FARMERS INSURANCE EXCHANGE v. COCKING (1980)

This timely and appropriate appeal by plaintiff, Farmers Insurance Exchange (Farmers), from an adverse summary judgment in favor of defendants, Paul Cocking, Jr. and Cecilia Glorious, originally raised the single issue of whether Insurance Code section 11580.1, subdivision (c)(5), expressly permitting an automobile liability insurer, such as Farmers, to exclude, as here, from the coverage of its policy liability for bodily injury to one who is an insured under the policy, violates the equal protection provisions of the United States Constitution (14th Amend., s 1) and the California Constitution (art. I, s 7, subd. (a)).¹ The trial court expressly so declared on the basis of Cooper v. Bray (1978) 21 Cal.3d 841, 148 Cal.Rptr. 148, 582 P.2d 604, and Brown v. Merlo (1973) 8 Cal.3d 855, 106 Cal.Rptr. 388, 506 P.2d 212. In the Cooper case our Supreme Court, after considerable vacillation on the issue and a substantial intervening change in the Court's membership, held that Vehicle Code section 17158, denying a cause of action in negligence to an injured owner-passenger, violated the aforementioned constitutional guarantees. (21 Cal.3d at pp. 843-844, 148 Cal.Rptr. 148, 582 P.2d 604.) Earlier in Brown our Supreme Court had unanimously reached the same conclusion with respect to the other provision of the section then in effect the California guest statute. (8 Cal.3d at pp. 858-860, 106 Cal.Rptr. 388, 506 P.2d 212.)²

We will reverse this summary judgment because the statutory subdivision struck down by the trial court does not constitute state action and it is only state action that is subject to the constitutional guarantees at issue. (See Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 358-359, 113 Cal.Rptr. 449, 521 P.2d 441; Garfinkle v. Superior Court (1978) 21 Cal.3d 268, 282, 146 Cal.Rptr. 208, 578 P.2d 945; Moose Lodge No. 107 v. Irvis (1972) 407 U.S. 163, 171-179, 92 S.Ct. 1965, 1970-1974, 32 L.Ed.2d 627, 636-641; Crawford v. Board of Education (1976) 17 Cal.3d 280, 294, 130 Cal.Rptr. 724, 551 P.2d 28.)³

DISCUSSION

As pointed out in the just-mentioned unanimous Kruger decision of our Supreme Court, the cases predicating state action upon the impact of a statute on private behavior fall generally into three categories: (1) statutes that compel private action; (2) statutes that endorse and encourage private action as state policy; (3) statutes creating a private right. (11 Cal.3d at p. 361, 113 Cal.Rptr. 449, 521 P.2d 441.) Quite clearly the subdivision at issue neither compels private action nor creates a private right. It merely expressly permits a particular exclusion from the coverage of an automobile liability insurance policy effective in California. It does this, though, as state policy. (Ins. Code, s 11580.05.)

But this contractual or consensual exclusion existed in this state for some time before the Legislature expressly permitted it by the challenged subdivision. (See Schwalbe v. Jones (1976) 16 Cal.3d 514, 521, 128 Cal.Rptr. 321, 546 P.2d 1033, overruled in its holding in favor of the constitutionality of Veh. Code, s 17158, by Cooper v. Bray, supra, 21 Cal.3d at p. 855, 148 Cal.Rptr. 148, 582 P.2d 604; Farmers Ins. Exch. v. Geyer (1967) 247 Cal.App.2d 625, 633-635, 55 Cal.Rptr. 861.) As the court noted in Schwalbe, apparently substantially all automobile liability insurance policies effective in this state contain such an exclusion. (16 Cal.3d at p. 521, fn. 9, 128 Cal.Rptr. 321, 546 P.2d 1033.)

This statutory recognition of the right of an insurer to offer this exclusion at its option in any automobile liability insurance policy it issues, effective in this state, is insufficient to convert this act by an insurer into that of the State of California. (See Connolly Development, Inc. v. Superior Court (1976) 17 Cal.3d 803, 816, 132 Cal.Rptr. 477, 553 P.2d 637, cf. Garfinkle v. Superior Court, supra, 21 Cal.3d at p. 279, 146 Cal.Rptr. 208, 578 P.2d 945.) The challenged subdivision being entirely permissive in nature, is neutral in its stance. It does not actively and significantly encourage the use of this exclusion. It does no more than authorize it and mere authorization, without more, does not rise to the level of state action. (See Jackson v. Metropolitan Edison Co. (1974) 419 U.S. 345, 357, 95 S.Ct. 449, 42 L.Ed.2d 477, 487; cf. Kruger v. Wells Fargo Bank, supra, 11 Cal.3d at pp. 361-362, 113 Cal.Rptr. 449, 521 P.2d 441.) Private consensual conduct, generally, even when in the form of self-help remedies, does not amount to state action. (Martin v. Heady (1980) 103 Cal.App.3d 580, 587, 163 Cal.Rptr. 117.) Accordingly, we hold that this subdivision (Ins. Code, s 11580.1, subd. (c)(5)) does not in itself constitute state action and is therefore not subject to the equal protection constitutional guarantees.

DISPOSITION

The summary judgment under appeal is reversed and the trial court is direct to enter a judgment that Farmers' policy No. 29-9774-76-84, issued to defendant Cocking, does not cover bodily injury to defendant Glorious.

FOOTNOTES

1.  The Farmers automobile liability insurance policy, that is involved in this case, expressly excludes, pursuant to the statutory authorization, liability of any insured for bodily injury to the named insured. According to the policy, the term “named insured” includes, where such is an individual, as here, his spouse if that spouse is also a resident of the same household as the named insured. At the time of the solo accident in which the defendant Glorious was injured, she was a passenger in an automobile then owned and driven by defendant named insured, Cocking. She was then his wife and living with him in his household. She sued him, among others, for damages for her injuries. This exclusion provision clearly applies to her.Just prior to oral argument and at oral argument counsel for defendant Glorious brought to our attention Phelps v. Allstate Ins. Co. (1980) 106 Cal.App.3d 752, 754, 758, 165 Cal.Rptr. 263, which holds a family exclusion provision of an automobile liability insurance policy void because it is broader than that authorized by the statutory subdivision here at issue.This holding applies, however, only to the alternate exclusion in the policy covering defendant Glorious. It does not apply to the exclusion provision we have just discussed, which conforms to the statutorily authorized exclusion.In any event, the policy at issue contains the following provision: “Policy terms which conflict with California statutes are amended to conform to such statutes.” Moreover, the only possibly void exclusion in the policy before us is the unnecessary alternate exclusion. (See Truck Ins. Exch. v. Wilshire Ins. Co. (1970) 8 Cal.App.3d 553, 559-560, 87 Cal.Rptr. 604.)

2.  In Brown it expressly did not decide the validity of the injured owner-passenger portion of the statute. (8 Cal.3d at p. 862, fn. 3, 106 Cal.Rptr. 388, 506 P.2d 212.)

3.  By reason of this conclusion we do not reach the issue extensively briefed by the parties both here and below, whether the challenged exclusion violates the constitutional equal protection guarantees.

COBEY, Acting Presiding Justice.

ALLPORT and POTTER, JJ., concur.