Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIC871095, Yuri Hoffman, Judge.
NARES, Acting P. J.
Guy Ihrig (Guy) brought an action against Interinsurance Exchange of the Automobile Club (Interinsurance) after it denied underinsured motorist coverage to Guy for injuries he suffered in an automobile accident under a policy it issued to his brother Karl, for a vehicle owned by Karl that was not involved in the accident. The accident occurred when Guy, experiencing engine trouble, pulled over to the side of the road, got out to inspect his engine, and a vehicle then collided with his car. The court sustained Interinsurance's demurrer without leave to amend on the basis that (1) his vehicle was not an "insured motor vehicle" under the policy; and (2) because Guy was standing next to his vehicle inspecting the engine at the time of the collision, he was "occupying" the vehicle at the time of the collision.
Throughout this opinion we refer to Guy Ihrig by his first name in order to distinguish him from his brother, Karl Ihrig, who is not a party to this action but who is the named insured in the underlying policy of insurance, and who will be referred to as Karl.
Guy appeals, asserting the court erred in sustaining Interinsurance's demurrer because (1) he was an insured person under the policy; and (2) the exclusion Interinsurance relied upon in denying coverage was not applicable because he was not "occupying" his vehicle at the time of the collision. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Because we are reviewing a judgment following the sustaining of a demurrer, we take all well pleaded facts in the complaint as true. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125 (Moore).) Accordingly, we take the factual background in large part from the complaint in this matter.
A. The Collision
This case arises out of an automobile collision that occurred on April 7, 2002. On that date, Guy was driving his vehicle, a 1983 Volkswagen, southbound on U.S. Highway 101, when he began experiencing engine trouble. He pulled his vehicle off the roadway and over onto the right shoulder. He exited the vehicle and opened the front hood so that he could examine the engine compartment in an effort to determine the source of his engine trouble.
While Guy was standing outside and in front of his parked Volkswagen on the right shoulder of the roadway, another vehicle being driven southbound on Highway 101 by William Judd approached the rear of Guy's vehicle, veered off the roadway and onto the right shoulder, and struck the rear of Guy's vehicle. This caused Guy's vehicle to be propelled into Guy. As a result of the collision, Guy sustained severe injuries including multiple fractures and ligament ruptures of the left knee requiring surgical reconstruction, left humerus comminuted fractures, as well as a significant closed head injury and severe facial lacerations with major residual scarring and disfigurement. Guy also incurred medical expenses of approximately $72,000, and will continue to incur additional medical expenses in the future as a result of the injuries he sustained in the collision.
B. The Third Party Personal Injury Lawsuit
Guy filed a personal injury action arising out of the collision against Judd and his father, William A. Judd, who was the owner of the vehicle Judd was driving. The Judds were insured with Farmers Insurance Exchange (Farmers) under a policy issued to William Judd, which had a liability policy limit of $35,000. Guy settled his action against the Judds for the policy limit of the Judds' insurance coverage.
C. Guy's Auto Insurance Policy
Guy insured his vehicle with Explorer Insurance and had bodily injury liability limits that complied with the financial responsibility law of the State of California. However, Guy did not carry uninsured motorist (UM) or underinsured motorist (UIM) coverage on his vehicle or any other vehicle.
D. Underinsured Motorist Coverage under Karl's Policy with Interinsurance
Interinsurance issued an automobile insurance policy (the policy) to Guy's brother, Karl. The policy provided, among other things, UM and UIM coverage for a 1982 Mercedes Benz owned by Karl, with policy limits of $100,000 per person and $300,000 per occurrence.
The policy provided that in addition to covering Karl as the named insured, it also afforded UM and UIM coverage for relatives that resided in the same household as Karl, which Guy did. The policy also contained an exclusion that stated the coverage did not apply to bodily injury of a person insured "sustained while occupying a motor vehicle owned by a person insured, unless the occupied vehicle is an insured motor vehicle." (Boldface omitted.) The term "occupying" is defined in the policy as being "in or upon, entering into or alighting from." The "insured motor vehicle" on the policy was listed as Karl's Mercedes Benz.
E. Guy's Demand upon Interinsurance for UIM Benefits
In September 2005 Guy made a demand that Interinsurance pay him $65,000, representing the difference between the UIM policy limit of Karl's policy, and the $35,000 he had received from the Judds' carrier.
In October 2005 Interinsurance denied Guy's demand. Interinsurance based the denial on its position that Guy was "occupying" his Volkswagen at the time of the accident and the fact his vehicle was not an "insured motor vehicle" under Karl's policy. Guy attached a copy of Karl's policy with Interinsurance to the complaint.
G. Interinsurance's Demurrer
Interinsurance filed a demurrer to the complaint, asserting that Guy was excluded from UIM coverage under the Karl's policy because he was occupying a vehicle that was not insured under the policy.
The court sustained the demurrer as to all causes of action without leave to amend. In doing so, the court found that because Guy was standing next to his vehicle inspecting the engine at the time of the collision, he was "occupying" the vehicle. Moreover, the court found his vehicle was not an "insured motor vehicle" under the policy.
DISCUSSION
A. Standards Governing Demurrers
When reviewing a demurrer ruling, we determine whether the complaint states a cause of action. (Moore, supra, 51 Cal.3d at p. 125.) Although we assume that the complaint's well-pleaded allegations are true, we do not assume the truth of conclusions of fact or law. (Ibid.) Appellate courts interpret the complaint reasonably by "reading it as a whole and all its parts in their context." (Ibid.)
Facts appearing in exhibits to a complaint, like well-pleaded allegations in the complaint, are taken as true on demurrer. (Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627.) When the facts in exhibits are contrary to the facts alleged in the complaint, however, the exhibits take precedence. (Ibid.)
We need not accept as true allegations that are contradicted or inconsistent with matters subject to judicial notice, including exhibits attached to the complaint. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604; Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.) Appellate courts may rely on and accept as true the contents of exhibits attached to the complaint and "treat as surplusage the pleader's allegations as to the legal effect of the exhibits." (Barnett v. Fireman's Fund. Ins. Co. (2001) 90 Cal.App.4th 500, 505.)
B. Applicable Legal Principles
Under California law, insured motor vehicle owners must be covered, subject to certain limits, "for all sums . . . [which] they . . . shall be legally entitled to recover as damages for bodily injury or wrongful death from the owner or operator of an uninsured motor vehicle." (Ins. Code, § 11580.2, subd. (a)(1).) Likewise, auto insurance policies must also provide coverage for insureds where the other driver has liability insurance, but with lower limits than the insured's underinsured motorists coverage. (§ 11580.2, subd. (p).)
All further statutory references are to the Insurance Code.
"Our Supreme Court explained that '[t]he purpose of the [uninsured motorist] statute is "to protect one lawfully using the highway by assuring him of payment of a minimum amount of an award to him for bodily injury caused by the actionable fault of another driver." [Citation.]' [Citation, italics added.] Thus, '". . . the purpose of the uninsured motorist statute is not to make all drivers whole from accidents with uninsured drivers, but to make sure that drivers injured by such drivers are protected to the extent that they would have been protected had the driver at fault carried the statutory minimum of liability insurance." [Citation.] The law is not designed to provide the insured with greater insurance protection than would be available under a policy containing minimum statutory limits. [Citation.] These limits are not and never have been adequate to make insured parties whole.' [Citation, italics added.]" (Hartford Casualty Ins. Co. v. Cancilla (1994) 28 Cal.App.4th 1305, 1310-1311 (Hartford).)
UM and UIM coverage extends to the "named insured" and his or her spouse, and relatives of either residing in the household "while occupants of a motor vehicle or otherwise . . . ." (§ 11580.2, subd. (b), italics added.) Thus, coverage extends to the named insured, spouse or relative residing in the same household "regardless of whether the individual is in a motor vehicle or on a horse, motorcycle, bicycle or stilts when injured by an uninsured or underinsured motorist, so long as one of the statutory exclusions does not apply." (Daun v. USAA Cas. Ins. Co. (2005) 125 Cal.App.4th 599, 610 (Daun), italics added.)
A policy may exclude UM and UIM coverage for injuries suffered by the named insured or insured family members while occupying a car owned by an insured, but not covered under the policy. For example, section 11580.2, subdivision (c)(2) (section 11580.2(c)(2)) provides in part that, "[t]he insurance coverage provided for in this section does not apply . . . [t]o bodily injury of the insured while in or upon . . . a motor vehicle other than the described motor vehicle if the owner thereof has insurance similar to that provided in this section." (Italics added.) Section 11580.2, subdivision (c)(6) (section 11580.2(c)(6)) permits insurance companies to exclude coverage for "bodily injury of the insured while occupying a motor vehicle owned by an insured . . . unless the occupied vehicle is an insured motor vehicle." (Italics added.)
C. Analysis
1. The vehicle was not an insured vehicle
The case of Sutton v. Farmers Ins. Exchange (1995) 35 Cal.App.4th 1800 (Sutton) demonstrates that coverage was properly denied under section 11580.2(c)(6) because Guy's vehicle was not insured under Karl's policy. In Sutton, the insured was injured by an uninsured motorist and the vehicle in which the insured was riding, an Isuzu, was insured under a policy that had UM/UIM limits of $30,000. The insured had sought coverage under a policy issued by the same insurer that carried $100,000 in UM/UIM limits, but which insured another vehicle, a Taurus, owned by the insured. (Id. at p. 1803.)
In rejecting the claim under the policy with the higher limits, the insurer relied upon a policy exclusion that excluded coverage for bodily injuries sustained by a person while occupying any owned vehicle for which insurance is not afforded under the policy. The Court of Appeal found that the exclusionary language of the policy for the vehicle carrying the $100,000 UM/UIM limits precluded coverage. Applying language similar to what is contained in the instant policy, the Court of Appeal held that the policy precluded coverage for the loss because the plaintiff sustained bodily injury while occupying a vehicle which he owned but "'for which insurance [was] not afforded under [the Taurus] policy.'" (Sutton, supra, 35 Cal.App.4th at p. 1804.)
In reaching this conclusion, the Sutton court relied on Harrison v. California State Auto. Assn. Inter-Ins. Bureau (1976) 56 Cal.App.3d 657 (Harrison)and Hartford, supra, 28 Cal.App.4th 1305. In Harrison, the claimant was injured by an uninsured motorist while riding his motorcycle. Although he carried liability insurance on the motorcycle, his policy excluded UM coverage. The claimant sought to obtain coverage through a policy on another vehicle he owned which was not involved in the accident, but which included UM coverage. That policy excluded coverage for injuries incurred while occupying a motor vehicle owned by the insured or a family member, but not insured under the policy. The Harrison court denied coverage stating that "[the other policy] both by its terms and consistent with the exemption authorized by section 11580.2, precluded liability to the plaintiff when he sustained injuries by occupying a motorcycle owned by him which was not an 'insured motor vehicle.'" (Harrison, supra, 56 Cal.App.3d at p. 663.)
In Hartford, supra, 28 Cal.App.4th 1305, the insured was killed in an accident involving his motorcycle and an uninsured motorist. The insurer of the motorcycle paid the UM coverage policy limits. Thereafter, the insured's heirs sought additional coverage from the insurer of his other vehicle, a van. However, the policy on the van excluded coverage for injuries incurred while occupying "'any vehicle owned by you . . . that is not a covered "auto."'" (Hartford, supra, at p. 1308.) In rejecting the heirs' claim, the Hartford court noted that section 11580.2 allows only certain people to claim uninsured motorist benefits─"those whose uninsured motorist insurance covers the vehicle they are driving at the time of the accident with an uninsured motorist." (Hartford, supra, at at p. 1312.)
Based upon these authorities, the Sutton court held that since the plaintiff's claim was based upon an accident involving an Isuzu, and the Isuzu was not the insured motor vehicle under the policy for the Taurus, the claim was not covered. (Sutton, supra, 35 Cal.App.4th at p. 1806.) In doing so, the Court of Appeal also noted that while the terms of the three insurance policies were very similar, they differed in one notable respect; the amount of UM/UIM coverage. The Sutton court observed that by issuing policies with varying amounts of coverage, the insurer was not only able to, but entitled to, accurately assess its risk. The court noted that the insurer's ability to accurately assess this risk would be thwarted by the insured underinsuring one vehicle to save premium dollars and then attempting to seek coverage through the vehicle with the higher limits. (Ibid.)
Thus, Harrison, Hartford, and Sutton establish that an insurance policy's UM or UIM coverage may exclude coverage to an insured for vehicles owned by the insured, but not named in the policy under which a claim is made. Here, while Guy was an insured under the policy as a family member residing in his brother Karl's house, his vehicle was not insured under his brother's policy. Karl's policy contained an exclusion that stated the coverage did not apply to bodily injury of a person insured "sustained while occupying a motor vehicle owned by a person insured, unless the occupied vehicle is an insured motor vehicle" (Some italics omitted, boldface omitted.) The insured vehicle identified under the policy is Karl's vehicle.
In support of his position that his vehicle was entitled to UIM coverage under Karl's policy, Guy relies upon Lopez v. State Farm Fire & Cas. Co. (1967) 250 Cal.App.2d 210 (Lopez) and Daun, supra, 125 Cal.App.4th 599. These cases are inapposite.
In Lopez, a father successfully sought coverage under his daughter's uninsured motorist provision for her vehicle after he was struck by an uninsured motorist while he was walking. The father had failed to insure his own vehicle. At the time Lopez was decided, section 11580.2(c) expressly required insurance policies to provide uninsured motorist coverage to relatives of an insured who live in the same household, even if they failed to insure their own vehicles. Because of this express statutory requirement, the Court of Appeal affirmed the trial court's judgment permitting coverage under the daughter's insurance. In doing so, the Court of Appeal noted that "[d]efendant's argument that [section 11580.2(c)(6)] should exclude one who doesn't insure his own car would better be addressed to the Legislature." (Lopez, supra, 250 Cal.App.2d at p. 212.)
In response to Lopez, the Legislature amended section 11580.2(c)(6) to provide that insurers could exclude uninsured motorist coverage for "bodily injury of the insured while occupying a motor vehicle owned by an insured . . . unless the occupied vehicle is an insured motorist vehicle." Thereafter, in Interinsurance Exchange v. Velji (1975) 44 Cal.App.3d 310, 315, the Court of Appeal upheld an exclusion in a policy with nearly identical language as the amended statute, and the policy here, indicating that the legislative purpose of the amendment was to was to respond to Lopez and its effect was to "'change a condition which insurance companies abhor: the situation where a person who does not carry insurance could take a "free ride" on someone else's policy. No longer will relatives in the household of a named insured be able to use his uninsured motorist coverage to cover cars owned by them which are NOT insured.' [Citation.] [¶] The purpose of the exclusion has also been discussed as follows: 'This exemption prevents the coverage of one policy from extending to accidents involving other owned but uninsured vehicles, and reflects the theory that each motor vehicle should carry its own liability insurance and uninsured motorist coverage.' [Citation.]"
Hartford, supra, 28 Cal.App.4th at pages 1311-1313 also concluded the addition of section 11580.2(c)(6) was intended to respond to the Lopez case and "to rectify a specific problem-attempts by those who do not maintain insurance to use another's coverage to make a claim. It was intended to make sure people carry their own insurance for their own claims." (Hartford, supra, at p. 1313.) With the addition of section 11580.2(c)(6), "[o]ne may make a claim for uninsured motorist coverage only for the vehicle involved in a given accident as described in the policy for which the claim is made." (Hartford, supra, at p. 1313.)
Here, Guy did not carry UIM coverage in the policy for his vehicle that was involved in the accident. Karl's policy only described Karl's vehicle as being insured under that policy. The exclusion in Karl's policy, and section 11580.2(c)(6), prevent Guy from trying to take a "free ride" on Karl's policy.
In Daun, supra, 125 Cal.App.4th at page 607, the Court of Appeal held the exclusion allowed by section 11580.2(c)(6) did not apply because the insured did not own the motor vehicle he was riding in when struck by an uninsured motorist. We do not have that factual scenario here.
In sum, the court did not err in finding Guy's Volkswagen was not an insured vehicle under Karl's policy.
2. Guy was "occupying" the vehicle
Guy asserts that even if the section 1150.2(c)(6) exclusion could ordinarily be applied to his vehicle, it could not in this case because he was not "occupying" the vehicle at the time of the accident. This contention is unavailing.
In Cocking v. State Farm Mut.l Automobile Ins. Co. (1970) 6 Cal.App.3d 965 (Cocking), an uninsured motorist struck an individual who had been driving an insured Volkswagen with the owner's permission, had exited the vehicle, and was standing one to four feet behind the vehicle in preparation for putting on tire chains. (Id. at p. 967.) The applicable automobile policy provided UM coverage and, similar to Interinsurance's exclusion in this case, defined an insured as "'any other person while occupying an insured automobile' and in turn defined the term 'occupying' as follows: . . . 'in or upon or entering into or alighting from.'" (Id. at p. 967.) The trial court concluded the injured driver had not been occupying the insured vehicle at the time of the accident since "at the time he was struck, [he] had been outside the car for approximately two minutes and was standing some one to four feet from it." (Ibid.)
The Court of Appeal reversed. In doing so, the Cocking court observed that "the dictionary definition of the word 'upon' includes 'in or into close proximity.' (Webster's Third New Internat. Dict.)" (Cocking, supra, 6 Cal.App.3d at p. 969.) It also pointed out that an Illinois court had concluded that "upon," as used in a medical payments provision, had "connoted some physical relationship enlarging the area defined by the words 'entering or alighting' and the word 'in.' [Citation.]" (Id. at p. 970.)
Moreover, the Cocking court held that dictionary definitions alone were not determinative because the policy language had to be "read and interpreted in the light of the purpose of the uninsured motorist statute, the provisions of which are a part of the instant insurance policy." (Cocking, supra, 6 Cal.App.3d at p. 969.) The Court of Appeal stated that there was "ample and significant authority holding that the purpose of uninsured motorist statutes is to give monetary protection to persons who, while lawfully using highways themselves, suffer grave injury through the negligent use of those highways by others." (Ibid.) The appellate court held that "[s]uch [policy] language has been interpreted to mean that coverage is extended to the person seeking recovery under the policy where he was using the vehicle, either as the named insured or with the latter's permission or consent, express or implied, and where he was in such a position in relation thereto as to be injured in its use." (Id. at pp. 969-970.) The Cocking court stated: "In determining whether the person was in such a position in relation to the vehicle as to be injured in its use, consideration must be given, not only to what the person was doing upon injury, but also to his purpose and intent." (Id. at p. 970.)
Relying on these principles, the Court of Appeal in Cocking found the insured was "occupying" the vehicle: "[I]t is undisputed that plaintiff was using the insured's Volkswagen permissively. Under the agreed facts it is also evident that plaintiff was performing an act physically and directly related to the car. Since plaintiff was traveling under highway conditions requiring tire chains, his acts of stopping the vehicle to put chains on, and of undoing the bag containing the chains while in close proximity to the car, clearly suggest his intent to place those chains on the car's tires. Accordingly, we hold that plaintiff's position preparatory to placing the chains on the tires of the car put him in the requisite physical relationship to the car. His injury while in that position, therefore, occurred while he was 'using' the car and while he was 'upon' the Volkswagen within the meaning of the policy and section 11580.2." (Cocking, supra, 6 Cal.App.3d at pp. 970-971; see also Utah Home Fire Ins. Co. v. Fireman's Fund Ins. Co. (1970) 14 Cal.App.3d 50, 54 [pedestrian hit by uninsured motorist while standing at door of insured's car conversing with insured was "in or upon" insured vehicle].)
In this case, immediately before the accident Guy had exited the vehicle, opened the hood, and was looking into the engine compartment. Thus, he was in close proximity to the vehicle, and his physical relationship to the car demonstrated he was "using it." His relationship to his vehicle at the time of the accident showed he was "occupying" the vehicle as that term is used in the UM and UIM statutes, and the Interinsurance policy exclusion.
Guy asserts that because we are not determining whether he is afforded coverage under the policy, but are applying an exclusion, we must strictly construe the term "occupying." It is true as a general rule that exclusions from coverage are "strictly construed against the insurer and liberally interpreted in favor of the insured." (Delgado v. Heritage Life Ins. Co. (1984) 157 Cal.App.3d 262, 271.) However, when an exclusion is unambiguous, it is given literal effect. (Westoil Terminals Co. v. Industrial Indem. Co. (2003) 110 Cal.App.4th 139, 146.) Guy does not point to anything in the term "occupying" that renders it ambiguous, and thus we do not construe it to mean something different when that term is applied to a denial of coverage under an exclusion, as opposed to a determination that coverage is afforded.
DISPOSITION
The judgment is affirmed. Interinsurance shall recover its costs on appeal.
WE CONCUR: McDONALD, J., AARON, J.