Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. 460014.
Bruiniers, J.
Appellant Rick W. Grimsley, who suffered serious injuries when struck by a drunk driver, brought this declaratory relief action against third party insurers to determine the policy limits available to provide compensation for his damages. Grimsley contends that a reduction in coverage under an umbrella policy issued by one insurer, and requested by the policyholder prior to the date of the accident, was not effective at the time of the accident. He also contends that he is entitled to seek compensation under policies issued in subsequent years for his “continuing or progressively deteriorating” injuries under the rationale of Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645 (Montrose). The trial court granted summary judgment to the insurers.
We conclude that summary judgment was properly granted, since there was no disputed issue of material fact that the policy in effect at the time of the accident had been effectively amended pursuant to mutual agreement of the insureds and insurers to reduce the coverage limit, regardless of whether an amending policy endorsement was actually delivered prior to, or subsequent to, the date of the accident. We further agree that primary and umbrella policies for policy years subsequent to the accident do not provide coverage for Grimsley’s injuries. We therefore affirm the judgment.
Grimsley also seeks review of a related discovery order. Because we affirm the summary judgment ruling, the discovery issue is moot and need not be addressed in this opinion.
I. Background
Appellant, Rick W. Grimsley, was a police officer with the City of Visalia. On September 1, 2002, he was struck by a drunk driver during a roadside traffic stop. He suffered catastrophic injuries, including the loss of both of his legs. Grimsley alleged that the driver of the car had become intoxicated at his workplace, The Depot Restaurant in Visalia, and that his employer had allowed him to drive away from the workplace in that intoxicated state. Grimsley sued in the Tulare County Superior Court (Grimsley v. Estrada et al. (Super. Ct. Tulare County, 2003, No. 03-205574)), naming as defendants the driver’s supervisor, Armando Apodaca, and the owners of the business, Andrew Piperis and Andrew Piperis, Inc. (collectively, the Insureds), all of whom were insured by Mid-Century Insurance Company (Mid-Century) and Truck Insurance Exchange (Truck; collectively, the Insurers) under primary and umbrella commercial liability insurance policies.
In April 2006, Grimsley, the Insureds and the Insurers signed a Settlement Agreement and an Insurance Litigation Agreement (Litigation Agreement). In the Settlement Agreement, which resolved the underlying Tulare County litigation, the Insurers agreed to pay Grimsley cash and annuity payments with a present value of $2 million for his personal injuries in exchange for the dismissal of Grimsley’s claims against the Insureds, an assignment of the rights of the Insureds under their primary and umbrella policies with the Insurers, and a general release from liability.
The Litigation Agreement acknowledged a dispute about the policy limits available to indemnify the Insureds for Grimsley’s damages: the Insurers contended there was a cumulative total of $2 million coverage provided ($1 million under the Mid-Century primary policy and $1 million under the Truck umbrella policy) and Grimsley contended there was more than $2 million in cumulative coverage available. The parties agreed the dispute would be litigated in an action to be filed in San Francisco Superior Court seeking a judicial declaration of the amount of insurance available (the Insurance Action). For purposes of the Insurance Action, the parties agreed (1) that Grimsley sustained damages because of bodily injury due to the September 1, 2002 accident; (2) that the Insureds were legally liable and obligated to pay those damages; and (3) that “the insurance provided by the Policies is applicable to and affords coverage for Plaintiff’s Damages, subject to the contested issue... that the amount of insurance available under the Policies to indemnify Insureds for their obligation to pay Plaintiff’s Damages may be limited to $2 Million ($2,000,000).” The “Policies” were defined as “primary and umbrella insurance policies issued by [Mid-Century] and [Truck], including policy number 60069-24-94 issued by [Mid-Century] and policy number 60069-24-96 issued by [Truck] (collectively the ‘Policies’).” The Insurers agreed that, if the judicially-declared amount of insurance was greater than $2 million, they would pay Grimsley that amount less the $2 million already paid in the Settlement Agreement.
The Insureds’ position on the amount of insurance available was “purposefully not set forth herein.”
Grimsley filed this declaratory relief action (the Insurance Action) in January 2007. In March 2008, he filed the operative first amended complaint, which alleged that Mid-Century and Truck each issued successive annual policies (commencing on July 15 of one year and expiring July 15 of the following calendar year) for the periods of 2002–2003, 2003–2004, 2004–2005, and subsequent annual periods thereafter. Each Insurer’s successive policies had a single policy number: 60069-24-94 for the Mid-Century policies and 60069-24-96 for the Truck policies. Grimsley alleged that he sought more than $10 million in damages in the underlying Tulare County litigation and that the Insurers’ policies for the 2002–2003, 2003–2004 and 2004–2005 policy periods afforded $8 million of coverage. Grimsley asked for a declaration that the total amount of the insurance available to pay his damages under the policies was $8 million, and for an order requiring the Insurers to pay him that amount.
The Insurers moved for summary judgment, or in the alternative summary adjudication. They argued that undisputed evidence in the record established that coverage was available only under the 2002–2003 Mid-Century and Truck policies and that those policies each had a coverage limit of $1 million, for a total of $2 million in coverage. In opposition, Grimsley argued the 2002–2003 Truck umbrella policy had a coverage limit of $2 million (for a cumulative total of $3 million in combination with the Mid-Century primary policy for that period), and that coverage was also available under the 2003–2004, 2004–2005 and 2005–2006 Mid Century and Truck policies, cumulatively providing a total of $9 million in coverage.
Summary Judgment Evidence
Troy Korsgaden, an appointed insurance agent for Mid-Century and Truck, placed commercial liability coverage for The Depot Restaurant through his agency, Troy Korsgaden Insurance Agency (Agency). For the period July 15, 2001 to July 15, 2002, a Mid-Century primary insurance policy provided $500,000 in liability coverage, and a Truck umbrella policy provided $2 million in excess coverage.
On June 6, 2002, Truck notified the Agency that its underwriting standards mandated an increase in the Insureds’ primary coverage. Apodaca, Piperis and Korsgaden averred that they met in mid-June 2002 to discuss insurance coverage; that the Insureds, who were concerned about their total premium costs, instructed Korsgaden to increase the Mid-Century coverage limit to $1 million and decrease the Truck umbrella coverage limit to $1 million; and that Korsgaden agreed to do so. The parties all agree that an increase in coverage under the Mid-Century policy (from $500,000 to $1 million) was processed and became effective before the September 1, 2002 accident that injured Grimsley. They dispute whether the same is true of the reduction in coverage under the Truck policy.
As we discuss post, in the trial court, Grimsley did not dispute that this meeting took place; however, he now argues on appeal that this is a disputed fact.
Piperis apparently died after he signed his declaration and before Grimsley had an opportunity to depose him.
Korsgaden averred that he received the 2002–2003 Truck renewal policy for $2 million in excess coverage the period of July 15, 2002 to July 15, 2003, shortly after June 6, 2002, and before he had requested the change in coverage. That policy includes an integration clause and requires that any changes be made by written endorsement. On June 20, 2002, Korsgaden sent a “Commercial Policy Change Request” form (Change Request Form) to Truck requesting a reduction in coverage for the 2002–2003 policy period from $2 million to $1 million effective July 15, 2002. The printed form included the statement, “This is an acknowledgement of your request. Upon approval, the company’s records will be adjusted accordingly, and if a premium adjustment is required, it will be done at premium audit or by endorsement.”
The form also includes the statement “Any deletion or reduction in coverage requires the Insured’s signature.” The form submitted by Korsgaden was not signed by the Insureds. As discussed post, we do not find this omission to be material.
Hiroe Hayes, Commercial Service Analyst and underwriter for Truck Underwriters Association, processed the Change Request Form by preparing three other forms, which she produced and authenticated: (1) a Truck Rating Worksheet, (2) a Commercial Umbrella Program Standard Rating Plan Worksheet (Rating Plan Worksheet; used to calculate the new premium), and (3) a Commercial Umbrella Underwriting Ticket (Underwriting Ticket). The Truck Rating Worksheet, which is signed “Hiroe, ” refers to the 2002–2003 Truck policy, includes the handwritten notation “chg. limits to 1, 000, 000, ” and appears to authorize a premium credit of $500. The Rating Plan Worksheet, which bears the stamp “Rolando Ferrer; June 06 2002, ” refers to the 2002–2003 Truck policy and shows an original handwritten entry of two $500 premiums for $1 million in coverage each and a total premium of $1,000; however, the second $500 premium (for the second $1 million in coverage) is crossed out, as is the total premium of $1,000, and a new total premium of $500 is written in the margin. The Underwriting Ticket refers to the 2002–2003 Truck policy, includes the handwritten notation, “CHG policy aggregate limit to 1, 000, 000, ” and appears to reflect a $500 premium credit. Hayes averred that she forwarded the Underwriting Ticket to a clerk in Truck’s Commercial Issue Department to prepare an endorsement.
Hayes produced a copy of the form that is identical to Korsgaden’s copy except for two immaterial handwritten markings.
Lori Welch, a service clerk whose responsibilities included preparing documents for the Commercial Underwriting Department for both Mid-Century and Truck, averred that her regular procedure was to complete documents requested by an underwriter or analyst and send them to the mail room for mailing to the agent or the insureds. When she completed the work, she would stamp the underwriting ticket with her personal stamp that included both her name and current date. The Underwriting Ticket produced by Hayes is stamped, “Received; July 29 2002; Comm’l Issue” and “Lori Welch Aug 12 2002.” She averred that in the 20 years she worked in this capacity, she never knowingly used any date on her date stamp other than the current date. Although Welch had no specific memory of preparing the Underwriting Ticket or sending it to the mailroom, she believed based on the date stamp on the document that she took these actions on or about August 12, 2002, in accordance with her usual practice.
Sharon Larsen, Service Group Manager in the Northern California Commercial Center for Truck Underwriters Association and custodian of records for Underwriters, confirmed that the underwriting files for the Truck policy contained the following documents: the Change Request Form, the Truck Rating Worksheet, the Rating Plan Worksheet, and the Underwriting Ticket. She averred that under company procedures Welch’s stamp on the Underwriting Ticket indicated that Welch typed the endorsement and that it was mailed on the same date to the Agency for delivery to the Insureds. In a document dated August 2002, Truck notified its reinsurer of the related reduction in the premium for the Truck policy effective July 15, 2002.
Korsgaden averred that he received a General Change Endorsement (Endorsement) for the Truck policy “prior to the accident involving Rick Grimsley, which occurred September 1, 2002. From the placement in my agency files, I estimate it was received in the first half of August 2002. Shortly after receiving the Truck Umbrella renewal change endorsement, I provided a copy to The Depot Restaurant representatives, Messrs. Piperis and Apodaca.” Piperis did not recall whether he received a copy of the Endorsement before September 1, 2002, and he did not have a copy of the Endorsement in his files. Before the September 1, 2002 accident, Apodaca did not see the Endorsement at the restaurant or any other paperwork showing that the Truck coverage had been reduced to $1 million. However, Apodaca was not primarily responsible for maintaining insurance for the business and he never specifically looked for such paperwork.
At a deposition, Korsgaden testified that he specifically remembered that he gave the Insureds the Endorsement more than a week before the September 1, 2002 accident because the accident had a serious emotional effect on him personally for three reasons. First, his father and sister-in-law were both killed by drunk drivers. Second, the severe injury of a police officer “was a serious thing.... I mean, everybody in the community knew about it.... [A]nd I’m civic-minded. I’m involved in the community.” Third, “[W]hen you change coverage, that’s significant. I’ve been an agent 26 years. It’s unusual [¶]... [¶]... [t]o reduce coverage.” “My job is to try to solve [sic] more coverage, not reduce coverage. But I give the customer what they want....” Korsgaden testified that in the context of this significant event he remembered the day he had received the endorsement “wasn’t the day before; it wasn’t a week before. It was a couple of weeks before.”
Korgaden produced a copy of the Endorsement that shows the policy limit was changed to $1 million and that the Insureds were owed a $500 premium credit. In July 2005, Larsen, as Truck’s custodian of records, certified a copy of the Truck policy for the 2002–2003 period that includes the same Endorsement.
A printed notation at the bottom of the form states that it is an “Agent’s Copy.”
The Endorsement lists an “effective date” of July 15, 2002, and a “renewal date” as July 15, 2003. Grimsley argues the effective date refers to the effective date of the policy, not the effective date of the change in the coverage limit. However, there is no other date on the document that would indicate when the change became effective.
Grimsley cites to documents in the record that he characterizes as the original 2002–2003 renewal policy issued before the Insureds allegedly requested a reduction in the coverage limit. That policy consists of the same Bates-stamped pages as the policy certified by Larsen (F 001328 to F 001350) with the Endorsement (F 001335 to F 001336) omitted. Korsgaden confirms that he received a written renewal policy without the Endorsement before he requested and received the Endorsement, which was later added to the policy.
Premium Payment History
In early June 2002, Truck calculated the annual premium for the Insured’s 2002–2003 umbrella policy with $2 million of coverage to be $1,000. As noted ante, Truck paperwork on the coverage reduction request indicated that the premium would drop to $500 a year.A $1,000 annual premium would result in 11 monthly payments of $83.33 and one monthly payment of $83.37; a $500 premium would result in 11 monthly payments of $41.66 and one payment of $41.74. The Insureds paid Truck premiums of $83.37, $83.33 and $83.33 respectively for the months of July 15 to August 14, 2002, August 15 to September 14, 2002, and September 15 to October 14, 2002. The September to October 2002 premium was paid by a check dated September 4, 2002, which was deposited by the Agency on September 10, 2002.
The Agency charged, and the Insured paid, a premium of $84.16, which might have included an agency mark-up.
Truck personnel averred as to each of the first three monthly billing periods of the 2002–2003 policy period (i.e., July to October 2002): “When the Truck umbrella policy limit reduction was processed and the premium accordingly reduced, effective 7-15-02, Piperis received a credit of $125.06, which included a partial credit for the premium overpayment Piperis made during this billing period.” Piperis averred in discovery responses that Andrew Piperis, Inc. received a credit for the overpayments, but the averment is ambiguous on the timing of the credit. Truck did not state when the credit was issued. Because a credit of $125.06 is equal to three monthly payments on a $500 premium, a reasonable inference could be drawn that the credit was received after those three payments were made, i.e., after September 10, 2002.
When asked to admit that “[p]rior to September 1, 2002, YOU did not receive a credit for any premium paid for the policy, ” Piperis responded, “Deny in that we paid the premium and got credit for the payment thereof because the policy was issued and was in force.”
The Insureds were again billed for and paid the higher premium for the months of January 15 to February 14, 2003, and May 14 to June 15, 2003. They do not cite to any evidence in the record about the amount of premiums paid in other months of the 2002–2003 policy period, and in our review of the record we have found none. A reasonable inference could be drawn that the Insureds were billed for, and paid premiums, for $2 million in excess coverage for the 2002–2003 policy period.
The premiums for the umbrella policy were separate line items on a “Farmer’s Easy Pay Statement” encompassing seven policies. Mid-Century and Truck are Farmer’s affiliated companies.
2003-2004 Policy Renewal
On June 9, 2003, Truck mailed the Insureds a 2003–2004 renewal policy with a stated coverage limit of $2 million. On June 16, 2003, Mike Jansma, a sales representative of the Agency with managerial responsibilities for its Commercial Department, sent a facsimile transmission to Truck (“Red Team – Underwriting”) requesting, “Per the insured’s request please reduce the limit of insurance for the [Truck] policy effective 6/16/2003 to $1,000,000.” Alice Duran-Martinez (Duran) of Truck received the fax in June 2003 and advised the Agency that the reduction could not be effected midterm but only on commencement of the renewal period. In June 2003, Duran and other Truck personnel completed paperwork to reduce the 2003–2004 policy limit to $1 million.
On July 8, 2003, the Agency received a renewal policy declarations page that still showed a coverage limit of $2 million. On the same day, Jansma sent Truck a fax with a cover sheet that said, “Attached is our original request and the response we received from Alice” and the following attachments: the June 16, 2003 request to reduce coverage and Duran’s note that coverage reductions could only be made effective on renewal. Agency and Truck documents show that Truck agreed to process a coverage reduction from $2 million to $1 million effective June 16, 2003. Truck issued a “revised” declarations page for the 2003–2004 policy showing a coverage limit of $1 million. Separate documents confirmed reduced coverage for the period June 16, 2003, to July 15, 2003.
On August 18, 2003, Duran sent the Agency the following memo: “In reviewing this umbrella policy to change the liability limit to $1,000,000 I found that the limit had been changed to 1, 000, 000 back on 7/15/02. I’ve made copies for your records. What happen[ed] to cause the confusion was that the paper work in file was not filed in [sic] correctly. Umbrella policies are handled manually. I’ve numbered according to date order.” Document 1 was the declarations page of the 2002–2003 policy showing $2 million in coverage. Document 2 was the Agency’s 2002 Change Request Form asking Truck to lower the limit to $1 million. Document 3 was the 2002 Endorsement. Document 4 was the initial declarations page for the 2003–2004 policy showing $2 million in coverage with the handwritten notation, “void.” Document 5 was the revised declarations page for the 2003–2004 policy showing a coverage limit of $1 million.
April 2004 Agency Chronology
In about April 2004, Jansma prepared a chronology of changes to the 2002–2003 Truck policy based on his search of Agency files for the Insureds. The chronology provided in its entirety:
“6-6-02 [¶] Received notice from Rolo at NCCC that in order to meet the commercial umbrella requirements, the underlying liability limits would have to be raised from 500, 000 to 1, 000, 000.
“6-20-02 [¶] Our office sent a request to NCCC to increase the underlying G/L limits from 500, 000 to 1, 000, 000. [¶] We also requested that the Umbrella limit be decreased from 2, 000, 000 to 1, 000, 000....
“7-15-02 [¶] Rcvd endorsement for G/L policy showing limits had been raised to 1, 000, 000. Rcvd declaration page for Umb policy still showing a limit of 2 m.
“Never received anything on Umb decrease
“6-16-03 [¶] Req NCCC, per the insured’s request, to decrease the umb limit from 2m to 1m.
“7-8-03 [¶] Rcvd rnwl dec page showing the umb limit was still at 2m. [¶] Faxed NCCC our original request to have the limit reduced to 1m.
“8-18-03 [¶] Rcvd detailed explanation as to why the req to lower umb limits never was processed. It was misfiled.
“Received revised umb dec page showing correct limit of 1m.” (Italics added.)
On April 16, 2004, Jansma faxed the chronology and supporting documentation to Mark Jones, a Truck employee who worked in the claims department. The supporting documentation included: (1) a “Speed Memo” recording (a) a June 6, 2002 message from Rolo Ferrer that the primary insurance coverage had to be increased to $1 million in order to meet Truck’s underwriting requirements, and (b) a June 20, 2002 reply by “Dana” explaining that a request to change limits was faxed to Truck on that date; (2) the Change Request Form; (3) a fax transmission sheet showing that the Change Request Form was sent on June 20, 2002; (4) a change request form increasing the coverage limit on the Mid-Century primary insurance policy; (5) a copy of Jansma’s June 16, 2003 faxed request to reduce the Truck coverage limit to $1 million; (6) a copy of Jansma’s July 8, 2003 fax reminding Truck of his June 16 request to reduce the coverage limit; (7) Duran’s August 18, 2003 memo explaining that the coverage limit had been reduced on July 15, 2002.
During a 2009 deposition, Jansma testified that he recalled searching the Agency’s file for the Insureds and preparing the chronology, but did not specifically remember searching for the Endorsement in the files. When he was shown a copy of the Agency’s business package policy file for the Insureds that included the Endorsement and was asked if he had ever seen the Endorsement before, Jansma replied, “Flipping through it, I may have come across it, but I haven’t noticed that this is what it was.” Immediately thereafter he was asked, “You’ve never seen these two documents in this file today, before today? To the best of your recollection?” He responded, “To the best of my recollection.” Jansma testified that he did not recall what he was asked to look for during his search of the files. He did not know if he would have included the Endorsement in his chronology if he had seen it during his search of the files. He could not determine from his 2009 review of the file when the Agency received the endorsement.
Trial Court Arguments
The Insurers argued that undisputed facts established the coverage limit of the 2002–2003 Truck excess policy was $1 million at the time of the accident. First, they argued the coverage reduction became effective because the Endorsement was processed and issued to the Insureds before the September 1, 2002 accident. Second, they argued the reduction was effective immediately upon Korsgaden’s oral agreement at the mid-June 2002 meeting to obtain the reduction in coverage, as Korsgaden was Truck’s agent and his agreement was binding on Truck. In opposition, Grimsley argued there were material factual disputes about whether the Endorsement was processed and issued before the September 1, 2002 accident, and that Korsgaden’s oral agreement to reduce the coverage was not effective for several reasons: the parties stipulated in the Litigation Agreement there were no prior agreements with respect to the Policies; the policy itself required that any changes be made by written endorsement; and Korsgaden only agreed to seek a reduction in agreement and did not agree on behalf of Truck to immediately effect the reduction in coverage. Grimsley also argued as a matter of law that insurance agents’ oral agreements are not binding in the circumstances of this case.
On the issue of whether coverage was available under successive policies in effect after the 2002–2003 policy period, the Insurers argued no coverage was available because Grimsley’s injuries arose from an automobile accident on September 1, 2002, constituting one occurrence and triggering coverage only during that policy period. Grimsley argued that the continuing effect of his injuries during subsequent policy periods permitted cumulative “stacking” of coverage under the successive insurance policies in the absence of express and unambiguous anti-stacking provisions in the policies and that the Insurers’ policies do not contain such provisions.
Trial Court Ruling
The trial court granted summary judgment to the Insurers. The court found the evidence established that Korsgaden agreed to reduce the coverage limit in mid-June 2002, Korsgaden submitted the Change Request Form on or about June 20, 2002, Truck processed the coverage reduction in July 2002, and the Endorsement was typed on August 12, 2002, and mailed a day or two thereafter. It found that the undisputed facts showed that the coverage limit for the 2002–2003 Truck umbrella policy had been reduced to $1 million prior to the September 1, 2002 accident. The court found that Grimsley suffered immediate injury in the September 1, 2002 accident, and that, as a matter of law, coverage was triggered only under the 2002–2003 policies. The trial court overruled both parties’ objections to the evidence with exceptions not relevant here.
At oral argument, the trial court observed that the evidence was “overwhelming” that the policy was amended before the September accident.
II. Discussion
Summary judgment is appropriate “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn. omitted (Aguilar).) In ruling on the motion, the court must draw all reasonable inferences from the evidence in the light most favorable to the opposing party. (Id. at p. 843.) The court may not weigh the evidence as if it were sitting as the trier of fact; however, “it must nevertheless determine what any evidence or inference could show or imply to a reasonable trier of fact.... In so doing, it does not decide on any finding of its own, but simply decides what finding such a trier of fact could make for itself. [Citations.]” (Id. at p. 856.)
“[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Aguilar, supra, 25 Cal.4th at p. 850.) Ultimately, “[t]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Ibid., fn. omitted.) When the plaintiff bears the burden of proving facts by a preponderance of the evidence and the defendant moves for summary judgment, the defendant “must present evidence that would require a reasonable trier of fact not to find any underlying material fact more likely than not....” (Id. at p. 851.)
An order granting summary judgment is reviewed de novo. (Aguilar, supra, 25 Cal.4th at p. 860.) “We review the trial court’s ruling, not its rationale; thus, we are not bound by the trial court’s stated reasons for granting summary judgment. [Citation.]” (McIntosh v. Mills (2004) 121 Cal.App.4th 333, 337–338.)
A. Coverage Limit on the 2002-2003 Truck Policy
We conclude that the undisputed evidence demonstrates that the Insureds and Truck mutually intended to reduce coverage under the 2002–2003 excess policy to $1 million effective on the first day (July 15) of the policy, and that the Endorsement reflecting this change was issued prior to the date of Grimsley’s accident. The only true factual dispute presented was whether the written Endorsement was actually delivered to the Agency or the Insureds before the date of the accident. We conclude this factual dispute is not material because the mutual intention of the parties to the insurance contract controls the meaning of its terms, and the issuance of the Endorsement, and its subsequent delivery-whenever accomplished-satisfied any and all requirements to make it effective. (See Kazanteno v. Cal.-Western etc. Ins. Co. (1955) 137 Cal.App.2d 361.) Thus, the 2002–2003 Truck excess policy provided only $1 million in coverage for Grimsley’s injuries.
1. Mutual Intent to Reduce Coverage Prior to the Accident
Grimsley argues there is a disputed factual issue about “when (and if) the Insureds and the Insurance Companies intended to reduce the [Truck] Policy’s coverage to $1 million....” More specifically, he argues there are factual disputes about whether Korsgaden met with Piperis and Apodaca in June 2002, whether Korsgaden agreed at that meeting to reduce the coverage limit for the 2002–2003 Truck policy, and whether Truck processed that reduction before the September 1, 2002 accident. We find that the undisputed evidence establishes that the Insureds requested a reduction in coverage to $1 million for the entire 2002–2003 policy period and thereafter, and that Truck accepted that request and prepared and processed an Endorsement documenting the reduction in coverage in response, before the September 1, 2002 accident.
No fewer than seven witnesses and nine documents confirm that the Insureds requested, and Truck processed, the coverage reduction before the September 1, 2002 accident. Korsgaden, Piperis and Apodaca all averred that they met in mid-June 2002 to discuss insurance coverage, that the Insureds asked Korsgaden to reduce the Truck coverage limit to $1 million, and that Korsgaden agreed to do so. The contemporaneous documentation supports their testimony. Korsgaden averred that he submitted the Change Request Form to Truck on June 20, 2002; Jansma stated in his chronology that the coverage reduction was requested in June 2002; Jansma attached two documents to his April 2004 fax confirming that the Change Request Form was sent in June 2002; and both the Agency and Truck produced copies of the dated Change Request Form. Hayes, a Truck underwriter, averred that she processed the Change Request Form so that a written endorsement confirming the change could be issued, and dated documentary evidence corroborates her averments. The Underwriting Ticket bears Welch’s date stamp and she averred that she regularly affixed that stamp, with the correct date, after the stamped paperwork had been processed. Larsen, the underwriting supervisor, further averred that Truck’s business records indicated that the request was processed, the Endorsement was prepared, and the Endorsement would have been sent to the Agency in ordinary course of business on the date of preparation. Truck also produced an August 2002 notice to its reinsurer about the reduction in the premium for the Insureds’ policy, corroborating the change.
As previously noted, the printed form includes the statement that “Any deletion or reduction in coverage requires the Insured’s signature.” Grimsley argues here that that the absence of a signature is evidence that the Insureds did not intend to reduce their coverage. He made no such argument in the trial court, and did not mention it in his response to Truck’s statement of undisputed material facts. He is precluded from raising it for the first time on appeal. (Baugh v. Garl (2006) 137 Cal.App.4th 737, 746.) We would in any event find this fact to be immaterial, since Piperis and Apodaca unequivocally stated that they authorized the Change Request and Truck processed it without challenge.
Korsgaden averred that these changes were made in tandem with an increase in primary coverage under the Mid-Century policy that had been mandated by Truck underwriting guidelines. Documentary evidence corroborates these averments: an increase in the Mid-Century policy limit was requested on June 20, 2002, was effected by written endorsement, and became effective July 15, 2002.
In response to this uncontroverted evidence of actions in June 2002 to amend the policy limits, Grimsley implies that there is circumstantial evidence of a conspiracy to backdate a June 2003 meeting and change request so as to make it appear as if they had occurred in June 2002.
We observe first that Grimsley conceded below for purposes of the summary judgment proceeding that Korsgaden, Piperis and Apodaca in fact met in June 2002. He argues now that he should not be bound by this concession. First, he cites a case holding that a concession made for purposes of a summary judgment proceeding does not amount to a binding judicial admission. (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 747–748 (Myers).) In Myers, however, the court held the concession in the summary judgment proceeding did not bind the parties at trial. (Ibid.) Here, Grimsley attempts to avoid the consequences of the concession on appeal of the very summary judgment proceeding in which he made the concession. To allow him to change strategies in this manner for the first time on appeal would be unfair to the trial court and the opposing litigants. (See Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316.)
The Insurers’ statement of undisputed facts included the statement, “In mid-June, 2002, Troy Korsgaden met with The Depot representatives, Andrew Piperis and general manager, Armondo Apodaca, to discuss The Depot’s insurance program.” In response to the statement, Grimsley wrote, “Undisputed for purposes of determining Defendants’ Motion.”
Grimsley also argues the concession is not binding if other evidence in the record establishes the fact is actually disputed. (See Wright v. Stang Manufacturing Co. (1997) 54 Cal.App.4th 1218, 1224–1225, fn. 2; Leep v. American Ship Management (2005) 126 Cal.App.4th 1028, 1039.) He refers the court to a computer printout in the record that shows Agency computer entries regarding the Insureds’ account that were made between August 1995 and May 2008. The printout includes entries related to the Jansma’s June 2003 request to lower the Truck policy coverage limit from $2 million to $1 million, but does not include any entries related to a June 2002 request to reduce the coverage limit. However, Grimsley did not make this observation in the trial court; therefore, the Insurers have not had a fair opportunity to respond to it. In any event, the evidence is ambiguous and thus insufficient to overcome Grimsley’s express concession that the meeting occurred in June 2002.
Grimsley further argues that, while there is Agency documentation of the 2003 request, there is no similar documentation of a 2002 request. As we have just observed, this is patently untrue. No fewer than seven witnesses and nine documents confirm that the Insureds made the request and that Truck processed the request, including preparation of the Endorsement for the purpose of granting it and reducing the coverage limits. Grimsley offers nothing that would discredit this documentary evidence beyond implying that one could infer the existence of an extensive and complex conspiracy involving Korsgaden, Piperis, Apodaca and Truck personnel (who would have necessarily had to forge Truck documentation using at least two different date stamps) to falsify the change in the coverage limit in order to limit Truck’s financial exposure. Grimsley cites only speculation in support of this theory and points to no evidence of misconduct by the Insureds or Insurers to make the necessary existence of such a conspiracy a reasonable inference to be drawn from the evidence.
The essential predicate of Grimsley’s opposition is that, at minimum, both Hayes and Welch were lying in their sworn declarations. He fails to produce any evidence which would permit a reasonable trier of fact to reach such a conclusion. “ ‘To avoid summary judgment, admissible evidence presented to the trial court, not merely claims or theories, must reveal a triable, material factual issue. [Citation.] Moreover, the opposition to summary judgment will be deemed insufficient when it is essentially conclusionary, argumentative or based on conjecture and speculation.’ [Citation.]” (Trujillo v. First American Registry, Inc. (2007) 157 Cal.App.4th 628, 635.)
All of the evidence Grimsley cites (the Insureds’ payment of premiums for $2 million in coverage throughout the policy period; the $2 million limit on the 2003–2004 renewal policy; the Agency’s June 2003 request for a reduction in the policy limit from $2 million to $1 million; and Jansma’s April 2004 chronology, which states that a reduction was not processed until 2003) gives rise to a factual dispute about whether the Endorsement was delivered before the date of the accident, an issue we discuss post. It does not, however, create a genuine factual dispute about whether coverage reduction was requested, and whether that request was accepted and processed by Hiroe Hayes and Lori Welch at Truck in June, July and August of 2002, in light of the uncontradicted direct evidence that those events in fact occurred. “ ‘It is not enough to produce just some evidence. The evidence must be of sufficient quality to allow the trier of fact to find the underlying fact in favor of the party opposing the motion for summary judgment.’ ” (Miller v. American Greetings Corp. (2008) 161 Cal.App.4th 1055, 1061–1062.)
The undisputed evidence establishes that the Insureds and Truck mutually intended and agreed before the September 1, 2002 accident that the coverage limit of the 2002–2003 Truck excess policy would be reduced to $1 million for the entire policy period.
Under Grimsley’s view, he would receive the benefit of a total of $3 million aggregate coverage under the 2002–2003 policies, with an effective increase to $1 million coverage under the Mid-Century policy, and the decrease from $2 million under the Truck policy ineffective. The evidence presented was that the Insureds intended to decrease their total coverage, not increase it.
2. Factual Dispute about Delivery of the Endorsement
Conflicting circumstantial evidence exists in the record that would permit an inference that neither the Agency nor the Insureds were in receipt of the Endorsement before the September 1, 2002 accident. Even if we assume that Grimsley raised a genuine factual dispute about whether the Endorsement was received by the Agency or the Insureds before the September 1, 2002 accident, we find that this dispute is not material.
The Insurers objected to much of Grimsley’s evidence on this issue. They first argue that Grimsley failed to authenticate much of the documentary evidence he produced in opposition to summary judgment, and failed to establish that it was not inadmissible as hearsay. Grimsley simply provided a declaration by one of his attorneys stating that the documents were produced in the action by either the Agency or Truck. The trial court overruled the Insurers’ objection and considered the evidence when ruling on the summary judgment motion. The Insurers also raise evidentiary objections to the chronology that Jansma prepared in April 2004. Since we find this issue to ultimately be immaterial, we need not consider these objections here.
3. Timing of Endorsement’s Receipt is Not Material
As we have discussed, the undisputed evidence establishes the mutual intent of both the Insureds and Truck, before the September 1, 2002 accident occurred, to reduce the coverage limit on the 2002–2003 Truck policy from $2 million to $1 million effective on the first day of the policy period. The evidence also conclusively shows that the Endorsement was authorized and prepared by Truck in August 2002, and was subsequently received, at some disputed point in time, by at least the Agency on behalf of the Insureds. As we have noted, we will assume there is a factual dispute about whether the Endorsement was delivered to the Agency or the Insureds before the accident occurred or after. At the latest, Jansma received the 2002–2003 Endorsement as an attachment to Duran’s August 2003 fax, which stated the Endorsement had been misfiled in Truck’s files.
The single remaining question then is whether a failure to actually deliver the Endorsement until after the accident, if that were the case, would affect the effective date of the coverage reduction reflected in the Endorsement. Insurers argue any delay in delivery of the Endorsement is immaterial because Korsgaden’s oral agreement to reduce the coverage was binding on Truck. Grimsley argues the reduction in coverage could not take effect unless and until the Endorsement was both issued and delivered to the Insureds. We conclude the clearly expressed mutual intention of the parties to the insurance contract at the time of their agreement to amend the contract controls, and the issuance of the Endorsement, even if later delivered, both satisfied all requirements of the policy for a writing and clearly established the effective date of the coverage modification.
“An insurance policy is a contract between the insurer and the insured.” (Abifadel v. Cigna Ins. Co. (1992) 8 Cal.App.4th 145, 159; see Ins. Code, § 22 [“[i]nsurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event”].) “ ‘ “While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.” ’ [Citation.]” (Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198, 1204.) “Under long-standing contract law, a ‘contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, § 1636.)” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524.) The interpretation of an insurance policy, like other contracts, is a legal question to which the court applies its own independent judgment. (Haynes v. Farmers Ins. Exchange, supra, 32 Cal.4th at p. 1204.)
It is true that some case authorities recite the rule that “ ‘It is usually held that when application is made for a policy of insurance, and the application is acted upon and the contract issued, the act of delivery completes the transaction so as to place into force and effect a binding contract. Thus delivery is considered to be a necessary condition precedent to the validity of the contract....’ ” (Hartford Acc. & Indem. Co. v. McCullough (1965) 235 Cal.App.2d 195, 203 (Hartford).) But here there was an existing and established insurance contract, with no dispute that there was actual delivery of the 2002–2003 policy. Thus, to the extent delivery might be required for what was a renewal of the insurance contract, there was no unsatisfied precondition to the formation of that contract. At issue here is the delivery of an endorsement, not delivery of the policy itself.
“ ‘Endorsements are modifications to the basic insuring forms in the policy. Endorsements may alter or vary any term or condition of the policy.’ (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2002) ¶ 3:188, p. 3-50.)... Endorsements may be attached to a policy at its inception or added during the term of the policy. (Id. at ¶ 3:191, p. 3-50.) [¶] Thus, an endorsement is an amendment to or modification of an existing policy of insurance. It is not a separate contract of insurance.” (Adams v. Explorer Ins. Co. (2003) 107 Cal.App.4th 438, 450–451.) The question then is whether there was an effective amendment to that existing contract under its terms.
Oral contracts to insure are valid. (Spott Electrical Co. v. Industrial Indem. Co. (1973) 30 Cal.App.3d 797, 805.) “ ‘A parol contract of insurance, or agreement to issue, renew, or make an endorsement upon a policy, or to waive a provision or condition thereof, is valid and enforceable.’ [Citations.]” (Kazanteno v. Cal.-Western etc. Ins. Co., supra, 137 Cal.App.2d at p. 370, italics added.) “ ‘Where a valid parol contract of insurance has been entered into, the policy to be issued thereon is simply the memorial of the prior parol contract, and even though the policy be not delivered until after the loss occurs, the insurance is deemed effective from the time agreed upon in the parol agreement, irrespective of any delivery of the policy. [Citation.]’ ” (Ibid.)
Grimsley argues that the plain terms of the written policy here prevented any change from becoming effective unless and until a written endorsement was issued. The policy provides: “This policy contains all the agreements between you and us concerning the insurance afforded. The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy upon our giving written consent. This policy’s terms can be amended or waived only by endorsement to this policy issued by us.” (Commercial Umbrella Policy, Section V, ¶ 4.) Accepting that both “written consent” and an “issued” endorsement are required by the terms of the policy in order to amend the coverage, the uncontradicted evidence is that Truck gave its “written consent” in accepting and processing the specific change requested by the Insureds, as memorialized in the Endorsement. The term “issued” in the context of an insurance policy is used in different senses, “ ‘ “sometimes as meaning the preparation and signing of the instrument by the officers of the company, as distinguished from its delivery to insured, and sometimes as meaning its delivery and acceptance... [.]” [Citation.]’ ” (Hartford, supra, 235 Cal.App.2d at p. 199.) In Hartford, the court specifically distinguished between the preparation and issuance of a policy, as there evidenced by the records of the insurer, and the subsequent conditional delivery of the policy. In Ahern v. Dillenback, the court, discussing the requirement under Insurance Code section 11580.2 for uninsured motorist coverage in policies “issued or delivered” in California, held that under “the well-established meaning of ‘issuance’ in insurance law, the policy was issued in Texas... when the insurer’s officials countersigned the policy.” (Ahern v. Dillenback (1991) 1 Cal.App.4th 36, 48–49.) The testimony of Welch and Larsen confirms that Truck had accepted the Insured’s request for modification of the policy, completed its underwriting process, physically prepared the Endorsement, and in the ordinary course of business would have mailed the Endorsement to the Agency for delivery to the Insureds. As of August 22, 2002, Truck had taken every necessary responsive step required on its part to modify the policy coverage, and unequivocally intended that the requested change become effective. Grimsley fails to establish here any genuine factual dispute that Truck issued the Endorsement prior to the accident.
Grimsley also suggests here that the absence of a purportedly required signature of the Insureds on the Change Request Form is a fatal defect. As we have noted ante, he cannot raise this argument for the first time on appeal. Even had he not forfeited this claim, he can point to nothing supporting an assertion that the Insureds’ signature on the form was a contractual requirement to effect a policy change.
There is no additional express requirement in the policy here for “delivery” of the Endorsement, and it is in any event not necessary for an insurance policy to be physically received by the insured in order for the policy to be effective. (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1388, citing Hartford, supra, 235 Cal.App.2d at p. 204.) “ ‘[W]here the insurer mails the policy to its agent, the intent with which this act is performed governs in determining the sufficiency of delivery.’ [Citation.]” (Golden Eagle Ins. Co. v. Foremost Ins. Co., at p. 1388.) The “delivery” of a policy or endorsement is not some talismanic ritual that must be invoked to effectuate an insurance policy or changes to it. It is simply one method of evidencing the intent of the parties to the insurance contract. As we have discussed, that intent was not truly in dispute. The issue is “not who has the actual possession of the policy, but who has the right of possession.” (Hartford, supra, 235 Cal.App.2d at p. 204.) Truck’s expressed and documented intention on August 22, 2002, was to surrender possession of the Endorsement to the Insureds, whether it was immediately successful in that effort or not.
Moreover, it is not the date of mailing or physical receipt of the Endorsement that is significant in determining when it is effective. Our Supreme Court long ago held that as between the date of signing of an insurance policy and the act of delivery of the policy, the date of “ ‘issuance’ ” was “[t]he day upon which, by the agreement of the parties, the risk attached, ” that is, the date which the policy bore. (Anderson v. Mutual Life Ins. Co. (1913) 164 Cal. 712, 716; see also Ball v. California State Auto. Assn. Inter-Ins. Bureau (1962) 201 Cal.App.2d 85, 87.) That date was July 15, 2002.
There is no genuine dispute that prior to the accident the Insureds and Insurers mutually intended the 2002–2003 umbrella coverage limit to be reduced to $1 million effective on the first day of the policy period. Grimsley cites no legal authority to support his claim that the policy’s writing requirement was not satisfied under these circumstances. As Grimsley acknowledges, an assignee “ ‘stands in the shoes’ ” of his assignor. (Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 Cal.App.4th 765, 775.)
In the cases cited by Grimsley, the plaintiffs unsuccessfully attempted to challenge the terms of integrated contracts based only on oral evidence, not writings. (See Mercury Ins. Co. v. Pearson (2008) 169 Cal.App.4th 1064, 1073; Everett v. State Farm General Ins. Co. (2008) 162 Cal.App.4th 649, 662–663; see also EPA Real Estate Partnership v. Kang (1992) 12 Cal.App.4th 171, 175 [parol evidence rule]; Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433–1434 [same].)
Grimsley also argues that an insurance policy may not be retroactively modified to defeat the interests of third parties. We first do not agree that the evidence reflects any “retroactive” modification of the coverage. In any event, case law confirms that “ ‘an insurance policy may be reformed to limit or exclude coverage if such was the intention of the parties, even where the rights of third party claimants who are not parties to the insurance contract are adversely affected.’ [Citations.]” (Alderson v. Insurance Co. of North America (1990) 223 Cal.App.3d 397, 412 (Alderson) [insurance policy reformed to exclude coverage for accident victim].) In Alderson, a car rental company and its insurer mutually intended to exclude coverage for accidents caused by the negligence of its customers while driving the company’s vehicles, but the exclusion was mistakenly not included in the written policy. (Id. at pp. 401–402.) The court held that the policy could be reformed to reflect the exclusion, even though a third party accident victim might be prejudiced by the reformation. (Id. at p. 412; but see id. at pp. 412–413 [holding reformed contract failed to comply with statutory requirements, thus rendering the exclusion void].) Similar results have been reached in at least three other cases. (See Truck Ins. Exch. v. Wilshire Ins. Co. (1970) 8 Cal.App.3d 553, 559 [car dealer and insurer mutually intended to exclude liability coverage for loaner cars, but written policy mistakenly omitted exclusion; contract reformed to detriment of accident victim]; Schools Excess Liability Fund v. Westchester Fire Ins. Co. (2004) 117 Cal.App.4th 1275, 1283–1285 [some evidence showed that school bus company and insurer mutually intended to exclude coverage for buses owned by school district but written policy mistakenly omitted exclusion; if facts established, contract could be reformed to detriment of accident victim]; Employers’ L. A. Corp. v. Indus. Acc. Com. (1918) 179 Cal. 432, 442–443 [employer and insurer mutually intended to cover employees at only one site but written policy mistakenly provided coverage for all employees in state; contract reformed to detriment of accident victim]; see also Shapiro v. Republic Indem. Co. of America (1959) 52 Cal.2d 437, 438–440 [policy may be reformed to reflect contracting parties’ initial mutual intent that defeats coverage, but injured third party must be given opportunity to be heard on the reformation issue]; Insurance Co. of North America v. Bechtel (1973) 36 Cal.App.3d 310, 316–317 [affirming principle but concluding mistake was not mutual].)
Grimsley also argues the Settlement Agreement bars the Insurers from relying on an oral agreement that was not reduced to writing before the September 1, 2002 accident to reduce coverage. He cites the following paragraph of the Settlement Agreement: “[Grimsley], [the Insureds] and [the Insurers] represent, warrant and stipulate that none of them has entered into any agreement with respect to the Policies and/or the subject matter of this Agreement, except the following: (a) The agreement set forth in this Agreement; (b) the agreement set forth in the Insurance Litigation Agreement; (c) the agreements set forth in the Policies themselves; (d) the conditional written settlement agreement after mediation between [Grimsley] and [the Insureds]; (e) the Prematic Service Corporation agreement (Account Number H514288) dated July 15, 1995; and (f) reinsurance agreements.” (Italics added.) The Settlement Agreement was signed in April 2006. Grimsley’s contention is meritless. By that time, Grimsley already knew that the Insurers contended that the Endorsement was part of the 2002–2003 policy. Therefore, the italicized phrase above cannot reasonably be construed as a stipulation that the 2002–2003 policy did not include the Endorsement.
In his statement of facts in opposition to summary judgment, Grimsley wrote that Piperis “answered verified Requests for Admission in the Underlying Action attesting in October 2005 that he had no record or recollection of receiving defendant Truck’s 2002/2003 Change Endorsement....” This statement implies that in October 2005 (i.e., before he signed the Settlement Agreement) Grimsley knew that Truck was relying on the existence of a written Endorsement that reduced the coverage limit.
Finally, Grimsley attempts to invoke the rule that any doubts about restrictions, limitations and reductions of coverage must be construed against the insurer. He cites Haynes v. Farmers Ins. Exchange, supra, 32 Cal.4th at p. 1204, which holds that the “burden of making coverage exceptions and limitations conspicuous, plain and clear rests with the insurer, ” and Insurance Co. of North America v. Sam Harris Constr. Co. (1978) 22 Cal.3d 409, 412, which holds that “ ‘any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer.’ ” These cases merely reiterate the rule that ambiguities in insurance policies are to be resolved in a manner that protects the objectively reasonable expectations of the insured. (See State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1018.) The expectations of the insured are examined at the time the contract is made. (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 766.) Here, however, there is no ambiguity in the Endorsement, which plainly and clearly reduced the coverage limit to $1 million and which was a conspicuous part of the policy once it was issued. If it were necessary to look to the objectively reasonable expectations of the Insureds in this instance, that unequivocal expectation was that they had excess coverage of $1 million under their Truck policy as of July 15, 2002. Again, there is no doubt that the Endorsement was actually issued and that the Endorsement, whenever delivered, reflected the true mutual intent of the parties at the time that they entered into the contract. Therefore, it is enforceable.
The undisputed material facts in the record before the trial court establish that the coverage limit of the Insureds’ 2002–2003 Truck policy was $1 million.
B. Successive Policies Do Not Provide Coverage for Grimsley’s Injuries
Grimsley argues that there was insurance coverage for his injuries not only under the 2002–2003 Mid-Century and Truck policies, but also under each of the successive policies covering the policy periods for 2003–2004 and thereafter, to at least the 2005–2006 policy period. He further argues that the coverage under each of these successive policies can be “stacked” to provide cumulative coverage of at least $8 million for his injuries. “Stacking” in this context refers to “ ‘the ability of the insured, when covered by more than one insurance policy, to obtain benefits from a second policy on the same claim when recovery from the first policy would alone be inadequate’ to compensate for the actual damages suffered. [Citation.]” (Wagner v. State Farm Mutual Auto. Ins. Co. (1985) 40 Cal.3d 460, 463 fn. 2.) The trial court ruled that, as a matter of law, coverage was available only under the 2002–2003 policies. We agree.
Grimsley argues that the Insurers conceded the issue of his continuing injuries in the Litigation Agreement. The parties agreed for purposes of the Insurance Action that “the insurance provided by the Policies is applicable to and affords coverage for Plaintiff’s Damages....” It defined “Policies” as “primary and umbrella insurance policies issued by [Mid-Century] and [Truck], including policy number 60069-24-94 issued by [Mid-Century] and policy number 60069-24-96 issued by [Truck] (collectively the ‘Policies’).” Grimsley argues that these statements amount to a concession that all of the Insurers’ policies provide coverage for his injuries. However, Grimsley omits important qualifying language. The parties agreed “the insurance provided by the Policies is applicable to and affords coverage for Plaintiff’s Damages subject to the contested issue (which is the subject of the parties’ Dispute) that the amount of insurance available under the Policies to indemnify the Insureds for their obligation to pay Plaintiff’s Damages may be limited to $2 Million ($2,000,000).” (Italics added.) That is, the Insurers agreed simply that their policies covered liability for Grimsley’s damages, but contended the coverage was limited to $2 million, the amount of coverage provided only by the 2002–2003 policies as the Insurers interpreted those policies. There was no concession of coverage by the subsequent policies.
Grimsley contends that the decision of our Supreme Court in Montrose, supra, 10 Cal.4th 645, holds that where an event triggering coverage occurs in a specific policy period, and damage continues or worsens in subsequent policy periods, an insurer is required to pay for those continuing/deteriorating damages up to the policy limits for each succeeding policy period in which there are damages. Grimsley argues that since his injuries continued through successive policy periods, he is entitled to recover up to the limits of coverage for each policy period, to the full extent of his damages. He further cites Aerojet-General Corp. v. Transport Indemnity Co. for the proposition that “ ‘once a policy is triggered, ... [t]he insurer is responsible for the full extent of the insured’s liability..., not just for the part of the [injury or] damage that occurred during the policy period.’ ” (Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, 57, fn 10 (Aerojet).) Grimsley misreads Montrose and its progeny, and essentially asks us to extend Montrose to a context where we find that it would have highly questionable application, if any. We decline to do so.
In Aerojet, the Court considered a slightly different issue and stated (arguably in dicta) that when a policy is triggered because some harm due to an occurrence happens during a policy period, that policy covers all of the harm caused by that occurrence up to the policy’s limits, including harm that occurs outside the policy period. (Aerojet, 17 Cal.4th at pp. 57–58 & fn. 10, quoting Montrose, supra, 10 Cal.4th at p. 686.) Several courts of appeal have reached the same conclusion. (See Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (1996) 45 Cal.App.4th 1, 49–50 (Armstrong); Stonewall Ins. Co. v. City of Palos Verdes Estates (1996) 46 Cal.App.4th 1810, 1835, 1855, 1861 (Stonewall); FMC Corp. v. Plaisted & Companies (1998) 61 Cal.App.4th 1132, 1184–1185; Stonelight Tile, Inc. v. California Ins. Guarantee Assn. (2007) 150 Cal.App.4th 19, 36–37 (Stonelight).) The issue is currently before the Supreme Court in a case under review. (State of California v. Continental Insurance Co., review granted Mar. 13, 2009, S170560.)
In Montrose, the California Supreme Court considered whether continuous or progressive injuries caused by an insured’s disposal of toxic wastes triggered commercial liability coverage over multiple policy periods. (Montrose, supra 10 Cal.4th 654, 656–659, 662.) As the court observed, third party commercial general liability (CGL) policies “provide coverage for injuries and damage caused by an ‘occurrence, ’ and typically define ‘occurrence’ as an accident (or sometimes a ‘loss’), including a ‘continuous or repeated exposure to conditions, ’ that results in bodily injury or property damage during the policy period.” (Id. at p. 664.)
The policies in question in Montrose provided that the insurer would “ ‘pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of... bodily injury, or... property damage to which this insurance applies, caused by an occurrence....’ ” (Montrose, supra, 10 Cal.4th at p. 668, italics omitted.) “ ‘[B]odily injury, or... property damage to which this insurance applies’ ” was defined as bodily injury or property damage “ ‘which occurs during the policy period.’ ” (Ibid., italics omitted.) Occurrence was defined as “ ‘an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage....’ ” (Id. at p. 669, italics omitted.) The 2002–2003 Truck policy contains similar provisions. Commercial Umbrella Policy, Section I, Coverage A, ¶ 1, “Insuring Agreement” states: “We will pay those sums that the insured becomes legally obligated to pay as damages for ‘ultimate net loss’ in excess of the ‘retained limit’ because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. The ‘bodily injury’ or ‘property damage’ must occur during the policy period and must be caused by an ‘occurrence’....” An “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same harmful conditions.” (Commercial Umbrella Policy, Section VI, ¶ 14.) “Ultimate net loss” is defined as “the total amount of damages for which the insured is legally liable in payment of ‘bodily injury, ’ [or] ‘property damage’...” after credits for other recoveries. (Id. at ¶ 25.)
“A key inquiry under an occurrence-based policy is what fact or event triggers an insurer’s duty to defend and/or indemnify its insured. (Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006) ¶ 7:161, p. 7A-66.) The word ‘trigger’ is not found in the insurance policy or defined in the Insurance Code. (Ibid.) It describes what must happen during the policy period to activate the insurer’s duties to defend and indemnify. (Ibid., citing Montrose, supra, 10 Cal.4th 645, 655.) The trigger of coverage usually determines which insurance policy or policies may provide coverage. (Croskey et al., supra, ¶ 7:162, p. 7A-67.)” (Stonelight, supra, 150 Cal.App.4th at p. 35.) The question in Montrose was how to define the appropriate “trigger” for coverage in that case.
The Montrose court specifically noted that “the proper resolution of a trigger of coverage issue in any given case may turn on whether the court is addressing underlying facts involving a single event resulting in immediate injury (e.g., an explosion causing instantaneous bodily injuries and destruction of property), a single event resulting in delayed or progressively deteriorating injury (e.g., a chemical spill), or a continuing event (referred to in CGL policies as ‘continuous or repeated exposure to conditions’) resulting in single or multiple injuries (e.g., exposure to toxic wastes or asbestos over time).” (Montrose, supra, 10 Cal.4th at p. 666.) Montrose dealt with claims of continuous or progressively deteriorating bodily injury, and progressively deteriorating property damage, all arising from continuous or repeated exposure to hazardous waste contamination over time, allegedly including the periods when multiple successive insurance policies were in effect. (Ibid.)
The court considered and analyzed in considerable detail alternative theories to determine what events or occurrences would trigger coverage in that context. It noted that some courts had adopted the exposure (or continuous exposure) trigger. “This trigger of coverage theory, first applied in cases involving asbestos-related bodily injuries, focuses on the date on which the injury-producing agent first contacts the body. The exposure theory apportions the cost of indemnity among those insurers whose policies were in effect from that point in time onward. In effect, under this theory, damage or injury is deemed to commence from the first contact of the injury-producing agent with the injured party.” (Montrose, supra, 10 Cal.4th at p. 674.) The reasoning of that theory of coverage was that “because of the cumulative and progressively deteriorating nature of the disease, it had to be distinguished from the ordinary accident or injury situation, and further, that because the injury is a continuing one, the insurers who furnished comprehensive general liability policies would expect the scope of their policies’ coverage to parallel the applicable theory of liability.” (Ibid.) Another alternative approach was the continuous injury (or multiple) trigger. “Under this trigger of coverage theory, bodily injuries and property damage that are continuous or progressively deteriorating throughout successive policy periods are covered by all policies in effect during those periods.” (Id. at p. 675.) The timing of the insured’s negligent act and the date of discovery of the damage or injury are largely immaterial to establishing coverage. “It is only the effect-the occurrence of bodily injury or property damage during the policy period, resulting from a sudden accidental event or the ‘continuous or repeated exposure to conditions’-that triggers potential liability coverage.” (Ibid.) A third alternative was the injury-in-fact trigger, under which “coverage is first triggered at that point in time at which an actual injury can be shown, retrospectively, to have been first suffered.... In the context of continuous or progressively deteriorating injuries, [this approach also] affords coverage for continuing or progressive injuries occurring during successive policy periods subsequent to the established date of the initial injury-in-fact.” (Id. at pp. 675–676.) The court adopted the “continuous injury” trigger of coverage: “where successive [commercial general liability] policies have been purchased, bodily injury and property damage that is continuing or progressively deteriorating throughout more than one policy period is potentially covered by all policies in effect during those periods.” (Id. at pp. 686–687.) The court also observed, however, that a different approach might be more appropriate in a different context (i.e. asbestos-related bodily injury claims that would present “unique facts”). (Id. at p. 676, fn. 16; see Armstrong, supra, 45 Cal.App.4th at p. 45 [applying “injury-in-fact” trigger to an asbestosis claim].)
The Supreme Court also noted that some courts, in discussing coverage issues, fail to draw the critical distinctions between first and third party insurance policies, and in the third party liability insurance context, have “muddied the waters” by failing to distinguish between disputes arising between an insured and insurer, and actions among several CGL carriers that seek a judicial declaration allocating a loss already paid out to the insured under one or more such policies. “Reported cases whose analyses fail to take these distinctions into account, although purporting to clarify or settle an underlying ‘trigger of coverage’ issue, may shed more darkness than light on the matter.” (Montrose, supra, 10 Cal.4th at p. 665.)
Beyond the setting of toxic tort claims, the “continuous injury” trigger has also been applied in the context of earth movement and subsidence cases, and in some construction defect cases. In Stonewall, for example, the insured’s negligent design and maintenance of a storm drain “periodically and consistently contributed [to]... activation of a deep-seated landslide which effectively destroyed the property in 1981.” (Stonewall, supra, 46 Cal.App.4th at p. 1832.) The court held that all of the insurers “who issued policies with policy periods including any date subsequent to the commencement of harm to the... property... and prior to the date the... property was effectively destroyed” covered the liability. (Id. at p. 1835.) In contrast, in Safeco Ins. Co. v. Fireman’s Fund Ins. Co., a landslide took place on a single day when portions of uphill properties failed. (Safeco Ins. Co. v. Fireman’s Fund Ins. Co. (2007) 148 Cal.App.4th 620, 625.) Due to delays in repairs, the injured parties lost use of their property for years. (Ibid.) The court held that the continuation of this loss of use into subsequent policy periods did not trigger coverage under the subsequent policies. (Id. at p. 634.)
Grimsley seeks to apply the “continuous injury” concept in the context of an automobile accident-a demonstrably single event or occurrence, with immediate manifest damages. He reads the language of Montrose and cases following it which refer to “continuous injury” to mean that the very existence of an injury which continues into a subsequent policy period triggers coverage under the later policy or policies. In fact, he appears to assert that once a policy is triggered by an “occurrence, ” no further trigger is required in subsequent policy periods to require coverage for an ongoing injury. No case has so held, and Montrose still makes clear that “injury or damage... must ‘occur’ during the policy period, ... ‘which results’ from the accident or ‘continuous and repeated exposure to conditions.’ ” (Montrose, supra, 10 Cal.4th at p. 669.)
Virtually all cases we have reviewed applying the “continuous injury” trigger to bodily injury claims involve either long latency disease processes developing from exposure or exposures to toxic materials difficult to pinpoint, and resulting in increasing or cumulative damage over time. The only bodily injury case outside this context cited by the parties, Bjork v. State Farm Fire & Casualty Co., involved an effort to obtain insurance coverage for sexual molestation that occurred over an extended period of time. (Bjork v. State Farm Fire & Casualty Co. (2007) 157 Cal.App.4th 1, 11–12.) Bjork argued that Montrose required coverage under policy periods after the time the molestation had ceased because she continued to suffer bodily injury as a result of the molestation. She alleged that her “ ‘emotional and physical injury occurred both at the time of the molestation and up through the present time’ ” and that she “ ‘continued to suffer emotionally and physically from [her] father’s molestation of [her].... These problems have continued to the present.’ ” (Id. at p. 12.) The court held that she had alleged only subsequent emotional distress, excluded from coverage under the policy, and had not identified a “continuous or progressively deteriorating bodily injury.” (Ibid.) The court therefore did not need to reach the issue of what policy trigger might otherwise apply, but clearly rejected the contention that merely continuing to suffer the effects of an earlier traumatic event would suffice.
We decline to apply a Montrose “continuous injury” analysis to a situation in which there is a single clearly defined injury causing event, with immediate and evident consequences. The Supreme Court in Montrose expressly recognized that “the proper resolution of a trigger of coverage issue in any given case may turn on whether the court is addressing underlying facts involving a single event resulting in immediate injury (e.g., an explosion causing instantaneous bodily injuries and destruction of property), a single event resulting in delayed or progressively deteriorating injury (e.g., a chemical spill), or a continuing event (referred to in CGL policies as ‘continuous or repeated exposure to conditions’) resulting in single or multiple injuries (e.g., exposure to toxic wastes or asbestos over time).” (Montrose, supra, 10 Cal.4th at p. 666.) Some injuries arising from an automobile accident may be transient, some recurrent, and others, as in Grimsley’s tragic circumstance, may be permanently debilitating, with consequences that will continue throughout a lifetime. The fact that an injury and damages continue to exist after the causal event and after it is first manifest does not mean that there is a causal “occurrence” triggering policy coverage thereafter.
We need not decide the extent to which elements of a progressive injury, albeit resulting from a single discrete event, might be sufficient to trigger policy coverage under a Montrose analysis because Grimsley presents no such claim here. He alleges only that his injuries have “continued” into later policy period, and did not contend or establish that he has suffered any “progressively deteriorating injury.” The Insurers’ statement of undisputed material facts includes the statement, “In the underlying litigation, Grimsley denied sustaining any injuries after the date of the incident for which he was seeking compensation.” In support of this statement, the Insurers cited Grimsley’s negative response to the following interrogatory: “At any time after the INCIDENT, did you sustain injuries of the kind for which you are now claiming damages[?]” to which Grimsley responded, “No.” Grimsley argued in the trial court that this interrogatory simply asked whether he sustained similar injuries as a result of a different and later incident, not whether he sustained later injuries as a result of the September 1, 2002 accident. We disagree. The response was sufficient to shift the burden of production to Grimsley on the issue (see Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1598 [“defendant may rely upon factually insufficient discovery responses by the plaintiff to show that the plaintiff cannot establish an essential element of the cause of action sued upon...”]), and Grimsley produced no independent evidence demonstrating that he sustained new or aggravated injuries as a result of the accident in later policy periods. Grimsley contended that his complaint in the underlying litigation alleged physical and continuous injuries that were continuous throughout four successive policy periods under the Insureds’ policies. However, even assuming these pleading allegations were sufficient to raise the issue, allegations in a pleading, even if verified, do not constitute evidence that can be considered in a summary judgment proceeding. (Code Civ. Proc., § 437c, subd. (b)(1); Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2010) ¶ 10:51.30, at p. 10-24.3 (rev. # 1, 2010); College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 720, fn. 7.) Grimsley produced no declaration, deposition testimony, medical records or other evidence demonstrating that he suffered any new or different injury as a result of the accident at any time after September 1, 2002.
The trial court correctly found that Grimsley failed to establish entitlement to coverage under any policies issued by Mid-Century and Truck beyond the 2002–2003 policy year.
III. Disposition
The judgment is affirmed. Grimsley shall pay the respondents’ costs on appeal.
We concur: Jones, P. J., Simons, J.