by the California Supreme Court in the case of Schwalbe v. Jones.2 The Schwalbe case dealt with section 17158 of the California Vehicle Code, a statute which is similar to the statute in the case herein. That statute as originally enacted provided that all “guests” of the driver of a vehicle who drove a vehicle negligently could not state a cause of action for bodily injuries proximately caused by the driver's simple negligence. In 1961 the statute was amended to resolve the issue of whether owner-passengers were “guests” within the meaning of the statute. The statute, as amended, barred both nonowner and owner-passengers from recovery for bodily injuries suffered as the result of the simple negligence of a permissive user. This was the state of the law until 1973 when Brown v. Merlo3 was decided. In Brown, the Supreme Court decided that the portion of section 17158 which barred non-owner guests from their cause of action was constitutionally invalid, but the court made no ruling regarding owner-passengers. In 1976, in the Schwalbe case (which was a rehearing by which the court reversed its position from April, 1975), the court again considered the constitutionality of section 17158. The court upheld the statute stating that the act of the 1973 Legislature in precluding owner-passengers from recovery against the driver was not necessarily irrational. Justice Sullivan said there was scant legislative history to provide insight into the thinking of the legislators but they probably relied on a line of cases extending at least back to 1966, by which “the courts of this state had indicated that a liability insurance provision excluding the named insured or members of his family from coverage was valid and not in contravention of public policy (citations).” (Schwalbe, supra, 16 Cal.3d pp. 520-522, 128 Cal.Rptr. p. 325, 546 P.2d p. 1037.) (The statute being considered in the instant case likewise precludes family coverage.) The court did not consider the constitutionality of section 11580.1(c)(5) in Schwalbe, but did state, as indicated above, that such exclusions are valid. On August 16, 1978, Schwalbe was expressly overruled.
The Hartle case, one of the progeny of Schwalbe, involved a policy of insurance which contained an exclusionary clause worded exactly the same as the clause in the instant case. State Farm issued a policy of automobile liability insurance to Hartle who became involved in an accident during the policy period. Bardelmeier was driving with Hartle's permission and with Hartle riding as a passenger. Hartle suffered personal injuries and filed an action against Bardelmeier. State Farm sought declaratory relief urging that the exclusionary clause of the policy relieved them of the responsibility to afford liability coverage to the permissive user Bardelmeier, relying on section 11580.1 of the Insurance Code which permits the exclusion. The court did not agree with the contention that the exclusionary clause was violative of the public policy of the State of California, and in violation of the equal protection provisions of the Constitution. The court said: “This argument is effectively countered by the recent Supreme Court decision in Schwalbe v. Jones (citation).” Relying on the rationale of Schwalbe the court upheld the validity of the statute holding that it did not contravene the public policy of California. Such exclusions, said the court if stated in unambiguous terms as required by State Farm, etc. v. Jacober (1973) 10 Cal.3d 193, 110 Cal.Rptr. 1, 514 P.2d 9534 are valid.
The Klapper case5 was factually similar to the instant case, inasmuch as the injured party was the passenger-wife. The court, in considering the constitutionality of section 11580.1(c)(5), stated: “We are given some guidance . . . (by) the recent Supreme Court decision in Schwalbe v. Jones . . . .”
Suffice it to say that the foundation which has supported section 11580.1(c) (5) has been the reasoning stated in Schwalbe. That foundation collapsed when Schwalbe was overturned by Cooper v. Bray, supra, 21 Cal.3d page 855, 148 Cal.Rptr. 148, 582 P.2d 604 (1978).
In Cooper, the California Supreme Court found that section 17158 was unconstitutional because it inflicted upon owner-passengers who are injured a burden that is not borne by any other class of accident victims without there being any rational basis for this disparate treatment. The court rejected that line of reasoning which supported Schwalbe and its progeny. For example, disparate treatment cannot be justified on the theory of encouraging the careful selection and supervision of permissive drivers because the passenger has no effective right of control over such drivers. Moreover, the statute, in barring all owners who are passengers actually draws no distinction between those who are careful in selecting drivers and those who are not. To underscore the point, the statute permits recovery if the passenger owner selects as a driver either an intoxicated person or one who engages in willful misconduct, thereby negating any possibility that the statute's purpose could be to enhance careful selection. The court laid to rest, also, the rationale that it was the intent of the Legislature to insulate negligent permissive drivers from liability since the Vehicle Code6 imposes primary liability on the negligent permissive driver who negligently injures third parties, and the owner-passenger who negligently chose him is secondarily liable. Moreover, such intent could not be inferred because it is the basic policy of the state as expressed in California Civil Code section 1714 that every person is responsible for his negligent acts. The court viewed the section as operating simply to relieve the driver's insurer from a risk which he had assumed by agreement.
In the instant case we are faced with an issue singularly similar to that disposed of by the Supreme Court in Schwalbe. There the Court could find no rational basis upon which to sustain the preclusion of a class of accident victims from a cause of action for negligence. In the instant case the precluded class is all owner-passengers and their family members who reside in the same household. Can there be discerned any rational basis to sustain a covenant and a statute which preclude this class from insurance coverage particularly in view that the policy basis which heretofore supported it has been repudiated?
Appellant contends that she is not afforded equal protection as is required by the state and federal Constitutions because Vehicle Code section 11580.1(c)(5) withdraws from all family members who reside in the same household and who ride as passengers in a vehicle the protections of California law which are afforded to non-family members or to family members not living in the same household. She argues that the insurance policy clause which permits this is in violation of the public policy of the State of California and the statute which permits the exclusion is unconstitutional because there is no rational relationship between the classification in the statute and any legitimate state purpose. Respondent argues that the clause is not violative of the equal protection provisions and that the Legislature had a legitimate purpose in enacting section 11580.1(c)(5), to wit, “By permitting the insurer to exclude coverage for liability by one insured to another, the Legislature encourages the insurer to extend liability protection to additional insureds under the policy.”
It is clear that a statute may isolate a class for unique treatment only if such classification bears a rational relation to the purpose of the statute enacted. (Brown v. Merlo (1973) 8 Cal.3d 855, 861, 106 Cal.Rptr. 388, 506 P.2d 212; Purdy and Fitzpatrick v. State of California (1969) 71 Cal.2d 566, 578, 79 Cal.Rptr. 77, 456 P.2d 645; Rinaldi v. Yeager (1966) 384 U.S. 305, 86 S.Ct. 1497, 16 L.Ed.2d 577.) It is also well-settled that all presumptions favor the validity of a statute and unless it is clearly and unmistakably unconstitutional its validity must be sustained. (Russell v. Carleson (1973) 36 Cal.App.3d 334, 342, 111 Cal.Rptr. 497.) To properly evaluate the classifications drawn in a statute the “traditional” or “restrained” standard of review must be applied and to establish the validity of the statute it is necessary only to find the distinction drawn by the statute bears some reasonable relationship to a legitimate state purpose. (Cooper v. Bray, supra, 21 Cal.3d p. 847-848, 148 Cal.Rptr. 148, 582 P.2d 604; Newland v. Board of Governors (1977) 19 Cal.3d 705, 139 Cal.Rptr. 620, 566 P.2d 254.) In our view, the statute at issue in the instant case does not meet this test.
Section 11580.1(c)(5) in effect withdraws from an injured auto passenger family member, the right to recover compensation from the insurance carrier for injuries received as a result of the driver's negligence. Thus, the statute deprives the wife, the children, the parents, and conceivably the grandchildren and grandparents of the insured driver, the insurance protection against bodily injury caused by negligent behavior which is afforded to all others under the laws of California. This arbitrary classification is in contravention of the well-established public policy of the State of California.
“The public policy of this state as expressed in section 11580.1 of the Insurance Code, and sections 16451 and 16452 of the Vehicle Code, as those sections, and their predecessor sections have been construed in Wildman v. Govt. Employees Insur. Co. (1957) 48 Cal.2d 31, 307 P.2d 359, and the latter cases applying its rule is as follows: ‘Any owner's motor vehicle liability policy governed by California law must provide coverage for the vehicle therein described no matter who operates it, so long as that operation is within the continental United States and with the consent of the named insured, unless, by an endorsement conforming to subdivision (e) of 11580.1 of the Insurance Code some particular person is expressly excluded. Abbott v. Interinsurance Exchange (1968) 260 Cal.App.2d 528, 67 Cal.Rptr. 220.’ ” (Midcentury Insurance Co. v. Hernandez (1969) 275 Cal.App.2d 839, 843, 80 Cal.Rptr. 448, 452.) This policy of the state to protect the public using the highways from financial hardship that can result if financially irresponsible people use the highway, is reflected in the Financial Responsibility Law7 which has been enacted in California. The driver of an automobile involved in an accident is required, by that law, to show proof of financial responsibility. Section 16451 of the Vehicle Code8 requires that insurance policies insure not only the named insured but also must insure those using or responsible for the use of the motor vehicle with the express or implied permission of the insured owner. In 1957, the Supreme Court of the State of California determined that this requirement was intended by the Legislature to be, and is, a part of every motor vehicle liability insurance policy issued by an insurance carrier authorized to do business in the State of California whether or not the policy was issued for the purpose of satisfying the Financial Responsibility Law. (Wildman v. Government Employees' Insur. Co. (1957) 48 Cal.2d 31, 39, 307 P.2d 359.) On the authority of this announced public policy it has been consistently held in California courts that section 415 (presently ss 16450, 16451) must be read into every auto liability insurance policy issued or delivered in the state. (See, for example, Pac. Employers Ins. Co. v. Am. Mut. Liab. Insur. Co. (1966) 65 Cal.2d 318, 419 P.2d 641, 54 Cal.Rptr. 385; Uber v. Ohio Cas. Insur. Co. (1967) 247 Cal.App.2d 611, 616-617, 55 Cal.Rptr. 720, 724; General Ins. Co. v. Truck Insur. Exch. (1966) 242 Cal.App.2d 419, 421-422; 51 Cal.Rptr. 462, 465; Pac. Indem. Co. v. Universal Underwriters Ins. Co. (1965) 232 Cal.App.2d 541, 543, 43 Cal.Rptr. 26, 27-28; Interinsurance Exchange v. Ohio Cas. Insur. Co. (1962) 58 Cal.2d 142, 23 Cal.Rptr. 592, 373 P.2d 640; Bonfils v. Pac. Auto Insur. Co. (1958) 165 Cal.App.2d 152, 331 P.2d 766; Cassin v. Fin. Indem. Co. (1958) 160 Cal.App.2d 631, 325 P.2d 228.)
Subsequent to the Wildman decision the Legislature, in 1963, amended section 415 and in the same legislative session amended the Insurance Code adding section 11580.1 (Cal.Stats.1963, ch. 1259, s 1.) It has been argued9 that by these changes the Legislature changed the public policy of the State of California so that presently broad exclusionary clauses are prohibited but unambiguously stated clauses which come under sections 11580, 11580.1 and 11580.2 are permissible. It is our view that such is not the case.
The 1963 legislative amendments were interpreted by the Court of Appeal for the fifth district in 1968, in the case of Abbott v. Interinsurance Exchange (1968) 260 Cal.App.2d 528, 67 Cal.Rptr. 220, and the court specifically stated that the public policy of the state was not changed. The purpose of the 1963 amendments were merely, the court said, to “refer to one means of proof of the liability of (an) owner of a car to respond in damages and . . . that it was not the intention of the Legislature, in such a furtive way, to abrogate the public policy of this state as it is expressed in section 16451 of the Vehicle Code and an unbroken line of specific court decisions”. (Ibid., p. 555, 67 Cal.Rptr. p. 226.) The facts of the Abbott case are similar to the facts herein. The Abbotts were issued an automobile liability policy which specifically excluded their son, Barry. Thereafter, as a permittee, he had an auto accident while driving and injured Batchelder. The insurer asserted that the exclusionary clause relieved them of any obligation for coverage. The Abbott, supra, court in rejecting this contention said that public policy as expressed in section 16451 of the Vehicle Code required that insurance policies issued in this state apply to injuries suffered by innocent third parties at the hands of negligent permittee drivers of an insured's car. Moreover, the court continued “There are no exceptions in the statute to the omnibus coverage thus required. Since the provisions of section 16451 are made a part of every policy of insurance issued by an insurer, if not expressly then by implication of law, it must follow that any provision (that) would exclude such coverage, whether it relates to a group or class of permissive drivers, or to some named individual, being contrary to the provisions of the statute, and against public policy, must be held invalid and void. (Citations).”
The Financial Responsibility Law requires that all owners and drivers of motor vehicles be insured.10 The public policy of California is not to permit insurers the right to promiscuously choose those groups whom they will insure and those whom they will not, thereby eradicating at their pleasure the public policy requiring all drivers and owners to be insured. (See, Midcentury Insur. Co. v. Hernandez (1969) 275 Cal.App.2d 839, 80 Cal.Rptr. 448; Jurd v. Pacific Indem. Co. (1962) 57 Cal.2d 699, 21 Cal.Rptr. 793, 371 P.2d 569; Interinsur. Exch. etc. So. Cal. v. Ohio Cas. Insur. (1962) 58 Cal.2d 142, 23 Cal.Rptr. 592, 373 P.2d 640.) The philosophy enunciated by Wildman, supra, still lives. The innocent third party suffering bodily injury proximately caused by the negligence of the permittee driver of an insured, is still within the penumbra of California's financial responsibility protective umbrella.
The public policy being designed to limit exclusion from insurance coverage and to encourage coverage it is appropriate to inquire whether it appears that the differential treatment accorded the class of persons to which appellant belongs is rationally related to the legitimate purposes of the statute. The statute treats passengers who are not related to the driver differently from those passengers who are his relatives and reside in the same household. The former are permitted insurance coverage for negligently inflicted injuries under the insured's policy whereas, the latter are precluded. The statute also distinguishes between passenger-relatives who reside in the driver's household and passenger-relatives who do not. The former are denied auto insurance coverage whereas, the latter are not.
The exclusion clause in a policy of motor vehicle liability insurance which excludes from coverage a relative who has suffered injury because of the negligent driving of a fellow household relative has its genesis in the concern of insurers regarding the possibility of collusive lawsuits. The presence of such clauses and their enabling statutes is grounded in the philosophy that where filial ties are present the penchant to shade the events surrounding any accident in favor of the injured relative will also be present. Such clauses are designed to exempt the insurer from liability on the theory that relatives would have a natural partiality to the claimant and would thus collude and help to strengthen or expand the claim, to the detriment of the insurer, whose ability to defend would be diminished.
The suggestion that a separate classification scheme can be justified and sustained on the theory that it serves to eliminate the possibility of collusive lawsuits has been exhaustively examined and rejected. (Brown v. Merlo, supra.) A covenant, and/or a statute which denies a right to insurance coverage to the relative of a driver exclusively because he is a relative of the driver is not a permissible classification under equal protection principles inasmuch as it cannot be established that the genealogical connection is rationally related to the purpose of the exclusion, the prevention of collusive lawsuits. An exclusion which is grounded upon the assumption that being a relative will breed dishonesty whereas the absence of a blood relationship is more likely to insure honesty is irrational. Those who are non-relative passengers are permitted recovery and it is obvious that many such non-relative passengers would have as much reason and as much opportunity to engage in collusion as those relative-passengers who are exempted by the clause and under the statute. An exclusion scheme such as this is overly broad because it cannot restrict its disparate treatment to those who actually institute lawsuits on a collusive basis. Such a scheme which bars recovery on a significant number of valid claims in order to prevent a fewer number of collusive claims is too broad to be justifiable in equal protection terms. The elimination, wholesale, of the substantial right of all passenger-relatives is an irrational treatment and affects similarly situated people unequally on the basis of a factor which has no appreciable relation to actual fraud or collusion. Not only does such a scheme burden those who would collude, it precludes from insurance protection the greater number of honest relatives who are passengers who would not collude.
This theory in support of the exclusionary scheme is further irrational in that it makes the assumption that certain parties are likely to commit perjury regarding a negligence claim and, therefore, treats in a disparate manner the greater number of honest individual relatives who have legitimate claims, and for whom the need to commit perjury would never arise.
Moreover, the clause and its permitting statutes defy any sense of reasonableness or fairness because the burden imposed by them does not extend to non-relative passengers who reside in the same household and who pose as great a danger of collusion as the relatives who are the subject of the statute. Additionally, the statute is irrational because it frustrates the public policy of the state encouraging insurance coverage by exempting from any coverage at all for bodily injuries that large class of persons who at a given time are riding as passengers with a spouse or other relative; that class for whom, arguably, the premium paid is intended to provide coverage.
The concept of possible collusion among family members as a legitimate basis upon which to defeat the many legitimate claims has given way to recognition that such a rationale is a social anachronism. (See, Emery v. Emery (1955) 45 Cal.2d 421, 289 P.2d 218; Self v. Self (1962) 58 Cal.2d 683, 26 Cal.Rptr. 97, 376 P.2d 65; Klein v. Klein (1962) 58 Cal.2d 692, 26 Cal.Rptr. 102, 376 P.2d 70; Dillon v. Legg (1968) 68 Cal.2d 728, 69 Cal.Rptr. 72, 441 P.2d 912; Gloria v. Amer. Guar. Co. (1968) 391 U.S. 73, 88 S.Ct. 1515, 20 L.Ed.2d 441; Gibson v. Gibson (1971) 3 Cal.3d 1914, 92 Cal.Rptr. 288, 479 P.2d 648.) Family or household exclusions have succumbed to the revelation that the public policy of spreading the risk of loss cannot be foreclosed from a particular class on the sole and arbitrary basis of family relationship. The exclusion of family members and relatives, on that basis alone, is inconsistent with the public policy of California. (Farmers Insur. Exchange v. Teachers Insur. Co. (1980) 101 Cal.App.3d 811, 161 Cal.Rptr. 829.) “To deny a spouse and for that reason alone the legal rights enjoyed by every other class of automobile victim would give new life to a statutory denial of equal protection more blatant than those laid to rest in Brown v. Merlo, supra, and Cooper v. Bray, supra.” (Monroe v. Monroe (1979) 90 Cal.App.3d 388, 392, 153 Cal.Rptr. 384, 386.) The clause and the statute herein considered base their differentiation on the sole ground of family relationship and residence and, therefore, equal treatment is not afforded to all persons who are similarly situated, with respect to the purpose of the clause and the statute; in this they each overstep rational limits and thereby deny equal protection.
Insurers enjoy the same right enjoyed by all individuals, the right to contract on their own terms, imposing conditions and limiting their exposure on terms not inconsistent with public policy. One must, however, recognize that insurance contracts are not made or entered into in the same manner as other contracts. They are, in the usual form, completely standardized, printed documents which have been skillfully prepared and which the customer has no opportunity to object to. There is no provision for variance from the standardized form other than by the insertion of other standardized, printed forms or clauses. The only option available to the purchaser is to contract on the company terms or to not contract. In this sense they are contracts of adhesion drawn in terms from which no deviation is permitted.
The object of insurance is to insure. The public policy of this state is to encourage coverage. The insurer must not be permitted by irrational exceptions to defeat the purpose for which a policy is issued, the risk sharing purpose of extending coverage to the driver in the event of his negligent infliction of bodily injuries to any third party.
The rationale for the herein statute met its demise with Schwalbe, supra, and the public policy of California is unchanged from its goal of broad coverage to innocent third parties. Accordingly, we find that Insurance Code section 11580.1(c)(5) and the family exclusion clause of the policy, which isolate and bar from recovery one class, simply allow the insurer to avoid a risk as to the specified large group so as to eliminate the risk posed by a small group. In this regard, they eliminate the rights of an entire class, injured passengers who are family members, and thereby exceed rational bounds.
The judgment is reversed.
I respectfully dissent. I would affirm the judgment. My reasoning follows:
Here a wife living in the same household with her husband sued him for injuries sustained in an automobile accident allegedly proximately caused by her husband's negligent operation of the family car (owned by both husband and wife) in which she was riding as a passenger.
Defendant husband initially obtained a summary judgment in his favor on the basis of Vehicle Code section 17158 (the “guest statute”) and Schwalbe v. Jones (1976) 16 Cal.3d 514, 128 Cal.Rptr. 321, 546 P.2d 1033, which precluded an owner-passenger from recovery for injuries sustained in an automobile accident. Plaintiff wife appealed from the granting of the summary judgment. While the appeal was pending, the state Supreme Court decided Cooper v. Bray (1978) 21 Cal.3d 841, 148 Cal.Rptr. 148, 582 P.2d 604, which held that the “guest statute” (Veh.Code, s 17158) was unconstitutional and that owner-passengers have a cause of action for injuries sustained when the driver of the subject vehicle is negligent. Subsequent to the Cooper decision, the underlying personal injury action was then remanded to the trial court for further proceedings.
Since the underlying personal injury action was reversed, State Farm Mutual Automobile Insurance Company (State Farm), which issued the automobile liability insurance policy on the family car with the husband as the only named insured, filed a complaint for declaratory relief naming both husband and wife as defendants. This complaint seeks a declaration that under the policy of automobile insurance issued by it no duty to pay wife arose under the family exclusion clause in the policy. The trial court granted the relief sought and defendant wife appeals from that judgment.
ITHE FAMILY EXCLUSION PROVISION IN STATE FARM'S POLICY OF INSURANCE IS AUTHORIZED BY STATUTE, IS UNAMBIGUOUS AND IS NOT AGAINST PUBLIC POLICY
Provisions (h) under the exclusions from liability coverage of State Farm's policy of insurance is clear and not ambiguous. It reads as follows:
“EXCLUSIONS SECTION I
”THIS INSURANCE DOES NOT APPLY UNDER:
“(h) COVERAGE A. TO BODILY INJURY TO ANY INSURED OR MEMBER OF THE FAMILY OF AN INSURED RESIDING IN THE SAME HOUSEHOLD AS THE INSURED.”
The above exclusionary clause is expressly authorized by statute. Insurance Code section 11580.1, subdivision (c)(5), provides:
“(c) In addition to any exclusion as provided in paragraph (3) of subdivision (b), the insurance afforded by any such policy of automobile liability insurance to which subdivision (a) applies may, by appropriate policy provision, be made inapplicable to any or all of the following :
“. . .
“(5) Liability for bodily injury to an insured.
“(T )he term ‘an insured’ as used in paragraphs (5) and (6) of this subdivision shall mean any insured under the policy.” (Italics added.)
The foregoing Insurance Code section clearly authorizes insurance policy exclusions excepting liability of the insurance carrier for bodily injury to “any insured”. The policy of insurance in the instant case did exclude liability coverage for “bodily injury to any insured or member of the family of an insured residing in the same household as the insured.” (Italics added.) Here the policy in question defined the term “insured” to include the named insured (husband) and his spouse if a resident of the same household. Wife at the time of the accident resided in the same household as her husband.
In California State Auto Assn. Inter-Ins. Bureau v. Warwick (1976) 17 Cal.3d 190, 130 Cal.Rptr. 520, 550 P.2d 1056, the state Supreme Court affirmed the trial court's judgment in a declaratory relief action in favor of plaintiff insurance carrier holding that the carrier had no duty to defend or indemnify husband in regard to the personal injury liability claims of his wife. While the insurance policy was in full force and effect, the wife sustained personal injuries resulting from an accident which occurred while she was a passenger in the insured vehicle driven by her husband. As in the instant case, undisputed was the fact of the husband-wife relationship and that they resided in the same household.
The liability insurance policy in Warwick excluded from coverage “liability to (sic ) bodily injury to any insured.” (Italics added.) The state Supreme Court after observing that the exclusion involved in the case was authorized by subdivision (c) of section 11580.1 of the Insurance Code, addressed the determinative issue as to whether the exclusionary language was sufficiently clear to put the policyholder on notice that it is intended to apply to liability for injuries to “any and all” insured persons who were injured while driving or occupying the insured vehicle. The court concluded by holding:
“In view of the popular and accepted meaning of the word ‘any,’ the term ‘any insured’ unmistakably refers to any person insured under the policy, whether such person is a named or unnamed insured, a driver or a passenger. We conclude that the exclusion clause in the policy is susceptible to only one interpretation by the lay reader: that the insurer would not pay indemnity for injuries suffered by Bernice Warwick while she was riding as a passenger in the insured vehicle.” (17 Cal.3d at p. 195, 130 Cal.Rptr. at p. 523, 550 P.2d at p. 1059, fn. omitted.)
“(I) determine, therefore, that, in view of the statutory definition contained in subdivision (c) of Insurance Code section 11580.1 and the language of the policy itself, the exclusion clause at issue is clear and unambiguous, that it falls within the ambit of the permitted exclusion contained in the section referred to, and that it is effective to exclude coverage to the (husband) for bodily injury to (any) insured, (wife). (Citation.)” (State Farm Mut. Auto. Ins. Co. v. Hartle (1976) 59 Cal.App.3d 852, 857, 131 Cal.Rptr. 141, 144.)
In the case of Meritplan Ins. Co. v. Woollum (1975) 52 Cal.App.3d 167, 123 Cal.Rptr. 613 (petn. for hg. den. by S.Ct. Dec. 11, 1975), this court of the Second Appellate District affirmed a judgment in the trial court in favor of an insurance carrier under a similar factual situation as presented in the instant case.1 This court held that the exclusionary and definition clauses, defining the “named insured” to mean the individual named in the declarations and also his spouse, if a resident of the same household, was unambiguous and hence effective to insulate the insurer from liability to the insured's wife and the exclusionary clause was not contrary to public policy and unenforceable, since Insurance Code section 11580.1, subdivision (c), authorized exclusion of a named insured from the coverage of an automobile liability policy.
The Meritplan court acknowledged that “Coverage clauses of an insurance policy are construed broadly, resolving all ambiguity in favor of coverage. Exclusionary clauses are interpreted narrowly, resolving all ambiguity against exclusion. (Gray v. Zurich Insurance Co., 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168; Mid-Century Ins. Co. v. Hauck, 35 Cal.App.3d 293, 110 Cal.Rptr. 707.)” (52 Cal.App.3d at p. 170, 123 Cal.Rptr. at p. 615) and after a careful analysis of State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193, 110 Cal.Rptr. 1, 514 P.2d 953, Farmers Ins. Exch. v. Frederick (1966) 244 Cal.App.2d 776, 53 Cal.Rptr. 457, Farmers Ins. Exch. v. Geyer (1967) 247 Cal.App.2d 625, 55 Cal.Rptr. 861, Farmers Ins. Exch. v. Brown (1967) 252 Cal.App.2d 120, 60 Cal.Rptr. 1, and Hale v. State Farm Mut. Auto. Ins. Co. (1967) 256 Cal.App.2d 177, 63 Cal.Rptr. 819, concluded “(t)hat the exclusionary and definition clauses in the case at bench must also be held unambiguous and hence effective to insulate Meritplan from liability to (wife).” (52 Cal.App.3d at p. 174, 123 Cal.Rptr. at p. 618.)
This court in Meritplan also held that the exclusionary clause in the Meritplan policy (see fn. 1, ante ) was not contrary to public policy and was enforceable, being clearly within the ambit of the Insurance Code passed by the state Legislature. The court stated 52 Cal.App.3d at page 175, 123 Cal.Rptr. at page 619:
“Paragraph (5) of subdivision (c) of section 11580.1 thus authorizes the exclusion of a named insured from the coverage of an automobile liability policy to which section 11580.05 applies. Section 11580.1 does not engraft the Jacober limitation, used in a different context, that the exclusion applies only where the insured is subject to the particular claim. It does so by expressing the limitation with respect to other exclusions but not as to the exclusion of an insured.”
In Meritplan the wife argued that unless the Meritplan exclusionary clause was declared unenforceable as against public policy, the abolition of interspousal immunity declared in Klein v. Klein (1962) 58 Cal.2d 692, 26 Cal.Rptr. 102, 376 P.2d 70, would be meaningless. This court in holding this argument lacked substance stated:
“(N)aomi can still sue David for negligently inflicted injury and recover from him. Absent an as yet unenacted requirement that all liability for personal injury be covered by insurance, the public policy declaration in Insurance Code section 11580.05 requires rejection of the argument.” (52 Cal.App.3d at pp. 175-176, 123 Cal.Rptr. at p. 619, italics added.)
The Fifth Appellate District case of California Cas. Indem. Exch. v. Hoskin (1978) 82 Cal.App.3d 789, 147 Cal.Rptr. 348, involved another declaratory relief action brought by an insurer for a declaration that defendant was not afforded liability coverage or uninsured motorist protection under her automobile insurance policy with plaintiff with respect to an accident that occurred while plaintiff was a passenger in her insured automobile being driven by her son with her consent. Defendant had filed an action against her son and the driver of the other vehicle for damages arising out of the accident. The trial court determined that the liability section of the insurance policy, which excluded liability for bodily injury to the named insured, did not provide coverage for defendant's claims against her son.
The Court of Appeal affirming a judgment in favor of plaintiff insurance carrier stated at pages 792-793, 147 Cal.Rptr. at pages 350-51:
“The policy of the State of California with regard to exclusion of the named insured or members of his family is clear and unequivocal.
“ ‘In a line of cases extending at least back to 1966, supported by authorities from other jurisdictions extending back considerably further than that, the courts of this state had indicated that a liability insurance provision excluding the named insured or members of his family from coverage was valid and not in contravention of public policy. (See Travelers Indem. Co. v. Colonial Ins. Co. (1966) 242 Cal.App.2d 227, 234, 51 Cal.Rptr. 724; Farmers Ins. Exch. v. Geyer (1967) 247 Cal.App.2d 625, 629-632, 55 Cal.Rptr. 861; Farmers Ins. Exch. v. Brown (1967) 252 Cal.App.2d 120, 122, 60 Cal.Rptr. 1; Hale v. State Farm Mut. Auto. Ins. Co. (1967) 256 Cal.App.2d 177, 180-181, 63 Cal.Rptr. 819; Paul Masson Co. v. Colonial Ins. Co. (1971) 14 Cal.App.3d 265, 269, 92 Cal.Rptr. 463; cf. Farmers Ins. Exch. v. Frederick (1966) 244 Cal.App.2d 776, 781, fn. 3, 53 Cal.Rptr. 457; see generally Annot., 46 A.L.R.3d 1061.) In view of these authorities the Legislature in 1970 had amended section 11580.1 of the Insurance Code to expressly permit such an exclusion. (Stats.1970, ch. 300, s 4, p. 573.) Moreover, it was aware that section 11580.2 of the same code precluded recovery by the owner under the uninsured motorist provisions of his policy. (See Hale v. State Farm Mut. Auto. Ins. Co., supra, 256 Cal.App.2d 177, 181-183, 63 Cal.Rptr. 819; see also State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193, 205, 110 Cal.Rptr. 1, 514 P.2d 953.)’
“In footnotes at this point the court provides: ‘9 Section 11580.1, subdivision (c), has provided since the enactment of the section in 1970 that a policy of automobile liability insurance may be appropriate policy provision be made inapplicable to: ”. . . (5) Liability for bodily injury to an insured.“
“ ‘We may judicially notice as a matter of generalized knowledge (Evid.Code, s 451, subd. (b)) that substantially all such policies presently contain exclusions of this nature which exclusions, if stated in unambiguous terms clearly operate to preclude an owner from recovering under his own liability policy under any circumstances, including those here at issue. The case of State Farm Mut. Auto. Ins. Co. v. Jacober, supra, simply held that the particular exclusion there in question was ambiguous with respect to whether the named insured was to be excluded from recovery when a second ” insured,“ the permissive user-driver, negligently injured him. It is to be assumed that insurance companies will be studious to avoid such ambiguity in the future by modelling their exclusions upon that which was approved in the Geyer and Brown cases, a course which we clearly invited in Jacober (see 10 Cal.3d at p. 206). In so doing they will merely avail themselves of an exclusion expressly permitted by section 11580.1 of the Insurance Code. Any suggestion in Jacober that this would contravene some vaguely conceived public policy (see 10 Cal.3d at pp. 205-206, 110 Cal.Rptr. 1, 514 P.2d 953) must surely founder upon the explicit language used by the Legislature to authorize such exclusions. (See Farmers Ins. Exch. v. Geyer, supra, 247 Cal.App.2d 625, 629-632, 55 Cal.Rptr. 861; Travelers Indem. Co. v. Colonial Ins. Co., supra, 242 Cal.App.2d 227, 234, 51 Cal.Rptr. 724; see generally Annot., supra, 46 A.L.R.3d 1061.)
“ ‘ ’
“Appellant is also a named insured. It follows that part I of the policy expressly excludes from coverage any claim appellant asserts against Kenneth as an insured. The judgment is in accord with Meritplan Ins. Co. v. Woollum (1975) 52 Cal.App.3d 167, 123 Cal.Rptr. 613 and California State Auto. Assn. Inter-Ins. Bureau v. Warwick (1976) 17 Cal.3d 190, 130 Cal.Rptr. 520, 550 P.2d 1056.” (Italics added.)
Accordingly, by reason of the foregoing, since it is undisputed in the case at bench that the wife is “an insured” under the policy of insurance the exclusionary clause adopts the same terminology for “any insured” as used in Insurance Code section 11580.1, subdivision (c)(5), it is clearly unambiguous and enforceable and in accordance with sound public policy.
The “public”, through duly elected members of the state Legislature, establishes “public policy.” The “public policy” in respect to the exclusionary clause in the insurance contract in the instant case is specifically authorized by Insurance Code section 11580.1, subdivision (c)(5).
Insurance Code section 11580.05 entitled “Legislative declarations” states in pertinent part:
The Legislature declares that the public policy of this state in regard to provisions authorized or required to be included in policies affording automobile liability insurance or motor vehicle liability insurance issued or delivered in this state shall be as stated in this article, and that this article expresses the total public policy of this state respecting the content of such policies. . . .“ (Italics added.)
WIFE NOT DENIED “EQUAL PROTECTION” BY REASON OF INSURANCE CODE SECTION 11580.1, SUBDIVISION (C)(5)
“Case law has developed a two-level standard in evaluating legislative classifications under the ‘equal protection’ clause. The traditional test is that there is a presumption of constitutionality which will not be overthrown by the courts unless it is palpably arbitrary and beyond rational and reasonable doubt erroneous and no set of facts reasonably can be conceived that would sustain it. This traditional test is usually applied to ‘economic’ regulations.
“The other, and stricter, standard is employed in cases involving ‘suspect classifications' or ‘fundamental interests.’ Here the courts take a close look at the classification and require not only a compelling state interest which justifies the law, but also that the distinctions drawn by the law are necessary to further its purpose. (In re Antazo, 3 Cal.3d 100, 89 Cal.Rptr. 255, 473 P.2d 999; California State Employees' Assn. v. Flournoy, 32 Cal.App.3d 219, 108 Cal.Rptr. 251.)” (Alex v. County of Los Angeles (1973) 35 Cal.App.3d 994, 1000-1001, 111 Cal.Rptr. 285, 289, original italics.)
Since it is clear that the traditional test is applicable to the instant case and in light of the presumed constitutionality of Insurance Code section 11580.1, subdivision (c)(5), I certainly cannot say that the provision “is palpably arbitrary and beyond rational and reasonable doubt erroneous and (that) no set of facts reasonably can be conceived that would sustain it.” (35 Cal.App.3d at p. 1000, 111 Cal.Rptr. at p. 289.)
To the contrary the state Legislature may have reasonably and rationally recognized that an insurance liability policy is a contract between the carrier and the insured, that the right to contract is protected by the Constitution and so long as consumers (policyholders) clearly know what they are buying for their premium dollars the sanctity of the contract should be protected. Moreover, the state Legislature may have reasonably and rationally been concerned over the threat of collusive suits between family members. In addition, the state Legislature realizing that the family unit is the cornerstone of our society may have felt that such an exclusionary clause would preserve rather than disrupt tranquility within households.
Furthermore, in respect to one spouse suing another spouse, it would not be unreasonable or irrational for the state Legislature to realize that in most instances where one spouse is injured while riding in a vehicle driven by the other spouse by reason of negligent operation of the vehicle the medical expenses are usually covered and it is only remuneration for pain and suffering that is sought.
However, since they took each other “for better or for worse” and since a premium has not been paid for that coverage, the carrier should not be held liable.
Moreover, Division Three of this district recently, when faced with the “equal protection” issue in its well reasoned opinion in Farmers Ins. Exchange v. Cocking (1980) 108 Cal.App.3d 572, 166 Cal.Rptr. 647, held that the statutory regulation of the right of an insurer to offer the exclusion in question at its option in any automobile liability insurance policy it issues in this state as embodied in Insurance Code section 1180.1, subdivision (c)(5), was insufficient to convert that act by an insurer into an act of the state. Accordingly, the Cocking court held the statute does not in itself constitute state action and is, therefore, not subject to the equal protection constitutional guarantees.
Finally, it should be noted that the court in Cooper v. Bray, supra, 21 Cal.3d 841, 148 Cal.Rptr. 148, 582 P.2d 604, merely declared a Vehicle Code section unconstitutional (Veh.Code, s 17157). While the wife in the instant case may have a right to seek compensation from her husband, this does not mean that the insurance carrier has to indemnify the husband when the insurance contract with the husband provides otherwise as expressly authorized by statute and husband had not paid a consideration in the form of a premium to cover such a risk.
I would affirm the judgment.
1. State Farm Mutual Auto Insur. Co. v. Hartle (1976) 59 Cal.App.3d 852, 131 Cal.Rptr. 141 and Civil Service Employees Co. v. Klapper (1976) 59 Cal.App.3d 918, 130 Cal.Rptr. 921, Sup.Ct., petn. den. 9/3/76.
2. Schwalbe v. Jones (1976) 16 Cal.3d 514, 128 Cal.Rptr. 321, 546 P.2d 1033.
3. Brown v. Merlo (1973) 8 Cal.3d 855, 106 Cal.Rptr. 388, 506 P.2d 212.
4. Approved in Farmers Insur. Exchange v. Geyer (1967) 247 Cal.App.2d 625, 55 Cal.Rptr. 861.
5. Ibid, fn. 1.
6. Sections 17150-17153 California Vehicle Code.
7. California Vehicle Code sections 16000-16484; originally Cal.Stats.1929, ch. 258, section 4, Cal.Stats.1929, ch. 259, sections 1-2.
8. s 16451. Owner's policy“An owner's policy of motor vehicle liability insurance shall insure the person named therein and any other person, as insured, using any owned motor vehicle with the express or implied permission of said assured, against loss from the liability imposed by law for damages arising out of ownership, maintenance, or use of such motor vehicle within the continental limits of the United States to the extent and aggregate amount, exclusive of interest and costs, with respect to each motor vehicle, of fifteen thousand dollars ($15,000) for bodily injury to or death of each person as a result of any one accident and, subject to said limit as to one person, the amount of thirty thousand dollars ($30,000) for bodily injury to or death of all persons as a result of any one accident and the amount of five thousand dollars ($5,000) for damage to property of others as a result of any one accident.”(Formerly Veh.Code, s 415(a)(2).)
9. State Farm Mutual Insur. Co. v. Allstate Insur. Co. (1970) 9 Cal.App.3d 508, 88 Cal.Rptr. 246; Globe Indem. Co. v. Universal Underwriters Insur. Co. (1962) 201 Cal.App.2d 9, 20 Cal.Rptr. 73; Royal Exchange Assurance v. Universal Underwriters Co. (1961) 188 Cal.App.2d 662, 10 Cal.Rptr. 686; State Farm Mut. Insur. Co. v. Flynt (1971) 17 Cal.App.3d 538, 95 Cal.Rptr. 296; Donohoe v. Wilshire Insur. Co. (1972) 26 Cal.App.3d 471, 103 Cal.Rptr. 57.
10. Vehicle Code section 16020 provides: “Every driver of, and owner of, a motor vehicle shall, at all times, maintain in force one of the forms of financial responsibility specified in Section 16021.” (Added by Stats.1974, c. 1409, p. 3095, s 8.)
1. In Meritplan (a husband-wife situation) husband was the insured and the wife was injured while riding as a passenger in an automobile registered in husband's name and driven by him. Wife, as here, sued for her injuries. This court affirmed the granting of a summary judgment by the trial court in favor of the insurance carrier.“(T)he policy on page one state(d) under the heading ‘Part I Liability,’ that Meritplan agrees: ‘To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . bodily injury . . . sustained by any person . . . arising out of the ownership . . . or use of the owned automobile . . . .’“On page one under a subheading ‘Persons Insured,’ the policy provide(d) : ‘The following are insureds under Part I . . . with respect to the owned automobile: (1) the named insured, (2) any other person using such automobile with the permission of the named insured . . . .’ On page two of the policy, under the subheading ‘Definitions: Under Part I,’ it state(d) : ‘ ”(N)amed insured“ means the individual named in the declarations and also includes his spouse, if a resident of the same household; (P) ”insured“ means a person or organization described under ” persons insured“ : (P) ”relative“ means a relative of the named insured or spouse who is a resident of the same household and not temporarily residing . . . elsewhere; provided neither he nor his spouse owns a private passenger automobile.’“On page three under the subheading ‘Exclusions,’ the policy provide(d) : ‘This policy does not apply under Part I : (P) to bodily injury to (1) the spouse or any parent, son, or daughter of the insured, or (2) the named insured.’ ” (52 Cal.App.3d at pp. 169-170, 123 Cal.Rptr. at p. 615.)
DUNN,* Associate Justice. FN* Assigned by the Chairperson of the Judicial Council.
JEFFERSON (Retired Presiding Justice of the Court of Appeal, sitting under assignment by the Chairperson of the Judicial Council), Acting P. J., concurs.