Opinion
NOT TO BE PUBLISHED
Sonoma County Super. Ct. No. SCV244993.
NEEDHAM, J.
California law prohibits the “stacking, ” or combination, of uninsured/underinsured motorist coverage (UMC) under separate automobile liability policies, whereas Arizona law permits the stacking of UMC under certain circumstances. In this case, a California resident was fatally injured by a driver in Arizona. May his heirs stack the UMC under his two automobile liability policies, which were issued by a California insurer for vehicles registered and garaged in California?
We conclude that California law governs and that stacking is barred by statute. But even if we were to apply Arizona law, we would reach the same result in light of the policy language at issue. We therefore affirm the summary judgment entered in favor of respondent Farmers Insurance Exchange (Farmers) and against appellants Julie Veveiros, Nicholas Veveiros and Olivia Veveiros.
I. BACKGROUND
Steve Veveiros (decedent) lived in Rohnert Park, California with his wife Julie and their two children, Nicholas and Olivia. He owned a 1997 Dodge Grand Caravan and a 2000 Pontiac Bonneville, which he garaged at his home and insured through Farmers under two separate policies. Each of these policies (Nos. 95-15871-98-60 and 95-15871-99-15) had UMC with policy limits of $250,000 per person/$500,000 per occurrence. Farmers is a California insurer domiciled in California.
The relevant provisions of decedent’s two Farmers policies were identical. Part II describes the scope of UMC and provided, “We will pay all sums which an insured person... is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury actually sustained by the insured person including the wrongful death of an insured person....” An “uninsured motor vehicle” is defined to include any motor vehicle “[i]nsured by a bodily injury liability bond or policy at the time of the accident which provides coverage in amounts less than the limits of Uninsured Motorist Coverage shown in the Declarations.” A section entitled “Limits of Liability” provided, “The limits of liability [for UMC] shown in the Declarations apply subject to the following: [¶] 1. The limit for ‘each person’ is the maximum for bodily injury sustained by any person in any one occurrence [$250,000].... [¶] [¶] 2. Subject to the limit for ‘each person, ’ the limit for ‘each occurrence’ is the maximum combined amount for bodily injury sustained by two or more persons in any one occurrence [$500,000]. [¶] 3. Subject to the law of the state of the occurrence, we will pay no more than these maximums regardless of the number of vehicles insured, insured persons, claims, claimants, policies or vehicles involved in the occurrence....” (Italics added.)
The policy language also described what would happen in the event that other insurance policies covered a claim made under the UMC provisions: “Other Insurance [¶] 1. We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements. [¶] 2. The amount of Uninsured Motorist Coverage we will pay under Additional Definitions 3b shall be reduced by the amount of any other bodily injury coverage available to any party held to be liable for the accident.... [¶].... [¶] 5. If any applicable insurance other than this policy is issued to you by us or any other member company of the Farmers Insurance Group of Companies, the total amount payable among all such policies shall not exceed the limits provided by the single policy with the highest limits of liability.” (Italics added.) Part V, which listed the “Conditions” generally applicable to the policy, included the following paragraph: “6. Two or More Cars Insured. With respect to any accident or occurrence to which this and any other auto policy issued to you by any member company of the Farmers Insurance Group of Companies applies, the total limit of liability under all the policies shall not exceed the highest applicable limit of liability under any one policy.” (Italics added.)
On December 14, 2008, decedent was hit by a car while crossing the street during a visit to Tempe, Arizona. The driver of the car that hit him carried an insurance policy with limits of $25,000 per person. On December 24, 2008, attorney John DeMeo wrote a letter to a Farmers branch claims office in Santa Rosa, California, stating that decedent had been killed while crossing a street in Tempe, on December 14, and that a UMC claim was contemplated under both of decedent’s Farmers policies.
Farmers received DeMeo’s letter on December 30, 2008. On January 28, 2009, it sent a letter advising him that the UMC coverage under the two policies could not be stacked and requesting that Julie Veveiros “choose which policy she wishes to pursue [under] her Underinsured Motorist Claim.” DeMeo responded with a letter dated January 29, 2009, asserting that the coverage was governed by the law of Arizona, where the accident occurred, and that Arizona law did permit stacking. Farmers tendered the policy limits of $250,000 under one of its policies, less $25,000 that was paid to the Veveiroses under the liability policy of the driver who hit decedent. The Veveiroses accepted this money while reserving their right to pursue a UMC claim under the other Farmers policy.
Farmers filed a complaint for declaratory relief seeking a determination that the Veveiroses (Julie, Nicholas and Olivia) could not stack the UMC benefits under the two policies. The Veveiroses filed a cross-complaint for declaratory relief, breach of contract and breach of the covenant of good faith and fair dealing, alleging that stacking was permitted under terms of the policies issued and under Arizona law. Farmers filed a motion for summary judgment, arguing that the case was governed by California law, which statutorily prohibited the stacking of UMC benefits under separate policies. (See Ins. Code, § 11580.2, subd. (q).) Farmers argued that it would also prevail under Arizona law, because stacking was expressly prohibited by the policy language. (See Ariz. Rev. Stats., § 20-259.01, subd. (H); Farmers Insurance Company of Arizona v. Voss (Ariz.Ct.App. 1996) 188 Ariz. 297, 298 (Voss).) The Veveiroses filed a motion for summary judgment arguing that Arizona law applied and permitted the stacking of UMC benefits.
The trial court granted summary judgment in favor of Farmers and against the Veveiroses. It agreed with the Veveiroses that the stacking issue was governed by the law of Arizona, rather than the law of California, based on policy language providing that the limits of UMC were “[s]ubject to the law of the state of the occurrence.” Though Arizona law did not completely foreclose the stacking of UMC benefits, stacking was not permitted in this case because decedent’s policies specifically provided that in the event more than one policy had been issued by Farmers, the total amount of UMC would not exceed the limits of the policy with the highest limits. (See Ariz. Rev. Stats., § 20-259.01, subd. (H).) The court also concluded the Veveiroses were not entitled to stack the two policies because Farmers had timely notified them that they could elect to proceed under one of them, and Arizona allows an insurer to preclude stacking upon giving such notice within 30 days after receiving notice of an accident. (See ibid.)
The Veveiroses appeal, arguing that the stacking issue is governed by the law of Arizona, where the accident occurred, and that Arizona law allows stacking under the circumstances of this case. Farmers responds that the claim is governed by California law, which prohibits stacking under any circumstances, and that in any event, stacking would not be permitted under Arizona law.
We agree with Farmers. Unlike the trial court, which determined that Arizona law governed the controversy, we conclude that California law applies. Because this leads to the same result as was reached by the trial court—namely, that stacking is not permitted—we affirm the order granting summary judgment.
II. DISCUSSION
A. Standard of Review
Summary judgment is proper if the moving papers establish that there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Jambazian v. Borden (1994) 25 Cal.App.4th 836, 843-844.) On appeal, our review of an order granting summary judgment is de novo. (City of Oakland v. Hassey (2008) 163 Cal.App.4th 1477, 1486.) Absent a factual issue concerning the meaning of policy language, the interpretation of an insurance contract is a question of law subject to our independent or de novo review. (Gin v. Pennsylvania Life Ins. Co. (2005) 134 Cal.App.4th 939, 943; Miller v. American Home Assurance Co. (1996) 47 Cal.App.4th 844, 848; Homestead Ins. Co. v. American Empire Surplus Lines Ins. Co. (1996) 44 Cal.App.4th 1297, 1300-1301.) We may affirm an order granting summary judgment on grounds that differ from those of the trial court so long as the parties had an opportunity to brief the issue. (Code Civ. Proc., § 437c, subd. (m)(2); Blanco v. Baxter Healthcare Corp. (2008) 158 Cal.App.4th 1039, 1058; Bunnell v. Department of Corrections (1998) 64 Cal.App.4th 1360, 1367.)
B. Stacking of UMC – California Law versus Arizona Law
The parties agree that California law prohibits the stacking of UMC benefits when such benefits are potentially available under two separate insurance policies. California’s UMC statute is Insurance Code section 11580.2, subdivision (q) of which provides: “Regardless of the number of vehicles involved whether insured or not, persons covered, claims made, premiums paid or the number of premiums shown on the policy, in no event shall the limit of liability for two or more motor vehicles or two or more policies be added together, combined, or stacked to determine the limit of insurance coverage available to injured persons.” (Italics added.) Subject to an exception not relevant here, section 11580.2, subdivision (d) additionally states, “[T]he policy or endorsement may provide that if the insured has insurance available to the insured under more than one uninsured motorist coverage provision, any damages shall not be deemed to exceed the highest of the applicable limits of the respective coverages, and the damages shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits.” (See Wagner v. State Farm Mutual Auto. Ins. Co. (1985) 40 Cal.3d 460, 467-469 [Ins. Code, § 11580.2, subd. (d) prevents stacking of two policies issued by single insurer].)
Arizona law, by contrast, allows an insurer to preclude the stacking of UMC under multiple policies by taking certain affirmative steps, in the absence of which stacking shall be allowed. Subdivision (H) of Arizona Revised Statutes section 20-259.01, the Arizona statute governing UMC, provides in relevant part, “If multiple policies or coverages purchased by one insured on different vehicles apply to an accident or claim, the insurer may limit the coverage so that only one policy or coverage, selected by the insured, shall be applicable to any one accident. If the policy does not contain a statement that informs the insured of the insured’s right to select one policy or coverage as required by this subsection, within 30 days after the insurer receives notice of an accident, the insurer shall notify the insured in writing of the insured’s right to select one policy or coverage. For the purposes of this subsection, ‘insurer’ includes every insurer within a group of insurers under a common management.” (Italics added.) “[T]his provision is not self-executing because its wording is merely permissive.” (State Farm Mutual Auto. Ins. Co. v Lindsey (Ariz. 1995) 182 Ariz. 329, 331 [897 P.2d 631, 633] (Lindsey).)
C. The Policies do not Contain a Choice of Law Provision Requiring the Application of Arizona Law
A contractual choice-of-law provision in an insurance policy will generally be enforced, provided that it does not result in a substantial injustice. (Discover Bank v. Superior Court (2005) 134 Cal.App.4th 886, 896-897; see also Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc. (1993) 14 Cal.App.4th 637, 645-646.) The Veveiroses claim that each of the Farmers policies contains a choice-of-law provision requiring UMC to be determined under the law of the state where the accident occurred whenever that state’s stacking laws are more favorable than California’s. We disagree.
The language on which the Veveiroses rely is contained in the UMC provisions, under “Limits of Liability.” Paragraph 3 provides, “Subject to the law of the state of the occurrence, we will pay no more than these maximums regardless of the number of vehicles insured, insured persons, claims, claimants, policies or vehicles involved in the occurrence.” (Italics added.) Paragraph 3 is immediately preceded by paragraphs 1 and 2 of the “Limits of Liability” section, which define the limits of UMC for “each person” and “each occurrence”: “1. The limit for ‘each person’ is the maximum for bodily injury sustained by any person in any one occurrence [$250,000].... [¶] [¶] 2. Subject to the limit for ‘each person, ’ the limit for ‘each occurrence’ is the maximum combined amount for bodily injury sustained by two or more persons in any one occurrence [$500,000].”
In context, it is clear that the introductory clause of paragraph 3 (“subject to the law of the state...”) “serves only to insure that the policy will remain in compliance with the laws of the state where an accident occurs if that state’s law requires the payment of benefits in excess of the ‘maximums’ stated in the policy and regardless of the other circumstances set out in paragraph 3.” (Mid-Century Ins. Co. v. Perkins (Or. 2008) 344 Or. 196, 206 [179 P.3d 633, 639]; accord, Western States Ins. Co. v. Zschau (Ill. 1998) 298 Ill.App.3d 214, 219 [698 N.E.2d 198, 201]; but see, contra, Williams v. Silvola (Mo.App. 2007) 234 S.W.3d 396, 401-403 ; Bauer v. Farmers Ins. Co. (Mo.App. 2008) 270 S.W.3d 491, 493.) In other words, paragraph 3 assures that the benefits available under the policy will satisfy the requirements of a state with a higher mandatory amount of UMC. The Veveiroses do not suggest that the $250,000 per person policy limits for UMC under either Farmers policy fell short of Arizona’s mandatory coverage requirements. Nothing in the express language of the policies requires us to apply Arizona law to the stacking issue.
D. Under the Governmental Interest Analysis, California Law Governs and Precludes Stacking
Having determined that the insurance policies do not contain a choice-of-law provision, we apply the “governmental interest analysis”—“[t]he most prevalent modern choice-of-law rule in California”—to determine whether California or Arizona law applies to the stacking issue. (Frontier Oil Corp. v. RLI Ins. Co. (2007) 153 Cal.App.4th 1436, 1454 (Frontier Oil); see also Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, 107-108.) This approach stems from the landmark decision in Reich v. Purcell (1967) 67 Cal.2d 551, and requires us to ascertain the competing interests of the parties and the jurisdictions involved in relation to the specific issue in controversy. (Hernandez v. Burger (1980) 102 Cal.App.3d 795, 798.)
Farmers argues that the applicable law should be determined under Civil Code section 1646, which provides that “[a] contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and the usage of the place where it is made.” We are not here concerned with the interpretation of the insurance policies, but with the statutory law governing the practice of stacking UMC under multiple policies. Section 1646 does not apply. (Frontier Oil, supra, 153 Cal.App.4th at pp. 1460-1461 & fn. 18.)
“Under the governmental interest analysis, the court first determines whether the applicable rules of law of the potentially concerned jurisdictions are the same or different. If the applicable rules of law are identical, the court may apply California law. If the applicable rules of law differ materially, the court proceeds to the second step, which involves an examination of the interests of each jurisdiction in having its own law applied to the particular dispute. If each jurisdiction has an interest in applying its own law to the issue, there is a ‘true conflict’ and the court must proceed to the third step. In the third step, known as the comparative impairment analysis, the court determines which jurisdiction has a greater interest in the application of its own law to the issue, or conversely, which jurisdiction’s interest would be more significantly impaired if its law were not applied.” (Frontier Oil, at pp. 1454-1455; see also Tucci v. Club Mediterranee (2001) 89 Cal.App.4th 180, 189.)
California law bars the stacking of UMC benefits from multiple policies, whether or not the policies specifically state that stacking is prohibited. (Ins. Code, § 11580.2, subd. (q).) Arizona, on the other hand, allows an insurer to preclude stacking by inserting appropriate language in its policy or by notifying the insured within 30 days of receiving notice of a claim that stacking will not be permitted and that the insured must select the policy under which benefits will be claimed. (Ariz. Rev. Stats., § 20-259.01, subd. (H).) The laws of California and Arizona are not identical with respect to the stacking of UMC benefits, although Arizona law permits insurers to obtain through policy language or notification procedures the same prohibition against stacking that California has implemented by statute. We assume, without deciding, that this difference is “material” under the first stage of the governmental interest analysis.
Notwithstanding the different approaches to stacking taken by California and Arizona, there is no true conflict under the second stage of the governmental interest analysis “ ‘where only one of the states has an interest in having its law applied.’ ” (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 920 (Washington Mutual).) “If the interests of the foreign state will not be significantly furthered by applying its law, the California court must conclude that the conflict is ‘false’ and apply California law.” (American Bank of Commerce v. Corondoni (1985) 169 Cal.App.3d 368, 372; see also Hurtado v. Superior Court (1974) 11 Cal.3d 574, 578, 580 [“false conflict” between laws of Mexico and California where Mexico did not have interest in applying its law limiting tort damages to a Mexican resident injured by a California resident while driving in California]; Ashland Chemical Co. v. Provence (1982) 129 Cal.App.3d 790, 794.)
The insurance policies in this case were issued by a California insurer to a California resident, for vehicles that were registered and garaged in California. Consequently, California has a strong interest in seeing that its anti-stacking law is enforced. The Restatement Second Conflict of Laws section 193 states, “The validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship....” Although the coverage under decedent’s policies extended to accidents occurring in other states, the principle risk in this case was located in California.
Arizona, by contrast, does not have an interest in whether decedent’s UMC coverage may be stacked. It has no relationship to the insurance policies themselves, which were issued outside its borders to a nonresident for a risk that would occur primarily in another jurisdiction. To the extent that Arizona has an interest (as expressed in its statutes) in seeing that an insured is given notice that stacking will not be allowed, either through policy language or the giving of notice within 30 days of a claim, this interest does not extend beyond the residents of Arizona or nonresidents who purchase insurance within the state. Given Arizona’s lack of an interest in this controversy between a California insured and a California insurer, this case involves a “false conflict” and we may apply California law to the stacking issue without resort to the third step of the governmental interest analysis. (Washington Mutual, supra, 24 Cal.4th at pp. 919-920.)
Even if we were to weigh the comparative interests of California and Arizona in applying their own laws to the stacking issue, California’s interests are stronger by far. The case is analogous to California Casualty Indemnity Exchange v. Pettis (1987) 193 Cal.App.3d 1597 (Pettis), in which California residents driving a rental car in Hawaii were injured in an accident involving an uninsured driver. (Id. at p. 1600.) They were compensated for their injuries under a no-fault insurance policy that covered the rental car as required by Hawaiian law, but additionally sought to obtain UMC benefits under the California insurance policies that covered their personal automobiles. (Id. at pp. 1600-1601.) Hawaiian law permitted the stacking of these coverages whereas California did not. (Id at pp. 1603-1605.)
The court in Pettis concluded that California law applied to the stacking issue, noting that the policy had been issued by a California company, to California residents, for vehicles that were registered, garaged and primarily operated in California. (Pettis, supra, 193 Cal.App.3d at pp. 1605.) Although Hawaii had a significant interest in regulating motor vehicles within its boundaries, that interest was fully satisfied by the Hawaiian no-fault policy that covered the rental car. “The fact that defendants had additional insurance, whether vehicular or otherwise, was fortuitous for them but is extraneous to the calculus of Hawaii’s interest. Hawaii’s interest centers on compliance with its own statutory requirements. Once those requirements have been satisfied, Hawaii has little, if any, other interest in this case.” (Id. at p. 1606.) “California’s more significant contacts to the case and the fact that the insurance policies were purchased in fulfillment of our law rather than Hawaiian law necessarily gives California the greater interest in the resolution of the case.” (Id. at pp. 1606-1607.)
The Veveiroses assert that we should apply Arizona law under the authority of California Casualty Indemnity Exchange v. Deardorff (1984) 157 Cal.App.3d 548 (Deardorff), in which a couple who resided in California and insured four vehicles under a California liability policy were injured while driving one of those vehicles in Minnesota. (Id. at p. 550.) Their insurance company had signed an agreement with the state of Minnesota requiring it to provide the same minimum no-fault insurance coverage for nonresidents driving in Minnesota—$30,000 per person—as was required for residents under Minnesota law. (Id. at p. 551.) The couple received $30,000 each in no-fault benefits from their insurance company, but sought to “stack” the benefits and receive $30,000 for each vehicle insured, as allowed under Minnesota law. (Id. at pp. 550-552.)
The court in Deardorff agreed that stacking was permitted. It reasoned that the insurance company’s agreement with the state of Minnesota required it to comply with Minnesota law, and additionally noted that the insurance policy at issue provided that policyholders would be covered to the extent required by the laws of that state when the state required greater coverage than provided under the policy. (Deardorff, supra, 157 Cal.App.3d at pp. 551, 552.) The insurance company was “obligated, under its agreement with the state of Minnesota and by the terms of its contract with [the insureds], to comply with Minnesota law as interpreted by the Minnesota court.” (Id. at p. 552.)
The decision in Deardorff is distinguishable from the case before us. There is no suggestion here that Farmers has signed an agreement with the state of Arizona requiring it to apply Arizona’s stacking provisions to nonresidents of that state. Nor is there any language in the policies themselves that requires such a result; to the contrary, the policies state expressly that when more than one Farmers policy has been issued, the total amount of UMC payable “shall not exceed the limits provided by the single policy with the highest limit of liability.” The “Conditions” section of each Farmers policy includes a provision that when two or more cars are insured by Farmers, “the total limit of liability under all the policies shall not exceed the highest applicable limits of liability under any one policy.”
California law applies to this controversy and bars the stacking of UMC under decedent’s policies.
E. Stacking Would Also Be Barred Under Arizona Law
Although the governmental interest analysis dictates the application of California law, we agree with Farmers that stacking would also be disallowed under Arizona law. Language identical to that contained in decedent’s Farmers policies was held sufficient to preclude stacking in Voss, supra, 935 P.2d at p. 876 [“If any applicable insurance other than this policy is issued to you by us or any other member company of the Farmers Insurance Group of Companies, the total amount payable among all such policies shall not exceed the limits provided by the single policy with the highest limits of liability”].) We agree with Farmers that Voss would be controlling if this case were decided under Arizona law and that it would bar stacking in this case.
In light of this conclusion, it is arguably unnecessary to even determine whether the law of California or Arizona applies. (See Stockton v. Ortiz (1975) 47 Cal.App.3d 183, 194 [unnecessary to determine whether law of California or Mexico applied to derivative suit when result would be the same under either]; Gianaculas v. Trans World Airlines, Inc. (9th Cir. 1985) 761 F.2d 1391, 1393 [unnecessary to decide which law applies because recovery prohibited under either California or New York law].)
We are not persuaded by the Veveiroses’ attempts to distinguish Voss or by their suggestion that it is contrary to the decision of the Arizona Supreme Court in Lindsey, supra, 897 P.2d at p. 633, in which the court allowed the insureds to stack UMC benefits when the policy language erroneously suggested that they did not have the right to make an election of coverage among multiple policies. Voss specifically considered Lindsey in reaching its conclusion that the policy language before it was sufficient to bar UMC stacking. (Voss, at p. 876.)
Because the policy language itself precluded stacking, we need not discuss whether Farmers properly notified the Veveiroses under Arizona law that stacking would not be permitted. (Ariz. Rev. Stats., § 20-259.01, subd. (H).)
F. Conclusion
California law applies to the stacking issue presented by this case. Under Insurance Code section 11580.2, subdivision (q), the UMC of decedent’s two policies may not be stacked. Moreover, the policies explicitly preclude stacking, using language that was held to be effective in Voss, supra, 935 P.2d at p. 876. Were we to apply Arizona law, the policy language would require the same result. (Ariz. Rev. Stats., § 20-259.01, subd. (H).)
III. DISPOSITION
The judgment is affirmed. Farmers shall recover costs on appeal.
We concur. JONES, P. J., SIMONS, J.