Opinion
H045087
12-18-2018
IDS PROPERTY CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. ROBERT RUSCONI, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 16CV296235)
I. INTRODUCTION
Defendant Robert Rusconi was allegedly injured in an automobile accident. He sued the owner and the driver of the other vehicle. The insurance company for the owner of the vehicle offered to settle Rusconi's claim for $30,000, which was the policy limit for bodily injury liability. Plaintiff IDS Property Casualty Insurance Company (IDS), which was the separate insurer for the driver, refused Rusconi's offer to settle for its policy limit of $100,000 for bodily injury liability and instead offered to settle the claim for $70,000, which was the amount of the IDS policy limit minus the policy limit of the other insurance.
IDS filed a complaint for declaratory relief against Rusconi, contending that the policy limits of the two policies could not be "stacked," and that the maximum amount available under the IDS policy was $70,000. IDS and Rusconi each filed motions for summary judgment. The trial court denied IDS's motion and granted Rusconi's motion, determining that the full $100,000 under the IDS policy was available regardless of the amount paid by the other insurer.
On appeal, IDS contends that its policy precludes the stacking of liability limits, and that its policy only fills the gap, if any, between the policy limit of the other insurance and IDS's own policy limit. IDS argues that the trial court therefore erred in granting Rusconi's summary judgment motion, and that IDS's motion for summary judgment should have been granted instead.
For reasons that we will explain, we will affirm the judgment.
II. BACKGROUND
The Accident and Settlement Demands
Rusconi allegedly suffered bodily injuries in an automobile accident. He sued, seeking damages from Frank Ricceri, who was the driver of the other vehicle, a Toyota Camry, and from Ricceri's mother, who was the owner of the Camry.
Ricceri's mother, the owner of the Camry, had an automobile policy issued by Farmers Insurance Exchange (Farmers) with a $30,000 per person limit for bodily injury liability. Farmers agreed to settle Rusconi's claim against the mother for the policy limit.
Ricceri, the driver of the Camry, had an automobile policy issued by IDS with a $100,000 per person limit for bodily injury liability. Rusconi made a settlement demand for the policy limit. Rusconi believed both the $30,000 limit of the Farmers policy and the $100,000 limit of the IDS policy were available to pay his alleged damages.
IDS determined that the value of Rusconi's claim exceeded the policy limit, and that there was no legal reason not to offer the policy limit to settle Rusconi's claim. However, IDS believed that its policy precluded stacking, and that Rusconi's maximum recovery under the policies was $30,000 from Farmers and $70,000 from IDS. Thus, IDS only offered to settle Rusconi's claim for $70,000.
The IDS Policy
The IDS policy provides for bodily injury liability coverage. The policy states that IDS "will pay damages for which an insured becomes legally responsible because of bodily injury . . . resulting from the ownership, maintenance or use of an insured vehicle." (Bold omitted.) An "[i]nsured vehicle" includes any vehicle described in the declarations and a "non-owned vehicle." (Bold omitted.) A non-owned vehicle includes a vehicle that is not owned by the insured and is being used with the vehicle owner's permission. The declaration page of the IDS policy states that the limit for bodily injury liability is $100,000 per person.
The IDS policy contains a section entitled "Limits of Liability," which states in part:
"The liability limits shown in the Declarations may not be added to the limits for similar coverage applying to other motor vehicles to determine the limit of insurance coverage available. This applies regardless of the number of:
"a. Policies involved;"THIS MEANS THAT NO STACKING OR AGGREGATION OF AUTOMOBIILE LIABILITY INSURANCE-BODILY INJURY AND PROPERTY DAMAGE WHATSOEVER WILL BE ALLOWED BY THIS POLICY." (Some bold omitted.)
"b. Vehicles involves;
"c. Insureds;
"d. Claims made; or
"e. Premiums paid or vehicles shown in the Declarations.
Immediately following the "Limits of Liability" section, the IDS policy sets forth a section entitled "Other Insurance," which states in part:
"If there is other applicable liability insurance:
"1. Any insurance we provide for a vehicle you do not own, including any vehicle while used as a temporary substitute for your insured vehicle, shall be excess over any other collectible insurance. . . .
"[¶] . . . [¶]
"3. We will pay only our share of:
"a. The loss. Our share of the loss is the proportion that our limit of liability bears to the total of all applicable limits.
"b. Defense costs if both primary and excess policies of liability insurance apply to the loss. Our share of defense costs is the proportion that the amount of damages paid by us bears to the total amount of damages paid under all applicable policies of liability insurance." (Some bold omitted.)
IDS's Declaratory Relief Action
IDS filed a complaint against Rusconi, Ricceri, and Ricceri's mother, seeking a declaration that the IDS policy limit available to pay Rusconi's claim was $70,000. Only Rusconi filed an answer to the complaint. A default was entered against Ricceri, and IDS apparently voluntarily dismissed Ricceri's mother from the case.
The First Motion for Summary Judgment - IDS
IDS filed a motion for summary judgment. IDS contended that, based on the language of its policy, its liability limit could not be stacked with the limits of other insurance. IDS argued that the Farmers policy provided primary coverage with a limit of $30,000, and that the IDS policy provided excess coverage with a limit of liability of $70,000.
In opposition, Rusconi contended that the language of the IDS policy required insurance coverage up to the policy limit of $100,000 without an "off-set" or deduction for the $30,000 from the primary insurance carrier, Farmers. Rusconi argued that the antistacking provision in IDS's policy meant that coverage for the multiple vehicles listed within the IDS policy could not be added or stacked to increase coverage, but that coverage between the IDS policy and the Farmers policy could be stacked.
The trial court denied IDS's motion for summary judgment. The court was "not persuaded" that the antistacking provision was "an inter-policy restriction rather than an intra-policy restriction which would reduce the amount of coverage available to Rusconi under the IDS Policy." In this regard, the court observed that there was no language in the policy indicating that there would be a "set-off or reduction" in the liability coverage.
The Second Motion for Summary Judgment - Rusconi
After IDS's motion was denied, Rusconi filed his own motion for summary judgment. Rusconi contended that IDS was required to pay up to $100,000 under its insurance policy. He argued that the antistacking provision in the policy was only an "intra-policy" restriction preventing the vehicles listed in the declaration page of that policy from being added together to increase Ricceri's coverage. Rusconi also argued that the IDS policy purported to restrict stacking while at the same time required stacking. He contended that a conflict or ambiguity in the policy must be resolved in favor of the insured.
IDS contended that the antistacking provision in its policy precluded the liability limits of the two polices from being added together, and that its policy only required it to pay the difference between its limit and the limit of the Farmers policy. IDS argued that the antistacking provision could be read harmoniously with the other provisions in the policy that were identified by Rusconi as being in conflict.
The trial court granted Rusconi's motion for summary judgment. The court determined that the antistacking provision in the IDS policy precluded only the stacking of coverage within the IDS policy and did not preclude the stacking of coverage between the IDS policy and another insurance policy. The court also observed that the portion of the IDS policy addressing uninsured motorist coverage contained antistacking language followed by set-off or reduction language, whereas in the portion of the policy addressing liability coverage, the policy did not similarly state that there would be a set-off or reduction in such coverage when other insurance existed. The court concluded that "the full $100,000 in excess coverage provided by the IDS Policy is available to Rusconi, regardless of the amounts already paid to him under the Farmers Policy."
A judgment was entered in favor of Rusconi and against IDS.
III. DISCUSSION
A. The Standard of Review and the Interpretation of Insurance Policies
"In general, interpretation of an insurance policy is a question of law and is reviewed de novo under settled rules of contract interpretation. [Citations.]" (Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1377-1378.) " 'The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.' [Citations.] 'Such intent is to be inferred, if possible, solely from the written provisions of the contract.' [Citations.] 'If contractual language is clear and explicit, it governs.' [Citation.] ' "The 'clear and explicit' meaning of these provisions, interpreted in their 'ordinary and popular sense,' unless 'used by the parties in a technical sense or a special meaning is given to them by usage' [citation], controls judicial interpretation. [Citation.]" [Citations.]' [Citation.]" (State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195 (Continental).)
Thus, insurance "policy language is interpreted in its ordinary and popular sense [citation] and as a 'layman would read it and not as it might be analyzed by an attorney or an insurance expert.' [Citations.]" (E.M.M.I. Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 471.) "Insurance policy terms will be given the objectively reasonable meaning a layperson would ascribe to them. [Citation.]" (Regional Steel Corp. v. Liberty Surplus Ins. Corp. (2014) 226 Cal.App.4th 1377, 1390 (Regional Steel).)
" 'A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.' [Citations.] . . . ' "[L]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract." ' [Citations.] 'If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insured's reasonable expectation of coverage.' [Citation.]" (Continental, supra, 55 Cal.4th at p. 195.)
B. Types of Insurance Coverage
"There are two levels of insurance coverage—primary and excess. Primary insurance is coverage under which liability 'attach[es] to the loss immediately upon the happening of the occurrence.' [Citation.] Liability under an excess policy attaches only after all primary coverage has been exhausted. [Citation.]" (North River Ins. Co. v. American Home Assurance Co. (1989) 210 Cal.App.3d 108, 112.)
"A problem arises when two or more policies apply at the same level of coverage. Most insurance contracts include some provision attempting to limit the insurer's liability in the event that another insurance policy covers the same loss." (Olympic Ins. Co. v. Employers Surplus Lines Ins. Co. (1981) 126 Cal.App.3d 593, 598 (Olympic); accord, Commerce & Industry Ins. Co. v. Chubb Custom Ins. Co. (1999) 75 Cal.App.4th 739, 743-744 (Commerce).) There are several forms of "other insurance" clauses, including pro rata, excess, and escape clauses. A pro rata clause "limit[s] the insurer's liability to 'the total proportion that its policy limits bear to the total coverage available to the insured.' [Citation.]" (Commerce, supra, at p. 744.) An excess clause provides that the insurer will not be liable except to the extent that the loss exceeds other insurance, meaning the policy is excess to other insurance. (Olympic, supra, at p. 598.) An escape clause provides that the insurer is not liable for any loss that is covered by other insurance, meaning the existence of other insurance extinguishes the insurer's liability. (Ibid.)
" 'Stacking' " has "been held to refer 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 (Wagner).) The California Supreme Court has explained that, "absent antistacking provisions, statutes that forbid stacking, or judicial intervention, " 'standard policy language permits stacking.' " (Continental, supra, 55 Cal.4th at p. 201.) However, "contracting parties can write into their policies whatever language they agree upon, including limitations on indemnity, equitable pro rata coverage allocation rules, and prohibitions on stacking." (Id. at p. 202, italics added.)
C. Automobile Liability Insurance
Regarding automobile liability insurance policies in particular, Insurance Code section 11580.9 addresses the situation in which two or more policies cover the same loss. Relevant here, subdivision (d) of section 11580.9 sets forth the following rule: "[W]here two or more policies affording valid and collectible liability insurance apply to the same motor vehicle or vehicles in an occurrence out of which a liability loss shall arise, it shall be conclusively presumed that the insurance afforded by that policy in which the motor vehicle is described or rated as an owned automobile shall be primary and the insurance afforded by any other policy or policies shall be excess." (Italics added.) In other words, under this subdivision, the "policy which describes or rates the motor vehicle as an 'owned automobile' bears primary responsibility for the loss and any other policy is excess." (Transport Indemnity Co. v. Royal Ins. Co. (1987) 189 Cal.App.3d 250, 253.)
All further statutory references are to the Insurance Code. --------
Prior to the enactment of section 11580.9, "the allocation of loss between coinsurers, two or more insurers affording coverage to the same loss, was made by judicial resort to the provisions of the respective policies. Often the policies contained provisions (so-called 'other insurance' clauses) through which one coinsurer would attempt to avoid or minimize the amount of its liability at the expense of the other coinsurers. 'The court's first task in analyzing an other insurance provision was to determine whether, with regard to a particular loss, another insurance clause purported to render the insurance afforded by the policy excess, prorata, or ineffective.' [Citations.] Judicial construction of these provisions was marked by inconsistency, prompting commentators and the courts alike to request legislative clarification. [Citation.] [¶] [T]he Legislature responded to these requests with the enactment of section 11580.9." (Zurich-American Ins. Co. v. Liberty Mut. Ins. Co. (1978) 85 Cal.App.3d 481, 485.)
D. Analysis
In this case, the parties do not dispute that the Farmers policy, which covered the Camry owned by the mother, was the primary policy, and that the IDS policy, which covered Ricceri and the non-owned vehicle he was driving (that is, the mother's Camry), was an excess policy. (See § 11580.9, subd. (d).) Regarding the primary policy, Farmers agreed to settle Rusconi's claim against the mother for the policy limit of $30,000. Regarding the excess policy, the declaration page of the IDS policy states that the limit for bodily injury liability is $100,000 for per person. The issue here is whether the IDS policy limit available to pay Rusconi's claim against the son, Ricceri, is $100,000, or the reduced amount of $70,000.
The IDS policy expressly prohibits stacking. Under the "Limits of Liability" section, the policy states: "The liability limits shown in the Declarations may not be added to the limits for similar coverage applying to other motor vehicles to determine the limit of insurance coverage available. This applies regardless of the number of: [¶] . . . Policies involved." (Bold omitted and italics added.) The policy further states: "THIS MEANS THAT NO STACKING OR AGGREGATION OF AUTOMOBIILE LIABILITY INSURANCE-BODILY INJURY AND PROPERTY DAMAGE WHATSOEVER WILL BE ALLOWED BY THIS POLICY." It thus appears from the "Limits of Liability" section that the $100,000 bodily injury liability limit in the IDS policy "may not be added" to the $30,000 in "similar coverage" applying to the mother's Camry under the mother's Farmers policy. (Bold omitted.) This construction prohibiting stacking between policies is reinforced by the language stating that liability limits may not be added together "regardless of the number of: [¶] . . . Policies involved."
Notwithstanding the express language in the IDS policy prohibiting the stacking of liability limits between policies, we determine that the policy does not unambiguously provide that the available limit for bodily injury liability in this case is $70,000.
First, we do not believe the language in the "Limits of Liability" section, prohibiting the adding, stacking, or aggregation of liability limits, would have necessarily been understood by a layperson to mean that the IDS policy limit of $100,000 would be reduced if liability insurance from another insurer was available. (Bold omitted.) The "Limits of Liability" section states that the "limit of liability shown in the Declarations for each person for Bodily Injury Liability is our maximum limit of liability." (Bold omitted & italics added.) The adjective "our" refers to the limit of liability of IDS. A layperson could have reasonably understood the no-stacking and associated language that follows this statement as prohibiting an increase in the IDS policy limit of $100,000 through the adding, stacking, or aggregation of liability limits with another policy. Indeed, as IDS itself states on appeal, pursuant to "its anti-stacking provision," "[i]t will not provide Ricceri with coverage for this accident that equals the combined limits of the Farmers policy and the IDS policy." The ordinary and reasonable person could thus conclude that, although IDS would not provide coverage equal to the combined limits of the two policies, IDS would provide coverage equal to the IDS policy limit of $100,000.
Second, the ambiguity is exacerbated by language in the "Other Insurance" section of the policy. (Bold omitted.) Despite express language in the "Limits of Liability" section prohibiting the stacking of liability limits between insurance policies, the "Other Insurance" section contains several provisions addressing when the insured may resort to both IDS insurance and "other applicable liability insurance." (Bold omitted.) In particular, the "Other Insurance" section states that any insurance IDS provides for a vehicle that Ricceri does not own (here, his mother's Camry) "shall be excess over any other collectible insurance." (Bold omitted.) In that circumstance, IDS will pay its "share of" the "loss," meaning "the proportion that [its] limit of liability bears to the total of all applicable limits." Thus, although the "Limits of Liability" section states that "no stacking or aggregation . . . whatsoever will be allowed by this policy," the "Other Insurance" section expressly allows the insured to collect insurance under both the IDS policy and "other applicable liability insurance." (Bold and some capitalization omitted.)
Significantly, IDS admits on appeal, as it did below, that "[t]he combining of benefits from the Farmers policy and the IDS policy under the 'Other Insurance' section is interpolicy stacking." (Italics added.) Indeed, stacking has "been held to refer 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, supra, 40 Cal.3d at p. 463, fn. 2.) Such stacking is expressly permitted under the "Other Insurance" section of the IDS policy. (Bold omitted.) Thus, in view of the language in the "Limits of Liability" section and the "Other Insurance" section, an ambiguity exists regarding the available limit for bodily injury liability when, as in this case, the IDS policy applies as excess coverage with respect to a primary policy. (See Martin v. Auto Owners Ins. Co. (Mo. Ct.App. 2016) 486 S.W.3d 390, 396 ["promise of excess coverage in the other insurance provision read in conjunction with the anti-stacking provision and disclaimer purporting to take away such coverage create an ambiguity to be resolved in favor of the insured"].)
Third, the ambiguity is further exacerbated by the absence of a policy provision that dictates the particular calculation that IDS contends is required in this case. Indeed, stacking is not defined in the policy in the manner claimed by IDS. IDS variously states on appeal that its policy "provides the difference in its limit and the limit of the Farmers policy," that its policy "will fill the gap, if any, between the limit of the other insurance and the IDS Policy's limit," that "the IDS policy will only provide enough coverage to bring the total available up to the IDS Policy's limit," and that "the IDS Policy states that it shall apply . . . only to the extent necessary to provide Ricceri [the insured] with the coverage limit specified in the IDS Policy." IDS fails, however, to point to a provision in its policy that expresses this concept, or that otherwise provides for a reduction in the stated policy limit of $100,000. For example, IDS does not point to any language in its policy indicating that its excess coverage will be reduced by the amount paid under some other primary policy. In contrast, as the trial court observed, in the part of the IDS policy concerning uninsured motorist coverage, the antistacking language is followed by an explanation that "the limit of liability shall be reduced by" certain specified categories of payments. "Insurance policy terms will be given the objectively reasonable meaning a layperson would ascribe to them" but in this case, IDS fails to identify a policy provision that a layperson would reasonably understand to mean that the full policy limit would not be available in the circumstances presented by this case. (Regional Steel, supra, 226 Cal.App.4th at p. 1390.)
Fourth, as we have set forth above, the IDS policy concerning liability coverage describes primary/excess coverage and pro rata payment in the "Other Insurance" section. (Bold omitted.) Pursuant to the primary/excess coverage provision, the Farmers policy is the primary policy and the IDS policy is excess. (See § 11580.9, subd. (d).) The pro rata provision states that IDS will pay its "share" of the "loss," meaning "the proportion that [its] limit of liability bears to the total of all applicable limits."
On appeal, IDS contends that the primary/excess and pro rata provisions only address the "order" and "proportion" in which the policy will respond if there is other applicable insurance, and that those provisions do not address the maximum the policy will pay, which is addressed in the "Limits of Liability" provision (bold omitted). According to IDS, "if there are multiple policies that apply at the same level (i.e., multiple primary policies or multiple excess policies), the policies at a common level will share pro rata in the loss." For example, "[i]f the other insurance also applies as primary insurance, then the two (or more) policies will share pro rata according to their relative limits. Thus, if the limits are the same, the two insurers will share equally. If the other insurance has a limit half of the IDS limit, then the other insurer will pay 1/3 while IDS will pay 2/3."
In this case, there was only one primary policy (Farmers) and one excess policy (IDS). Therefore, there was no other insurance "at a common level" with IDS, that is, another excess policy, to "share pro rata in the loss." In this context, the IDS policy is reasonably susceptible to the interpretation that stacking would occur pursuant to the "Other Insurance" provision, with Farmers paying up to its $30,000 limit on a primary basis, and IDS providing excess coverage for an amount equal to the policy limit of $100,000.
Fifth, we are not persuaded by IDS's contention that the language in the IDS policy is simply an enforceable, more generous version of section 11580.9, subdivision (e) for the insured. As we explained, subdivision (d) of section 11580.9 states that liability insurance describing a vehicle as an owned automobile is primary insurance and any other insurance is excess. Pursuant to subdivision (e), the excess policy may state that it "shall apply only to the extent necessary to provide the insured with the coverage limits specified in Section 16056 of the Vehicle Code." (§ 11580.9, subd. (e).) Vehicle Code section 16056 requires a minimum of $15,000 per person for bodily injury. (Id., subd. (a).) In this case, IDS does not point to any language in its policy indicating that its excess coverage "appl[ied] only to the extent necessary to provide" the statutorily-required minimum (§ 11580.9, subd. (e)), nor has IDS identified any other policy language that an ordinary and reasonable person would have understood to mean that the available policy limit would be reduced by the amount of collectible primary insurance. (See Regional Steel, supra, 226 Cal.App.4th at p. 1390 ["Insurance policy terms will be given the objectively reasonable meaning a layperson would ascribe to them"].)
In sum, there is ambiguity in the IDS policy regarding whether the entirety of the $100,000 policy limit is available in this case, or whether the policy only "provides the difference in its limit and the limit of the Farmers policy" as IDS contends on appeal. As we have explained, an insured could reasonably expect the availability of the entire $100,000 policy limit in this case, based on the language of the "Other Insurance" section and notwithstanding the antistacking language in the "Limits of Liability" section, where IDS was the only insurer providing coverage on an excess basis. (Bold omitted.) Construing the ambiguity regarding the available policy limit " 'against the party who caused the uncertainty to exist (i.e., the insurer [IDS]) in order to protect the insured's reasonable expectation of coverage,' " we determine that the trial court properly granted summary judgment in favor of Rusconi. (Continental, supra, 55 Cal.4th at p. 195.)
IV. DISPOSITION
The judgment is affirmed.
/s/_________
BAMATTRE-MANOUKIAN, ACTING P.J. WE CONCUR: /s/_________
MIHARA, J. /s/_________
DANNER, J.