Opinion
C041698.
7-3-2003
SHIRLEY A. EVANS, Plaintiff and Appellant, v. 21ST CENTURY INSURANCE COMPANY, Defendant and Respondent.
Plaintiff filed an uninsured motorist claim with defendant, her insurer, through her attorney, Thomas Meyer. After a year had gone by from the date of her accident, defendant notified plaintiff that the statute of limitations had run on the claim because Meyer never formally demanded arbitration or filed suit against the other driver involved in plaintiffs accident, as required by Insurance Code section 11580.2 and plaintiffs policy. Plaintiff filed this action against defendant, pleading causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and unfair business practices (Bus. & Prof. Code, § 17200 ). Defendant moved successfully for summary judgment. Plaintiff appeals.
Undesignated statutory references are to the Insurance Code.
We shall affirm the judgment.
FACTS
Plaintiff carried automobile insurance provided by defendant. The uninsured motorist provision of plaintiffs policy contains the following exclusion: "Under Coverage D [damages for bodily injuries], this policy does not apply:
"(a) unless within one year of the date of the accident wherein bodily injury is sustained agreement as to the amount due under this part has been concluded or the person insured under this part or the legal representative of said person insured has formally instituted arbitration proceedings by notifying us in writing by certified mail, return receipt requested, or has commenced action for bodily injury in a court of [competent] jurisdiction against the uninsured motorist; [Emphasis in original.]" This exclusion derives from section 11580.2, subdivision (i)(1) (section 11580.2(i)(1)) as follows: "No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless one of the following actions [has] been taken within one year from the date of the accident:
"(A) Suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction.
"(B) Agreement as to the amount due under the policy has been concluded.
"(C) The insured has formally instituted arbitration proceedings by notifying the insurer in writing sent by certified mail, return receipt requested. Notice shall be sent to the insurer or to the agent for process designated by the insurer filed with the department."
On March 30, 2000, plaintiff suffered injury in a two-car accident. The driver of the other car was not covered under its owners insurance policy.
On July 7, 2000, attorney Meyer notified defendant of the incident and his representation of plaintiff. On July 31, 2000, Meyer wrote to defendant by certified mail: "According to the [traffic collision report], [the other driver] was totally at fault for the accident. The insurance company who [sic] covered the vehicle he was driving, has [the other driver] as an excluded Driver, accordingly this appears to be an uninsured motorist claim and request is hereby made that you open a UM file and treat this case as provided under your Uninsured Motorist coverage."
On August 21, 2000, Dawn Grimoldi, an adjuster employed by defendant, replied that "investigation of this loss is continuing" and requested Meyer to provide a list of items. After receiving the requested information, Grimoldi wrote to Meyer on August 30, 2000, requesting all medical bills and records once treatment was complete "in order to resolve the outstanding issue(s) of damages." Grimoldi wrote again with the same request on September 29, 2000, November 27, 2000, and January 25, 2001, "to resolve this claim."
On April 6, 2001, Michelle Windle, a claims examiner employed by defendant, wrote to Meyer as follows: "As you are aware, the Statute of Limitations has run for this case. Please provide me with documentation to support [sic] that the statute was protected. . . .
"According to Insurance Code 1158.2(l) [sic], the insured must have filed suit against the uninsured motorist or made a formal demand for arbitration. The formal demand for arbitration must be made via registered mail."
Meyer replied on June 1, 2001, that his registered letter of July 31, 2000, presenting the claim to defendant, was legally sufficient. Windle replied on July 18, 2001, that plaintiff had failed to protect the statute of limitations because Meyer did not formally demand arbitration in that letter.
Plaintiff then filed suit against defendant, alleging causes of action for breach of contract, bad faith, fraud, and unfair business practices. Plaintiff pleaded: (1) defendants course of conduct, in purporting to accept and process plaintiffs claim, led her reasonably to believe defendant had accepted the claim and estopped it from asserting a statute-of-limitations bar, and (2) defendant breached its duty under California Code of Regulations, title 10, section 2695.5 to give plaintiff all required assistance in perfecting her claim. Plaintiff did not expressly plead compliance with the requirements of the Insurance Code and her policy, but impliedly did so by alleging defendants failure "to pay the benefits owed under the policy contract" as a breach of contract.
Title 10, section 2695.5 of the California Code of Regulations (10 CCR section 2695.5) states in part: "(e) Upon receiving notice of claim, every insurer . . . shall immediately, but in no event more than fifteen (15) calendar days later, do the following unless the notice of claim received is a notice of legal action: [P] . . . [P]
"(2) provide to the claimant necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the claimant must provide for proof of claim."
After defendant answered the complaint, the parties filed cross-motions for summary judgment. Defendants motion asserted:
Plaintiffs opening brief states that the parties agreed to file cross-motions on essentially undisputed facts. She has not included her motion in the record she provided this court, nor made any argument specifically directed to the trial courts denial of that motion. For simplicity, we refer to defendants filing as its motion for summary judgment.
Plaintiffs policy and section 11580.2(i)(1) plainly exclude uninsured motorist coverage unless the insured demands arbitration within one year after an accident (or other events occur which did not occur here). Attorney Meyers request to open an uninsured motorist claim file did not comply with this requirement because it did not even mention arbitration. Defendants routine inquiries in the course of investigating plaintiffs claim did not waive the statute of limitations or estop defendant from raising it. Defendant did not breach its contract with plaintiff or the implied covenant of good faith and fair dealing by denying plaintiffs claim as time-barred. Plaintiff could not show fraud because defendant did not misrepresent or conceal any material facts about the statute of limitations; furthermore, plaintiff could not justifiably have relied on any purported misrepresentation or concealment because she was represented by counsel. For all of these reasons, plaintiff also could not state a cause of action for unfair business practices.
Opposing the motion, plaintiff asserted that either her counsels letter of July 31, 2000, met the requirements of her policy and section 11580.2(i)(1), or if it did not, 10 CCR section 2695.5 imposed a duty on defendant to advise counsel of any deficiency. On either premise, defendants conduct supported all of plaintiffs causes of action.
Defendant replied in part that section 11580.2(i)(1) prevails here over 10 CCR section 2695.5, a general regulation that does not address uninsured motorist claims or statutes of limitations. Moreover, section 11580.2, subdivision (k) (section 11580.2(k)) provides that an insurer need not notify an insured of the statute of limitations if the insured is represented by counsel.
Section 11580.2(k) provides: "Notwithstanding subdivision (i), any insurer whose insured has made a claim under his or her uninsured motorist coverage, and the claim is pending, shall, at least 30 days before the expiration of the applicable statute of limitation, notify its insured in writing of the statute of limitation applicable to the injury or death. Failure of the insurer to provide the written notice shall operate to toll any applicable statute of limitation or other time limitation for a period of 30 days from the date the written notice is actually given. The notice shall not be required if the insurer has received notice that the insured is represented by an attorney." (Italics added.)
The trial court granted defendants motion, finding: (1) attorney Meyers letter of July 31, 2000, did not meet the requirements of the uninsured motorist statute and plaintiffs policy; (2) plaintiff did nothing else to prevent the statute of limitations from running; (3) defendant had no duty to notify an insured who was represented by counsel about the statute of limitations; and (4) 10 CCR section 2695.5 was inapposite. The court accordingly entered judgment for defendant.
DISCUSSION
I
Summary judgment is properly granted to a defendant who shows without rebuttal that the plaintiff cannot establish an element of his case or that an affirmative defense bars recovery. (Code Civ. Proc., § 437c, subds. (o)(2), (p)(2).)
An appellate court reviews the trial courts decision to grant summary judgment de novo. The appellate court reviews the ruling, not the rationale. In reviewing the summary judgment, the appellate court applies the same three-step analysis used by the superior court: the appellate court (1) identifies the issues framed by the pleadings; (2) determines whether the moving party has negated the opponents claims; and (3) determines whether the opposition has demonstrated the existence of a triable, material factual issue. (Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261.)
II
Plaintiff contends, as below, that either her counsels letter of July 31, 2000, met the requirements of her policy and section 11580.2(i)(1), or that defendant had a duty under 10 CCR section 2695.5 to inform her of any noncompliance and to alert her to the statute of limitations. Plaintiff also contends that defendants wrongful conduct—purporting to accept and process her claim while keeping silent about the impending limitations date—waived the statute of limitations or estops defendant from invoking it. Plaintiff is wrong.
First, counsels letter did not formally institute arbitration proceedings. Second, section 11580.2(k) defeats plaintiffs assertion that defendant had a duty to tell her the statute of limitations was running. Third, because defendant did not act wrongfully, it did not waive the statute of limitations and is not estopped to invoke it.
Arbitration not instituted
Section 11580.2(i)(1) "sets forth the minimum requirements and its provisions are controlling on the subject of arbitration unless broadened by agreement of the parties. [Citation.]" (Mayflower Ins. Co. v. Pellegrino (1989) 212 Cal. App. 3d 1326, 1336, 261 Cal. Rptr. 224 (Mayflower) .) Here, the policy language does not broaden the statutory provisions.
"The Insurance Code does not specify what is necessary to formally institute arbitration proceedings. . . . At the very least, [however], a written demand for arbitration is required under [a] policy [which does not broaden the provisions of section 11580.2(i)(1)] to formally institute arbitration proceedings within the one-year period of limitations." (Mayflower, supra, 212 Cal. App. 3d 1326, 1337.)
Furthermore, an insured seeking arbitration under the statute must do more than merely demand arbitration in writing. The statute also requires "a declaration, under penalty of perjury, stating whether (i) the insured has a workers compensation claim; (ii) the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim; and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately." ( § 11580.2, subd. (f) (section 11580.2(f).) A formal demand for arbitration lacking this declaration is insufficient. (Allstate Ins. Co. v. Gonzalez (1995) 38 Cal.App.4th 783, 792 (Allstate).)
Attorney Meyers letter of July 31, 2000, met none of the statutes prerequisites. It did not mention, let alone demand, arbitration, or include the declaration required by section 11580.2(f). Thus it was insufficient to begin the accrual of plaintiffs claim under section 11580.2(i)(1). (Allstate, supra, 38 Cal.App.4th 783, 792; Mayflower, supra, 212 Cal. App. 3d 1326, 1336.) Meyers letter was a notice of claim, not a demand for arbitration.
Plaintiff disagrees, invoking the rule that the uninsured motorist statute must be liberally construed in favor of coverage. (Pugh v. State Farm Ins. Companies (1991) 227 Cal. App. 3d 816, 822, 278 Cal. Rptr. 149 (Pugh) .) That rule does not assist her.
In Pugh, supra, 227 Cal. App. 3d 816, the court examined the novel question whether the "notice that the insured is represented by an attorney" ( § 11580.2(k)), which relieves an insurer of the duty to inform the insured of the statute of limitations, must be in writing. (Id. at p. 820.) Partly because of the liberal-construction rule, Pugh held that the answer is yes. (Id. at pp. 820-823.) But plaintiff does not point to any similarly ambiguous and previously unconstrued language in section 11580.2(i)(1). Nor does she explain how even the most liberal construction of that provision could turn a letter which did not mention arbitration into a formal demand for arbitration.
Plaintiff also asserts her counsels letter formally instituted arbitration because it "notified the insurer in writing sent by certified mail, return receipt requested," as section 11580.2(i)(1)(C) and plaintiffs policy require of a formal demand for arbitration. This argument in effect rewrites the statute by inserting language as follows: "The insured has formally instituted arbitration proceedings by notifying the insurer in writing sent by certified mail, return receipt requested that the insured has an uninsured motorist claim." Only if the statute read that way could giving notice of an uninsured motorist claim suffice to "formally institute[] arbitration proceedings." But we may not rewrite a statute to add language the Legislature did not choose to include.
No duty to warn plaintiff about the limitations period
As mentioned, section 11580.2(k) expressly provides that if an insured is represented by counsel, the insurer need not give notice of the statute of limitations. Plaintiff contends, nevertheless, that defendant had to do so under 10 CCR section 2695.5, which requires every insurer, on receiving notice of a claim, to "provide to the claimant necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the claimant must provide for proof of claim." (See Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1267-1269 (Spray) [insurer may be estopped to invoke statute of limitations if it failed to comply with related regulation].) We disagree.
The recently decided case of Juarez v. 21st Century Ins. Co. (2003) 105 Cal.App.4th 371 (Juarez) is generally on point. There, as here, the plaintiff, represented by counsel, filed an uninsured motorist claim with his insurer, but did nothing required by section 11580.2(i)(1) to accrue his claim within one year of the accident date. (Id. at pp. 373-374.) The insurer denied the claim (though not because of the statute of limitations). The plaintiff sued the insurer for breach of contract and bad faith. (Id. at p. 373.) The insurer moved for summary judgment, asserting the statute of limitations had run. (Ibid.)
Opposing the motion, the plaintiff cited California Code of Regulations, title 10, section 2695.4 (10 CCR section 2695.4), which provides in part: "Every insurer shall disclose to a first party claimant or beneficiary, all . . . time limits. . . of any insurance policy issued by that insurer that may apply to the claim presented by the claimant." (Juarez, supra, 105 Cal.App.4th 371, 375.) Plaintiff argued that this regulation imposed a duty on the insurer, independent of the uninsured motorist statute, to notify him of the statute of limitations, and the insurers breach of that duty estopped it to invoke the limitations period as a bar. (Ibid.) The trial court and the reviewing court disagreed.
The reviewing court assumed for the sake of argument that this regulation also created a duty to notify insureds ofstatutory time limits. (Juarez, supra, 105 Cal.App.4th 371, 375-376.) The court noted that there was a separate regulation—California Code of Regulations, title 10, section 2695.7, subd. (f)—which expressly imposed a duty on insurers to notify insureds of statutory time limits, but provided an exception where insureds were represented by counsel. (Juarez, supra, 105 Cal.App.4th at p. 376, fn. 2.)
Sims, J., concurring.
I concur in my majority opinion. I write separately because I do not think that Shirley Evans, who apparently has a valid uninsured motorist claim, should go uncompensated for her injuries if her claim is valid. In my view, her remedy is probably an action for legal malpractice against her attorney, Thomas Meyer. Plaintiff Shirley Evans placed the handling of her claim with attorney Meyer, and he apparently botched her claim.
On this record, it appears plaintiff might have had a valid uninsured motorist claim if she had not permitted the limitations period to expire. It is undisputed that she suffered injury in an accident involving an uninsured driver who was at fault. Defendant has never contended otherwise.
It also appears on this record that plaintiffs claim was forfeited by the negligence of her counsel, Thomas Meyer. To represent plaintiff properly, Meyer had a duty to familiarize himself with relevant statutory and case law and the terms of plaintiffs policy, and to act with diligence on plaintiffs behalf, performing with the knowledge, skill, and ability ordinarily possessed by other attorneys similarly situated. (Smith v. Lewis (1975) 13 Cal.3d 349, 356-359, 118 Cal. Rptr. 621, 530 P.2d 589.) So far as the record before us shows, he breached that duty.
If Meyer genuinely believed he had formally instituted arbitration by writing a letter which did not even mention arbitration, or if he genuinely believed defendant had a duty to notify him of the statute of limitations despite the plain terms of section 11580.2(k), he was inexcusably ignorant of the law. Whether or not he was so, the record suggests that he failed to act with due diligence to protect his clients interests.
I cannot and do not say that Meyers committed malpractice; however, the record before us tenders a prima facie case that he did. In fairness, he should alert his client to this possibility by furnishing a copy of this opinion to her.
The statute of limitations for legal malpractice claims is "one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first. In no event shall the time for commencement of legal action exceed four years except that the period shall be tolled during the time that any of the following exist:
"(1) The plaintiff has not sustained actual injury;
"(2) The attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred;
"(3) The attorney willfully conceals the facts constituting the wrongful act or omission when such facts are known to the attorney, except that this subdivision shall toll only the four-year limitation; and
"(4) The plaintiff is under a legal or physical disability which restricts the plaintiffs ability to commence legal action." (Code Civ. Proc., § 340.6, subd. (a).) Here, because attorney Meyer has continued to represent plaintiff in this case through the appellate process, his representation tolls the limitations period under subdivision (3) of the statute.
I assume attorney Meyer will furnish his client, Shirley Evans, with a copy of this opinion pursuant to rule 3-500 of the State Bar Rules of Professional Conduct.
SIMS, Acting P.J.
As the reviewing court explained, the regulation at issue was promulgated under section 790.10, which generally authorizes the insurance commissioner to make regulations as needed to administer the Unfair Practices Act. ( §§ 790-790.10.) (Juarez, supra , 105 Cal.App.4th 371, 375; Spray, supra, 71 Cal.App.4th 1260, 1269.) As a general regulation, it could not be applied in an uninsured motorist case where the insured was represented by counsel "because doing so would contravene the clear language of [section 11580.2(k)], which eliminates any such disclosure requirement when the insured has an attorney." (Juarez, supra, 105 Cal.App.4th at p. 376.) This was so for two reasons. First, "[a] statute overrides any inconsistent provision in a regulation." (Ibid.) Second, "because [the uninsured motorist statute] is a specific provision that explicitly applies to coverage provisions for injuries caused by uninsured motorists, it governs over any general provision" such as the regulation the plaintiff relied on. (Ibid.; see San Francisco Taxpayers Assn. v. Board of Supervisors (1992) 2 Cal.4th 571, 577, 828 P.2d 147.)
Here, plaintiff cites 10 CCR section 2695.5, a general regulation of the same ilk as that cited in Juarez. For the reasons stated in Juarez, it does not override the specific provisions of the uninsured motorist statute. Because section 11580.2(k) expressly states that an insurer has no duty to notify an insured of the statute of limitations if the insured is represented by counsel, defendant did not breach any duty by failing so to notify plaintiff. Spray, supra, 71 Cal.App.4th 1260, on which plaintiff relies, is inapposite: it involves a different regulation; it deals with contractual rather than statutory time limits; and it is not an uninsured motorist case. (Id. at pp. 1263-1264; cf. Juarez, supra, 105 Cal.App.4th 371, 376.)
No waiver or estoppel
Plaintiff also contends defendant waived the statute of limitations or is estopped to invoke it because (unlike the insurer in Juarez, supra) defendant fraudulently purported to accept and process her claim and did not alert her to any deficiency. Thus, she maintains, defendant led her reasonably to believe it saw no legal impediment to the claim and could not thereafter invoke one to her detriment. For these reasons, according to plaintiff, her causes of action for fraud and unfair business practices are viable. We disagree.
First, plaintiff fails to cite any authority on point. She relies only on Spray, supra, 71 Cal.App.4th 1260, and California Service Station etc. Assn. v. American Home Assurance Co. (1998) 62 Cal.App.4th 1166, which is also not an uninsured motorist case and does not address any statute or regulation at issue here.
Second, defendant simply did not do anything fraudulent or misleading. Defendant never stated affirmatively that it would pay plaintiffs claim or would do so without regard to the statute of limitations; thus it did not waive the limitations bar. And as we have explained, defendant had no duty to point out the limitations period or the statutory requirements to plaintiff because she was represented by counsel. Thus, defendant did not make any misrepresentations, express or implied, and plaintiff could not reasonably have relied on defendants conduct to conclude defendant would not raise the statute of limitations as a bar; defendant is therefore not estopped to raise that defense.
In summary, plaintiff failed to take any of the steps specified by section 11580.2(i)(1) and her policy to accrue her claim within one year of the accident date. Defendant had no duty to notify a claimant represented by counsel that the limitations period was reaching its end. Therefore defendant acted legally and properly in rejecting plaintiffs claim, and the trial court properly granted summary judgment to defendant.
DISPOSITION
The judgment is affirmed. Defendant shall receive its costs on appeal.
We concur: RAYE, J., and ROBIE, J.